6th Parliament · 1st Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
KALGOORLIE TO PORT AUGUSTA RAILWAY.
Mr. RICHARD FOSTER. - I ask the Prime Minister if there is any truth in the allegations published to-day concerning the control of the east- west railway, particularly the stores control?
Mr. FISHER. - I know nothing about the matter. It may be necessary to take steps to discover whether there is any truth in the allegation referred to.
Mr. KELLY. - The medical faculty here asked that a doctor named G. C. Mathieson. who was director of the Patho logical Institute at the Melbourne Hospital, and was regarded as one of the most brilliant research men in the world, might be appointed for special investigation work at a base hospital on the other side of the world; but he was sent away as a regimental doctor, and has been lost to Australia in action. I ask the Minister representing the Minister of Defence whether he will lay the papers connected with the matter on the table.
Mr. JENSEN. - I shall bring the question under the notice of the Minister of Defence. I dare say that he will not object to compliance with the request.
Motion (by Mr. Fisher) agreed to - That the House, at its rising, adjourn until half-past 10 o’clock a.m. to-morrow.
Mr. W. ELLIOT . JOHNSON. - Has the Prime Minister yet devised any means whereby payments can be made to old-age pensioners who, because of physical or other disabilities, cannot conveniently get to a post-office?
Mr. FISHER. - The officers of the Department have told me that no set scheme will meet every case, but that they are endeavouring to get suitable individuals to assist them in this work, including permanent officers of the Commonwealth.
Preference in Employment.
Mr. GREENE (for Sir Robert Best) asked the Prime Minister, upon notice -
Is view of the recent announcement on the authority of the Prime Minister that the rules as to preference to unionists are not to apply to returned soldiers -
Is it a fact that the District Military Orders contain explicit instructions that preference is to be given to returned soldiers on condition that, if not already unionists, they immediately join a bond fide union?
Is it the policy of the Government that returned soldiers are only to be employed on the condition referred to?
What is the exact policy of the Government in regard to this matter?
Mr. FISHER. - The answers to the honorable member’s questions are -
Debate resumed from 18th August (vide page 5851), on motion by Mr. Hughes -
That this Bill be now read a second time.
– We are unfortunate in the occasion that has been selected for the consideration of this measure, which is, so far as the Commonwealth is concerned, entirely novel, and of far-reaching importance. We are now being asked to consider the assembling of machinery which is entirely new to the Commonwealth ; we are, so to speak, blazing a track, and we are doing this against time. It may well be asked whether such an important proposal should be submitted at the fag-end of what is virtually a session, when there is really not enough time for its thorough discussion. I am not now making a complaint ; I am merely pointing out the difficulty of the position. Many other countries and other States already possess machinery for the collection of income taxation, machinery which has been elaborated at leisure during many years, and is as perfect as human ingenuity can make it. But we are asked to do in a few hours, under great pressure, what has occupied other Parliaments for months, and sometimes for years.
In providing for a Federal income tax, we cannot overlook the machinery and taxation of the States. The essence of Federation, as I understand it, is not to cut across State legislation unnecessarily, nor to interfere with State obligations. To say this is not to lay oneself open to the accusation of undue solicitude for State rights. The object of Federation was to increase the sum of the States forces. It was thought that the States and the Commonwealth would work in harmony, each complementing and buttressing the other, instead of acting as jarring factors, which has too often been the case. The State income taxation differs in many particulars, the rate of tax being very small in some instances, and very large in others. In New South Wales the income taxation is very heavy, and has been increased since the war commenced, allegedly for war purposes, though one may well ask what war functions the Government of New South
Wales has had to undertake. With the war as an excuse, the income taxation of the State has been increased, and a super tax has been added. Now, after the State Governments have each had their cut at the incomes of the people, the Commonwealth is proposing to make its cut, which is to be very severe.
– It ought to be emphasized that the States incur no expenditure at all for war purposes.
– And I emphasize the statement that it is an infinite pity, particularly in time of war, when taxation must always have some relation to the financial reserve forces of the community, that these measures cannot be concerted by the whole of the parties interested, and an agreement or understanding come to on fair lines as to the amount to be imposed. Here are two authorities cutting into the same reserve; and, whatever we may say, this must lead to much confusion unless we can chart and delimit the financial spheres of the Commonwealth and States more accurately than we have hitherto been able to do.
– Has theright honorable gentleman any suggestion to make as to how to deal with that matter in an urgent time like this ?
– I confess that I have not offhand; but the right honorable member knows that I have all along been pressing him to keep in close consultation with the States in relation to all these financial matters during the war time.
– I have been doing so.
– Their interests and ours are impinging at every point, and it is of the utmost consequence that there should be cordial and conjoint effort - harmonious effort - so that we may each know what the other is doing, and thus avoid duplication and trouble from time to time.
Having made those general observations, I have to say that I regard an income tax as peculiarly appropriate in time of war. The world recognises the fact that the wealth and incomes of the community are the only financial reserves of the nation liable to be called upon at any moment when a national emergency threatens. But by the same reasoning we ought to be very careful how we draw on these national reserves; and they ought not to be drawn upon for ordinary purposes if that can be avoided. General taxation of a moderate character is fair at any time; but what we have been doing in Australia has been to cut into these reserves for developmental and political purposes, in order to carry out political theories, until now, when the real emergency and crisis arises, I am afraid we find that our sources of taxation are not so plentiful as I submit they ought to be in a young country like this.
My first point, therefore, is that this taxation, added to the taxation elsewhere, is too high in amount. If the Government had set themselves to raise, say, £2,000,000 for this year, they would have done a fair thing. It is unwise, in my opinion, at this stage of the war to exhaust our financial resources, because such a course is unnecessary. I have long held the opinion, and have expressed it in the House, that a part of the £4,000,000 could be realized by judicious retrenchment in the services - by not voting money which it is perfectly certain the Government will not be able to spend during the year. Remember, always, that in war time the financial problem is regarded as one, though every nation, so far as I can find out, separates its actual war expenditure from its ordinary services. In budgeting in the Old Country the two sources of income are placed together - both the taxation and loans - as one proposal. But what they do in England is to allocate the special war taxation specifically for the war; and I am afraid there is no such intention here - no intention to determine that the moneys shall be for war purposes, and not for liquidating ordinary current liabilities. In the Old Country, the war obligations incurred this year are, roughly, £3,000,000 a day, or a little over £1,000,000,000 for the twelve months, and the increased taxation, so far as I can find out, is from £50,000,000 to £60,000,000 only, or one-eighteenth or one nineteenth of the total obligations; while our increased taxation for the year will represent about oneninth of our total. It will be seen that our taxation, compared with the taxation in the Old Country, relatively to the total burden to be met, is nearly as heavy again.
– It will be about onetwentieth of our total war obligations.
– Does the right honorable member say that £4,000,000” is one-twentieth of the whole?
– We shall require about £80,000,000 before we finish.
– The right honorable member is now taking the whole course of the war, whereas I am dealing with only one year.
– Before we get this money, we shall have incurred an expenditure of about £60,000,000, and the liability will probably be £80,000,000 before the end.
– Of course, we may incur obligations to the extent of £160,000,000.
– But what I speak of is in sight.
– I am talking about the right honorable gentleman’s own statement, not about something unknown. Nobody knows what the total obligations may be, but we must financeaccording to the scheme laid down by the right honorable gentleman. The total he gives is, I think, £63,000,000 from the time of the outbreak of the war until the end of the year. I remind the right honorable gentleman, however, that this- £4,000,000 is not all, since there have been imposed extra Customs duties to the amount of £1,500,000, together with land and probate taxes, which in a normal year would, altogether, yield £7,000,000’ extra taxation. And £7,000,000 represent one-ninth, and not one-twentieth of £63,000,000.
– There is not such an amount of money coming in, or likely tocome in. I do not object to any statement which you make.
– The facts are there, are they not?
– That is a speculative statement.
– No ; I am going on the fact which the right honorable member himself has told us, that the new Tariff has yielded £1,500,000; the Minister of Trade and Customs has told us that himself. Now, £4,000,000 from the income tax and £1,500,000 from theTariff amount to £5,500,000. I am putting probate duty and the extra land tax down in a normal year at £1,500,000.
– Their estimate is that amount.
– No, their estimate is very much higher than that. I am under their estimate a great deal. I am pointing out that the total burden of taxation we are taking, measured by the total war obligation, is very much higher than the taxation being imposed by Great Britain. Therefore, I think it is heavy, and I am suggesting that it might have been lighter only for the one reason, that we are not through with the war yet. Our own services, it seems to me, are continually growing, and every year there is a fresh financial demand made to increase them. If on the top of that there is to be further war expenditure, as seems demonstrably certain, we ought to husband our financial resources to the utmost possible extent, so as to have something of a reserve to meet the great obligations which are certain to arise in the future. I hope that in making these remarks I shall not be considered as putting the slightest obstacle in the way of the Government in connexion with the war finance.
– Hear hear ! Mr. JOSEPH COOK. - It is far from my purpose to do so. But I do suggest to my right honorable friend that he could relieve the people of this country in respect of a portion of this tax, spread it over a more modest scale, leaving something to which recourse can be had afterwards if need be, and if the war should last, as I am afraid it is going to last, for a good while longer.
I think that the right honorable gentleman will agree with me, as any fair minded man must, that when we have an amount of taxation proposed, which altogether will mean from 8s. to 9s. in the £l at this stage of the war, it is excessively heavy. The Government are cutting into their resources unnecessarily. It would be far better to save a little and keep it to measure against the obligations which will be incurred in the future, and, I fear, before the war is over. That, therefore, is my one point of criticism concerning the tax itself. I think that the Government might very well have made it less irksome for the community at the present time; and the less irksome it is made on the business, trading and wealth earning community the more we will increase and multiply the staying power of the nation. In this matter we cannot have our cake and eat it too. As
I have pointed out before, this money is being taken from the working capital of Australia, and, therefore, will diminish by so much its productivities, and, therefore, again will diminish by so much its staying power in the war, and anything which does that cannot be a good thing for the country. If money is needed to prosecute the war we have to run all those risks, but have we really reached that point? That is the question I am stressing. I am not against the matter in and by itself ; I am only talking of time and circumstances and appropriateness. That is the purpose of my discussion of the item this morning.
Leaving that matter, I do not know whether the proposal in the Bill submitted to me by the Attorney-General is to be regarded as a law of the Medes and Persians. I hope sincerely that it may not be, for I do think that the period of assessment of the first tax ought to be shifted from December, 1914, to June, 1915. It would not be fair to tax the people on last year’s income to be paid out of this year’s income, for the latter will be abnormal in every way. It is not a fair year ; it is about the worst year which we have known for very many years as regards many of thegreat producing interests of the country. I urge with all my heart that the honorable member should treat fairly the community, who have been hit so hard, and give them a little relief in this way. And there hangs another point about which I would like to ask the Government a question. May I ask, When do they contemplate collecting this tax?
– As soon as the machinery for the purpose can be created.
– Do you propose to put it in this calendar year, for instance?
– Yes, partly.
– And raise it in this calendar year?
– Then one wonders what is going to be done in the following year. What I mean is, that the time for collecting this sort of tax ordinarily is in the beginning of the calendar year.
– The Government are proposing to collect their tax at the end of the calendar year.
– And the relation of the actual collection to the time of assessment therefore is different entirely from their relation in the States aud elsewhere. It may be an all right proposition to say that the assessments shall be to December, when the tax is going to be collected in March immediately following. But it is a very different proposition when the Government put a Bill through immediately, make an assessment and collect the tax. That I submit is not fair to the trading interests of the community nor is it fair to the Bill.
– As the. Bill stands now the Government will collect two taxes in one year.
– That is the point which I am trying to make.
– That is not so. “
– It is so.
– It will not be so, then, if it is so.
– May I suggest that it is the easiest possible thing for it to be so ? If the Government are going to collect the tax in October or November, there will be nine months in which to collect the next tax in the next calendar year and within the present financial year.
– It will be collected for the financial year ending on the 30th June, 1915 - that is the year to which it is to be applied - and the next tax will be collected and applied to the year ending on the 30th June, 1915. There cannot be two taxes collected in one year.
– No; that is satisfactory, so far, and I am glad to have that assurance from the Government. -
– It is not clear.
– I hope that it will be made quite clear in the Bill, but I am afraid that it is not so now.
– Yes, it is.
– What the honorable member says only stresses the point I am trying to put, that the Government ought not to assess the people on an income derived in the previous year, which is intended to be for 1915-16. At least make it 1914-15, the year before. Do not make it eighteen months or two years before. That is the point, and that is what the Minister proposes to do.
– It is not.
– The wealth census is to be taken for the year ending on the 30th June, 1915.
– Exactly, but in this case the Government are proposing to make the return as from January, 1914, and the tax is for the year 1915-16.
– Oh, no.
– What is it?
– And apply it for the year 1914-15.
– But the halfyear is over; is this tax to be retrospective?
– The AttorneyGeneral has made it clear that there are to be two taxes-
– There will not be two taxes in one year.
– Only you go back for the assessment, is that it?
– Then the tax is to be retrospective in character ?
– All income taxes are retrospective; they must necessarily be so.
– No; not to that extent. The ordinary income tax of the States is assessed up to the end of the year, but is levied early in the following year. It appears that the AttorneyGeneral is going to begin his assessment from January, 1914; but he says the tax is to be devoted to the year 1915-16. We are pot financing last year over again, are we?
– Order ! I am sorry to interrupt the right honorable member for Parramatta, but I want to point out that he, and other honorable members of the House, have adopted the practice, at the second-reading stage, of extracting information from the Minister in charge of a Bill when, as a matter of parliamentary practice, the discussion should be confined to the principles of the measure. It is in Committee that these details should be discussed; and I hope that, for the future, honorable members will observe this practice as far as possible.
