House of Representatives
28 September 1910

4th Parliament · 1st Session



Mr. Speaker took the chair at 10.30 a.m., and read prayers. -

page 3822

QUESTION

LAND TAX ASSESSMENT ACT

Effect on Existing Leases.

Mr SCULLIN:
CORANGAMITE, VICTORIA

– Has the AttorneyGeneral seen the following paragraph in this morning’s Age -

Mr. E. Manifold has issued notices to his tenants on Danedite Estate giving them till’ Friday to consider whether they will purchase their farms. If they do not want to purchase, the farms will be put up to auction. The leases, provide that tenants must pav all land taxes, but this provision is superseded by the new land; tax, which makes the owner liable. The leases of several tenants do not expire for some years, but they have been informed that the leases have been rendered negligible by the new Act.

Is it a fact that the leases have been, rendered negligible by the Bill?

Mr HUGHES:
Attorney-General · WEST SYDNEY, NEW SOUTH WALES · ALP

– It is not a fact that the leases have been tendered negligible orin any way interfered with in the manner suggested.

page 3822

NAVAL UNIT: DREADNOUGHT

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Has the PrimeMinister seen a recent statement by the Prime Minister of England with regard’ to the number of war vessels now building, in which the Australian and New Zealand’ vessels are referred to as Dreadnoughts 1

Mr FISHER:
Prime Minister · WIDE BAY, QUEENSLAND · ALP

– I have not seen thestatement, but am sure that no one will’ take exception to it, should the Prime Minister of England be properly reported.

page 3823

QUESTION

CENSUS

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Has the attention of the Minister of Home Affairs been drawn to a leading article in yesterday’s Argus, in which the writer, speaking of the honorable gentleman, says -

He has so strong a dislike for the ordinary common-sense words “legitimate” and “illegitimate,” of which the meaning is understood by every one, that he substituted for them the expressions “of legitimate parents” and “of illegitimate parents “ respectively. When the absurdity of this was pointed out to him he decided to use the words “ nuptial “ and “ exnuptial,” and that is how the paper stands at present. He thinks he can alter a fact by altering the word that describes it.

I ask the Minister if he is not opposed to the desire of the Argus to stigmatize every little Australian whom Christ would have blessed had He been here?

Mr KING O’MALLEY:
Minister for Home Affairs · DARWIN, TASMANIA · ALP

– My honorable friend must be aware that the Argus is a pagan journal, and has not yet felt the soothing spirit of Christianity. We wait for its conversion.

page 3823

QUESTION

OFFICIAL PUBLICATIONS

Mr FOWLER:
PERTH, WESTERN AUSTRALIA

– I hold in my hand a pamphlet purporting to be issued by the Department of External Affairs, Melbourne, entitled The Commonwealth of Australia for Farmers. I understand that the production is being extensively circulated in other parts of the world, with the object of attracting farmers to Australia; but opening it accidentally a few minutes ago, my eye encountered the following statement : -

In the Northam district, which is 800 feet above sea level, with an average annual rainfall of 115 inches…..

I know that the rainfall in that district is at least twice as much as has been stated. I ask the Minister if misstatements like that are likely to attract farmers to Australia, and if he will issue the instruction that advance copies of future productions be supplied to members of Parliament, so that they may see that they are what they purport to be?

Mr BATCHELOR:
Minister for External Affairs · BOOTHBY, SOUTH AUSTRALIA · ALP

– I am unable to promise to forward proof copies of publications to members in advance of issue.

Mr Joseph Cook:

– The publications: might be supplied to us when they are issued.

Mr BATCHELOR:

– I should he pleased to arrange for that. The publication referred to by the honorable mem ber for Perth is most valuable, every care having been taken to verify its statements. Those regarding rainfall were obtained from the State Meteorologist, and checked by the statistics of the Commonwealth Meteorologist; if there is any error, it has been received through official sources. 1 am not prepared to accept the honorable member’s statement that there is an error.

Mr HEDGES:
FREMANTLE, WESTERN AUSTRALIA

– Is the Minister prepared to accept my statement that the rainfall for a hundred miles east of Northam is from 50 to 60 per cent, more than is set down in the pamphlet?

Mr BATCHELOR:

– I am not prepared to accept any correction except from official sources, though I shall have the matter investigated.

Mr Mcwilliams:

– Why did not the honorable member say that before?

Mr BATCHELOR:

– I did not consider it necessary, because it goes without saying that when the existence of a mistake is suggested, an inquiry will be made.

Mr JOSEPH COOK:

– Will the Minister cause copies of ali these publications, which are circulated broadcast throughout the world, to be distributed to honorable members ? At present we know nothing of them until they have gone abroad. Each member might very well be .furnished with a copy of each pamphlet issued.

Mr BATCHELOR:

– I should be very pleased to provide for that.

Mr FOWLER:

– -As the Minister will not accept my statement about the rainfall of Northam, I draw his attention to a Western Australian official publication in which the town of Northam is shown to be situated within a belt of country enjoying a 20-inch rainfall.

Mr BATCHELOR:

– I misunderstood the honorable member’s original question, thinking that he referred to the northern district of Western Australia, not to the Northam district. I am prepared to accept his statement regarding the rainfall of a particular place, but regarding the rainfall for a whole district I naturally prefer to accept the official statistics.

page 3823

QUESTION

VANCOUVER MAIL SERVICE

Mr FINLAYSON:
BRISBANE, QUEENSLAND

– There is a statement in this morning’s Argus to the effect that the Premier of New “Zealand has received a cable message from Sir Wilfrid Laurier saying that -

He was informing the Commonwealth Government that the contractors would be forthwith notified that they had the permission of the Government of Canada to make a call each way at New Zealand under the existing contract. Sir Wilfrid Laurier was expressing the hope that Australia would concur. In any case Canada was obliged to see that from August next the steamers must call at New Zealand.

Has the Postmaster-General received such a cablegram from the Government of Canada, and will he, before coming to any agreement, give Parliament an opportunity to discuss the matter?

Mr THOMAS:
Postmaster-General · BARRIER, NEW SOUTH WALES · ALP

– A cablegram has been received from the Canadian Government, containing a statement similar to that which has been read, but as it came only a day or two ago, no opportunity has been given for the discussion of the matter in Cabinet. It will be discussed as soon as possible, and then a more definite answer will be given to the honorable member.

page 3824

QUESTION

POSTMASTER-GENERAL’S DEPARTMENT

Staff Grievances

Sir JOHN QUICK:
BENDIGO, VICTORIA

asked the Post master-General, upon notice -

  1. Whether his attention has been directed to a speech by Mr. R. F. Power, Secretary of the Post and Telegraph Association (Electrical and Mechanical Branch), Sydney, reported in the Sydney Morning Herald on the 24th September, in which it is stated that the Association is doing everything it could to secure a redress of grievances, but that the Postmaster-General was not assisting them, and that the time might come when the Association might have to fry other means ?
  2. What are the grievances referred to?
Mr THOMAS:
ALP

– The answers to the honorable member’s questions are as follow -

  1. I have not seen the Sydney Morning Herald, but apparently a similar report has appeared in the Daily Telegraph, which I have seen.
  2. From reading the report it seems the chief grievance is that some officers were sent from Melbourne to Sydney at a salary of £60 per annum. The appointments referred to appear to have been made in February last, when the honorable member for Bendigo was PostmasterGeneral.
Sir JOHN QUICK:

– I wish to explain, sir, that the appointments referred to were not made by me as Postmaster- General, but by the Public Service Commissioner.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The way in which the Postmaster-General is going on is scandalous. He is trying to deceive the House every day.

Sir JOHN QUICK:

– He calls boys officers.

Mr Joseph Cook:

– Oh, this is disgraceful.

Mr SPEAKER:

– I ask the honorable gentleman to withdraw that remark.

Mr Joseph Cook:

– I withdraw it, sir.

page 3824

PAPERS

MINISTERS laid upon the table the following papers : -

Census and Statistics Act - Specimen of proposed Schedules to be filled up at the Census on 3rd April, 191 1.

Naval Forces - Regulation No. 74 Amended (Provisional) - Statutory Rules 1910, No. 87.

Military Forces - Regulations for the Entrance Examination to the Military College of Australia (Provisional) - Statutory Rules 1910, No. 88.

page 3824

LAND TAX ASSESSMENT BILL

In Committee (Consideration resumed from 27th September, vide page 3783) :

Clause 10, as amended - (1.) Land tax shall be payable by the owner of land upon the taxable value of all the land owned by him, and not exempt from taxation under this Act. (2.) The taxable value of all the land owned by a person is -

in the case of an absentee - the total sum of the unimproved value of each parcel of the land.

in the case of an owner not being art. absentee - the balance of the total sum of the unimproved value of all the land, after deducting the sum of Five thousand pounds.

Upon which Mr. Hedges had moved by way of amendment -

That after the word “ land,” line 9, the following words be inserted - “ in excess of the amount (actual or estimated) originally paid to the Crown, on grant in fee-simple of the land.”

Mr HEDGES:
Fremantle

.- I feel that this amendment will appeal to many honorable members, because I take it that the object of this measure is to tax the land increment. There can be no increment on the money which was first paid for the land - if there is, it is, or should be, in the coffers of the State. I propose to exempt the amount which was actually paid, whether it was 2s. or£3 per acre, because it would be unfair to adopt a fixed amount. If my amendment is not agreed to a hardship will be inflicted on persons who purchased, at a price, poor land which has not increased in value to any great extent. In fact, there are any number of cases where adjoining land of similar quality has been leased. I claim that my amendment, if made, will help a freeholder who has poor land, as against a leaseholder who holds tracts of equal, perhaps better, quality at a nominal rate. I know of instances where land which was purchased years ago “is not worth the purchase money, including the value of the improvements, so that there can be no hardship in what I propose. In regard to the exemption of the money first paid for town lots, the amount would be so trivial that it is hardly worth consideration. But in the case of country lands it is worth consideration. Whereas on town blocks, perhaps, it would not amount to a few shillings, on country land it would amount to so much per acre. In many instances the money which was paid by the early settlers has gone to the improvement of towns, the building of roads round cities, and the improvement of public parks and recreation reserves, and all that sort of thing. After thirty or forty years of settlement, roads have not even been formed through the properties, so that the settlers have received very little in return for the money which they paid for the feesimple of their lands. I claim that, in accepting my proposal, the Government would only be treating those persons with fairness. There is another phase of this subject which should be considered, because the time will come when the ,£5,000 exemption will be lowered. It would not come with a very good grace to make this proposal when we were asked to lower the exemption. It is better to lay the foundation now, so that in after years the principle can apply with fairness to smaller areas. I think honorable mem.1,rs will see that the wrong which would otherwise be done to persons in (he back blocks, who have paid even more than- their land was worth, would lie to some extent averted by what I propose. In fact, when the money was taken from these persons, many others considered that they had. paid too much for their lands, and many of them did. I think that if the actual amount which was paid for the land were exempted from the tax, the exemption would be well received throughout Australia, and persons would look upon this Parliament as trying to act fairly, instead of penalizing them. There is no doubt that many honorable members on the Ministerial side will see the fairness of my proposition. Let us look at the increment on the money paid for the land.

The value of ,£20,000, paid in twenty annual instalments, would, at 5 per cent., be over ,£200,000. No doubt the buyers have had the use of the land in the meantime, but the Government have had the use of the money, so that it is really fair not to tax men on the money which was paid. I hope that the Minister will agree to amend this portion of the clause in the manner I propose.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– This amendment te exempt the price paid to the Crown is not one which can be accepted by the Government. The argument which is mostly used, in the press and elsewhere, in favour of the acceptance of this principle presumes that the justification, ethical and economic, for the tax is the right of the community to the unearned increment, and that as the Crown has been paid for the land it has no right to demand the amount again. If this tax were based on that, the argument would have weight, but its justification is not dependent upon the right of the people to the unearned increment. No graduated land tax can be, because the unearned increment is, so to speak, the layer of value which is added to all lands uniformly - that is, uniformly so far as the size of the holding is concerned. Quite irrespective of whether a man owns £100 or £100,000’. worth of land, the unearned increment attaches to every pound’s worth of value uniformly. But the principle of this Bill is quite opposed to that. It does not take off or attempt to take off a uniform skiming of value, but it becomes more intense in the ratio of the aggregation of the individual holdings. The principle underlying the Bill, therefore, is not the right of the people to the unearned increment, although that, of course, is clearly established, but the right of the people to have access to the land itself and the danger to the community of allowing large aggregations of land in the hands of individuals. It is quite immaterial whether a man bought his land from the Crown or from somebody else, whether he paid £1 or £100,000 an acre, the fact remains that if one man owned this country he would have the right to determine the conditions under which the whole community could live. It is for that reason that a graduated land tax is finding favour in countries where the aggregation of lands in the hands of private individuals is becoming greater as time goes on. A uniform land tax is an attempt to take back by the community a value which it gives to land, but a graduated land tax is an attempt to effect a more even distribution of land. The two things are fundamentally distinct. Therefore this amendment which aims at exempting the price paid to the Crown cannot be accepted. Looking at the proposal from another stand-point, let us see where it takes us. Such a proposal has never been accepted by any Legislature that has attempted a graduated land tax, or, so far as I am aware, any other kind of land taxation. It certainly has not been accepted in New Zealand or Victoria. If it were adopted by us, clearly its effect would be practically to exempt from taxation great pastoral properties, and the exemption would be the greatest where the value of the land per acre was the least. There are many cases where the value of the land to-day is probably not more than was paid for it to the Crown, so that in such instances the whole of the value, under this amendment, would be exempt. We should thus have large pastoral holdings, owned by .some of the wealthiest men and institutions in Australia, wholly exempt from the operation of this tax. Although . we have heard lately a very melancholy wail from the poor land-owners of this country, I venture to say that a man who has 100,000 acres of land worth £1 an acre could scarcely come with reason to this Legislature and ask to be treated differently from the poor workman who receives £2 2s. per week, and who is taxed through the Customs to the last penny. Some of these men, if they have 100,000 acres, want 150,000 acres; if they have 150,000 acres they want 200,000 acres. Even if they had 1,000,000 acres they would not feel that they had enough. We are asked to exempt from taxation the price that they have paid to the Crown. Presumably, they purchased the land because it was a good bargain, and in very many cases the transactions have proved the best that they have ever made for themselves, and the very worst for the community. The Victorian Treasurer, Mr. Watt, pointed out in the State Legislative Assembly that the whole of the alienated lands in Australia had been sold at a price which was to-day less than the value of the lands in Victoria. That is to say, the unearned increment has so increased the value of the alienated lands of Victoria that it exceeds to-day the price actually paid for the whole of the alienated lands of the Commonwealth. As I mentioned last Friday, in Sydney alone during the last six years there has been added to the value of the land no less than £6,000,000. Not a railway or improvement is made or even contemplated that does not add to the value of the land. People hold on to it, and reap the benefit of the efforts and expenditure of the community. Every pound that is borrowed - and the country seems to be always borrowing - adds to the value of the land, yet these large land-owners ask that they shall be exempt from taxation. The adoption of such a proposal would be unfair to the community, and unfair to the rest of the land-owners of Australia. If I have bought a piece of land from Jones, I have as much right to be considered as has a man who has bought direct from the Crown. If I am buying .£5,000 worth of city land, I have as much right to be considered as if I had purchased 5,000 acres in the country at £1 an acre. The amendment cannot be accepted. It is not based upon any sound economic or ethical principle; it is discordant with the principles of the Bill, and its acceptance would not be fair either to the general community or to the rest of the landlords of Australia.

Mr SAMPSON:
Wimmera

.- The Attorney-General has stated that the amendment moved by the honorable member for Fremantle is without precedent; that the primary purpose of this tax is to burst up large estates ; that it is the duty of the people to take back to themselves some of the unearned increment that they have given to the land ; and that this is a taxation measure. In the Nineteenth Century for September, 1909, there appeared an article by .Mr. Alfred Mond, in which it was pointed out. that the’ betterment principle, which is only another form of taxing the unearned increment, has been in operation in France since 1679, when an ordinance, providing for the taxation of land, increased in value by public improvements, was issued by Colbert. Article 30, of a law passed in 1807, under the inspiration of Napoleon, provides that-

When private property has considerably increased in value in consequence of public works, the proprietor can be taxed up to one-half of that increase in value ; the amount of the . increase being ascertained by legal valuation.

That form of taxation, according to the writer, has been extended to other pro- vinces in Europe. Writing of the increment tax in Germany, he tells us that -

There taxation is on the increased value of land and buildings at the time of sale, the whole tax being treated more in the nature of an additional transfer duty. On the other hand, the British tax is levied on more occasions - not merely on the sale of real property, but on death.

He goes on to say -

The most important distinction in principle is that, whereas the English tax will be levied on future increase of value, the datum line being the valuation now made, the German tax is retrospective.

According to this article, in 200 municipalities in the German Empire, the tax is levied on the increment of the land - or in other words, the amount paid for the land, either to the Crown or to an individual, is deducted. That is a sound principle, and its operation is rapidly increasing in Germany. The writer predicts that the whole basis of the taxation of land in Germany, which has the most scientific form of taxation in the world, will be on the increment value, after deducting, the full amount paid to the Crown, or to the individual from whom the land has been purchased. That system is in operation in France, and the writer of this article states that Mr. LloydGeorge also embodied in his taxation proposals more or less the same principle of taxation on the increment of the land. Thus the amendment embodies a principle’ that is by no means new. Whatever arguments might be advanced in favour of taxing land acquired under the feudal system in England, or in European principalities, on the plea that it was never legitimately purchased from the Crown, they cannot be applied to the lands of Australia, the whole of which have been legitimately purchased.

Mr Fenton:

– Very legitimately.

Mr Fairbairn:

– £113,000,000 has been paid for them.

Mr SAMPSON:

– The money was legitimately paid. If the Government wish to impose a tax on wealth, they should adopt some other method than that proposed in the Bill. If this is to be a tax on the unearned increment of land - and the burden of the argument put before the people at the last general election was that it was the duty of the Government to tax that value which had been given to the land by the operations and activities of the community - then this amendment should be accepted. It will not mete out full justice, but it will, at least, do an act of tardy justice by exempting from taxation that amount which has been paid to the Crown for the purchase of land, and which has been applied to the construction of public works, which have benefited * the whole community.

Mr Bamford:

– Are there any exemptions in Germany and the other countries to which the honorable member has referred ?

Mr SAMPSON:

– The increment on the land is alone taxed, and I do not suppose that exemptions would apply.

Mr Fenton:

– In those countries nearly the whole of the economic rent is taken, is it not?

Mr SAMPSON:

– The principle is that the increments should be taxed.

Mr Tudor:

– To what extent?

Mr SAMPSON:

– Just as far, I presume, as the necessities of the Government require. The amendment is only an affirmation of the principle that we should tax only that portion of the unearned increment which has been given to the land by the corporate effort of the community. I am very sorry that the AttorneyGeneral refuses to accept it.

Mr CARR:
Macquarie

.- It seems to me that members of the Opposition overlook the fact that due allowance is already made in the Bill for the amount which was originally paid for land “by reason of the fast that it is not proposed that we shall appropriate all interest on its communitycreated value. As a matter of fact, we shall not appropriate even one-half that interest unless the land be worth £80,000. It must be apparent to everybody that half of the economic rent which will not be touched under this measure, will more than set off the amount which was originally paid for the land, which in most instanceswas only £1 per acre. I contend that the community has an absolute right to the community-created values.

Mr Fairbairn:

– Suppose that a man’s land be mortgaged to the extent of one-half its value. What would become of him if we appropriated the other half ?

Mr CARR:

– There are very few cases in which land is mortgaged up to one-half its value.

Mr Fairbairn:

– There are hundreds of them.

Mr CARR:

– I do not know of any institution which will lend money to that extent upon a man’s own valuation of his land.

Mr Fairbairn:

– Financial institutions will always lend up to one-half the value of land, and they are glad to have the opportunity of doing so.

Mr CARR:

– I repeat that the amount which was originally paid for the lands of Australia is more than set off by the fact that under this Bill we do not propose to exact anything like its full rental value.

Mr Agar Wynne:

– Does the honorable member think that we have. a right to take the lot?

Mr CARR:

– While the community has an undoubted claim to the values which it creates, the difficulty is that many of those values have been bought and paid for.

Mr Groom:

– The honorable member does not contend that the full rental value of land has been added by the community ?

Mr CARR:

– Even the original value of land must have been a communitycreated value. W;hy did men pay £i per acre for their land? Simply because of the inhabitants who were here. Ample allowance is made in this Bill for the money which was originally paid for the purchase of land. The honorable member for Fawkner has pointed out that a financial institution may hold a mortgage over land to the extent of half its value. But I would remind him that any man who holds decent land makes a good deal more than 5 per cent, out of it. As a matter of fact, he should be making 100 per cent.

Mr Agar Wynne:

– The honorable member has not had experience of farming.

Mr CARR:

– I know men who purchased land for £1 per acre, and who are making £a and £3 per acre out of it. I know others who are making £30 per acre out of such land by fruit farming. They seldom make less than £20 or .£30 per acre.

Mr Agar Wynne:

– The farmers at Warrnambool, Ballarat, and Bungaree, where the best lands in Victoria are to be found, cannot make that.

Mr CARR:

– Because the land-owners have put up values to such an extent that there is no room for genuine workers there.

Mr Agar Wynne:

– All the land there is in small holdings.

Mr CARR:

– I understand that for the most part it is held under lease.

Mr Agar Wynne:

– Not an acre of it.

Mr CARR:

– Then it may be held by men who have been compelled to pay such a high price for it that they have placed a millstone round their necks from which they cannot hope to escape for many .years. If such cases as the honorable member for Fawkner has mentioned really exist, I say that the men who are holding those lands are not putting them to their best use, and it is time they made way for better men.

Mr W ELLIOT JOHNSON:
LANG, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– At first sight the amendment appears to be based upon a fair principle, but in reality, there is room for considerable doubt on the point. Judge Blackstone, in his Commentaries on English Law, points out that an estate which is held in fee-simple is really an estate which is held in tenancy at the will of the Crown - that the Crown is the ultimate owner of all land. In other words, when it sells land the Crown does not part with its right to tax that land up to the last pennyworth of its value. Now, let me take the case of a municipal council. I happen to know an instance in which a municipality proposes to sell certain lands which are in its possession, and upon which a town hall was built some years ago. That building is no longer adequate for the purpose for which it was originally erected, and IKe council has purchased some more land upon which it proposes to erect a more suitable building. If the principle which is embodied in this amendment is recognised in the case of Crown lands, it must also be recognised in the case of municipal lands. But would anybody contend for a moment that the sale of the land upon which the building to which I have referred now stands, ought to exempt the purchaser from municipal taxation?

Mr Fairbairn:

– The same principle is not applicable in both cases, because a municipality gives something in exchange all the time.

Mr W ELLIOT JOHNSON:
LANG, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The destination of the purchase money makes no difference whatever to the principle involved. The principle remains the same, irrespective of whether that money finds its way into the Treasury or into the pockets of private individuals. And the purchaser from the Crown has not only the land for his use and profit, but all the advantages of railway construction, protection of his life and property, road and bridge construction, but many other advantages also beyond the power of a municipality to confer. The Crown does not part with its right to tax land whenever the public needs demand it. So that whatever we may think of the constitutionality or otherwise’ of this Bill, there are certain fundamental principles which we must recognise, because failure to do so may land us into many, serious difficulties in the future. Whether it is expedient or not to exempt the amount originally paid, is a point I am not discussing, and the whole point is whether it is right or just to do so.

Mr SPENCE:
Darling

.- In addition to the points which were made by the honorable member for Macquarie, I wish to remind the Committee that a very considerable return has been derived from the State by those who have purchased land. Undoubtedly the money which they paid in the first instance was a source of revenue to the Government. But it was expended in providing public utilities in the form of railways, &c. So that the purchasers have already had a very considerable return.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Everybody has had that return.

Mr SPENCE:

– Just so. But I would point out to the honorable member that there are cases in which the construction of railways has had the effect of enhancing the value of land by ,£2 per acre. In submitting his amendment, the honorable member for Fremantle did not mention quite a number of factors which are worthy of consideration. We all know that some persons have purchased from the Government land at ,£1 per acre which was worth £4 per acre, whilst others have paid _£i per acre for land which was not worth 5s. per acre. But these are extreme cases. When the honorable member for Fremantle reminded us that it was not worth our while to consider city lands, it . at once occurred to me that a block between Elizabethstreet and Swanston-street, which was originally sold for ,£3,000, was valued fifty years afterwards at £19,000,000. In the Western District of Victoria, large estates were purchased for which .£5, ,£6, and ,£7 per acre was paid.

Mr Mcwilliams:

– It is very good land.

