4th Parliament · 1st Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
– It is stated in this morning’s newspaper that I was paired for the Government proposal to bring the Land Tax Assessment Bill into operation as from 30th June last. I do not blame any one for making the pair, though I did not consent to it, being away, but I should not have voted for the proposal had I been present, because I do not think that effect can be given to it. I make the explanationso that it shall not be thought that I am in favour of bringing the measure into effect as from last July.
– On Tuesday night I moved to insert in clause 10, after the word “land,” in lines 13 and 15 of the Bill as printed for honorable members, the words -
In excess of the amount (actual or estimated) originally paid to the Crown on grant in fee simple of the land.
The amendment was debated yesterday morning, and the Age, referring to the discussion in to-day’s issue, says in a subleader -
Mr. Hedges moved that the tax in such cases should not apply to the unearned increment, but only to the original value of the land as it was before the owners subdivided it.
I made no reference to either subdivision or unearned increment, my proposal being merely to allow an exemption in respect to the amount originally paid to the Crown for. the land, whether 2s. or £3 an acre.
– I desire to make a personal explanation. Since my arrival at the House this morning my attention has been drawn to a report of yesterday’s proceedings, in the Age newspaper, in which I am represented to have used rather strong and vigorous language. I know that I am accustomed to use strong language, but I do not think that I have ever transgressed the rules of Parliament to the extent that is attributed to me. The report, which has reference to the debate on the Land Tax Assessment Bill, reads -
Just before the amendment was passed, Mr. Cook and Mr. Page came into conflict. The member for Parramatta addressed an innocent remark to Mr. Page, who promptly objected to be lectured. “ Stop your- wowsering,” he observed, in an angry tone.
I say emphatically that that statement is a lie. I did not use any such language, nor was I angry.
– The honorable member did not say “ blank,” either.
– I did not.
– Nor did the honorable member say “ dash.”
– It is not the language which the honorable member used.
– No. I have never transgressed the rules of Parliamentary debate to that extent, and I hope that I never shall. The honorable member for Parramatta and I were in “ holts “ at the time, and they were very mild “ holts “ at that. The report further says -
Mr. Page objected to being lectured, and was told by a member to “ shut up, and go to Hong Kong.”
As a matter of fact, it was I who told the honorable member for Parramatta to go to Hong Kong. The report also states - that the honorable member for Parramatta said -
I will have to reflect on the Chair some time.
What the honorable member did say was that he would have to reflect upon somebody.
– I wish to make a personal explanation. What the honorable member for Maranoa has said is substantially correct. I heard himuse no such language as is represented bythe mysterious dash in the Age report. The honorable member said what appears in that report, without the dash. For the rest, it is just the usual embellishment which we get in the press whenever it reports the small incidents which occur here from time to time. It is one of the unfortunate things with which we have to contend nowadays, that though the newspapers snatch up things which are not of the slightest moment, and which serve only as food for gossip outside, they leave our pearls of wisdom unreported, and, therefore, so far as the outside public is concerned, unuttered.
– It is stated in to-day’s newspaper that a number of free labourers have been engaged in London to take the place of strikers in Berlin, much to the irritation of the latter. I wish to know from the Minister representing the Minister of Defence if there can be any military and naval antagonism between Great Britain and Germany, seeing that German employers are engaging British workmen to take the place of German employés on strike ?
– It is impossible for me to answer a question regarding the relations between Great Britain and Germany, but the Department of Defence will be glad to supply any information it can that the honorable member may desire.
– Can the Prime Minister inform the House when the report and evidence of the Postal Commission will be laid on the table?
– As soon as it is received.
– Has the Prime Minister not yet received it?
– The following paragraph is taken from The Evening News, a Sydney newspaper -
In Melbourne on Monday the Minister for Customs told a deputation, representing the bevelled and silvered plate glass industry, that the people were to be asked in March next, or thereabouts, to deal with the Tariff question, and say whether or not it should be re-opened ; also whether the Commonwealth should take over industrial legislation or not.
Is the re-opening of the Tariff to depend entirely on the taking of a referendum, or has the Ministry decided that the Tariff must be re-opened next year?
– The report is hardly correct. What I stated was that a referendum would take place in March or April, when the people would be asked whether they would give this Parliament increased industrial powers, and that the action ‘taken regarding the Tariff would depend largely on the result of the referendum.
– Will the Minister of Home Affairs obtain from the Governments of the States, and lay on the table, the latest information regarding the artesian water supplies of Australia?
– I shall be pleased to do so.
Mr. KING O’MALLEY laid upon the table the following paper -
Kalgoorlie to Port Augusta Railway - Artesian water on route - Communication from Jas. Thompson, Engineer-in-Chief, Perth (dated 15th September, 1910).
Naval Bases (Garden Island, Spectacle Island, Western Port) - Military Pensions
asked the Minister representing the Minister of Defence, upon notice -
– The Minister of Defence has supplied the following answer -
The services of an officer of high qualifications have been obtained by the Government to consider and advise on the whole scheme of Naval Establishments for Australia, and, pending the receipt of his report, the Government consider it would be undesirable to discuss the relative merits of any Australian ports.
asked the Minister representing the Minister of Defence, upon notice -
Will the Minister of Defence grant permission to representatives of warrant officers, non-com missioned officers, and men ofthe permanent forces in the various States to hold meetings to discuss a scheme of superannuation or pension for retiring members of the Commonwealth Military Forces?
– The reply furnished by the Minister is -
There is no objection provided the request is made through the proper channel, and the meeting is confined solely to the purpose indicated.
Subdivisional Promotions - Sale of Postage Stamps - Natimuk to Goroke Mail Service- Victorian Salaries and Promotions
asked the Minister of Home Affairs, upon notice -
– The information is being prepared, and, it is hoped, will be available upon Thursday next. It will require a very large amount of work to obtain the desired particulars.
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are these -
While I do not think railway officials should attend at their offices for the express purpose of selling stamps, I see no objection to their giving thispublic convenience if the Railways Commissioners consider it does not interfere with their railway duties.
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and the desired information will be furnished as early as possible.
asked the Minister of Home Affairs, upon notice -
– The information is being prepared, and it is hoped will be available upon Thursday next. It will require a very large amount of work to obtain the desired particulars.
asked the Minister of Home Affairs, upon notice -
With reference to the Public Service Commissioner’s report referred to by the Minister for Home Affairs on 13th September, 1910, respecting increments granted during 1910-11 -
Will he supply the following information, namely : -
The number of officers in the fourth and higher classes in each Department and each State who -
are eligible for increments, 1910-11 ;
have been granted increments, 1910-11;
have been refused increments, although recommended by the Permanent Head, 1910-11 ?
As regards new Departments, will he supply the information in respect of : - (ii.) each branch or sub-branch in each
– The information is contained in the following return : -
asked the Minister of Trade and Customs, upon notice -
– What the honorable member suggests is not practicable unless we restore the border stations and reimpose the restrictions to Inter-State trade for the purpose of entry and record. That, it is considered, would be in direct conflict with the intention of the Constitution in regard to the absolute freedom of trade and commerce among the States, and it would be entirely opposed to the first principles of Federation.
Debate resumed from 8th September (vide page 2834), on motion by Mr. G. B. Edwards -
That, in the opinion of this House, the electors of the Commonwealth should be consulted by referendum to fix the amount of allowance to be paid to members of the Senate and House of Representatives, and that such referendum should provide for a vote to be taken by a system of preferential or contingent voting on the amounts£400, or£500, or £600, or£700, or £800 per annum.
– It is a somewhat ungracious task which I have set myself in moving the motion, but I perform it as a duty which I owe to certain of my constituents, and it commends itself to my own mind because I regard it as necessary that we should’ seek to put ourselves into accord on this subject with the electors whom we represent. It should be admitted by honorable members opposite that the referendum is the most modern and democratic way of obtaining the expression of the will of the people, and if there is any subject on which the true Democrats of the House should desire such an expression of opinion, it is as to the rate of remuneration, allowance, pay, or whatever we may choose to call it, to be given for services in Parliament. As we shall shortly have to consult the electors on a number of questions, which are to be submitted to them by referendum, it will cost very little to submit this question in addition, and a pronouncement upon it would set some of our consciences at rest. I greatly regret that the electors were not consulted before the parliamentary allowance was increased from£400 to £600. I am not an opponent of payment of members, which obtains in all democratic communities. Ours is the most democratic Constitution with which I am acquainted, and I fail to see how we could give effect to its spirit if the members of Parliament were not paid. Personally, I should seek the honour of a seat in this House, even if members were not paid. But, professing to be a Democrat, I acknowledge and adhere to the principle. I also believe that the payment should be adequate to the services rendered, so that a representative can live under those conditions which it is desirable that a man occupying such an honorable and onerous position should enjoy.
– What does the honorable member think is an adequate amount?
– I shall deal with that point later, but I certainly think that the electors should fix the amount. In the course of my remarks, I shall make it plainly understood what I mean, but I am perfectly prepared to accept the decision of the electors on this as on any other question; indeed, more so on this than on any other question. I wish to make it clear in my introductory remarks that I am no opponent of the principle, nor an opponent of the payment being sufficient for the purpose. This is a question which I think we ought to refer to the electors in some form. The form I propose will give the widest reasonable latitude to the electors to decide upon ari amount either above or below that which’ is at present drawn. I desire to place on record a brief review of the facts of the case.The Constitution Bill of 1891 contained this provision -
Each member of the Senate and House of Representatives shall receive an annual allowance for his services, the amount of which shall be fixed by the Parliament from time to time. Until other provision is made in that behalf by the Parliament the amount of such annual allowance shall be£500.
The Convention, which was subsequently elected to draft a Constitution to be submitted to the people of Australia, took a somewhat different view. At the Adelaide session, in 1897, the clause as introduced was to the same effect as the provision in the Bill of 1891, except that the sum was fixed at£400. In Committee on the Bill, Mr. Gordon moved an amendment to substitute£500, and it was negatived by twenty-six votes to nine. I propose to make a few quotations in order to show the attitude of the members of the National Australasian Convention on this subject. Having moved that the amount be increased from ^400 to ^500, Mr. Gordon said -
The ground for the motion is that £400 a year is insufficient. While some local Parliaments are paying their resident members ^300 a year, £400 is not enough for a member who has to leave - as most members of the Federal Parliament would have to do - his colony, and practically abandon his business or his profession. He would have to rely either upon his private means or his parliamentary salary, which, in this ase, would be inadequate. I think, if £400 8 year is fixed, the choice for members of the House of Representatives will be limited to those who can afford to leave their business or profession, and to those who are prepared to depend entirely on the small parliamentary salary. While members of both of these classes are exceedingly desirable members of Parliament, I think it would be a mistake to have a whole Parliament consisting of them, which the payment of the salary proposed would lead to. I think ^500 little enough ; the £100 makes all the difference to the ordinary professional or business man.
After further discussion Mr. Higgins, who, I think, will be acknowledged by the House as one of its most advanced and democratic members in the early days of this Parliament, and who is now an honour to the Bench of the High Court, said -
I think that, having regard to the fact that the Federal Parliament will have much less to do than the ordinary local Parliament after the first Parliament, ^400 is sufficient. I am as strongly in favour of payment of members, on the grounds alluded to by Mr. Gordon, as any man, but I say that the work done in the States Parliaments takes far more time than will the work in the Federal Parliament, after its first meeting. It is not likely, indeed, that the Federal Parliament will sit more than two months in the year. I should like to strike out “ four,” with a view to trie insertion of “ three.” At the same time, as ^400 has been fixed as a compromise, I hope it will remain at that amount as the maximum.
Here we have a gentleman who was one of the most democratic characters in the political life of Australia, not only arguing that ,£500 might be considered too much, but that it might even be considered that ^300 was sufficient. _ I am willing to admit that his anticipation has not been realized. With the exception of the first session, when we sat right on for seventeen months, the Parliament has not sat for two or three months in the year, but for six months, and the time given to each sitting has been somewhat in excess of that taken in any State Parliament, so that whatever Mr. Higgins may have based his contention on has not been proved to be sound. If we take the amount of work done, or the claims made on the time and energy of honorable members, it will be seen that his view as to a lower salary than ^500 could not be upheld by him to-day. After further discussion, in which Mr. Trenwith, in a rather short speech, advocated an increase of the amount to’ ^500, a division was taken, and by twenty-six votes to nine the amendment of Mr. Gordon was negatived. Amongst those who voted against the proposed increase was Mr., now Sir George, Reid, who afterwards voted for a larger increase, namely, for an increase from ^400 to ^600. That was the position at the first session of the National Australasian Convention. At the Sydney session, a suggestion from the Legislative Council of South Australia and of Tasmania, to reduce the amount to j£3°°> was negatived, and at the Melbourne session some verbal amendments were made to improve the drafting, leaving the provision as it now stands in’ the Constitution -
Until the Parliament otherwise provides, each senator and each member of the House of Representatives shall receive an allowance of ^400 a year, to be reckoned from the day on which he takes his seat.
No doubt it will be contended that the use of the phrase “ Until the Parliament otherwise provides,” left the Parliament absolutely, unfettered. There is no doubt that it could have increased the allowance to ,£600 or ^11,000 a year, or reduced it. It was decided to make a very substantial increase from ^400 to ^600, under circumstances to which I shall have to refer. It was such an unusual course - seeing that it was so easy to consult the electors on the subject - that we ought to take the earliest opportunity of remedying the mistake, and putting ourselves in accord with the electors by getting them to indorse the present amount, or to alter it as they may think fit. I have a very definite recollection of the attitude of the members of the first and second Parliaments. I know that from the time it was realized that the sessions would be protracted, and make greater demands upon the time and energy of honorable members, a general feeling of dissatisfaction did exist as to the inadequacy of .£400 a year to properly remunerate them. Those who were members of the first two Parliaments will be able to bear out my statement that throughout the whole period this question was privately discussed in all its phases and bearings. There is no doubt that a proposal! would have come before the first Parliament had we been able to get an honorable member to father one, or to “ bell the cat.” The trouble was that no Government would submit a proposal without being assured of the support of a majority, and it was difficult to get a majority who would agree as to the details of a scheme. Many of us thought that the amount ought to be increased, but that the increase should only apply to succeeding Parliaments. Some thought that an increase of £100 should be made, and others favoured an increase of £200. The whips of the three parties were busily engaged more or less during the first two Parliaments in trying to get the members of the House privately into some form of agreement by which the question could be tested, but, owing to the difficulties which were met with, it could not be tested. A little while ago the honorable member for Capricornia asked me to state my view of what is an adequate allowance. I adhere to the view which I expressed when I was privately consulted years ago. I said that I thought that .£400 a year was inadequate, but that I was willing to vote for an allowance of ^500 to be applied to succeeding Parliaments, and, moreover, that I would prefer that the whole question should be put to the electors in the form of a referendum, if that could be done without incurring special expense, that is, if it could be submitted with other questions, or at a general election. I took up the attitude that we could safely rely upon the electors to deal fairly and generously with their representatives. I expressed the view that it would be far better for the members of the House to consult the people on a question of this kind than to set to work and settle it for themselves.
– But have we not just come from a referendum?
– I shall refer to that later if- the honorable member will allow me. I know that we shall differ very largely as to the significance of the verdict of the last election, but as to the truly democratic nature of the proposal I am making, I am perfectly satisfied that he and I will not differ. I know from his past career that he believes in trusting the people all the time. If we should trust them on anything, we should trust them on this question.
– It is too late.
– In the last Parliament the matter seems to have come to a head, for on the 14th August, 1907, a message was received from the GovernorGeneral recommending an appropriation. But previous to the receipt of the message, the Treasurer - the honorable member for Hume; I think - said -
I hope this week to clear the business-paper of certain measures appearing upon it, as well as to deal with one other matter.
– Does the honorable member refer to a proposal to increase the allowance granted to members representing other States?
An idea seems to have been floating about that the increase in the emolument or allowance should be granted to those who came from far distant States, and not to those resident in Victoria. It is only another instance of the variety of the opinions that were held with regard to the details of this proposal.
– I did not say that the increase was to apply only to members residing in this State.
– I did not say that the honorable member did. His reply to the question was -
Since the honorable member has put that question, to me I may say that before the House rises I propose to make a statement with regard to the question of allowance.
The message was ordered to be taken into consideration forthwith, and the question was discussed on the following day. The honorable member for Flinders, Mr. W. H. Irvine, asked for an explanation of the attitude of Ministers towards the proposal. That was a pertinent question, because up to that point no Government had fathered the proposition.
– The Government fathered it right enough.
– The honorable member for Hume, who was then Treasurer, said in reply, “ I made a statement on the subject last night.” Honorable members have just heard what that statement was. The honorable member for Flinders proceeded -
I gather that although the Treasurer has brought down the message Ministers will not take any step in connexion with the matter.
– He was really putting words into my mouth.
– At all events, no further explanation of the attitude of the Government was made. Having refreshed my memory by reading what occurred, it seems to me that the Government merely brought down the message so as to enable any private member to move a motion with regard to it, and that this course, as was pointed out during the debate, and, as I hold, was a direct evasion of the constitutional responsibilities of the Government. The defence set up for the action taken at the time was that the same course was pursued in the Parliament of New South Wales when a proposal was first made to adopt the principle of payment of members. As a matter of fact, there was a marked difference between the two cases. In the New South Wales Parliament, an abstract motion providing for the payment of members was carried by 41 votes to 20, and Sir Henry Parkes, who was then Premier of New South Wales, allowed Mr. O’Connor, a member of his Administration, to introduce a Bill to give effect to it. That Bill, I presume, was preceded in the ordinary course by a message from the Governor. In 1907, the honorable member for Hume, who was then Treasurer, claimed that every member of the Government was in favour of the proposed increased allowance, and yet neither he nor any member of the Ministry would admit that the measure to give effect to it was a Government measure. Sir George Reid, who was then Leader of the Opposition, supported the proposal to increase the allowance from ^400 to £600, although in the Federal Convention he had opposed an amendment to increase the allowance from ^400 to £500. He certainly submitted some strong arguments in favour of his change of attitude, declaring that the work of members of this Parliament had proved to be much greater than had been anticipated, and that, whilst he did not sacrifice his time and labour to such an extent as did a number of honorable members, he knew that a great many made considerable personal sacrifices in order to attend to their duties in this Parliament, and that they found it very difficult to make .£400 a year an adequate sum for the services rendered.
– He said also that the Convention always regarded the fixed allowance of ^£400 per annum as an experimental amount.
– No doubt the Convention thought that the Parliament would increase the allowance to ^500, if such an increase were thought desirable. I also believe that Mr. - now Mr. Justice - Higgins was perfectly right in anticipating a time when the normal sessions of the Federal Parliament would be reduced to three or four months’ duration. We have been occupied for months in framing great measures, but it must be recognised that while we shall probably have to amend them from time to time no possible amendment of the Tariff, or of Land Tax, Defence, and like measures can occupy as much time as did the consideration of the original Bills. During the discussion on this question the honorable member for Grey, Mr. Poynton, who is still with us, advocated that the question should be submitted to the electors, and I hope to have his support for this motion. He, like the honorable member for Maranoa and myself, believes that we can trust the people, and would adopt the principle of the referendum as the most perfect machinery for ascertaining the people’s will. The honorable member for Angas also thought that the question should go before the electors at, 1 presume, the next election, and as a sound constitutional lawyer, he held that the proposal ought to be -fathered or adopted by the Ministry of the day.
– I think that the honorable member is wrong in assuming that there was a majority for the principle of an increase in 1901.
– I did not say that there was then a majority either for or against the proposal. Honorable members were very much divided regarding the details. The debate in this House in 1907 was terminated by an amendment moved by the honorable member for Wentworth restricting the payment of the increased allowance until after the next general election. That was a legitimate proposition, but it was negatived by 10 to 38 votes, and the original motion to increase the allowance from ^400 to £600 a year was carried by 31 votes to 15.
– But even the minority at the time said that they would be prepared at the next election to advocate a large increase in the allowance.
– That is so. The honorable member for Wentworth adopted the principle, but affirmed that the increase should not apply until after the next general election. By some form of ingenious analysis we often endeavour to determine the decision of the electors on any question that has been dealt with by pointing out how those who supported or opposed it fared at the succeeding genera’ election. That cannot be done in this case, because I find that five who voted with “ the Noes “ and nine who voted with “ the Ayes “ were beaten at the last general election, the proportion being in analogy with the total numbers voting on the question.
– The honorable membermust not forget that the Labour party were blamed in the press for forcing the increase.
– The Labour party were not blamed, but the honorable member for Hume certainly was blamed more than once. He was wrongly blamed so far as the actual determination arrived at was concerned, but was rightly blamed for failing to take the true constitutional course of fathering the proposal as a Minister. I do not think he was to blame for the actual increase, for the act was that of a majority of the House previously ascertained by “whipping.” It would be preposterous to blame the Labour party, for the proposed increase was supported by many honorable members on both sides of the House. It is said by many that there was no general public outcry against the increase, and that the people, by their silence as it were, gave consent to it. That is not so. Several daily newspapers and large bodies of people here and there thought that the Parliament had no right to advance the emolument of members by such a large amount, and that the electors should first have been asked to decide the question. At the last general election, however, the question was a subsidiary one, and was not included in the platform of either the Labour party or the Fusion. It was notorious that honorable members on both sides had supported the increase, and it was therefore impossible for either party to take action to support or condemn it. All the efforts made by some of the great daily newspapers to force the question into the political arena at the last general election were futile. The blacks might have been a little brown and the whites a little’ brown, but there was not enough interest in the brown question to cause it to be brought into the political arena, and we obtained no decision from the electors with regard to it. But if we believe in Democracy we should take the earliest opportunity of bringing the members of this Parliament into accord with the electors whom they represent. We now have an opportunity of submitting this question for the decision of the electors. I have framed my motion in such a way as to afford them the widest possible choice. Under its terms they would be able to reduce the allowance of their parliamentary representatives to a point below which I am sure nobody would desire to go, whilst, on the other hand, they would be able to increase it to a point beyond which very few would care to go. We thus have an opportunity of placing ourselves in harmony with the electors upon a very delicate and difficult question with a very slight expenditure. We need not fear that they would treat us shabbily. My own opinion is that they would declare themselves in favour of retaining the present allowance. “ Why, then,” it may be asked, “ should a referendum be taken upon the subject?” Simply to ascertain their views upon a question which at present is a ground of friction between the general body of the electors and their representatives in this Parliament. There is a feeling abroad that the last Parliament increased the allowance of members in a way that it should not have done, without first consulting the electors. It is idle for us to lay the flattering unction to our souls that they have approved of our action. They have nol. They may approve of it if they are provided with an opportunity of doing so. If they are afforded that opportunity, I shall advocate the fixing of the parliamentary allowance at £500 per annum. I think that would be a fair amount. Whether it is fixed at £400 or £800, I do not care twopence. But I do desire that the electors should be consulted upon many subjects, and upon this subject more than upon any other. I recognise that I am now appealing to honorable members opposite who at various times have approved the principle of the referendum, and who at all times profess themselves Democrats. Surely, if we are the Democrats that we. avow ourselves, we ought not to object to submitting this question to the people by the way of the democratic device of a referendum.
– It is unfortunate that the honorable member for North Sydney should have brought this question forward. I do not see what good can be accomplished by agreeing to his motion, save that it may result in making an allowance to members of this Parliament of ,£1,000 a year instead of £600. In most other countries the representatives of the people are paid £1,000 a year.
– In South Africa their allowance is fixed at ,£1,000.
– Members of the American Senate receive ,£1,200 a year, and the parliamentary representatives of the people in Switzerland and France get considerably more than we do.
– The honorable member is quite wrong in regard to Switzerland. Parliamentary representatives in that country are poorly paid.
– In France, the allowance to members of the Legislature has recently been increased by £200 a year.
– Yes, and in Canada members of Parliament receive a much larger allowance than do members of this Parliament.
– About the same.
– They receive £1,000 a year, I think. However, honorable members can look up the figures for themselves, as they are all recorded in Hansard. The question of the allowance which should be paid to members of this Parliament was dealt with by the Federal Convention, and, at the instance of Mr., now Sir George, Reid, it was reduced from ,£500 to ,£400 per annum. I supported his proposal, but it was distinctly understood at the time that the Commonwealth Parliament should be empowered to increase the amount if experience showed that £400 a year was not sufficient. With that object in view the Convention deliberately inserted the words, “ Until the Parliament otherwise provides,” in section 48 of the Constitution. That section reads -
Until the Parliament otherwise provides, each senator and each member of the House of Representatives shall receive an allowance of Four hundred pounds per year, to be reckoned from the day on which he takes his seat.
At that time we had little knowledge of what would be the effect of that payment in the case of representatives from distant States, although we knew what its effect would be upon the representatives of New South Wales and Victoria. We did not then- know how the representatives of Queensland, Western Australia, and South Australia would fare, seeing that they would be required to reside in Melbourne during the parliamentary session or travel backward and forward. When they approved of the Constitution, the electors knew perfectly well that it contained the words to which I have directed attention. I do not think that I should be blamed for having increased the parliamentary allowance to honorable mem bers. At the time the question was dealt with I was acting for the Prime Minister, the honorable member for Ballarat being absent through ill-health. I introduced the Parliamentary Allowances Bill, which was carried with only ten dissentients, five of whom were defeated at the recent election. Their defeat in itself supplies a pretty good answer to the proposal of the honorable member for North Sydney, if that was brought into the contest at all. Of course, I was blamed for my action by the press, and especially by the Sydney Daily Telegraph. According to that journal, I can never do anything right. The result is that the Daily Telegraph has very little influence with me. At the last general election, that organ attempted to raise this question in my constituency, for the purpose of discrediting me. The result was that, although I was not well enough to address the electors, I was returned by a much greater majority than on the previous occasion.
– But the honorable member did not fight his election upon the question of payment of members.
– It is equally unfair to blame the Labour party for having increased the parliamentary allowance. No doubt many of its members felt that £400 a year was not a sufficient allowance, and voted accordingly. In the interests of Democracy we ought not to cater merely for the return of wealthy men to this Parliament. It was to prevent Parliament becoming a close corporation of moneyed men that we increased the allowance to its members. This matter has been clearly decided by the electors. The last Parliament increased the allowance to members of the Commonwealth Legislature, and since then the matter has been referred in an indirect way to the electors, who have indorsed its action. Other Federations pay their parliamentary representatives much more than is received by the members of this Parliament. Only in this morning’s cables I read that payment of members is now being advocated by persons who never before advocated the principle in the Old Country.
– About time, too.
– It is about time, because there can never be a proper representation of the democratic people in England until those who have brains, but no money, are enabled to enter Parliament. The absence of adequate payment keeps brainy men out of the British as well as other Parliaments. When looked at properly the sum of £600 is a paltry thing at the mast ; it is simply bread and butter, and nothing more. It would undoubtedly have been better if the payment had been made ^1,000 a year, in order to place every one who comes into this Parliament in a position of independence regarding his living while he is here. The honorable member is unwise in stirring the matter up again, and asking for a referendum to be taken on it, or trying to have it brought in as one of the side issues in future elections. The question is settled now; the people know it, and are satisfied- with the allowance paid, which enables members to come here who otherwise could not come.