– Meantime, I hope I shall be in order in protesting, as strongly as I am able, against tho proposal to make the assessment for this tax go back to the beginning of 1914, after the financial year 1914-15 has been closed. We have done our financing for those years, and, I submit, it is grossly unfair to make an assessment for a year which has been closed. Let the Minister do as the States do, tax for one year on the basis of the preceding year.
– That is what we are doing.
– No; my honorable friend is not doing that.
– We are financing this year on the income earned last year. That is a perfectly fair proposal.
– No, it is not; because the assessment would not be coterminous with the financial year - that is the point. If the Minister wants to tax for 1915-16, it should be on the assessment for the financial year 1914-15, and not on the calendar year 1914 alone, because that will be going back eighteen months for the assessment.
– We are going back to the year ending 31st December last.
– Yes; and for a tax which will take you into June of 1916. That is not fair to the taxpayers of this country. It is doubly and grossly unfair, I submit, at times like the present, when our people are passing through all the difficulties which we have seen come upon them in these recent days. I hope, therefore, this defect will be remedied when we get into Committee. It is very largely a Committee Bill, and, as I have made some general observations on this matter already during the financial debate, I shall not claim the attention of the House further at the present time. All I have to say, in conclusion, is that honorable members on this side generally will agree that the Government are taking the right course in resorting to direct taxation for war purposes. We only differ from them with regard lo the methods to be adopted to gather this money, and we criticise the proposal from that stand-point. That is a legitimate criticism, I hope, and I trust the discussion will be carried on in that spirit. Above all, I earnestly hope that the war may soon be over, so that we shall be able to relieve our people of this burden of taxation, which I sincerely trust is being imposed for war purposes only, and not for the purposes of the ordinary services of the year.
.- Mr. Speaker, I desire to raise a point with regard to the assessment-
[11. 7j. - Ti the honorable member will allow me, I should like to reply to the speech made by the right honorable the Leader of the Opposition. I do not want the honorable member for Grey to forfeit his right to speak. I desire at this stage to express my appreciation of the manner in which the Leader of the Opposition approached this discussion.: I quite admit that the Opposition have a right to discuss this and every measure, in as critical a manner .as they think necessary. It is their duty to do that, and no matter how severe may be the criticism, there need be no cause for complaint. I agree with the right honorable gentleman that an income tax is a very appropriate means of raising revenue for war purposes. I do not say that it is the ideal way, but it is good. I disagree with him in his statement with regard to the position of the revenue of the Commonwealth and the increase of taxation since we came to office. It must be obvious to the right honorable gentleman, also to the right honorable member for Swan, as well as other members of the previous Cook Administration, that they spent all their revenue in 1913-14 plus over £1,500,000 of surplus funds that we left to them, thus showing clearly that in a year of boasted economy they left an actual deficit of over £1,500,000.
– You call this a non-party statement, I suppose $
– I am stating a bare fact.
– I am sorry to say it is not a fact.
– Are you comparing a peace year with a war year ?
– If honorable members will let me finish my sentence I will hear interjections with pleasure. That year was balanced by a portion of the surplus left. If that balance had been kept for a rainy day, or for a war, that Government would have raised £1,500,000 of revenue, and the reserve of over £2,500,000 would have been waiting to meet circumstances such as those in which we unhappily find ourselves to-day.
– If we had had a free hand such as you have we would have acted very differently.
– I have not a tinge of party feeling in what I am saying.
– Then why not state the facts?
– I am trying to do so. We took office, and before we could impose taxation to get the revenue necessary to meet the expenditure we had mopped up the additional sum of £1,100,000 or £1,200,000, and found ourselves short in our revenue. There was, therefore, serious leeway to make up immediately. The people had not been taxed sufficiently to enable the ordinary services of the Government of the Commonwealth to be carried on. Therefore, the right honorable gentleman must deduct from his estimate of our taxation over £1,500,000 at least, which had been financed for the previous years out of reserves. The right honorable gentleman was careful to pile up £7,000,000 of taxation by this Government, including, approximately, £4,000,000 from the proposal now before the House, and an extra £1,500,000 for Customs, which is a very uncertain item at all times, and which, in the case of a Protectionist Tariff, ought to be a diminishing amount. He must cut off £1,500,000 from the £7,000,000 he spoke of by reason of the fact that I have already stated, which leaves’ an additional amount under all our proposals of £5,500,000.
– Why must I do that?
– Because we were living on accumulated money or borrowed money during the last two years to the extent of £2,500,000, and that leeway had to be made up. We were only financing it to pay our way before we began to impose taxation for war purposes.
– That is so. Either that or economy.
– Yes. The right honorable member followed a line of argument that I first heard laid down by the right honorable member for Swan in his criticism of my recent financial statement.
– Order ! I must request the right honorable member not to reply to statements made in a debate on another question.
– I think you missed my introductory remarks. What I said was that the right honorable member for Parramatta had to-day followed a line of argument that I first heard from the right honorable member for Swan. I propose to deal with the argument of the right honorable member for Parramatta, and not with that of the right honorable member for Swan. That line of argument was this : That because there will be a little interregnum between the time we impose this taxation and the time when it will be necessary to take the whole of the revenue from it to pay for our war loan expenditure, and war expenditure generally, we should borrow to fill up the interval so as to relieve the people during those few months.
– I made no such suggestion, I hope.
– That was the effect of it. We shall need at least £4,000,000 to meet our war expenditure now in sight, and pay interest, and I doubt whether there will be any sinking fund.
– Do I understand, then, that this £4,000,000 is to be devoted to the war exclusively ?
– For all practical purposes, yes.
– Then how are you going to finance your ordinary services?
– I am not in favour of sectional taxation. I am not in favour of hypothecating any particular revenue for any particular purpose ; but I do say that this income tax should be made to cover at least the interest and a small sinking, fund on the money that we shall have to borrow to perform our share in the war.
– Our war pensionsought to be covered also.
– The war pensions must be provided. They are part of our war expenditure, and I include them. They represent the payment of our soldiers. When they are, unhappily, no longer able to fight, the nation will have to be their guardians, and I hope with no stinting hand in a relative sense, to look after them, because the war will be with us as; long as they are with us. The part we are playing; for which this money is largely required, is a part in respect of which we stand alone in the whole Empire. We have agreed to pay the whole expense of the home defence of Australia and of the Australian Expeditionary Forces, wherever they are. This is in every way a noble aim that will stand to the credit of Australia. To half do it would be a mistake. To do it thoroughly, even if many or all of us have -to suffer some slight inconvenience, will give us a spirit of manhood and nationhood. That is the spirit, the object, and the aim actuating this proposal. It would serve no good purpose, and lead only to misapprehension in the minds of a great number of people, if we were to fill in the few months between now and the time when that large expenditure will be needed, by borrowing money. Such a policy would, in my opinion, be not only mistaken, but stupid and misleading.
– I am not suggesting borrowing any money at all. I do not follow the right honorable gentleman.
– We are short now, and that shortage would have to be made up. We could borrow the difference for the few months, but that would be a mistaken policy, and would not be helpful.
– Nobody is suggesting that you should borrow.
– The right honorable member suggested it.
– What was suggested was that the tax should be for a different period - the financial year.
– I am dealing with the argument put forward by the Leader of the Opposition, that the urgency for collecting the tax is not so very great, because we could put it off for half a year.
– Because the Government could economise on special expenditure.
– I will take that answer.
– No. My point is that the Government proposal has the effect of the imposition of two taxes, one to the end of this year and the other at the beginning of next year, and that if only one tax was in contemplation the assessment should be for the last financial year, and not for the calendar year.
– I think that the Government will be able to meet the right honorable gentleman to some extent bv preventing the two taxes being collected in one year. It will be late this year before we can get in the tax, and we might be able to adjust the matter so that the tax could be carried over to a later period of next year. It is not beyond the bounds of possibility that we may be able to collect the tax in two parts.
– The Attorney-General has already announced that that will be done.
– I say that it may be possible to adjust the matter in that way, but the Government have felt in duty bound to impose the tax on the 1914 calendar year.
– It is in accordance with a sound practice commonly adopted, and the money is required. It is only going back a little, and the difficulty can be adjusted in a simple way.
– Is there any insuperable difficulty in the way of imposing the tax for the present financial year and collecting it a& soon as the year is over ?
– There is a difficulty, but of course it is not insuperable. The Leader of the Opposition has said that this is the most unfortunate time at which to bring in this Bill. The Government are not to blame for that. According to the little history I know, war, unhappily, falls upon unprepared people, and always at the most unfortunate time. This has applied to us. War seems always to break out when nations are forgetting their duty, and when people are beginning to forget what they exist for. Other people then fall upon them, and they are obliged to defend themselves. It is in such circumstances that the present war has arisen. We are engaged in a world war, which is unprecedented in history. We live in the most wonderful times in the history of the world, but I am not one of those who believe that the human race will ultimately suffer because of the war. We must suffer theterrible disaster of the slaughter of human beings by human beings but apart from that I believe that the world will emerge from this great struggle better than it is to-day. Wherever the centre of the struggle may be, in Europe, Asia, or America, I think that we in this part of the world will remain free of the actual contest, and will be able to carry on our ordinary avocations. It will still be our duty, not only to provide men and equipment as far as possible, but also themoney necessary to pay our Forces. Wehave appealed to the people of Australia for money to enable us to finance the capital expenditure of the war. I believe that the response will be found to be liberal and patriotic. I believe that further appeals will be answered in the same way. I have no doubt on that point, but while our own people and tha- people of the Mother Country are prepared to provide us with the capital funds for the conduct of our part in the war, it will be our duty to make sure that the amount of money we raise by way of taxation will be sufficient to liquidate our obligations to both. Regarding the other main point mentioned by the Leader of the Opposition, that we should be in close touch with the Governments of the States in the matter of taxation and loan money, I have only a word or two to say.
– “We should have been in touch with them long before.
– I agree with that. I have tried to get into closer touch with the Governments of the States. I await at the present time a conference with the State Premiers, and inter-communications are of almost daily occurrence. It has been the policy of this Government, and it is particularly my own desire and policy, that the State Premiers should feel that they are invited to approach the Commonwealth Government at any and all times, but preferably in conference with a common object. The way is always open to them to approach the Commonwealth Government for the discussion of any financial matter, or any matter of common concern. I had a conference yesterday with an individual State Premier. I take this opportunity to say - not by way of reflection upon any one, but in order that the Leader of the Opposition may understand what is really the position in connexion with this matter - that I had a communication regarding a Premiers’ Conference to be held on the 10th of next month. I have since seen a number of announcements in the press to the effect that the conference is not to be held on the 10th, but I have had no official intimation to that effect. I believe that it will be held on the 10th, as I have had no official communication to the contrary. At that conference we shall discuss all these important matters. I cannot be more definite on the matter than that. The Commonwealth Government has no power to ask the State Premiers what they propose to do in the matter of income tax or any other form of taxation. The Leader of the Opposition must be aware of that.
– I merely suggest that since the Governments in five of the States belong to the right honorable gentleman’s own political party, at least they might have some working agreement between them.
– This Government is ready to discuss matters with the State Governments. Before we can have a working agreement discussion is of course necessary. I hope that we shall have that discussion, but it is too late-
– Does not the Prime Minister think that the proposed conference should have taken place before the income tax was brought down?
– Yes, it should have taken place five years ago.
– And so it did.
– But, unfortunately, it “missed the bus.’’
– Is the New South Wales Government to be represented at the coming conference?
– I hope so. I do not mean to say anything more about that. Political and financial necessity, and not political wisdom, in my opinion, determines the holding of many conferences. As we are sovereign in our own sphere, and they are sovereign in theirs, the best thing we can do in the meantime is to invite the States to meet us in free open conference, to discuss all the affairs which affect the people of Australia generally, and none of them particularly. Regarding minor matters, they can better be discussed in Committee.
– Does the right honorable gentleman propose to exempt from the payment of this tax those who are serving at the front?
– It has been frequently stated that the wages which our troops earn as soldiers are not taxable. I think, however, that we might well allow matters of detail to be discussed in Committee. On the general principle of the tax, I think it has been drawn with moderation. I do not think the amount is too large for our requirements, and I am of opinion that the assessment should be made in the calendar year 1914.
.- I think that the House desires to keep absolutely clear of anything connected with the financial management of the past which might give a party complexion to this matter, and into which the Prime Minister at first seemed - under a misapprehension as to what the Leader of the Opposition had said - desirous of drifting when he spoke of the history of the surplus from 1910, that historic surplus which the right honorable gentleman disposed of to the tune of £1,600,000 in one year. If we desired to serve a party purpose, we might put on the history of the four succeeding years, a very different complexion from that which seems to present itself to the mind of the Prime Minister. But the one fact with which Ave are now concerned is that a war is in progress, that the Imperial Government have been landed in obligations which will represent, when their next Budget is presented, something like a national debt of £2,100,000,000- an expenditure for interest on loan moneys of £90,000,000 - and that we shall have to bear, to the very last, our share of whatever sacrifices and self abnegation patriotism may call for. Our expenditure during the current financial year we are told will reach £76,000,000. In one year the States have borrowed £26,000,000. The rate at which they have borrowed during recent years has increased enormously. In 1905, for example, their loan expenditure was only £3,424,000, as against £20,734,984 last year. They have increased their indebtedness per head since 1905 from 17s. 8d. of £4 5s. These figures do not affect political parties, but they do affect the people of the Commonwealth, and the time will come when the electors will ask us what we have been doing regarding the economic development” of our resources. It is only a recognition of the fact that we are at war that induces me to refrain from cavilling at what, under ordinary circumstances, would impress me as being the very severe pressure of this tax. I quite agree that the tax is necessary. Of course, it might have been expected that some Treasurers during the past five or ten years would have tackled the question of economy to an extent beyond that which is represented by the cant phrase so often heard from the public platform, that there is a grave need for the exercise of economy. Indeed some Treasurers might have come forward with a statement showing what we have received in return for our expenditure during the past ten or fifteen years. In England to-day the question is being asked why the Civil Service Estimates have increased from £20,000,000 to £60,000,000 ‘ during the comparatively brief period of twenty years. It has been pointed out, during the past six weeks, that so great has been the reckless laxity of official heads of Departments, that, on stationery alone, the Imperial authorities are spending £600,000 a year more than they expended twenty years ago. Surprise is being expressed at this condition of affairs, and the demand is being made that the permanent heads and the temporary heads of Departments should institute some reform. Similarly, we require to answer the expressed, as well as the unexpressed, sentiment of the Commonwealth that something serious must be done to insure that we get value for ihe money which i3 being paid by 118, and which represents an increasing burden on the people.