Mr SPENCE:

– But it was never intended that its present holders should get that land. They secured it by means of dummying under the Act of 1863. It was deliberately cut up into blocks for farmers. The largest area of the blocks was 640 acres, and they were smaller according to quality. The farmers did not procure a bit of that land. It was all secured by the original squatter - the man who held previously under lease - although it was never the intention that he should secure it. In some cases the average that he paid for areas of something like 170,000 acres was just a few pence under ‘£2 an acre. The honorable member quotes cases of land sold at ;£i an acre, which is perhaps worth less now j but he does not quote the cases I am speaking of. The honorable member is probably unaware of them, but if he wants to ascertain some of the facts he win find them in the very interesting History of Land Tenure in Victoria, written by the honorable member for Bendigo. He will see there that men secured areas of 25,000 acres, 11,000 acres, and so on. The very principle of this Bill is to make it unprofitable for the big holders to continue to hold that agricultural land which is now being used for grazing. Before we could adopt the honorable member’s proposal we should have to reconstruct the measure, and put it on an altogether different basis. If we carry out the principles that the Government have adopted, and wish to strike a “straight-out blow at the big estates, and make it unprofitable to hold them, the amendment cannot be accepted, because it would release from any sort of tax that would have any effect upon them some of the very estates that it is most desirable should be restored to the uses which the Government of Victoria originally had in view when they framed a Bill to cut them up. That purpose was. defeated by systems which I do not want to dwell upon now, but they were aided very much in the drafting of the measure by a little word slipping in at the instance of their friends in the Victorian Legislative Council, and opening the door practically for dummying. The honorable member now proposes that those people should be allowed exemption on the money that they paid ; but that would defeat the whole purpose of the Bill.

Mr Mcwilliams:

– They did not all acquire their land in the manner to which the honorable member refers.

Mr SPENCE:

– I have already said that all sorts of prices were paid. Some secured at £1 an acre - the peculiar old idea of £1 an acre came originally from South Australia - land which was worth £4 an acre when they bought it, and which is worth a very big sum now.

Mr Mcwilliams:

– They bought quite honestly.

Mr SPENCE:

– Yes, in those cases. In other cases, ,£i an acre was paid to the Crown for land that is not worth it to-day.

There is such a wide difference between the different cases that the honorable member’s proposal could not be applied with any fairness. I admit that, on the first look at it, there appears an element of fairness about the proposition, but when one goes into it in detail, he realizes that the circumstances and conditions are so varied that the principle cannot be applied without raising many other difficulties. To my mind the Bill all through aims at putting a stop to the accumulation of large estates by making it unprofitable to hold them when they exceed a certain area. There is also the big exemption of £5,000 worth of unimproved value. All these things have to be recognised. We could make allowances in different ways if the Bill was entirely different. If, for instance, the Bill was purely a taxation Bill without any exemption, these points might be considered; but, viewing the. principle which the measure has been framed to accomplish, I do not see how it is possible for the Government to accept the amendment. They have already stated that they cannot accept it, and I think they are doing right.

Mr AGAR WYNNE:
Balaclava

– I was surprised to hear the honorable member for Macquarie talk about the wonderful returns from land. I lived for many years in the Ballarat district, where the best potato-growing land is to be found. Many of the farmers there would be very pleased to get anything like the returns mentioned by the honorable member. The holdings there are not big. They run from 20 to 300 acres,, the latter being a very big property in that district, and the farmers do very well if they get more than 5 per cent, ‘on the present value of the land. There is very little land in Victoria, that will pay more than 5 or 6 per cent, on’ its present value. It is very good land, indeed, that will return foi wheat an average of 30s. an acre, year iii and year out. By very intense cultivation, in the case of a man working a market garden near a city with his own family, a return of £30 an acre may be got, but you cannot make farming land pay if you have to cart your produce any distance. If you are further than sixteen miles at the outside from the railway, farming will not pay.

Mr Carr:

– If a man got £30 an acre off land, would the honorable member say it was worth £600 an acre?

Mr AGAR WYNNE:

– I do noc think a man could get £30 an acre regularly off land, nor do I think any of such land is worth £600 per acre. There may be an exceptional case where a man is growing some special class of fruit, or tomatoes, or asparagus, or, perhaps, flower seed. From an exceptional block you may get a fairly big return in those ways, but I am satisfied that no man can get £30 an acre per annum off land by farming.

Mr Spence:

– I have known a man get £60 an acre for onions in the south-east of South Australia, and £40 an acre from potatoes near Ballarat.

Mr AGAR WYNNE:

– But not year in and year out. I have known times when onions have not paid for digging, and have seen in the Ballarat district thousands of tons of potatoes that it did not pay to dig out of the ground. It is not fair to quote exceptional cases as giving the average over a long term of years. If any man gets a return of 6 per cent, off his land year in and year out, he is very lucky. ‘The honorable member for Darling told the Committee just now that a block of land in Melbourne, sold in 1837 for ,£3,000, is now worth £19,000,000. What is this tax going to realize if one block of land in the city of Melbourne is worth £1.9,000,000? Assuming that half of that is the unimproved value, what an enormous return the Government will get. The tax, instead of bringing in £1,000,000 per annum, will bring in nearer £10.000,000 at that rate. I do not know whether the honorable member’s figures are correct, but it was rather an eye-opener to me to hear there were blocks worth such an enormous sum. During the whole of this debate the members on the Government side have been preaching that they want to do justice and give fair play. The lands in the western district of New South Wales cannot pay interest if there is a mortgage on them, and also pay the land tax, and give the owner anything. The owner is going to be absolutely starved out. I am not interested in any way in that land myself. I saw a balance-sheet yesterday of a syndicate of Victorian people, who had invested money in New South Wales, and who held their interest in small snares. They had bought a property with the idea of subdividing, but it is too far away from a railway, and therefore it has to be carried on as a grazing proposition. They put £72,000 into it, and they owe £80,600, the balance of the purchase money. They have worked that property for three years ; and the balance-sheet for last year shows, after paying interest and rates and cost of management, a return of £49-

Mr Bamford:

– Some of those people ought to have their heads shaved.

Mr AGAR WYNNE:

– For the three years the profit and loss account shows a credit of .£1,030 odd. They have- received no interest whatever on their £72,000.

Mr Bamford:

– Those are the heavenborn financiers that we hear about.

Mr AGAR WYNNE:

– They have struck bad seasons. In good seasons, the return might have been better. The managers are shrewd, common-sense men. I am only showing what may happen to a man who puts his money into that land.

Mr Roberts:

– Where is the land where they have struck bad seasons for three years ?

Mr AGAR WYNNE:

– Not very far from the Hunter River district.

Mr Roberts:

– Does the honorable member say that there have been dry seasons there during the last three years?

Mr AGAR WYNNE:

– This season is a bad one for them. They have had no rain there for seven weeks, and that has affected them very seriously. The AttorneyGeneral said that men in acquiring land had, in many cases, bitten off more than they could chew. That remark might be applied to almost everybody in this country. All men who go on the land, and especially the farmers, rely on their own labour, and the labour of their family, and the returns from the land, to pay off their debt. Many a man in Victoria who has had four or five good seasons is well off. There was an article in the Lone Hand the other day, showing how a man made £^8,000 out of .£75. I read that article carefully, and know that such things do happen in the mallee country ; but the man took the risk. Was he not a bold man, and is not that the class of man that makes a country like Australia? The AttorneyGeneral says that he has no consideration for the man who is game to take the risk, because he has bitten off more than he can chew. How are men to get on if they do not sometimes take a good bite? It is the perseverance and pluck of those men, with the assistance of the monetary institutions, that has helped to make this country, and I do not think we ought to drive thiem off the land. I believe the great majority of the members of this House know that, in the western part of New South Wales, without close railway communication, and without water conservation, it is absolutely impossible to settle small men on the land. If you cut that land up into blocks of 2,000 or 3,000 acres, there will not be a man on it in the next five years. The same thing was done near Hay, in the northern part of the Riverina. The land was cut up for closer settlement into blocks of from 2,400 to 3,000 acres, but I do not believe 1 per cent., or even per cent., of the settlers are left there now. They struck three or four bad years, and were all starved out. The only chance these men have is where they get near railways and water. If you put them on to the back country and starve them out, you will ruin them, and make it necessary for them to start life afresh. That is no good to the country. If you cut up these grazing properties before the proper time comes, you will do no good. But in the eyes of honorable members opposite it is a sin for a man to own land at all.

Mr Roberts:

– Why make such absurd statements ?

Mr AGAR WYNNE:

– The statement is not absurd. I have heard it shouted from the Ministerial corner time after time. I have heard it shouted from the public platform. I know that it is absolutely true that some honorable members regard it as a crime to own land in Australia. Under this Bill the man who lends his money on the security of land - the mortgagee - will be on top. He will get the benefit. But the man who is living in the country and working hard to produce for export and pay the interest on our national debt will be squeezed and ruined. He will be driven off the land. I am quite certain that the proposal of the honorable member for Fremantle is fair and just. The people who originally purchased land, and who have reaped the benefit of its subsequent rise in value, will not be made to suffer. We are going to punish -those who have purchased land from them.

Mr Hughes:

– What amount was paid to the Crown for the £70,000 estate to which the honorable member has referred?

Mr AGAR WYNNE:

– The amount paid for the estate was £150,000.

Mr Hughes:

– How much was paid to the Crown originally?

Mr AGAR WYNNE:

– I presume that the Crown was paid j£i per acre, but the present owners paid £3 10s. per acre

The increment to the original owner is about j£2 10s. per acre. He has got his money and gone away with it.

Mr Hughes:

– Land on the Hunter is worth £20, £30, £40, and £50 per acre.

Mr AGAR WYNNE:

– I do not say that this land is actually on the Hunter River, but it is in the Werriwa district. I had the name of the estate in my memory last night, but have forgotten it to-day.

Mr Mcwilliams:

– The man who made his money by purchasing that land from the Crown will not be taxed.

Mr AGAR WYNNE:

– No, he has made his profit, and the people who bought it will, under this tax, lose all that they have paid. Of course, they did not know that the tax was going to be imposed. They did not expect to be treated in this unfair way. They have not been dishonest. Yet they are to suffer. The Crown received its money from the original purchaser and expended it. Who benefited chiefly from that expenditure? Honorable members opposite are always talking about the way in which land-owners have benefited from the increment of value. But has not the greater part of the money been spent at the seaboard ? Has not any country representative experienced the greatest difficulty in securing the expenditure of a few pounds in his electorate? The expenditure has principally been in the centres of population. In our large cities we have our splendid streets, our convenient railways, our palatial post-offices and public buildings, whilst the country districts have been comparatively neglected. It will be just the same at Yass-Canberra when the Federal Capital is established. We shall have our magnificent buildings there, and the people of the country will have to be taxed to pay for them. The Prime Minister has said that the Government are willing to listen to reason. I have heard the AttorneyGeneral say the same thing. But when a reasonable proposition is made from this side of the House it is scouted, and we are informed that the Government cannot accept it.

Sir JOHN FORREST:
Swan

– I do not think that it will serve any very useful purpose to prolong the debate. Honorable members opposite have proclaimed that they are willing to listen to reason, and that their principal object is to do justice: but they will not listen to arguments on the ground of justice from this side of the House. In listening to this debate one cannot but be struck by the fact that it is not land taxation, but land settlement, that is aimed at. There seems to be a desire to make restitution, to- give back to the people that which - so they say - has been improperly taken from them. In fact, there is a crusade against the ownership of land, and therefore a proposition such as we are now considering which would be of very much value to a large number of people, especially in the drier parts of the Commonwealth, does not receive any real consideration. Of course, I am well aware that in the older parts of the country the proposal of the honorable member for Fremantle would not have very much effect. In the early days lands were acquired from the Crown at rates which were not veryhigh, and values have very much increased since then. But in the drier parts of Australia - in the Riverina, in western Queensland, and in western New South Wales - the amendment would confer a great advantage. And, after all, it does seem reasonable and fair that we should not tax that amount which the Crown has been paid. There are other cases of hardship that will occur unless the amendment be adopted. One to which I should like to refer is the case of the Midland Railway Company, which constructed in Western Australia 300 miles of railway without receiving any cash. It was paid on the land grant principle. The company received 3,000,000 acres of land, and has sold only 1,000,000 acres.

Mr Mahon:

– The company ought to have been taxed long ago.

Sir JOHN FORREST:

– I know, from the point of view of dishonest minds, that some honorable members have-

The CHAIRMAN:

– Order ! The right honorable member is not right in referring to any honorable member in such terms.

Sir JOHN FORREST:

– Well, I think that the man who says that people who under agreement with a State bring capital into the country to develop it’ in exchange for land ought to be taxed out of existence, and who urges that their property ought to be practically confiscated, cannot have a properly constituted mind. .1 withdraw the word “ dishonest,” and say that the honorable member’s mind is not properly constituted.

Mr Mahon:

– The right honorable mem ber need not withdraw the word so far as I am concerned.

Sir JOHN FORREST:

– The honorable member’s mind is warped in many directions. However, the point I wish to make is this : I do not say that people should be at liberty to come to Australia, acquire land, and escape taxation altogether. But when a company takes land in payment for doing a great work for a State, and a heavy penal tax is placed upon it afterwards, it amounts almost to confiscation. At all events, some time should be given to the company to unload. It seems unfair for the Government to say to them, “ We will put a tax of £20,000 or £30,000 a year on you.” The company is trying its best to unload. Whatever may have been said about them in the past, they have been doing their best in recent years. I am informed that they have 200,000 acres of land surveyed, subdivided, and ready for occupation, but they cannot- get people to take it. The company has had a troublesome career. It is not very popular on account of the great quantity of land which it holds. Years ago it was in financial difficulties, and the State had to come to its rescue on one occasion to the extent of £500,000, which amount is being paid off gradually. A tax of £20,000 or £30,000 a year would be a very heavy burden, and it is only reasonable that time to unload should be given. If, however, the Government are not willing to accept the amendment of the honorable member for Fremantle, it is of no use for me to move a further amendment with a view of meeting this case. Nevertheless, I think that the tax is unduly heavy, and some means should be found of making it less burdensome. The tax is going to produce a very much larger amount of revenue than has been estimated. So much, I think, is certain. I should say that the yield will be at least twice or thrice the amount of the estimate. Unless the Government wish to dispossess people or unduly injure them, some alteration should be made,. if not in the direction suggested by the honorable member for Fremantle, then “in some other direction. Every one has come to the conclusion that this is a very drastic proposal. But unless the Government take a different view to that which they have enunciated, it is useless to labour the question. Therefore, I shall do no more than call the attention of the Attorney-General to it.

Mr. MAHON (Coolgardie) [TT.58I.- I regret having missed the AttorneyGeneral’s explanation of hig opposition to the amendment of the honorable member for Fremantle. The only present clue to the Government attitude is that afforded by the speech of the honorable member for Darling, but he gives no reason that appeals to me for rejecting the amendment. His speech showed no justification whatever for taxing the value for . which the owners originally paid cash to -the Crown. The honorable member said something about people having obtained land for less than the market value at the time of the purchase; and also pointed out that much of that land has since increased largely in value. That may be so. It is that value - the unearned increment - the community-created value - that we are going to tax by this Bill, and I go as far as he does in appropriating that increment for the community. But I see nothing in the amendment of the honorable member for Fremantle that is not strictly iri accordance with justice. If a land-owner had invested his money in Government debentures, instead of purchasing landed property, I presume that no one would sanction a proposal to tax him on his investment. That being so, I am unable to see the justification for a tax on the amount which the Crown originally obtained for land. That outlay ought to be as free, in a taxation measure of this kind, as any of the improvements which the owner’s capital has placed upon the- land, and which improvements this Bill exempts from taxation. The permanency of any law depends on its abstract and intrinsic justice; and if, by the refusal of a rational and fair amendment like this, we impose on the people a measure which flouts that inherent sense of justice which exists in every community, this measure will have a very short life. The first opportunity the people obtain they will sweep it away, and replace it, perhaps, with something which errs in a contrary direction. When the right honorable member for Swan was speaking I made a harmless interjection, which, however, seemed to excite him very much. The honorable member was refering to what has long been a curse to the people of Western Australia, namely, the monopoly of a vast tract of country by a foreign syndicate, which has kept back development by mismanagement of their privately-owned railway. What I said was that I thought it a pitythat the land held by this company had not been taxed long ago, so that they should have been compelled to, as they have done since, throw open the land for settlement, and runtheir railway to the advantage and benefit of the settlers. I regret that the right honorable member should think I have a dishonest mind, simply because I made such a suggestion.

The CHAIRMAN:

– The right honorable member for Swan withdrew that expression.

Mr MAHON:

– I do not wish to refer further to the episode, though it is strictly in order for me to correctany misapprehension by way of a personal explanation. I hope the Attorney-General is not going to be adamant in regard to this amendment. If there be any justification for his refusal to accept the amendment, I, as one who wishes to dothe fair thing between those who have land and those who have not, would be glad to hear it. I remind the Attorney -General again that the object of the Bill is to throw open lands for settlement, and not merely to raise revenue. I remind him also that that is the policy of the party of which he is a member, and that when a land-tax scheme was adopted at the Brisbane Conference in 1908, at which I was present, not a word was said about taxing the value represented by the amount originally paid to the Crown. There never was, in any man’s mind at that Conference, any idea that such a proposal would ever be made to Parliament.

Mr Carr:

– No one suggested such an exemption.

Mr MAHON:

– At the Conference I heard a proposal for an exemption of £5,000, which I resented. And I apprehend that the honorable member will be in a difficulty to find an effective answer to the charge that an exemption of a class makes a measure of this sort class legislation.

Mr Fenton:

– All the same, it is a tax on the class best able to pay it.

Mr MAHON:

– I do not know that even that is true. Very often the owner of between £1,000 and . £5,000 worth of unimproved value may be in a better position to pay a tax than is the man who holds more land.

Mr Carr:

– If it is a class tax, it is only to adjust the balance of taxation.

Mr MAHON:

– That may be, but I am not going into these refinements. I point out that a large section of the Labour party oppose all exemptions in land taxation, and that, in Western Australia, Labour Conferences have repeatedly pronounced against exemptions. The amendment of the honorable member for Fremantle is strictly and absolutely just, and ought to be adopted if we mean to adhere to the original purposes of this measure, which are solely to promote settlement and appropriate the unearned increment for the community.

Mr FAIRBAIRN:
Fawkner

.- It is somewhat difficult to find out what is really in the mind of the AttorneyGeneral. At one time we were led to believe that this was a measure for bursting up large estates, at another time, that it was for the purposes of revenue, and to-day the proposal is based on some other more abstract ground. Whatever is in the honorable gentleman’s mind, I am certain that what was in the mind of a great number of honorable members opposite, and of the public, was that we were going to tax, not so much the unimproved value as the unearned increment. If that be admitted, as it ought to be, between man and man, we shall arrive at what the mandate really was. Australians are a fair-minded people, and do not desire to tax a man who in the way-back districts is making nothing to speak of out of his land. There is no wish to tax people who hold land in the Western Riverina, and who are actually prepared to sell for less than they originally paid ; a bursting-up tax in regard to such holders was never contemplated. The honorable member for Lang said that, of course, all kinds of property, or, at any rate, all kinds of land are subject to taxation, and to ordinary taxation no one objects. But when an avowedly bursting-up tax is imposed on people who cannot burst up their estates, because no one will take up small areas away from railways and settlement, we see that great injustice must be done. We have had difficulty in bringing names before honorable members, but Mr. Alexander T. Creswick, of Western Riverina, published a letter in the Argus of the 24th September, putting the position very plainly; and Ishould like honorable members to hear what he says in regard to land there which has not at all increased in value. Mr.Creswick said -

In this district half the runs were resumed20 years ago, and allotted, in blocks of 10,240 acres, to settlers. Very few of these now remain, whilst those who remain have holdings of from 40,000 to 50,000 acres.

Many honorable members seem to regard all land as if it were like that to be found on the rich Hunter River flats, or about Warrnambool.

Mr Cann:

– This is taxation on values.

Mr FAIRBAIRN:

– But what if the value does not reach the price originally paid? If the Crown possesses the £1 per acre which was paid, and the land is now only worth 8s. 6d., as was the case with land sold only the other day, is the proposed tax fair? Such a man cannot burst up his estate, and must be simply ruined. The argument is that if a man does not like to pay the tax he “may sell his land, but, as I have pointed out, these people cannot sell.

Mr Carr:

– The tax will be adjusted to the value.

Mr FAIRBAIRN:

– But the tax in these cases will take the whole of the yearly value.

Mr Carr:

– How can it do that?

Mr FAIRBAIRN:

– I can assure the honorable member that .it will do so. As a rule, these men had to borrow in order to pay the original £1 per acre to the Government, and throughout the whole of the district, from Hay and away out to the west, that money has never been repaid. However, Mr. Creswick is a man who has a large holding, and I should like to read further what he says -

The land is not fit for cultivation - the rainfall is too light; and, if it were, there is no means of getting produce away. There is land suitable for irrigation, but no water to irrigate with ; more often there is no water to drink.

It is also said the tax is for the purpose of taxing the unearned increment. In Western Riverina there is no unearned increment to tax. As an example, 1 will sell to the Commonwealth the whole of my freehold lands at what was originally paid to the Crown for them, plus the visible value of improvements.

That, I think, is a very fair offer.

Mr Batchelor:

– He will sell all his bad bargains, but not the others; and a good many people would like to do that.

Mr FAIRBAIRN:

– But this man hasnothing but bad bargains; and it would seem as if the Government would like to do as the honorable member suggests, and get rid of their bad bargain in selling the land so cheap in the early days. Mr. Creswick went on to say -

Now, with regard to the injustice of the proposed tax. The Government of New South Wales sold this land at from 20s. to 25s. an acre to raise revenue for expenditure upon public works, &c. At the same time the Crown also raised money upon its debentures. The bulk of the money to pay for these lands was borrowed from insurance societies and English investors, on the reckoning that an acre of land bought from the Crown for 20s. was worth the money and should show a rental value of at any rate 4 per cent. Now the federal Government pro pose to tax the purchaser of that land (who cannot get what he originally paid for it) 23 per cent, on the capital invested, so that the return of the money so invested i; Only 1^ per cent., instead of 4 per cent.

That does not seem fair. A purchaser of Government bonds receives his 3 J per cent., and has no further trouble, his income being regular from this source.

Mr Groom:

– And is free from income tax in some cases.’

Mr FAIRBAIRN:

– In all cases; yet when a man has to work his land, which he has. bought, he is called upon to pay this heavy bursting-up tax. Land-owners do not desire to escape taxation altogether, not even these poor, wretched people who have made bad bargains; and it would be some concession, at any rate, if the Government would impose a flat rate of id. in the £i. I do not think that in a private transaction any honorable member would take such a course as the Government propose; and there would seem to be one set of morals for private business, and another for public business. In his private capacity, no honorable member would take a man’s sovereign for something, and then, if he had the power, take from him half what he had sold for the sovereign. That, however, will be the effect of this measure, and there will be no escape from it for the people to whom I am referring. The AttorneyGeneral said that there was no similar exemption in a land tax law in any part of the world. The answer to that is that there is not in any other part of the. world a state of affairs similar to that existing in Australia, where the Governments of the different States have disposed of the land, and have received over £113,000,000 for it. In New Zealand a great deal of the land was bought from the Maoris, and only a comparatively small area was sold by the Government. I have been unable to find the exact amount received by the Government of New Zealand from the sale of land. But in the Commonwealth every single acre of freehold has been sold and paid for in cash. No similar state of things exists in any other part of the world. People situated as are those to whom I have referred will be unable to escape this imposition by selling their land, because it is not wanted in such districts, except in large areas. The position of these land-owners will be a very hard one under this Bill, and might be met to some extent by the amendment; or if the Government would be content with a flat rate of id. in the j£i, that would give great relief to these men. I cannot help thinking that they must be ruined under this measure.

Mr Carr:

– Does the honorable member say that the land to which he refers is not worth £i an acre?

Mr FAIRBAIRN:

– The writer of the letter I have quoted bought a place in the Riverina the other day at a price which worked out at about 8s. 6d. an acre, and the Government received £i an acre for that land originally. People in Queensland were actually asked by the Minister of the day to buy land, and as soon as they have bought it and paid for it they are to be treated under this Bill as outlaws.

Mr Carr:

– At the price stated by the honorable member 20,000 acres would be exempt altogether from the tax.

Mr FAIRBAIRN:

– In the country referred to - which does not carry more than one sheep to 4 or 5 acres - 20,000 acres is a comparatively small holding. I have bpfore said that measures involving great injustice will not last in a British community such as ours, animated by a love of justice, and there is no doubt that this measure will involve very great injustice to the owners of land to whom I have referred.

Mr. HUGHES (West Sydney- AttorneyGeneral) ([i2.2o]. - I think ‘that the Committee should come to a decision on this matter. It has been discussed now for several hours.

Mr Fairbairn:

– The convenience of the Government must come before justice to the individual.

Mr HUGHES:

– I do not deny that the matter is very important, but I trust the Committee will make some progress. We must dispose of the amendments one by one, and we have a sheaf of them yet to deal with. The position put by the honorable member for Fawkner is substantially that put by the honorable member for Fremantle and other honorable members opposite. It amounts practically to this : That the State having taken the money of the individual has no right to call upon him further to make a contribution in respect of that which he has already bought and paid for.