– I do not think any one can object to the motion of the honorable member for North Sydney, so long as he is satisfied that the public of Australia desire a referendum to be taken on the question. The honorable member for Hume thinks the people are quite satisfied with the decision of Parliament, that £600 per annum should be the allowance paid to members of the House of Representatives and the Senate, while the honorable member for North Sydney is under the impression that the public are not satisfied. The question of the increase was brought prominently before the electors in the district of Capricornia, mostly ‘by opponents of the Labour party, who desired to keep the Labour party out of Parliament, on the ground that they had increased their own salaries. As a matter of fact, no one is able to judge of the services of members of Parliament and the work they do, so well as the members themselves. The public outside are not in a position to judge. Indeed, they are positively misled by some of the newspapers who, for reasons of their own, it may be merely for something to write about, are continually referring to liquor in Parliament, games of cricket out on the lawn, and billiards, and charging members with wasting their time.
– The increase was brought about in the last Parliament by the combined efforts of all parties.
– That is quite true. The members of all parties recognised that in such an enormous territory as Australia members cannot be expected to travel, as many of them have to do, thousands of miles to Melbourne, and either keep two homes, or at the very least take their families to their electorates during some portion of the year, and live reasonably and decently, on £400 per annum. It is a curious fact that some men who have spent the greater portion of their lives in amassing money, and then give the public the fag-end of their career, think that £400 per annum is enough to pay a member. Indeed, some of them go so far as to say there should be no payment of members at all. A politician to be a success must devote his whole time to politics. In fact, nowadays to be a success in any profession a man must give his whole time to it. Why is it that, as a rule, the business men who come to this House, or to other Parliaments in Australia, and try to carry on their business at the same time, invariably fail in one direction or the other? Either they are inefficient as politicians, or their businesses go to pieces, and they become insolvent.
– As a rule, their businesses go.
– That is true. No man with any sense enters public life in Australia for the purpose of making money. Any one who has been in politics very long knows that, if the majority of members of Parliament had to depend on their savings, after a period of twenty years in public life, they would not get 10s. a week interest on them. The late Sir Henry Parkes, the late Sir George Dibbs, the late Sir Graham Berry, and others who occupied the highest positions to be obtained in parliamentary life in Australia, died poor.
– And Mr. Kingston.
– The late Charles Cameron Kingston and a host of others could be named.
– It was a great credit to them. ‘
– The public give them credit for it now. The misfortune is that the credit often comes to a man only after he has passed away. During life members are only politicians; after death they are statesmen: 1 do not think the public are asking for a referendum on this subject at piesent. While listening to the honorable member for North Sydney, the honorable member for Bourke and myself, on consultation, came to the conclusion that the best way to ascertain whether the honorable member for Hume is right in his opinion that the public are satisfied, or the honorable member for North Sydney is right in saying that they are not satisfied, is to submit an amendment. I therefore beg to move -
That after the word “ referendum,” line 3, the following words be inserted : - “ On all occasions when five per cent. of the electors of the Commonwealth, on petition, express their desire that the people should be consulted on the matter set forth in the petition, and urges the Government to bring forward an Initiative and Referendum Bill at its earliest convenience.”
– I submit that the amendment is not in order. It raises the general subject of the initiative and referendum on a motion which is confined to the question of payment of members.
– I cannot accept the amendment. The motion deals with the specific question of the payment of members of this Parliament, and the honorable member for Capricornia desires, by means of the amendment, to introduce an issue which is not relevant to the motion. If I permitted that to be done on this occasion any motion that was submitted to the House could be converted into one of an entirely different character.
– It might be supposed by the public that, as the honorable member for North Sydney sits on this side of the House, he has the acquiescence of all the members of his party in the motion that he has moved. I wish to say at once that I thoroughly disapprove of the honorable member’s proposal. The matter should be left alone, and it ill becomes members of this Parliament to be constantly, raising the question of how much the public shall pay them for their services. I do not want to take a one-sided view of the issue, because I know there are men in this House to whom the payment is of considerable importance, and I quite recognise the reasonableness of the contention that unless a substantial payment is made, the fair representation of all classes in the community cannot be secured. I do not agree with the honorable member for Hume that payment of members would be the means in England of bringing the brains of the country into the House of Commons. That is an altogether perverted view. The House of Commons in the past has been an arena in which the greatest intellects of England have been found. The only ground upon which I should recognise the right of members to be paid for their services in the Imperial Parliament is, not that it would bring more brains into the House of Commons, but that it would enable classes of society throughout Great Britain to be more evenly and fairly represented than they have been in the past.
With regard to Australia, I think this is. a question that ought to be allowed to rest. We have all gone through a good deal of unpleasantness over it, because the public are too ready to suppose that every man comes into Parliament simply for what he can get out of it. I find it sometimes very difficult to discover people sufficiently public-spirited to believe that a man can enter Parliament with some other desire than to benefit himself. We all know Dr. Johnson’s definition of patriotism as the last refuge of the scoundrel. I think that is a little one-sided, but no doubt a great deal of unpatriotic conduct has often been perpetrated by men under the name of patriotism. At the same time I am happy to think that my view of human nature is still sufficiently healthy to make me believe that there are men in both public and private life who are prepared to make great personal sacrifices in order that, as they advance in years, they may look back and say, “ Thank God I have left a clean track, and not one that has been devoted wholly to myself.” I think most men will find as they get on in life that it is one of a man’s greatest pleasures to be able to look back and feel that after all he has not devoted the whole of his life to his own personal interests. If all men did so it would be a poor world for those who cannot take a direct or indirect part in public life. There seem to be two simple points involved in the motion : one is whether we are going to stir the question up again for the press and the public, and the other whether we shall stir it up, if at all, in this form. The Constitution does not hold out to us any inducement to be constantly meddling with it, or referring to the people to do for us what we are supposed to do for ourselves. The Constitution provided that a certain payment should be made to members until Parliament altered it. The Parliament has altered it. The amount was most carefully discussed, and it was determined that , £600 a year was a proper payment to remunerate members for the sacrifice of their time and their expenses as members of Parliament. The chief feature of that Act to which I objected in connexion with the parliamentary allowances was that the money was voted before consulting the public at a general election. I always said that, provided the proposal was referred to the next Parliament, so that the constituencies would have an oppor- tunity of saying whether or not they considered their candidates proper people to represent them in the whole of the circumstances, and at the salary, I should have had no objection. But I did object, and I object now, and I should object again, if any one said to me, “ While you occupy the position of trustee of the public funds, or are one of a body of trustees, you may take something for yourself out of the public purse before you consult those who are entitled to be consulted.” I always thought that we were wrong in taking that additional payment of money until we had been before the people. But, although I took that objection at the time, I say frankly that, if the additional money had been voted for the Parliament which was to follow the one of which we were then members, I should have heartily supported the proposal. I say the same now, because I recognise that membership of this Parliament involves the sacrifice of almost the whole of one’s private interests in order to do justice to the duties entailed upon us. Of course, the value of the services of a member of Parliament, and the extent of his sacrifices, are not to be determined by the amount paid to him. It depends very largely upon the occupation that ‘ a man has previously followed. If a man comes to Parliament out of a mine, or from following some other occupation as a working man, where he has been receiving perhaps £3 or ,£4 a week, it may seem to some members of the public to be a tremendous lift that he should suddenly be placed in receipt of £12 a week. But it ought to be remembered that when such a member comes into this House, he has to live in a totally different manner from that in which he would have lived if he had continued to pursue his former occupation. His family also have to live in a different manner. He is required to mix with men in a way that necessarily involves an addition to his ordinary expenses. Moreover, he so completely gives up his own business that he must, if he be a provident man, and thinks of the interest of his family, put a little by in order that, when in future he happens to lose his seat, he may not find himself absolutely without means while he is trying to recover his old position as a workman. With regard to a professional man, the acceptance of a seat in Parliament involves very great sacrifices. If a man comes into this Parliament from a profession at which he has been making £3,000 or £4,000 a year, it means, I am bound to tell the House, almost a complete sacrifice of that income. Because, whether a man is a doctor - and we have had some members of that profession in this House - or whether he is a solicitor or a barrister, or has been following any other professional calling, the fact of his coming into this House involves the complete destruction of his power of earning the income that he formerly enjoyed. That is still more so if he comes from another State. I formerly carried on my profession as a member of the Bar in New South Wales, as a State member, without any diminution of professional income, because I was able to appear in the Courts by day, and to spend my evenings attending to the business of the Parliament of the country. But when a professional man comes to this Parliament from a distant State, it means practically the sacrifice of the whole of his income. Membership of Parliament affects a merchant who comes from another State in just the same way.
– It affects every one.
– If I were asked what a member of Parliament was entitled to get, I should say that the- remuneration fixed for members of Congress in the United States of America was not a bit too much. There a representative of the people is paid a round £1,000 a year, with about £350 additional for his secretarial and other expenses. That, I should say, is not a bit too much.
– In addition, a member of Congress is supplied with a secretary.
– Well, they could undertake to do without additional secretarial work.
– A member of Congress also has a typist.
– Some of us might get into bad habits if we had both a typist and a secretary. But we have no right to raise this question now. The public have a right to have our time in Parliament devoted to public matters. The question has been sufficiently discussed in the country and in this House for us to let it rest. And even if we were not going to let it rest, I do not think that the method proposed by the honorable member for North Sydney is a good one. I do not think that the practice - and it is a growing one - of proposing to refer questions to the public on various occasions, is justifiable. We all know the history of Parliament. We know that originally the people met together in a moot to discuss questions affecting their interests. They discussed their affairs directly, instead of through their representatives. But the history of civilization shows that, as population increased, it was found to be more convenient for the people to delegate their thinking and their speaking to legislators - to representative men - who are supposed to have more time, and a better equipment for the consideration of public questions. We, as representative men, are the result of a later civilization. We are representatives of the people. We are sent here to discuss public questions amongst ourselves, and to determine them in the manner that we think best in the interests of the country. For us to be going back, and referring things of this kind to a busy people - to one of the busiest people in the world - and asking them their opinion on questions which they are’ really not qualified to discuss and do justice to, amounts to saying that, in our own opinion, we are not fit to fulfil our functions as representatives of the people.
– It shows a lack of courage.
– I do not want to use hard terms when we are not dealing with a party question. We can reserve our hard terms for party conflicts. I do not think that this question should be raised at all now. Secondly, I think that, if it be raised, we should have the courage to deal with the matter for the next Parliament, leaving the public to say whether we were justified in doing so. Therefore, I disapprove of the motion, and wish to be wholly dissociated from it.
– I listened very carefully to the speech of the honorable member for North Sydney, and cannot help taking up the attitude that has been adopted by most of the subsequent speakers. Speaking on behalf of the Government, I submit the view that the question of the remuneration to be paid to members of the Federal Legislature was deliberately handed over to the Parliament by the people when they accepted the Constitution. After some years of experience, Parliament, in its wisdom, came to the conclusion that the amount which had been fixed by the Federal Convention was insufficient. Parliament increased that amount by an additional £200 a year. I do not think that any one can say that the question of the increase was not very definitely, and in many cases, vigorously, put before the people. A general election has since taken place ; and whilst some honorable members state that there was a good deal of discussion upon the matter in some constituencies, I must say that that was not my own experience. Nor do I think that such was the experience of any other representative of a Western Australian constituency. The people seemed to think that Parliament had acted wisely. Although they had an effective way of expressing an opinion, it must be admitted that there is no considerable number of honorable members at the present time who are pledged to an alteration of the amount fixed by the previous Parliament. At all events, it is certain that the question was not a burning one. The position of the Government in regard to the matter is simply this : We consider that the amount of the remuneration has been fixed ; and whilst on the general principle of the referendum we are not in disagreement, nevertheless we are not in favour of taking a referendum on this matter in the circumstances. .
– I should have been entirely silent on this question were it not that my silence might be misunderstood. When the matter was raised in the last Parliament, I attacked what was done very strongly on various occasions ; but I never for a moment felt that the question as to whether the payment to a member of Parliament should be £400 or £600 a year was arguable. I merely attacked the method adopted. If Parliament had decided to make increased provision for the succeeding Parliament, so that the electors would have had an opportunity of expressing their opinion, I should have had no objection to what was done. So far as I know, the opposition to what was decided by the last Parliament was entirely to the method adopted. The newspaper opposition and the opposition of the electors generally was directed against the method. But we have since had a general election; and whilst in South Australia there were previously execrations all over the State directed against, not only Labour members, but every member of Parliament who voted for the increase, and whilst it was threatened that those members would be politically annihilated - what were the facts? I know of only one instance in which the question was raised at the general election, and that was at the smallest polling placein my own electorate. It may have been raised elsewhere, but I am pretty certain that it was not raised half-a-dozen limes from one end of South Australia to the other. Therefore, it is clear that the objection was to the manner in which the last Parliament increased the remuneration, and not to the fact that the remuneration was increased. The electors of the Commonwealth have since had an opportunity of dealing with the representatives who transgressed. What has been the result? My honorable friend who has submitted this motion says - these are his own words - that efforts to make this a prominent question were entirely futile.
– On account of the party situation.
– As far as I watched the elections throughout the Commonwealth, there was no real effort to make it a live question. The electors having. had an opportunity to deal with the matter, they - as one honorable member has said - forgot all about it. At all events, they evidently did not think that it was of sufficient importance even to mention it at public meetings when the candidates were before them. We may, therefore, take it for granted that the electors do not desire to be troubled, either twelve months hence, or at the next general election, with a referendum on this question.
– I was only asked a question on the matter once, and that was by a South Australian.
– We in South Australia are generally recognised as being, in financial matters, the Scotsmen of Australia; and, if the Scotsmen of Australia only asked a question on this subject once or twice, they evidently were not very much troubled about it. There is another point with which I wish to deal. My honorable friend, who has submitted the motion, wishes, in a cheap-jack manner, to ask the electors whether they desire to pay to their representatives£400, £500, £600, £700, or £800 per annum. That proposal does not commend itself to me. If anybody ought to know the value of the services rendered in the Federal Parliament it is the Federal Parliament itself. If I thought that this was really a live question, or had the semblance of being a live question with the electors; if I thought that the electors themselves had given us any real evidence that they were dissatisfied, and if the honorable member would come forward in a proper way, and suggest a referendum us to the repeal of the Act under which an allowance of , £600 is paid, and a reversion to the amount of£400, I might be prepared to support him. When the last referendum was taken on what was, perhaps, the biggest question that could be placed before the country, what percentage of the electors voted?
– Only one-third.
– What percentage can we expect to vote when the people are asked to express an opinion as to what should be the allowance paid to members of Parliament? In my opinion it is simply a waste of time to discuss the motion.
.- I have no hesitation in opposing this motion. This question was never raised by my supporters or myself at the last election, although my opponent tried to make as much capital out of the increase of salaries as he possibly could, with the result that he did not “ take on “ at all. We pay very high salaries to the Judges and others who interpret the laws we make. In the Supreme Court the sittings are from 10 o’clock until 4 o’clock, with an hour for lunch, and the Judges are paid£2,000 or £2, 000 a year.
– Of course, the Judges do work at other times.
– That may be, but they do not work any harder than do members of Parliament.
– They possess different qualifications, perhaps !
– Perhaps so; but if it is essential to pay high salaries to those who administer our laws, it is equally essential that the men who make the laws should be paid fair salaries. As a matter of fact, I am now receiving£150 a year less than I was paid as a member of the Conciliation and Arbitration Court, when we rose at 4 o’clock in the afternoon, did no work on Saturdays, and had long vacations.
– The honorable member had a “ good thing “ on !
– Still, I think the members of the Court earn their money. A New South Wales member of Parliament leaves Sydney on the Monday, travels all night, comes straight into the House after lunch on the Tuesday, and sits until n o’clock at night. That continues the whole week through until, perhaps, half-past 4 o’clock on Friday, and then the travelling recommences. In addition, members have large correspondence to attend to, and altogether, I contend that we are overworked. We cannot give that attention we would like to give to the Bills and other business placed before the House, owing to the long hours we sit; and if the honorable member for North Sydney had moved to reduce those hours, he should have had my support. There is no real reform in the motion, and it’ is idle to talk about a referendum on such a question.
– Would the honorable member have a referendum on any question ?
– Yes; for instance, I should not object to a referendum on the question of abolishing the Senate, for that would represent a substantial saving. We should be occupying our time better by discussing other and more important questions.
.- During the elections I was impressed at the meetings I held with the idea that the people generally were not adverse to the increase which had been made in members’ salaries, but a very decided objection was expressed to an existing Parliament voting the increases in its own case. The public mind seemed to be occupied with the question as to our powers to still further increase our salaries without any reference to the people; and I would gladly support the motion if it were for a referendum on the question of amending the Constitution to prevent our salaries being increased above a certain sum.
– What sum would the honorable member make the maximum?
– I am not prepared to name any particular sum, but I think there should be a maximum. The public imagination is somewhat staggered at the fact that Parliament has the power, without any reference to any superior body, to increase the salaries.
– The public gave Parliament that power.
– If the honorable member for North Sydney could see his way to amend the motion in the way I have suggested, I should be prepared to support him. The whole question is difficult. As a resident in Victoria, I feel that £400 was ample; at the same time, I am prepared to admit that honorable members from distant States, who are practically forced to maintain two homes, are in an entirely different position. If we could so legislate as to equalize matters, well and good, but, unfortunately, that is beyond our power, and, therefore, I suggest that a maximum sum should be fixed.
– It is generally admitted that the members of the Federal Convention were men of standing and character, who had served the public in the various States with conspicuous ability, and the fact that the. power to fix the salaries was left with the Parliament, shows that they were of opinion that it would be unwise to draw a hardandfast line. If any honorable member feels that he is aggrieved or overpaid, it is a simple matter for him to leave the money in the Treasury, and to obtain an extra advertisement by announcing it as “ conscience money.”
– I can assure the honorable member that I have no personal feeling or grievance in the matter.
– The honorable member was not in my mind ; I was speaking in a general way. As an outsider, it has always struck me as remarkable that the salaries were not increased earlier, Decause, if any honorable members were entitled to consideration of the kind, they were those who, in a heavy session of unparalleled length, framed the Tariff. For some reason best known to themselves, the members of that Parliament made no move in the matter, much to my surprise. I take it that whatever objection there may have been to the increase which was made in the salaries, the general election that has intervened shows a general approval at the present time. At any rate, the electors in my district did not trouble themselves about the matter, any feeling there may have been, having, apparently, died down. My own belief is that the opposition to the increase of the salaries was worked up considerably by the press. It is possible, and likely, that some honorable members are well satisfied with the existing arrangement, while others may have been quite content with £400 a year. I can understand £400 a year being regarded as ample in the case of a representative of a district practically adjoining Melbourne, but we have to take into account honorable members from Western Australia and Queensland, who have practically to remain at the Seat of Government during the whole of the session.
– The same with Tasmanian representatives.
– Not altogether, because it is possible for Tasmanian representatives to take frequent trips home, and, at any rate, there is not the same inconvenience as attaches to the position of those from the more distant States. However, if we regard the question from that point of view, we must admit that representatives from Western Australia and Queensland should be paid more than representatives of metropolitan constituencies in Victoria, but any differentiation in that respect is unthinkable. One reason I was anxious to speak this morning was not so much my anxiety to defend the existing arrangement as to enter a strong protest against this referendum mania. I regard the referendum as a .”coward’s castle.” The only referendum I approve is the only one we have a right to take, namely, that on the question of enlarging the powers of this Parliament. We have been sent to legislate, to the best of our ability, in the interests of the people, and if we find that we are unable to do justice to the manhood and womanhood of Australia without enlarged powers, then is the time for a referendum. Could anything be more ridiculous than an appeal to tHe people on a question of this character? What do they know about it? In what position are any of the electors to judge the extent and character of the work of a public man in this Parliament from day to day? I venture to say that even members of the State Parliaments are not in a position to gauge accurately the work that devolves upon a member of this Legislature. Our responsibilities are greater than are those of members of State Parliaments. The necessity of paying very close attention to our duties, which, I am sure, is recognised by honorable members generally, is very great in view of the fact that we are legislating here in the interests of not a particular State, but the whole of the Australian people in their National Parliament. I regard a proposal for a referendum on this matter as on a par with the proposal that the selection of the Federal Capital should be submitted to the people in the same way. What would they know or care about it? What, after all, does such a proposal mean? It can only mean that the members of this House have not pluck enough to take on their own shoulders the responsibility of settling the question. They should, as strong men, accept the responsibility, and stand or fall by the judgment they pronounce. If honorable members act on those lines the people will respect them all the more. One thing that has struck me in my experience of my countrymen in Australia, and in Great Britain, is that they do not expect that those who are elected to represent them will never make mistakes. They understand that all men are liable to make mistakes, but what they do strongly object to is that they should be represented by weak men who, having considered questions, are unwilling to adopt a strong course, and stand or fall by their action. In the history of Australia, as well as of the Mother Country, the admiration of the people for the men who, having matured their judgment,, have been prepared to stand or fall by it, is writ large. Our countrymen have always been willing to support such men, though they may not have agreed with every one of their views. I hope that the motion will be rejected, and that it will be the last of such proposals. It will be a sorry day for this House when it carries a motion for a referendum of this character, because it will stamp the members of it as being too feeble to represent the people.
– I can scarcely follow the honorable member for Hindmarsh in his violent denunciation of the referendum excepting as applied to purposes in which he is intimately and directly concerned. He evidently does not believe in the same physic for other people that he takes for himself. I am one of those who voted for the increase in the salary of members of this House. I accepted full responsibility for it. and, with others, submitted to some dissent from my action on the part of a number of my constituents. It was expressed in one or two places in communications which reached me, and which, of course, caused me very keen regret. I was rather surprised to find the honorable member for North Sydney taking up this matter as one of his first actions on re-entering this Parliament. He used to be one of my illustrations of the necessity for an increase in the salary previously paid to members of this House. I referred to the fact that the honorable member and others had left this Parliament because they had large private interests which could not be neglected.
– No payment would have altered that.
– It might not in the honorable member’s case, but in some cases it is possible that it would. At any rate, that is the consideration which induced me ultimately to support a proposal for an increase in the salary of members of this Parliament. Honorable members are well aware that in two Parliaments I stoutly opposed the proposal, even though a majority of my own party were in favour of it. But when, at election after election; I found that men who had business interests to look after dropped out of this Parliament one by one, I came to the conclusion that the most valuable members we could have - men trained to business, accustomed to organization, with a large outlook upon life, and thoroughly acquainted with human nature - were being lost to the service of the country. The absence of such men from any Parliament can only be regarded as a misfortune and a calamity to the nation.
– Some business men have a very narrow outlook upon life.
– That is true of some men in all ranks of life, but I am speaking of the generality of men. The honorable member will admit that, as a rule, the man of business has motives and opportunities which tend to widen his outlook upon life, and he has larger opportunities than most other men for the study of human nature, which is very necessary for every legislator, and distinguishes the business man from the mere theorist and propagandist. The advice and counsel of such men are valuable acquisitions to any Parliament, and when I found that election after election such men disappeared from this Parliament, I came to the conclusion that the salary paid to members ought to be such as would enable a man to take some little risks in connexion with his business activities. I am not quite sure that the amount which has been fixed upon is sufficient in all cases to attract good men who are actively interested in business and have family cares to look after. I know that I attended two Parliaments at very great inconvenience, and suffered severely, from a monetary point of view, from being here. I came to the conclusion that it would be a fair thing to increase the emoluments previously paid to members of this Parliament, and, having arrived at that decision, I felt that I ought to take upon myself the responsibility for my vote in giving effect to it. I do not at all agree with the suggestion that we should regard ourselves in this matter as trustees of the moneys of the people, and should not increase our emoluments except upon a direct reference to them. I say that if the people trust us to spend £17,000,000 per annum, they may well be thought to trust us to arrange a little matter of this sort. I felt that we had an obligation to settle the matter ourselves, because of the plain direction of the Constitution, which does not provide that we should regard ourselves as public trustees in that or any other matter. It states that until Parliament otherwise provides, we are to get a certain amount. It made no reference to a referendum on the question. Parliament was left free to determine the matter in any way that seemed to it best. In the circumstances it seemed to me that we should take the responsibility of settling the question. Just why we should open up the matter again now, I am at a loss to understand.
– Does the honorable member not think that we should be given pensions when we are defeated?
– Tempting as is the field opened up by the honorable member’s interjection, the time still available for the discussion of this motion does not permit proper consideration of the question he has raised. If the honorable member for South Sydney, and a few more I could mention, would undertake speedily to retire upon a pension, I am not sure that his suggestion would not be worth while considering. .1 think the House should be prepared to give a decision upon the motion.
.- It is very disappointing that when honorable members seek to put forward a principle they should be thwarted by a ruling of the Chair. I do not support this motion, which proposes to fix the amount of our allowance by submitting the matter to the people. I object to any proposal to reduce our remuneration. I cannot understand any body of men rushing round to the boss and taking the risk of his refusing to reduce the remuneration. The motion proposes a referendum to fix the allowance, but it should say that the allowance should be fixed at anything or nothing. It proposes to fix a maximum and a minimum. I object to the minimum. I have no objection to the maximum being increased. It might bc fixed at £400, but I do not intend to take the risk of a reduction. I am satisfied with a minimum of £600, and anything upwards. That is my attitude. I am in this position : I offer my services at a. salary, and if I can get an increase I am going for it. I cannot understand any one asking a private individual or corporation such a question, and running the risk of a reduction in his remuneration. For my part, I am not taking any risks.
Debate (on motion by Mr. Bamford) adjourned.
.- I have heard what the Minister has had to say on this matter on more than one occasion, and being satisfied with the assurances he has given the House, I ask that ihe motion be discharged from the paper.
– As amendments have been moved upon the motion it is necessary that the consent of the House should be unanimous. Is it the pleasure of the House that the motion be discharged from the paper ?
Honorable Members. - Hear, hear !
Order of the Day read and discharged.
Resumed debate (vide page 3257), on motion by Mr. Riley, adjourned.
Resumed debate (vide page 3257), on motion by Mr. Sinclair, adjourned.
Resumed debate (vide page 3597), on motion by Mr. King 0; Malley, adjourned.
– I move -
That this House, following the practice of the House of Commons, is of opinion, in view of ;the unequal distribution of Federal properties in the various municipalities of Australia, that the Commonwealth should grant yearly to each municipality as an act of grace, an amount equal to the municipal rates and taxes which it would have to pay were it not exempt from taxation under the Constitution.
Section 114 - leaving out immaterial words - reads -
A State shall not, without the consent of the Parliament of the Commonwealth, impose any tax on property of any kind belonging to the Commonwealth.
That provision was framed to prevent any State, or State agency, from so abusing its powers of taxation as to impede Commonwealth agencies, and to obstruct the operation of Commonwealth powers, but it was not intended to afford the Commonwealth an opportunity to evade moral or equitable obligations. The framers of the Constitution did not dream that the Commonwealth would use the provision to escape paying for services rendered.
When an individual performs services for the Commonwealth, either as a public servant or as a contractor, he is paid in the coin of the realm, and it is only right that the Commonwealth should in the same way meet its obligations to municipalities for providing access to its buildings, the making, paving, and lighting of streets, and other municipal undertakings, the benefits from which are enjoyed by its agencies.
– Do the State Governments pay for such services?
– The New South Wales Government has made its properties subject to municipal taxation.
– Railway properties are exempt.