– What does the honorable member mean by an increased expenditure on stationery?
– I was speaking of the Imperial authorities. There was a motion tabled by Lord Middleton upon these questions, and even Mr. McKenna had to acknowledge on another occasion, that the Government were incurring obligations that were almost beyond their powers. Now, as to the proposed income tax itself. As the Leader of the Opposition has properly said, it is perhaps, under existing conditions, apart from other forms of direct taxation, the best war tax we can adopt. A wealth tax, of course, would fall on capital that ia necessary for producing income. It would also fall on capital without any regard to its productivity. On the assumption that the actual income of the United Kingdom is £1,800,000,000 annually, which is about £600,000,000 less than the estimate adopted by Mr. Lloyd George in his Budget, £556,000,000 of it represents income which is taken from wealth. That would be equivalent to an average return of 6i per cent, from capital. But of course it is clear that the percentages of returns from various forms of wealth differ vastly. In the case of some banks, for instance, a return of 25 and 30 per cent, is obtained, whilst in the case of others the yield is only 3 or 4 per cent. It will be seen, therefore, that there is a marvellous disparity in connexion with the returns from wealth. Without discussing the comparative merits of an income tax and a wealth tax. the very fact that there is such a disparity in the returns from wealth, and that the incidence of a wealth tax would fall upon all capital alike, shows how oppressive it might be. Generally, I do not believe much in this mathematic precision in respect of progressive taxation. But we have to face the fact that our main source of taxation, until quite recently our only source of taxation - I refer to Customs - falls with a very unequal incidence on the people of the Commonwealth. The smaller the income of the individual the greater is the pressure applied. A man with a salary of £150 a year pays far more than his proportionate share of taxation through the Customs. Thus, we fmd that taxation through the Customs, though nominally equal in its incidence, is, in reality, very unequal. We cannot, therefore, logically complain of the application of a similar principle by means of an income tax. In regard to the estimates given by the Attorney-General, and upon which he asked the House to accept this principle of taxation, I wish to say that there have been no exhaustive official estimates given in the United Kingdom in connexion with either wealth or income tax. Sir Robert Giffen, when head of the Statistical Department of the Board of Trade, about 1885, gave an estimate of the wealth of the United Kingdom, based upon a capitalization of the income tax returns received, and the application of the same principle to the incomes which were not taxed. His estimate differed substantially from a recent one made by Sir Bernard Mallett. The Economist, in 1909, gave another estimate, also based upon the estate and income tax returns, and I notice that between the estimate given by the Economist and that given by Sir Bernard Mallett there is a difference of about £4,000,000,000 in £14,000,000,000. That shows how utterly unreliable are the figures, which have been given by an alleged authority, Mr. Chiozza Money, and quoted in the AttorneyGeneral’s speech. In regard to what the Leader of the Opposition said upon the subject of economy, I think that when we impose severe taxation the people are entitled to know that the most will be made of the returns. We should simplify the returns, and avoid duplication and triplication as far as possible, so as not to unnecessarily irritate the people by the number of returns we ask for. The Commonwealth and States could easily have one assessment for land tax and income tax.
This year in some States there will be three returns for income tax, or of income. There is to be the return for the imposition under this Bill, a second for the State tax, and a third for the purpose of estimating the general income of the Commonwealth. Both the Commonwealth returns are for different periods - one for the year ended 31st December, 1914, and the other for the year ended 30th June, 1915. I cannot see why we require two different returns, and why at a time like this we should irritate the taxpayer who, from patriotic motives, is prepared to bear an exceptional burden. In some cases there will be no less than three payments of income tax - the Federal tax, the State tax, and the tax upon incomes earned in Australia by British companies or people residing in Great Britain. The Constitution of the United States was amended in 1913 by modifying the provision under which direct taxes had to be raised, not on the total wealth or incomes of the people, but in such a way as to represent a per capita return from the States. In other words, the taxes had to be apportioned amongst the States on the basis of population. The result has been that when the Supreme Court of America declared that the income tax .was a direct tax it had to be apportioned on a per capita basis, and in that respect it would be futile. The Constitution was amended in February, 1913, and now a Federal income tax has been imposed. The result is that the people of the United States are asking for an immediate reform in order to avoid duplication. As far back as 1901, a Conference, representative of all or many of the States of the Union, was held at Buffalo, and the Conference recommended that there should be co-ordination between the States in connexion with taxation. At that time there was no uniformity in regard to either the form or the rate of the taxes, nor was there any reciprocity between the States to relieve, so far as expedient, the taxpayer of double payment of the same form of taxation on the same income. Recently a good deal has been written in the United States on this question of uniformity. A writer in the annals of the American Academy of March of this year said -
The steady increase in Federal and State expenditure - outstripping our income in both wealth and population - makes it high time to suck out some remedy for the growing defects in our tax systems.
And after referring to the duplication of income tax, he asks, “ “Why should this costly machinery be duplicated?” What we require to be achieved as soon as possible is some Imperial arrangement, so that the same income shall not be taxed in the United Kingdom and in the Commonwealth. The United Kingdom taxes incomes from abroad, and when that income is produced in Australia it is taxed here also. The objection applies reciprocally. There ought to be also some InterState arrangement to deal with the duplicate taxation of incomes. The rate might be increased in order to cover the necessities of both ; but what I am aiming at is simplicity and avoidance of the duplication of returns. The States might make some arrangement between themselves, the Commonwealth with the States, and the Imperial Government with the Dominions. I attempted something of that nature when I was Minister of External Affairs, and the income tax measure was before the British Parliament. At any rate, telegrams were sent to the High Commissioner on the subject. F. N. Judson, an American writer on double taxation, wrote, in March, 1915 -
Some States have recognised a retaliatory principle in their tax legislation by providing for the exemption of resident stockholders as to their holdings of the stock of non-resident corporations when the laws of the State of the incorporation provided a like exemption from that domiciled in that State.
The Supreme Court in several cases called attention to the very complex and burdensome character of this double, and sometimes treble, taxation. I quote what was said by a Judge of the Supreme Court in delivering judgment in the case of Kidd v. Alabama -
No doubt it would be a great advantage to the country and to the individual States if principles of taxation could be agreed upon which did not conflict with the others, and a common scheme could bc adopted by which taxation of substantially the same property in two jurisdictions could bc avoided, but the Constitution of the United States did not go so far, and a State was not bound to make its laws harmonious in principles with those of other States.
I agree generally that revenue produced by taxation should not be ear-marked. That objection, however, does not necessarily apply to loans. The revenue produced from a particular form of taxation has very often been applied to the payment of interest and the creation of a sinking fund; and I think there is more in the suggestion made by the Leader of the Opposition than the Prime Minister recognises. I have heard it said, by a man who has a good deal of experience in financial transactions in Australia, that a mistake had been made in failing to declare, in the prospectus of our war loan, that the. £4,000,000 to be derived from income tax was to be used solely for interest and sinking fund in connexion with that loan. It may be, however, that even without such a declaration the loan will be a success. I would suggest to the Attorney-General that we ought to accede to the desire of the States that there should be reciprocity as regards the exemption of State and Federal securities from the taxation of the Commonwealth and States respectively. The law i&, I think, that if Commonwealth bonds or securities are exempt from a State taxation, so the State bonds and securities are similarly exempt from Federal taxation. I notice that in the war loan prospectus investors are told that they will not have to pay either State or Federal income tax upon the returns from that investment. If the High Court holds that, as matters now stand, the promise is bad - that the States can tax our securities - what will be the position of the Commonwealth Government? Will there be a breach of one of the conditions on which the advance was made ? Assuming that the rate of interest, after the war, goes up to 5^ per cent., while our war loan produces £4 14s. per cent., as it probably will, it will show a loss on the current rate of interest. In that case, will the Government afford the people who have invested in it an opportunity to secure the return of their money, or will they have to submit to the opprobrium of having misled them as regards the law on the subject?
– Unless the States tax income derived from the loan, how can such a difficulty arise? And how can they tax it without breaking their word
– I am merely talking of the possibilities. We cannot restrain the States in this matter. If the power of the States to tax our securities is established by the High Court, then our declaration will have been futile. It is one thing to permit taxation by the States; it is quite another thing to say that they shall not tax Federal instrumentalities. Owing to the conflict of opinion between the Privy Council and the High Court as to whether Commonwealth salaries were liable to State taxation, we permitted the States to tax them. We got over the difficulty by passing an Act of Parliament permitting the States to tax Commonwealth salaries; but it is quite a different thing to assert in the war loan prospectus that the investment is free from State taxation.
– Does the honorable member say that the States can tax our securities 1
– I intend to deal with that point. I shall deal first of all with United States’ cases on the point. In the case of the Tax Collector v. Day, heard in 1870, it was decided that Congress could not tax the salaries of State officials, because that might hinder the government of the States. In the case of the Veazie Bank v. Fenno, decided a few months before, the validity of a 10 per cent, tax on States notes was upheld as being incident to the national currency. It was held, in the case of the United States v. The B. <& O., in 1873, that Congress could not tax the municipal share of the income from a municipal railway, because that railway was an instrumentality of a State, being an instrumentality of a municipality which was the agent of a State. I am afraid that that point has been decided by the High Court here, without very elaborate argument, and decided to the contrary. I was engaged in a case in which I found that, after a comparatively short argument, the High Court had given a judgment in another case contrary to what I thought to be the position, and to what it is in America. In Pollock v. The Farmers Loan and Trust Company, which dealt expressly with the income tax, it was held on various grounds that the income tax of that time was invalid. One of the grounds for this decision was that, being a direct tax, it wag not apportioned amongst the States on the basis of population; another ground, which touches us more closely, was, that as a Federal tax it was bad as a tax on the interest on municipal bonds. A Federal tax on the interest on municipal goods, said the Court, was in substance a tax on the bonds themselves, and this was a tax on the Government’s power to borrow. There were two cases, and I am citing that decided in 1895. There is another case bearing directly on the point - that of Weston v. Charleston, decided in 1829. That, in effect, was a case in which the municipality of Charleston imposed a tax on personal property and income derived from personal property, including 6 per cent, bonds of the United States. The tax was collected from all residents of Charleston owning such property; but, on appeal, was declared to be unconstitutional.
– That is directly to the point.
– It is. There is yet another case to which I shall refer - that of Bonaparte v. The Tax Court - in which it was held that each State has full liberty to tax the securities of its sister Commonwealth, which belongs to its own residents. In other words, under this decision, the State of Victoria would have power to tax the securities of New South Wales held in Victoria by a resident of Victoria. These are matters that require a good deal of attention, and I regret that the offer of some of the States to come to an arrangement as to mutual exemption from taxation has not been accepted by the Commonwealth Government.
– The relation between the sovereign States before Federation, and the relation between the Federal Government and the States after Federation, are quite different matters so far as the power of mutual taxation is concerned.
– I am dealing with the position in the United States, of whose Constitution we have a very much improved edition. The American decisions, therefore, if we are to follow similarity of conditions, may be regarded as pretty high authority here. The conditions existing prior to Federation have nothing to do with my argument.
– The honorable gentleman mentioned a case in which he referred to the right to tax the securities of another State, when those securities were held by persons within that State.
– That point has not arisen here. I was endeavouring to show that, whatever the law is, it has not been established that the Commonwealth possesses any paramount right in this matter of taxation.
– But I should like the honorable gentleman to apply his argument to the point I have mentioned.
– It was decided by the High Court in two or three cases that Federal salaries were exempt from State taxation, and the assumption may be made that State salaries are similarly exempt from Federal taxation. The Privy Council delivered an opinion, but not a judgment, on the point. That opinion was in conflict with the opinion previously expressed by the High Court, and we may now assume that if the matter went forward to the Privy Council for final judgment, the Privy Council would override the opinion of the High Court as regards the exemption of State and Commonwealth securities from taxation.
– Is that the honorable gentleman’s opinion?
– I think that would be the position after the decisions already given.
– I should like to know the authority for the honorable gentleman’s opinion. Why does he think that?
– I am dealing with what I think would be the line of judicial thought on this point. The Privy Council regarded the decision of the High Court that the States could not tax Federal salaries, and that the Commonwealth could not tax State salaries, as bad law. They declined to follow the American decisions, holding as their ground this view - which may be good or bad - that a condition of the American Constitution required that the point should be decided.
– Does the honorable gentleman say that the Courts here will follow that decision?
– No. I say the High Court did not follow it. What the High Court did decide was that these salaries were exempt from taxation. They decided one thing, but the Privy Council declared another. The Privy Council, however, gave no actual decision on the point, inasmuch as the Federal Government was at the time about to pass an Act of Parliament under which the States were to be permitted to tax Federal salaries, and that, therefore, there was no necessity for a final judgment. A recent decision of the Supreme Court of Canada, which reverses a number of other judgments of the same Supreme Court, is one to which I also desire to draw the at tention of the Attorney-General. From this decision it would seem that the Supreme Court of Canada does not recognise this doctrine of exemption, and, following upon this judgment, it may be that when the matter comes to be threshed out later on, the States will he held to have power to tax Federal securities, and the Commonwealth will also be declared competent to tax State securities.
– The law, after all, has some relation to common-sense. Can the honorable gentleman apply that decision to the situation in Australia ?