Mr Fairbairn:

– I did not object to a tax. but to a fine.

Mr HUGHES:

– That is the basis of the argument. Let us see how it conforms to the practice adopted in everyday life. A man making an ordinary purchase is able to put the article pur chased to a very limited number of uses, whilst the purchaser of land secures with it an undiminishing use. A man who purchased land twenty years ago for £1 an acre has been able to use it for twenty years, and is still able to use it for an unlimited number of years. If a man bought a horse twenty years ago, by this time the animal would be of little or no use. But land purchased twenty, thirty, or forty years ago is not only of use for an indefinite term, but has increased in value sometimes a hundredfold. The suggestion of honorable members opposite is that the price paid for it twenty, thirty, or forty years ago should be regarded as a perpetual set-off to any claim by the community. It is forgotten that the community at the time the land was sold had the right to sell for the time they lived, and no longer. I fail utterly to see how it can be logically contended that those who bought land thirty or forty years ago, and paid for it to those who are dead and gone, owe nothing to the present generation who have received nothing for the land.

Mr Hedges:

– They have the benefit of the roads, bridges, railways, and public works constructed with the money paid for the land.

Mr HUGHES:

– The descendants of the nian who bought land forty years agc still have the use of it, and while it might be perfectly fair to exempt those who bought their land during the present generation, it cannot be said to be fair to exempt the value paid for land twenty or fifty years ago. There is neither justice, sense, nor equality of incidence in such a contention. As to the right of the community to tax land irrespective of whether the holder has paid for it or not, I remind the Committee that it is acknowledged that the community has a right to tax. It may tax, in whatever way.it pleases, a man’s ‘ income, whether he has earned it or not, and it is a fact that the tax upon unearned incomes is at a higher rate than upon those which are earned. It may tax his land, or it may tax his property generally. There is a positive recognition of the principle that no matter how a man gets a thing, whether by his own labour, or in some other way, the fact that he has it is a sufficient justification for the community to tax it. The basic principle of taxation after all is that people should pay according to their ability. There is nothing wrong about that. What canon of justice is violated by the acceptance of this principle ? The honorable member for Coolgardie spoke of this measure as being based on injustice, and as a’ class tax. That might be a perfectly proper thing for the honorable member for Fawkner to say, but it is not a proper thing for the honorable member for Coolgardie to say, who, as a member of this party, was returned to this House as a supporter of this very tax, set forth not in a general sort of way, but as a panacea for a number of evils which every member of this party declares this country to be suffering from. When the honorable gentleman says that the .£5,000 exemption makes this a class tax he fails to understand the principle on which this party deliberately adopted this proposal, and the reason why we advocated a .£5 ‘ 000 exemption rather than no exemption at all. He further fails to remember that the Bill now before the Committee is in every essential particular precisely the same as the Bill laid on the table of this House by the first Fisher Government, of which he was a member. Whatever may be properly said by honorable members returned to this Parliament pledged to oppose this measure, it does not lie in the mouth of those returned to support it to dissent from the basic principle on which it rests. The ,£5,000 exemption is certainly one of the principles upon which this party was returned to power. No honorable member opposite will deny that for a moment.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Honorable members opposite offered so many inducements to the public that it is impossible to say which of their bribes they accented.

Mr HUGHES:

– The honorable member for Parkes will not deny that the £5,000 exemption was put clearly before the people. We may differ as to how much further our mandate went, but as to the proposal that there should be an exemption of £5,000 in value, there can be no question that we have a mandate on that point from the people. In this Bill w.e have endeavoured to give effect to the principles we set before the electors. The honorable member for Coolgardie has said that we made no mention of taxing the value paid for land, but that was naturally taken for granted. We have a right to say that, because in every other Act, including the Western Australian Act relating to the taxation of land values, the amount paid to the Crown for the land is not exempt from taxation. Since it is clearly the general and uniform practice in New Zealand, New South Wales, Victoria, Western Australia, and South Australia, where land taxation has been imposed, not to exempt the value paid to the Crown for land, it rests with the honorable member for Coolgardie to show that the people were led to believe that the Federal tax would differ fundamentally from the State land taxes in this particular, and that there is some violation of justice and some departure from the clear mandate of the people in the proposal made in this Bill. ~l submit that his position is quite untenable. The amount paid to the Crown is taxed in every tax, State and municipal. If there is a violation of justice by the Bill, there is also a similar violation by the Acts of Western Australia, South Australia, and New South Wales.

This measure, in all essential particulars, conforms to the published platform of the Labour party, and to the statements made from the public platforms, and strictly conforms to the mandate deliberately given to us by the people on 13th April, after they had heard every conceivable argument from the other side.

Mr ATKINSON:
Wilmot

.- The Prime Minister and the AttorneyGeneral would have us believe that the Government does not wish to inflict injustice or undue hardship on any land-holder in Australia. But unless some such amendment as has been proposed is made, great injustice will be done to a good many persons. It is nonsense to say that the measure is in strict conformity with the policy advocated by the Labour party at the elections. According to the Attorney-General, the object of the Bill is to tax communitygiven value, or unearned increment, the value given to the land by the energy of the community. The price originally paid to the Crown for the land cannot be regarded as unearned increment.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– What injustice will be done by the Bill in the Wilmot district ?

Mr ATKINSON:

– I am speaking of the effect of the Bill on the whole of Australia. There are not many persons in the Wilmot division who hold land whose unimproved value is more than £5,000, it being one of the best examples of a closely settled district in Australia, though many of the farmers there, having mortgages, desire cheap money, and the Bill will make it more difficult to get money cheaply. The honorable member must be aware that western Riverina contains many large holdings bought from the Crown, and heavily mortgaged, and that their owners will be ruined if the Bill is passed as it stands, because their returns will not enable them to pay interest on their mortgages and a tax on the unimproved value of the land, including the price at which they bought from the Crown. In that district estates are being offered to-day with all their improvements for the price paid to the Crown for the land in its unimproved state. Mortgagees are offering the land to-day in the open market, and cannot get £1 an acre for it. There must be persons similarly situated in the other States.

Mr Fenton:

– Would the honorable member exempt the Van Diemen’s Land Company ?

Mr ATKINSON:

– I have no desire to exempt any company or person, but I wish to prevent injustice. Honorable members opposite seem to think that because a man holds a large area of land he must be wealthy, and must be preventing settlement; hut in western Riverina there are many holdings on which closer settlement would be impossible, and if the present owners were dispossessed, the land would fall out of use. It now produces a certain quantity of wool, but were it to fall out of use our wool clip would be less, and wool still represents a very large part of the wealth annually produced in Australia. The people who are struggling on this land to-day are using it to the best advantage, considering its conditions. They are some of the most capable managers of grazing areas that we have. If the land could be put to better use, or sold to advantage, they -would not continue to use it only for grazing. Is it likely that they would stand in the way of bettering themselves? In Tasmania there has been a great outcry against certain owners for not selling their land, but I know that they would gladly sell at reasonable prices, if they could get them. Many of the Riverina land-owners cannot get even what they originaly paid to the Crown.

Mr MAHON:
Coolgardie

.- The Attorney-General supports his opposition to the amendment with just the sort of arguments which I anticipated he would use. They are not altogether unfamiliar, and therefore one is able on the spur of the moment to subject them to a short analysis.

He told us that had the present generation received the money paid to the Crown, it might be equitable “to exempt the holders from taxation in respect of the sums so paid, but that the land having been bought by a generation which has passed away, no such exemption can be allowed. In other words, he would exempt payments for land made by a man three years ago, but would not make an exemption in respect of payments for land made by his father. He reminded us that land has an undiminishing use, but forgot to add that so has Government stock, and so has every other form of investment in which the original purchase money or its equivalent value remains intact. If, forty years ago, one man had paid £1,000 for land, and another the same sum for Government stock, while the first would have had the continuous use of his land ever since, the other would have been in the regular receipt of interest from his investment.

Mr Carr:

– He would not have gained any unearned increment.

Mr MAHON:

– I am not objecting to the taxation of the unearned increment; I am speaking of the taxation of the sums paid to the Crown for the purchase of land. The honorable member will see that we are now singling out for special taxation the money originally invested in land, while allowing the money originally invested in Government stock to go scot free. That seems to me an utterly indefensible proceeding. It is absurd for any one who knows the history of Australia to say that because the generation which has gone received the money paid to the Crown for the land, this generation does not benefit by it. To what purpose has the land revenue of the States been applied? Has it not been devoted to the construction of railways, the building of bridges, the making of roads, and the carrying out of other public works, whereby the present generation benefits? It is nonsense for the Attorney-General to contend that this generation has received no benefit from the expenditure of the money which was received during the time of a former generation ! The bulk of this money has been expended on what may be called national improvements.

Mr Hughes:

– In which these persons alone get a benefit.

Mr MAHON:

– Not at all. I am not objecting to the taxation of the unearned increment.

Mr Hughes:

– The honorable member is only objecting to our putting it on, apparently.

Mr MAHON:

– Nothing of the kind. I am adhering to the proper principle; that is the taxation of the community-created value. I do oppose taxation of the money which owners honestly paid to the Government, and which, had it been invested in Government stock, or anything else, would be free from taxation under this measure. The honorable gentleman undertook to inform me as to the proper interpretation of the Labour platform, but I decline to accept him as the sole interpreter of it. He may be very astute, but I was present at the Brisbane Labour Conference, and know what was in the minds of its members a little better than he does, since he was not there. He complained that the Bill is identical with that of the Fisher Government, of which I was a member. We certainly have here the skeleton of the measure brought down by the Government, but we have also sheaves of this Government’s amendments which leave little resemblance between the two Bills. And let me remind him that the basic principles of the measure brought in by the Government of which I was a member, are set out clearly in a memorandum attached to the Bill itself. This memorandum shows that the Bill was designed to burst up land monopoly, to promote settlement, and to obtain for the community some of the land values created by communal expenditure. It contains no hint or suggestion of a proposal to tax the value represented by the purchase money paid to the Crown by the possessors of land. The Attorney-General now tells us that the taxation of the amount paid to the Crown was to be taken for granted. I for one never took such an unfair proposal for granted; and I say now that nobody, on reading the Bill or the memorandum, would ever suspect that the amount which had been paid to the Government honestly by the owners of land was ever likely to be taxed. The Attorney-General further attempts to justify his attitude by pointing to the fact that in land taxation by the States no exemption is allowed for the purchase money paid to the Crown. He instanced several States, among them Western Australia, where no exemption of this sort exists. Even if that be correct, it does not bear on this measure. This Bill is one to tax community -created values and to dislodge the land monopolist.

The State taxation measures which he cited had a totally different design. Their object was to raise funds to meet the ordinary expenses of government; and their Parliaments recognised that land, like other forms of property, should bear its legitimate share of general taxation. There is, therefore, no precedent in State enactments or policy to justify the Attorney-General’s contention. He can scarcely have overlooked the essential distinction between the two cases. He must know that, whereas we are taxing the community-created value, the Governments of the States tax land for the purpose of getting revenue to defray the cost of administration - a totally different thing. If he is aware of this fact, and desires to conceal it, then his action is pitiable. It looks like a deliberate attempt to misstate the case in order to mislead the Committee.

Mr Hughes:

– What the honorable gentleman says is not true.

The CHAIRMAN:

– Order ! The honorable gentleman must withdraw that statement.

Mr MAHON:

– I do not mind it, sir.

The CHAIRMAN:

-The AttorneyGeneral must withdraw that statement.

Mr Hughes:

– I withdraw the words, sir.

Mr MAHON:

– My word is-as good as . his in regard to that matter.

The CHAIRMAN:

– The honorable member has withdrawn the statement.

Mr MAHON:

– I think that the common knowledge of the Committee will enable members to decide between my assertion and the apparent denial of the AttorneyGeneral. The State Governments do not tax land to get in the accrued value, but to raise revenue, just the same as they do by taxing other forms of property. That is the difference, and an important one it is, which the Attorney-General ignored. He also stated that persons are expected to pay taxes according to their ability. Of course, that is perfectly correct in a general way, and it would be proper in the case of an income tax. But this Bill does not involve the payment of tax according to ability, but rather the payment of tax according to the amount of property the value of which was created by the community. The honorable gentleman also said that it was not proper for me, as a member of the Labour party, to say that this measure is not in accordance with that view - that it would be a proper statement for the honorable member for Fawkner to make, but coming from a member in my position it is little short of flat blasphemy. I do not know by what warrant the Attorney-General sets himself up as a judge of my conduct. I decline his arbitrament, and shall exercise my rights here irrespective of his opinion. I wish to see land taxation fixed on equity ; and if we are to have an enduring law, it must be based on just foundations. I see nothing improper in that contention. Probably the AttorneyGeneral desires the Bill to go down to posterity as one of the monuments of his great wisdom and constructive statesmanship. If so, he will be solicitous that the Bill does not violate the principles of natural justice, and that it is in accordance with the dictates of fair play and common sense. And in that regard I think it is very proper for a member of the House, charged with responsibility to the whole nation as well as to his constituents, to say that he hopes the measure will ultimately be fashioned so as not to inflict injustice or hardship on anybody. My reference to the £5,000 exemption was made in consequence of an interjection by the honorable member for Macquarie. I recognise that the exemption is provided for in the programme of our party, and have no wish to disturb it. But surely it is not heresy for me to say that as the exemption had my strong opposition when it was being ‘ placed in the platform, I am sorry it is there; and that its being there leaves this Bill open to the charge of being a class measure. It is not logical, however far it may be defensible on the ground that we should not at the present stage of affairs include in it persons who have only a small interest in land. Our object is to break up large country estates which are suitable for agriculture, and by discouraging these aggregations of land to promote closer settlement, and add to the population of this country so that it may be properly defended. There is not one syllable of my previous remarks which I propose to withdraw. or to qualify in the slightest degree. I regret that the AttorneyGeneral has not better reasons than those which he cited in the beginning of his speech for his opposition to the amendment. I think that if he is prepared to admit, as he did, that allowance ought to be made for money paid three or four years ago, the benefit of which is enjoyed by this generation, he has no warrant for refusing to make allowance for money honestly paid to the Crown by the pre- decessors of this generation, seeing that the latter are also sharing in the benefits brought about by the expenditure of this public money.

Sir JOHN QUICK:
Bendigo

– I think that the Committee is indebted to the honorable member for Coolgardie for his valuable and interesting contribution .to this discussion from the Labour stand-point. If the Attorney-General’s argument be correct, it amounts to a claim on the part of the Commonwealth Government not merely to tax the annual value of a freehold estate, but to tax the capital value, and if necessary to tax it out of existence. It practically amounts to a claim of right to repudiate a contract between the Crown and a freeholder. There is no reasonable land taxer but would agree that -it is the right of this Parliament, as representing the people, to tax ‘land values based upon earning capacity, but to claim the right to tax the capital value really amounts to a claim to assert the right of confiscation and repudiation. The amendment is based on equity.

Mr Hughes:

– Why has not the principle been embodied in every State Act ?

Mr Groom:

– Because they are revenue Acts.

Sir JOHN QUICK:

– I know of no similar legislation in Victoria, and certainly no similar drastic legislation in any State, and probably it is the severity of these taxation proposals which have drawn attention to the extraordinary claim to tax out of existence the land values which were honestly sold by the Crown to the freeholders. I understand that whilst I was temporarily out of the chamber the honorable member for Darling quoted a passage from a pamphlet on the land question, which I wrote some years ago, and pointed out that in some cases, no doubt, the settlers and squatters in those days acquired the land by means of violations of the law, in the shape of dummyism, or something of that kind. He has also stated that in some cases they bought the land, not merely at the ordinary upset price of £1 per acre, but at the exaggerated value of £2 per acre, and that if the proposed exemption were allowed, those estates would escape taxation under the Bill. There can be no doubt that large areas of land in Victoria and other States were acquired by means of dummying and other illegalities. If the Parliaments of those days had been in a position to examine the transactions it would have been right and just on their part to pass laws superseding titles which had been dishonestly acquired. But I would point out that the titles were acquired many years ago; and that many of the dummymongers have passed away.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Their descendants are still here.

Sir JOHN QUICK:

– In many cases the estates of the dummymongers have passed into other hands; have, indeed, been subdivided beyond recognition and the law of restoration. All that this Parliament can deal with is the state of things which it finds established by the law. I submit that we would not be justified in entering upon a policy of revenge or a policy of confiscation and repudiation merely because wrong acts were done very many years ago. I think that the testimony of the honorable member for Coolgardie is very valuable, as showing the original intention of the Federal land tax proposals. We are all aware that the argument used during the Federal campaign was that the basic principle of a Federal land tax was to tax the betterment value acquired from the development and progress of the State, but it was never suggested that the Federal law should tax the improved value added by the owner, or the capital value for which the owner or his predecessors in title had honestly paid the Crown. With reference to the argument that many of these estates would escape taxation if we gave credit for the upset price paid to the Crown, I may say that it told with me at first, and I was inclined to give considerable weight to it, but other statements have been made to the Committee. Although in many cases some estates would escape taxation under the measure because of the honest increment in their value, still if it be a fact that estates, sold at an upset price of, say, 10s. or 15s., or £1 per acre twenty or thirty years ago, have not increased in value, why should they be made the subject of this drastic legislation ? Does it not show that the estates have not enriched the owners by any increased value?

Sitting suspended from 1 to 2.30 p.m.

Sir JOHN QUICK:

– I was pointing out that during the campaign in favour of a Federal land tax it was urged that it was the right of the Federation to tax any public betterment or community-added value of land, and that the Labour party expressly repudiated any intention of taxing improvements. Nothing was said about taxing the capital value of land for which the Crown had been paid, and I submit that a tax on the capital value for which the Crown has been paid, although in form a tax, would amount to a penalty which, if persisted in, might result in the complete effacement of the original value.

Mr Hughes:

– Is it the amount or the principle to which the honorable member takes exception?

Sir JOHN QUICK:

– I take exception ro both the amount and the principle so far as this Parliament is concerned. The argument that by excepting the Crown-paid value we should leave very little on which the tax could operate has not sufficient in it to warrant opposition to the amendment. Even if the Crown-paid value be excepted, there will still be an immense area of publicly added taxable value on which the tax will operate.

Mr Frazer:

– Has the honorable member any figures showing what the exemption of the Crown-paid value would amount to?

Sir JOHN QUICK:

– I have no particular figures, but, generally speaking, there has been an increase in value on the price originally paid to the Crown. In some parts of Australia there may be estates which have not increased on their original capital upset price ; but if any landed estates have had no public betterment value since being purchased from the Crown, we have proof of one of three things : In the first place, it may prove that the original upset price was too high, and that there has been no increment because of the anticipated payment of too much value. Secondly, it may be that the land, because of its situation or poverty, is not capable of any increased value; and, thirdly, it may be that the owner has had only a limited use of the land. We may fairly draw the conclusion that if, at the present time in Australia, with all its progressive tendencies, there is a landed estate which has not increased in value since it was originally purchased from the Crown, at probably £1 per acre, there must be something inherent in its situation or potency that renders it incapable of increasing in value - that there is a limit to its possible use, and that this tax should not operate upon land of that peculiar and poverty-stricken character. I suppose that it is not desired even by the most enthusiastic advocates of this progressive graduated land tax that large aggregations in country districts which are incapable of being put to any use save pastoral occupation should be burst up. Of what use would it be to impose a penal tax on some of the remote, poor lands of Riverina or Central Australia, which would be useless if held in small isolated blocks?

Mr W J JOHNSON:
ROBERTSON, NEW SOUTH WALES · ALP

– If there is no value there will be no tax.

Sir JOHN QUICK:

– This tax will be imposed, not upon the productiveness of the land, but upon its abstract capital value. Let me point out to the AttorneyGeneral the dilemma in which one of his arguments must place him. He said that the exception proposed by the honorable member for Fremantle was inconsistent with the basic principle of this Bill, namely, the imposition of a progressive land tax for breaking up large holdings.

Mr Hughes:

– I did not say that.

Sir JOHN QUICK:

– I understood the honorable member to say so.

Mr Hughes:

– I did not say that.

Sir JOHN QUICK:

– The honorable member made some such statement. He said that unless we taxed the capital value paid to the Crown we could not burst up or prevent the accumulation of large estates. If that is the object of the Bill, then the Government are endeavouring, by a side wind, to do by means of Federal legislation that which can be done constitutionally only by State legislation. The honorable gentleman would not dare to state any such intention in the preamble to the Bill. If he did, it would be a proclamation on the face of it that it was ultra vires of the Federal powers.

Mr Hughes:

– Does the honorable member say that the amendment as proposed by the honorable member for Fremantle is unconstitutional ?

Sir JOHN QUICK:

– There is nothing jocular in what I said. I am dealing with the Attorney-General’s own argument, which I contend amounts to a statement that this Parliament has a general power of land legislation, whereas it has no such general power.

The CHAIRMAN:

– I ask the honorable member not to deal with the constitutional question on this clause.

Sir JOHN QUICK:

– On the “whole, I think that there are strong reasons, founded on natural justice, for the proposed exception. With the general proposition that Parliament has a right to tax values added to land by the general progress of the community, no reasonable politician will disagree. The only point made by those on this side of the Committee who favour that principle is that it ought to be left to State legislation. The honorable member for Fremantle has made out a strong case, and if the amendment be adopted it will not be inconsistent with the basic principle of this Bill - the taxation of community-added value, or, better value added by the community.

Mr CANN:
Nepean

– I see no valid reason for accepting this amendment. The honorable member for Lang pointed out this morning that the British Government had not conceded to landlords any right to exemption from taxation, and I fail to see why we should do so. The honorable member for Wimmera referred to taxation in Germany, and said that in that country the unearned increment was taxed for municipal purposes. So far as the exemption is concerned, that is the only instance that has come under my notice of the adoption of such a practice. Many English municipalities impose taxation ranging from 4s. to over 10s. in the £1, and yet the British Government reserve the right to tax income from land over and above that taxation. I failed to understand the argument advanced by the honorable member for Coolgardie, when he said that he was not really in favour of an exemption of £5,000, but approved of this amendment. This amendment, if it means anything, means an additional exemption, and I cannot square the two arguments.

Mr Mahon:

– They do not require to be squared. I do not think the honorable member understands the purpose of this Bill.

Mr CANN:

– I understand the principles on which I was elected, and have a full recollection of my public promises. I certainly declared from every platform on which I spoke that I favoured a Federal land tax to burst up large estates, and also to produce revenue.

Mr Hedges:

– If this tax bursts up large’ estates, how will it produce revenue T

Mr CANN:

– The honorable member has been contending that there are certain estates which cannot be burst up, and therefore we shall obtain revenue from them. If in other cases the tax has the effect of bursting up large estates, it will therefore carry out the double object which we told the electors we had in view. We went to the country pledged to an exemp- tion of £5,000, but this amendment means an additional exemption.

Mr Hedges:

– What does the honorable member mean by that?

Mr CANN:

– Under the Bill as it stands provision has been made for an exemption of £5,000, and the honorable member would grant a land-owner a further exemption in respect of the amount originally paid to the Crown.

Sir William Lyne:

– And which in some cases would represent all that the land was worth.

Mr CANN:

– Probably it would. I also object to the amendment, because I believe that we ought not to make any distinction with respect to the price originally paid to the Crown. Many people hold land which has been sold three or four times since it was originally purchased from the Crown.

Mr Hedges:

– And the purchasers have paid for what was paid to the Crown.

Mr CANN:

– They have paid gold for it, and if it be reasonable to exempt the amount paid to the Crown, where the land is held by the original purchasers, it is just as reasonable to grant the same exemption to owners two or three removes from the Crown. Many of us would be acting contrary to our pledges to our constituents if we supported the amendment.