– There are exemptions ; but in New South Wales the public buildings generally are rated by the municipalities. In Great Britain, Parliament, as an act of grace, votes a sum annually in lieu of rates, the amount so voted on the Estimates for 1 9 10 for England alone amounting to £563,000. The Mother of Parliaments also provides an equivalent for the rates and ‘ taxes on ambassadorial dwellings, thus honoring the moral obligations which would have to be legally met were it not a principle of law that the property of the Crown may not be taxed.
The Commonwealth should follow that example. It may be urged that it now pays for water supply and sanitation; but it cannot take credit for that, because, if it did not pay, the services would be discontinued.
There can be no danger of the Commonwealth being blackmailed should my proposal be adopted, because if any municipality rated Commonwealth property more highly than other property the allowance to it could be withheld, the payments being merely an act of grace.
The value of the Commonwealth properties on the 28th July of last year is shown by the Statistician in the following table : -
Some of these properties would not in any case be rateable. According to the Statistician, the equivalent of the municipal taxation of the properties of the Commonwealth would have been last year£51,542, from which has to be deducted the amount paid for sanitation and water, namely, £14,139 16s. 7d., leaving a balance of £37,402 3s.5d.
It may be asked, Why should we take money out of one public pocket and put it into another? Why should the people pay the people? My reply is that the municipalities are burdened unequally. For instance, in Sydney, the Victoria barracks occupy many acres of very valuable land in the heart of one of the most closely populated municipalities in the metropolitan area. The people of Paddington are taxed to the utmost to provide for the maintenance and lighting of its streets, and get no assistance from the Commonwealth, notwithstanding the services given in providing access to the barrack grounds for the large number of Commonwealth servants who go there for military instructional purposes. Then there are other municipalities in which there is no Commonwealth building.
– Commonwealth money is not being expended in them.
– Does the honorable member think that any but an infinitesimal part of the Commonwealth expenditure in connexion with the Victoria Barracks finds its way into the pockets of the people of Paddington, who are nearly all clerks and employes engaged in Sydney business houses?
– The honorable member is citing probably the worst case in Australia ; one that is almost unique.
– I think that governing bodies should pay for all services rendered by municipalities. New South Wales is better than the other States in that regard, because it is the only one which does anything. The Home authorities cover every sendee which is rendered. But the municipality of Paddington has to bear the whole cost of the municipal services which are rendered to the Victoria Barracks - a vast area which, if subdivided, could be sold next week and settled on, and would return many thousand pounds a year in rates. At present the council does not make a penny piece, because a power which was inserted in the Constitution, in order to protect the Commonwealth frorm blackmail, is being made an engine to save it from meeting its honest obligations for services rendered by municipal bodies. I think I have shown clearly in this single instance that all municipalities are not on the same basis as the Paddington municipality, and that consequently as a matter of simple equity it is necessary that the Commonwealth should meet its obligations.
– Will the honorable member give us another illustration?
– I think that I could give many illustrations. Take, for instance, Melbourne. How many offices has the Commonwealth here which no other capital in Australia has?
– And barracks, too.
– And barracks, too, although, owing to their situation here, they are not a matter of so much importance.
– Surely rented buildings are not exempt.
– I do not think so, but public buildings are exempt. That shows the farce of the whole thing. If the Commonwealth rents a building for public purposes it has indirectly to pay municipal rates, but if it erects a building it refuses point blank to pay such charges, because it is exempted by the Constitution.
– Does the honorable member, think that, because the Government erected a post-office in Melbourne, at a cost of, say,£100,000, it ought to be penalized for having expended that sum in this locality for the public convenience?
– Does my honorable friend think that any person is penalized if he pays for services rendered to himself? That is all I ask in this proposal.
– What services does the municipality render to the Post Office in Melbourne ?
– The City Council paved and light the streets which public servants use. Without these conveniences, could public servants get to their offices at all? Does the honorable member think that persons create a municipality merely to provide themselves with valueless streets and useless lights? Does he think that they do it believing that those services are of no value to them?
– If they are of value to the residents, they are also valuable to those who use the Government’s agencies there.
– No. The honorable member knows that the public of Australia had to contribute in order to provide an immense public building where it was necessary. People in all portions of the Commonwealth will never see the building, and because this expenditure was incurred in a certain municipality, they are to be further penalized.
– No. The Post Office in Melbourne was not erected merely for the people who live here, but as a central headquarters for the administration of the State’s postal matters. The honorable member ought to know that the service which the building renders is not only to the people in Melbourne, but to every agency which it operates throughout the State. It is the same with the municipality of Paddington. The Honorary Minister has admitted that in its case a grave injustice is done.
– I did not say that. I said that it is an isolated case.
– Will the Government meet that case? Will it make an act of grace to Paddington equivalent to the rates and taxes which should be collected?
– Does it make a request that it should get compensation from the Commonwealth ?
– I dare say that the municipality will speak through its own representative in this matter, but I personally should be delighted if the Government would make even this step onwards, because it would show conclusively that the Commonwealth is prepared to pay its way in matters of this kind.
– Does the honorable member make a request on its behalf for special consideration to Paddington?
– I do make an appeal, not purely for special consideration to Paddington, but on the ground of public equity and justice to all municipalities. But if the honorable gentleman wishes to deal with Paddington separately from other municipalities, I ask him to consider the injustice under which it suffers.
– Does the Minister suggest that the Government should give the money to the honorable member for his personal benefit?
– The Minister tried to make it appear that I am asking for special consideration for Paddington. I am almost as young as he is, and I do not usually fall into these traps. If, however, he is prepared to give special consideration to Paddington, I, as a man who recognises the difficulties of the municipality, will offer no opposition. But I make the request on much higher ground. I claim this consideration for every municipality in Australia.
Every governing body should rest upon its own financial bottom. Every municipality should pay what it is entitled to pay, and receive for its operations what it is entitled to receive. Until the House remedies the present grievance, the balancesheets of the Commonwealth, and of the municipalities of Australia, will be entirely misleading.
The previous Government regarded this claim in a far more friendly light than the interjections of the Honorary Minister seem to suggest that he, if not his Government, regards it. In his opening speech on the subject, made at the end of July, 1909, the honorable member for Il- lawarra, who was then Minister of Home Affairs, said -
I suggest that an opportunity be given for a thorough investigation of all the circumstances so that the result may be laid before the Cabinet for its consideration.
The attitude whichmy honorable friend adopted was a perfectly proper one. I was not then in a position to give the figures with the same certainty as I can do now.
– The State Government gave a similar reply twenty-five years ago when I was on a deputation.
– I propose to show exactly the attitude of the late Government on this matter. In reply to a question from me, the Minister showed a friendly attitude towards the proposal ; he wanted merely an estimate of the cost.
– He did not rush the thing, he took time to consider.
– It is very difficult for the Government to get at the figures, and a large amount of correspondence had ti take place, but they were obtained for me more quickly than I have been able to obtain figures on simpler questions from other Governments. By the courtesy of the present Minister of Home Affairs, I have been permitted to see the figures which show that the matter has now reached a stage approaching a definite conclusion. Only a Ministerial indorsement is needed.
– Is the Minister favorable?
– I have not seen the present Minister in the chamber throughout this discussion, so I must suppose that he is favorable ! In reply to a question asked by me on the 16th September, 1909, the late Minister said -
The Government consider it a serious question, and I know they will give it their earnest attention.
Again, on the 7th December, that is just before the close of the session, the Minister said -
I have obtained some of the figures, but the returns are as yet in a very rough form. As soon as they have been completed I shall bring the matter under the consideration of the Cabinet.
Since then the honorable member for Illawarra .has not had an opportunity of pressing the matter, but I think that the House will gladly welcome an expression of his opinion.
– Would the honorable member, in keeping with this proposal, suggest a tax or the inclusion of municipalities in the Land Tax Assessment Bill in order to get the money to pay for municipal services ?
– My honorable friend shows an entire want of appreciation of what a municipality does. As a- selfgoverning body, it represents the people within its area just as much as does this House. If he has studied the question of housing the poor and ameliorating their conditions, he has realized the immense possibilities which municipalities offer for improving the conditions of mankind.
– The answer is that you should apply the tax to all lands, with certain exceptions.
– The answer is that municipalities are exempt.”
– And the exemption is to be on one side.
– Not at all.
– The Honorary Minister suggests that we should tax municipal lands.
– My honorable friend must realize that in levying a tax at all the Government decrease the taxable value of municipal areas, and decrease their revenues from rates.
– Order ! I ask the honorable member not to discuss that question.
– I admit that I must not discuss the land tax, but the Minister’s interjection shows conclusively that there is an additional reason why the Commonwealth should pay municipalities for services rendered.
Surely he does not think that a municipality is a sort of enemy? All these small agencies are absolutely necessary for the well being, the good health, and the advancement of the people whom we represent. Municipal bodies reach as closely to the hearts of the people of Australia as can this great assembly. This House deals with the broader affairs of the people, but the municipalities deal with their every-day lives and necessities. We ought not to look at these things in the jealous spirit which the Honorary Minister has evinced. We ought to deal with them broadly, intending to pay our way as we go, and to see that justice is done to every self-governing body. I shall not detain the House any longer. The figures are now complete, and I strongly urge that the House should take immediate action to remedy this wrong, and show that the Commonwealth is unwilling to shelter itself behind a constitutional immunity which was never intended to enable it to evade its honest obligations towards selfgoverning bodies.
Sitting suspended from 1 to 2.30 ~f~.m
.- -The honorable member for Wentworth has performed an important public duty in submitting this motion to the House. It is true that, as he has stated, the Commonwealth Government are exempt from municipal taxation, but I do not think that the framers of the Constitution intended that municipal and other local bodies should render services to it without some recompense. I desire to discuss this question from a national rather than a parochial stand-point, and, although I shall have to refer to one or two municipalities, it will be because they are peculiarly affected. The municipality of Paddington affords a splendid illustration of the services that local governing bodies render to the Commonwealth without reward. Paddington comprises an area of about 400 acres, of which no less than 40 acres are occupied by the military barracks. The block is a very valuable one, and in connexion with it Paddington renders more services to the Commonwealth than are performed by most municipal councils. The site of the barracks is estimated tobe worth £250,000,- and if municipal taxation were paid upon it at the ordinary rate, it would yield to the local council a revenue of about £3,000 per annum. There is over a mile of kerbing, channelling, and pathways surrounding the barracks, and it cost the municipality between £7,000 and £8,000 to pave with wooden blocks about a quarter of a mile of the roadway on which the barracks abut. The council also renders services in the shape of lighting the roads, removing garbage, and draining the area. The draining of the barracks was a difficult matter, because the fall of the ground is towards a portion of the town from which the water can be removed only by means of a storm water channel. The cost of these services is very considerable. I would remind the House that this proposition is by no means new, and that services rendered by the municipal authorities are essential to the welfare of the people. The local governing bodies are charged with many duties relating to the housing and food supply of the people, to drainage and to sanitation, and it is not right that they should be expected to attend to such matters on behalf of the Commonwealth without reward. Lithgow affords another illustration of the way in which small property-owners are taxed by the municipalities to pay for services rendered to the Federation. The honorable member for Wentworth has referred to the attitude taken up by the State Government in regard to this question. Under the Local Government Act of 1906, the municipalities were empowered to tax State buildings, although railways were exempted. The State Government recognised that the municipalities were e’ntitled to be recompensed for services rendered to it. and that the ratepayers should not be called upon to defray the whole cost. Commonwealth buildings are not to be found in every municipality. They exist in comparatively few, but in some cases large areas are occupied by them. In Melbourne, for instance, we have large Commonwealth buildings, and it is not fair that the citizens should be called upon to bear the cost of the works done by the City Council in connexion with them. The Town Clerk of Paddington, who takes a deep interest in local government, and has done a great deal to advance the system in New South Wales, dealt with this question, in his report for the year ended 30th September, 1908, in the following paragraphs : -
The matter is of vital importance to this municipality, however, and should not be allowed to drop. It is an accepted principle that municipal services should be paid for, and although the law exempts Commonwealth property from taxation, that is clearly a defect in the Commonwealth law, because it is manifestly unjust and subverse of that principle. These remarks, of course, apply to all Federal property in land.
As regards the barracks, considered from the stand-point of “ military privilege,” if such properties may not be taxed, that does not relieve the Defence Department from the moral responsibility of paying something for special benefits enjoyed by them in common with all dwellers in well-governed towns. This responsibility is, I believe, accepted in England, and the Council may be pardoned for contending that it should be equally recognised in Australia.
There we have the position put in a nutshell, and I’ feel confident that the Government, recognising that municipalities have incurred a large expenditure in rendering services to the Commonwealth, will view this motion favorably. Local government is an important factor in civilization, and, no doubt, in its own sphere, is as essential to the well-being of the community as is the Government of the Commonwealth. Some of its undertakings are more important to the people than are those of the Federation, and although the present may be considered an inopportune time to recognise this claim. I am confident that the Ministry will decide before long to do so. I fail to see how it can be justly ignored. If the site of the barracks in Paddington were submitted to public auction to-morrow, a very large sum would be obtained for it.
– If we tried to sell it tomorrow, how would the people of Paddington view our action?
– I think that they would consider that we were doing- the municipality a good service, but it would not be a good thing for the Commonwealth. The site is a valuable one for defence purposes, and, while the municipality of Paddington would not expect the Government at the present time to remove the barracks, it is quite within its rights in asking that this proposition shall be favorably considered.
I do not wish to labour the question. It was discussed on a previous occasion, and was shelved by a former Administration. I do not suggest that that course was adopted because of a desire to ignore the claim; it was probably thought that the time was inopportune to deal with it. We have now reached -a stage in our history when the Commonwealth should take some step to recompense municipalities having within their boundaries large areas used for Commonwealth . purposes, and upon which no municipal taxation can be levied. Paddington has a population of about 26,000, and the municipal rate at the present time is about 4jd. in the £1. If the Government cannot see their way to pay the ordinary municipal taxation upon these buildings, I trust that they will at least place on the Estimates a sum sufficient to enable the municipal councils to receive some reasonable recompense for services rendered by them to the Federation. Without those services, our officers in these public buildings could not well exist. Drainage and lighting, for instance, must be supplied.
– Do not the Government pay for the cost of sewerage connexions, and also pay the sewerage rates ?
– They pay for sewerage, but not for the removal of storm water. I leave the matter in the hands of the Government, feeling sure that they will acknowledge that the services rendered in this way to the Commonwealth should be rewarded. The New South Wales Government have made the payments, and it is also acknowledged by the authorities in England that the municipalities are entitled to compensation, or reasonable recompense, for the services they render. I am sure, therefore, that the matter will be given consideration. I am putting it forward only as a just claim for services rendered, and am asking for no charity or special privilege.
– I am sorry the Minister of Home Affairs, in whose Department this matter lies, has not been present during the discussion, for it is very desirable that the House should have some direct expression of opinion from the Minister upon a proposal which cannot be regarded as unimportant.
– As soon as one speaker sits down the honorable member jumps up.
– I shall be very glad to sit down if the Honorary
Minister desires to speak. I merely wish to say that the proposal seems to be a very fair one indeed. We have to remember that the municipalities require all the revenue they can get to carry out the various works over which they have control. We should recognise that Commonwealth .buildings - and I suppose there are very few municipalities in which there are no Commonwealth buildings, such as post-offices, &c, to be found - enjoy all the benefits of municipal government just the same as do private dwellings. They have the advantage of the making and maintenance of roads, lighting, and all the other functions carried out by the municipal governments. Under present conditions they are exempt from the ordinary obligations which attach to the owners of other properties in respect of the paying of rates to the municipal councils for the maintenance of those services. Under the Constitution there is no power to rate the Commonwealth for them, but the motion simply proposes that the Government should waive its constitutional rights in that regard, and as an act of grace give to the municipalities an equivalent for the sum which, under other conditions, the Commonwealth would be called upon to pay in rates in respect of its premises. I am sorry that so much discussion has centred round the Paddington barracks. Of course, there are not barracks in every municipality, and perhaps the very worst example has been chosen. It is an example which, on account of its very magnitude, might perhaps militate against the granting of the concession. The Minister must not suppose that, because the barracks are situated in Paddington, and the motion would involve a large outlay in municipal rates in that particular instance, an equally large or anything approaching so large an outlay would be required in other municipalities. In some the amount required would be very small indeed. At the same time, it would be an act of grace, and would not be in any way a surrender of the rights of .the Commonwealth under the Constitution, if effect were given to the motion. I do not know whether anything is paid now in respect of rates. When the last Government were in office the question was brought up, and I believe, speaking from memory, that the proposal was favorably regarded by them. Irrespective, however, of what Ministry are in office, the proposal, on its merits, should commend itself to the very serious consideration of the Minister, and I hope it will receive it.
– Those who are in favour of the motion must admit that, in view of what is likely to take place, municipalities might claim chat certain Government works should be within their boundaries in all cases where material benefits might accrue. One can understand how certain works might bring business to a particular locality, and cause the erection of houses for people who are working there. In that way the municipality would receive a material benefit from the establishment of Commonwealth buildings within its area. There are, however, many Commonwealth functions which require the occupation of large areas of land, but which, so far from conferring any material benefit on a municipality, considerably reduce its revenue. In approaching the question, therefore, one has to consider it from both aspects. I am not asking that in every case where a Government building or Government land is in a municipality the ordinary rates should be paid, because I do not think it would be just. But the Commonwealth Government, taking into consideration the principle that one section of the community have no right to be overcharged for any national benefit, should certainly take into account the many and varied aspects of certain Government properties in different municipalities. Let me quote a case in my own constituency. The premier rifle range in Victoria, or, as we think, in Australia, happens to be situated at Williamstown, and covers many hundreds of acres. The Williamstown Municipal Council find themselves considerably restricted in their operations by the existence of the range at that spot. Let me point out some of the disadvantages to show that in seeking some recompense they are not asking for too much. For instance, they say that the houses abutting on the range are reduced in value, and therefore return less rates, because of the danger of stray bullets. Williamstown, again, is a seaside resort, and the council are endeavouring to make the foreshore an attraction to the people of Melbourne. They have made the beach rather a fine one, but the range stops the continuance of the drive or walk along the foreshore. The council maintain that the position of the range is a detriment to the locality, and that some consideration should be given them by the Commonwealth. I do not say that they should be paid the exact rates that might be drawn from the site if it were a residential area, but, at any rate, as other speakers have said, some concession should be made to them for the losses they sustain. While giving that instance, 1 do not deny that the Commonwealth might undertake many works that would be beneficial to any municipality. I simply pick out that one municipality, which has been unfortunate enough to have within its boundaries a Commonwealth undertaking which is a disadvantge to it. Another municipality might obtain some Government utility that would be of great advantage, and it is not fair that one should benefit at the cost of another. Many of these cases have been brought before the Minister of Defence, and considered by the Government. The Department have been asked to remove the rifle range elsewhere, but the answer given is that it is the most suitable site obtainable, and that they could not acquire another so suitable, either in area or position, except at too great a cost. Seeing, therefore, that the range in its present position is a benefit to the Commonwealth, we are surely not asking too much in expecting some consideration for the loss of rates to the Williamstown Council. Close alongside the rifle range are the Newport work-shops, a State undertaking which is a material benefit to Williamstown, because hundreds of workmen employed there reside in the municipality, and therefore the Council receive, I suppose, hundreds of pounds in ‘rates that they would not get if the work-shops were elsewhere. The two instances make an effective contrast in illustration of my meaning. Almost every municipality in my electorate contains some rather large area taken up by the Defence Department. In the municipality of South Melbourne, a large area, not quite so large as at Paddington, is occupied by the barracks. There are four streets surrounding it, and the whole area has to be kept well up to the standard, but the municipality receives no recompense from the Commonwealth for the money it spends in that direction. I suppose the Minister representing the Minister of Defence in this Chamber has learned that objections have been taken to many of these matters before, and that claims have been made on the Defence Department. I daresay that, even if this motion goes no further, it will at any rate cause the Government to look seriously into the question of whether a municipality which is suffering under disadvantages should not be recompensed in some way. It is only fair that the whole Commonwealth should make good to any particular municipality the loss sustained through national works being within its boundaries. Certain States make claims on the Commonwealth for disabilities under which they labour, and it has been thought fit that the other States should pay their share to recompense them. The municipalities should be treated in the same way. In common with others, I have to thank the honorable member for bringing this motion forward with a view to the ventilation of the question ; and I hope the Government will consider it seriously.
.- The principle advocated by the honorable member for Wentworth is adopted in England ; and in the recent work on rating, to which T have referred in the discussion of another question, it is stated that the Government there subsidize the local body to the extent of the relief from the rates. In the case of the Municipal Council of Sydney v. the Commonwealth, reported in the Commonwealth Law Re-ports, Vol. 1, it was mentioned that the municipality is an instrumentality of the State, and is relieved from taxation, but that it was possible in the case of the Commonwealth for the Parliament to permit the States to tax Commonwealth property. Mr. Justice Barton, referring to section 114 of the Constitution, pointed out that it is therein provided that the State shall not, without the consent of Parliament, impose any tax of any kind on property belonging to the Commonwealth. That would imply that we can permit the States to tax us in common with ordinary owners of taxable property. Section 114 is as follows : -
A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain any naval or military force, or impose any lax on property of any kind belonging to the Commonwealth -
Then comes the word “nor” not “or” - nor shall the Commonwealth impose any tax on property of any kind belonging to a State.
I think the grammatical reading of that is that the Commonwealth shall not impose a tax of any kind on the property of the State, even with the consent, possibly, of the State Parliament. That may or may not be the meaning; but, at all events, Mr. Justice Barton read the section as enabling the Commonwealth Parliament to permit taxation by the States. I suggest that what we ought to do is to follow the English practice, but only when the States justify that course by their own action. If we pay an amount equal to the rates released, we may be paying more than we ought to. If the States continue these exemptions, the sum total required for municipal purposes will be greater than if the States made a corresponding allowance to the municipalities - that is, paid the municipalities an amount equal to the rates they would have acquired had the States not by Act exempted Government property. I suggest that the honorable member for Wentworth should confine his motion to cases in which the States do what he asks the Commonwealth to do.
– Why treat the State as a whole? It is the municipality that yields the service.
– The reason is that the municipality is an instrumentality of the State, and, in the case to which I have referred, it is described as a subordinate instrumentality. If we allow an amount equal to the rates that cannot be imposed on us, we are to that extent helping State instrumentalities or the State itself. It does not matter whether the allowance goes to the municipality or the State, because, to its extent, we are relieving the obligations of the States.
– I prefer to regard this as helping the people of Australia through the municipalities.
– I cannot help that ; and I think I am putting a very fair view. I do not see why we should make a present to a State instrumentality which the State is not prepared to give. I agree with the principle of the motion which, in the case of New South Wales, could be carried into effect at once, because I believe in that State allowances are made to municipalities. We ought not, however, to treat in the same way other States which do not make allowances. We are here to deal fairly with the States, and not give one a preference over another.
.- In my opinion the principle advocated by the honorable member for Wentworth is a correct one. In the municipality of Lithgow, the Federal Small Arms Factory covers a very large area of land.
– The municipality was glad enough to get the factory there !
– That I quite admit, and the municipality would also be glad to have the Federal Woollen Factory within the area. However that may be, the ratepayers of the municipality have to pay for the upkeep of the roads to the factory, and for other services; and I do not see why the whole Commonwealth should not bear a proportion of the cost. Post-offices are a very small factor; but there are large areas of land involved, and this is a question which affects, not only my electorate, but electorates all over the Commonwealth. The principle advocated is acknowledged in England ; and to adopt it here would only be an act of simple justice. We have been told that the honorable member for East Sydney has no official authority for citing Paddington in this matter.
– I have.
-The Lithgow Council is unanimously of opinion that the Commonwealth should pay some recompense for this kind of work. The councillors are not acting in a selfish manner, but are quite willing to encourage the erection of Commonwealth buildings in their midst.
– And then they want to rate them !
– I am sure that if honorable members who are objecting, had similar services performed within their areas, they would be pressed quite as much as myself and others are by the municipalities.
– We are great nationalists !
– We are, inasmuch as we are asking the nation to pay for services in a national way, and not be petty. The amount involved is not large, but there is an important principle involved.
.- I regret I cannot support the motion. I regard this matter from a broad standpoint.
– A national stand-point !
– Yes, a national standpoint. The Sydney General Post Office, for instance, has large frontages to three main streets, and there is not the slightest doubt that the expenditure of the Federal Government on this building greatly enhances the value of other buildings in the immediate neighbourhood, and thereby, of course, increases the contributions to the local rates.
– Why should the local councils pay for all the up-keep of the roads in the vicinity?
– The local councils are only bodies of the people of the Commonwealth, elected to carry on the work for the citizens. In my own district there are rifle ranges and other Commonwealth utilities requiring large tracts of land ; and it would be preposterous to suggest that the Commonwealth should pay local rates. In North Sydney there is a quarantine station ; and surely it would not be suggested that the municipal council of Manly should collect rates in regard to a work so necessary to the public health? If this motion be carried to its logical conclusion, it will mean that the Commonwealth will have to pay over £2,000,000 in taxation to the different municipalities.
– No, no, - that is the valuation.
– I am relying on the figures of the honorable member for Weritworth. We have exempted municipal properties from the operation of the land tax. Municipalities are now leasing land in large tracts, as, for instance, in Georgestreet, Sydney, where there are markets and shops ; and yet, in respect of these no land tax will be paid. Why, therefore, should the Commonwealth be asked to pay rates ?
– The Commonwealth uses the streets in connexion with its buildings.
– Of course it does. But the Commonwealth represents both municipalities and the people, as a whole - we are not foreigners one to the other. I hope the Government will stand firm, because, otherwise, it would be hard to see where such a movement would stop. The fact that a large area of land is covered with barracks in Paddington, has drawn a good deal of trade to that town.
– Ask the tradesmen of Paddington.
– The barracks have been one of the main factors in making Paddington go ahead.
– I hope that the Government will stand firm. When the Land Tax Assessment Bill was under discussion-
– The honorable member must not refer to anything said or done then.
– The honorable member for Wentworth has often told us that we should not do anything contrary to the Constitution, but his motion proposes that the Commonwealth should pay rates which it would have to pay “ were it not exempt under the Constitution.” On this occasion I am a stickler for what is constitutional, and think that the framers of the Constitution took a very wise view when they determined that the Commonwealth should be exempt from municipal taxation. To carry the proposal of the honorable member to its logical conclusion, each of the State Governments would have to allow its property to be taxed. The honorable member for Melbourne Ports objects to the taxing of the Newport workshops, on the ground that they attract population, and thus benefit the municipality in which they are situated. Similarly, Commonwealth public offices, rifle ranges, and other institutions benefit the municipalities within which they are situated. Without protection, the arts of peace could not be pursued in safety, and thus our military defence preparations assist to increase the wealth of the community, and rifle ranges may, in that sense, be regarded as reproductive works. If the honorable member for Wentworth is in earnest, I hope that he will move to refer this matter to a referendum, for which I should vote, although I do not think that the people desire that the Commonwealth property should be taxed by the municipalities. In my opinion, the account between the Governments and the municipalities is balanced by their mutual services.