– I have no specific case before me. I am only referring the Attorney-General to what has recently been decided. The Attorney-General surely does not expect me to adopt the arrogance of some political whipster and state in advance, on unknown circumstances, what the decision of the High Court or the Privy Council must be, because in the opinion of such a tyro it ought to be. I am not attempting to do that. But the Supreme Court of Canada, in the case of Abbott v. The City of St. John, quoted in 40, Supreme Court Reports, page 597, overruled a number of earlier cases, and held, notwithstanding No. 8 of section 91 of the Constitution, which provides that Parliament shall have exclusive legislative authority over the fixing of and providing for the salaries and allowances of civil and other officers of the Government of Canada, that a civil or other officer of the Government of Canada may be lawfully taxed in respect of his income, as such, by the municipality in which he resides under the authority of provincial legislation.
– That is in direct conflict with the decision of our High Court.
– It is.
– -Very well; what is the good of citing it as an authority in this particular case?
– I am not citing it as an authority. I am endeavouring to show the Attorney-General that it was inexpedient to put into the prospectus for the loan the categorical assertion regarding immunity from taxation in face of the conflicting decisions of the Privy Council and of the High Court, and the trend of judicial decision in another British community.
– The honorable gentleman is now saying something that will disturb the mind of the people without any reason at all. An undertaking has been given by the States that they will not tax interest upon this loan, quite apart from whether they have or have not the power to do so.
– The Attorney-General has never told us that before, though I have several times asked for information upon the point. Why should honorable members be wasting their time here because of the reticence of Ministers? I asked deliberately whether the Government had or had not come to an arrangement with the States. All that the Prime Minister told me was that the Government would not give up any power of taxation it already possessed.
– Quite so.
– How can that be, if an arrangement has been arrived at with the States ?
– The States, as the honorable gentleman knows, agreed not to tax our securities
– I knew some of the States did; I did not know all of them did. But my information was obtained from newspapers and not from Ministers, and I think it is due to the House that Ministers should tell all the facts.
– Where that undertaking has not been given, the honorable gentleman’s remarks apply; otherwise they do not.
– I assumed that no undertaking was given by any of the States. I harp asked for information on that very point, but my question has not been answered until this moment.
– When has the honorable member asked for information?
– I asked the Prime Minister across this table, and was told something to the effect that no arrangement would be come to with the States because the Government would not relinquish any of its powers of taxation.
– That is our attitude; that is quite right.
– Is there any reciprocal arrangement between the Commonwealth Government and the State Governments that neither will tax the securities of the other by income tax or otherwise?
– I am not aware of any.
– Then I am perfectly, entitled to pursue this line of argument.
– My own opinion, which has been given to the Government, is that the States have no power to tax our securities. In the face of that, where is there any necessity for a reciprocal arrangement?
– I am endeavouring to show that the Attorney-General may, to use a colloquialism, have been somewhat “previous” in that opinion.
– What I say is that the position, as I believe it to be, is the sensible and logical position that must obtain in a Federal form of government. Otherwise, either Government could reduce the other to a condition of nullity. If the Commonwealth could tax the States, or the States could tax the Commonwealth, government would quickly be reduced to 8 farce.
– So far as may be gathered from the American decisions, the opinion of the Attorney-General appears to be correct, but so far as the recent decision of the Supreme Court of Canada goes - and this is the more likely to be accepted by the Privy Council - the opposite appears to be the case. According to that authority, the States may tax us and- we can tax them. In the face of a host of American cases, the Canadian Court, on grounds that are to an extent applicable here, declined to follow the principle laid down by the United States of America Courts. I think that clause 9, read with clauses 25 and 38, shows clearly that there is to be no double taxation this year, and that the tax is to be levied for the current financial year, ending the 30th June, 1916, on income derived during the year ending the 31st December, 1914, as the Attorney-General could not collect it sufficiently early if he had to wait to collect on the income derived during the year ending the 31st December, 1915. The Attorney-General has made fairly clear the fact that there are not to be two taxes on the one income during this year. The only difference that can be made is that, at the abolition of the tax - which is a matter for the future, and a very far-distant future, as far as I can predict at present - the taxpayer may have to pay for one additional year. The injustice, however, is that we may be taxing a man on an income the greater part of which, or the whole of which, he may have spent, and when he may have suffered such a change of circumstances as to render it impossible for him to pay it, and also the State tax. For this reason, the States do not, as the Prime Minister said they do, tax retrospectively. For instance, the South Australian Land and Income Tax Act declares that the taxes are levied for the financial year ending 30th J une on the income of the then current year. The Act came into force on the 14th November, 1884, and the income upon which the tax fell was that which was derived during the year ending the 31st December, 1884. The tax was levied on the 1st of January of the succeeding year, and was payable in March. There is nothing to prevent the Commonwealth Government adopting the 3ame course.
– A man may have derived his income in the first six months of the year and lost it in the second half of the year, so that precisely ‘ the same set of circumstances might have arisen in South Australia.
– The Bill was introduced about May or June.
– And the tax was collected in the following year.
– Yes, upon the income of the year unexpired at the time of the passage of the Bill. There is a marvellous difference in degree between taxing an income derived during a current year, half of which may have passed at the time, end levying it on a past year after six months have expired.
– Circumstances make it imperative that we shall get this money.
– At least Ministers might admit that there is this difference in degree, and that circumstances compel them to ignore State precedents. Imposing a flat rate of ls. 6d. does not seem to be the best means of taxing the reserves of companies. On the whole, itis not more onerous or unequal than the taxation imposed by the States. In som<» cases they tax the full income of companies, but mostly allow a reduction by the individual taxpayer of an apportionate share of the tax paid by the company. We have adopted, very properly, the principle of taxing the receiver of the dividend, so that the income of the Company is not taxed. Every man pays on his share of dividends according to the scale set down in the Bill. If his income from this source is low, the sum that he pays to the Treasurer is low. If it is under £156 he pays nothing. It is entirely fair, because the bulk of shareholders in the Commonwealth are holders of comparatively small interests in companies, and, as the Attorney-General has pointed out, the most of our modern industry is carried on by the co-operative effort of small shareholders in companies.
– To that extent capital, as such, escapes taxation.
– Very properly, too; but it seems to me that, in regard to the reserves of companies, we should have followed up the principle of taxing the shareholder. Why should we not regard reserves as apportioned dividends? Surely we can estimate the share of each shareholder in a company’s reserves, as his share of the dividends placed to that reserve ? In some cases taxation would not be payable under the Bill in relation to these reserves, but in other cases it would be on the highest scale, because the receiver of the dividends might be receiving £5,000 or £6,000, and not from personal exertion. Of course, there would be difficulty in administering this; but, regarding each shareholder of a company as being entitled to a proportion of the reserves set aside by the company, we should call on the shareholder to pay an additional tax represented by his proportion of the reserve.
– In many cases companies would escape taxation in that way. It would also be very difficult to administer.
– No doubt the system of having a flat rate is an easy method to administer, but we are not called upon to tax companies as such; we are called upon to tax those who possess the income made by companies. I am endeavouring to ascertain whether it would not be logically correct to apply that principle to companies’ reserves.
– That point was considered very carefully. Many methods were suggested, but on the whole we found that the course followed in the Bill was the better way.
– I understand that the Attorney-General proposes to define “ profits.” As the Bill is printed it is ambiguous in this respect, but I shall deal with that matter in Committee. Many companies, banking corporations in particular, provide provident funds. One bank pays £30,000 a year towards annuities or retiring allowances .for its officers, but these premiums are not exempted by the Bill.
– We propose to exempt them. I listened to a deputation the other day, and was unable to distinguish between these premiums and friendly societies’ funds. I do not say that a case could not be made out for taxing them, but I could not see where any logical line could be drawn between these premiums and the trust funds of friendly societies.
– I agree with the Attorney-General that there might be a slight doubt as to whether these premiums should not be liable, but I am glad to hear from him that they are to be exempt. I understand that some State taxes exempt life assurance companies, but under this Bill they will be liable to taxation on their incomes.
– That is so.
– Can mutual life assurance companies be said to be carrying on for a profit ? They themselves are paying their own income. Insurance is based on the assumption that, if a certain number of persons subscribe so much a year each, the tables of mortality will allow so much to be paid to those who die. In England, under certain conditions, ten persons in 1,000 die at the age of twentyeight. A premium of over £1 meets an assurance of £100 on such a mortality. It is the subscriptions of the members of mutual societies that provide the so-called profits, and these ought not to be taxed as income.
– Insurance’ societies invest their funds, and in so doing act much as ordinary traders.
– That is so; but the Bill should tax only actual income, that is the surplus actuarially necessary for purposes of assurance which has been invested at a profit. Investments in land and in other securities representing the savings of past years, and not being a reserve held against contingent liabilities, should be taxed. To the extent to which contributions -exceed the needs laid down by actuarial tables, consequent upon a diminished mortality over a particular period, or from some other cause, you get a surplus which, strictly speaking, is capital not required for life assurance. That is invested, and becomes income.
– I do not think that you could draw the distinction in practice.
– It is drawn in practice, and some of the States confine the taxation of life assurance companies, in respect of assurance business, to the actuarial surplus of which I speak, that is the surplus beyond what is necessary to assure safely, on the basis of probabilities, all the risks taken.
– If the honorable member will refer me to the State Acts in which that is done, I shall be glad to examine them.
– I strongly recommend the exemption of the income of life assurance companies, except so far as it is derived from investments of capital. We do not want to press upon what is not strictly income. Another matter to which my attention has been drawn is the position of Savings Banks. It has been thought that the Bill imposes taxation on the total income of Savings Banks; but, having looked into the matter, I do not think that that is so; and I mention it to elicit public confirmation of mv opinion. I think that the Savings Banks will be entitled to deduct from their profits the interest which they. pay to depositors. The Savings Bank of South Australia was established as a corporation under an Act of Parliament, with a State guarantee, which it has not drawn on. It is provided that, at the end of each of its financial years, an estimate of profits shall be made before taking into account the interest paid to depositors. The trustees naturally desire to know whether these profits, which sometimes amount to as much as £336,000, will be liable to taxation. If they are made so liable, the bank will have to close. As a politician, I gave to the chairman of the Savings Bank, who asked me a question on the subject in the course of a conversation, the opinion that the interest paid to depositors could be deducted from the profits so-called, and that only the balance remaining would be liable to taxation.
– I think that an amendment which is to be moved will prove satisfactory.
– The trustees have to assess the interest payable to depositors each year on the basis of the profits that have been made, and the rate of interest varies from 3 per cent, to 3f per cent.
– The interest paid to depositors may be regarded as dividends, the depositors being in the place of shareholders.
– But the depositors are not shareholders. I mention the matter so that the Attorney-General may allay the uneasiness of those connected with these institutions. The reserves of cooperative societies and building and investment societies are to be taxed, but we ought to encourage the formation of reserves by these corporate bodies. The Bill defines a company as any body corporate or incorporate, and several building societies are corporations within its meaning. There are in South Australia twenty-seven building and investment societies, whose shares number 25,329, and whose shareholders number 11,113 ; so that the average interest of a shareholder is not very large. I think that we should not tax them. They are almost in the same category as life assurance societies. I am unable to give figures for the whole Commonwealth, because, according to Mr. Knibbs, some of the States give complete information and others do not. I am glad that the AttorneyGeneral has promised consideration of some of these points, and I hope that an amendment will be drafted to give us an opportunity of testing the opinion of the Committee regarding them. As this is war time, we must bear with cheerfulness whatever obligations appear to be reasonable under the present extraordinary circumstances.
.- The Attorney-General is under some misapprehension as to the State attitude towards the Commonwealth war loan, or the State Treasurers are under a misapprehension as to the promises made to them. Last week a State Treasurer told me that, on being asked whether the Commonwealth war loan would be free from State taxation, he said that he did not know ; and I ascertained that he was under the impression that there was to be some kind of reciprocity, though the matter had not been finalized - that is to say, that State loans were to be made free of Federal income tax, I know that that is not the intention of the Primo Minister, who recognises the distinct difference there is between a war loan like this and an ordinary State loan. If we granted reciprocity it would establish a precedent for making all income from future State loans free of Federal income tax. Although a war loan is in a very different category from that of a State loan, the State Treasurers do believe that there should be reciprocity; and the Attorney-General has said that tie States have promised to introduce the necessary legislation if the Constitution as it stands does not exempt Federal loans from State taxation. I understood the AttorneyGeneral to say that if there was any doubt as to whether this point was not covered already by our Constitution, the States had promised to introduce legislation making the matter clear.
– I do not admit for a moment that there is any doubt that the States have no power to tax incomes from the war loan.
– That may be so, but, at the same time, there is some misunderstanding or misconception on the part of the State Treasurers. There is an impression that the interest on this loan will be free from income tax, and that, if the law as it stands at present, does not so provide, the State Treasurers have undertaken to introduce legislation to make it clear. If that be so, why did the State Treasurer of South Australia, when asked a question by probable subscribers to the war loan, say that he did not know whether the incomes derived therefrom would be free? The State Treasurer also said that there had been some correspondence between the Federal Treasurer and himself in regard to reciprocity.
– Did he say that the correspondence had resulted in any agreement?
– No ; he had not received an answer. I only mention this to show that there is some doubt on the part of the State Treasurers.
– Does the honorable member think that we ought to make such an agreement ?
– No, I do not, holding as I do that a war loan is different from an ordinary State loan. If we did make such an agreement we should establish for all time the principle that we could not, under any circumstances, levy income tax on incomes from State loans.
– The people of the States appointed a super-Government, which is this Government, to deal with the defence of the Commonwealth, and, therefore, it is essential that, in matters of defence, all the taxing power should be in the Commonwealth Government.
– However, I shall leave that question now. Not only we of this Parliament, but the public, should know what is the actual amount to be collected under the proposed income tax. I gather from clause 9 of the Bill that the assessment covers 1914, and that the tax will be levied on the incomes for that year. This means that in connexion with the raising of £4,000,000, income tax will be levied on two periods - namely, 1914 and also 1915-16. There is every likelihood of this income tax being: imposed for many years to come - until the loan dies out, if we may judge from the arrangements for sinking fund.