Mr FOWLER:
Perth

.- The honorable member for Nepean was somewhat unfortunate in comparing Australian conditions with those of England as regards land. In England, there is no such thing as an absolute ownership of land; it is all held there under an old feudal system, by which the rights of the Crown to obtain practically the whole economic value have been preserved for all time. It is not so very long ago, comparatively speaking, that practically all the taxation of that country was raised from land. Under the domination of certain influences that taxation was gradually taken off the land and put on the shoulders of the people as a whole, but those conditions do not apply to Australia. Here, rightly or wrongly, the land is parted with absolutely by the Crown. It may also be said that it is parted with absolutely at pretty well its market value. So far as the greater part of the lands of Australia are concerned, and having regard to the time at which they were taken over, the price put by the Crown on them represented approximately as much as they were likely to bring. In Western Australia the Crown is increasing the value of its lands accord ing as the demand goes, and is very careful to keep it as near as possible to the present requirements of settlement. The Attorney-General would be doing his own cause and party a good service if he simply sat tight and allowed .his battalions to speak by means of their voting, because the last time I heard him refer to the amendment of the honorable member for Fremantle I felt almost under compulsion to reply to what he said. He indicated that the honorable member for Fremantle practically contended in his amendment that once land was parted with by the State the State was not entitled to place any further charges upon it. Nothing could be further from the real contention of the honorable member for Fremantle. It was quite a simple matter for the AttorneyGeneral, having stated the position to suit himself, to proceed to demolish it. The honorable member for Fremantle does not contend that the State has no right to whatever increment may be added to the land subsequently. He merely contends that the price originally paid for the land shall not be regarded as portion of that unearned increment. If the Government are contending for the taxation of the unearned increment, I fail to see how they can, consistently with their own principles and position, refuse to accept the amendment of the honorable member for Fremantle. It will come upon the farming community as somewhat of a shock to learn from the speeches of honorable members on the other side that, apparently, the one form of unearned increment which the Labour party, in this Parliament, at any rate, have any regard for taxing is the unearned increment on land. Undoubtedly, as this principle is extended, and the limit of .£5,000 becomes reduced, as must inevitably happen, those people who are being protected by the exemption will no longer have that advantage. They will begin to realize before very long that the unearned increment, added to their smaller holdings, will be part and parcel of the plan of taxation that is now being adopted in the case of the larger estates. I think that if investigation were made of some of the speeches of the AttorneyGeneral, not perhaps in this House, “ but in connexion with debates in which he has taken part in the past, there would be found in his own language the best possible refutation of the contention that we have a right to the unearned increment on land, but not on any other form of wealth. Every individual member of a civilized community obtains, either to his labour or to his capital, the unearned increment added by the general operations of the whole community, and I fail to see, therefore, why the man on the land should be selected as the object of a tax of this kind while the unearned increment in other respects escapes altogether. If the Government had been in earnest in the desire to obtain a percentage of the unearned increment created by this community, they should have applied another kind of tax altogether.

Mr Beard:

– We did so the other day, in the Notes Bill ; we are doing a bit there.

Mr FOWLER:

– The Labour party are doing a little bit here, and there, but they are only nibbling at their own principles. I believe that by the methods they are adopting they will yet land themselves in the mire. The amendment is in absolute harmony with the principles and objects of the Bill, and I shall give it my hearty support.

Mr BEARD:
Batman

– I hope the Attorney-General will not relax in the least his opposition to the amendment. We ought to keep the Bill as it is now. I am surprised to hear the honorable member for Coolgardie trying to persuade the Committee that the Federal Parliament is not endeavouring to raise revenue by means of this tax, although the State Governments do apply land taxes for purely revenue purposes. The principle of this tax is to raise revenue. I distinctly stated that what commended this tax largely to me, amongst other very beneficial effects, was that it would raise a considerable amount of income for purposes of defence, and other necessary works. I therefore say it is to a great extent a revenue Bill. The amendment is dressed up in such a way that at first sight it bears the stamp of equity, but it is not so when you come to analyze it. What will be its effect? How is it to be carried out? The blocks of land that were paid for to the State originally have, in many cases, been split up in a great many ways. Some of them have been absorbed into larger estates. The question as to any particular area of land is, what did the Crown actually receive for it ?

Mr Harper:

– That can easily be found out.

Mr BEARD:

– I do not see that it can. Take a block that was sold in Melbourne for £46, and that has since been subdivided in such a way that the original frontage is not in the hands of the present owner. There would be trouble between the Commissioner and the present owner as soon as an attempt was made to fix what the Crown originally got for his holding. Endless difficulties would arise, and such an army of officials and such a large amount of inquiry would be required that it would kill the Bill for any practical purpose.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– All the titles go back to the Crown grant.

Mr BEARD:

– Honorable members say that many of these people have paid £1 an acre for the land. That is hardly a fair way to put it, and I . should not be prepared to give a man an exemption at the rate of £1 an acre, even if the amendment were carried. The Crown in many cases parted with the land nominally at j£i an acre, but those who bought it had twenty years’ time in which to pay the purchase money. That is practically the same as selling the land at 12s. dd. an acre spot cash. It would therefore not be fair to allow an exemption at the rate of £1 an acre for land purchased under the category of first-class land at a nominal price of £1 an acre, as was the case in Victoria. I agree with the AttorneyGeneral that the money that has been received for the lands of Australia has been re-expended by the States, and that a great majority of the present enhanced values are partly due to that expenditure.The money passed into the Treasury and passed out again for the construction of railways and other works to still further enhance the value of the land. The money was simply transferred to the Treasury, and the value went back to the land, and is still there. The Bill is perfectly fair, but if amendments of this character are inserted it will break down of its own weight. It will be impracticable to put it into active operation, and I believe that that is the object of the Opposition in introducing these specious amendments.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I was interested to hear the AttorneyGeneral’s statement of the principles of the Bill. I was certainly under the impression, with the honorable member for Coolgardie, that the principle of the Bill was unimproved value taxation - a tax imposed on unimproved land values for the purpose of bursting up big estates which were suitable for closer settlement.

Mr Hughes:

– Not a tax imposed on unimproved land values, but a tax imposed on the unimproved value of land, which is quite a different thing.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– I am willing to put it that way. I believe that what I have stated is the impression which the country as a whole gained, but to-day we are informed that that is not the principle of the Bill at all. It is not a mere “ skimming,” as the Attorney-General put it, of the community-added value of the land; the principle that underlies the Bill is that of preventing any man in Australia holding more than a certain quantity of land. The amendment of the honorable member for Fremantle - I had already given notice of a similar amendment, which will not, of course, now be moved - is designed to provide that so much of the unimproved value for which the Crown has received full satisfaction should not be taxed. One of the great objections to the tax is its uniform action from one end of the Commonwealth to the other. It falls on land which is eminently suitable for closer settlement, and for the taxation of which there might be some justification, though I am not attempting to justify it. But the penal clauses also apply in the case of land which is in no way suitable for this purpose, for which the Crown has already received full cash value, and which has had no added value given to it since it was sold. No argument has yet been submitted showing that taxation should be imposed on land which is not suitable for closer settlement and which can only be profitably held and worked in large areas. If any honorable member opposite can show any justification for applying the penal clauses to land of that description I am willing to hear him, but I have heard no such agument adduced throughout the whole of the debate. When honorable members have an opportunity to exempt this class of land they should seize it and prevent the penal clauses being applied. If, as it is contended, this tax is also for revenue purposes, surely there are ways and means whereby such land as I have indicated, and city lands, could be taxed on a flat rate, and the penal clauses reserved for the case of lands suitable for closer settlement. I see no reason why that should not be done if it is desired to carry out the mandate which honorable members opposite claim they have from the country. The Government might, at all events, make an honest attempt to exclude these two classes of land.

Mr LIVINGSTON:
Barker

.- We have, I think, a very difficult task when we set out to ascertain the unimproved value of land. The land sold in the earlydays was always the most improved areas in leaseholds, the improvements consisting of houses and outbuildings, fencing, dam making, and so forth; this land was sold by auction, always at high prices, and in some cases at much over the value. At the present day it is almost impossible to say what was the unimproved value. The honorable member for Darling must recollect that when these lands were first put up to auction there were very few farmers in Australia, and that, at any rate, they were not expected to buy land. The sales were with a view to getting money out of the squatters ; the people generally did not know the value of the land, and only men with money could buy. The only person who profited was the “ land shark,” who always “ stood in “ to make money. I quite agree with the statement that many of the old’ land-owners paid a great deal more for their holdings than they would be able to get for them to-day ; and many of them absolutely ruined themselves through buying at high prices. The money thus raised was spent on the country, and if the expenditure was not wise, it should have been. At the present time, in many cases there is not the slightest indication of the improvements that were made on the land in the very early days. In my own district, for instance, drainage has greatly enhanced land values, though for years and years afterwards the land was too sour for profitable use, and the interest on the purchase was lost during that time. As I say, it is simply ridiculous to suppose that we can now form any idea of the real unimproved value.

Mr Sampson:

– We know that the land was paid for.

Mr LIVINGSTON:

– Quite so; and I think the only fair basis for arriving at the unimproved value is that presented in the amendment, though even that would not, I think, afford much relief. I was rather surprised to hear an honorable member talking about outside lands being productive to the extent of £30 an acre, because only in very few places can land of. that character be found. The honorable member for Balaclava instanced land at Ballarat, Warrnambool, and other places in Victoria, and I may point to lands at Mount Gambier, and elsewhere, in the south-east portion of South Australia, where such a value per acre might be produced.

Mr Spence:

– Any amount of that land carries nothing but sheep at present.

Mr LIVINGSTON:

– That may be; but I was going to point out that it is only now and then that such high production is achieved. After land has been ploughed and produced, perhaps, £30 an acre, it has to be sown with grass at a cost of at least £1 per acre, and thus left for some years, when again high production may be obtained. I mention this to show that the condition of the land is constantly changing, so that, I suppose, only once in five years or so can these very large trops be grown. My own opinion is, so varying are the conditions, that every part -of the country ought to be regarded differently for the purposes of a measure of this kind. We were told by another honorable member that much of the land was originally sold on credit ; but, as a matter of fact, in the early history of Australia every acre was sold for spot cash ; the price was £1 an acre, and if a man had no money he could get no land. Twenty years after the original sale, £1 an acre was the minimum upset price; and the facts all show that the land-holder is always the one to be penalized. The Government of a State, after selling land at £1 an acre, have sold similar land at 2s. <5d. an acre, thus placing the old land purchasers at a disadvantage of i/s. 6d. Financial institutions, which have advanced money on values on the basis of .£1 an acre, have found the selling (price reduced to 5s. or 2s. 6d ; and to these and similar troubles the land-owners all over Australia have ever been subjected. We know that in the old days the Government used to take from the squatters the “best of the country, with the object of selling it. I recollect well the story of one man riding up to another man’s station in South Australia and inviting his neighbour to come and look at his lovely crop of wheat; but the neighbour told him that that crop of wheat would mean the loss of the land.

The CHAIRMAN:

– Has that anything to do with the question?

Mr LIVINGSTON:

– I am talking about the unimproved value of land. The old owners of land improved their holdings, which were then seized by the Government, and sold at big prices, forcing the pioneers to also pay similar prices if they desired to retain their areas. This Bill is another blow at the landholders of Australia, and every such blow is at development. I hope that this great Federal Parliament will turn their attention to the development of the country, and leave the poor land-owners alone.

Sir WILLIAM LYNE:
Hume

– - I have been in the chamber only a few minutes, but I have made myself acquainted with the terms of the amendment, which, in my opinion, would practically take away the taxable value of a great part of the land of the country. It would be quite impossible for the Government to accept such a proposal, though I think it a great pity that the taxation has one general effect all over the Commonwealth. Some parts of Australia are much more valuable for agriculture than others, and districts possessing a good rainfall should have been declared agricultural areas. To tax all the land in Australia as if it were of one quality, and had the same rainfall, and were equally suitable for agriculture, is a mistake. The proposal of the honorable member for Fremantle verges on the absurd. In years past land was occasionally sold for a keg of rum. We exempt unimproved values below £5,000, and that surely is a sufficient exemption; it will relieve the most deserving men in the community. I hope that before the Bill is finally disposed of we shall be able to consider the possibility of declaring certain districts to be suitable for agriculture; to treat all alike is bad in principle. I know that it is thought that we cannot discriminate, but it may be possible to get over* that difficulty in some way. If it cannot be got over, there will be great trouble in the future.

Question - That the words proposed to be inserted be so inserted (Mr. Hedges’ amendment) - put. The Committee divided.

AYES: 26

NOES: 30

Majority … … 4

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Amendment (by Mr. Hughes) proposed -

That the word “ all,” in paragraphb, be left out with a view to insert in lieu thereof the words “ each parcel of.”

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

. The honorable member has not dealt with an objection which I have already raised in regard to the like amendment which was carried in paragraph a. It is common in Victoria, and, I think, in other parts of Australia, to subdivide land by leasing it with the right to purchase. This is advantageous both to land-owners and to men without capital to buy land, who are glad to acquire leases and thus earn the capital necessary to purchase freeholds. But under the proposal of the AttorneyGeneral, a land-owner in considering whether he should subdivide on lease with the option of purchase would say, “ If I do not do this, I shall be able to deduct the whole value of the improvements on the land, with their mutual benefit to one another, but if I subdivide in leases, the reductions which I can make will be less, and the amount of tax which I shall have to pay will be more.”. Where there is separate occupation of parcels of land, the improvements on them are of less value in the aggregate than where the land is all in the hands of one owner. It necessarily follows, therefore, that as soon as a man , puts tenants on his land he at once increases the taxation payable. This is a question upon which I should like to hear the Attorney-General’s views.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The Committee has; adopted a basis of assessment for absentees, and the question is whether the same basis should be adopted in respect of resident owners.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– Because the Committee has gone wrong in one case it must go wrong in the other? Is that the only answer ?

Mr HUGHES:

– We have now amended paragraph a so that it reads - ‘ ‘ The total sum of the unimproved value of each parcel of the land,” and so forth.. We propose to amend paragraph b in the same way, and whatever may be said in regard to the basis of assessment in respect of resident owners must apply equally to the basis of assessment in the case of absentees.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– It is possible to recommit if the honorable member thinks that we have done wrong.

Mr HUGHES:

– But, in the opinion of the Government, we have not done wrong. I had the honour to point out to the Committee last evening that it was necessary -that each parcel of land should be dealt with separately in order that all landowners should be treated exactly alike. I pointed out that we might distinguish clearly those improvements which add to the unimproved value of a particular block from those which were on that block, and were to be distinguished fromthe unimproved value, and that that could be done only by treating each block or parcel separately. Let us assume, for the sake of argument, that the land on the south side of Bourke-street, from Spring-street to Elizabethstreet, is held infifty blocks, each worth £10,000, and that the land on the north side is held by one owner, and is worth £500,000. It is perfectly clear that the aggregate unimproved value of the blocks on the south side would be greater than the aggregate unimproved value of the one block on the north side, because there would be deducted from the one block all the improvements that were upon the whole of it, whereas there would be deducted from each of the fifty blocks on the south side only the improvements on that particular block. Now, as the improved value of any one piece of land is the result of improvements made on all “other lands, it follows quite naturally that the amount to be deducted in the one case would be very much less than the amount to be deducted in the other. The principle is perfectly sound.

Mr KELLY:
Wentworth

.- I am afraid that I am not quite clear as to the answer which the Attorney-General has given to the position stated by the honorable member for Flinders. The honorable member referred to the subdivision of country properties, whereas the Minister” told us what would be the effect of the Bill on town properties that had already been subdivided. I am assured by representatives of country constituencies that this method of leasing land, with the option of purchase, is, in certain cases, the only means of bringing about subdivisions.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– It is the only way in which a man without capital can get on the land.

Mr KELLY:

– There is a great inducement for a man to purchase a property which he can lease, in the first place, in order to earn the purchase money.

Mr Page:

– The honorable member does not know much about the subject when he talks like that.

Mr KELLY:

– I do not know much about this particular matter, and that is why I ask for information. The fact that few of us know very much concerning it is an additional reason why information should be given to the Committee. The honorable member for Flinders urged that the system to which he referred is much in vogue in Victoria and other States, and that it leads to the passing of land from one owner into the hands of many. If I understood the Attorney-General last night, that is the “principle” of this Bill, and I wish to know how the principle will be affected by the position cited by the honorable member for Flinders with regard to country lands.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The honorable member perhaps does not realize the importance of this basis of assessment in such a case as I have cited, or in the case of a subdivision. Let us suppose that a man sub divides a large block, not by selling it, but by leasing it in various holdings. The question then arises, how is he to be assessed - on the value of the whole land, less all the improvements on all the land, or upon the value of each allotment, less the improvements on each allotment? The difference is perfectly clear. Let us take the block on which the White Hart Hotel is built.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– Take a country block.

Mr HUGHES:

– An inn is a good place from which to start, but, in any event, the principle is the same, whether we deal with country or town lands. The honorable member shakes his head. No doubt the whole synthetic philosophy of Spencer would have been utterly crushed if he had seen that shake of the head, but still the fact remains as I have stated. In the case of the White Hart Hotel we should have to get at the site value, whatever it is, because that is what we are going to tax. The owner would have a right to deduct from the site value all the improvements upon it. Now the site value has been added to by the improvements made, say, by the owners of the Grand Hotel on the adjacent land, by this building of Parliament House, and by all the surrounding buildings, if they are good. The particular site value of a piece of land is increased by the improvements placed on adjacent pieces of land. The site value, or what we call the unimproved value, is nothing more than the value of the sum total of the whole of the improvements made by the community, including, of course, public utilities, such as roads, water, light, and traction. If we take this particular case, and suppose that one man owns the Grand Hotel, the White Hart Hotel, and other adjacent buildings, it is perfectly clear that in assessing the whole block we should not be able to take from each that value that had been added to it by the improvements on each neighbouring block. We should be able to take from the whole only that value which had been added to it by the buildings and improvements outside it. Therefore it is very much to the interests of the large land-owner that he should be assessed on the whole block. For. the sake of argument, let us take a case where a man holding a large station property has cut it up and leased it to forty different tenant farmers. The value of each farm, apart from its productivity, - speaking of it as a site value - lies in the fact that there are improvements on adjacent ground, and that there does attach to each block, although, I admit, not to the same degree as in the case of a town property, a value other than the value which is attached to the particular block under consideration. And if no value has been added to each farm by improvements or any other means, then there can be no difference in the methods of assessment. Therefore, when each particular block is taken by itself, there is less to deduct - there is more unimproved value than there would be if we took a number of blocks added together.

Mr GLYNN:
Angas

.- The question is whether we should insist upon a technical adherence to the theory of the unimproved value, or whether we should not accept the suggestion made by the honorable member for Flinders, and refrain from insisting upon it, when by noninsistence we should increase the . likelihood of subdivision. I agree with the reasoning of the Attorney-General so far as the principle of taxation is concerned, because if we tax each block separately-

Mr Sampson:

– The municipalities would look after that part of the matter.

Mr GLYNN:

– We are dealing, not with municipal rates, but with the effect upon the tax proposed to be imposed. I do not think there can be any doubt that when a particular area is reduced to one hundred holdings, by taxing each block separately a bigger unimproved value is obtained from the general congestion of population and improvements than would be secured if we simply taxed the one owner who had subdivided. If we are to adhere to the strict reading of the Bill, then we may be right in adopting that principle, but from the point of view of expediency it is wrong, because by following it we shall really take away an inducement to subdivide, since the moment an owner began to subdivide his property he would have to pay more taxation. Considering there are few cases of the kind, I prefer that we should not adhere to the strict theory of unimproved value, but that we should allow in these cases the tax to fall on the lower value. I have before me a letter, referring to a case in South Australia, where, by such a subdivision as that indicated, 129 persons have been placed upon land on which previously only two or three resided. They are all lessees, and they are thriving. It is mere pedantry, for the sake of a few more pounds in taxation, to insist on the owner, in a case where there is no true unearned increment, paying the full rate. My impression is that the reason this amendment is introduced is because it has been decided in New South Wales that it is the true principle of taxation under the New South Wales Act. There was a case in the Cooper Estate that went before the Court. Subdivision had taken place, and it was doubtful whether the owner should be taxed allowing him for all the improvements, including roads and houses, or taxed for each block separately. There was a division of opinion upon the point, and the New South Wales Court decided that each block should be taxed separately. We are not obliged to follow that course, and I think, as a matter of expediency, we ought not.

Mr JOSEPH COOK:
Parramatta

– I do not follow the reasoning of the Attorney-General when he says that the character of the improvements upon a block gives an added site value to the adjoining block. If that be so, how comes it that the site on which the White Hart Hotel stands, in Spring-street, is worth only, say, one-half, of the site value of a block in Swanston-street? It is not the character of the building at all. There may be a worse building and less improvements on the site in Swanston-street.

Mr Hughes:

– The honorable member is perfectly correct. The character of the building is only one of the elements.

Mr JOSEPH COOK:

– It is an element of the very slightest value. If there were the cheapest possible form of improvement on land where business concentrates, it would not stop the site value from incrementing.

Mr Hughes:

– I said myself that it was one of the elements, together with all those which the community created.

Mr JOSEPH COOK:

– Then apply that to country lands. A man has a large block of land, and decides to put roads through it himself, and increased facilities. To whom does that improvement belong but to the man himself?

Mr Hughes:

– I do not deny that it belongs to him.

Mr JOSEPH COOK:

– But the honorable member is going to tax him additionally for it. He says the value of the sites increases because of the facilities given for placing corner block buildings there.

Mr Hughes:

– The honorable member is in error. I did not say that.

Mr JOSEPH COOK:

– The honorable member may not have used those words, but his point was that land divided up in that way and formed into streets _ is of greater aggregate value than a piece of land which has no such facilities. He is perfectly right, but I contend that the man is entitled to an exemption under the Bill for all that improvement. I should think it would depend on whether he had provided those facilities himself, or whether the State provided’ them.

Mr Hughes:

– If the honorable member admits the fact, the question as to whom the return should go to is, I admit, a matter for argument.

Mr JOSEPH COOK:

– I do admit the fact that every facility, every road, does add to the incremental value of the land, but to whom does it belong? If the man himself has made the road over his own land, clearly the improvements belong to him, but under this proposal the honorable member is going to tax them.

Mr Hughes:

– We do not tax the improvements at all.

Mr JOSEPH COOK:

– How can it be a community-created value, since it arises from nothing but what the individual has done himself in making the road or breaking up the block ? The value is the same in each case, until the man himself decides to break it up. The moment he breaks it up, and provides facilities, people want to go there to build, and so the increment goes on, but the increment is of the man’s own creation. It is an increment of improvement pure and simple on the whole block, and there is no community-created value in it. Before there could be any communitycreated value, the State must have purchased from the individual the land over which the roads are made, and spent State money on them, but so long as the man divides his own private estate, and, by providing greater facilities for people to go there, increments the value of his estate, it seems to me that it belongs to him just as much as it did before.

Mr Roberts:

– He could subdivide it and make roads through it, but it would not be worth anything unless some one came and bought the blocks and lived on them.

Mr JOSEPH COOK:

– That is so; but on the other hand, if it were not subdivided, it might not be worth anything, even if there were 1,000,000 people round it. It is availability and accessibility to the people that create the value for business and .other sites. In this case, the value is created by the man himself on his own private estate. It is a different thing where the State resumes land and makes roads through it. I admit that, then, whatever the State does in providing facilities creates an increment in the value of the sites; but my point is that in these blocks the increment in value belongs to the man, since he himself has created it by providing facilities for access to the blocks.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The honorable member for Angas stated that the principle of the amendment is perfectly correct, but the honorable member for Parramatta does not agree to the application of it, although he sees the difference in the two methods of assessment. The only difference he has is as to whether, where a man owns a block upon which there are many parcels or divisions, the benefit of each of the improvements on all the blocks other than on his own particular parcel should go to him, or whether he should be treated as if he were the owner of only that one parcel. The honorable and learned member for Flinders said he thought that this amendment would not help subdivision, or, in effect, that to treat the man who had a big block differently from a number of persons who owned separate portions of the block, did not make for subdivision. But it does. In the list of amendments to be moved by the Government the honorable member will find that in sub-clause 3 a parcel is defined so that every part of a holding which’ is separately held by any occupier, tenant, lessee, or owner shall be deemed to be a separate parcel. That means that if a man subdivides, as we want subdivision, that is, if he parts with the fee-simple, or leases for a term of years in such a way that the lessee has a taxable interest, then he does get a distinct benefit from the subdivision, and only fails to get a benefit from the subdivision when he does not subdivide. What we desire is not to create an increased number of tenants, but an in: creased number of land-holders.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– But tenancy with the option of purchase by the payment of small sums is the poor man’s only way of getting land.

Mr HUGHES:

– I agree with the honorable member, and under the Bill it is provided that if a transfer is accompanied by only 15 per cent, of the purchase-money or even by less than 15 per cent., if the Commissioner is satisfied that the transfer is bond fide, it is a division within the meaning of the Act, and exempts both the transferor and the transferee.

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– I am speaking of cases where there is no immediate transfer, but an option of purchase.

Mr HUGHES:

– Where there is no immediate transfer, naturally this proposal will not prevent subdivision, but the honorable member spoke of it as preventing subdivision. On the contrary, it is a direct incentive to subdivision. The more the owner subdivides the smaller his tax becomes, not merely (actually and in the aggregate, but also proportionately on each block he retains. The point, then, is whether the man has a right to exemption for these improvements. I submit that he has not.

Mr AGAR WYNNE:
Balaclava

– I do not think the Attorney-General has quite grasped the meaning of the speech of the honorable member for Flinders. I know of numerous cases where the tenant or share farmer has become the owner. In the Hopetoun and Sealake districts of the Mallee over 500 men are now owners of the land, who started there with scarcely a shilling. They own their properties now, but they would have had no chance of becoming land-holders had it not been for the leasing or share system. On the Nerrin estate, near Streatham, belonging to the trustees of the late J. Macpherson, the land has been dealt with in much the same way. One farmer who came down from the Mallee in 1904, after being starved out of his other place by bad seasons, and having only his team of horses and his implements, took up 640 acres on the share system on that estate, with the right of purchase. He told me recently that out of his first crop he was enabled to pay his deposit on the land, and now had the land free of debt. That was in six years, and I believe the land is worth £6 an acre.