. -I favour the proposal of the honorable member for Wentworth, the strength of whose contention lies in the fact that the Commonwealth properties are distributed unevenly amongst the municipalities. Further, Commonwealth premises are almost always situated in towns, though the services for which they are erected benefit the population of towns and country alike. It is hardly fair, therefore, that those in the towns should be saddled with the sole responsibility of providing access to them. We have heard a good deal about the advantages conferred on municipalities by having Government institutions within their boundaries, but unless those institutions can be rated,the revenues of the municipalities are not increased, while their obligations are made greater, because as a town increases its expenditure on roads, sewerage, and lighting increases.
Debate (on motion by Mr. Fenton) adjourned.
Motion (by Mr. Hughes) proposed -
That leave be given to bring in a Bill for an Act to alter section 51 of the Constitution.
Mr. Hughes. - No.
.- The Attorney-General should explain the objects of the Bill which he asks leave to introduce. That procedure was followed with Bills at this stage last session, and is always followed in the Imperial Parliament in regard to measures of importance ; Mr. Gladstone making his speech on the Irish land question on the motion for leave to introduce a Bill to deal with it. I do not ask the honorable member to anticipate the second-reading speech by explaining the details of the measure, but I wish to know how much of section 51 is proposed to be amended.
– Will it be possible to provide in the Bill for the taking of a referendum on the Federal Capital question ?
– Does the Bill provide for two referenda ?
– No. Another Bill is to be introduced later.
– What alteration is this Bill to provide for? The AttorneyGeneral is taking an extraordinary step, in asking leave to introduce a Bill, and not telling us what he desires to do. A Bill to alter section 51 of the Constitution might deal with any or all of the thirty-nine functions of government there enumerated. To which of these functions will this Bill relate? The honorable member will admit that we have a right to know exactly what business we are transacting.
– If the honorable member will permit me to formally move that the Bill be read a first time, I will explain.
– The honorable member ought to make an explanation at this stage, or, rather, the order of leave itself should give an indication of what is proposed.
– I think that the Opposition might allow the motion to pass. We shall then learn what the Minister intends to do.
– Does not the honorable member think that the AttorneyGeneral should indicate what is proposed to be done?
– The AttorneyGeneral has told us that the Bill will provide for an amendment of section 51 of the Constitution, and as soon as the Bill is introduced we shall learn exactly what alteration is to be made.
. - We have before us a motion for leave to bring in a Bill for an Act to amend section 51 of the Constitution. That section, as we all know, deals with some thirty or forty different subjects, and the Attorney-General should, on this motion, indicate to the House the nature of the Bill that he proposes to introduce. Under this order of leave he might introduce a Bill to provide for an alteration of the Constitution in regard to lighthouses, quarantine, weights and measures, or any one or more of the many other matters with which section 51 deals.
– What is wrong with altering the whole lot?
– If it is proposed to alter the whole lot, then we ought to be so informed.
– I have said that it is not intended to do so. I was going to explain when the honorable member rose.
– The motion should state distinctly what sub-section of section 51 of the Constitution it is proposed to alter.
– As I understand the practice, it is quite usual to allow the debate on a Bill to stand over until the motion for the second reading is submitted. It is true that a debate is sometimes invited on a motion for leave to introduce a Bill, but it is, after all, purely a matter of convenience. In relation to a Bill of this kind, it would be far more convenient not to be called upon to discuss the matter until we have the proposed amendment of the Constitution before us in black and white. I can see nothing more likely to lead to a wrangling, desultory, and useless debate than an attempt to discuss the general question on a motion for leave to introduce the Bill.
– We are not proposing to discuss it - we wish only to know what the Bill means.
– I have no objection to information being supplied, but it would be highly improper for the AttorneyGeneral to limit the Bill in any way by including in the motion for leave to introduce it any particular portion of section 51 of the Constitution.
– Why improper?
– If the right honorable member will possess his soul in patience I shall tell him. When we are dealing with any amendment of section 51 of the Constitution which relates to the powers of the Commonwealth Parliament, I, for one, shall claim that an amendment of any sub-section of that section will be relevant to the Bill. To attempt even to discuss at this stage an amendment of a particular sub-section of section 51 of the Constitution would be to hamper the liberty of Parliament in dealing with the whole subject when a Bill is before it.
– I can usually follow the honorable member for Flinders, but must confess that I fail to understand his contention that, if the Attorney-General on this motion announced the particular part of the Constitution which it is proposed to amend, he would limit the discussion on the motion for the second reading of the Bill.
– I did not say that; I said that I had no objection to our obtaining information.
– The honorable member said that a statement by the AttorneyGeneral at this stage would hamper him in attempting to include some new provision in the Bill. I take it that the Bill is in print, and that Ministers know what they intend to propose. Had the AttorneyGeneral briefly announced the object of the Bill, he would have saved the whole of this discussion, and I think that the Opposition are quite within their rights in asking information as to the subjects with: which the Bill will deal.
Question resolved in the affirmative.
Bill presented, and (on motion by Mr. Hughes) read a first time.
In Committee (Consideration resumed from 28th September, vide page 3880) :
Clause 24 agreed to.
Clause 25 -
In the case of land held under a lease from a freeholder made after the commencement of this Act-
the owner of a leasehold estate in the land shall be deemed (though not to the exclusion of the liability of any other person) to be the owner of the fee-simple ;
the owner of the leasehold estate shall be deemed to be the secondary taxpayer ; and the owners of any freehold estate and of any precedent leasehold estate shall together be deemed to be the primary taxpayer; and there shall be deducted from the tax payable by the former in respect of the land such amount (if any) as is necessary to prevent double taxation.
.- The AttorneyGeneral has given notice of his intention to move the omission of this and the succeeding clause. There is a good deal of anxiety as to what really is the meaning of the clause dealing with the liability of lessees and others, as if they were the owners of land in fee-simple, and in explaining what I think is the effect of these provisions it may be necessary for me to refer to the new clauses to be substituted. The new clause which the honorable member proposes to substitute for that now before us provides -
That deals with lessees after the commencement of the Act,, and clause 26 deals with leases from the owner in freehold made before the commencement of the Act. The scheme of clause 26 is to apportion the liability between the leaseholder and the freeholder in a way to be prescribed. There is to be a table showing, after taking into account the rent and the term of years, what total of the valuein fee-simple is represented by the leasehold estate. That is a correct and fair provision. The rent paid by a leaseholder to a freeholder might be smaller than the true annual value, and it is only fair to apportion as between the freeholder and leaseholder, who holds the land at what perhaps is less than its true valuation, the total of the tax payable to the State. What is the position under clause 25 of leaseholders under leases made after the commencement of the Act? In that case the Commissioner may look to the owner in fee-simple, or to the lease- holder, who is described by clause 25 to be for certain purposes the owner of the feesimple. The leaseholder might be merely a man who, being in possession of an estate in the land, is obliged to make a return to the Commissioner of Taxes. Honorable members will note that under this Bill the owner in fee-simple, as well as every beneficial holder, and the lease- holder, is obliged to make a return, but that there is to be no double taxation. They are to make returns to enable the Commissioner to collect the tax. It is, apparently, the opinion of the Parliamentary Draftsman that it is necessary for the Commissioner to get all these returns to enable him to ascertain the total tax payable on the feesimple or freehold. Where there is no sale value I take it that the leaseholder is merely looked to, and may be selected, as the person who will be liable for the whole lax merely as a surety. It is to be collected from him, and the clause provides that he may deduct from the tax paid by him the tax payable by any other leaseholder, or by the freeholder. He might be merely a person who has to make a return, and might not be liable for a single penny of taxation in his direct capacity, but he pays as a leaseholder - as one of those who are to make a return - and, I think can recover, under a subsequent clause, from the person who is really liable. Clause 54 provides for contributions between taxpayers, and another clause enables a person who pays in a secondary capacity to recover the amount he pays from the person who is really primarily liable. It may be, however, that the leaseholder has a sale value in his land, and is consequently liable as a taxpayer. He pays, therefore, under this clause as if he were the owner of the fee-simple, but he is then entitled to deduct from the total that he has paid the amount for which the freeholder, or a sub-lessee, or a precedent lessee, may be liable. He is liable only in respect to the sale value of his lease. Thus, if the lease bears a rent which is not of the true value, you capitalize the difference between the true rent and the rent that is paid in relation to the unexpired term of the lease, and the result represents the taxable value of the lease. I am simply endeavouring to find out what these leasing clauses mean, in order to ascertain if my apprehension of them is correct, because I had to read them two or three times before I seemed to grasp them. I take it that a leaseholder under clause 25 may pay either as a person making a return, but who is not ultimately liable, or as a leaseholder liable as having a profit rental ; or, if asked to pay, may have to pay the whole of the tax that will be imposed on the fee-simple, but may deduct that portion of the total which other leaseholders or the freeholder are liable to pay, this operation taking place under the provisions, of clause 54.
– How is he to find out how much the freeholder has to pay?
– I do not know. I am glad the honorable member mentioned the point. Under clause 26 there is a scheme of apportionment which will determine what the freeholder and what the leaseholder has to pay, but it is provided that that has to be prescribed by the Department, and applies only to leases made before the commencement of the Act. Generally speaking, the Attorney-General stated in introducing the measure that the proportion of the tax paid by the leaseholder is the difference capitalized between the rent that he pays under his lease and the real rental value of the land at the time of the assessment.
– But some of the rent that he pays is attributable to the unimproved value, and some to the improvements.
– The honorable member for Parramatta has something to say upon that point. Although these clauses are rather ingenious, and go, perhaps, beyond what is necessary, I think they are correct from the point of view of the draftsman, and accomplish the end at which he was aiming. Personally, I should much prefer the simple method adopted in South Australia of dealing only with existing leases, and leaving everything else to be regulated between the parties themselves. To some extent, that is done under clause 26, which does not take account of any scheme of apportionment between lessor and lessee regarding leases made after the passing of the Act. Something, however, must be done, because the lessee is liable if he has a sale value. I have been asked by several what these clauses mean, as they stand, and have stated the view that I took.
– There are two notices of amendment by the Attorney-General to leave those clauses out.
– I am dealing with them as they will read when amended.
– It is desired to leave out clause 25 with a view to inserting in its place a provision which I have circulated as new clause 24A. That will be the proper place to provide for persons who are not liable, in spite of the wording of clause 24. I had a proviso to add to clause 24, but am unable to add it now, owing to the clause having been put, dealing with the position of a life tenant who has no power of sale. That matter will be dealt with when the Bill is re-committed. I am now desirous of inserting as a new clause 25 the words circulated as new clause 24A.
– The Standing Orders strictly provide that new clauses shall be dealt with after the Bill has been gone through.
– It is of no use to leave out clause 25 if I cannot put anything in its place.
– The difficulty could be overcome by moving to leave out all the words after the word “ the “ in clause 25, and inserting the words of the new clause in their place.
– That is not according to custom.
– If I withdraw my amendment, and move instead that all the words after “ case of “ in clause 25 be left out, and that is carried, I can, I submit, move to insert in their place any words I please.
– The whole of the introductory words of clause 25 down to the word “act” might be left in with advantage.
– The original proposal of the Attorney-General was to leave out clause 25. He now proposes to move to amend it.
Amendment (by Mr. Hughes) agreed to:-
That all the words after the word “ of,” line 1, be left out.
Amendment (by Mr. Hughes) proposed -
That the following words be inserted - “ the holder of land under a purchase or a right of purchase from the Crown upon conditions, under the laws of a State relating to the alienation or disposition of Crown lands, shall be deemed to be the owner of the land if all the conditions other than the payment of purchase money hate been fulfilled, but not otherwise.”
– I submit that the amendment is an entirely new clause dealing with a different matter. It relates to conditional purchase from the Crown, whereas the old clause dealt with ordinary leases. I want to see the case of the ordinary leaseholder dealt with, but I do not know where this procedure will land the Committee.
.- The AttorneyGeneral’s proposal is based on a similar clause in the agreement to surrender the territory of Yass- Canberra. In that matter with which I had something to do, the question arose as to what payments that had not been made should belong to the State of New South Wales. We came to the conclusion that in the case of conditional purchase leases, where no other condition had to be complied with except the payment of purchase money, the lands might be regarded as having been absolutely sold, and therefore not Crown lands transferred in virtue of the agreement. The same principle holds here, and I think the proposed clause is correct.
.- The Attorney-General’s proposal, which has been circulated as new clause 24a, introduces a new subject-matter altogether. Proposed new clause 25 might be fairly regarded as an amendment of clause 25 as it stood in the Bill, and be properly inserted here within the meaning of the Standing Orders. Clause 25 may be amended in reference to private leaseholders, but new clause 24A deals with Crown leaseholders, who ought not to be dealt with at the present stage. The case opened by the honorable member for Angas had reference to private leaseholders and not Crown leases, and I suggest that the Attorney-General should now deal with the question of private leaseholders, and explain the principle on which the liability of leaseholders and freeholders is to be apportioned, because that is a problem before us.
.- I think there is a great deal in what the honorable member for North Sydney, and the honorable member for Bendigo, have said. It would be very inconvenient to deal with the proposed clause 24a now, bena use, in substance as well as in form, it deals with a totally different matter; and I suggest that it be postponed.
– I have looked into the matter, and I have come to the conclusion that I cannot accept the amendment on this particular clause. One clause deals with lessors and lessees, and the other with conditional purchases, and there is a distinct difference between the two cases.
Amendment (by Mr. Hughes) proposed -
That after the word “of,” line i, the following words be inserted : - “ the owner of a leasehold estate in land, under a lease made after the commencement of this Act, shall be deemed (though not to the exclusion of the liability of any other person) to be the owner of the feesimple. (2.) He shall be entitled to deduct, from the tax payable by him in respect of the land, an amount equal to the sum of the amounts payable in respect of the land by the owners of any freehold estate and of any precedent leasehold estate in the land.”
.- The principle of this clause, I understand, is to treat the estate as in two parts, the first part being the interest of the landlord, and the second being the interest of the lessee, and to enable the lessee to be primarily liable for the payment of the tax on the land, but to be able to deduct from the tax payable the amount of the tax which would be payable in respect of the landlord’s interest in -the land. The way in which this will work out is, I am sure, one which the Attorney-General does not desire. Whether the provision operates properly or not will entirely depend on the rates’ which these two partial owners will pay. Let me take an example : There is A, who is a lessor, and who may have £100,000 worth of land, and there is B, the lessee, who may have no other interest in land except his particular leasehold interest. Let us suppose that the tax on the whole of the land under lease amounts to £100 ; it may well happen in such case that the lessee may be entitled to deduct, under this clause, an amount far more than the whole of the tax he has to pay. That is not the result contemplated, but is merely one of several instances of how difficult it is to work a complex piece of machinery such as is contained in this Bill. In other words,, if the lessor is a large land-owner, and,, therefore, paying at a high rate, and thelessee is .1 small owner, apart from his lease, and therefore paying a low rate, thededuction which he will be enabled to makewill prevent any tax at all being paid.
– - The honorable member for Flinders has pointed out the difficulties relating to the owner and his interest in the land, but the converse also holds good. In the case of a number of leaseholds, such as there are, for instance, in the city of Sydney and environs, the operation of the clause is exactly the other way.
– The deduction will not be any relief.
– The lessees find that, owing to the method of capitalizing the rent, they are left with all the tax to pay instead of their fair proportion.
– That is the other side of my picture.
– I am told that in some cases, following on the rule laid down in the New South Wales Act, as the leases expire the amount to be paid increases; and there is constant trouble and friction on this score. The result is that in some cases the owner escapes scot-free, leaving the lessee to shoulder the whole of the tax. What is required is some basis fixed in the Bill for the capitalization of the annual rent. If that were done, it would be fair to both sides, because in nearly the whole of these covenants the improvements at the end of the lease go to the owner ; and, therefore, there is left for determination simply the capital value of the unimproved land. It seems to me that as is the case in all municipalities, there ought to be some basis fixed in the Bill. We might, for instance, take a 5 per cent, basis for the capitalization of the rental, and thus obviate much of this trouble, and at the same time act fairly between the owner and the lessee. Has the Attorney-General any objection to fixing a basis for the ascertainment of the point of fairness as between the two parties ?
– I understand th« objection of the honorable member for Flinders and the honorable member for Parramatta is not so much as to the amount to be paid, as to the liability of the lessor, who may be mulcted in an amount very much more than he himself receives.
– That is not quite the point. The objection raised by the honorable member for Parramatta and myself is the same objection from two different aspects. In the one case, the effect will be that the whole of the tax will be thrown on the lessee, though his interest may expire at the end of the present year. In the other case, the lessee will not have to pay any tax, be cause, while primarily liable, he is entitled to deduct the whole which the lessor would be bound to pay. I may give two examples of extreme cases by way of argument. In the case presented by the honorable member for Parramatta, there maybe one lessee holding a number of interests under different lessors, none of whom may hold more than £5,000 of unimproved value, and, therefore, the lessee will be bound to pay on the whole; there would not be anything that he could deduct, though his interest may be a very slight and expiring one.
– But, if neither the lessor nor the lessee has land of the value of £5,000, neither can possibly come under the provision.
– I am assuming that the lessee has a number of interests which accumulate to more than £5,000 worth. It is admitted that he should pay something, but to make him pay on the whole value of the freehold, when he may have merely an interest which expires in six months, would be contrary to all principle. On the other hand, the lessee may be a man who has only a small interest, saY> °f £5>°00 or less, while the lessor has other landed interests which cause him to pay on the higher rate. In such a case, the lessee would be able, under this clause, to deduct from the tax an amount which, by reason of the higher rate on the lessor, would prevent the lessee paying any taxation at all.
– Would that be so, seeing that the lessee is allowed to deduct only from the tax payable by him?
– If the honorable member looks at the first sub-clause, he will see that the lessee is taxed on the whole land as if he were a freeholder.
– Each lessee’s interest is regarded as separate.
– That is precisely what it is not, under this clause. The original clause treated the interests as separate, making one the primary and the other the secondary taxpayer ; and this would have worked out a little better, though somewhat unequally. The suggestion of the honorable member for Parramatta appears to me the only one that can work with any consistency with the Government proposal, namely, that there should be fixed a basis of calculation - that we should take the value of the reversion and the value of the lease, and let each party be taxed on his own interest. These reversions are capable of being valued just as leaseholds are; but if we go beyond that, we shall find ourselves in difficulties.
– I am afraid I am unable to follow the honorable member as clearly as one could wish. I may be permitted, however, to point out what the clause intends. Clause 25, as amended, which deals with leases made after the commencement of the Bill, provides that a lessee shall be deemed to be, though not to the exclusion of the liability of any other person, the owner of the fee-simple, and entitled to deduct from the tax payable by him an amount equal to the sum of the amounts payable by the owners of any freehold or precedent leasehold estates in the land. The principle of the clause is that every man shall pay in accordance with his interest in the land which is taxed, and if that is not properly provided for, we must amend the clause.
– It. is necessary to arrive at some means of valuing the separate interests.
– No doubt it is possible to give instances of cases in which at first sight a lessor or lessee might appear under a disadvantage, but the object is to apportion to each man who has an estate in the land the liability properly attaching to his interest.
– Does not clause 54 get over the difficulty?
– That clause bears out what I have been saying. Our intention - and I. believe that effect is given to it - is to properly apportion liability according to interest. I think there is no doubt that a lessee may deduct the amounts due in respect of other interests in the land, and pay only the tax with which his interest properly saddles him. The original clause was thought to be defective in certain particulars, and a new draft was made, to which I have paid considerable attention. The draftsman is well qualified to give legal expression to the intentions of the Cabinet, and he is of opinion that the provision under discussion gives full effect to the object aimed at, namely, a proper apportionment on the basis of the interests which each contributor has in the land.
– I believe that the clause defines the taxable interest of each person who has an estate in land, but I would point out that, although there is a similar provision in the New South Wales Act, end less trouble and confusion have been caused through the want of machinery for properly determining such interests. In some cases lessees have had to pay the whole tax, and in others lessors have had to do’ so. Why should we not lay down a method for the determination of each interest, providing, say, for the capitalization of the rent on a 5 per cent, basis, as is ;done in local government and other Acts. The whole trouble would be got over in that way.
– The real point is whether the case put by the honorable member for Flinders is met by the clause. I understood him to ask what would be the position if in regard to a certain piece of land there were an estate of fee-simple, a leasehold estate, and perhaps two sub-leases. For the purposes of the measure the lessee in possession would be regarded as the owner in fee simple. What deductions could he make? The honorable member for Flinders suggests that, as the value of the estates possessed by the other persons interested in the land might each be less than £5,000, they would be under no liability, and, consequently, the lessee in, possession could not make any deduction.
– One case put was that in which the owners of a number of separate pieces of land had leased to one man, the unimproved value of none of the blocks being £5,000. In such a case it would seem that the lessee would have to pay tax as if he were the owner in fee simple of the whole area.
– That case is similar to the case which I have just referred to, and which I thought was the one which the honorable member had in his mind. Does clause 54 cover it ? There persons who are jointly liable for land tax are each made liable for the whole tax. Persons who are at law joint owners are made under this clause owners in severalty. Is it meant that a person should be liable as a contributor, although his interest, if regarded separately, would not be taxable? I admit that the draftsman generally attains his object.
– He had a very difficult task in drafting the Bill.
– Yes, and considering the conditions prescribed, he has displayed a great deal of skill. My impression is that the tax being levied on the unimproved value of all the interests, he sought to meet a case such as that raised by the honorable member for Flinders, by declaring that the lessee in possession should be entitled to contributions from all the other persons interested in the land, even though their interests might each be less than ,£5,000.
.- The problem is to determine in legal form the interest of the leaseholder and the residuary interest of the freeholder, so that the liability of the leaseholder may be a gradually diminishing one, and that of the freeholder a gradually increasing one.
– Each should be capable of valuation in the year of assessment.
– Quite so. In my opinion, the clause does not provide a method for ascertaining the value of the respective interests in any piece of land. The honorable member for Parramatta has shown that in New South Wales in actual practice the liability of the freeholder in some cases instead of increasing with the lapse of years, decreases. The proviso of section 63 of the New South Wales Act is absurd, since it says that the interest of the lessor shall be calculated on a basis excluding the value of the reversionary interest. The liability of the freeholder should depend on his reversionary interest, and that of the leaseholder upon the value of his term. The honorable member for Parramatta wishes to provide for some formula by which the liability of the persons interested in the land may be determined. Paragraph a of the old clause 26 did supply a method, although a somewhat vague one, of determining trie respective interests of the leaseholder and freeholder, but that clause is to be omitted. I suggest that the Attorney-General consult with the Parliamentary Draftsman, and see whether he cannot introduce a new basis for determining the capital value of the leaseholder and the reversionary interest of the freeholder.
– I shall deal first of all with the desire of the honorable member for Parramatta, and the honorable member for Bendigo, that there shall be included in the Bill such a basis of calculation as will enable the interest of each person to be determined merely by multiplying it by the number of years that each person is entitled to the tenure of the land. I admit that it is very desirable that that should be done in order that the various liabilities of each may be precisely determined. I would point out, however, that in determining the value of property, no arbitrary annual value can be taken. For instance, in some shire and municipal assessments in Australia thirteen times the annual value is taken, and in others sixteen times, twenty times, or twenty-five timesthe annual value. Speaking generally, 1 think that twenty times the annual value gives us a fair basis. In discussing the extent to which this tax will go, honorable members have throughout assumed that the annual value is one- twentieth of the capital value.
– That is adopting a 5 per cent, calculation.
– Yes. It is not uniformly the case. There are in this Bill clauses which provide for the value of a lease being determined by tables of valuation which are to 6e prescribed.
– That provision was in paragraph a of old clause 26’.
– If it appears, on further examination, that there is no reference to prescribed tables, I shall certainly see that provision is made in the Bill in that direction. There being a prescribed table, freeholders, leaseholders, and sub-lessees will know at once what their liabilities are, and it will be immaterial whether the calculation is on the basis of 20 or 5 or 4 per cent. As to the case of a number of sublessees, to whom the honorable member for Flinders has referred, 1 am inclined to agree with the honorable member for Angas that clause 54 deals with it.- My own opinion is that they are not jointly, but severally, liable. Provision is made for each person to deduct such an amount as has already been, or is to be, paid by another, and although the land itself is security, and may be attached by the Commissioner in respect of the whole tax, there can be recovered from the person holding it only the amount that he owes. Let me now deal with the position of sublessees. Suppose, for the sake of argument, hat we take the case of land worth £30,000, leased for forty years at £1,500 per annum, which would be practically a 5 per cent, basis on its full annual value for such a term. The lessee for the whole of that period, provided that the value of the land did not very materially increase, would not be liable to any tax because he would be paying the full annual value. I am assuming, of course, that £1,500 per annum would be the full annual value. Let us suppose, further, that the lessee leased to another for a period of ten years, at, say, £1,800 per annum. In that case, the sublessee would be paying more than the full annual value, and would not be liable to pay any taxation. If he, in turn, leased part of the land for a period of five years to another, neither he nor that other would be liable. Nor in the case of a number of sub-lessees could any of them be liable if the owner of the freehold received the full value of the land from the first lessee. Supposing, further, that the block was cut up into six or eight equal parts, and each one were leased, the question of whether any one of them would be liable would depend entirely on whether his interest amounted to£5,000 and over. If the rental the sub-lessee paid were the full annual value, he would not be liable. If it were not the full annual value, and the basis for calculating the capital value were such that by multiplying it twenty or twenty-five times, as the case might be,we got a total of £5,000 or over, he would be liable, but not otherwise. Take the case of a property of the value of £30,000, to which reference has been made. If a man leased that land for a period of twenty years, at a rental of £1,000, and ten years of the term had not expired, he would, in that case, be liable on ten times £500, because he would be getting it at £500 a year less than its full annual value, but since he would be entitled to an exemption of £[5,000, he would really not be called upon to pay any taxation. If the whole twenty years’ period was still unexpired, he would be liable on twenty times £500, or a total of £10,000, in which case he would be taxed on £5,000. That rule may be applied generally. In all cases the liability of a lessee can be determined by taking the difference between the full annual value and the rental paid by him, multiplying it by twenty or twenty-five, as the case may be, and giving the lessee the benefit of the. deduction.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 26 -
In the case of land held under lease. . . .
Amendment (by Mr. Hughes) agreed to -
That all the words after the words “ In the easeof,” line 1, be left out, with a view to insert in lieu thereof the words - “ the owner of a freehold estate in land who has before the commencement of this Act granted a lease of the land shall, for the purpose of his assessment under this Act, be entitled, during the currency of the lease, to have the unimproved value (if any) of the lease deducted from the unimproved vaiue of the land. (2.) The owner of a leasehold estate in land, under a lease made before the commencement of this Act, shall be deemed to be, in respect of the land, the owner of land of an unimproved value equal to the unimproved value (if any) of his estate; but if he has, before the commencement of this Act, granted a lease of the land, he shall be entitled, during the currency of that lease, to have the unimproved value (if any) of that lease deducted from the unimproved value of his estate :
Provided that where the owner of the leasehold estate has, within three years before the commencement of this Act, been the owner of a freehold estate in the land, he shall be assessed and liable to land tax as if his leasehold estate had been under a lease made after the commencement of this Act. (3.) For the purposes of this section -
the unimproved value of a lease or leasehold estate of land means the amount by which the part of the unimproved value of the land corresponding to the unexpired term of the lease exceeds the value of the rent reserved by the lease, according to calculations based on the prescribed tables for the calculation of values;
rent, in the case of a lease of improved land, means so much of the whole rent as bears to the whole rent the proportion which the unimproved value of the land at the date . of the lease bore to the improved value :
Provided that, where onerous conditions for constructing buildings, works, or other improvements upon the land, or expending money thereon, are imposed upon the lessee, the Commissioner may assess the amount (if any) which ought, for the purposes of this section, to be added to the value of the rent in respect thereof, and the value of the rent shall be deemed to be increased by that amount accordingly.”