– There is nothing that allocates this tax to the loan fund.
– This is called a war tax.
– It is “ called “ a war tax.
– But it is not so called in the Bill.
– It is to cover the interest on money borrowed for war purposes, and a sinking fund, and it is also to cover, as far as possible, the war pensions fund. We thus see that this will probably be a continuous tax for many years to come. I take no exception to this, because I believe that an income tax is the fairest tax that can be imposed. I offered strong opposition to the land tax because I know that a large number of people who have land have no income; but that argument cannot apply to the tax under discussion, seeing that it will be paid only by persons who have incomes.
– If it applies to this year, that is so, but if the assessment is made on a good year, and people are made to pay on a bad year, it is not so.
– That brings me to the date of the assessment.
– The trouble I see is that we not only tax land with a land tax, but also by means of this income tax.
– The income tax applies only if there be income. Will the Prime Minister explain why the date in tha case of the war and wealth census has been fixed for 30th June, 1915, while the Bill before us fixes 31st December, 1914?
– I think that the War Committee altered the date in that case.
– I think that the War Committee only altered it with the approval of the Attorney-General.
– Of the Government.
– And of the Government.
– The Government approved of it.
– In my opinion the date should correspond if it is only considered as a matter of convenience. Why should we ask people to make up a return to the 31st December, 1914, and another return to the 30th June, 1915 ? It ought to be borne in mind that a fair amount of work will be involved in making out the returns in order to get accuracy.
– Business men will have to pay accountants a fair sum to do tho work.
– In many cases it will mean increased taxation without the Government getting any of it.
– And without benefiting any of the firms concerned.
– Exactly. What objection can there be to an amendment in clause 9 to bring one date in accordance with the other? Otherwise all the information collected under the wealth portion of the war census will be out of agreement with the other information. I cannot see any sense in adopting two dates. It may be urged that the Government will receive six months’ less income tax.
– No, that is not possible.
– It is possible, because the financial year is made to end on the 30th June instead of 31st December.
– But you will only be assessed on the income for the past year; you will not have to pay income tax on that amount.
– A taxpayer will do so.
– If the honorable member refers to clause 38 he will find, I think, that he will have to pay on whatever amount he is assessed at. For instance, if my income is made up to 31st December, 1914, I would pay under the assessment a tax to that date, whereas if it was made up to the 30th June, 1915, I would pay a tax on whatever my income was from the 1st July, 1914, to 30th June. 1915.
– That is what the Minister said. It is only the assessing.
– The period represents the basis of assessment; you will pay on the figures for this year.
– I believe it will be found that my view is correct. I think that a man will pay income tax in respect of a period six months further back.
– What you mean is that he will pay on an assessment put further back ?
– That is right.
– The dale being altered a man will have to pay six months’ more tax.
– There is no doubt that it means six months’ more tax.
– Exactly. I consider that the fairest method of assessment would be to take the income for the first twelve months of the war, whereas this proposal covers only the first period of the war. If the 30th June, 1915, were adopted as the date it would cover, practically, the first twelve months of the war. There are some persons who lost very heavily in the latter part of last year. We know that a vast number of persons had a very bad time, receiving hardly any returns, and in their case it would be very hard to go back to the income for the previous year. My suggestion would, at any rate, relieve them of the tax for a period of six months. On the other hand, there are some persons who during the war have made money, and, therefore, the fair thing would be to make the assessment cover the period of twelve months from the beginning of the war. That would relieve those who have been hit so hard by the drought of half a year’s income tax. When the Bill goes into Committee, unless I hear something further, I shall hope that the Government will agree to an amendment in that direction, if for no other purpose than to save the duplication of a lot of work, which must take place if the two dates are not made to correspond. In that case, the wealth census returns could be utilized for the future. If the date is allowed to stand as it is, the whole expenditure incurred in ascertaining incomes under the wealth portion of the census will be so much waste paper, because the date to which the information is made up will not correspond with the taxing date. In my opinion an income tax is the fairest tax which can be imposed. I am absolutely opposed to a wealth tax, because it would be levied on everything in the possession of a man - plant, working material, and other things. Under this measure if a man has not a taxable income he will not be called Upon to pay a tax. I should say that, under present conditions, when men are volunteering readily in a great crisis, it is a fair tax to impose. I desire here to pay a tribute to the women folk of this country. In my opinion never have greater signs of patriotism been exhibited than during the currency of the war, when mothers, wives, and sweethearts have willingly sacrificed those who were dear to them to go to the front to help the Empire. In those circumstances persons with incomes ought to pay cheerfully.
– The House readily recognises the necessity for raising money to prosecute the war to a successful end, and thi3 is one of the forms of taxation best suited for raising money at the present juncture for that purpose. While fully admitting the necessity for imposing the tax, and assisting the Government to raise the requisite funds, at the same time the Opposition are not absolved from directing criticism to various aspects of this legislation, including the amount proposed to be imposed. It is clear that when thi* Federation was established there was a distinct understanding in the minds of the Australian people that there ought to be tacitly admitted a recognised sphere of taxation for the Commonwealth -and the States. It was realised that if both authorities attempted to invade the same sources of taxation there would be endless confusion and disaster to the taxpayers in Australia. On the 17th January, 1901, Sir Edmund Barton, then Prime Minister, dealt with that aspect of the question in his first policy speech. Sir Edmund Barton said -
Now as to taxation by the Commonwealth, I may tell you that I feel, quite as fully as any Treasurer could, that such a power is not to be harshly or rashly exercised. In this case any rash exercise of the power might be disastrous to every State. We have taken over great obligations from the States; but we have taken over the Customs with them, and you must recollect that if; after the Commonwealth imposes its Tariff, the States require more revenue, they can only obtain it by direct taxation within the States. The exercise of the power by the Commonwealth imposes on us an enormous responsibility; but in carrying out that responsibility they would interfere as little as possible with the States of the Commonwealth, as it was absolutely necessary to leave the field of direct taxation to those States. The States should be studied in every way, and the early difficulties of so great a change made as little trying as possible. There must be no direct taxation by the Commonwealth unless under the pressure of some great national emergency, and not even then if it can be avoided.
Sir George Reid, speaking on the 21st January, 1901, said: -
Mr. Barton says he is. against direct taxation in the Commonwealth, except in the case of emergency. As I pronounced this policy two or three weeks before, I am very glad Mr. Barton has in this respect adopted my views.
There is the pronouncement of the two rival leaders at the time. Taking their view of the machinery of government which had recently been brought into being, it was clearly understood that the Commonwealth should live, so far as it could, on the revenue from Customs and Excise, and that the States should have left to them the other chief source of revenue, namely, direct taxation. While admitting that division, and agreeing that it was a sound and proper basis for the carrying on of the affairs of the Federation, yet, seeing that the Commonwealth is invested with an almost unlimited power of taxation, it was obvious that that authority was vested in the Parliament, to be used if the occasion or the emergency should so require. I feel that this is an emergency which justifies Parliament in exercising this power of taxation.
– If the necessity has been proved.
– The necessity does appear to exist for the imposition of further taxation to enable the Government to carry on the affairs of the Commonwealth, but the form and amount of taxation to be imposed ought to be the subject of friendly discussion by members on both sides of the House. It is obvious that the Administration should not seek to raise from the people, by means of taxation, an amount in excess of the necessities of government, for that will draw from the taxpayers resources which should properly be devoted to furthering production. It would be diverting to revenue what should be capital1 for reproduction. This would be an absolutely unsound basis upon which to carry on the administration of a country. My own feeling is that, as we get into the higher limits of taxation as we are now under these proposals, the combined effect of municipal taxation, State income tax, Federal income tax, and land tax, together with the probate duties, will be to take the capital of the country, and use for revenue those resources which should otherwise be employed.
– A man will be better dead.
– I think my honorable friend will find that death will make some difference. The probate duties in the various States of Australia are exceedingly heavy, and as we get up the scale and add to it the Commonwealth duties, we shall find that in the future men who are conducting large business concerns will be compelled to convert the probate duty into income taxation if they want to prevent a dislocation of their trading concerns. Here, as has been done elsewhere, business men, with the knowledge that death will certainly overtake them some day, will realize that if by the payment of probate duty large sums are to be withdrawn from the capital of their businesses, they will be compelled to insure their lives, or else build up large reserves to provide against this contingency ; and in that way the probate duties will act ultimately,” in many instances, as a form of income tax.
– They do now.
– Therefore, in considering this aspect of the question, we are perfectly justified in asking the Government whether they have fully considered the necessity for imposing such high rates of taxation and raising such a large sum as £4,000,000, especially as we have been told that this taxation is intended for war purposes only, although, on the face of it, there is no provision for the automatic extinction of the war liabilities. It is introduced as part of the permanent machinery of government, and my own experience is that once a tax is imposed it is difficult to secure its removal, even when the necessity for it has disappeared. A tax intended for war purposes should not be in excess of the amount required and applied to increasing expenditure for general purposes. I hope there will be some adjustment of the financial relations of the Commonwealth and the States, and that some arrangement will be made in order properly to define, for the future, their respective spheres in regard to taxation. In regard to measures such as this, and our war loans, there ought to be some clear understanding at an early date between the Commonwealth and the States respectively. There is need for economy in view of the increasing expenditure in Commonwealth and States. In 1904-5 the Commonwealth expenditure amounted to £4,322,829, or £11s. 9d. per head of population, while in 1913-14 it rose to £15,458,776, representing £3 3s. 5d. per head. Concurrently with that progressive increase in expenditure - much of which might have been justified owing to the taking over of transferred Departments - we find there has been the same expansion of expenditure within the States out of the Consolidated Revenue alone. In 1905 the expenditure of the various States from this source amounted to £29,566,522, representing £7 8s. 9d. per capita; and in 1914 it rose to £46,561,907, or £9 l1s. 2d. per head. Although there was supposed to be an adjustment of the powers of government between the States and the Commonwealth, there has been this heavy progressive rate of expenditure during a period when the Commonwealth revenue increased from £2 17s. 8d. to £4 9s. 3d., while the State revenue rose from £7 9s. 6d. to £9 14s.1d. per capita. All through Australia there has been this increasing expenditure and this growth of Departments, with a corresponding advance in taxation and an enormous concurrent increase in loan expenditure. In 1905 the loan expenditure of the States was £3,424,475, equalling 17s. 8d. per head; and in 1914 it was £20,737,984, representing £4 5s.1d. per head. If there had been an increase in population in Australia to correspond with this growth of expenditure, there would have been good reason for rejoicing, but we find that the population in 1905 was 4,032,937, and in 1914 it was only 4,940,952. On the top of this expansion in expenditure we are now launching out by a further increase in our expenditure upon our ordinary ser vices, and we are imposing this heavy burden in connexion with the war.
Sitting suspended from 1 to 2.30 p.m.
– I desire to rise to a matter of privilege. According to the report in the Age newspaper, the honorable member for Dampier, during my absence from the sitting of the House yesterday, made the following statement: -
Mr. Gregory expressed the opinion, with some heat, that if the Attorney-General used eau-de-cologne in large quantities for the rest of his life he would not be able to rid himself of the smell of the Blau transaction.
– Do you impute bribery ?
– There is something about this matter that wants further investigation.
I desire to invite the honorable member for Dampier and those who are acting with him in this matter to make a plain statement of what they mean.
– The matter requires further investigation.
– That is a contemptible insinuation, and I desire to repudiate it. The honorable member for Wentworth is reported,in the same column, to have said -
The Attorney-General knew that, when he allowed Blau to go to America, Blau was to meet one of the heads of the German scent firm there.
That is absolutely untrue.
– Order !
– The statement that I knew that Blau was to meet that person is untrue. Mr. Blau was under a. bond of £6,000 not to communicate with any enemy agent directly or indirectly. He was permitted to go to America only upon that understanding. I am sorry that I was not present when the statements were made, but as they reflect upon me personally I take this the earliest possible opportunity of refuting them. The honorable member for Wentworth continued - and that the moneys Blau got from sales of eau-de-cologne here Blau was to remit to the American exporters, and they would pay them to the head office in Germany.
As to that statement I knew nothing of his intention to purchase “4711.” As I have said, he undertook to do the very opposite of that, namely, to purchase a plant for manufacturing the perfume in Australia. I have not approved of the importation of eau-de-cologne into this country. The honorable member proceeded -
In the House the other night, when attention was drawn to a solicitor named Curtis, said to be a son-in-law of Blau, having since the Blau affair been appointed to prosecute for the Crown, the Attorney-General said he never knew until then that Curtis was Blau’s soninlaw. But Blau’s statutory declaration in the eau-de-cologne matter, which the AttorneyGeneral must have previously read, stated that Curtis was his solicitor and son-in-law.
The statutory declaration states nothing of the sort; it says that a person named Curtis is Blau’s son-in-law. As a matter of fact, Curtis is not a solicitor; he is a barrister. Furthermore, I did not appoint Curtis, nor was I cognisant of his appointment, but I did appoint a man named Shannon to act in this case. I will read the correspondence relating to the appointment -
Crown Solicitor’s Office,
Collins-street, Melbourne, 13/8/15.
Bahrs and Briemli.
I have the honour to acknowledge receipt of your letter herein of the 12th inst., nominating Mr. Shannon as counsel in this matter.
I have the honour to be, Sir,
Your obedient servant, (Sgd.) Gordon H. Castle,
I did not approve of that appointment; I did not know of it. I appointed Shannon. Not one statement made by honorable members opposite in regard to this matter is in accordance with the facts, and I invite the honorable member for Dampier particularly to make his statement again and to prove it, and if he does not prove it I shall know what to do with him. To make such a statement was contemptible and cowardly - an action which just suits the honorable member.
– Order! The honorable member must withdraw that statement.
– I withdraw it.