Mr Roberts:

– Can the honorable member show me anything in the amendment that will prevent that form of subdivision?

Mr AGAR WYNNE:

– Yes. The AttorneyGeneral’s amendment is all right as regards town properties. I see nothing unfair in it in that regard, but it is different when you come to country properties and improvements. Suppose a man has 5, 000 acres of land which is valued as a whole. Take the value of the improvements off, and the balance represents the unimproved value. If, however, he lets that land in ten farms of 500 acres each. he will be allowed only for his improvements on the one block on which he dwells himself. For each of the other nine blocks that he has let he gets no exemption, because there are on them no improvements worth speaking of. Therefore, the whole of his allowance for improvements will be on what may be called the homestead block. What inducement is there to a man to let his land to tenant farmers with the option of purchase if he is going to be taxed at a higher scale that if he retains it all himself? That is the whole point of the honorable member for Flinders. The Attorney-General says that if these men put down 15 per cent, they can become owners. I have some properties, and some very good men working for me, and I have said to them, “ As soon as you save .£100, and huy plant, I shall give you 100 acres without any deposit.” If these men had to pay me £ 100 or ^£150 as a deposit, they would not have any money with which to buy their working plant, whereas, under such terms as I offer they can set to work, and out of their first crop provide the deposit. There ought not to be any compulsory percentage so long as the transaction is bond fide. Of course, if there is dummying or fraud, let the offenders be punished ; but people who are acting bond fide ought to be encouraged. The allowance for improvements should extend over the whole block, * whether it be leased or” not, because, otherwise settlement to a great extent will be prevented. So long as the tax is paid over the whole 5,000 acres, the Government will not lose anything; they will receive exactly the same tax whether one man or ten men occupy the land. On the other hand, if this increased tax be put on the owner, he will take care not to settle people.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The honorable member for Balaclava has been dealing with a matter which more properly falls under a later clause. Any transfer which the Commissioner is satisfied is bond fide is a subdivision which will relieve both the vendor and the buyer from the tax, unless, of course, the value be ,£5,000, and over, in which case the buyer pays the tax. There can be no possible question as to the effect of this clause. The honorable member for Balaclava says he has offered to put men on the land so long as they put down £100 to show their bona fides.

Mr Agar Wynne:

– No; I say that they require that money to. buy working plant.

Mr HUGHES:

– Very well; in buying that working plant, they show that they are going to effectively occupy the place; and it amounts to the same thing.

Mr Agar Wynne:

– The AttorneyGeneral has not met the case of land leased with the right of purchase.

Mr HUGHES:

– If a man is going to exercise his option, and does exercise it-

Mr W H IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

– But he does not know yet.

Mr HUGHES:

– We have a number of gentlemen opposite who are bitterly opposed to the fundamental principle of the Bill, and they are picking holes in the method by which we are endeavouring to settle people on the land. I am not going to bother about people who do not exercise their option ; but if a lessee does so, and pays ever so little down to the satisfaction of the Commissioner, both he and the former lessor escape the tax. At the present time, settlers must effectively occupy the land, and fulfil certain conditions. The honorable member for Bendigo, a little while ago, spoke of dummying; but that offence was rampant at one time. Are we to allow make-believe transfer to take the place of bond fide subdivision ? Under the Bill, the subdivision must be such as to satisfy the Commissioner; and we do not desire lessees afraid to exercise their option, but men prepared to. go on the soil, and to occupy it.

Mr SAMPSON:
Wimmera

.- If the Attorney-General is anxious to encourage the class of settlement that he says this clause is designed to promote, he will provide something in the place of the transfer in respect to tenants. Throughout the mallee country, a large proportion of the people have gone on to the land under an arrangement with the landlord, with an accompanying agreement giving the option of purchase. The honorable member for Flinders, in the first instance, raised this question in order that no impediment should be placed in the way of tenants becoming proprietors of the land they are cultivating.

Mr Hughes:

– We are seeking to remove any bar.

Mr SAMPSON:

– Then the AttorneyGeneral is not going the right way about the business. The honorable member for Angas has told us that in South Australia a large proportion of the tenants have thus become proprietors; and the experience is similar in my own district. It ought to be possible to embody an amendment deal ing with such leases, as they were dealt with in a piece of legislation passed in Victoria when the honorable member for Kooyong was Minister of Lands in the State Government;

Mr Frazer:

– How long would the honorable member give for the completion of the lease?

Mr SAMPSON:

– The period might be anything from two to five years; but under the Victorian Act the lease was regarded as equivalent to a transfer for the purpose of separate occupation; the moment the lessee obtained the right of purchase at a fixed rate he was regarded by the Crown as to all intents and purposes the owner of the land ; and in the. course of five years he could select as a freeholder. I shall not discuss the question of city properties, because I believe there is a certain amount of justice in the contention of the Attorney-General that every piece of city property, in relation to improvements, should be assessed separately. In the case of large estates, however, some such amendment as I have suggested should be made, so as to enable the cultivator to secure enough money to pay the first deposit. That is what we are aiming at, and it can be accomplished by placing no bar or impediment between the present owner of the land and the future lessees and proprietors.

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– I hope the Attorney-General will disabuse his mind of any idea that we on this side are actuated by a spirit of factious opposition, or with any desire to raise quibbles. What we are discussing now is the very heart of the Bill, the object of which is to secure subdivision. The AttorneyGeneral is prepared to allow transfer in the case of an absolute purchase, when 15 per cent., at least, of the purchase money has been paid, the balance to be provided at reasonable periods. There is another way, however, by which a chance may be given to the poorest man. When this Bill becomes law a great many of the biggest estates in the Commonwealth cannot continue to exist and to pay the tax ; and, therefore, the owner will at once look around to discover the best means of disposing of them, or, at least, of a large portion.

Mr Hughes:

– That is the most refreshing statement we have heard for some time !

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– It is an absolute fact ; we all admit on this side that, with such a big impost, there is going to be subdivision. But the AttorneyGeneral by his proposal is placing a bar in the way of that object. The honorable gentleman proposes the one method of immediate sale, but there is the other method, which will be largely availed of, namely, the leasing of the land with the absolute right of purchase in a given time. I ask the Government to protect themseleves in every respect, and not to fix the period at snore than six years, having satisfied themselves that there is a bond fide registered agreement to lease at a reasonable rental, with the right of purchase, not at a fictitious value, but at a value which will satisfy the “Commissioner. The Government, if they believe in encouraging subdivision, ought to impose the most favorable conditions ; and the suggestion made on this side will assist the very poorest of industrious men who desire to go on the land. To require a deposit of 15 per cent, would deprive such men of the money necessary to buy plant and stock; and we desire to assist those who, with little or no cash, may have strong muscle, and, possibly, a useful family of boys. In nine cases out of ten, suitable men would be able to exercise their right of purchase at the end of six years. To encourage the holders of big estates to subdivide, we should bring estates such as I have referred to under the most favorable conditions.

Sir JOHN QUICK:
Bendigo

.- I understand that it is intended to bring the Bill into line with the decision in the case of the New South Wales Commissioner of Taxes v. Cooper, of which I do not understand the justice. It was there held that a proprietor who had cut up his land, separating it into parcels divided by roads, was taxable on the added value resulting from the subdivision. The value of the land had increased, not in virtue of public betterment or unearned increment; but merely by the action of the owner in dedicating part of his land to the public for loads. The contention of the honorable member for Flinders is that we should make such exceptions as will promote subdivision in accordance with the policy of the measure. If a man divides his land into parcels by making roads through it, we should not tax him on the increased value which thereby results.

Mr. JOSEPH COOK (Parramatta) (4.20]. - It seems to me that the proposal before us takes away the incentive to subdivide. In the case just referred to by the honorable member for Bendigo, the result of the subdivision was to increase the value of the property from £80,000 to £240,000. It might happen that a man possessing a block worth £50,000 might subdivide it by making roads through it, and thus eventually increase its value to £150,000. If the land were subdivided into thirty blocks, all of which were sold, the original owner would have no tax to pay ; but he might be able to sell only ten blocks before the increment increased, in which case he would have twenty blocks on his hands, and his taxation would be increased from £440 to £1,593.

Mr Hughes:

– The honorable member misapprehends the .purport of the amendment.

Mr JOSEPH COOK:

– Does the honorable member propose to tax separate parcels only when they are occupied by’ persons other than the owner?

Mr Hughes:

– I propose to tax every parcel that is separately held.

Mr JOSEPH COOK:

– If a man, after subdivision, found himself the holder of twenty blocks?

Mr Hughes:

– The whole twenty would, be regarded as one parcel.

Amendment agreed to.

Amendment (by Mr. Hughes) proposed -

That the following words be added: - “(3-) Every part of a holding which is separately held by any occupier, tenant, lessee, or owner, shall be deemed to be a separate parcel.”

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I understand from the definition of “ parcel “ that if any part of a holding is occupied separately at the time of an assessment, it must be separately assessed. Now, it is a common thing in the country for a land-owner to let one or more padflocks for several months. He has never had these paddocks measured, and, consequently, does not know whether they contain 50 or 55 acres, 100 or 120 acres. Consequently, it will be impossible for him to correctly describe them separately for the purposes of assessment.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The meaning of the sub-clause is perfectly clear. In my opinion, its wording is not ambiguous, and will not create uncertainty.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That is no reply to the honorable member for Richmond.

Mr HUGHES:

– The honorable member has practically only repeated what has been said over and over again since a quarter to n this morning. He says that he is not certain what a “ parcel “ is.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Can the Attorney-General tell me how I, as the holder of land, could place on my assessment-paper the description of a paddock which I had leased to another, and never had measured?

Mr HUGHES:

– If the honorable member will put a concrete case, I shall try to answer the question.

Mr GROOM:
Darling Downs

.- We have already provided that in the case of an absentee the taxable value is the total sum of the unimproved value of each parcel of land owned by him. Now we are enacting that every part of a holding separately held by any occupier, tenant, or owner shall be deemed a separate parcel. It is not denning what parcels are, but saying that certain holdings shall be deemed parcels. There may be “ parcels “ other than these holdings. A man might cut up a large estate into, say, eighty allotments, ten of which he might sell. The others would be marked out on the plans as separate parcels of land, but would they be regarded as separate parcels, or as one parcel? Then, again, it is not uncommon in a country district for a man to permit his neighbours to make a road of access through his property, which may not benefit him, and really divides his holding into two parcels ; would that increase his taxation?

Mr Hughes:

– Such a road would not make the estate two parcels.

Mr GROOM:

– Would it make the estate two parcels if the ordinary definition of “parcel” were adopted? Would not the property be entered in the rate-books as two parcels.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– If a farmer permits a road to be taken through his property, dividing it into two blocks, he would be the owner and occupier, not of two parcels, but of one.

Mr Groom:

– But would it be two parcels of one block?

Mr HUGHES:

– No; what I said was that this clause, without limiting the ordinary meaning of “ parcels,” defines what a parcel is for the purposes of this measure. I take it to be perfectly clear that when for the purposes of any Act a term is defined and the general meaning of the term is inconsistent with that special definition, then the special definition must prevail. If a block were cut in two merely by the running of a road through it, it is clear that it would be one parcel although cut into two parts. In the case of the particular block to which the honorable member for Richmond has referred, it does not matter whether it is or is not usually described as a parcel. For the purposes of this Bill it will be a parcel whether it is, in fact, made up of several parcels or whether there is one deed or many conveying the whole.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– How would the honorable member describe portion of a piece of land included in a deed ?

Mr HUGHES:

– Unless the honorable member is going to tell us that the land in the Richmond district has peculiar and illusive properties unknown to mankind generally, then the law which prevails in respect of land generally will apply to land there. A block will be a block, and a parcel will be a parcel, and a parcel isthat which is set forth in the Bill.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The honorable member has not answered my question.

Mr HUGHES:

– If the honorable member still labours under any ambiguity I will again endeavour to explain the matter.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I have in mind a parcel of land which care easily be described for the purposes of assessment. As the owner of that parcel, however, I have leased for a term of six months a portion consisting of 50 acres or thereabouts in the centre of it. I cannot say what is the exact area leased, because I have never surveyed it; but if on the 1st July the tenancy is in force, I understand that under this definition the area so leased will be a parcel separately held. I desire to know how I, as the owner of the whole block, am to describe for the purposes of assessment that separate holding within it?

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The answer is perfectly simple. The honorable member would not describe it at all, for the good and sufficient reason that it is inconceivable that a six months’ lease in respect of 50 acres of land could be a taxable interest within the meaning of this Bill. The interest would be a negligible one. If the honorable member had built 100 houses on a suburban block, he would not have to describe the size of each allotment. All that the Commissioner would desire to know would be the value of the block and how that value had been arrived at. The area of 50 acres which the honorable member referred to would not appear in the assessment.

Mr. JOSEPH COOK (Parramatta) £4.383.^1 think that the Attorney-General is quite wrong.

Mr Hughes:

– I feel that I am quite right when the honorable member says that.

Mr JOSEPH COOK:

– I undertake to say that, in every return that he has furnished up to date, the honorable member has had to give the title of each block that he holds.

Mr Hughes:

– I have been asked for the blocks, but not for the kind of buildings that I have on them.

Mr JOSEPH COOK:

– The honorable member has been asked for every subdivision.

Mr Hughes:

– The honorable member for Richmond has been referring,’ not to a subdivision, but to a lease for a term of six months.

Mr Riley:

– And it would come within the £5,000 exemption.

Mr JOSEPH COOK:

– The case actually cited by the honorable member for Richmond may be a negligible one, but a larger area in a bigger estate would not be.

Mr Hughes:

– At all events if the honorable member for Richmond wants an answer, I say that the middle block to which he has referred is not a parcel.

Mr JOSEPH COOK:

– I am referring not to that point, but to that with which I dealt a few minutes ago. The AttorneyGeneral said that if a man did not sell all the blocks in a subdivision that he had made, his holding would still be regarded as one block. That subdivision might ultimately increase the value three times over, and according to Cooper’s case the owner would find that he had to pay three times more tax than he had to pay before.

Mr Hughes:

– He would not.

Mr Roberts:

– Does the honorable member suggest that a man does not subdivide a piece of land in order to secure the unearned increment, and that-

Mr JOSEPH COOK:

– Does the honorable member suggest that he could sell land any day that he pleased?

Mr Page:

– Yes.

Mr JOSEPH COOK:

– At a price?

Mr Page:

– Not at the honorable memtier’s price, but at a price.

Mr JOSEPH COOK:

– At a sacrifice. The honorable member knows that subdivisions sometimes take years to get off. The case that I put was one in which the increment, as the result of subdivision, was threefold. What man is going to sub divide his land when he may find himself taxed on the increment which has been added to land of which he is unable to dispose? I pointed to” a case in which an estate valued at £50,000 had, by subdivision, incremented to £150,000. The owner might be able to dispose of only one-third of the land before the increment increased, so that taxation payable by him would be three times as much’ as he had to pay on the original holding. That is the case I put, and I contend that under this proposal the honorable gentleman is going to defeat the very object of his Bill, which is to induce subdivision.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– A most amazing statement has just been made. It is alleged that the way to prevent and discourage subdivision is that by which a man who cuts up £50,000 worth of land is able to get for one-third of it as much as the whole is worth.

Mr Joseph Cook:

– He may or he may not.

Mr HUGHES:

– The honorable member has just cited such a case. He spoke of the case of an estate valued at £50,000 being subdivided, with the result that its value is increased threefold, and the owner receives for one-third of it as much as the whole was worth prior to subdivision. The honorable member says that that is the sort of thing that discourages subdivision. I wish I could secure such a chance. I know of nothing more calculated to encourage a man to subdivide his estate than the prospect of his getting as much for one-third of it as the whole is worth. What is more to the point is that the honorable member says that the remaining two-thirds would be worth as much per foot as the one-third which had been sold, so that the owner would get £3 for every £1, and all that he would be asked to pay by way of penalty, at the outside would be the added amount of taxation on the two-thirds which he could not sell. He would already have in his breeches’ pocket as much money as the whole of his estate was worth before subdivision, and two-thirds of the estate would still be in his possession to sell at the same profit. It is this diabolical amendment of the Government that proposes to enable the landlords of this country to recoup themselves in this princely and extravagant fashion at the community’s expense which is denounced as a foe to subdivision. No finer testimonial was ever given by any Opposition to a. measure put forward by a Government.

Mr JOSEPH COOK:
Parramatta

– As usual, the Attorney-General has made his own case, and knocked it all to pieces. I never said that the individual sold one-third of the area, and got the full value. That is the honorable member’s proposition, and, of course, he has no difficulty in demolishing it.

Mr Hughes:

– The honorable member said it twice, and emphasized it the second time. I missed it the first time.

Mr JOSEPH COOK:

– I made no such statement. I put the case in which the estate has incremented threefold in value, and which the subdivider has not been able to sell. Meantime, his tax has gone up three times. What is he to do about that? Is that an inducement to subdivide, unless he has purchasers beforehand ready to buy? He would be a fool if he did.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 11 -

Land tax shall be charged on land as owned at noon on the thirtieth day of June immediately preceding the financial year in and for which the tax is levied.

Sir JOHN FORREST:
Swan

.- I move -

That all the words after the word “ owned,” line1, be left out, with a view to insert in lieu thereof the words “ on the first day of January,1911.”

I have a great objection, and I think honorable members generally will agree with me, to retrospective legislation, nor do I see any necessity for it in a Bill of the farreaching character of this one. The object, no doubt, is to get more revenue for the current year, but I do not think the clause is justifiable. It is most unusual.

Mr Roberts:

– We have to pay for defence this year, and for the ships the honorable member’s Government ordered.

Sir JOHN FORREST:

– Again the end justifies the means with the honorable member. Surely the fact that some necessity has arisen does not justify the Government in doing an unusual and unjustifiable thing. I have understood from the AttorneyGeneral, and almost every honorable member on the Ministerial side, that the object of the Bill is primarily to burst up estates.

Mr Archibald:

– No ; it is taxation.

Sir JOHN FORREST:

– Let us say that the objects are taxation and the burst ing up of estates. I have heard very little about taxation from honorable members opposite until now. The main objective has been closer settlement. If closer settlement is desired, we should give every inducement to people to subdivide their estates as quickly as possible, and if the Bill did not come into force for a reasonable time, it would give those who have large estates an opportunity to subdivide and promote closer settlement. The only objection, therefore, to the amendment is from the revenue point of view. I do not speak with absolute knowledge, but I think it is very unusual for taxation Bills to be retrospective. All sorts of interests are involved when you go back from the time at which you are legislating. We certainly should not go back to the 1st of July, seeing that the Bill was not introduced until long after that date, and, I suppose, will not be passed until some time in October. If we make the present holders pay the tax for the current year, there will be no inducement to them to subdivide their lands until towards the time when the tax becomes due again next year. If it were known that the tax would not be imposed if the lands were subdivided quickly, it would be a great incentive to people to subdivide. The purchaser, of course, would know that he would have to pay the tax if the unimproved value was over £5,000. There is no doubt that the main reason for the introduction of the measure is to burst up large estates and give facilities for the closer occupation of land. I understand from honorable members opposite that if they could by one stroke take away all the revenue out of this Bill, and have closer settlement, they would feel that they had achieved their object. I heard one honorable member say that if they had not settled the land difficulty and brought about closer settlement within three years their work would have been a failure. Of course, this Bill is ostensibly a Tax Bill. There is nothing about closer settlement in it, for the very good reason that it is an attempt to invade an arena that does not belong to us. It is not possible to put in the Bill a statement that it is intended to deal with land settlement or land occupation. Even if it were only a revenue Bill there would be no justification for making it retrospective. The result of my amendment, if carried, would be that only half the year’s tax would be collected.

Mr Groom:

– Would there not be an assessment for the full year?

Sir JOHN FORREST:

– When the Land Tax Bill was introduced in Western Australia, it was proposed that the assessment should be for the year, but that only half the tax should be paid during the currency of that year. The Act came into force on the 1st of January, whereas the financial year ended on the 30th June.

Mr Archibald:

– That was not done in South Australia.

Sir JOHN FORREST:

– Did they make it retrospective there?

Mr Archibald:

– Yes, the same as here.

Sir JOHN FORREST:

– I thought it Wad never been done, and would not be done, in any British . community. South Australia is, perhaps,- the exception that proves the rule.

Mr Hughes:

– It was done in New Zealand.

Sir JOHN FORREST:

– As against that, I have the precedent of Western Australia. In this clause the Government are doing something of which the people had no knowledge on the 30th June last. I shall divide the Committee on the amendment, because it is a wrong principle to make taxation Bills retrospective.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The object of the amendment, according to the right honorable member’s own statement, is to enable land-owners to make what dispositions they may wish during the next few months, and allow their liability to begin only on the first day of the new year, A new clause which the Government propose to introduce in effect gives land-owners three months’ grace. It provides that anybody who has sold his land up to the 30th day of September shall not be assessed for this year, notwithstanding that on the 30th day of June he was liable under the Bill. Consequently, practically what the right honorable member desires is provided for by the Government, because a person who has bond fide disposed of his estate up to the 30th day of September will not be liable for assessment for the current year. In the circumstances, the right honorable member might not press the amendment, as the Government cannot accept it, and their own amendment does, in essentials, what he wishes to do.

Mr GROOM:
Darling Downs

– Will the Attorney-General see if he cannot go a little further in his desire to meet the right honorable member for Swan, whose proposition, that it is not just to tax retrospectively, is a sound one? The

Attorney-General apparently admits that there is some justice in that plea, and the question is, what time should be given? The Government propose to give up to the 30th September.

Mr Hughes:

– Retrospective taxation is quite usual.

Mr GROOM:

– It is most unusual to tax a man on something that he had in thepast.

Mr Hughes:

– Look at the income tax proposals in . Great Britain - the whole Budget !

Mr GROOM:

– That is not retrospective taxation, but merely providing for a basis ; while here it is proposed to tax a man on land he held. The object of the Bill is to effect the subdivision of estates, and an owner ought to be given the chance to subdivide so as to escape the burden of taxation. The hope that has been expressed all through is not that land-holders will pay this heavy taxation, but that they will subdivide their lands so as to promote greater settlement. We are told that the taxation is only incidental.

Mr Fisher:

– I have never said that.

Mr GROOM:

– The Prime Minister has not ; but other honorable members have distinctly said so. The honorable member for Coolgardie, one of the Government supporters, told us to-day that that was practically the object of the taxation.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– That is only the individual opinon of the honorable member for Coolgardie.

Mr GROOM:

– And the Prime Minister has only expressed his individual opinion.

Mr Fisher:

– Have I? I have given the opinion of the Government.

Mr GROOM:

– However, assuming that the desire is to gain revenue, another object is to split up big estates.

Mr Fisher:

– Certainly.

Mr GROOM:

– If that be so, and a person up to the date of the passing of the Bill-

Mr Riley:

– If a man is compelled to pay the taxation, will he not more quickly split up his estates?

Mr GROOM:

– The splitting up of the estates is the object?

Mr Riley:

– Yes.

Mr GROOM:

– Then, I am appealing to honorable members on that very point. If a man is willing to split up his estate, and so accomplishes the end in view, surely he is doing a praiseworthy act ?

Mr Finlayson:

– We are going to help him. to do’ so !

Mr GROOM:

– That being so, I submit that if a man disposes of his estate, even right up to the date on which the Bill becomes operative, he is doing something that is laudable; and it would be better to fix a date after the Bill comes into operation.

Mr West:

– And give an owner longer time in which to pay no taxation?.

Mr GROOM:

– Give longer time in which to induce people to settle on the land. From a legal point of view, prior to this Bill, there was no harm in a man holding land in large areas; and if he, right up to the date of the coming into operation of the measure, subdivides his land, he should be taxed only on the land he then holds.

Sir John Forrest:

– It is only a matter of two or three months.

Mr GROOM:

– Quite so; the only idea is to do justice by preventing, as is usually done, a Bill of this kind having a retrospective effect.

Mr GLYNN:
Angas

.- What was done in South Australia might in one sense be termed retrospective ; that is, the tax was imposed as from the 1st January, as the honorable member for Swan now suggests, of the next ensuing year, but it was collected at the full rate of a whole year. Taxpayers, however, did not get the advantage of half-a-year, owing to the fact that, though the next time the tax became due was in the succeeding January, it was paid for the financial year ending in June. Perhaps the honorable member for Swan had in view the making of the financial year, for the purposes of this Bill, from January to January.

Sir John Forrest:

– The amendment can be altered in that respect.

Mr GLYNN:

– The amendment will do something, but not exactly what has been slated. As the honorable member for Darling Downs has suggested, the Bill is in one sense retrospective - in other words, we are taxing men who are not owners of the land at the time of the passing of the Bill. Can we legally do this? I draw attention to this only as a matter of drafting for the consideration of the Attorney-General. By way of illustration, I point out that clause 9 imposes a tax on land owned by the taxpayer, and prima facie, that means land owned on the date when this Bill comes into force, because taxation must not be assumed to be retrospective unless there are clear words to that respect. Then we have the clause before us which speaks of land owned on the 30th June, and also clause 14 to a similar effect. Who Is the taxpayer ? The man whom we can tax ; and I do not think the Court would hold that we could tax a man who did not own the land at that date.