Clause, as amended, agreed to.
Clause 27 -
No deduction from the unimproved value of any land shall be allowed in respect of any mortgage to which the land is subject, or in respect of any unpaid purchase money ; and a mortgagor shall be assessed and liable for land tax as if he were the owner of an unencumbered estate.
.- No deduction is to be allowed under this clause from the unimproved value of the land in respect of any mortgage. The mortgagor is assessed and liable as if he were the owner of an unencumbered estate. As I read the Bill, there is no consideration or concession of any kind to qualify its operation upon any estate, no matter what the amount or circumstances of its mortgage may be. Practical instances can be given of injustice to properties in the pastoral districts of New South Wales, and also of a certain number of city properties. Curiously enough those entirely differently circumstanced cases are alike in this, that either the imposition of the tax will reduce the income of the mortgagor to next to nothing, or, in many cases, the income actually received by the mortgagor will not suffice to pay it. Yet the mortgagor has to bear the whole of the tax, and, so far, no provision is made in the measure for dealing with cases of that kind. Some general relief is promised under clause 62.
– That is pretty wide.
– I do not know how wide, but do not wish to discuss it now. Has the Minister in his mind, or does he intend to frame, any addition to clause 62, or a fresh clause, which will enable cases of undoubtedly extravagant hardship to be dealt with by some proper, tribunal? If he can make that announcement, it may considerably curtail debate. Something of that kind is urgently needed, quite apart from any reasonable change that can be made in the clauses imposing the obligations.
– Some tribunal apart from the Commissioner?
– Yes, of an inexpensive character, which would enable cases of flagrant hardship to be considered. For instance, here is the case of a city property - three shops and a store in Georgestreet, Sydney. The shops are old, so that the repairs are considerable. I take this case because it comes first to my hand. Allowing for rates and repairs, the total income derivable from the three shops and the store together, forming the total income of the life tenant, a widow, amounts to ,£51. That is, of course, without paying any tax.
– What is the property worth ?
– The unimproved value is .£4.657
– That is under the £5,000 exemption.
– The improved value of the estate, as assessed by the City Council, is £10,250, but. as the unimproved value is below the £5,000, and this Bill taxes the unimproved value only above that amount, there will be no deduction from the £51 per annum for land tax.
– Except that the owner might have other land.
– In this case no.
– Unless an absentee.
– The owner is not an absentee, but a widow resident in Sydney, whose £1 a week seemed in peril.
– There must be something radically wrong when she can only receive £1 a week from a property valued at £10,000.
– My point is that the wit of man is not capable of foreseeing all the extraordinary cases that may arise under the application of a general law of this kind, or of providing for all the infinite variety of private circumstances affected by investments scattered over the continent. That is why I put in the very forefront of my remarks an appeal for an independent tribunal, qualified and authorized to deal with all those cases, which it is hopeless to expect us to trace out and provide for by any conceivable system of legal definition.
– If .£51 is the total possible revenue, the property cannot be worth £10,000.
– It depends altogether on the mortgage, which I see amounts to £5,600, and eats up practically all the return. I have a number of other cases, in each of which the unimproved value is over the exemption. Take this one : Unimproved value of estate, £24,100 ; amount of mortgage, £13,500; rate of interest, 5 per cent. ; net return from the estate, £400 per annum; proportion of tax to net return, 33 per cent. That is not a case of extinction, but the tax is a tremendous burden to impose upon one estate - one of those pastoral properties that will not be broken up in consequence of its imposition, or, if it is, not with any effect.
– Is not the interest on the mortgage pretty stiff?
– I think not. T. have known a number of cases of interest at 5 per cent, on mortgages on outlying pastoral properties, which, even with the high price of wool, have been giving small returns. These are cases of exceptional hardship-
– What does the honorable member suggest in such a case as regards the mortgage? What is the relief asked for?
– The Minister may find that the tribunal which I suggest for extravagantly hard cases, where the whole of the mortgagor’s income is eaten up, can be extended to deal with mitigating circumstances in instances of this kind, where it is plain that, so far as settlement under this Act is concerned, it cannot become operative when the land is not cultivable, or could not be put to a better use, or expected to yield a greater revenue than at present. Then the tax becomes wholly a penal impost. That was never intended; some relief might well be given. I admit that this is a much more difficult problem than the first comparatively simple one I submitted.
– Would the honorable member suggest that the mortgagee should pay his portion?
– I am afraid that whatever we put on him would be immediately transferred to the mortgagor. If such a way were open it might be welcome. There are also a series of cases which deserve to be mentioned in which the operation of the absentee provisions probably exceeds anything contemplated by the measure. I have here a series of cases which have been tabulated relating to properties held by British companies, the bulk of whose shareholders are resident outside of Australia.
– Then under our amendments only the bulk will pay.
– That limitation was not in the original measure, and I am unable to say whether this calculation was made before or after the amendment was announced. Let me take the three most exaggerated cases of hardship. In one the tax takes 35 per cent. of the net income, in another nearly 38 per cent., and in another 58 per cent. These again are country properties of considerable size, the unimproved values being respectively £35,000, £55,000, and £107,000, odd. In the case of the £107,000 estate, 58 per cent. of the net income will be taken by the tax.
– To what uses are those properties being put?
– Pastoral and grazing. They are all far out. They have done very well, owing to the high price of wool. In bad seasons, the proportions would be much more adverse.
– Are no particulars given as to the number of sheep carried to the acre ?
– No. My whole object in rising at this stage is to address myself, not so much to the principles of the Bill as to the unintended consequences of the endeavour to make it operate without distinction on all classes of properties in every part of Australia, and irrespective of the possibilities at present of doing anything else with them. That seems a vital consideration, which ought to be adequately met.
– The same properties might be put to much better use by other people.
– That is a suggestion. In response to a question from the other side of the table, I said at once that special relief can only be asked for if it can be shown that the properties could not be handled for the time being better than they are, or more to the public advantage.
– Does not clause 62 deal with such cases?
– Insufficiently. No doubt the value is a chief factor, but we have area also operating. There are many parts of the interior where, owing to circumstances of climate, a larger area has to be held than can be used in a good year, in order to mitigate the circumstances of a bad year. For instance, an owner, if he could be guaranteed good years, might find land under £5,000 in value quite sufficient, but may have to hold £15,000 n orth in order to provide against bad years.
– Then it is not worth
– It is in good years.
– The whole of these elements appear in the valuation.
– Acre for acre they will appear, but the size of the holding has to be taken into account, because it alone brings the individual property above the exemption. Then, again, the aggregation principle has the most extravagant effects, linking town properties to country properties, and bringing up the rate upon the total. If, as is the case in many parts of Australia, an estate has to be worked in two divisions, one in a mountainous part, with a regular rainfall, though poor soil, and another with rich soil on the river-flats - or an estate which, in bad years, yields next to nothing, but the owner of which has also city property, his tax is raised to such an fixtent as to make the country properties, which, from the public point of view, are the more important, unremunerative.
– Does the honorable member suggest that a man needs £100,000 worth of land in order to make a living?
– Possibly so, in the interior; and no doubt in the Northern Territory the circumstances may be so.
– There would not be £100,000 worth; taking all the circumstances into consideration, that value could not be made up.
– In some cases it could; at any rate, there are such instances. But if the value be only one-tenth of £100,000, is it wise to discourage by a burden a man who is doing his best, not only for himself, but for the country?
– Such a property is not doing any more than any other investment of £100,000.
– My argument holds good with £10,000 worth as with £100,000 worth; the consequences to the owner may be relatively as serious.
– As a general principle ten men, with £10,000 worth of land each, can do more than one man with £100,000 worth.
– As a rule, undoubtedly, though there are exceptions. I have here another case, and am confessedly citing exceptional cases. In the western Riverina there is a freehold estate originally purchased from the Government at £1 an acre. The owner, after attempting several times during the last few years to sell without success, at length disposed of it with the stock for a lump sum; deducting the value of “ the stock at current rates, the purchase money of the land, works out at only 8s. 6d. per acre, the owner thus losing ns. 6d. per acre on the original purchase money, in addition to all improvements he has made in the meantime. The Minister, no doubt, will tell me that that is an extraordinary case, and that there are not many others of the kind ; I hope there are not, but I cite this as an illustration.
– There are a good many cases not quite so bad, but nearly.
– Quite so; I am putting these cases in the hope that Ministers will recognise, their responsibility.
– In the case cited the stock was deducted at current prices?
– Yes, at the current pikes when the place was sold, and that is only fair.
– If the deduction were made when prices of stock were down, it would make a great difference.
– It would apparently ;put up the price of the land, but this sale was quite recent, and the price of stock, though good, is not as high as it was.
– But supposing the estate happened to be temporarily overstocked, the whole case, so far as the values are concerned, would be understated.
– Here is another class of case; during the last five years wool prices have been exceptionally high, and yet the average return on a particular station, the affairs of which have been submitted to the scrutiny of responsible public accountants, has been, during that period, one-tenth of 1 per cent. This is a highly improved property, but the seasons have been against the owner. In 1906-7 he had a surplus, which was wiped away in- 1908-9, while 19 10 shows only a small surplus, or, so to speak, a living wage. Am I to understand that the Bill allows for the recognition of the variation of the seasons in the assessment of the value? Am I correct in supposing that in a season of drought the unimproved value, which may have been fixed in good seasons, will not be maintained ?
– The honorable member is quite right there; necessarily values go up and down with the good and bad seasons.
– The assessment could be altered only in cases of transfers or conveyances.
– Under such circumstances, the assessment would come down.
– The Bill merely provides that such cases can be considered.
– I suppose the owner can send in a new assessment showing that his property is only of the current value.
– The Commissioner may at any time make a re-assessment.
– Supposing there were a succession of bad seasons; the added value of the land would fall, and the assessment with it.
– That is what I assumed. We cannot imagine a much worse state of affairs than is shown in the case I have just cited, a return of only one- tenth of 1 per cent, over a series of five years. In bad seasons, land must necessarily come down in value; but here we have a man working without any margin at all, with three bad years out of five. I desire to be assured that the Bill is sufficiently elastic to allow these circumstances to be taken into consideration. I have here another case of three different properties owned by the same man. In 1905-7, there were surpluses, but in 1908-9, there were losses; and the result of the hve years is an average return of 2.13 per cent, on the capital invested. I suppose that a graduated land tax will wipe out halt of that profit, or, at any rate, a very large proportion of it. This owner has been willing to sell, but unable to find a buyer for more than one of the properties during the last two years.
– The value of that case depends entirely on the price at which the owner is willing to sell. What is an estate worth which returns only z.13 per cent. ? If the owner fixes a price which will not return 5 per cent., he cannot expect to sell.
– I take it that in this case the price asked was the price current in the particular area.
–A property that will not return 5 per cent, is not worth owning.
– I should say not. There have been placed before myself, and others, schedules of pastoral properties, which, over a series of years, show wholly unsatisfactory returns.
– That shows that the owners are over-valuing their properties.
– It is to be hoped that the assessment will not follow on the same lines.
– The cases simply show that the valuation is wrong.
– I have for a moment mislaid my notes relating to quite a number of similar cases in the town. One particular instance is almost under my own observation, inasmuch as I know of the people concerned. About thirty years ago, a merchant in Melbourne bought a property, not at a time of inflation, but at a fair ruling value. During the banking crisis of 1892-3, he was unfortunate, and had to borrow to the full limit on the property. Since then, owing to the locality having rather fallen behind, this property has declined in value. It would not now fetch the price paid for it.
– Is this property above the exemption ?
– Far, I am sorry to say. It meant the investment of many thousands of pounds; but, after rates and taxes, and the necessary repairs have been provided for, with £800 a year interest,^ and rents £500 less than formerly, there is a return of £70 to £80 a year. This represents the sole support of the daughter of the original owner, and will be entirely absorbed now by the tax on the unimproved value. This income is payable under a will, and the present beneficiary, when this tax is imposed, will receive absolutely nothing. There are several similar cases, most of them in Melbourne, in which the original owners, when they made their wills, left their properties, subject to legacies for their widows, unmarried daughters, or other children. These are life estates, and there are no powers of sale.
– I must ask the honorable member to deal with that matter under a subsequent clause.
– I have practically finished. There are a whole series of cases of the kind. It seems to me that the draftsman had in his mind only estates which could be divided and disposed of. There are many estates under wills which cannot be so treated, and the interests of the beneficiaries, who are utterly helpless to alter the conditions, will be greatly impaired. I hope that cases of the kind have been borne in mind by the Government.
– I must ask the honorable member to deal with that matter in the next clause.
– I did not expect the clause to be reached so soon, or I should have put forward very numerous cases which have been submitted to me. I am satisfied that whatever we may be able to do towards improving the Bill - and we have endeavoured to assist the Government in making it a working piece of machinery - its very nature requires that there should be a safety valve, or valves of several different kinds, if this tax is not to bear the odium of fulfilling no public purpose, while causing absolute ruin to a great number of helpless women and children, and others, who have no possible means of relieving themselves of burdens they are utterly unable to bear. It is a problem bristling with difficulties, but I hope that the Minister will give it his serious attention. The payments which could be wrung from these people would benefit the public exchequer little, but their enforcement would create hideous injustices with which no one on this side would willingly be associated.
– - The liability for taxation in respect to land which is mortgaged is a matter of great importance, and I should like to explain the principle regarding it which runs through the Bill. Provisions relating to mortgages which appear in other legislation of this kind are not to be found in the Bill. In the New South Wales, New Zealand, and Western Australian Acts the liability of mortgagor and mortgagee is generally apportioned in the ratio of their respective interests.
– Is that so in the New Zealand Act?
– There you have a uniform and a graduated tax. Ours is wholly a graduated tax, its object being to discourage the holding of land in large areas, and to encourage settlement. We have arbitrarily fixed upon an unimproved value of £5,000 as the maximum quantity of land which any man may hold without creating a monopoly, or impairing the opportunities of others. Exemptions of this nature are well known in connexion with income taxation, and are supported by reasons which are well-known and longestablished. Our object being what I have stated, we must consider how taxation should be applied in regard to land held under mortgage. Were we to make mortgagors and mortgagees liable in proportion to their interests, we could not offer the inducement to subdivision which is offered in the Bill. A man may own land whose unimproved value is £100,000. If he cut it up into ten blocks, each worth ,£10,000, and accepted as an instalment 10 per cent, of the purchase money, taking a mortgage over the land as security for the balance, he would, under the proposal of the honorable member for Ballarat, be liable for taxation in respect to the amount for which the mortgages were security, which would be £[90,000; but under the provisions of the Bill, he would not be liable for any taxation at all, and the persons to whom he had sold would be liable only on a value of £5.000 each, because each would hold land whose unimproved value was £10,000, and would be entitled, in respect to his holding, to an exemption of £5,000. Thus the Bill enables the land-owner who subdivides and sells, taking a mortgage as security for payment, to escape taxation, and taxes very lightly those who buy from him. This is an inducement to subdivision and closer settlement. What the honorable member proposes would retard subdivision, and would open the door to the evasion of taxation, because there would be nothing to prevent land-owners from giving mortgages, and the collection of the tax from the mortgagees would be very difficult. It seems to me that the honorable member was not very successful in showing that the Bill would create hardship. In one of the cases he mentioned, the value of the property concerned is less than the taxable amount, and other cases are clearly exceptional, thic annual return being so grossly inadequate. If a man were asked to give £20,000 for a piece of property from which he could expect a net annual return of only £51, he would naturally decline to buy it, and it would not be long before the property was offered for twenty times the amount of its annual return, its true value being only £1,020. Inflated values may hold for short periods, but, generally speaking, the price is regulated by the return which can be obtained from the investment, and estates are worth only what they will fetch. If a property cannot be sold for £10,000, it is not worth that amount. A man might, at an auction, give £24 for a gold watch, and, on trying to pawn it, find that it was worth only 7s. 6d., which would prove that he was a bad judge of the value of watches. For a man to give £140,000 for a station, to borrow £80,000 on mortgage to stock it, and then to get a return of only £1,000 a year on the £220,000 thus invested, is not a typical instance of a pastoral dealing; if it were, the country would soon go to the dogs. The honorable member for Ballarat, in conjuring up hard cases under the Bill, cannot make anything like the mountain ot hardship disclosed in a recent sworn return compiled by an accountant, which showed that of 3>999 men working on the wharves of Sydney, 2,453 last year earned less than £25 each. How they managed to live I cannot tell. No doubt a being possessing unlimited wisdom and unlimited power could make a better law than can result even from the accumulated wisdom of an assembly like this. Hampered as we are by the Constitution, we cannot do all that we desire to do; but clause 62 empowers the Commissioner to deal specially with hard cases.
– That is a very dangerous power to place in the hands of one man.
– My suggestion was that exceptional cases should be dealt with, not by the Commissioner, but by a tribunal specially appointed for the purpose.
– Let us see what clause 62 does. What I desire the Committee to realize is that we have no power to discriminate in law. I do not know how far we can go in delegating to another the power to discriminate, but we may assume that we can go so far as to remit taxation in cases where its imposition would result in the bankruptcy or ruin of the potential taxpayer. I do not know that the clause as it stands goes further than to contemplate disaster or hardship where the individual taxpayer is a passive agent - where he has been overtaken say by drought or by flood.
– The honorable member can deal with that matter when we come to clause 62.
– The honorable member for Ballarat was permitted to refer to it; but I shall not transgress your ruling, sir. In my opinion, the scope of the clause is limited in the direction I have indicated. It does not cover a case where a man has made a bad bargain. . It contemplates hardship arising only from something over which the person concerned has had no control - something which lias overtaken him - and whether it can go any further I doubt, but that is a matter that we shall be able to discuss later on. I submit that, so far as the principle of the Bill is concerned, we cannot do other than leave the clause as it stands - leaving the liability on the mortgagor - since we desire that the land shall be cut up as far as possible in blocks the value of which shall be below, or very nearly below, the exemption fixed. The honorable member referred to estates under wills or settlements, in respect of which there is no power of sale. I mentioned to the honorable member for Angas that it was my intention to move as a proviso to clause 24 an amendment that would deal with the matter, so that where there is no power of sale special consideration will be shown. So far as that amendment goes, I am sure it will be quite satisfactory to the honorable member.
– I propose presently to move -
That the following words be added - “ Provided that any mortgagor shall be liable to deduct from the tax payable by him a proportion of the amount by which the tax payable by him has been increased by the inclusion in his assessment of such mortgaged lands equal to onehalf the proportion which the amount of the mortgage bears to the improved value of the land.”
The clause as it stands would inflict a great hardship on a large number of landowners. Instances of the injustice of its application to certain land-owners in the Riverina have been cited, and many other cases relating to all parts of Australia might be mentioned. There are numerous cases where a man having an estate of the unimproved value of £80,000 has mortgaged it to the extent of £50,000 or £60,000, and, after paving interest on the mortgage, as well as this tax on the full amount of £80,000, he will have really nothing left. He will be ruined.
– His estate would be burst up,.
– Not in every case. If the land were unsuitable for closer settlement, he would be unable to sell it, and he would lose it, and have practically to start life again. Let me give an example of how this amendment would work. Under the Bill as it stands, the tax payable on an estate of the total improved value of £100,000, and with a taxable unimproved value of £69,200, would amount to £953- If the estate had been mortgaged to the extent of £50,000, the proportion of the mortgage to the total improved value would be one-half, so that, under this amendment, he would be able to deduct from the tax payable by him one-half of that proportion. In other words, he would be able to deduct one-fourth of the tax payable, which would be £238 10s. from a total amount of £953. In many cases that would be after all very slight relief. The deduction is not as great as I should like the Committee to agree to, but we have to consider not what deduction reasonable men would allow, but what the Government are likely to accede to. They say that they desire to avoid giving rise to cases of hardship, and I offer them in this amendment a means of carrying out their object. T make no attempt to touch the mortgagee. The amendment may not be based on any well-known principle, but it is designed to meet actual necessities.
– The honorable member’s amendment would practically invite every man to put a “ plaster “ on his property.
– I have heard that objection before, but I can assure the honorable member that it is not likely to be realized. No one would be so foolish as to give a man a registered mortgage for £50,000 over a property worth £100,000, merely with a desire to escape the payment of a sum of £238 by way of taxation. There would be no inducement to give a bogus mortgage. We have in the Tasmanian Act a somewhat similar provision, but it has not had the effect of inducing people to enter into bogus mortgages with a view of evading payment of the tax. In July, 1906, a caucus meeting of the Labour party was held in this House, and it was decided that the party should propose the imposition of an unimproved land values tax with an exemption of £5,000. The rates were much lower than those now proposed, and had that proposition been adopted the taxation payable under, it on a property having an unimproved value of ,£100,000, would have Deen £1,239. Under the present Bill as it stands, however, the taxation would be nearly £400 in excess of that amount. Another important point is that at that time the Labour party intended that mortgagees should pay a part of the tax in proportion to their interest in the land.
– How was it thought that that was to be done?
– That was decided by the caucus in July, 1906. Now we find the Labour party coming along with a Bill increasing those rates beyond all reason, and refusing to throw any portion of the burden on the mortgagee. The poor mortgagor is in just as much need of relief to-day as then, but the Government have no consideration for him. Simply because he is in a hole they are going to put a weight on the top of him and give him no chance to get out. There is a vast difference between this Bill and what the same party really intended three or four years ago. The least the Government can ‘do is to relieve mortgagors as far as they can. The proposition I am making does not relieve them to any great extent. On big estates the relief would amount to about 25 per cent, of the tax payable.
– Is the honorable member willing to tax mortgagees?
– I do not want to tax them, because that will be no ultimate relief to the mortgagor. The mortgagee will simply pass the tax on. The rates of interest would be so regulated that the mortgagor would have to pay it in the end.
– How did the caucus propose in 1906 to deal with the mortgagor and mortgagee?
– The proposition of our honorable friends opposite at that time was that the mortgagee should pay a proportion of the tax in accordance with his interest in the taxable amount. The Tasmanian Act allows a rebate to the mortgagor of one-sixth of a penny for every £1 of mortgage on the property.
– The Tasmanian Act is not a land-value tax.
– It is imposed on the total improved value, and I am trying to bring in something on the same lines.
– But graduated taxes do not go on the same lines.
– We have to deal with instances as they arise, and the necessity of the case allows us to depart somewhat from strict principles.
– The object aimed at is quite different in the two cases.
– Then why do the Government say they want to relieve hardship, and keep the Committee here for days for nothing? Why do they not say straight out that they will not come down one jot, that it is all a hollow pretence, and that they do not care a hang about the suffering land-owner, or anybody else? The Government profess to be the most kind-hearted and fatherly people in the country-
– The honorable member is not in order.
– When a Government make such professions as the present Government have made, we naturally expect them to do something. The Attorney-General has replied to various speakers on different points, and I now put before him a new proposal which does not put the Government to the necessity of taxing mortgagees in any way. Although I am afraid that the relief that will be given by it to the man who is heavily mortgaged will be so slight as to prove of no benefit, it will help a good many people.
– It would altogether defeat the purposes of the measure.
– The only effect would be that certain people would pay a little less into the Treasury, and they would be the very people whom the Government have professed a desire to relieve. If there is any real desire to help those who are going to be hardest hit by the tax, some such method as I have suggested ought to be accepted by the Government..
. - I move -
That after the word “ mortgage,” line 3, the words “ entered into after the coming into operation of this Act” be inserted.
This clause, which takes away from mortgagors the right to exempt mortgage values from the assessable value, brings into verystriking relief some of the most cruel aspects of this legislation. I shall not refer in detail to the instances cited by the Leader of the Opposition. I have been supplied from various sources with other instances quite as strong as those which he brought forward. For the Government, under the name of taxation - the very basis of which is always acknowledged to be that it should as far as possible be made proportionate to the ability of people to bear the burden - to bring in a scheme which brings irretrievable ruin on a number of people, numerous in themselves, but not numerous enough to have a strong political voice, savours more of a class vendetta than a sober attempt to bring about reform. We have here, apparently, an attack directed specially against one particular class of people who have hitherto been honestly carrying on an industry sanctioned by the law. I am not going to deal with the question of the hardship inflicted upon people who are interested either as shareholders in companies or otherwise in town properties, and whose interests may be small. I shall direct my arguments especially to the effect that the clause will have, if unamended, upon a considerable section of the people who are engaged in the pioneering part of the pastoral industry. One would think, to hear the Attorney-General speak, that he has no idea whatever of what is going on around him in this country. Has he no idea of the nature of the evolution of our industrial relations? Does he not know that the pastoral interest is still, perhaps, one of the largest producing interests in Australia? I feel sure that honorable members on the other side of the House do not really intend, if they allow their minds to dwell upon it, to deliberately strike a destructive blow at the progress of that industry.
– Nor does this Bill do so.
– I shall show that it does, and that the Government have not taken its effect into consideration. Any one who throws his mind back upon the development of this country knows that the progress of settlement, apart from the gold fever, was originally almost entirely pastoral; that as time went on the pastoral conditions spread further out from the centres of population, leaving in their progress, however, areas which were still put to pastoral uses, and which would be more suitable for agricultural purposes under closer settlement. But what we may call the pioneering conduct of the pastoral industry in the outlying portions has been in the hands of men who did not start with great quantities of capital. They have pressed forward, and brought great tracts of this country into the only use for which they were, and in many cases still are, suitable, by obtaining the capital for it from other persons. They have done what is essential in the pioneering work of all communities by borrowing and mortgaging their interests. The hope held out to them, of course, was the hope of ultimately becoming rich men. Some of them have succeeded in doing it ; many have failed, but in this Bill the Government are going to strike a blow at the whole development of the pioneering branch of the pastoral industry They ought not to impose ruinous taxation upon that class of pastoralists who are, perhaps, the most deserving at the present time in the industry, namely, those who, being mortgagors, are for the most part most heavily laden with encumbrances, and striking out into the remoter districts to get a footing in areas which are utterly unfitted for subdivision for agricultural purposes. Those are the people who are being hit hardest. Those are the people the Government are actually ruining. The Government take an instrument here and wield it for their own purposes. In order to do what most people in this House, and, perhaps, in the country believe to be a necessary thing - in order to bring pressure to bear upon owners of large areas of land nearer centres of population and means of communication, to make them facilitate closer settlement - they are under the name of taxation actually passing a measure which will ruin a considerable number of people who have hitherto been carrying on honestly and diligently, and with the hope of the reward which such honesty and diligence ought to bring them, an industry which has been sanctioned and permitted by the law.
– Where is this outside country which cannot be cut up?
– Instances have been given in the Riverina and other parts.
– It has not been shown that the Riverina cannot be cut up.
– Instances have also been given in Victoria and other States. There are hosts of instances.
– So far, they are not given.
– The AttorneyGeneral simply gets up and endeavours to distinguish between particular cases. ‘The Minister of External Affairs need not conceal the fact that he does not know something about the matter.
– I do know something about it. I want to know the instances.