– I rise to a point of order. May an honorable member raise a matter of privilege in this way in order to reply to the speech of another honorable member, who is not to have the privilege of a further reply ? I am not suggesting that the Attorney-General should not make his explanation, but I ask whether this is the proper time to make it - whether he is in order in interrupting a speaker for the purpose of making a reply to a statement made at a previous sitting?
– At any time an honorable member who considers that he has been misrepresented may rise on a question of privilege, or to make a personal explanation. The honorable member for Darling Downs, who had not completed his remarks, offered no objection to the Attorney-General making his explanation at this stage.
– I cannot prevent an honorable member from making a motion of privilege.
– The AttorneyGeneral rose to a question of privilege, as any honorable member is at liberty to do at any stage. If the honorable member for Dampier believes that the AttorneyGeneral in his explanation has misrepresented him, he also has the right to make a personal explanation.
-i have no desire to make any explanation, beyond repeating fully what I said yesterday.
– Order ! The honorable member would not be in order in following that course.
– I desire to be clear about the practice. Do I understand you, sir, to rule that at any time when I feel myself to have been misrepresented I can rise under cover of privilege to reply to the statements which have been made ?
– What the honorable member desires to know is whether an honorable member is in order in replying, on a question of privilege, to a speech made in a former debate. An honorable member would not be in order in so replying, but if he has been misrepresented he has a perfect right to correct the misstatements.
– But only by way of personal explanation, not on a question of privilege.
– Perhaps the honorable member is correct in contending that the Attorney-General should have risen to a personal explanation, and not on a matter of privilege. To that extent, the Attorney-General’s remarks have been irregular.
– I propose now to deal with the Bill itself. I think it is very unjust to collect income tax in a financial year which begins six months after the close of the year for which incomes are assessed. In the States, the year for which income is assessed coincides, to some extent, with the year in which the tax is collected. In Queensland, during the financial year 1915-16, income tax is collected upon the incomes earned during 19l5. As the honorable member for Angas pointed out, the collection of the tax should have some closer reference to the year in which the income was earned. If the provisions of the Bill are adhered to, the tax will work very unjustly. During the year 1914, a large number of persons were engaged in enterprises and industries which produced income. They had an idea of what their obligations and burdens were, and were able to adjust their finances accordingly. Now, eight or nine months after the close of the calendar year, a tax is to be levied on incomes earned in 1914. That is inequitable and unfair in every way. Taxpayers have had no opportunity of so adjusting their affairs as to be able to meet this taxation. If the conditions in Australia had continued normal, there would have been more justification for the course the Government propose; but shortly after the middle of last year the whole of our commercial affairs were dislocated by the outbreak of war, and the incomes of many Australian residents have, in consequence, absolutely ceased, or been very much reduced. With that very much reduced income those people are called upon to pay taxation which is based upon a much higher income than they are now enjoying. As another honorable member has pointed out, a number of people have made large profits since the outbreak of the war, and they ought to pay taxation on those profits ; but, under the scheme contained in the Bill, those men will not be taxed, except in regard to profits made during a. few months of the year 1914. If this tax were collected for the year commencing in the middle of 1914, or on the 1st January, 1915, those persons would be reached, and taxation would be collected from them; whilst, at the same time, we should avoid the injustices to which I have referred. That suggestion is not made with the object of embarrassing the Government. We desire to assist the Government to collect the tax, but .we wish it to fall fairly on all people. When we are dealing with the exemptions, the whole relationship of the Commonwealth and the States in regard to taxation comes under consideration. This Bill purports to exempt from taxation municipal corporations, friendly societies, or other local governing bodies, trade unions, and charitable, religious, scientific, or educational bodies, incomes derived from bonds, debentures, stock, or other securities of the Commonwealth issued for the purposes of the war loan, and also the salary of the Governor-General. I am not taking exception to these exemptions, but I wish to refer to the position under this Bill of a large number of State agencies and instrumentalities - using the technical term - such as the State Governors, the State Judges, and members of Parliament, and the State Public Service generally. All these are State agencies and instrumentalities. This Bill does not expressly exempt income received from State securities, such as Treasury bonds, Treasury-bills or stock, or even those issued by other instrumentalities. We have, therefore, to consider the point raised by the honorable member for Angas as to what is the constitutional relationship between the Commonwealth and the States, in regard to their powers of mutual taxation. Dealing first of all with the principles of exemption, I think that there should be a mutual agreement between the Commonwealth Mid the States not to tax each other’s securities, and that it should be covered by legislation so as to preclude even the possibility of any question being raised. The State Income Tax Acts exempt their State securities, and this Bill exempts only one class of Commonwealth security, namely, the war Joan. We have to ask ourselves whether, even if we do not specially exempt them, we have the power to tax State instrumentalities. This raises the question of the whole fundamental relationship of the Commonwealth and the States. In the case of d’Emden v. Pedder, 1 C.L.R. 91, decided in 1904, Chief Justice Griffith said that -
In considering the respective powers of the Commonwealth and of the States, it is essential to bear in mind that each is, within the ambit of its authority, a sovereign State, subject only to the restrictions imposed by the Imperial connexion and by the provisions of the Constitution, either expressed or necessarily implied.
The theory of the Constitution is that the Commonwealth and the States are each sovereign within the ambit of their own authority, and the doctrine laid down by the Court in the case of d’Emden v. Pedder was upheld in the case of Deakin v. Webb, 1 C.L.R. 585, and reaffirmed in Baxter’s case 4 C.L.R. 1087. . The Court laid it down that when a State attempts to give to its legislative or executive authority an operation which, if valid, would fetter, control, or interfere with, the free exercise of the legislative or executive power of the Commonwealth, the attempt, unless expressly authorized by the Constitution, is to that extent invalid and inoperative. The Court stated that that appeared to be the true test to be applied in determining the validity of State laws and their applicability to Federal transactions. An Income Tax Act of a State, in so far as it attempted to tax the salaries of officers of the Commonwealth, was held to come within that principle. In the railway servants’ case, 4 C.L.R. 488, it was held that that doctrine was reciprocal : that as a State could not interfere with Commonwealth agencies and- instrumentalities, so the Commonwealth could not interfere with State agencies and instrumentalities. In other words, the doctrine is one of reciprocal relationship. It is absolutely essential to the continuance of the sovereign bodies under the Federation that that doctrine should be observed. I agree with the AttorneyGenera] that where we have a Federal Constitution dividing sovereign powers between the central and the provincial authorities, this doctrine is essential to the due carrying out of the Federal system. I desire to refer more particularly to Baxter’s case, in which this principle was reaffirmed, and in which the Chief Justice made some observations and quoted some authorities which have referonce to the question of taxation of not only public servants but other instrumen- talities, such as securities. His Honour quoted from the minority judgment in South Carolina v. United States, as reported in the Commonwealth Law Reports (vol. 4, page 1134): -
The Court has constantly held that the absence of authority in the Government of the United States to tax or burden the agencies or instrumentalities of a State Government, and the like want of authority on the part of the States to tax the agencies or instrumentalities of the National Government, results from the dual system of government which the Constitution created, and that the continuance in force of such a prohibition is absolutely essential to the preservation of both Governments.
It would be superfluous to review in detail the many cases decided on the subject; but in the endeavour to bring the settled doctrine clearly to the mind, I refer to the most salient of the cases.
In McCulloch v. Maryland (1) and Osborn v. Bank of the United States (2), it was held that a State could not impose a tax on the operations of the Bank of the United States, or any of its branches. In Weston v. City Council of Charleston (3) ; Bank of Commerce v. New York (4) ; Bank Tax Case (5) ; and Banks v. Mayor (6), it was decided that a State was without power to tax stock or bonds issued by the United States for loans made to it, when held by an individual or by a corporation. In Dobbins v. The Commissioners of Erie County (7), it was decided that a State might not tax the compensation of an officer of the United States. And, in Van Brooklin v. Tennessee (8), and cases cited on pages 168 et seq., it was held that the State might not impose a tax on any property of the United States, including real estate of which the United States had become the owner as the result of a sale to enforce the payment of direct taxes previously levied by the United States.
Conversely, the adjudications concerning the want of power in the United States to tax the States are of a like scope. In the Collector v. Day (9), it was decided that Congress could not impose a tax on the salary of a judicial officer of a State:
The judgment seems to indicate that the Commonwealth cannot tax the instrumentalities and agencies of the States, and that the States cannot tax those of the Commonwealth. If a case under this measure ultimately comes before the High Court, the question will be as to whether, seeing that the States cannot tax Commonwealth public servants, the rule is reciprocal, and that the Commonwealth cannot tax State public servants or other State instrumentalities, including State securities. When the High Court decided that the States could not tax Commonwealth public servants, this Parliament passed a law authorizing them to do so upon exactly the same basis as they tax their own citizens resident in the Commonwealth .
– Was that legal?
– The High Court held that it was. In the case of Chaplin v. the Commissioner for Taxes, South Australia, 12 C.L.R. 375, it held that this exemption was a privilege granted to the Commonwealth for its own preservation, but that the Commonwealth, if it chose, could waive that protection. These, after all, are matters for reciprocal arrangement, and I think the Commonwealth and the States could arrange to avoid any litigation on the subject. It would be easy for us under this Bill to exempt income from State securities just as it is announced that the States are not going to tax Commonwealth securities. There is only one other matter to which I propose at this stage to refer. I think it advisable for the Attorney-General to endeavour to devise a simpler means of deciding appeals than that for which the Bill provides. In Queensland and New South Wales appeals for assessments are decided by a Court of Review, which is proclaimed, and which may consist of either a District Court Judge or a Police Magistrate. Under this Bill, apparently, all appeals must go to the higher tribunals. The testing of any question relating to an exemption is more important to the man who has a small income than it is to the man with a big income, and I think a simpler method of appeal should be provided.
– There is exactly the same difficulty with regard to land tax appeals.
– -Quite so. It would be better to provide that a District Court Judge may be proclaimed a Court of review, as is clone under the State legislation. The Justices of the High Court visit Queensland only twice a year, whereas the State District Court Judges are constantly travelling over the whole State, so that if they were empowered to deal with appeals, subject, of course, to the right of appeal to the High Court where some big principle was involved, the procedure would be better than that for which the Bill now provides.
– Does the honorable member suggest that as a substituted or as an additional power?
– I would not make it a substituted power. Where some big principle was involved, it might be far better for all the parties to agree to have it decided by the High Court. A whole class of taxpayers might group together to obtain the decision of the Court. I think, therefore, that it would be better to give the right to appeal to a District Court Judge as an alternative choice.
– I have no objection to that.
– There are other matters which may well be held over until we go into Committee, but I should like the Attorney-General to draft an amendment to meet this objection. I have compared this Bill with State legislation on the same subject, and find that the machinery for enforcing it, the penalties provided, and, indeed, the whole scheme of the measure, are more drastic than are the State Acts. Speaking from memory, I would point out that, under the Queensland Act, for instance, considerable notice is given before the fixing of the date for the collection of the tax. Some time after that date has been fixed the taxpayer is notified of the amount of his tax, and is then allowed a much longer time to meet his liability than that for which this Bill provides. The times fixed under this Bill are very short, having regard to the fact that it will apply to a whole continent. Thirty days after receiving notice a taxpayer must pay the amount of his tax, otherwise he is liable to heavy penalties. In Queensland, the population of which is scattered, the provision of the local Act in this respect is much better. In passing legislation of this character we have to test it, not by the conditions prevailing in the more closely settled portions of the Commonwealth, but by those of the most remote and scattered parts of the Federation. Taken as a whole the Bill is more drastic than State legislation on the subject.
Mr.Hughes. - The honorable member might also say that the taxation for which it provides is based on more equitable lines than that of the States.
– I admit that, in certain aspects, it is fairer; but in respect of other matters it is certainly open to criticism.
– I was asked a few minutes ago for a ruling regarding the right of an honorable member to interrupt another in order to make a personal explanation. I desire to explain that the Attorney-General said, at the time, that he was rising to a question of privilege, and that I had no clear conception of what he proposed to say. His statement ultimately proved to be a personal explanation, and I do not wish the action that I took on the occasion in question to be regarded as a precedent. An honorable member may not interrupt another in order to make a personal explanation, but must wait until the close of his speech. I was misled by the statement of the Attorney-General that he rose to a question of privilege.
.- I do not suppose that the person can be found in this House, or out of it, who does not* regret the introduction of this very drastic income tax at the present time. A difference of opinion exists between the Treasurer and the Attorney-General and myself as to its necessity at the present time. I adhere to my already expressed opinion that if due economy had been observed and other financial arrangements made, it would not have been necessary to impose this taxation now. In a period of difficulty, stress, and suffering like that through which Australia has passed during the last two years, it is undesirable to impose heavy taxation unless the circumstances render such taxation absolutely imperative. The country has sufficient trouble to meet in other directions. Our producing interests are at a very low ebb. Rural populations have suffered severely, and are not in ‘ the position to meet increased burdens. That being the case, the Government, possessing as it does a large majority in both Houses, should have tried to discover some means of avoiding this drastic taxation; but the course that is being followed is that taken by the Labour party since it first came into power in 1909. Its policy has been to tax, and tax, and tax, whether the money was required or not.
– What about the war pensions?
– All that has been provided in the Estimates to meet expenditure on war pensions is £500,000, and I have already pointed out how a very much larger sum than that could have been wade available without increased taxation. My complaint is that when taxation is proposed in this Legislature, honorable members fore, t that another taxing machine, the State Par liament, exists in every State of the Commonwealth. Honorable members here do not know what amount of taxation may be imposed by the States, and, so far as I can judge from the demeanour of honorable members opposite, they do not care. They forget that the State Governments have already invaded almost every avenue of taxation. The States have income taxes, they have land taxes, they have immense municipal taxation, and now, on the top of all that, the Federal Government, after imposing a heavy tax on land, and an immense levy in probate duties, comes forward with this heavy tax on incomes, apparently unmindful and regardless of the impositions already existing on these sources by the States.