Mr Hughes:

– It is land which is owned by the taxpayer, but not owned by the taxpayer who necessarily pays the tax.

Mr GLYNN:

– What is meant by “ taxpayer?” Does it mean a man who owned land on the 30th June or afterwards?

Mr Hughes:

– Not necessarily.

Mr GLYNN:

– If it means a man who owned land on the 30th June, the effect will be that the man who owned it then, and subsequently sells it, will be taxed on land that he does not possess at the date of the passing of the Bill. If it means the man who owns land at the date of the passing of the Bill, we cannot tax the man who owned the land on the 30th June.

Mr Hughes:

– I shall look into the matter ; but I think “owner,” “owned,” and “ taxpayer “ are all defined.

Mr GLYNN:

– I do not think that the point is at all clear, but it is got over by the amendment of the honorable member for Swan, which means the man who owns the land on the 1st January; and there will be no retrospective dragging in of the man who did not own the land at the date of the passing of the Bill. The effect of the amendment seems to be that the full results of the tax will be gained throughout the year, except so far as subdivision takes place up to the 1st January.

Question - That the words proposed to be left out stand part of the clause (Sir John Forrest’s amendment) - put. The Committee divided.

AYES: 30

NOES: 23

Majority … … 7

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I move -

That the following words be added : - “ Provided that an owner of land who, after the thirtieth day of June, but before the thirtieth day of September, One thousand nine hundred and ten, has sold part of the land or has sold all the land to different purchasers, shall, if the Commissioner is satisfied that the sale was bond fide and not for the purpose of evading the payment of land tax, be separately assessed for the year ending on the thirtieth day of June, One thousand nine hundred and eleven, in respect of the land so sold to any one purchaser, and be charged with land tax in respect of that land as if it were the only land owned by him.”

Under this proviso any person who,before the 30th day of September, subdivides his land will be entitled to be separately assessed for each parcel sold, as if it were the only land owned by him. The owner of land of the unimproved value of £150,000 will have to pay a tax at the rate of about 5d. in the £1, but if, before the 30th September, such a man were to sell to ten purchasers £100,000 worth of that land, he would be entitled to be separately assessed in regard to eleven separate parcels, obtaining an exemption of £5,000 on each, which would, of course, mean a very great reduction in the rate and amount of his tax. The concession which we offer is a substantial one.

Sir JOHN FORREST:
Swan

– Seeing that the object of the measure is to burst up large estates, and to bring about closer settlement; the Government, with a view to inducing subdivision, should not curtail the period within which advantage may be taken of the concession provided for in the amendment just moved by the Attorney-General. It must be remembered that the Bill was not introduced until after the beginning of the financial year, and that we are now within two days of the 30th September, so that this concession cannot become known, and cannot be taken advantage of, unless the date is extended. Nothing will be lost by extending the period during which it will be available, except a slight amount of revenue. We hear on all sides that subdivision is necessary, but why offer an inducement to subdivide which is to have effect only until the 30th of this month, so that it will expire before it can become known? I should like the opportunity to take advantage of the provision to be extended to the end of: the financial year; but in any case it should be extended until the end of the calendar year. I, therefore, move -

That the amendment be amended by leaving out the words “ thirtieth day of September,” with a view to insert in lieu thereof the words. “ thirty-first day of December.”

Mr ATKINSON:
Wilmot

.- The Attorney-General is to be congratulated upon the proposition now before the Committee, but the time within whichthe concession offered may be taken advantage of should be extended as suggested by the honorable member for Swan. . If the concession expires on the 30th September - that is, two days hence - land-owners will not know of it, and will not, in any case, be able to take advantage of it. There may be a slight loss of revenue if the time is extended, but, as the desire of the Government is to encourage subdivision, it should not spoil the effect of the proposal now under discussion by making it impossible for land-owners to take advantage of it. I hope that the extension of time proposed will be agreed to.

Mr PALMER:
Echuca

.- No doubt the concession offered will be a substantial one, if the time within which it may be accepted is extended, but otherwise it will be useless. I hope that the Attorney-General will agree to some extension, even if he cannot accept the amendment of the honorable member for Swan..

Mr AGAR WYNNE:
Balaclava

– This morning I informed the AttorneyGeneral that certain Victorians had bought a property in New South Wales, for which they had paid a large sum on deposit, but that they were getting no return for their money. I also handed him their balance-sheet as evidence of their bona fides. Since then I have seen one of the owners, and he informs me that they have now arranged to subdivide the property amongst themselves. Each man will work his own share as a separate property. That will be a bond fide subdivision, and I ask the Attorney-General whether he would object to a slight amendment of the amendment to meet such a case. I suggest that the proposed proviso should read -

Provided that the owner or owners .of land who sell or bond fide subdivide their land - before the 30th September, and so forth. By such an amendment, the people to whom I have referred would be treated as if they had sold the land.

Mr Groom:

– In that case there would be a partition of the land.

Mr AGAR WYNNE:

– Yes j I should like the word “ partition,” as well as the word “ sale,” to be used.

Mr GLYNN:
Angas

– Assuming that the Government adopt the principle suggested by the honorable member for Balaclava, it can be embodied in the Bill by the addition of the words at the end of the clause, “ For the purposes of this section ‘sale’ includes ‘partition.’” I agree with the merits of the proposition, but wish now to point out how the drafting of this provision will work. The AttorneyGeneral said that a man might sell portion of his land, and it seems to me that, so far as subdivisions and sales are concerned, this is a very fair provision, because, in respect of the portions sold, the tax will be imposed on the lower rate. As regards the part not sold, however, the effect of the drafting is, I believe, that the owner will pay on the rate determined by the whole area. He will not pay the sum total of the tax over the whole area, but a rate to be determined by that on the whole area.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– Clause 39 deals with double taxation, and would, I think, prevent a man from being charged twice.

Mr Glynn:

– No.

Mr HUGHES:

– If it be as the honorable member supposes, then, both in respect of the land so sold and the land remaining unsold, the effect of this clause will apply.

Mr Groom:

– What about a partition of land?

Mr HUGHES:

– The honorable member for Balaclava spoke of a partition of land under a deed of partnership, and I promise him that when the Bill is recommitted I will include bond fide partitions.

Sir JOHN FORREST:
Swan

– - The Attorney-General has not said whether he is prepared to agree to my amendment of the amendment providing for the substitution of the words “ thirtyfirst day of December “ for the “ thirtieth day of September.” What objection can there be to such an alteration?

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The reason is that it would mean a distinct and very valuable concession, and one that, in its practical operation, would have obvious limitations. The Commissioner will have to be satisfied that a sale is bond fide, and I am afraid that if this period were extended so as to take in the whole of the year, so many applications would be made under this provision that, although I look at the matter from an entirely philosophical stand-point, the Treasurer could not afford to do so. It would be impossible to determine the bona fides of every sale if the whole nation, so to speak, applied for a remission of taxation under this proviso. I take it that we have allowed for a fair and reasonable period. In another part of the Bill we deal specially with leases, mortgages, and marriage settlements, and I think that, in the circumstances, we cannot go any further.

Mr KELLY:
Wentworth

.- Perhaps the best course to pursue would be to determine that this clause shall cease to operate on the day on which this Bill becomes law. The Bill may become law at any time within the next month or two, and the course I have suggested seems an easier way of dealing with the matter than would be the fixing of any special date. I can see some reason for fixing upon the 30th June as the date of ownership, so that the tax may be collected .in respect of this year; but in the amendment now before us the Minister is making a concession in order to prevent hardships occurring to persons who bond fide wish to divide their land and so- carry out what I conceive to be the first principle of the Act. People should be given every opportunity to bond fide divide their land up to the date on which the Bill becomes law. The moment the Governor-General’s assent is given to this measure it will become law, and then the general provisions of the Act may very well apply to all classes of property.

Mr MAHON:
Coolgardie

.- In view of the statement made by the AttorneyGeneral that he will amend the clause when the Bill is recommitted, I suggest to him the substitution for the words “ at noon on ‘ ‘ the 30th day of June, the words ‘ at the close of business” on the 30th day of June. A practical authority who has had a good deal to do with land taxation matters states that the words to which I take exception will probably lead to trouble, and he suggests the amendment indicated. Although this clause has been adopted from the New Zealand Act, I am assured that in practical operation the fixing of ownership as at noon on the 30th day of June will make for trouble. In any case, it will involve the Commissioner possibly in some complications regarding time, and as it is now too late for me to move an amendment, I suggest to the Government that when the Bill is recommitted they should consider the advisableness of making this alteration.

Sir JOHN FORREST:
Swan

– It is difficult to follow the AttorneyGeneral’s reasoning. He seems now to think that if the amendment were amended as I propose it would lead to such a rush on the part of persons desiring to reduce the areas held by them that complications would arise.

Mr Hughes:

– I said that there would be evasions.

Sir JOHN FORREST:

– The Commissioner must guard against that sort of thing. It seems to me that although the AttorneyGeneral said yesterday that the object of this Bill was to bring about the subdivision of land, he is afraid that if we extend the date in the proviso to the 31st December too many subdivisions will take place. I fail to see why any date should be named. If a person honestly subdivides his property and portion of it is purchased by others, why should not the amount of his taxation be reduced and be chargeable proportionately to the new owners?

Mr Hughes:

– Why should a man buy if he is by so doing to place on himself a load of taxation?

Sir JOHN FORREST:

– If I have a large estate and find that I must either reduce it or pay this tax, why should I be discouraged when I propose to subdivide it? The object of the Government, I understand, is to compel the owner of a large estate, not to pay this tax, but to subdivide his property.

Mr Hughes:

– In the first year the buyer would not have to pay the tax.

Sir JOHN FORREST:

– The vendor would take care that he did. When a pro perty is sold the purchaser has to pay even the municipal rates from the date of sale.

Mr Hughes:

– But under this Bill a buyer will not pay during the first year.

Sir JOHN FORREST:

– He would probably have to pay the seller.

Mr Hughes:

– If the seller could get it out of him.

Sir JOHN FORREST:

– The seller would always get it out of him, because it is a fair thing. If I sell a piece of land, and pay the rates on it for a whole year, and the buyer has it for half the year, he pays me the rates for the half year. The honorable member gave notice of this amendment, I think, yesterday.

Mr Hughes:

– It has been on the table for a fortnight or more.

Sir JOHN FORREST:

-And the month of September is now practically gone. How much notice is that to give to people all over this continent? In my own State, the people have never seen this clause yet, and the fixing of the 30th September is worth nothing to them.

Mr Hughes:

– They have had ample notice.

Sir JOHN FORREST:

– They have had no notice in the far-away districts. The honorable member thinks of only Melbourne and Sydney. It is most unreasonable to fix a date, and call it a concession, when the period expires two days hence. I cannot understand the reasoning of the honorable member. He says that he wants subdivision, and is doing his best to prevent it.

Question - That the words proposed to be left out stand part of the amendment (Sir John Forrest’s amendment of Mr. Hughes’ amendment) - put. The Committee divided.

AYES: 30

NOES: 24

Majority … … 6

AYES

NOES

Question so resolved in the affirmative.

Amendment of the amendment negatived.

Mr SINCLAIR:
Moreton

.- There is no doubt that this proviso is a great concession from the Government point of view, and makes the Bill very much more acceptable than it was before. But it throws a lot of responsibility on the shoulders of the Commissioner. I move -

That the amendment be amended by leaving out the words “ and not for the purpose of evading the payment of land lax.”

Those words are not necessary, because the words “bonâ fide sale” are already used, and they may put into the mind of the Commissioner thoughts that it was never the intention of this House that he should entertain. I cannot see how any one can bonâ fide dispose of his property “ with a view to evade the payment of land tax.”

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The words the honorable member proposes to strike out are very necessary. Yesterday, we discussed for hours the insertion of words to make the purpose of a clause quite clear. These words make the purpose of this clause quite clear, but apparently the honorable member does not desire that. The sale has to be bond fide, but for what purpose? It must not be for the purpose of evading the Act. There can be no possible objection to retaining the words. The honorable member ought to give a concrete illustration showing how their retention would be harmful. If he could do that, I should be glad to strike them out, but he must provide us with a case. The sale must be bond fide, and not to evade the purpose of the Bill, which is to tax a big holding at a higher rate than a small holding. If the subdivision is toevade the tax, and not for the purpose of a bonâ fide subdivision, the owner ought not to get the advantage of it.

Mr KELLY:
Wentworth

– A sale may have been entered into absolutely bonâ fide in order to get rid of a certain quantity of land, with thedirect and deliberate object of escaping the penalties of the land tax.

Mr Hughes:

– That is not an evasion. The incidence of the tax is so arranged that if the owner parts with the land the tax does not fall upon him.

Mr KELLY:

– The language of the proviso is so indefinite on that point that some Commissioner may hold the view that a man who obviously sold his land in order to escape paying the heavier rates of taxation should not get the benefit of the proviso.

Mr Hughes:

– What does the proposal mean, then?

Mr KELLY:

– I think it means broadly what the Attorney-General thinks it means ; but it is to be interpreted, not by a Court of law, but by a Commissioner. The words seem to be surplusage, and as we are trusting absolutely to the , discretion of a Commissioner, whose ipse dixit is to be final, it might be safer to leave them out. If the sale is bond fide, that is all we can reasonably ask.

Mr GLYNN:
Angas

.- I do not think it matters much whether we keep the words in or leave them out. The Privy Council decided, in Sims’ case - a South Australian case - that where a man makes a bond fide arrangement with his family for the purpose of escaping the liability for the tax, it is not an evasion of the tax, but a perfectly legitimate operation. In South Australia, two Judges held otherwise, and the case went to the Privy Council, which sustained the judgment of the Chief Justice of South Australia, as I think is invariably the case. As this proviso only applies until 30th September, I do not think it matters whether we keep the words in or not. I can quite appreciate the anxiety of the honorable member for Moreton that no injustice should be done, but I do not think we can conceive of any case in Australia of an estate having been sold now with a view to repurchase after the 30th September. In any case, the proviso applies only to this year. If it were an annual thing, the words would be clearly necessary, because there might be a sale at the end of the year with a view to repurchase after the 30th June, thus enabling the owners to escape the incidence of the higher rate. The word “evade “ would be applicable in such case; but, this being a saving provision, I do not see that it matters whether the words are kept in or not.

Mr SINCLAIR:
Moreton

.- The intention of the Government is that any bona fide sale may be completed; and the inclusion of the words may raise a doubt in the Commissioner’s mind as to whether a sale has been made for the purpose of evading the Bill.

Mr Kelly:

– He may read “ evade “ as “ escape.”

Mr SINCLAIR:

– The Commissioner will put his own construction on the words without any regard as to how we intended them to apply. He may say that a sale effected after the 30th June has been with the object of evading the provisions of the Bill, and he will throw the onus of proof on the owner. If the Commissioner is satisfied that a sale is bond fide, that should be quite sufficient for the Government; and the deletion of the words would be a safeguard against misunderstanding. I do not desire to cross swords with the AttorneyGeneral on the matter ; but I am asking for an amendment which cannot prove detrimental to the Bill and which will make the clause very much clearer.

Amendment of the amendment negatived.

Amendment agreed to.

Mr FAIRBAIRN:
Fawkner

.- Does the Attorney-General attach any great importance to the words” ending on the thirtieth day of June “ ? I happen to know of some bond fide sales made prior to that date, but they will hardly be regarded as sales under the Bill, seeing that the 15 per cent. provided for in clause 32 was not made. It is very customary to pay a small deposit, and, though the sale actually dates from that time, delivery does not take place until later, in order to allow time to get rid of the stock and so forth.

Mr Fisher:

– Would it not be a sale as soon as 15 per cent. was paid?

Mr FAIRBAIRN:

– Yes, so long as that were a bond fide deposit. I think the Attorney-General would do no harm to theBill by simply taking those words out. There are very few instances of the kind, but there are some.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– If the honorable member means generally that an agreement to sell ought to come within the limits of this proviso in the same way as a conveyance, dated some time between 30th June and the 30th September, I think I see no objection.

Mr Fairbairn:

– That is what I desire.

Mr HUGHES:

– I understand that in such a case there is a legal agreement to sell, that part of the purchase-money has been paid, and that, as with a conveyance, a right of action exists. Under the circumstances, I see no reason why the suggestion should not be acted on. When the Bill is recommitted we shall see that it includes agreements to sell between those dates, exactly in the same way as if they were conveyances.

Mr G B EDWARDS:
NORTH SYDNEY, NEW SOUTH WALES · LP

– The way to meet the difficulty raised would be to take an agreement to sell at a certain date as tantamount to a sale, and the same in regard to leases. I have a similar difficulty in regard to a subsequent clause.

Clause, as amended, agreed to.

Clause 12 -

The following lands shall be exempt from taxation under this Act, namely : -

all land owned by a public charitable or public educational institution, however formed or constituted, if carried on for any public charitable or public educational purpose and not for pecuniary profit;

all land owned by, and used for the purposes of a local authority or other public authority acting under any State Government;

all land owned by a Savings bank regulated by any State Act;

all land, owned by a religious society, the proceeds whereof are devoted to the support of the aged or infirm clergy or ministers of the society or their widows or children;

all land owned by any person or society and used or occupied by that person or society solely as a site for -

a place of worship for a religious society, or a place of residence for any clergy or ministers or order of a religious society ;

a charitable or educational institution not carried on for pecuniary profit ;

a public library, institute, or museum ;

a show ground ;

a public cemetery or public burial ground ;

a public garden, public recreation ground, or public reserve ; or

a public road.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

.- I desire to strike out sub-clauses a, b, andc, and to their omission I think the Committee will agree without discussion. I shall then move to insert other sub-clauses in substitution, and the discussion can take place on these. I move -

That sub-clauses a, b, and c be left out.

Amendment agreed to.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I suggest that the sub-clauses I propose to substitute be discussed and decided upon separately ; and therefore, I move first -

That the following paragraph be inserted : - “ (a) all land owned by a State, or by a municipal, local, or other public authority of a State;”

Mr Agar Wynne:

– Will these words include the Metropolitan Board of Works, Melbourne ?

Mr HUGHES:

– That is a public authority.

Sir John Quick:

– Will the words embrace tramways owned by municipalities, as, for instance, those in Melbourne, Bendigo, and Ballarat?

Mr HUGHES:

– In so far as any lands are taxable at all, and in so far as they are held by any public authority, which, of course, includes a municipality, those bodies are exempt.

Mr Glynn:

– It might also be considered whether the Adelaide Tramway Trust is exempt. These tramways are not municipal in the ordinary sense.

Mr HUGHES:

– That is a public authority clearly.

Mr Glynn:

– All I desire is that the draftsman might look at the Act under which the Tramway Trust is constituted, because there is a desire that it should be excluded. Even without this provision, all the other bodies are exempt, because we cannot tax either municipal or State ownership.

Mr Groom:

– Does this sub-clause cover all the exemptions that were asked for by the municipality of Sydney and other municipalities concerned ?

Mr HUGHES:

– Yes. As to what the honorable member for Angas has said, I think that “ public authority “ will cover a trust formed for carrying on tramways, as in Adelaide. The words clearly cover the Harbor Trust of New South Wales, theMetropolitan Board of Works of Melbourne, the Water and Sewerage Board in Sydney, and all municipal bodies. If we were to insert the word “ Trust,” does the honorable member for Angas think that the provision would be made any clearer, as applying to the Tramway Trust in Ade laide ? I am perfectly willing to insert the word ; but I think the Trust is covered by the clause.

Mr Glynn:

– Personally, I think it is ; but if I were drafting the Bill, I should look very carefully at the constitution of the Trust.

Mr HUGHES:

– I understand that the effect of the interpretation of section 114 of the Constitution in the Railway case, is that we have no power to tax such bodies.

Mr Glynn:

– There is no doubt that we cannot tax municipal instrumentalities, but the question is whether this Trust is a municipal instrumentality.

Mr HUGHES:

– Section 114 of the Constitution provides that the Commonwealth shall not impose a tax on property of any kind belonging to a State, and that provision includes municipalities. A State cannot delegate to a subordinate body any powers it does not possess itself - it cannot delegate any authority excepting by virtue of the authority possessed by itself. Anything that a municipality does directly, or indirectly, and anything that a State does, directly or indirectly, must be done by virtue of its public authority; and, therefore, I take it that if we did not insert any words in the Bill, we could not tax a municipality as a corporate entity, or any of its subordinate bodies, suchas Boards or Trusts.

Sir JOHN QUICK:
Bendigo

.- I am glad to have the assurance of the AttorneyGeneralbutIreallythinkthereis some doubt whether this clause will exempt, for instance, the Melbourne, Bendigo, and Ballarat tramways.

Mr Agar Wynne:

– They are leased.

Sir JOHN QUICK:

– They are leased under certain rights given to the municipalities, to which they eventually revert.

Mr Hughes:

– There is no unimproved value in respect of a road.

Mr AGAR WYNNE:
Balaclava

– I do not think that we need trouble about the position of tramway companies, but I should like to point out that, in our dry districts, a number of water trusts, created by Act of Parliament, own water channels and adjoining land. There is such a trust at Ballarat. I am not sure that such a trust could be called either a municipal, local, or public authority, so I ask the AttorneyGeneral to consider their position, and, if he does not think that they are covered by the paragraph, to recommit the clause.

Mr SAMPSON:
Wimmera

.-I emphasize what the honorable member for Balaclava has said. If the words “ public authority “ do not cover water trusts which have borrowed money extensively, and hold large estates, some other words should be inserted.

Mr Frazer:

– The Attorney-General has said that public bodies so constituted are exempt from the operation of the measure.

Mr SAMPSON:

– I wish it to be made clear. If the legal members of the Committee think that the word “ trust “ should be inserted in the paragraph, I hope that that will be agreed to.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– In my opinion, the meaning of the paragraph is perfectly clear. If an honorable member wishes to know whether any particular body is or is not covered, he has only to ask himself whether it is a public authority. Is there, outside the Broken Hill Company, any private authority supplying water in Australia? Whether the authorities controlling a water supply are termed a board or a trust, they are exempt from taxation. The provision has been inserted merely to make the intention of the measure clearer, but I doubt whether, even without it, the bodies referred to could be taxed.

Amendment agreed to.

Amendment (by Mr. Hughes) proposed -

That the following paragraph be inserted : - “ (4) all land owned by a Savings Bank regulated by any Slate Act.”

Mr Groom:

– Is it the intention of the Attorney -General to include land banks created by the States, and authorized to make advances on the Crédìt Fonciersystem?

Mr Hughes:

– The intention is to exempt all Savings Banks.

Amendment agreed to.

Amendment (by Mr. Hughes) proposed -

That the following paragraph be inserted : - (c) all land owned by any society registered under a State Act relating to friendly societies or trade unions.”

Sir JOHN QUICK:
Bendigo

.- This is a fitting time to determine whether the property of mutual building societies should be exempt from taxation. These societies are registered under State laws, and are kindred to friendly societies, about the desirability of whose exemption there will be hardly any doubt. They are established to encourage thrift, and to assist the working classes in obtaining homes of their own. They do not declare dividends, but under the amendment as it stands their property would be liable to taxation at a high” rate. When they make advances, they are registered as the absolute proprietors of the securities. A man who borrows from one of these societies to purchase a freehold allows it to register the property in its name, his only title being a deed of defeasance. These societies will, I think, unless specially protected, be liable to taxation on the aggregation of the properties which they hold in trust for various borrowers ; but that is scarcely the desire of the Government. The tax would fall on the thrifty, and could have no effect in bursting up large estates.

Mr West:

– Few of these societies hold much land, except as mortgagees.

Sir JOHN QUICK:

– Yes, but they are registered, not as mortgagees, but as proprietors, of the properties on which money has been borrowed from them. The honorable member for Herbert has given notice of an amendment which would meet the case.

Mr BAMFORD:
Herbert

.- I have given notice of an amendment for the protection of what are known as StarrBowkett building societies, which are wholly mutual, the members contributing so much each, and balloting for the right to borrow the whole sum. The winner obtains the money without interest, and uses it generally for building a house, or acquiring a home. I had intended to propose the insertion of a new paragraph.

Sir John Quick:

– If the words “ or mutual building societies “ were added to the paragraph, it would meet the case.

Mr BAMFORD:

– The honorable member for Melbourne has given notice of an amendment dealing with other societies.

Sitting suspended from 6.28 to 8 p.m.

Mr BAMFORD:

– Without further debate, I move -

That the amendment be amended by adding the following words - “ and all land owned by a building society registered under any State Act relating to building societies, and conducted on co-operative or mutual principles.”

Mr Hughes:

– I suggest that the honorable member should allow the amendment to be agreed to, and submit his proposal as a separate paragraph.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I wish to support the amendment moved by the honorable member for Herbert; but have another amendment to propose providing for the exemption of co-operative dairying and producing companies.

Sir JOHN QUICK:
Bendigo

.- There will be no objection to the honorable member for Herbert’s proposal being inserted as a separate paragraph, if the AttorneyGeneral thinks that that is the more convenient course to adopt ; but I should like to know whether the honorable gentleman is in favour of it?