– The honorable member can get them by the hundred. I am telling him the results of what the Government will be doing if they pass this clause as it stands. Even if my amendment is adopted, it will still leave the clause a very severe handicap upon the future progress of settlement of that kind, because it will deter some of the most vigorous and adventurous of the people of our race from going out into areas that have not yet been brought into pastoral occupation, by preventing them from getting the accommodation necessary to do it. To that extent, the clause, even with my amendment in it, will do a considerable injury to that part of the development of Australia ; but, at all events, it will prevent that gross and cruel injustice which it would work, if unamended, upon a number of perfectly innocent, and not rich, but in many cases poor and struggling people. If the amendment is agreed to, the effect will be that, as to all existing mortgages, the mortgagor will be given the benefit of deducting the proportionate value of the mortgage from the unimproved value on which he would have to pay the taxation.
– The practical effect would be that all mortgaged land would be free of taxation.
– Not at all. If a man has mortgaged up to the hilt, the land will be free; that is one of the practical necessities that flow from the fact that you cannot impose the tax on the mortgagee.
– Why should a man pay on more than what is his real interest in the land?
– On the other hand, we shall not be able to tax mortgagees.
– The practical difficulty in taxing the mortgagee is that he can always get rid of the tax.
– That is what I mean.
– We might be able to tax present mortgagees, but not future mortgagees.
– There are a lot at present which cannot be taxed, owing to the way in which mortgages have been drawn for some years past.
– That is quite true. If it were practicable, I should have no objection to making present mortgagees bear their fair share.
– Does that not mean that mortgaged land will not bear any taxation?
– The mortgagor will pay full taxation on his interest. It has been suggested that if we leave this clause as at present, it might lead to mortgagors or land-owners evading the tax by means of mortgages which were not real, and I am prepared to admit that there might be some danger of that in the future. There may be difficulty, but we have to get what we can at this Committee stage, or we get nothing. It is difficult, indeed, to get any consideration ; our views seem to be regarded by the Government, first of all with suspicion, then with doubt, and then with absolute hostility. All we can do is to put our views forward in the best possible way. If the clause be amended in the way I suggest, we shall not do away with what, to my mind, will still be a great difficulty, very much hampering development in outlying districts, but we shall do away with gross cases of hardship or injustice under the name of taxation, and prevent the ruin of a great many people.
– The proposal of the honorable member is’ to exempt from the operation of this clause mortgages entered into before the passing of the Bill, and involves and limits the principle we have already discussed. It is necessary to remind the Committee again what the object of the Bill is, and that no mortgagor will pay unless he has a taxable interest, or, in other words, has more than £5,000 worth of land. The object of all closer settlement schemes in every State of the Commonwealth is to cut up land, not into blocks worth £5,000, but into blocks worth very much less, and to that end the State Governments have spent, literally, millions on millions of pounds in resuming estates from the great land-owners, and some of them estates which, according to the honorable member, cannot be subdivided. I do not agree generally that, outside the cities, there are many estates that cannot be cut up, or cannot be profitably used. lt is not typical of the condition of this country that an estate should be not suitable for subdivision or of returning in an average season a handsome profit on the capital invested. The honorable member proposes to divide between the mortgagee and the mortgagor a liability that the Bill seeks to place on the mortgagor, in order to encourage persons who hold land to subdivide. The only argument advanced by the honorable member is that those estates cannot be subdivided, but I say that we are going to see whether that be so or not, because they never will be subdivided if there is no inducement offered. There is a penalty and an inducement ; if estates are cut up in part they will come from the high level to the low level, and they will evade the tax altogether if they are divided into lots of £5,000 and under, in which case neither mortgagee nor mortgagor will pay. We desire to promote settlement, and if we place the burden on the shoulder of the mortgagee the seller of money will naturally raise his price ; so that the honorable member for Flinders, under cover of helping the mortgagor, is really going “to help the mortgagee. In this very building we were told by the representatives of great financial institutions that if this tax were imposed the price of mortgage money would be raised ; and that is very natural on the part of men who have money to sell. It is a sound, commercial proposition.
– I point out that there is no proposition to make the mortgagee pay a portion of the tax.
– I submit that there is - that the proposition is to take the liability off the mortgagor altogether. The argument of the honorable member for Flinders is only the same kind of argument we have been hearing all along; it opens up no new field for discussion and discloses no new facts. It is true that it is a matter of argument to what extent the bursting up process will go - whether there are lands, and to what extent, which cannot be divided. The latter is, more properly speaking, a matter of experience - we shall see what we shall see. We are in exactly the same position in discussing this matter as were the members of the Imperial Parliament in discussing the British Budget, when all sorts of evils were predicted from a tax not one-tenth of that now proposed. The amendment would be likely to lead to evasion of the tax, prevent subdivision, and raise the price of money, and, therefore, cannot be accepted.
.- I have listened with amazement to the statements of the Attorney-General ; and I can scarcely believe that he heard the arguments of the honorable member for Flinders, because he has not answered them in any way. The honorable member for Flinders has pointed out that under this Bill no attempt is made to tax mortgagees for reasons which we all appreciate, and he asks why we should make the mortgagor pay the tax, not only on the interest he has in any individual property, but also on the interest which the mortgagee has. The Attorney-General, apparently, does not comprehend that proposition, because he merely talks about raising the price of money.
– Of course “the proposition will be perfectly clear after the honorable member has spoken !
– If the honorable gentleman will only listen–
– The honorable member is always lecturing the House !
– I do not lecture the House ; it is the Attorney-General who does that. At any rate, the honorable gentleman has not met the arguments of the honorable member for Flinders.
– That is a matter of opinion !
– I am now making my statement.
– -Well, keep on making it !
– The Attorney-General said that the proposed amendment would raise the price of money; but how can it raise the price of money when it applies only to mortgages already in existence?
– The Attorney-General was then speaking generally.
– The Attorney-General does not know what he says, I think. The honorable member for Flinders admits that it is possibly necessary, in the circumstances, to tax mortgagors to the extent of their interest in a property, but he asks why a mortgagor should be asked to pay the whole. There are hundreds of people, we know, who have their properties mortgaged up to 60 per cent. of their value; and many will have to continue to pay for some years the interest of 4½ per cent. Why should we make the man with only 40 per cent. of the interest shoulder the liability of the man with an interest of 60 per cent. ?
– Can money be obtained on country property at 4½ per cent. ?
– Yes. oceans of money.,
I can assure the honorable member that until this extraordinary legislation was introduced, I knew of tens of thousands of pounds ready for investment at 4 per cent. on good country securities.
– I know cases in which 8 per cent. is being paid !
– If so, I expect that, on inquiry, the security would be found to be bad.
– It would be very hard for such a man to pay the tax.
– Certainly. The AttorneyGeneral entirely missed the point. The provisions of the Bill will result most cruelly, and inflict hardships which my honorable friends opposite do not, I am sure, desire. What the honorable member for Flinders wishes is to exempt mortgagors in respect to existing mortgages. As for future mortgages, the mortgagors will know that they will be taxed whether their land is or is not encumbered. The AttorneyGeneral did not answer the contention of the honorable member for Flinders that we should not depart from the recognised principle in respect to existing mortgages that men should be taxed only on the interest they hold in land.
.- I hope that the point under discussion will not be obscured by statements regarding the money which would_have been invested in the country had this legislation not been introduced. Similar statements have been made in regard to every proposal made by the Labour party during the last nineteen years, but to-day the country is better off than ever before, and the prospects are excellent. The persons chiefly responsible for the absurd statements admit that they have already acquired over £400,000,000 of the wealth of the country. I hope, too, that differences of opinion may not lead to the making of unkind remarks which maybe regretted in the future. The honorable member for Flinders no doubt will regret his statement that this legislation is the result of a class vendetta. For my own part,
I repudiate the suggestion, and would not give my adherence to any provision of such a character. I am willing to vote for any amendment which, in my opinion, will improve the Bill without interfering with any of the basic principles in regard to which I am pledged to my electors. It has been said by Opposition members that their criticism receives a patient hearing, and no more. If that statement is true, they are better off than we were last year, when we were not permitted to express our opinions, much less to have a patient hearing. I understand the suggestion of the honorable member for Flinders to be that land on which there is a mortgage prior to the coming into force of the measure shall not be subject to taxation.
– That it shall be subject to taxation only to the extent of the interest of the mortgagor.
– For example, I propose that land mortgaged to 60 per cent. of its value shall be taxable only in respect to 40 per cent.
– The 60 per cent. in respect to which an advance has been made is not to be taxable, and an exemption of £[5,000 is to be allowed in respect of the unimproved value of the balance. It seems to be admitted that it is almost impossible to tax the mortgagee, who passes on the tax.
– The existing mortgagees could not do that.
– If the amendment were carried, would the honorable member approve of a provision making the mortgagee liable in respect to the amount for which the mortgagor secured exemption?
– If I could not get what I desired in any other way ; but there are practical difficulties, making it hard to do what the honorable member suggests. We should tax, not land, but the interests held in land.
– The mortgagee In the example mentioned would have an interest of 60 per cent., but it is proposed that he should not be taxed in respect to it. I seeno difficulty in taxing him.
– The difficulty would be in taxing future mortgagees.
– That is not proposed.
– The effect of my amendment would be that mortgagors would have no exemption in regard to future mortgages. I recognise that there may be opportunities for evasion in respect of them.
– The Bill practically enacts the New Zealand provision.
– It might be possible for persons to execute unsubstantial mortgages between now and the date on which the measure will come into operation.
– That could be provided against.
– I know of cases in which exceptionally good securities have been mortgaged because their owners can trade on the advances thus secured at higher rates of interest than are paid to the mortgagees.
– That is not of disadvantage to the country.
– No; but the existence of such mortgages does not constitute a reason for exempting the mortgagors from taxation in respect to them. We should not agree off-hand to a sweeping amendment which would allow persons so situated to escape taxation, because to do so would defeat one of the main objects of the Bill, which is to bring about subdivision.
Sitting suspended from 6.30 to 8 p.m.
– At the dinner adjournment I was submitting that the amendment would exempt from - taxation a class of mortgages that may for the moment be termed “ mortgages of convenience.”
– What is a mortgage of convenience ?
– As I understand the position, honorable members of the Opposition desire to exempt those who have bond fide borrowed money on property with a view to their developing it, or those who, without such borrowed money, would be unable to take up the land, much less to work it. They are a type of citizen whom we have a right to consider, and who should be encouraged, particularly when by such means they are able to open up some of our back country. If a workable amendment in that direction were suggested, I should be prepared to give it most favorable consideration. But this amendment, providing as it does for the exemption of all lands over which mortgages of any kind have been given, is of so sweeping a character that 1 ask for a review of the situation. Let me illustrate what I mean by “mortgages of convenience.” A certain person owns very valuable city areas, and with those as his security is able to effect loans at particularly low rates’ of interest. That is his specific business, and he is thereby enabled to lend money, not necessarily on land, at a higher rate of interest, and to make an exceptionally good living. Under the amendment that individual would have all the land that he had mortgaged exempt from taxation. Is that the desire of honorable members who support the amendment? If it is, I hope that the proposition will not be pressed. It appears to me that this amendment might be unending in its operation, for although on the face of it it refers only to mortgages at present in existence, there is such a thin as a renewal of a mortgage, not merely to the existing mortgagee, but to some one else. The amendment seems to be of too sweeping a character. It is urged that unless some such amendment were made, hardship would ensue in certain directions, and we are forced to admit that only exceptional cases have been cited in support of it. I doubt if we ought to legislate for exceptional cases, particularly when we know that by attempting to exempt exceptional cases, which may be few in number, we shall exempt hundreds of persons who are well able to pay. It is not right that we should carry legislation of a sweeping character merely because of a few cases which may, by special pleading, be shown to be cases of hardship. The honorable member for Ballarat this afternoon mentioned two or three cases which, in his opinion, were exceptional. The very first on which he relied, however, went by the board almost immediately it was mentioned, because it was clearly shown that it did not come under the provisions of the Bill. The poor lorn widow, who was to be brought in, with tears streaming down her cheeks, and her clothes in tatters, as the result of the passing of the clause as it stands, turned out to be a person entirely exempt from this taxation. I am entitled, I think, to call attention to a remark made, perhaps unconsciously, by the honorable member for Ballarat, who said : “ Let me put before you a few of the most exaggerated cases.” Possibly he. meant to use the word “ extreme. “ But since he used the word “exaggerated” I am led to believe that some of the cases of hardship to which he referred may be exaggerated, and do not call for consideration. The amendment is too sweeping.
– Could the honorable member suggest an amendment to meet the cases to which he has referred?
– The mover of the amendment was at a loss to indicate how it could be so worded that only certain areas would be entirely exempt. If we exempt a mortgagor in respect of the tax on the area of land that is mortgaged, apparently that proportion of land will be exempt altogether from taxation. Why should a piece of land, simply because there happens to be a mortgage over it, be exempt from taxation any more than an adjoining piece over which the owner has not found it necessary to execute a mortgage? I fail to see why these vast distinctions should be made. If the honorable member would submit .an amendment which, while exempting the mortgagor, would make the mortgagee pay the tax according to his interest in the land, I should see no objection to it j but I see at present- a very considerable objection to permitting lands to escape taxation altogether, merely because there is a mortgage over them. When the suggestion as to the mortgagee was made we were told by way of interjection that it would be very- difficult to carry out. Either the mortgagor or the mortgagee must pay. Because of an alleged difficulty in placing the tax on the mortgagee are we to exempt land altogether? I hope that tHat will not be done. I am in doubt even now, notwithstanding the special pleading of the mover of the amendment and the unfortunate terms used in supporting it, as to whether there are many cases of hardship such as have been suggested. We had the general statement, ‘ thousands of them could be brought up but it may be a case of ‘ ‘ our cat and another.” When we look into the matter closely we find that few specific cases have been brought forward. The honorable member for Ballarat, a gentleman of experience, legal and otherwise, entered the chamber with specific cases, that, to all appearances, had been collected over a period of many weeks, and we are entitled to assume that the three or four that were cited represent a very large proportion of the many cases of alleged hardship. Then, again, this amendment would interfere with what some honorable members of the Opposition have declared to be the basic principle of this measure, in regard to subdivision. Some hope that the Bill, if passed, as It stands, may lead to subdivision in certain directions, but if this amendment be agreed to, subdivision, instead of being encouraged, will be prevented. We shall give to certain individuals, in effect, a premium to hold their lands, although there may be a’ trifling mortgage or one of convenience over them.
The honorable member for Kooyong asked whether I could suggest a modification. It would be my bounden duty to accept any reasonable modification which he could suggest, or I could devise, if there were no provision in the Bill to meet cases of hardship. I would point out, however, that there is such a provision. Clause 62 has a very wide application, and under it any case which in the opinion of the Commissioner ought to be exempted can be exempted.
– Will the AttorneyGeneral say that?
– I am not responsible for what the Attorney-General says.
– But the honorable member must be guided by him.
– I am guided by what each and every honorable member says ; but am not necessarily convinced. It is not necessary that I should follow willy-nilly everything that is said, even by the AttorneyGenera], ;or any ether honorable member. I place my own interpretation on the clause, and if it can be shown that my interpretation is incorrect then I am bound to support any proposal that will bring it into conformity with that which I desire.
– Surely the Minister in charge of the Bill should declare its intention.
– Up to the present I have not heard him debate that matter in the Committee. I am asked for a modification of this clause, and I point to the provision in the Bill by which the Commissioner can meet every case of hardship. I have no doubt, as the result of many years of practical experience, that fully 50 per cent, of the persons assessed will think that their cases are ones of hardship, and bring them up for consideration by the Commissioner, who in his uncontrolled discretion will be able to treat each case 011 its merits and make every allowance necessary. To show the honorable member for Kooyong how far that clause goes, the honorable member for Flinders himself said it gave a very wide and dangerous power to the Commissioner. That is an indication from one of the leading members of the Opposition that the clause does go very far in giving the Commissioner the right to make modifications and grant exemptions. In the circumstances, I am unable to support the amendment.
.- I was very glad to hear the remarks which have just fallen from the honorable member for Adelaide. I was rather under the impression that he shared to a great extent the opinion that an honorable member of his party is reported to have expressed the other day in New South Wales. Speaking of this Bill, that gentleman said he did not stop to consider the equity ; it was enough for him to. know that it was a necessity. I think that is an opinion shared by a good many honorable members. Our greatest industry in Australia is carried on almost entirely on borrowed money. I refer to the pastoral industry, in which, probably, borrowed money plays a bigger part than in any other. Our financial institutions have more money out in it, and are more deeply interested in it, than in any other industry in the whole of Australia.
– It pays better to lend to the pastoralists.
– It does, because the money is lent in very large sums and on comparatively few accounts, and so that particular class of investment is one which our financial institutions get hold of as -much as they can. Consequently, this clause and the amendment affect that industry more than they do any other in Australia. I admit at once that the position taken up by the Government in regard to this question is, from their point of view, a perfectly logical one. I do not think any one can say that to sweep away all the tax on mortgages at one fell blow would assist the policy of closer settlement on the areas which will come under the operation of the tax. A child could see that; it does not require arguing.
– Therefore, mere is no necessity to suggest, as the honorable member did, that this is being done for the sake of class prejudice.
– It depends altogether on the point of view. It is simply a question of whether the desire for the tax arises in the first instance from class prejudice. The Government take a perfectly logical view in saying that the exemption of mortgages would, to a great extent, prevent closer settlement in regard to the particular areas which they have in mind. We admit that it would, but that does not in the least get away from the fact that by taxing the whole of the interest in the land, whether the man owns it or not, this Parliament will be doing a great injustice to him, nor does it get away from the fact that great and serious hardship will be in- flicted on many individuals, and that the clause aims a deadly blow at probably Australia’s greatest industry.
– It is certainly not doing that.
– The honorable member for Adelaide admitted quite candidly that there is, principally on the fringe of settlement, a class of industry carried on to a great extent by borrowed money, which is exceedingly beneficial to Australia. To impose this tax on that class of industry will not assist closer settlement at all, because the experience of the past has shown conclusively that upon those areas small men cannot live.
– Where the small man cannot live the values are very low.
– I admit that; but it is there that the capitalist, having a big backing, can go and build up an industry which is impossible to the small man. As sensible men, with the history of Australia in front of us, and our experience to guide us, we must all admit that there are large areas in which, under existing conditions, it is not possible to bring about closer settlement as M’e have it in our coastal regions.
– Of that outside country, about 90 per cent, is held under Crown lease.
– A great deal of it is not. In placing this tax on the whole of the unimproved value, independent altogether of the interest which the individual has in the property, we shall be doing an injustice unless we can extend some grace by allowing a little time in which to unload. I come to the point whether it is possible or not to tax the interest which the mortgagee holds in the land. I do not think it is, without having the tax passed on. If we attempt to place the tax upon the mortgagee, it will simply lead to a rise in interest rates. That has been the experience elsewhere. I cannot see how it is -possible to impose this tax and avoid the injustice which must be inflicted on the mortgagor, unless by some means we give him time to pass on to somebody else that portion of the unimproved value in which he has no interest. It is possible for this Parliament to carry out the policy of the Government if it is prepared to take a little time in the process. I would suggest that we should exempt from the operation of the tax so much of the unimproved value as the mortgagor has no interest in, for a period of, say, five years.
– Postpone the breakingup effect of the tax for five years ?
– It would do that to a certain extent, but during the five years those men would presumably attempt to get rid of their mortgaged estates, and so the policy of the Government in breaking up estates would be carried out. The holders would start to sell as soon as they could, and it must be remembered that pastoral property in particular is not got rid of every day. It would take time to unload, particularly as a very large quantity of land will probably come into the market owing to the operation of the tax.
– The tax is not limited to pastoral property ; that does not represent more than i per cent, of the cases.
– My impression is that pastoral properties will be found to be a very large proportion indeed of those which will feel the injustice and burden of this tax if it is placed upon them immediately. If the policy of the Government is to burst up big estates, and not to do any injustice in the meantime, surely they can exempt for five years the amount of land in which the mortgagor has no interest from the operation of the tax, and in that way allow him to get rid of it. I purpose to move an amendment to that effect. It will apply only to mortgages which have been made prior to the passing of this measure, or to such renewals of them as in the opinion of the Commissioner are genuine renewals made during the period of five years. I appeal to the sense of justice and equityof honorable members opposite. The proposal is one which ought to commend itself to every fair-minded man, and one which, to a great extent, will assist the avowed policy of the Government, namely, the bursting up of large estates.
.- My objection to this clause does not lie in the hardships, which it may create, but in the absolute injustice of the clause itself. It violates one of the basic principles of the Bill, namely, that every person shall pay according to the value of his interest. This afternoon we had very elaborate amended proposals submitted with the object, as it was explained, of securing that lessors, lessees, and sub-lessees shall pay on the values of their respective estates; and if that consideration is shown to the small interests of sub-lessees, surely we ought to show a similar consideration to the man who owns only two-fifths of his estate, while somebody else owns the other three-fifths. Honorable members on this side do not seem to realize the enormous extent towhich the mortgage system prevails throughout Australia. I venture to say there is hardly one man who has gone on to the land, and now owns an estate of £5,000 unimproved value, who did not for many years have a mortgage.
– The mortgages are not there now !
– If the honorable member had any experience of big companies and banks, he would be surprised at the extent to which mortgages prevail.
– Some honorable membershave a lively imagination !
– If the honorable member had more experience, he would not talk about imagination in a matter of .this kind. The Opposition, instead of instancing particular cases, would have been better advised to get from the various Titles Offices and registry officesthroughout the States returns showing the number of mortgages and the money lent, for that would have been very valuable evidence, and would have given informationsufficient to stagger a good many honorable members. I understood the AttorneyGeneral to say that the difficulty he had! was in reaching the mortgagee - that had! he been able to do so he would have taxed! the mortgagee. We all admit that the difficulty is due to the fact that the mortgagee would, if taxed, pass the burden on to the mortgagor; but it seems stranger that, because we cannot tax the mortgagee, we should endeavour to make the debtor carry the burden. If a man has £10,000 worth of land, and it is mortgaged for, say, £5,000, his interest is not worth £10,000, but only £5,000; and, therefore, the proposal is to tax him on what he does not possess. When we have variations of seasons, or rises and falls in value, how often does the equity of redemption disappear altogether? It is manifestly unjust to compel a man to pay taxation on the value of what he does not possess; and all we can do, in justice, is to exempt the amount of the mortgage from the- burden of the tax that the mortgagor has to pay. It issaid that this may lead to an evasion of the law, and that may be so; but it ought tobe possible to prevent evasion by stringentpenalties. I was, unfortunately, not in: the chamber when the Attorney-General! spoke; but I was astounded, on my return,. to learn that he had refused to accept the amendment of the honorable member for Flinders.
– Did the honorable member expect that the authors of -this measure would accept such an amendment?
– I did.
– Then the honorable member has a very lively hope !
– I thought that the authors of the measure, and honorable members on this side, were not prepared to do an injustice.
– The amendment would practically wipe out the Bill for the sake of two or three hard cases !
– A few moments ago, I heard the Minister of External Affairs say that only 6 per cent, of the properties would be affected !
– Six per cent, of pastoral property - the amendment would affect all mortgages.
– I am not talking of pastoralists, or any other particular class, but of the principle of the Bill.
– So far, we have heard of no one but the “ poor pastoralist “ on the outside margin of cultivation !
– I am prepared to discuss the clause on its merits ; and, in my opinion, it bears injustice on the face of it. It is at variance with the rest of the Bill, which carefully provides that a man shall pay only on the value of what he possesses. The amendment of the honorable member for Flinders is, to my mind, exceedingly reasonable; and I felt positive that it would have been accepted. Had it been carried, it would mean that only those people who have entered into mortgages before the Bill was introduced, and who, therefore, could not have done so in order to evade taxation, would be exempt. When the honorable member for Adelaide talks about “mortgages of convenience,” created by persons who borrow money for the purpose of re-lending it at a higher rate of interest, I can assure him that the percentage of such mortgages is infinitesi-mal ; they are entered ‘into only by persons in the cities, and then to a very limited extent. I am prepared to go so far as to eliminate the whole clause. We have to consider, not merely pastoral or agricultural interests, but interests in the cities. How many parcels of land in the city of Melbourne are free from mortgage at the present moment? How are the extensive buildings now being erected in Melbourne and Sydney made possible? Are they paid for by the money which people have in their pockets ? Nc ; as a matter of fact, every one represents a mortgage.
– We are not proposing to tax buildings !
– But we are proposing to tax land on which money has been borrowed for the purpose of erecting buildings. The mortgage system, the extent of which, as I say, does not appear to be realized, will continue for a good many years, until the country is more settled, and the towns are clear of the debts incurred for the purpose of raising large buildings.
– I hope the Committee will not agree to make any alteration in this clause. There seems in the minds of some honorable members an idea that, in placing the liability on the shoulders of the mortgagor, we are doing what the honorable member for Gippsland describes as an injustice, and departing from those principles which we advocated when before the electors, and in this Chamber, before the last election. I invite honorable members to do me the favour to examine the position closely, and ask themselves what it is Ave are trying to do. The mortgagor to-night is playing the same part that the “ poor widow,” the “ POOl man,” and other unfortunate victims are usually called upon to play in connexion with various measures of reform. The mortgagor to-night is held up as the scapegoat - as the unfortunate sacrifice that Is to be offered at the altar of our shrine.
– That is a cruel remark.
– I venture to say that if we accept the amendment, the Bill, so far as its effectiveness is concerned in bursting up big estates, will not be worth the paper on which it is printed ; and I shall show the Committee why. When honorable members opposite smile, I am the more certain that I am right, and honorable members on this side who are inclined to follow them must begin to doubt the wisdom of doing so. We are trying to discourage the holding of large estates. The honorable member for Gippsland asks, “ How many farmers are there who are not in the hands of the mortgagee?” I ask, “How many are there? “ Who is it that we are being asked to assist? My honorable friend has given a plain answer. He has said that instead of farmers here and there being free, they are simply working for the benefit of the great moneyed interests of the country. Is it the mortgagor that we are being asked to relieve? My honorable friend is assisting us to burst up the big estates, with a view to making land available for more people. We wish to increase our population, and to settle more men on the land, which can be done only by making it unprofitable to hold large areas out of the best use. Therefore, we say to land-owners, “ The more land you have, the higher the tax you will have to pay on it. If you wish to reduce your taxation, sell half your land. If you want to reduce it still more, sell three-fourths of it. If you desire to reduce it still more, sell nine-tenths of it.” A man who holds lands whose unimproved value is ^150,000 will be taxed at the rate of 5d. or 5½d. in the £1. We told the electors, and they agreed with us, that it is a bad thing for one man to own so much land, while many men have none. We say, therefore, to such a man, “ If you cut up your land into fifteen lots, £ach worth £10,000, and sell it, you may escape taxation altogether.” But are there -many persons in the community who are able to pay cash for £10,000 worth of land? ? If there were, we should not hear “much about the land question, or any other social question. We have then to consider the general position of a man who desires to settle on the land. The man who wishes to do so probably has not the money with which to pay cash. He has to be content to pay an instalment, and to mortgage his holding as security for the balance. Under the Bill, if a land-owner, such as I instance, accepted 10 per cent, of the purchase money for the land which he subdivided, and took a mortgage as security for the balance, he would have no tax to pay ; and the mortgagors would not have to pay either. But under the amendment the big land-owner, whom we are trying to induce to break up his estate, would have to pay nine-tenths of the amount which he would have to pay if he ‘ did not subdivide at all. We say, “ Subdivide, and you will have no tax to pay “ ; honorable gentlemen opposite say, “ Subdivide, and you will still have nine-tenths of the tax to pay which you must pay if you do not subdivide.” We offer the mortgagee immunity from exemption, so long as he remains out of possession; but directly he enters into possession we tax him. Why? Because the aim of the measure is to prevent the aggregation of estates. Directly a mortgagee enters into possession, he pays, not the taxation which the mortgagor is paying, but, supposing that he holds many estates, a much higher rate, because of the aggregation of his holdings. The proposal of the Opposition is directed against the principle of the measure. The next clause gives a reasonable amount of time to the mortgagee in respect of existing mortgages; but the merits and virtues of the Bill are wrapped up in this clause. The N ew Zealand Act, as I have already pointed out, has been amended no fewer than nine times, and has been in force for eight or nine years. In the Dominion there is both a uniform and a graduated tax, the provision for mortgages in respect to the graduated tax differing from that in respect to the uniform tax. Let me read sections 66 and 67 of the Act, which deal with mortgages. They are these -
For the purposes of the graduated land tax, no deduction from the unimproved value of the land shall be allowed in respect of any mortgage or other charge to which the said land is subject, or in respect of any unpaid purchase money, and a mortgagor shall be assessed and liable for the said tax as if he were the legal owner of an unencumbered estate.