– But, notwithstanding all that, the people of Australia are the most lightly taxed people in the world.
– I have heard that statement before, but I do not think the honorable member knows much about it, and I am not going to accept his assertion. When the Federal income tax becomes operative, I believe that the people of New South Wales, and some of the other States, will be more heavily taxed than the people of the United Kingdom, notwithstanding all that honorable members opposite may say. It is all very well for people who have very little, and who have made no attempt to acquire anything by their industry, to talk lightly of taxation, but there are people in the community who have been industrious, careful, and self-denying all their lives, and it is not fair that they should be despoiled unjustly now.
– The people in Australia will not be taxed so heavily as those in the United Kingdom, even after the imposition of this tax.
– And in a new country like this they ought not to be, though I think the figures will show that our taxation will be quite as heavy as that in the United Kingdom. The municipal tax in the city of Perth, for instance, amounts to 5s. in the £1 on the annual rental value of property.
– And who pays that?
– The person who lives in his own house has to pay it. Double taxation of this sort - that is, double land taxes and double income taxes on the same individual - can only result in the destruction of the Federation, though possibly that is what apparently honorable members opposite desire. They laugh-
– I was laughing at the way the right honorable gentleman puts it. First he says we do not want to do this, and then he says we are going the right way to do it.
– I do not understand the honorable member, but what I do say is that the taxation of the people opposed to them appears to give them pleasure and enjoyment.
– Will the right honorable member show us some other way to get the money we need ?
– The money is not required this year, and even if money were required this legislation is too drastic, and will provide more than should be needed.
It was never understood when Federation was established that the Commonwealth would impose any income tax except in the case of some great emergency.
– Is not this a great emergency ?
– No ; it is not. The demeanour of honorable members opposite shows that they do not consider it a period of emergency, because they laugh with pleasure at the idea of any one else being burdened with taxation. On a previous occasion I proved up to the hilt that no necessity exists for this income tax this year, and I also showed that if attention had been paid by the Government to the practice of economy, or if the Government had made any attempt to live within their means, this income tax would not have been necessary for the services of this financial year.
– The honorable member for Balaclava said that the honorable member Was not correct.
– I do not care what the honorable member for Balaclava said. I have ideas of my own on that point. What I said then, and what I adhere to now, was that this Bill would have been unnecessary if the Government had made some attempt to introduce economy.
– Has economy always been the right honorable gentleman’s watchword ?
– Yes. My policy has been “bold but cautious.” When I complained to the Prime Minister at the absence of strict control over the administration of the Defence Department, the expenditure in which amounts to over £50,000,000, the right honorable gentleman replied by asking me if I had any doubt about the expenditure being properly conducted. My reply to that is that every one in this House and in the country has a doubt. Every one knows thatgross extravagance is being incurred in Defence expenditure. But apart from that, what honorable member will say that it is necessary to spend £4,000,000 more than was spent last year on current account? Can any reasonably -minded man say that it is necessary to spend £1,157,000 more on new works this year than last year, particularly when it is remembered that the largest expenditure ever incurred under these headings was recorded last year ? To-day the Prime Minister said the last Liberal administration spent £1,000,000 more than we received. But honorable members should consider the difference in the circumstances between then and now. They should look at the circumstances under which we took office. The last Liberal Government came in at the beginning of the financial year. They had no time to alter or retrench, and only had a majority of one, and that one was the Speaker. What could they do in the face of the opposition they met from honorable members at every turn ? Had the late Government possessed a majority such as that at the disposal of the present Government, the result would have been very different. Ministers are not only spending more than was spent last year; they are also incurring unnecessary expenditure. For instance, they are spending £100,000 on the referenda. It is the second £100,000 that they are spending on a referenda, and I suppose that they will continue to spend similar sums in the same direction in the hope that the people will tire of opposing it. Then there is £150,000 to be spent on the taking of the war census, which also is quite unnecessary expenditure at the present time, because I have it on a reliable authority that nearly all the information required could be supplied from the material now in the State Departments. In neither case is there justification for this huge expenditure. But the
Government show no desire to live economically; at least it is not indicated in their Estimates. We have had from the Prime Minister and the Attorney-General many platitudes about economy, but to talk of economy is valueless if it is not practised when the opportunity to do so is presented. The Prime Minister says -
We are faced with great difficulties, if not dangers, and the whole-hearted co-operation of the people of Australia is necessary….. The necessities of the Commonwealth demand economy on the part of the people in every walk of life.
The Attorney- General says -
It is in the last degree important at this juncture that enterprise should not be discouraged. …. The necessity for the imposition of an income tax arises out of the war and the growing demands made by the war.
The Attorney- General knows that the latter statement is incorrect. I deny that this taxation is necessitated by the war. I have proved that there would have been no need to impose it if the Government had practised economy, and altered their financial arrangements. The land tax is an offspring of the Labour party, which was imposed when it was not needed. The party was so. eager to harass land-owners that they imposed a tax which they could not spend. After a financial orgy of two or three years, they went out of office and left a surplus of about £2,250,000. The land tax has yielded £5,911,000 during the last four years, and it is estimated that there are only at present 16,733 taxpayers, and that they will pay £1,609,836 this year. The people must be gratified at having such a good Government, that taxes them so well, and makes it a fetish to do so. Let me point out the direct taxation for this year imposed, with only a small exception, by the Labour party since they came into office four years ago - Federal land tax, £1,609,836; State land taxes, £600,000; State income taxes, £3,000,000; probate duties, close upon £1,000,000; and this last monument to their statesmanship, the Federal income tax, £4,000,000. Approximately £10,000,000 has been imposed by the States and the Commonwealth in the shape of annual direct taxation, and will have to be paid this year and for the future.
– The land tax in Victoria was imposed by the Liberals.
– I do not think that the honorable member will repudiate the assertion that he is pleased that this extra taxation has been placed upon the people. This £10,000,000 does not include municipal and shire rating, which probably represents another £8,000,000 a year. The people of Australia should not be proud of this record of taxation. A new country, which has so much room and scope for all, is almost, if not already, the most heavily taxed place in the world. I do not admit the necessity for this income tax, butif its necessity be admitted, then I maintain it should be more moderate. To describe an impost which takes away the fourth of one’s income at one fell swoop as taxation is an abuse of words. It is not taxation; it is a levy on those who do not support honorable members of the Labour party, for probably not one supporter of the Labour party will pay this levy. He knows it. He has boasted that it is not excessive on the smaller incomes. He and his supportershave a vendetta against all who, by care, economy, industry, and enterprise, have been able to make money, and by their ability and enterprise have made Australia what it is to-day. They think that these people should be deported or interned for ever. To take away a fourth of one’s income is nothing but systematized political robbery. Honorable members take very good care that those who support them get off very lightly. I am not here to say unkind words, but the truth must be told. Fiat justitia, &c. But my words fall on deaf ears. I would not have bothered to speak but that I trust that something of the truth may find its way into the hearts and minds of the people of Australia. I know that honorable members opposite pay no attention to what we say. Often I have told Ministers what should be done, but they do not listen. Having made up their minds to a certain course of action, they treat our warnings and advice with contempt. The other day, when the Opposition moved an amendment, I thought every honorable member would agree with it. It was not hostile to the Government, and need not have been treated as such. We moved that the whole proceeds of the income tax should be free to be devoted to war purposes, and that the greatest economy should be practised, but it had no effect on honorable members opposite. They all voted against the amendment. They do not wish to have economy. They want expenditure, no matter how the money is spent, so long as it gives employment to their supporters. Consequently, though the amendment was a non-party one, it was unanimously rejected by honorable members opposite. In conclusion, all that I have to say is that an income tax is not necessary this year, that it is unduly high, and that any Federal land tax or income tax imposed without consultation with the States must be the prelude to the destruction of Federation.
.- With the exception of the right honorable gentleman, and a few more, all honorable members consider that an income tax is necessary, because we must have money with which to prosecute the war. The right honorable gentleman claims that this taxation is unnecessary, and that we should not impose an income tax except in a case of emergency. If when, along with the Allied nations, we are embroiled in a war requiring the expenditure of £1,000,000 a week, there is not a case of emergency, I would like to know what would be an emergency such as the right honorable gentleman would consider sufficient to justify the imposition of an income tax? Does the right honorable gentleman mean that we should wait until the conflict is right at our door? I venture to say that we shall never have a clearer case of emergency. We are called upon to find this money during the present financial year, and it can only be derived by taxation of this kind, which is the fairest method that could be adopted. All that we can expect from the poor man is that he shall give his services towards the safety of the country, and those who have money should feel it incumbent on them to find the sinews of war for the Commonwealth. The right honorable gentleman, however, thinks that this is unnecessary.
– He did not say so.
– He said very definitely that there was no necessity for taxation of this kind at the present moment.
– Yes, he said that; but that is quite a different statement.
– The right honorable gentleman made it very clear that he did not approve of taxation of this kind at the present moment, but later on he qualified his remarks, and said that if this taxation had to be imposed, it should not be so drastic. It is the only fair way in which we can finance the war. Some honorable members consider that we should borrow the money. We are borrowing money, but surely it is not contended that we should not make provision for interest and for sinking fund ? We should have to keep borrowing month after month to meet the expenses that are being incurred, and must impose extra taxation. It has been said that this income tax will not affect any supporter of the Labour party, hut, as a matter of fact, a large number of our supporters will have to pay it. Every man whose income exceeds £156 a year will be taxed, and what could be fairer than to tax the community in proportion to its income? Every person who has more than a living allowance must pay his share towards the cost of the war. The workers probably contribute more per head to the revenue of the country than do the rich. The revenue of the Commonwealth is derived chiefly from Customs taxation, and all sections of the community must pay Customs duties on what they consume. The worker generally has a much larger family than the rich man, and therefore pays proportionately more in Customs duties. Yet the right honorable member for Swan would have it appear that we are asking one section of the community alone to bear the burden of the war. I say that all sections are bearing their share. In my opinion, the exemption should be at least £200; in view of the high cost of living, an exemption of £156 is unjust to the poorer individuals of the community. In support of my contention that the worker pays in Customs duties proportionately more than the rich man, I quote the honorable member for Angas.
– The worker pays more than his share if he has a family.
– In that case he is not being let off. Reference has been made to the cost of the referendum, but the money will be well expended if this Parliament gets the power for which it is asking. ‘ It will mean something to the poor if we are able to protect them by seeing that they are not charged more than reasonable prices for the necessaries of life.
– In New South Wales the labour unions are protesting that the Necessary Commodities Boards are not keeping down prices.
– If the National Parliament had the power for which it asks, it could deal with monopolies all over Australia. It will be time to find fault w’hen we have failed to give effect to this power. This is a time of crisis, the Government being practically at its wit’s end to finance the public expenditure, and to conserve the best interests of the people. We therefore require additional powers to enable us to do what is necessary.
– These powers were asked for years before the war.
– Had we got them, the people would not be in their present predicament. The right honorable member does not desire the extension of the powers of this Parliament. Yet the decisions of the High Court show that this Parliament ,is shackled, and cannot give effect to the intentions of the framers of the Constitution. But I rose mainly to draw attention to the provision which imposes taxation on the capitalized value of the taxpayer’s horn©. To me that is an obnoxious provision that should not find a place in an Income Tax Bill. A poor man has to deny himself many things in order to obtain a house of his own, but when, after struggling for years to pay the necessary instalments, such a man has bought his own house, we propose to regard 5 per cent, of its capital value as income, and to tax that 5 per cent. I would not tax in this way the house which any taxpayer lived in and owned. Such a tax is a property or wealth tax, not an income tax. There are thousands of working men who, by great struggles, have managed to acquire homes worth, perhaps, £500 each.
– Some of the States have passed Workers’ Dwelling Acts to encourage the purchase of homes.
– Yes. The Bill exempts incomes under £156 a year, but if a man earning £3 a week has a home worth £500, his income is assessed as £156. plus £25 - the latter sum being 5 per cent, on the capital value of his house and land. Thus his income becomes taxable. This, I think, is altogether wrong. Another provision to which I object is that which imposes taxa tion on the income earned during the year 1914.
– We now have a new Bill before us.
– I am addressing myself to the Bill as it was introduced, and if amendments are moved which will meet my objections, I shall be satisfied. A great many men are paid according to results, at so much per ton or per yard, or according to other standards. Such men cannot be expected to say now exactly what they earned in 1914. But if they do not fill in returns, the Commissioner may go to their employers, whose information may show that they earned a few pounds over the exemption, and then action will be taken against them. Men would have a. better opportunity of making correct returns regarding the year ended the 30th June last, making the following assessment for the year ending the 30th June, 1916. Thus each year would produce income taxation for the expenditure of the year. During the last financial year we were at war for only eight months, and if the Bill be passed as it stands, we shall be taxing the income of practically two years to meet the war expenditure of only eight months. I would point out, too, that coal miners and other miners paid by the yard, or by the ton, cannot say very well what they earn during a given year. The companies can show that they paid certain amounts to certain men-
– Or to parties of men.
– Yes. But they do not keep any account of the deductions that are made for explosives, tools, and other things, which, in many cases, come to £50 a year.
– A company, if asked for a return, could give only the figures on its books.
– Yes ; without any offtake. For that reason I urge that the exemption be higher. The exemption is too low, and the taxation of 5 per cent, of the capital value of the home makes the position worse. It may be argued that in any case the amount pf the tax which will have to be paid by working men. will be very small . But the workers all over Australia will be put to great inconvenience in filling in returns, because they will not know what to put into them. It is quite unnecessary for a wage-earner who gets only a living wage to make a return. He pays his share through the Cus- toms, and, at the same time, he is always prepared to do what he can in the interests of the nation by offering for service at the front.