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I am not in favour of adding it to the proposed new paragraph ; but, after the amendment has been disposed of, I shall explain the position of the Government with regard to building societies and co-operative societies generally.

Amendment of the amendment, by leave, withdrawn.- .

Amendment agreed to.

Amendment (by Mr. Bamford) proposed -

That the following new paragraph be inserted : - “ ce. All land owned by a building society registered under any State Act relating to building societies and conducted on cooperative or mutual principles.”

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– With the object that the honorable member for Herbert has in view, I am entirely in sympathy ; but am not quite clear as to the extent to which the amendment would go. The honorable member has omitted from the amendment of which he originally gave notice the words, “ and from the operations of which no individual or company derives profit.” With those words, its application was clear ; but, as it stands, I do not think that it is. In clause 37, we provide that members of a mutual life assurance society shall be separately assessed, and the mutual principle, I understand, in its application to a life assurance company means that the profits are divided amongst the individual members of it. Starr-Bowkett societies, which my honorable friend has in mind, are admirable institutions; but they are subject to some practical disabilities. As some honorable members seem to be busily engaged in explaining something to each other, it appears to be useless to explain to the Committee the position that the Government take up.

Mr ROBERTS:
Adelaide

.- I am in doubt as to what is the real intention of the honorable member for Herbert in proposing this amendment. It appears, at the first view, to be a rather dangerous proposition.

Mr Deakin:

– Is it dangerous not to tax these societies?

Mr ROBERTS:

– I do not say that it is.

Mr Deakin:

– That is what the honorable member’s remark implied.

Mr ROBERTS:

– The honorable member is at liberty to place his own interpretation upon my remarks; but he must net commit me to it. The honorable member for Herbert has not explained his amendment.

Mr Bamford:

– I did before we adjourned for dinner ; but I do not think that the honorable member was present.

Mr ROBERTS:

– I have not been absent one moment from the chamber during the Committee stage of this Bill. We have no explanation from this side as to the meaning of the amendment.

Mr Deakin:

– We never get any explanation from that side of the Committee.

Mr ROBERTS:

– Perhaps it is because the honorable member does not care to listen to our dulcet tones. If we are to exempt building societies carried on under cooperative principles, why should we not exempt all co-operative societies? I am personally interested in a co-operative society, but do not desire, at all events at present, that such societies shall be exempt. If the enterprise and industry displayed by a man in becoming a member of a building society are to be recognised by exemption from this tax, then it seems to me to be a very small addition to the principle to exempt all co-operative societies. I fail to see why only co-operative societies relating to the building trade should be exempt when the same principle is followed in connexion with all co-operative concerns. At present the amendment appears to me altogether too wide, and possibly the honorable member for Herbert does not care to explain its far-reaching effects. Since we are completely in the dark as to what is intended, we may reasonably term the amendment dangerous until some further explanation is made.

Mr GROOM:
Darling Downs

– I hope that the honorable member for Herbert will press his amendment. We are told that the New Zealand Act is an excellent model, and that we should follow it. Under that Act all land held by any building society duly registered under any Act relating to building societies is exempt, and it is declared that the annual or other dividends or profits paid or credited to any member or shareholder of any such society shall be deemed to be part of his income, and be taxable accordingly. Building societies which are carrying on operations in Australia are subject, in some cases, either to the dividend duty tax or income tax. The exemption proposed by the honorable member for Herbert and the honorable member for Bendigo embodies exactly what is done in New Zealand. It is a fair and reasonable exemption to make on its merits, because building societies are co-operative companies.

Mr Hughes:

– Some are.

Mr GROOM:

– Those registered under special Building Society Acts are, as a rule, co-operative companies formed for the purpose of enabling people to combine amongst themselves to build their own homes.

Mr Frazer:

– Quite a number of them are speculative organizations of a proprietary kind.

Mr GROOM:

– I have in mind some of the Queensland cases, where hundreds of little homes have been built through the agency of building societies. A company is formed, deposits are made by different persons, who pay small sums at regular intervals, and the combined funds are used for the purpose of advancing money to. different people to build their own homes.

Mr Frazer:

– Is that the StarrBowkett ?

Mr GROOM:

– I am dealing, not with the Starr-Bowkett, but with mutual building societies.

Mr Hughes:

– They would not be taxed on the money that they lend in that way.

Mr GROOM:

– The properties which they technically own may be held to be their property, and subject to taxation. This is a class of investment and organization that we do not want to tax. The honorable member for Herbert knows that on the Darling Downs large numbers of people have been able to get their homes through the agency of these purely cooperative building societies, who, without them, would not have been able to get their own homes at all. The real object of the Bill, as the honorable member for Coolgardie put it, is to tax land so as to enable people to become owners of their own homes. If the Government include, as the subjects of taxation, the very institutions which enable people to get their own homes, they will cut right across the very principle of their own legislation. This matter is important, because in a case decided in New South Wales - The Commissioners of Taxation v. St. Joseph’s Invest ment and Building Society - it was held that the respondent society were the mortgagees in possession of a large number of parcels of land which had been mortgaged to them by different mortgagors, and that the society, being mortgagee in possession, and not a bare trustee of different estates, was entitled to only one deduction on the aggregate value of all the parcels of land. The building societies should be entirely exempt from the provisions of this Bill. No advantage is to be gained, and no big estates will be burst up, by taxing them. On the contrary, the Commonwealth will be taking revenue from the very contributions paid to the societies which enable people to get their own homes. They are the small investors, who should be helped, and not discouraged. I can understand the AttorneyGeneral saying that he does not know how far the proposed amendment will go, but if the words were put in it would be easy to recommit the Bill, and technically define them. None of us want to put in words that will leave the measure too open. We want to keep companies that are not bond fide out of it. I hope the AttorneyGeneral will see his way to grant the exemption asked for.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The object of the Government is to make the exemptions cover every case that ought properly to be exempted. There are building societies and similar institutions that ought not to come under the operation of the Bill, but the question is to what extent the amendment will open the door to others. The honorable member for Melbourne has given notice of an amendment to tax building societies generally to the extent of only half the amount. On the face of it, that is a proposition to which we could not readily assent. On the whole, I think it is far better to exempt them altogether, or to tax them. With regard to societies that are mutual in their nature, like a mutual life association, we have provided, without exempting them in set terms, that each person shall be assessed separately, the practical effect, of course, being that they are exempt. Whether it would be advisable to include all other mutual societies carrying on business on a mutual basis in the same or a similar class, is a matter which I should like to have an opportunity of considering. I should be glad if the honorable member will give me an opportunity to look into the matter, with a view to putting all building and other societies conducted on a mutual principle, on the same footing, where it can be safely done without jeopardizing the interests of the Bill. The matter ought to be looked into. I say candidly that the intention of the Government is not to tax any interest which makes for thrift and for the better distribution of land. It is, in fact, the very contrary. At the same time, there are some of these StarrBowkett societies promoted for various purposes, such as providing a manager with a billet, or giving work to conveyancers, and so on; but, generally speaking, I think it is entirely desirable to exempt building societies. I shall be glad if the honorable member will withdraw the amendment, and allow us to deal with .the matter generally on the recommittal of the Bill.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Committee would be saved a great deal of time if we could, at this early stage, make a distinction. The AttorneyGeneral now says that the Government are prepared to wholly admit the desirability of encouraging thrift through genuine mutual co-operative organizations. The difficulty, as he has pointed out, is that many of these organizations or associations are started with a mutual principle, but also with another principle present, by which profits are derived from them by individuals. I could name insurance companies which have the word “mutual “ in their title, but from which certain men are receiving large profits. The word “ mutual” may be used as an attraction to the public to operate through these organizations, although I do not say it is so. I have every sympathy with the thrift side of these organizations, and with every association that is formed to enable people of small means to help one another by cooperative methods, in the form of friendly societies, insurance companies, or building societies, towards a little saving of their means or earnings ; but I should be against including any organizations in the exemption which have underneath them a profit being drawn by promoters or proprietors. The amendment which the honorable member for Herbert proposed contained, in its first form, but not in its ultimate form, words which saved the situation in that regard, because it provided that no profits should be derived by individuals promoting the organization. The Committee seems to he of one mind on the whole question, and it simply remains for the Attorney-General to shape a provision, either by additions to clause 37, or by another clause, by which all mutual associations shall be absolved from the tax, provided there are no profits being derived.

Mr Atkinson:

– Some one must get some profits.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Not necessarily. I can tell the honorable member of many companies which are quite free from any but mutual profits, and of one, at least, very large insurance company in Australia which is supposed to be conducted on mutual principles, but from which very large dividends are being paid to the originators in the form of a commission on the management. If the honorable member looks into some of the great American organizations for insurance purposes, he will find that there are what are called founders’ shares, by which immense profits have been derived by these so-called mutual societies for individuals, who have grown extremely rich by using the innocent and alluring word “ mutual “ for the purpose of drawing the public in. The AttorneyGeneral could save a lot of time and discussion if he undertook to frame a clause which would recognise the merits of the purely mutual form of association, and exclude the other kind which I have mentioned.

Mr BAMFORD:
Herbert

.- I have no objection to adopting the suggestion of the Attorney-General. In moving the amendment I had my mind specially directed to Starr-Bowkett societies, and no others. I did not include the societies referred to by the honorable member for Darling Downs. I know of them, and have been a shareholder myself, but they are of such a character that individuals do derive a profit. In StarrBowkett societies there is no profit for any individual, nor for .the society as a society. There are no actual profits other than what may be derived from fines or sales of books of rules, and so on. This goes for managerial expenses, and the secretary is the only one who has anything out of it. That cannot be said to be a profit.

Mr Groom:

– Do those societies own large areas of land?

Mr BAMFORD:

– They may be mortgagees. I do not say that they come under the operation of the measure at all. They may fall below the exemption, but I want to have it made clear that if they did become taxable under the Bill, as it stands, they should be protected to that extent.

Mr Batchelor:

– It is hardly conceivable that, having regard to their principles, they will be taxable.

Mr BAMFORD:

– It will do no harm to explicitly exempt them in the Bill, and it might do good. The honorable member for Adelaide is rather exacting in asking me for a full explanation in regard to building societies. The only societies referred to in my amendment are StarrBowkett societies. As to the other societies referred to by the honorable member for Parkes, I may say that I am a policyholder in one, and derive direct benefit in the shape of bonuses.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I was not speaking of bonuses, but of proprietaryinterests.

Mr BAMFORD:

– I am going further, and saying that bonuses might be honestly declared to be profits under the Bill. In the Starr-Bowkett societies, however, there are no profits, but all the money advanced is without interest; so that we may say there are benefits without profits. However, I now ask leave to withdraw the amendment, on receiving an undertaking that the Attorney-General will look into the whole matter, and, if possible, draft an amendment to meet the case.

Mr WEST:
East Sydney

.- Co-operative and mutual building societies are registered under the Friendly Societies Act in New South Wales; but StarrBowkett societies cannot be so registered, nor can a building society, unless it is wholly and solely mutual. I have in my mind three so-called mutual building societies, which, however, would not be regarded as such for the purposes of this Bill, inasmuch as they purchase large areas of land and erect buildings on them.

Amendment, by leave, withdrawn.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I now desire to move a new sub-clause (d), dealing with public charitable and educational institutions.

Mr Fuller:

– I rise to a point of order. I handed you, Mr. Chairman, an amendment, which I asked you to submit before the new sub-clause referred to by the AttorneyGeneral was placed before the Committee.

The CHAIRMAN:

– I was under the impression that both the amendment referred to by the honorable member for Illawarra and that of the honorable member for Richmond dealt with mutual life assurance companies.

Mr FULLER:
Illawarra

.- What I desire is an intimation from the

Attorney-General as to how he proposes to deal withsuch companies or societies. When I handed the amendment to you, Mr. Chairman, I had in my mind such societies as the Australian Mutual Provident Society, and not societies like those referred to by the honorable member for Parkes. I had no idea of including societies carried on for personal or private gain. I desire the AttorneyGeneral to consider the position of societies like the Australian Mutual Provident Society, carrying on business in the Commonwealth. If I have an assurance that these will be considered, together with others that have been mentioned, and dealt with on recommittal, I shall be satisfied for the present.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I shall be very glad to include institutions of the class mentioned by the honorable member for Illawarra and others.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Including dairying societies.

Mr HUGHES:

– I shall be glad to include in the consideration co-operative dairying societies and others which, in the opinion of honorable members, oughtto come within the exemption. I now move -

That the following paragraph be inserted : -

all land owned by a public charitable or public educational institution, if the institution, however formed or constituted, is carried on solely for public charitable or public educational purposes and not for pecuniary profit ;

I find that, according to section 16, subsection 5, of the New Zealand Act, there are exempted inthe Dominion any public charitable or public educational institution, however formed or constituted, if carried on for any public purpose, and not for pecuniary profit. As a matter of fact, the proposed new sub-clause is taken word for word from the New Zealand Act. In the New South Wales Act, the exemptions are classified in a different fashion, but they include public charitable or educational institutions, and specify, in addition, some particular educational institutions, but none are carried on for pecuniary profit.

Mr GLYNN:
Angas

– I beg to move -

That the amendment be amended by leaving out the word “ public “ before the word “ charitable.”

I propose, later, to move also that the word “public” be omitted before the word “educational,” and that the word “ solely,” which does not occur in the original sub-clause, be also excised. I shall not debate the last-mentioned matter now, but merely refer the Attorney-General to a recent .book on rating, in which the word “ solely “ is said to, in nine cases out of ten, destroy the object of Parliament. The amendment which I now propose will bring within the exemptions institutions which are charitable, but which are not public in the sense of being controlled or supported by the State. I have in my mind various benevolent institutions, some under religious bodies, for the purpose of helping the weak and unfortunate, and finding new ways of life for them. If the word “ public” be retained, these societies will be excluded from the exemptions ; and I am sure every honorable member wishes that those legitimate efforts of benevolent people, and the public through their subscriptions, shall receive the same recognition as institutions that have to rely on the State for what should come from benevolence.

Mr Harper:

– The object is to strike out the word “ public “ throughout the clause?

Mr GLYNN:

– Yes.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I object to that.

Mr GLYNN:

– We ought to encourage everything that will lead to the development of charity, promote mutual assistance, and ultimately realize, perhaps, that truly Christian state in which man recognises, through the benevolence of his neighbour, that he is one with him. I do not wish to labour the point, because I think the amendment should pass without argument. Honorable members must have wide experience as to the extent to which various societies, religious and benevolent, are endeavouring to cope with charitable work.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I direct attention to sub-clause e of the exemptions, from which it will be found that land owned by any person or society, and used exclusively as a site for a charitable or educational institution not carried on for pecuniary profit, is already exempt, as well as public charitable and educational institutions. The only difference is that the proposed new sub-clause has relation, not so much to the lands, although it does relate to them, as to the proceeds. So far as the land itself is concerned on which charitable or educational institutions are erected, it is exempt.

Mr Glynn:

– Only the site?

Mr HUGHES:

– Yes, the land on which an institution stands; therefore, the discussion ought to turn on the question of proceeds, as distinguished from land. An institution may own land other than the land on which the institution itself is erected. It may use the proceeds of these lands for other than pecuniary profits, and they will be exempted from taxation if the institution falls under the heading of a public educational or a public charitable institution.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Bill does not deal with the proceeds of land.

Mr HUGHES:

– We can exempt from taxation any land, and propose to exempt land the rents and profits from which are devoted to particular purposes. The sites on which charitable and educational institutions stand are exempted by paragraph e.

Mr ROBERTS:
Adelaide

.- Paragraph e of the clause exempts the sites of all charitable institutions, whether public or not. The question raised by the amendment is whether the lands held by an educational or charitable institution apart from the site on which its buildings are erected shall be exempted from taxation. I think that we may well pause before determining to exempt such lands held by charitable institutions. In some cases, they are lands with which the institutions have been endowed, but in other cases they have been purchased with funds which have been collected, and it is doubtful whether the purposes of charity would not have been better served by expending the money directly in charitable relief than by investing it, to dole out the annual revenue.

Mr Groom:

– Sometimes money is left by will to be put to a capital account.

Mr ROBERTS:

– That is so. It must not be forgotten that we have heard of charitable institutions the major portion of whose revenues go to meet the expenses of management, only small sums being available for charitable relief. It is questionable whether the lands held by such societies, apart from the sites on which their buildings are erected, should be exempted from taxation. The honorable member for Angas desires to strike out the word “ public “ everywhere in relation to educational institutions, and I hope that that will be done. The words “ and not for pecuniary profit “ are a sufficient safeguard. There are large numbers of educational institutions endowed with lands the proceeds of which are devoted solely to educational purposes, and we, on this side, should be the last to prevent education being as free, full, and complete as it is possible to conceive. If the word “ public “ is used before “educational institutions” there will be grave doubt as to whether the lands of certain institutions that have been endowed will be exempt from taxation, because those institutions charge fees to students, though both the proceeds of their lands and the fees are used solely for educational purposes, no person receiving any profit from them. Some institutions may hold land whose unimproved value is thousands of pounds. In some cases specific pieces of land have been given in trust for scholarship purposes. No one would desire that such lands should be taxed. While I agree with the honorable member for Angas that the word “ public “ should not Be used before the word “educational,” I should like, for the reasons I Have mentioned, to hear further argument before striking out the word “public” before the word “charitable:”

Mr AGAR WYNNE:
Balaclava

– In my opinion, the words “ and not for pecuniary profit “ should be struck out. Institutions like the Wesley College, the Church of England Grammar School, the Presbyterian Ladies’ College, the convent schools, and other institutions throughout Australia cannot be kept going without charging fees. My father paid for my education at the Melbourne Grammar School, yet it is a public institution in the sense in which the large English schools are public ; it is not conducted for the making of profits to be distributed amongst the proprietors. The University of Sydney has had some very large bequests, and Challis House, opposite the General Post Office there, was erected out of the funds provided in that way. The University, of course, collects rents for the offices in that building. Then the Ballarat Orphanage has reclaimed 50 or 60 acres of wornout mining land on which it has a market garden and farm, the produce of which is sold, and the proceeds used for the maintenance of the institution. In my opinion, such land should not be taxable. The block occupied by the Church of England Grammar School here has an enormous unimproved value which, if taxed, would have to pay more than any income that could be obtained from the school.

Mr Hedges:

– The same may be said of the block occupied by the St. Xavier’s College at Kew.

Mr Hughes:

– The sites of educational or charitable institutions are clearly exempt by paragraph e.

Mr AGAR WYNNE:

– The clause speaks of charitable or educational institutions ‘ ‘ not carried on for pecuniary profit.” It seems to me that these words make the lands of such institutions as those to which I have referred taxable.

Mr Roberts:

– What does the honorable member understand by “ pecuniary profit” ?

Mr AGAR WYNNE:

– The fees charged for students, and the proceeds of the produce of land. The Salvation Army has farms outside most of our large cities, on which it grows produce which it sells for the benefit of its charities. Such lands would be taxable under the Bill. Under this provision mechanics’ institutes may not be exempt, because the committees of such institutions let their halls and charge rent for them.

Mr Groom:

– There are English cases in which it is held that, in such circumstances, the exemption goes.

Mr AGAR WYNNE:

– Quite so. There are, in this provision, words which must create a doubt, and which may lead to the taxation of institutions which I am sure the Committee generally does not desire to be taxed.

Mr GROOM:
Darling Downs

– I desire to draw the attention of the AttorneyGeneral to a question of drafting relating to the words “ all land owned by a public charitable or public educational institution,” and applying also to several other sub-clauses. Very often the lands on which such institutions are built are held in trust by trustees.

Mr Hughes:

– That is covered by the definition of the word” owner. ‘ ‘

Mr GROOM:

– I should like the AttorneyGeneral to consult the Parliamentary Draftsman on this point.

Mr Hughes:

– I shall do so.

Mr GROOM:

– Under the Bill, a trustee is made an owner liable to pay taxation. I would point out that the lands of many religious institutions are held by corporation trusts, under special deeds, or, in some cases, the synod or governing body of the church is made a corporation. The institutions receive only the rents or profits, and we need to exempt both the trustees and the persons who get the profits. In one or two cases, a question has been raised as to whether a distinction is made between the owners, who are the trustees, and the institutions themselves. The point is rather important, for I know that the AttorneyGeneral desires to exempt such institutions.

Mr Hughes:

– If the honorable member will allow me, I have already prepared an amendment of the amendment to cover the point.

Mr GROOM:

– Will that amendment of the amendment apply to other sub-clauses?

Mr Hughes:

– No; it will apply only to paragraph d, with which we are now dealing.

Mr GROOM:

– It may also be required in the case of paragraph e.

Amendment of the amendment, by leave, withdrawn.

Amendment of the amendment (by Mr. Hughes) agreed to -

That after the words “owned by,” in line i, the words “ or in trust for “ be inserted.

Amendment of the amendment (by Mr. Glynn) proposed -

That the word “ public,” line i, be left out.

Mr GROOM:
Darling Downs

.- 1 urge the Attorney-General to omit the word “ public,” as proposed by the honorable member for Angas. It is very difficult to obtain a satisfactory definition of the word ; and I am afraid that, by employing it, in this case we may frustrate our real intention. In some cases, an educational institution on land vested in trustees, and which charges no fees, is held to be a public institution ; but the difficulty is to determine whether by the mere act of charging fees the privilege of being a “public” institution is not destroyed. I think that the Committee desires to preserve from taxation all charitable and educational institutions that are substantially intended for the benefit of the community generally, notwithstanding that they may be limited to specific denominations or persons, provided that they are not carried on by some individual for his own personal gain.

Mr Mahon:

– We do not want, for instance, to exempt any Wackford Squeers’ Academy.

Mr GROOM:

– No ; but there are many large educational institutions doing excellent work which we should exempt. We have the Church of England, the Presbyterian, and Methodist colleges, the Christian Brothers’ schools, and various convent and charity schools, which we do not desire to tax.

Mr Fenton:

– As well as foundling hospitals and other like institutions.

Mr GROOM:

– Yes, those institutions are doing splendid work, and we desire to make sure that they are exempted from taxation, both as regards their sites and their endowments.

Mr Sampson:

– What is the meaning of “ pecuniary profit? “

Mr GROOM:

– The honorable member for Angas has intimated that he intends to move an amendment of the amendment dealing with those words. If a man accepted an offer to carry on an institution as a charity and to get what he could out of it, he would probably be carrying it on for his own pecuniary gain, but the institutions to which I have referred are not conducted in that way. The salaries of the teachers in public schools are fixed by public committees, and come out of the funds. Tn other cases public institutions are carried on by sisterhoods, who give their services free of cost, with the result that the whole of the fees charged go to the institution.concerned. In other cases teachers are appointed, and receive small salaries to carry on institutions, and all these should be exempt from taxation since they are not carried on for pecuniary gain or profit.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

.- The honorable member for Balaclava pointed out that the words “ and not for pecuniary profit “ might be interpreted otherwise than the Attorney-General thinks they ought to be interpreted ; and we have to remember that we shall not have the benefit of the honorable gentleman’s decision when these questions arise. The Commissioner may take a different view. The honorable member for Balaclava has pointed out that in some cases institutions which come within the exemption provisions, invest their money in a building from which they collect rents, and he expressed some anxiety lest these should be held to be properties which should be taxed since they produce a. commercial result in the shape of rents. I think that we are all anxious to provide that where one of these institutions so invests its money as to derive a profit in the shape of interest from its [accumulated funds that investment shall not, in itself, constitute it a profit-making concern. I ask the Attorney-General, therefore to consider whether he does not need some modification of the proposed amendment. Passing from that question I desire to know whether the Attorney-General does not think it would be desirable to deal with all these institutions, including building societies and mutual life assurance and friendly societies, in one clause providing for their exemption. As it is, we have one set of institutions dealt with in clause 37 and another in an earlier part of the Bill.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I have no objection to that. The matter which the Committee is now discussing is one of grave interest to large numbers of our fellow citizens. I share with honorable members generally the desire to make this tax press as lightly as possible upon every interest, and especially upon those of which mention has just been made. The word” “ public charitable or public educational institution “ are by no means unambiguous, and the decisions that have been given under the land and income tax law of New South Wales unfortunately do not make the position clear. They deal with public charitable, rather than wit!) ]ublic educational, purposes. Under the New South Wales Act a number of educational institutions are specified as being exempt. For instance, the University affiliated colleges, and the Sydney Grammar School are by name exempted. The institutions that are not so exempted are, of course, liable to taxation. The question is what is a charity? According to the technical legal meaning, it covers a very wide field, and would not appear to be at all limited by the popular meaning of the term, but it seems to be generally admitted that there must be some public purpose. It need not be a public purpose in which the whole community share, and its benefits may be restricted to a comparatively small proportion of the community. It may be for the relief of poverty, for the advancement of education or religion, or for other purposes beneficial to the community. It has been laid down, in the New South Wales Courts that the words “ public charitable purposes “ have a special and more limited meaning, and are not to be construed in their technical, acquired, and legal sense, although they go pretty far even there. For instance, in a case decided under the Municipalities Act in New South Wales, “ benevolent institution “ was held’ to include St. Martha’s Industrial Home, conducted by the Sisters of the Order of St. Joseph as a home for destitute and orphan girls. The institution received a substantial sum from fees and sale of work, but not enough to cover the expense of carrying it on, and the deficiency was made good, and some what more than made good, by voluntary subscriptions. Similarly, a refuge supported by donations, and carried on in a building used for private worship, was held to be a benevolent institution. The same thing applies to the Home of Hope, a very wellknown institution in our State, where evidently they live on something more than hope. I submit that there is no necessity to leave out the word “ public “ before the word “charitable.” “ Public charitable purposes “ is a term sufficiently wide to cover the whole field of charity, and if “public” were struck out, I doubt very much whether anything could be construed to be a charity that did not effect a public purpose.. Can the honorable and learned member find a decision bearing on that point ?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There was a case in New South Wales where a charity school was held not to come under “ charitable institutions,” because fees were received from some of the scholars.