No mortgagee or other person owning any legal or equitable estate or interest in any land by way of security for money shall be liable to pay graduated land tax in respect of that mortgage or other estate or interest.
There we have embodied provisions which constitute the essence of graduated land tax enactments, and are the result of nine years of experience. The New Zealand Parliament found that -those provisions were absolutely necessary to prevent fraud and to promote subdivision, which is the life and soul of the measure now before the Committee.
– - The provisions to which the AttorneyGeneral has just drawn attention were enacted to prevent fraud after the original Act had come into force; what we are urging is that when this measure comes into force those who are in the unfortunate position of mortgagors should not be penalized and driven off their properties. One honorable member spoke as if mortgages were exceptional. Every one has heard of the rich lands round Colac, a district which a’ few years ago comprised a number of large estates, but in which of late years £2,000,000 worth of valuable land has been cut up and sold. That land is today mortgaged for more than 60 per cent. of the £2,000,000 for which it was sold. It was bought by small men, who are working hard to pay off the purchase money.
– Are there any big blocks there?
– Not within 10 miles of Colac. I have been told on the best authority that there are only three large estates in the district, and they are not composed of rich land. The big estates close to Colac have all been cut up.
– In blocks worth more than£5,000 ?
– Many of the blocks are worth more than £5,000, and a number of the holders, in addition to having their land mortgaged for advances amounting to 60 per cent. of its value, have borrowed from stock and station agents and other lenders to buy stock, and for trading purposes. The effect of the land tax will be to’ depreciate their land by 25 per cent., an estimate well within the mark. The object of the measure is to make it unprofitable to hold land of more than a certain value. Large estates will be cut up, and a great quantity of land will be thrown on the market, which will naturally cheapen land. When the mortgagors to whom I refer wish to renew, the mortgagees will find that their margin, which is now 40 per cent., has been greatly decreased, and will inform the mortgagors that the advances must be reduced to a sum equalling 60 per cent. of the value of the security, which, according to my estimate, will be 25 per cent. less than the present value of the land. The stock and station agents and other creditors will find that they cannot advance any more money on a second mortgage, because of the narrowness of the margin. Thus many of these land-holders will lose their properties. Their lands will be sold by the mortgagees, or if the latter can obtain them at a depreciation of 40 per cent. they may be able to hold them, and pay the tax which the present mortgagors cannot pay. Thus we shall have a re-aggregation of estates, the present small holders being replaced by larger holders who will have got the land at lower prices. According to the Minister of External Affairs, the Government cannot afford to do what is asked, because of the loss of revenue which would result, but according to the Attorney-General, the object of the Bill is to cause as much subdivision as possible, and when all the lands of Australia have been subdivided there will be no graduated tax.
– We shall be very satisfied then.
– The AttorneyGeneral may be, but the honorable gentleman will not be. I pointed out in my second-reading speech that the Savings Banks alone have advanced something” like £9,000,000 on land, chiefly in the country districts. The Bill will depreciate the security on which the savings of the people have been advanced.
– The New Zealand legislation did not work as the honorable member says this Bill will work.
– We are starting where they left off.
– We have their experience.
– If this Bill were drawn on the same lines as the NewZealand Act, its provisions would be milder. This is a scissors and paste Bill. Ministers searched all the Land Tax Acts in and out of Australia.
– The honorable member must not refer to that.
– Then I shall say that scissors and paste have been used in connexion with this clause. It has been taken from an Act which as originally passed did not contain it. It was only when attempts were made to defraud the revenue by giving mortgages on property that the New Zealand Government found it necessary to pass such a provision as this. This clause deals with circumstances in Australia as they were in New Zealand when the original Land Tax Assessment Bill was passed by the Dominion Parliament. I agree with the honorable member for Flinders that all future mortgages should be taxable, because those who buy land and mortgage it hereafter will do so with a full knowledge of the imposition of this tax. We have endeavoured to apportion the tax as between the lessor and the lessee, and why should we not seek to grant relief in this case? We have got away from the pastoralist, and are now dealing with the poor farmer. This Bill will apply to all the closer settlement districts just as I have shown that it will apply to the Colac lands. Reference has been made to a clause under which the Commissioner will have power to grant relief, but that relief will be possible only when a man is on the verge of insolvency; it will come too late. As the result of a drought 1,500 people might suddenly appeal to the Commissioner for relief. They would desire to obtain money to re-stock their properties; their cases would be urgent, and would need to be dealt with in a week, whereas it would take the Commissioner a year or more to inquire into them. Meantime, these men would have been forced into the Insolvency Court, or would have had to part with their land.
– After that, the honorable member is an alarmist of the first water.
– I am not. The Income Tax Commissioner takes a considerable time to deal with small appeals that are made to him every year, and I repeat that the Commissioner under this Bill would require more than twelve* months to deal’ with 1,500 cases. Meantime, what would these men be doing?
– They would not have to pay the tax until their case had been determined.
– They might not have to pay it for six months, but they would need money in the meantime to restock their properties. They would require a margin to work upon, but under this clause no margin will be left to them. I fail to understand why the Government should refuse to grant a concession to these people. Owners of properties in this and other States that are fit for closer settlement, for the most part, owe nothing upon them. They will not escape this taxation, but unless the amendment be carried, those who have mortgaged 60 per cent, of their interest in their lands will be taxed to the extent of their full value.
.- The question before us is one of great importance. I have considerable sympathy with any attempt to relieve the man whose land is heavily mortgaged, more particularly if he is assisting in the development of the country. I have a strong feeling in favour of an effort to distribute the burden of taxation upon those who have land in proportion to the interest which they hold in it. I find, however, that the Opposition are absolutely opposed to a mortgagee being called upon to pay even a penny by way ot taxation under this Bill.
– I am not ; I am prepared to go with the honorable member.
– I am glad to know that there is one exception. I gather from the remarks of the Opposition that they are not in favour of taxing the mortgagee, because they consider he would pass on the tax to the mortgagor. That might occur :in connexion with mortgages containing penal clauses, but where a mortgage has been effected at a given rate of interest for a certain number of years there is absolutely no power for the mortgagee to pass on the tax.
– That is the exception.
– If it is, then the desire to have such an amendment effected, to a great extent, disappears. I, like the Minister of External Affairs, am surprised that the honorable member for Gippsland should expect the Government to accept the amendment moved by the honorable member for Flinders. It means that we are to exempt from taxation all land that is encumbered, and to the full extent of the encumbrance. The honorable member said that the majority of the lands of the country were encumbered, and that honorable members on this side of the House did not seem to know that the system of granting mortgages over land was carried on to any extent. We know just as much about farming conditions and land settlement as the honorable member does, and we know that the great bulk of the hardship suffered in connexion with the development of the land is borne by those who will come under the £5,000 exemption. The honorable member for Balaclava was good enough to refer to the rich lands in the Colac district, which is in my electorate, and to land-holders there who, he said, had heavy mortgages to clear off. There is no part of the State where the land is being put to better use, but hardly any of the hardworking men there have enough, and there are very few the unimproved value of whose properties exceed £5,000.
– If there were many would the honorable member tax them?
– The holders of that rich land, in areas the unimproved value of which exceeded £5,000, could afford to pay this tax. The honorable member for Flinders, in the course of his speech this afternoon, used the word “ruin” fully half-a-dozen times. His ordinary calm seemed to have forsaken him, and he constantly spoke of ruination. Let us see what would actually happen under the clause as it stands by taking as an illustration an estate the unimproved value of which amounts to £20,000. Even if the owner of that estate has borrowed 60 per cent, of its value, he has probably spent the money so obtained in improving his land ; if he has borrowed £12,000, then he has £12,000 worth of improvements. But let us take the worst possible case - a case where a man has borrowed to enable him to purchase his land. If, on an estate of the unimproved value of £20,000, a man had borrowed £12,000, he would have to pay by way of taxation £93 per annum, and that, says the honorable member for Flinders, would ruin him. But what would he pay in interest on his mortgage? I would remind honorable members that he would pay £600 per annum, or thereabouts. We hear nothing about the ruin of these men by the big financial institutions. Why cannot the Opposition advocate something that will reduce the rates of interest? Why do they not support a National Bank, which would give these men cheaper money?
– Why does not the honorable member do something in that direction ?
– We are going to do so. One of the most important planks of our platform is that providing for the establishment of a National Bank, to give cheap money to the men on the land. I wish to impress on the minds of the Committee the figures I have. quoted. The honorable member for Flinders said in effect that a man would be ruined because he would be compelled to pay a tax of £93 per annum on an estate of an unimproved value of £20,000. And yet he could afford t0 Pay £6°° Per annum by way of interest on his mortgage. If the land were worth what he said it was, the mortgaged portion would earn what the man had to pay by way of interest, and he would have, in addition, unencumbered land of the unimproved value of £8,000. Yet we are told that he could not afford to pay taxation to the extent of a paltry £93 per annum. Those who make these assertions would have no hesitation in imposing revenue duties amounting to £10 or £11 per family on a man receiving 7s. 6d. per day.
– The honorable member must not discuss that matter.
– The honorable member for Flinders said that he would distinguish between existing and future mortgages, and pointed out very rightly that future mortgages could be effected with a view to evading this taxation. The same objection would apply, however, even if this amendment were carried. A man could renew an existing mortgage. If he could not, this amendment would be of little advantage to him, because his mortgage might fall due next month. If he had £20,000 worth of land, and a mortgage of £12,000 upon it, he would take very good care not to pay off that mortgage when he knew that so long as it remained unpaid he would not be subjected to the tax on that amount. He would invest in a mortgage on another man’s property the money that he had accumulated to pay off his own, and the interest that he thus earned would pay interest on his own mortgage. In that way the existing conditions could be perpetuated.
Take a man having £100,000 worth of land, with a mortgage of £60,000 upon it, and consider why he mortgaged it. What is the history, at any rate, of Victoria?
– I ask the honorable member not to go into that matter. Clause 27 is now before the Committee.
– I shall deal with the case of a man with £100,000 worth of land and a £60,000 mortgage on it, the mortgage having been brought about by that man swallowing up his neighbours and going in for a policy of land aggregation. So long as that man is given an exemption for his mortgage, the present congestion and aggregation of land will continue, and one of the main objects of the Bill will be absolutely defeated. If he is given the £5,000 exemption under the Bill, and a £60,000 exemption in addition, he will have an exemption of £65,000. We are asked to agree to that, and go back to our constituents and say, “ We have imposed a land tax that will break up land monopoly ! “ I should not be game to face my constituents if I did so. I would resign before I would go back to them under those conditions. I have always held that the man who is struggling upon the land under a mortgage should have some sympathy, but when I remember that the majority of those men, who are the genuine producers on the soil, will be exempt now under the Bill, I do not think there is any need for an amendment.
.- I want to make a suggestion to get over the rather oppressive burden of this tax upon some existing owners. I quite agree that mortgagees ought not to be taxed in this Bill. This is a tax on land, and I quite appreciate, from the point of view of the Government, the desirableness of not putting a tax on mortgagees in proportion to their so-called estate in the land - personally, I do not think they have any - because that policy might check the tendency, which the
Government wish to promote, towards the subdivision of the land. At the same time I am sure that fair-minded members would not wish to ruin a lot of people who have been endeavouring to keep their homes or their pastoral runs together, and have” been obliged to run up fairly big mortgages in the expectation of better seasons and better conditions. No great loss of revenue will accrue through recognising that, in a transition from present conditions, under the operation of a very drastic system of taxation, certain existing interests are entitled to consideration. If this were a tax upon the unimproved value all round, taxing every one without any allowance at all, I should make no appeal for any one, because every one who owns land must expect to bear his ordinary share of the public requirements for revenue purposes. Every citizen ought to bear in mind the contingency of being called upon to pay a fair share towards the revenue requirements of the year, but no citizen could anticipate changes in policy such as this Bill brings about. He could not anticipate, for instance, that we would step in to aid the States in accomplishing a policy which they have been rather slow in giving effect to themselves. These are not matters of ordinary expectation to the people, and so these persons could not have gone into pastoral or other pursuits in the expectation that a tax of this sort, with its very heavy incidence, would suddenly come upon them. We find in the Bill already various transition provisions. There is one, for instance, giving a period of three years to mortgagees in possession at the date of the passing of the Act, and various other concessions have been made by the Government to the reasonable criticism of members. 1 believe that there may be a desire on all sides of the House that families, no matter what grade of life they are in, who are dependent upon mortgaged estates, and could not reasonably have expected such a tax as this to be suddenly placed upon them, should be allowed three or four years to make arrangements for subdivision. Is that unfair, or will it amount to a very big leakage, or substantially check the tendency to subdivision? Will it not rather prevent the sudden glutting of the market with estates, and so rather lessen the loss which would otherwise be caused to many deserving holders by a sudden glutting of the market? I do not believe in placing any of the tax on the mortgagees, because it is not a wealth tax.
If it were a property tax we might tax a man on his balance-sheet, but this is a tax on land for a specific purpose, and primarily we aim at taxing the unearned increment of the land. That being so, we ought to stick to principles, and on the whole the Government were perfectly right in refusing to regard the mortgagee as a joint owner of the land, because he is nothing of the sort. Would it not be fair, however, to make a temporary provision to avoid the cases of. great hardship that have been so well put by the honorable member for Ballarat and others? Following up the suggestion of the honorable member for Richmond, and putting it into, perhaps, a more definite form, I would suggest that a provision of this sort might be made -
Provided that, until the 30th June, 1915, from the taxable value of the land subject to mortgage in respect of moneys owing on the 30th September, 1910, there shall be deducted an amount bearing the same proportion to the taxable value that the amount of moneys for the time being secured by mortgage bears to the improved value of the land.
I specify there the taxable value of the land. That is the total unimproved value after the£5,000 deduction is made. The £5,000 is deducted, not from the balance after crediting the mortgage, which would be too big a deduction, but from the total taxable value. I specify also moneys owing on the 30th September of this year, as that will cover subsequent renewals, which the amendment of the honorable member for Flinders does not. I also fix that date because, to-morrow morning, if we passed a provision of this sort tonight, they might make the necessary provision to mortgage to take advantage of it. As during the five years the mortgage is reduced, so the exemption allowed during that period will go down also. To pass that amendment would be considerate, at all events, and violate no principle. I am not tied to the five years’ period, but understand that that would commend itself to the fair sense of honorable members. If nothing of the sort is done, however, the clause will really crush a lot of families who cannot make provision suddenly to meet the effect of this legislation, without there being the smallest intention that they should be unnecessarily sacrificed to the exigencies of the contemplated subdivision.
.- If we were considering how to make an attack upon any particular class or section of the Australian public, I could congratulate the Attorney-General on the drafting of this clause. When he was addressing the Committee, I understood him to say that the persons whom this Bill was “ attacking “ would escape unless it was passed with this clause in its present shape ; and that, without it, the Bill, as a whole, would hardly be worth the paper on which it was printed.
May I suggest to him that some tribunal outside this Chamber may take the view that the clause being drafted in . its present shape, argues that this Bill is not really a taxation Bill at all, but aims at land policy, and is consequently outside the constitutional powers “of this Parliament? Does the honorable member think that the obvious meaning that lies behind the clause will be passed over when the Bill and the clause have to stand the test of investigation as to their constitutionality? It will become clear to any Court that investigates the meaning of the clause that, inasmuch as it will tax a man for what he has not, it is not really a taxing measure, but a measure to compel him to divide land which he holds under a mortgage that has enabled him to buy the property. I therefore suggest to the Attorney-General, if he wishes to save his measure, that he should look into this business for himself to see if it would not be wiser to take some such step as would perhaps disguise his anxiety “ to attack “ this particular section of the Australian public, and so still be able to pose before the Law Courts of this country as an honest patriotic Australian, who seeks no other end than the raising of revenue by the powers reposed in us under the Constitution.
– Such foolish personal gibes ought to be kept out of the debate.
-r-The honorable member is quite right, and I hope he will keep silent.
– I ask the honorable member to confine himself to the clause.
– I am doing so. I am showing how this clause, which only too clearly expresses the intention of the AttorneyGeneral “ to attack “ a section of the Australian public, will expose the Bill as a whole to the humiliation of being rejected upon grounds of unconstitutionality.
– Then why worry about the Bill? Why not let it go?
– I do not care whether we leave the clause as it is, or alter it, for that reason, but it is my duty to point out that such proposals as this can cut both ways.
One feature about the amendment of the honorable member for Flinders is worthy of consideration. It is usually considered very improper to pass retrospective legislation. Assume that this Parliament passed a measure raising our salaries retrospectively for the last ten or fifteen years. Would there not be a howl of indignation throughout the country?
– The honorable member is not in order in discussing that question.
– With all deference to you, I submit I am in order in giving parallels. Conversely, this Bill, as a whole, and this clause, declare to the people of Australia that it is not the intention of this Parliament that they shall own large areas of land without suffering penalties. This clause declares that if they borrow money in order to take up land, they shall be taxed on the full value, irrespective of the fact that they owe the bulk of the purchase money. That would be all very well if it were confined to the future ; but persons who in years past have been obliged to go into the loan market never contemplated that this, or any other, Parliament would pass mortgage provisions of this nature. So far as these persons are concerned, however, the Bill is made retrospective right to the day - on which the mortgages were signed !
If the Attorney-General wishes to burst up estates in the future, the only person he can touch legitimately is the one who owns the land ; and it is ridiculous to say that the mortgagee is the owner, because he merely gets a promise to pay from the mortgagor. It is only under the Welsh system of mortgage, which is very rare in this country, that the land itself is made solely responsible for the debt. Under the Australian system the man is responsible, and he uses the land as a sort of first security. Consequently, We cannot regard the mortgagee as having any interest in the land until he becomes the mortgagee in possession through foreclosure - until then it is a mere relation of debtor and creditor. The Attorney-General . cannot attempt to make the mortgagee pay the tax by arbitrarily declaring him to have an interest in land which he does not possess, and over which he has no control.
So far as past mortgages are concerned, they were entered into, as I say, without any anticipation of this measure; and the Attorney-General might accept the amendment, or think of some other way to meet an obvious difficulty. I do not wish to argue by means of bad cases, although I have in my mind quite a number. For instance, a man may have an estate worth £20,000, on which he owes £15,000; and while he does not own more than .£5,000 worth of property in the whole wide world, he is to be taxed as if he possessed £20,000 worth.
– Surely the honorable member does not approve of men over-
Teaching themselves in that way? Why should they not be satisfied with a mortgage for £6,000 ?
– The honorable member is the sort of man who would never make a good pioneer. The men who have developed the country are those who have gone out prepared to take risks - men who have taken up country and borrowed money on it to clear it and render it fit for production - and yet the honorable member calls that “ overreaching “ !
– They do that in my district by buying tin at £60 and selling it at .£150 !
– I do not care how the honorable member says the thing is done; the honorable member will find that the only man worth anything as a pioneer is he who is prepared to take risks.
– He may be a valuable man; but those who succeed him do not take risks.
– But in this case the honorable member seeks to penalize the man who does take, and has taken, risks - the man who. has backed his own judgment as to the value of land, and who has borrowed money to enable him to make it productive. I have no quarrel now with the proposal to legislate in this way for the future ; but to penalize in this way a man who has entered into a legitimate transaction, perhaps twenty years ago, and is now just beginning to find himself able to clear off his indebtedness, is unjust and unBritish.
– Such a man as the honorable member has instanced would have to pay ,£900 a year in interest at 6 per cent., while thu land tax will be only ,£93.
– If the honorable member had £5,000, would he not feel aggrieved if he were taxed as though he possessed £20,000 ? And we must not forget that these obligations have been entered into without any anticipation of legislation of this kind.
– The honorable member would have an exemption of £20,000 !
– So far as past mortgages are concerned, I would exempt them or give reasonable notice. I do not believe in making legislation retrospective; and there ought to be fair notice of the starting of legislation of this kind. I have no sympathy with an insensate ambition to “attack” this or that section of the Australian people.
Let us deal sensibly with these great questions; and we can best do so if we consider them without hatred of this or that class of the community, treating every section according to its merits. If we do so in this case, we shall realize that the particular lands under discussion are as a rule unsuitable for closer settlement. I say without fear of contradiction that, so far as the vast majority of the cases is concerned, the man who owns land in large blocks suitable for closer settlement does not owe a penny piece on them, but is usually a rich man not affected one way or the other by these mortgage provisions. On the other hand, the man in the back-blocks who has to mortgage his land in order, perhaps, to buy stock after a drought usually owns areas not suitable for closer settlement. These provisions will to a great extent show the Courts of the country that this is not a taxing measure so much as a policy measure, and the legislation will drive out of occupation lands which are not suitable for closer settlement, and which must, therefore, revert to their primeval state.
– I must repeat that, in my opinion, the Government are making this too much of a revenue-producing measure. That was not the idea expressed by the people of the country ; and the Government are unwise in not strictly adhering to a measure designed to have the effect of subdividing large estates. I listened very attentively to the speech of the Attorney-General ; and I must say that it caused some little amusement in my mind. I do not think that the Attorney-General realizes what this measure means - I do not think he realizes that this is the most serious proposal in connexion -with the land question ever made in Australia.
– Where is the Honorable member getting his cheers from - the Opposition ?
– I do not care where the cheers come from - I know something of the subject, and I am stating what is the fact. In the matter of taxation it is not good to attack viciously any section of the community. If a person owns a property, large or small, and that property is mortgaged, he will be practically ruined if he is compelled to pay what ought to be paid by the mortgagee. Our financial system has been such that the men who are most prosperous are those who have been prepared to take risks. In that way the country has been developed ; and it is a trite saying that an enterprising man is prepared to mortgage his shirt if he sees a prospect of making money.
– That often means a legacy of trouble for the descendants !
– Then the trouble should not be intensified all at once by means of proposals of this kind. As has been pointed out, the Bill is retrospective in its operation ; and in that respect it is unfair to people who have mortgages, inasmuch as they are not given time to enable them to make new arrangements. I give the Attorney-General credit for the ingenuity with which he presented his case. His speech doubtless was a very good one from his point of view ; calculated to take very well on the hustings in West Sydney, and, indeed, it took very well here with one section ; but, at the same time, I repeat that I do not think that he, or, indeed, the Prime Minister, knows what this proposal means. I am as much in favour as any man can be of taxation for the purpose of preventing the aggregation of large estates ; and so I told my constituents, so far as I was able. I was not sent here, however, to support a taxing measure, and a taxing measure only; and, in my opinion, the country fs not behind the Ministry in so regarding this clause of the Bill. The question now raised is not a new one, but has often arisen in every Parliament of the States. A measure of this kind, if designed for revenue purposes, should be accompanied by an income tax. This is the only way of making the man who has lent the money pay. Under all the circumstances the Government should seriously consider the situation. As I said before, I am sorry that the Government should be in need of money; but the necessity would not have been so great if they had not promised £5,000,000 to the States. Why are we asked to impose taxation for the benefit of the States? Why not let the States themselves impose taxation if they require money? I think I hear mutterings and grumblings from the right honorable member for Swan.
– I was saying that the Government have plenty of money - £3,000,000 more than we had last year, or £4,000,000 more, if we include the proceeds of this proposed taxation.
– If the Government require the money to get a large revenue, it will be necessary to impose an income tax. The constituencies asked us to tax the unimproved value of large estates. I have shown that, in my electorate, twenty persons own 2,000,000 acres of as good agricultural land as there is in New South Wales. But we have not been asked to tax merely for the sake of taxing ; and I am not going to vote for that.
– We must have revenue.
– That should be got by means of an income tax. A mortgagor is in many cases only nominally the owner of his property, the mortgagee being the actual owner ; and the mortgagor should not be called on to pay taxation in respect to interest held by the mortgagee. To get at the mortgagee, we should impose an income tax. I know that this matter cannot be dealt with in a haphazard way. The Government need revenue, and Ministers wish to impose a tax on unimproved land values to burst up large estates. But those who are struggling on the land to make a living must not be placed in such a bad position that, with no time allowed to make permanent arrangement, they will be like persons scrambling from a sinking ship. The extent to which money has been lent on land by banks, investment companies, and private persons, is enormous ; and I am afraid that if the Government proposal is carried, there will be a revulsion of feeling which will bring about the repeal of this measure at the first opportunity. I cannot now suggest a proposal for adoption ; though I do not quite agree with the amendment. In my opinion, mortgages should come under some general provision applying to mortgages, whether made before or” after the passing of the measure. Ministers will do well to consider how they can ease the position of the mortgagors, who are in difficulties through, no fault of their own. When they borrowed, they did not know that this taxation was to be imposed ; and if they are pounced upon before they have time to make other arrangements, the Ministry will find that it has made a mistake, because the people will rise against this legislation. I ask the Government not to accept the proposal of the Opposition, but to seriously consider how relief can be granted. It will be better to provide that any system which may be adopted shall operate for a long, rather than for a short, time. But I should like to see a general system, which will give relief to the very large and deserving class that has borrowed on the security of land for the improvement of its properties.
– I am sorry that the honorable member for Hume takes the view of the clause which he has expressed. The amendment would exempt from taxation two-thirds of the taxable value of the lands of Australia, because it would remove from the operation of the clause all existing mortgages. According to’ the honorable member for Gippsland, the greater part of all alienated land is mortgaged j and I believe he is right, the advances being equal to two-thirds of the taxable value of the land upon which they have been taken. The honorable member for Hume said a good deal about the Government’s political immaturity, and suggested that we do not understand the effects of mortgages ; but, probably there is not a man in the Chamber who has not, at some time in his life, engaged in the fascinating pastime of raising the wind. I have achieved a reputation for great wealth by following the example of the reckless pioneers of whom the honorable member for Wentworth spoke. On the strength of having borrowed money on mortgage I have become, in the estimation of honorable members opposite, the possessor of millions, a reputation which has cost me much in money, and has shaken the faith of some people in the soundness of my democratic principles. But my experience has been that the greater portion of my working hours has been devoted to earning the interest to pay the philanthropic mortgagee. The proposal of the amendment is that I should pay my share, and that the mortgagee should not pay his. Does the honorable member for Hume call that justice? I have already explained what, in my opinion, are the objections to the taxing of the mortgagee according to his interest in the land, explaining that to do so would be to remove an inducement to subdivide. Under the Bill a mortgagee not in possession will not be taxed, but when he enters into possession, he will be taxed, not at the rate paid by the mortgagor, but at the higher rate imposed on large aggregations of landed estate. Take the case of a bank, which has perhaps £500,000 lent on mortgage ; if it foreclosed on an estate worth! £40,000, it would probably have to pay a tax of 6d. in the £1 on that value, and it would therefore be a matter to consider whether it would be worth while to pay z per cent, for the luxury of foreclosing. Under the proposal of the honorable member for Flinders, the mortgagee would be taxed whether he entered into possession or not, and thus would have no inducement not to remain in possession or not to foreclose.
Again, if the mortgagee is taxed in any case, the result will be to raise the price of money. Suppose that mortgagors now pay 5 or 4! per cent, interest, if mortgagees are made liable to taxation the rates will be increased by 5s. or 10s. per cent., and (he mortgagor will pay. Thus the mortgagees will cover their liability and have something to spare, and while ostensibly paying the tax, will really be making money out of it. Although a land tax cannot be readily passed on, those who have money to lend may charge within reason what they like, and money will be worth more if mortgagees have to pay tax or> their interest in the land upon which they advance money. The adoption of the proposal of the honorable member for Flinders would prevent subdivision, and would induce mortgagees to enter into possession, while if the mortgagees are taxed, they will pass the tax on to the mortgagors by raising the price of money. Our provision is the same as that concerning the New Zealand graduated land tax, which has been in operation for nearly ten years.
– In New Zealand there is an income tax, as there should be here.
– We have nothing to do with that now j no doubt the States will attend to the imposition of income tax.: Mr. George Fowlds, the New Zealand Minister for Education and Immigration. interviewed in Sydney last week as to the effect of the land tax of the Dominion, said -
In my opinion the tax on unimproved land values and the municipal land tax have been very important factors in the steady prosperity of New Zealand for a great many years past. We have a tax as high as 6d. in the £1 on large estates, and it exercises a steady influence in preventing land speculation, because, to some extent, it takes the large holders out of competition, since with each few thousand pounds they add to their properties the rate for the whole is increased. Then there is a stiff absentee tax on top of that.
I wish to point out to my honorable friend that the tax which has had that effect has included in it the provision to which he takes exception. I ask the Committee to realize that the object of this Bill being the encouragement of land settlement, every inducement must be held out to the great land-owners to subdivide their holdings, and that the inducement we offer them is that if they subdivide they pay no taxation. I ask the honorable member for Hume to realize that after subdivision the mortgagor will pay no tax whatever. That is a point which he has failed to recognise. The only mortgagors who will have to pay the tax are those who have £30,000, £”40,000, or £50,000 worth of land. A mortgagor who has £10,000 worth of property, £”5,000 of which consists of land and £5,000 comprise improvements, will pay nothing. A man who has £20,000 worth of property, of which £10,000 represents the unimproved value and £10,000 improvements, and who has borrowed £5,000 on mortgage, will pay on £5,060 about £”20 16s. per annum. It cannot, therefore, he said that the tax, so far as it affects those who have property worth £20,000, is worthy of consideration. It is for the great land-owner, the man who has borrowed £100,000 in respect of a property worth £150,000 - it is for these Leviathans in the money market that the Opposition are putting up their petitions this evening.
Mr. JOSEPH COOK (Parramatta) (10.3]. - On the contrary, the Leviathans of the money market are going to escape this tax. That, in a sentence, is the answer to the honorable member. He does not propose to touch them, and our complaint is that he is permitting them to escape. He is putting the burden which they otherwise would bear on those least able to bear it - the struggling mortgagors. The Attorney-General has quoted figures to show ‘ what the amendment will mean, and he says that it will exclude from the range of this taxation two-thirds of the taxable value of Australia. Let us put the position the other way round. Under this Bill two- thirds of the mortgagor landowners of Australia are to be taxed in a ruinous and unjust fashion.
– Not one-third of them come under this tax.
– The honorable member seems to think that even if the Government would ruin all the people in Australia by imposing this tax, they must, nevertheless, put it into operation. It would be far better for them to let it go altogether if they could not make it fair as between man and man. A sense of justice never seems to enter the minds of the Government and their supporters. It is only the completeness and penal character of this tax that they wish to fix upon the community, irrespective of whom it hits or in what way it hits them. The Attorney-General says that he has had some practical experience of mortgages and such like things, and that all that he has ever got out of them is a reputation. I congratulate him upon his reputation. I have been listening very carefully to the defence of this clause by honorable members opposite. The AttorneyGeneral has twice defended it on the sole ground that it will help to break up large estates. The honorable member for Corangamite set up an elaborate argument to show that the tax would be a mere fleabite, so to speak, and that there would be no inducement to do anything but pay it.
– That will be so, so far as the small man is concerned.
– What does the honorable member call a small man?
– A man with a property worth £”20.000 or £30,000.
– Is he a small man?
– Relatively, he is.
– I congratulate honorable members opposite on the way that their opinions are growing. The owner of property of the unimproved value of £20,000’ or £30,000, the AttorneyGeneral now tells us, is a small’ man.
– I say that he will pay a comparatively small tax.
– Really, the honorable member’s experience is causing his notions to grow. If honorable members opposite keep on growing in their opinions in this way, before the Bill is through we shall have the Attorney-General regarding the possession of ,£100,000 worth of land as a mere trifle, and saying that the great Leviathans are as yet untouched. Then the honorable member goes to New Zealand to find a defence for this tax. Is he prepared to give us the New Zealand tax for Australia?
– The AttorneyGeneral has been quoting a statement by a partisan critic of the New Zealand Act, and has been trying to lead the Committee to believe that this Bill provides for less taxation, whereas every one knows that it is infinitely more drastic. Why did he not tell us that the New Zealand Act makes special provision for large city blocks? In many cases city business areas are exempt.
– The honorable member is wrong.
– I am not wrong. Under the New Zealand Act there is no graduation in respect of city business areas. It is a much milder measure than is this, and it is idle to quote portions of it unless the whole Act be placed side by side with this measure. I should like the honorable gentleman to remember that the New Zealand Act has been amended nine or ten times. We shall not need to trouble about these mortgagors by the time that we have had a few amendments of this Bill. We are asking for relief for present, not future, mortgagors. The present mortgagors will have had time to shift for themselves before eight or nine amendments of this measure have been made. The AttorneyGeneral has been drawing parallels where no parallels exist, and his quotations only show the reasonableness of our contention that there should be some relief for the mortgagors who will be hit so heavily under this Bill. Does not the honorable gentleman know that the mortgagor will not be permitted to subdivide his land without the consent of the mortgagee?
– In some cases he can, and in some he cannot.
– In the majority he cannot. He is tied hard and fast by his mortgage covenant.
– I am willing to remedy that.
-If the honorable member will amend this Bill so as to release the mortgagor from-
– I said that where the mortgagor had not the power of sale I would endeavour to find some way of relieving him.
– Will the honorable member give him relief in that case?
– That is something very substantial, and approximates to dealing with the mortgagor in a just way. It is useless to talk of subdivision where the covenant itself prevents subdivision. That is one reason why we have had to omit Crown lessees from the operation of the Bill. No matter how we might tax the lessees of the States, they could not subdivide their lands unless the State Governments gave them a special permission to do so. They are tied up by their covenants; The more I think of this question the more I am unable, so far as the equities of this taxation are concerned, to see what is the difference between a mortgagor and a lessee. We have been dealing to-day with lessees and lessors. We have tied them together, and made them joint primary owners. Both are liable for taxation, and what is the difference, so far as the equity and justice of this taxation are concerned, between a mortgagor and a lessee? I cart see none. It is useless to tell me that the mortgagee has no control over the land.
– Only the Crown lessees are exempt.
– But the lessor and the lessee are tied together in this Bill. Both are called primary taxpayers, and! have to pay the tax in proportion to their interest inthe land. A mortgagee has as much direct control over the land as a lessor has, and is tied up by his covenants in just the same way. Land cannot be sold or cut up in any way until those covenants have been dissolved. That being the case, both are in the same position so far as taxation is concerned. If the Government are going to make the lessor pay some of the tax, I think we should give the mortgagor relief to the extent that his mortgage goes. The land that he has mortgaged is, for all practical purposes, no more his own than if he had not owned it, but merely leased it. The honorable member for Corangamite quotes only the case of the man who is doing first-rate out of his land. He says nothing about men who are struggling to get on their feet, whose land has not yet reached its full productivity, and to whom the amount of this tax may make all the difference between going on and going out. There are plenty of those cases in this country, and it would have been a bad thing for Australia if we had not had suchmen as those, prepared to run all the risks of pioneering enterprises, and, if need be, to lose money for the present, in the hope of ultimate gain. All these cases are left quite out of the range of the honorable member’s argument, and the case is put in its most roseate hues.I am glad to hear from the Attorney -General that he will see that the mortgagor gets some relief to the extent that he is tied by his mortgage covenant. If the honorable member does that, it will afford very substantial relief in cases where otherwise a glaring injustice would necessarily be done.
.- I desire to move the amendment I foreshadowed in the form suggested by the honorable member for Angas. I move -
That after the word “estate,” line 7, the following words be added - “ Provided that until the thirtieth June, 1915, from the taxable value of land subject to mortgage in respect of moneys owing on thirtieth September, 1910, there shall be deducted an amount bearing the same proportion to the taxable value that the amount of moneys for the time being secured by mortgage bears to the improved value of the land.”
Question - That the words proposed to be added be so added - put. The Committee divided.
Majority … … 6
Question so resolved in the negative.
.- One means which the Attorney-General might consider for giving relief to mortgagors is to tax them at a rate determined by the value of the equity of redemption. That is to say, he might tax the whole value, including the value of the mortgage, but determine the rate in that way, not for all time, but for a period of a few years.
– Upon existing mortgages ?
– Yes, upon existing mortgages only. That might be a fair solution, because they would still bear a rate for revenue purposes, and it would only apply for a few years, the rate not being an onerous one.
– Section 36 of the New Zealand Land and Income Assessment Act 1900, was as follows: -
Ordinary land tax on land shall in the case of each owner thereof be assessed and levied on the total unimproved value of all land other than mortgages, and on the total capital value of all mortgages of which he is the owner respectively, at noon on the thirty-first day of March in each year, after deducting from the sum total of such values the capital value of all mortgages (if any) due or owing by him on such land on that date, and also deducting from the value then remaining the special exemption following.
So that, when the New Zealand Act was originally drawn, the mortgagors were given time. We are giving them no time under this clause.
– That section of the New Zealand Act had to do with the flat rate.
– Ours is not a flat, but a graduated, tax.
– For how long was the New Zealand exemption?
– I think for nine years ; but when advantage was taken of it for fraudulent purposes an amendment had tobe brought in to stop it. Our Bill is not distinguished from the existing New Zealand Act, in that neither gives time to the mortgagor. We are not giving the mortgagor the slightest consideration, even for twenty-four hours.
Clause agreed to.
Clause 28 -
A mortgagee, or other person owning any estate or interest in land by way of security for money, shall not be liable to land tax in respect of that mortgage, estate, or interest :
Provided that a mortgagee in possession of land, or any other person in possession of land by way of security for money, shall so long as such possession continues (though not to the exclusion of any other person) be deemed to be the owner of the land ; and the mortgagor shall be deemed to be the primary taxpayer, and the mortgagee in possession to be the secondary taxpayer; and there shall be deducted from the tax payable by the latter in respect of the land such amount (if any) as is necessary to prevent double taxation.
– I move-
That the following proviso be added : - “ Provided further that the last preceding proviso shall not apply -
to any mortgagee or person in possession whose possession began before the first day of July One thousand nine hundred and ten ; nor
to any mortgagee or person in possession until a period of three years after he has entered into possession ; but any such mortgagee or person in possession shall, if the mortgagor makes default in the payment of land tax in respect of the land, be responsible for the payment of the tax due by the mortgagor, which payment shall be deemed to be made by him on behalf of the mortgagor.”
The object and intention of this proviso is that the provisions of the clause relating to the liability of the mortgagee in possession shall not extend to any mortgagee or person in possession, when the possession began before the 1st July this year, nor to a mortgagee in possession until a period of three years after he has entered into possession. This allows all mortgagees of existing mortgages to come under the same rate they would have come under if the land occupied by the mortgagor was then the only land occupied by them. It does not throw on them the liability which attaches to ordinary mortgagees in possession, of being taxed on the higher rate. The whole of the provisions of clause 28 do not apply to mortgagees in possession who took possession before 1stJuly. In regard to a mortgagee in possession after that date, it is proposed to allow him to be in possession for three years before he is forced to foreclose, in order to enable a mortgagor to get out of the hands of the mortgagee in what may be termed a reasonable period. We allow three years, because in this country there may be one or two bad years ; although the mortgagor usually gets into difficulties as the result of a number of bad years. We, therefore, as I say, allow three years before we put the screw on the mortgagee by means of the heavier rate, and so induce him to foreclose. He gets no benefit for not foreclosing, if we place the same taxation on him in possession as if he foreclosed. This carries out the principle of, as far as possible, preventing any further aggregation of estates, and enables the mortgagor to keep as far as possible out of the hands of the mortgagee.
.- We shall all agree, I think, that this is an exceedingly fair provision ; and it is all the more surprising that this consideration should be shown to the mortgagee, while none whatever is shown to the mortgagor. If a mortgagee is in possession before the 1st July he can apparently remain there; and if he goes into possession after that date he has three years to clear out. It is, as I say, a fair provision; but I cannot understand this tender solicitude for the creditor.
.-I should like to hear what the AttorneyGeneral has to say in regard to the remarks just made by the honorable member for Gippsland. Is it a fact that if a mortgagee is in possession before this Bill becomes law, he is permanently exempt?
– A mortgagee is not liable in respect of his mortgage, but if he goes into possession he becomes liable for the payment of the tax on the whole of his own land, together with the particular estate of which he takes possession. Supposing itto be a £40,000 estate on which £30,000 has been lent, and supposing, further, that the mortgagee owns besides an estate of his own worth £20,000 or £30,000, on which he is paying the lighter rate ; if he goes into possession of the estate, he immediately pays a tax on the whole at the higher rate. That is to say, he pays twice as much per £1 on his other land as well as on his mortgaged land. If the tax on the estate were, say, £100 per year, and the mortgagee goes into possession he might have to pay, not merely £100, but £200 a year, because he would be paying on a higher rate than did the mortgagor. This clause is for the purpose of enabling mortgagees of existing mortgages to incur no greater liability than the mortgagor incurred in respect of the particular piece of land held under mortgage. By imposing no greater liability on the mortgagee than on the mortgagor we offer no inducement to the mortgagee to foreclose; and it is very necessary that the Committee should accept the amendment.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 29 - .
Any person in whom land is vested as a trustee shall be assessed and liable in respect of land tax as if he were beneficially entitled to the land :
Provided ,that, where he is the owner of different lands in severalty, in trust for different beneficial owners who are not, by reason of joint occupation or otherwise, liable to be jointly assessed, the tax so payable by him shall be separately assessed in respect of each of those lands :
Provided also that when a trustee is also the beneficial owner of other land, he shall be separately assessed for that land, and for the land of which he is a trustee, unless by reason of joint occupation or for any other reason he is liable to be jointly assessed independently of this section,
.- Perhaps the Attorney-General will tell me whether the amendment which he intends to move in this clause meets the particular cases I shall rapidly put before him. There is an estate of the total unimproved value of £38,600 which is divided into three pastoral properties not worked conjointly, as they are separated by hundreds of miles. The eldest son has a life interest in the property of the unimproved value of £19,000, on which, if he were the absolute owner, he would pay £[85 per annum; the second son has a life interest of the unimproved value of £7,600, .on which, if he were the absolute owner, he would pay £11 per annum; and the third son has a life interest of the unimproved value of £12,000, on which, if he were the absolute owner, he would pay £[36 per annum. As they have only life tenancies the Bill under the aggregation clause imposes taxation amounting to £297, making the eldest son’s liability £140 per annum, the second son’s £60 per annum, and the third son’s £97 per annum - increases respectively of £55, £49, and £61. This payment they would avoid if they owned their properties, as they might if the will contained a power of sale. Unfortunately it does not.
– How many beneficiaries are there?
– All three are mortgaged, and subject to charges of fixed annuities in favour of the testator’s daughters.
– Can they sell?
– No; there is no power of sale. I do not think that case is met by the Bill.
– How was the estate left in that way?
– By will, made long before this legislation was submitted. I have here particulars of another case, in which the total unimproved, value of land in the estate is £33,200, divided into three agricultural properties, separately worked by life tenants.
– How many?
– Three. Here, again, the tax, if there were a power of sale, could be made in one case £30 instead of £71, in the next ,£46 instead of £109, and in the third £19 instead of £45, which means a penalty in the first case of £4r, in the second of £63, and in the third of £26. There is no power of sale. I have particulars of a third case, in which estates of less unimproved capital value than £[5,000 will yet be liable under this Bill to taxation. In this instance, the total unimproved value of the land is £11,000. It is divided into four parts, for which there are four life tenants. The first has £”2,100 worth of land, which would be exempt from taxation if he were the absolute owner. The second has £[5,200 worth of land, on which he would pay a tax of £[1 if he were the absolute owner; the third has £2,500 worth of land; and the fourth £1,500 worth of land, both of whom would be exempt from taxation if they were the absolute owners. In this case, three out of the four beneficiaries would be exempt, and the fourth would have to pay a tax of only £1, if there were a power of sale or subdivision.
– Is there not an amendment suggested providing for specific exemptions in such cases?
– It does not appear to me to apply to these cases, except in part, and quite inadequately. In the case just quoted, by aggregation the taxation would be heavily increased. In a fourth case, there is unimproved land value in a city property of £15,000, which, of course, is unsubdividable, and a country estate the unimproved value of which would be £[25,000. There is no power under the will for these properties to be partitioned. If there were, the property would be divided amongst eight beneficiaries, who would all be exempt from taxation, but, as it is, they will have to pay a tax of £316 a year. I have another case of an estate, the total unimproved land value of which is £51,667. It includes mineral-bearing land, grazing land, and suburban properties. There are three life tenants, who are without the power to sell, and under the aggregation provision their extra penalty would, in the case of the first two, amount to £95 each per annum, and in the case of the third to £22 per annum. I should like to know whether each of these cases would be met by the amendment which the AttorneyGeneral has tabled.
– I move -
That the following proviso be added to the clause - “ Provided further that, in the case of land vested in a trustee, under a settlement made before the first day of July, One thousand nine hundred and ten, or under the will of a testator whodied before that day, upon trust to stand possessed thereof for the benefit of anumber of persons who are relatives of the settlor or testator, then, for the purpose of ascertaining the taxable value of the land owned by him as such trustee, there may be deducted from the unimproved value of the land, instead of the sum of Five thousand pounds as provided by paragraph (b) of sub-section (2) of section ten of this Act, the aggregate of the following sums namely :
In respect of each share into which the land is in the first instance divided under the settlement or will amongst such beneficiaries, the sum of Five thousand pounds, or the unimproved value of the share, whichever is the less.
Provided further that a trustee shall be assessed as an absentee if more than two-fifths of the beneficial interest in the land is owned by absentees, and not otherwise ; and in that case, if any of the beneficiaries is not an absentee, there shall be deducted from the tax payable by the trustee in respect of the land, and from the contribution of that beneficiary to that tax, an amount equal to the difference between -
the amount which would be contributed by that beneficiary to the tax which would be payable by the trustee at the rate applicable to absentees; and
the amount which would be contributed by that beneficiary to the tax which would be payable by the trustee at the rate applicable to residents.”
I see nothing in the clause as it stands that involves a general assessment where, because of the nature of the property,or the terms of the will or settlement by which it is devised, it is capable of being treated separately.
– Even although it is vested in one trustee?
– Yes ; even though it is vested in one trustee. For instance, a man leaving a station, farm, and business, may leave a life tenancy in the station to one son, the farm to another, and the business to a third. In such a case, I have not the slightest doubt that each interest would be capable of being treated separately. Where that could not be done, the proviso I have moved would deal with the matter in another way, and give every beneficiary the benefit of a separate exemption. The effect of this on the various cases quoted by the Leader of the Opposition would be this : In the first case quoted, there are three life tenancies with total unimproved value of £38,000. The aggregate exemption there would be £15,000 instead of£5,000. That would reduce the total unimproved value to£23,000, and the tenants would pay the taxation on that amount instead of on £38,000. In the next case quoted of four life tenants with an estate of the unimproved value of £11,000, there would, of course, be no taxation, in view of the separate exemptions. In the next case, with eight beneficiaries, and an estate of the unimproved value of £40,000, there would be no tax payable. In the last case mentioned, of three life tenants, with an estate valued at £51,000, there might be another beneficiary;
– There are other beneficiaries in two of the cases.
– If there were only three beneficiaries in the case quoted, each would get an exemption of £5,000, or a total exemption of £15,000, leaving a balance of £36,000 on which taxation would have to be paid. I consider that beneficiaries have very little to quarrel with in this provision. Under the clause itself, they may have the benefit of a separate assessment, according to the terms of settlement, and under the amendment they will have the benefit of separate exemptions which, in some cases, will relieve them entirely from taxation under this Bill, and in every case will materially reduce the unimproved value on which they will be liable to taxation.
– I believe it is proposed to recommit certain clauses of the Bill. From the honorable gentleman’s statement, it would appear that the clause, if amended as proposed, would provide for some of the cases I have quoted. As that is not so in all, I will ask the Attorney-General to consent to a recommittal of the clause.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 30 agreed to.
Clause 31 - (1.) Land owned by a married woman for her sole and separate use shall be liable to assessment and taxation as if she were unmarried. (2.) Where a husband and his wife (not being judicially separated) are each owners of land, they shall be deemed to be joint owners of all the land owned by either of them.
. -Does the Attorney- General intend to insiston treating the property held by husband and wife as if it were held by one person? There might be something in preventing the abuse of an attempt to evade taxation, especially with respect to large estates in the country fit for closer settlement; but under the Bill the provision applies also to city properties. What justification is there for adopting this means of obtaining revenue?
.- I hold the opinion of the honorable member for Darling Downsthat it would be a mistake to treat the separate estates of husband and wife as if they were one. The proposal of the Bill is contrary to the trend of legislation for the last forty years regarding married women’s property. The law has tried more and more to make married women independent of their husbands in respect of property, but the proposal of the Bill is to penalize a woman for having property, and to bring her back to the old position by saying that for the purposes of the measure her property shall be treated as part of that of her husband. Settlements on a wife with a view to evade the payment of a tax might be met by the adoption of some such provision as this -
Where a husband directly or indirectly transfers land to or in trust for his wife (they not being judicially separated), and the Commissioner (subject to an appeal from his decision under clause 40) is of opinion that the transfer was forthe purpose of evading the payment of land tax, they shall be deemed to be joint owners for the proposes of this Act of all land owned by either of them.
Where there is no attempt to evade taxation the wife should not be penalized.
– No one wishes to deter persons from getting married, but the practice of transferring property to a wife to evade liabilities is well known and of long duration,’ the bankruptcy courts’ records being full of instances of it. . Therefore, it is well to be careful in this matter, and I confess that I do not at present know how far it would be safe to go in the direction suggested by the honorable member for Gippsland. If he will allow his proposal to stand over until recommittal I am prepared to consider it.
– I know of cases in which married women holding property acquired prior to their marriage, and not indebted to their husbands for a penny of it, would be penalized under this provision.
– I have said that I am prepared to go as far as is safe, and that I shall look into the matter.
– Will the honorable gentleman promise to recommit the clause?
– I am in accord with the spirit of the proposal of honorable members opposite.
.- I do not like the clause as it stands. While there may be attempts to evade taxation by settling property on a wife, the clause would operate unfairly by taxing a wife’s separate property as if it were owned jointly with that of the husband. It very often happens that women are left property by their parents, which is tiedup so that their husbands cannot touch it, and such property should not be taxed by joining it with the estate of the husband.
.- The amendment suggested by the honorable member for Gippsland is a very goodone, and should be adopted, sub-clause 2 being struck out. The retention of sub-clause 1 is necessary.
– We shall look into the matter.
Clause agreed to.
Clause 32 - (1.) Where, before or after the commence ment of this Act, an agreement has been made for the sale of land, whether the agreement has been completed by conveyance or not -
.- The Attorney-General has told us that the primary object of this Bill is to burst up large estates. Indeed, that has been the cry ever since the Bill was launched. One of the best means to induce settlement is to offer reasonable terms to wouldbe purchasers. The clause provides for a deposit of 15 per cent. to be paid by a purchaser before the sale is regarded as bonâ fide. This will havethe effect of increasing the deposit demanded by sellers of estates. In Queensland, since there has been a tendency to break up large estates, sellers have tried to meet purchasers by reducing the amount of deposit to the lowest possible figure, and in many cases no deposit whatever has been demanded. The clause contains a proviso to the effect that the Commissioner may make exemptions if he is satisfied that the proposed transfer is bonâ fide. But the Government might very well accept a reduction of the amount of the deposit in order to avoid raising the question which will often face the Commissioner as to whether less than 15 per cent. deposit has been paid by the purchaser of land. I move -
That the word “ fifteen,” line 10, be left out, with a view to insert in lieu thereof the word “ten.”
– The Government cannot accept the amendment. The clause is strictly in accordance with the corresponding sections in the New Zealand and Victorian Acts. We consider that 15 per cent. is a reasonable amount. The Commissioner need not insist upon any deposit if he thinks that the sale is perfectly bonâ fide.What more does the honorable member want? If we had made the amount of the deposit 5 per cent. some members of the Opposition would have proposed to reduce it to 2½, and if we had made it 2½ we should have been asked to reduce it to1¼. Indeed, I wonder that some honorable member opposite does not suggest that we should grant a bonus. The honorable member for Balaclava a day or two ago related the instance of a man who went on to a piece of land wanting nothing but £100 tobuy implements. In this case all that is required to satisfy the Commissioner as to bonâ fides is to show the agreement and to demonstrate the fact of possession. Whether the amount of the deposit be 15 per cent. or 5 per cent. is quiteimmaterial. The object is to get the man on to the land.
Clause agreed to.
– In moving -
That the House do now adjourn,
I desire to mention that as on Tuesday next there is a function in honour of distinguished visitors, I shall not ask the Houseto sit until 8 o’clock on the evening of that day. I also desire to intimate that we shall take Supply on Tuesday. Two months’ Supply will be asked for. To-morrow I shall give notice of motion that will enable the Supply Bill to pass through all its stages at the one sitting.
– Does the fact that Supply will be taken on Tuesday indicate that the Land Tax Assessment Bill will not be proceeded with until Wednesday? It may be convenient to some honorable members to know that.
– Weshall, of course, deal with the Land Tax Assessment Bill to-morrow, but inasmuch as it may be convenient to some honorable members, I will undertake that the Bill will not be dealt with on Tuesday.
Question resolved in the affirmative.
House adjourned at 11. 7 p.m.
Cite as: Australia, House of Representatives, Debates, 29 September 1910, viewed 22 October 2017, <http://historichansard.net/hofreps/1910/19100929_reps_4_57/>.