Mr HUGHES:

– I am anxious to exempt every charitable institution that is properly charitable, and shall be glad of the name of that case. The New South Wales and New Zealand Acts speak of public charitable purposes. The South Australian Act and the Victorian Bill do not use the word “ public.” I do not want to refuse the amendment without the best of reasons, and I confess that there appear to be conflicting authorities. I should like to be allowed to look into the cases, and, if the honorable member is agreeable, this exemption can be considered and dealt with on the recommittal.

Mr GLYNN:
Angas

– I appreciate the spirit in which the AttorneyGeneral has approached the question, but I do not know that much more information can be got upon it. There is a leading English case, Pensel v. The Commissioner of Taxes, decided about 1894, which defines what the Privy Council considered was meant by charities. The same significance would not attach to the term in Australia, because at Home there are charities under various Acts for the last five or six hundred years of which we know nothing, but even there they must not be institutions which are self-regarding. I think it has been decided that the receipt of fees is not the essential difference between what is and what is not a charity. It is the object of the application of the moneys that determines the charity, and common sense will follow in the line of judicial decision on that point. If an institution can further its own objects, which must be charitable, by the receipt of fees, so long as those fees are only applied to the maintenance or the development of the institution it still retains its essential character as a charitable institution. In South Australia, the words of the Act are “ solely for charitable or religious purposes.” The word “ public “ is not used. There was a test case there about five or six years ago as to the meaning of those words in the Waterworks Act. I appeared for one of the institutions - I think the Sisters of St. Joseph - and some other refuges. There is no doubt about their being strictly charities. They are supported by sisters, whose motives in life every one will respect. They do not get a penny piece for themselves, and in some cases have really to deny themselves a good deal in order to keep the institution going. The Crown, after hearing the merits of the case, declared that, whether the Act did or did not cover the case, they would not insist upon the tax if certain conditions in regard to inspection were complied with. Consequently, the defence was never gone into, the requisition for the tax or rates was abated, and the case is left undecided so far as the Supreme Court is concerned. I have not much doubt that the decision would have been that the institution was a charity within the apparent intention of the Legislature, and ought not to be taxed, as none of the funds were applied to other than charitable purposes. I have in my mind in this matter all institutions which serve every end that benevolence recognises, and which ought not to come under our taxing power. I do not think that, if the Attorney-General looks up the English case I mentioned, or the Victorian case decided some years ago, or the New South Wales cases referred to, he will get much more light than common sense will throw upon the interpretation of these words. In the South Australian Act, there is no limitation to the effect that the institution is not to exist for pecuniary profit. We are putting in additional words of limitation in that regard, which will prevent the possibility of institutions carried on purely for private ends being exempt. I propose to move to add, after the words “ pecuniary profit,” the words “ applied to other than such charitable or educational purpose.” Then, even if the institution is selfsupporting in the sense of doing some work and getting paid for it, and the proceeds being applied to the maintenance of the institution, but there being no division of profits amongst the members of the institution, it will still be exempt. Our common sense ought to regard such an institution as one that should be exempt from the taxing powers exercised under this Bill.

Mr ROBERTS:
Adelaide

.- I understand that, so far as the word “ public “ before “charitable” is concerned, the Attorney-General desires to look into the matter in view of the suggestions which have been made, and I should not like anything to be done when there is some disagreement, because it may subsequently be found that we are unanimous on the point. Under the circumstances, perhaps the honorable member for Angas would be prepared to let the clause pass.

Mr Hughes:

– My suggestion is that the whole matter shall come up for reconsideration on recommittal after I have had an opportunity to look into it.

Mr ROBERTS:

– We seem to be fairly unanimous in striking out the word “ public “ before “educational,” and we might do that now, leaving the other matter to be considered on recommittal. At present I cannot quite gather what is the exact position.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– Honorable members have made a number of suggestions to which I am not at all averse, but which are in conflict. The honorable member for Angas has moved to strike out the word “public” before the word “charitable,” and the honorable member for Adelaide, while not agreeing with that proposal, is in favour of striking out the word “public” before “educational.” While perfectly sensible of the importance of all that has been said, I think there ought to be an opportunity to review the matter in order to make the clause ship-shape ; and, therefore, I propose that the clause shall be passed as amended by me, with a promise that the whole subject will be brought up on recommittal.

Mr.. GLYNN .(Angas) £9.34]– I perfectly appreciate what the AttroneyGeneral has said, and I agree to withdraw the amendment, with a view to further consideration. I am sure, however, that honorable members are with me.

Amendment of the amendment, by leave, withdrawn.

Amendment (by Mr. Glynn) proposed -

That the word “ public,” line 4, be left out.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I cannot agree to that amendment, but ask that the whole of the honorable member’s amendments be held over. If the clause be passed as submitted by me, I shall consider every amendment that has been suggested with a view to meeting the wishes of honorable members, and the whole matter will come up for discussion on recommittal.

Mr ROBERTS:
Adelaide

– The Attorney-General has put the position as I understand it. My only fear is that if the word “ public “ be allowed to remain before the word “ charitable “ it may govern the word “ educational.”

Amendment negatived.

Mr GLYNN:
Angas

.- I understand that it is the wish of the AttorneyGeneral to postpone all amendments on this clause ; and, therefore, I move no more at present.

Amendment, as amended, agreed to.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The sub-clause d, as printed in the Bill, now becomes subclause e in consequence of the insertion of the new sub-clause ; and in regard to subclause e, as it now is, I move -

That after the word “ by,” line 15, the words “ or in trust for “ be inserted.

Sir William Lyne:

– Would it not be advisable to postpone the whole clause rather than cause difficulty by now making amendments, and then having a recommittal for, perhaps, further amendments?

Mr HUGHES:

– It is proposed to recommit the clause to consider points on which there is some difference of opinion, but I gather that there is no substantial difference in regard to the words now proposed, which are inserted merely because they have already been agreed to in the preceding sub-clause. As a matter of fact, land held by religious bodies is nearly always vested in trustees.

Mr Groom:

– Some of these funds are for aged ministers and their wives?

Amendment agreed to.

Amendment (by Mr. Hughes) agreed to-

That after the word” their,” line19, the words “wives or” be inserted.

Mr Glynn:

– I wish to include land held by fire brigades ; because it is doubtful whether it is exempt.

Mr Hughes:

– I do not object to that; but I should like to have the matter left over to be considered with the other proposed exemptions.

Mr ROBERTS:
Adelaide

– I wish to bring under the notice of the AttorneyGeneral a charity known as the Adelaide Workmen’s Homes, which I am not sure can be called a public charitable institution, though its land should, in my opinion, be exempt from taxation. A large sum was left by a gentleman to trustees for the building of homes for indigent workmen. I hope that the AttorneyGeneral will consider the advisability of exempting the lands of that, and similar institutions.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– If the word “ public “ before the word charitable is taken out of the clause, the lands of these institutions will be exempt from taxation ; but if the word remains, those lands will have to be’ exempted in set terms, or by some other words. I shall carefully consider the matter, and shall be glad if the honorable member for Adelaide will supply me with further information.

Sir JOHN QUICK:
Bendigo

.- I mentioned, on a former occasion, the advisability of exempting the land on which mining is carried on. I should like the Attorney-General to give consideration to a proposal exempting lands used exclusively for mines ; but, if he wishes for time to consider the matter, I shall not press it now.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– Will the land held by Marine Boards and Harbor Trusts be exempt from taxation?

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– As Marine Boards and Harbor Trusts are clearly public authorities, the lands held by them will be exempt from taxation. I cannot promise to exempt all land on which mining is carried on ; but, where such land is held under lease, it will be exempt from taxation. I move -

That after the words “ owned by,” line 20, the words “ or in trust for “ be inserted.

Sir WILLIAM LYNE:
Hume

.- In reference to the exemption of land used for mining, I would point out that an immense area of country is being held under mining lease, especially under coal-mining leases, without being worked.

Sir John Quick:

– Surely the State Governments enforce the labour conditions?

Sir WILLIAM LYNE:

– They do not. When there was a strike at Broken Hill, the mines were exempted from labour conditions; and the same thing happened at Greta lately. We should not exempt such land from taxation.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– All land not specially exempted will be taxable, and the only exemptions are those with which we have been dealing, and those provided for in the following new clause, which I intend to move to insert after clause 26 - 26a. Notwithstanding anything in the last two preceding sections, the owner of a leasehold estate under the laws of a State relating to the alienation or occupation of Crown lands (not being a perpetual lease without revaluation, or a lease with a right of purchase) shall not be liable to assessment or taxation in respect of the estate.

Mr CANN:
Nepean

– In my electorate, large areas of land are held for coal-mining purposes. In some cases, the land has been alienated in freehold, and will be taxable. I do not quite know the conditions under which such land is held under lease. The New South Wales Government receives 6d. per ton royalty on the coal mined from it; but I do not know whether other rent ispaid in addition.

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– The leases are all for a limited term.

Mr CANN:

– Yes. I believe that the Government lays claim to the minerals in any land. In some cases a mineral lease is let to a coal-mining company, and the surface is leased for agricultural or other purposes. The position is the same in the electorate represented by the honorable member for Hunter, and in one or two other constituencies. I should like to know exactly how such companies will be dealt with under the Bill. Some mining companies retain only sufficient of the surface to enable them to carry on screening and coking operations, and so forth, the rest of the land being leased for other purposes. The land is sometimes freehold and sometimes leasehold. The surface rights are occasionally sold, while the mining company retains all mineral rights. I think that honorable members generally will be anxious to learn what is the position of such companies under this Bill.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I trust that the Committee will not discuss the matter at this stage. It is dealt with in paragraph a of clause 26, and if honorable members desire to limit the operation of that clause, they will be able to propose amendments when it is before us. Mining companies cannot be included in the general exemption.

Mr GROOM:
Darling Downs

.- I have given notice of my intention to move that the following new paragraph be added to this clause -

  1. all lands owned by or in trust for any religious society the proceeds whereof are devoted to the payment of the stipends of the clergy ministers catechists or teachers of the religious society, or to building or repairing places of worship, places of residence, schools or other buildings used or occupied by a religious society or by the ministers thereof, or to the discharge of any liability affecting the same, or to any other religious or charitable purpose ;

Under section 68 of the New Zealand Act, it is provided that no graduated land tax shall be payable in respect of any estate or interest owned by or in trust for any church or religious society if the land which is subject to such estate or interest, or the rents or profits of such land, are used exclusively for religious, charitable, or educational purposes. That is as wide a provision as that which I intend to ask the Committee to accept in this case. The amendment is a very important one, and I think honorable members will agree that since the State does not aid the Church, the State should not make exactions from it.. Many church endowments provide for the stipends of the poorer clergy in bush districts.

Mr Mahon:

– Many of whom are already almost starved.

Mr GROOM:

– And the taxation of those endowments will greatly reduce the incomes of churches of all denominations. I understand that the Attorney-General desires to have time to consider the proposed amendment, and will deal with it when the Bill is recommitted.

Mr Batchelor:

– Yes.

Mr GROOM:

– I simply give noticeof this amendment, which will be moved when the Bill is recommitted.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– A good deal of correspondence has been received from various religious bodies in respect of this matter, and I have been requested to receive, in Sydney, on Saturday next,’ a deputation representing certain religious bodies there. I can assure the honorable member for Darling Downs that the matter will receive the most careful consideration, and will be dealt with on the recommittal of the Bill.

Clause, as amended, agreed to.

Clause 13 (Limitation of exemption).

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I think that this clause needs to be consequentially amended by the insertion of the words “ or trustee “ after the word “ owner.”

Mr Hughes:

– The point which the honorable member has in mind is covered by the definition of “ owner.”

Clause agreed to.

Clause 14 -

  1. For the purposes of the assessment and levy of land tax, every taxpayer shall in each financial year . . . furnish returns. . . . of all land owned by him ….
Mr GLYNN:
Angas

– I move-

That the word “ each,” line 2, be left out, with a view to insert in lieu thereof the words “ the present and every third.”

This is an important amendment, but I shall not discuss it at length, because it ought to be decided upon the knowledge we have of the inconvenience which would result from our insisting upon annual returns being furnished. We started in South Australia with triennial returns, but even those were found to be inconvenient and harassing. In 1902 the law. was altered so as to require that assessments should bo made only once in every five years. Under this clause we provide for an annual return, and at least several persons will be obliged to make returns, subject to the penalties of this Bill, as against only one under the South Australian Act. Under that Act .the first return was made in 1885, and from 47,000 to 50,000 returns were received. On that basis we shall have under this Bill something like 600,000 returns. If we make allowance for those who, for the purpose of this measure, will have to make returns, there may be more, even though no returns are made by those who own less than £5,000 worth. Are we going to insist that annual returns shall be made? Surely, if a valuation is made for one year, it ought to inure for three or ‘ four years. It is unnecessary every year to test whether there is a rise or fall in values. It requires more than a year to accurately determine what has been the addition to the unimproved value of land. If a slight leakage did occur, it would be in favour of the owner, and the taxpayer would not suffer very much. If the revenue shrank to too great a degree, we could always increase the productive rates under the tax. There would be no harm in providing that a valuation should operate for two or three years.

Mr Roberts:

– I think it is possible for the Commissioner to demand a return at any time.

Mr GLYNN:

– I believe the office would not ask for a return, after their first experience of that system in South Australia.

Mr Fenton:

– How does the honorable member arrive at his estimate of 600,000 returns ?

Mr GLYNN:

– There were from 47,000 to 50,000 returns in South Australia in 1885, with a much smaller population. In that State only two classes of persons had to make a return - the owner in fee-simple or its equivalent, and, if the land was held in trust, the trustee. Under this Bill, not only the owner of the fee-simple, but a lessee, a sub-lessee, beneficial owners, and others have to make a return. Making allowance for the difference in population, I think I am not far out in saying that 500,000 or 600,000 returns will have to be sent in every year ; and we shall have the position which has been arrived at in England, where they., simply cannot deal with the returns. In South Australia, it was found that the returns were so erratic, even when sent in by honest men, and that there were such honest differences of opinion, that the Commissioner got no guidance from them as to what he should do; and after his first experience of returns, he did not seek the aid of them. They now let the Department make the assessment; notice is given to each taxpayer, and if he thinks the assessment is unfair, he appeals. I do not think we require to do more than that. I hope, in the circumstances, the Government will consider the desirableness of not insisting on an annual return. I should like to see one Federal valuation made every three years, and let the States adopt it for their purposes also. It could be made in concert with !the States, on some basis which could be agreed upon, so as to save the necessity of harassing people unduly with our various systems of taxation. I hope, eventually, that every system, including municipal rates, water rates, and every thing else, will be based on the unimproved value of land ; and that we shall realize the ideal of having one unimproved assessment right through Australia, which may be used for State as well as Federal purposes. Although we cannot attain that ideal at once, we can do something to bring ourselves into line with the States by having the assessment as near as possible on the dates on which they make theirs. Let us, therefore, start with a triennial assessment. Advantage might be taken of the assessment that is now being made in South Australia; and that will; perhaps, be published within the next few weeks. By that means, a good deal of trouble could be- saved.

Mr. BRUCE SMITH (Parkes) [10.15;. - I should like to suggest a medium course. I recognise that the measure will require an enormous number of returns for the whole Commonwealth. If South Australia, some years ago, with a comparatively small population, required from 40,000 to 50,000 returns, we may safely conclude that the number will be 600,000. or 700,000 for the whole Commonwealth. To require these returns to be sent in every year by Statute is rather arbitrary. Very little change maytake place over a period of three years in the general value of lands. The AttorneyGeneral might accept the suggestion of the honorable member for Angas, while still giving the Commissioner power to have a fresh assessment made at any time within the three years if he thought it desirable. If the Commissioner sees that there is but little fluctuation in the land market, he might allow the assessment to run for another year.

Mr Hedges:

– He has a right to do so under this clause.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If that is so, I should like the Attorney-General to consider whether it would not be better to make the term three years in the first place, leaving the Commissioner power to make it less, if necessary. .

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– I shall support the amendment of the honorable member for Angas. In South Australia, the three years’ periodical assessment was continued for a considerable time ; and the change from three to five years was brought about to save money during times of very severe stress. While the change from three to five years might not have been for the better, it would be a distinct advantage to substitute a three-year for an annual period in this Bill. The Minister of External Affairs knows that, when the periodical assessment is made in South Australia, the taxation offices are crowded with extra hands. An annual assessment under this Bill would entail an extra amount of work, and an attendant cost that would not be justified. A big army would be required in the Taxation Department, and a three years’ periodical valuation is all that is necessary to catch the fluctuations in the value of land. I am strongly against requiring the individual land-owner to send in his own return. The system is copied from the original New Zealand Act ; but I believe it is .being set aside there because it has proved entirely unsatisfactory. Three or” four years ago, I was told by one of the Ministers who was in charge of that Department in New Zealand that the system was found in .practice to be bad. They had more people making an over, than an under, estimate ; and the system was so unsatisfactory that they abandoned the principle of every man making his own assessment for a better one under which the Department made it.

Mr Batchelor:

– Land tax returns in South Australia are submitted every year.

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– No, certainly not. I am a land taxpayer in South Australia, and I do not submit a return every year. I submit one every five years. It is here provided, however, that every year the individual owner shall make his own assessment. It would be infinitely better if the New South Wales and South Australian systems were adopted by the Commonwealth instead of the system of requiring each individual owner to make his own assessment.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– The Government cannot accept the amendment proposed by the honorable member for Angas. The valuations are to be made by the Commissioner, not every year, but when he pleases. Under the New South Wales Act return’s are called for every year. They may include any particulars. They may include, and usually do include - they have always included within my recollection - the value of land. There is nothing unusual in this. It is the practice followed in New Zealand and in New South Wales. The object is to burst up estates and settle people on the land. It is desired, therefore, to exempt persons who in a previous year were liable to the tax, but who, having subdivided, are no longer liable. We desire to see how the country progresses under a tax of this sort - whether, in point of fact, values are going up or down. It is an excellent thing to take an annual valuation. The amount of trouble to the taxpayer is quite negligible. He will have to furnish an annual return, and the question whether he shall furnish an annual valuation is merely one of putting down a few more figures on his already voluminous return.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I wish to direct the Attorney-General’s attention to the need, in some part of the Bill, for a provision dealing with a class of case in which, after the assessment is made, a sale is made of part of the property. If an assessment is made for this year, and a month or two after a sale is made of a part of the property to another owner, I think there is not any provision in the Bill which will entitle the taxpayer to recover the proportion of the year’s tax - to shift it on to the buyer.

Mr Hughes:

– I do not know of a provision of the Bill that would enable that to’ be done. We might very properly consider the point.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Will the AttorneyGeneral make a note of the point ?

Mr Hughes:

– Certainly.

Mr MAHON:
Coolgardie

.-. One of the weaknesses of any scheme of land taxation in a country like this must be the cost, not merely to the Government, but to the individual taxpayer. Experience has shown that it is very heavy. In his remarks to the Committee - the AttorneyGeneral appears to be utterly indifferent to this aspect* of the matter, and this is the: more regrettable because excessive cost of collection will be - a strong argument against the continuance of land taxation. The honorable gentleman said just now that it was a mere trifle’ for a man who was making up his annual return to include also the particulars required in clause . 14. The particulars required in that clause include a full and complete statement of the land owned by the. individual on the 30th June last. Now, there are very few alterations in the ownership of land throughout a year in proportion to the total number of assessments that must be made. I have it on the very best authority - that of a gentleman who has had practical experience in a land tax office in another State - that the cost of these annual assessments will be enormous. He says -

To furnish a return of land in each financial year would involve taxpayers in tremendous expense. The preparation of a big land tax return is a formidable affair. Once furnished, it should, after verification, be the basis; and subsidiary returns might be provided for in respect of sales and acquisitions.

Then he adds -

The necessity for these returns could he avoided by providing that the first return should, when dealt with, bc regarded as the basis, and thenceforward as land was acquired or sold, particulars thereof should be promptly fur- nished to the Commissioner, who would add or take from the original return. Take the case of a large bank or society or land mortgage company whose own first return would cover many sheets of demy-sized paper; they would have a substantial grievance if compelled to furnish practically the same particulars each year.

While it may be comparatively easy to deal with the returns made by new taxpayers, if the Commissioner is obliged to verify each separate return and to compare it with the previous returns of the same taxpayer, he will require a very large staff of officials. As the Attorney-General finds it necessary to indulge in second thoughts in respect of some of the- amendments which have been submitted, he may very fairly devote his attention to the proposal of the honorable member for Angas. It seems to be a more workable and less costly arrangement than that proposed in the Bill.

Mr GLYNN:
Angas

– I wish to point out that in South Australia a tax at one rate is levied upon land up to ?5,000 value, and a tax at another ratu upon land in excess of that value. The same practice is adopted in checking the subdivision of lands. That is accomplished by the Taxation Department being kept informed by the Registrar of Titles of every land transaction which takes place. The fact that an assessment is made every five years does not make the slightest difference to the owners of land. Consequently there is nothing in the objection of the Attorney-General regarding the necessity of effecting an alteration according to the way in which properties have been subdivided. We can provide in this Bill for the necessary information being supplied through the State Registrars of Titles Offices. But I object to the whole scheme of the Bill in regard to the assessment of land. I was told in Adelaide last week, by the solicitor of an estate which has a rent roll of about ?13,000 or ?14,000 a year, that to furnish the. Department with the returns contemplated under this measure will cost that estate about ?1,000 annually. This may be an exaggeration. There is not to be one general valuation made by the Commissioner; therefore, there will be no uniformity in regard to the comparative valuations. These are matters to which- I deem it my. duty to call attention. I regret that the Government are not prepared to prevent inconvenience by dispensing with these annua) returns.

Amendment negatived.

Clause agreed to.

Clauses 15 to 17 agreed to.

Clause 18 (Assessment in case of default or unsatisfactory return).

Mr GLYNN:
Angas

.- Asa matter of drafting, I think that the AttorneyGeneral might look at this clause in conjunction with clause 40 of the Bill, which deals with appeals. In this provision the words “taxpayer” or “person” are used, and under it a “ person “ will be at liberty to appeal, whereas under clause 40 the appeal must be by a “ taxpayer.”

Clause agreed to.

Clause 19 agreed to.

Clause 20 (Alterations of assessments in certain cases).

Mr GROOM:
Darling Downs

– I would call the attention of the AttorneyGeneral to the fact that sub-clause 1 provides a time limit after the expiration of which no assessment can be altered. Will he consider the advisableness of inserting a similar limitation in sub-clause 2 ? That provision stipulates no period after which the Commissioner may not assess a person upon any land which may not have been included in his return.

Mr Hughes:

– Just now I cannot say why there is a difference between the two sub-clauses, but I promise to consider the matter.

Clause agreed to.

Clauses 21 and 22 agreed to.

Clause 23 (Notice of assessment).

Mr GROOM:
Darling Downs

. -I wish to ask the Attorney-General whether the notices provided for under this clause are to be delivered to the taxpayer ill person. There ought to be some guarantee that the taxpayers actually receive them. We do not merely wish a lot of notices to be posted.

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– That is what is generally done.

Mr GROOM:

– There should be some guarantee that the taxpayers receive the notices.

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– That is never provided for.

Mr GROOM:

– The method proposed is very loose one. It is important, because nan desires to know what his assessment in order to preserve his right of appeal, andIsupposethetimewillbelimitedin which he may appeal. There should be some guarantee that the notice will be served. However, I do not ask the AttorneyGeneral to answer my inquiry on the spur of the moment.

Mr Hughes:

– When a man makes a return, I suppose he gives some sort of address, and I am quite willing that the notice should be directed to that address.

Mr GROOM:

– Is the service to be by post?

Mr Hughes:

– I have no objection.

Clause agreed to.

Progress reported.

page 3880

BANK NOTES TAX BILL

Bill returned from the Senate without request.

House adjourned at 10.43p.m.

Cite as: Australia, House of Representatives, Debates, 28 September 1910, viewed 22 October 2017, <http://historichansard.net/hofreps/1910/19100928_reps_4_57/>.