.- I am sorry that the Attorney-General was not present to hear the speech of the honorable member for Hunter, because it was one of the strongest that could be made against the Bill with regard to the proposed year of assessment. I personally have no objection to the principle of an income tax. Such a tax is based on ability to pay; and that is the principle which ought to guide us in levying taxation If we have the obligation on us to impose taxation, and we impose it on those who are able to pay, and if the money is properly spent, there is very little objection, except, of course, the inconvenience that taxpayers may have in finding the money. But, in my judgment, an income tax is about the. most equitable; and all we expect from the Government is that they will spend the revenue to the best advantage. It will be realized, I hope, by the Government that this tax, ranging up to 5s in the £1, is purely a war tax, and that it ought not to be imposed in future years, when the war necessities have passed away.
– You may be sure that the income tax has come to stay !
– It will not stay with a 5s. rate. Whatever we may expect to realize out of the tax, a rate of 5s. in the £1 would. in the long run, absolutely damage the commercial industries of Australia.
– It will not take a “long run “ to do that.
– Not a very long run.
– The 5s. rate does not cover very much of the taxation.
– It covers a considerable amount. As the Attorney-General pointed out, the tendency of all modern commerce and industry is to big aggregations of capital; and if taxation is imposed on capital thus employed in the development of industries, those industries will (be hampered, and, as sure as day is day, this will react on the workers, and lessen employment. The Attorney-General has hinted, though he has not definitely stated, that he is prepared to allow this tax to be paid in two instalments. This will be a welcome relief; but, in view. of that expression from the Attorney-Gene ral, I appeal to the Government to consider whether it is not possible to make the present calendar year 1915 the basis of assessment. I build that suggestion on the Attorney-General’s promise that the tax will be leviable in two moieties. If the balance-sheet of the average business firm up to the end of June is taken, it is possible to roughly estimate what the income will be for the current year; and if, on the passing of the Bill, the Government are in need of money, and wish to collect the tax before the end of the calendar year, it can be paid on the balance-sheet up to the end of June. Most business people prepare balance-sheets both in the middle and at the end of the year, and the second moiety could be paid on the balance-sheet made up to the end of December. Firms who do not make a balancesheet to the end of June could make an estimate of what they expected to earn, and pay on that estimate, the necessary corrections being made on the issue of the balance-sheet at the end of December. There are scores of reasons that could be advanced why the current year, in which we are actually living and earning the money, should be the year on which the tax should be levied. In the first place, take that large body of people in our midst - the farming community. The 1913 harvest, the money for which was paid in the early part of 1914, was one of the best that Australia has seen ; but, like average Australians, those who received that money have spent it. On the other hand, the 1914 harvest was an exceedingly bad one, and many of the farmers, in the early part of 1915, were in such a position that they had to go to their separate State Governments for grants of seed wheat to enable them to plant the present year’s crops. If we adopt the Bill as printed, these farmers will have to be assessed on the huge returns they got in the early part of 1914, and they will be made to pay in a year when they have had an exceedingly bad harvest - a year in which they are, may I say, absolutely stranded.
– Is not the possibility of that constant ? Whatever you do, there are the fluctuations of circumstances.
– No, and for good reasons. Every man in the community knows that there is going to be a heavy tax on incomes this year for a specific purpose, and each one has to “ cut his coat according to his cloth.’’ He has to provide out of his earnings this year for the payment of the tax, and he will provide accordingly; but to ask him to provide for the payment of a tax on an income which was spent long ago, and to do so in a year when he is not earning anything, is grossly unfair. I am quite satisfied that the Attorney-General himself will see that, if it is at all practicable, the income of the current calendar year should be the basis of the taxation.
– I do not see it. No matter when a tax is imposed, it must be for a past period, as well as for a present one, and, therefore, the greater portion of the income must have been spent.
– Let us take the case of the Victorian income tax. The necessary legislation is passed in the last half of the calendar year, and the tax is levied for the financial year from July to June, the tax being payable in March. That is exactly what I am asking the AttorneyGeneral to provide - to make this calendar year the basis of the taxation - and I have pointed out that if the Government desire to have the money in advance they can place the responsibility on the taxpayersof estimating their incomes, and paying the first moiety in advance, and the second moiety in March, when their annual balance-sheets are out.
– Is not the gravamen of the whole business that some people will have to pay something more under the Bill than they would if the suggestion of the honorable gentleman were adopted?
– I do not think they would pay one penny moto.
– I think they would, and that that is the real trouble.
– War profits will not be included under the Bill.
– There are firms in the community making fortunes out of the war. They are in a position to get contracts for supplying the Government with goods at profits which would be utterly impossible in normal times.
– We shall catch them next year.
– Why not this year? The point is that it is proposed to impose taxation on people who have already spent what they received last year.
– Then I commend them to what the right honorable member for Swan said - that they ought not to have done it.
– I did not say anything of the sort.
– I venture to say that the great bulk of the right honorable gentleman’s constituents have spent those incomes. The honorable member for Hunter, who, like myself, knows something of mining, has pointed out that it would be absolutely unfair to ask working miners to pay a tax on incomes they cannot even assess at this day. There are numbers of coal mining companies in Australia who pay their men £4, £5, and £6 a week, and all these men will be liable to taxation. But the men do not know at the present time what they earned in 1914, and, in order to ascertain the amount, they would have to go to the books of their employers. On their part, the employers can only give the totals of the money paid to the men. As the honorable member for Hunter says, they will be absolutely unable to estimate what the off-takes were, and the result will be that the tax will be levied on money that the men did not even receive. The only evidence admissible in a Court of law on such a question would be the books of the employers. At any rate, if the Attorney-General cannot agree to make the present calendar year the basis of assessment, he certainly has no justification for going beyond the last financial year - from July. 1914, to 30th June, 1915 - there can be no justification for going six months further back. Let me give another illustration. There are, I suppose, thousands of men who are building up businesses in different parts of Australia, and have in connexion therewith undertaken obligations and responsibilities in the way of borrowing money from banks and other financial institutions. At the end of the year such men may put whatever money thev earn into the businesses, retaining only sufficient for a bare existence. But, although this money is put into the business, these men are charged on the full amount of the profits they made. I could give instances, but, speaking in the abstract, I suggest that if a man, starting a business, borrowed £5,000, and, at the end of the year, has made £2,000 out of this particular branch of his business, and he uses that £2,000 to liquidate part of the £5,000-
– What does he live on?
– Another branch of his business.
– I can see that the honorable member’s friend will get into difficulties if he goes on in that way.
– If such a man takes £300 a year out of the business for living expenses, that is the only benefit which he personally has received out of the business for the time being. The balance of the profits has been put back into the business to liquidate the debt he has incurred on it. That year having closed, there follows a year in which his business has not prospered so well, and he has only been able to live on it, and not to reduce his debt. Then a new income tax is suddenly imposed, and he is charged, not on the income earned during the last year, but on the accumulated capital of, say, £1,400 which he has paid off and invested in his loan. The AttorneyGeneral proposes, not to tax the man upon the bad year, but on some preceding good year. That proposal is grossly unfair. If the development of businesses on those lines is retarded by the imposition of heavy taxation, we shall discourage the employment of labour, and thereby injure the working community as much as the capitalistic community. I use that illustration only for the purpose of showing how inadvisable it is to make the tax more retrospective than is necessary.
– How far back would you date the tax - to the 1st July?
– Not earlier. I should like, also, to draw attention to clause 17, because it affects so many industries, such as manufactories, mines, shipping, and other businesses of that description. Paragraph d of that clause provides that a certain sum for repairs may be deducted, but paragraph e states that an allowance may be made for depreciation if no advantage has been taken of the allowance for” wear and tear or repairs. In connexion with a railway, for instance, repairs may cost very little, but the depreciation may be considerable. The depreciation of ships is very great, and so also is the cost of repairs. The same remarks apply to manufacturing machinery.
– That clause has been amended by a proposal that the amount allowed for deduction under paragraph d is not to be regarded as debarring the1 Commissioner from allowing deductions under paragraph e.
– I am glad that the Attorney-General has amended the Bill in that respect. One other point I wish to make is that, although the applications for the first instalment of the war loan close to-day, there yet remains to be borrowed three-fourths of the total amount of the loan, and every pound of taxation we impose will diminish the amount of money available for the loan. We ought to give every possible inducement to our people to subscribe to this loan and make it a success, because upon its success or failure will depend the opinion in which Australia is held by the outside world. If the Attorney-General will favorably consider the few points I have brought under his notice, I am sure the Bill will be agreed to without much loss of time.
.- I rise to support the Government’s taxation proposal. I can find no substitute for the proposed system of taxation, nor have I heard any honorable member opposite propound any other means of getting’ the Government out of their difficulties. The imposition of taxation is always an unpleasant duty for a Government or Parliament; but when we have decided that taxation is necessary, it becomes our bounden duty as public men to impose a tax which will be as little as possible a burden on the people. The only means of raising revenue by taxation is to tax people who have money to be taxed. The Leader of the Opposition referred to duplication of taxation by the States and the Commonwealth. I am one of those who hope that before long there will be some better understanding between the1 Commonwealth and the States in regard to the power of taxation. It must be evident to the public men in Federal and State spheres that the time is approaching when the National Parliament must control taxation. The States have reached almost the limit of their borrowing powers, and now the Commonwealth has gone upon the money market. The Federal Government have, however, adopted a course which I am sorry the States have not previously followed, that of borrowing from the people of Australia itself. The consequence will be that the interest paid on the loan will be enjoyed within the Commonwealth, and there will be a more beneficial circulation of the money than has previously been experienced in connexion with Australian loan transactions. The Leader of the Opposition accused the Government of extravagance, and claimed that there was no necessity to raise an extra £4,000,000 by taxation during the present financial year. He endeavoured to show that there was a possibility of saving £3,000,000 by reducing the Estimates of expenditure. The right honorable member for Swan attempted to outdo his leader by showing how £7,000,000 could be saved. Then the honorable member for Balaclava, who has not been Treasurer of the Commonwealth, but has certainly had a good deal of experience in connexion with State finances, told us that he could not see how the Treasurer could do with a less vote than was being asked for. I once listened to a speaker on finance who concluded his remarks by saying that the figures did not lie, but that the persons who dealt with them were very often perverters of the truth. I do not know whether it is the Leader of the Opposition, the right honorable member for Swan, or the honorable member for Balaclava who is perverting the truth in this instance. War time provides a good opportunity for imposing taxation, because there is little doubt that profits are being made during such a time which are fairly taxable. Without wishing to strike a note of pessimism, I predict that our financial troubles will arise when the war is over, and when we shall not have the opportunities of taxation which we have to-day. That view is corroborated by men in the British Parliament who have an extensive knowledge of finance. After Lord Middleton had addressed the House of Lords on the matter of taxation, Lord St. Aldwyn remarked that “ it was not too much to say that the financial situation was very grave.” The state of our finances, whilst not altogether grave, is of momentous importance to the people of Australia. According to the Economist, Lord St. Aldwyn - . . criticised the Government for raising so little in taxation to meet the cost of the war. During the Napoleonic wars he thought nearly half the cost had been raised by taxation, and fully half had been raised in the Crimean war. During the three years of the Boer war he himself had provided one-third of the expenditure out of revenue.
Some honorable members have questioned the wisdom of the Government in sub mitting these taxation proposals, but authorities such as those I have just quoted cannot be ignored. The Government should find some consolation in the fact that the policy they are pursuing has the support of politicians in Great Britain who know something of taxation. In the Economist of 24th ult. the same policy is still being advocated. It remarks that with the advent of Mr. McKenna to the Exchequer it made sure that the necessary additions to taxation would be made promptly -
Even now it is not too late, and we would earnestly beg the Prime Minister and the Chancellor of the Exchequer to ask the House of Commons to agree to a 20 or 25 per cent. surtax on all branches of revenue, with one or two obvious exceptions, such as the beer duties.
British statesmen have a wider knowledge of war taxation than we have. Fortunatelyour experience in this respect is limited, but we may very well take a lead from the British Government. If, as is alleged, we are erring in imposing this taxation we are erring in very good company. According to the same issue of the Economist -
Mr. Godfrey Collins drew attention once more to the necessity for prompt action in regard to taxation, especially on luxuries,which nave been practically untouched; and his views were supported by Mr. Hobhouse and Mr. Morrell, who dwelt once more upon the cardinal fact that at a time when many incomes are inflated by the vast war expenditure, “ we are taking no toll whatever from these great profits to pay for the war.”
Statements of this kind would not be made without justification, and it is no stretch of the imagination to say that the names I have quoted are those of men who are intimately associated with the industrial movement in Great Britain.
– What they are proposing to do in the Old Country is not what we are doing. They are proposing taxation in respect of the warperiod.
– That is what we are doing.
– No; this tax is to apply to incomes earned during the year 1914.
– The right honorable member for Swan, speaking with great earnestness, has declared that the taxation of Australia is increasing by leaps and bounds, and that we are in this respect a persecuted people. Unfortunately, Liberal Governments in the past raised very little revenue by way of direct taxation. They did everything possible to avoid taxation, and lived on borrowed money. On one occasion I attended a meeting at which the late Sir Henry Parkes was explaining the wealth of the country, and I was much struck by the interjection of a coloured man in the audience : “I and one of my colleagues, who, like myself, is a nigger, could govern Australia very well as long as we had plenty of money to do it with.” That was the position of Liberal Governments in the days gone by. There was too great a. de-sire on their part to carry on by means of borrowed money. The people of Australia are determined that a stop shall be put to this excessive loan policy, lt cannot go on foi all time. Public utilities, however, must be carried on, and they cannot be carried on without taxation. The Leader of the Opposition has complained of extravagance. I am sure that none of us favour anything of the kind. Even in the most favorable circumstances, extravagance is a folly, but during war time it is a crime. According to newspapers received by yesterday’s mail, complaints of extravagance are still being made in the British Parliament, and the military authorities are being urged to assist the Government in putting an end to it. The British Government point out that during the excitement of war time it is difficult to control public expenditure, and that extravagance is likely to occur. I am sure that the Commonwealth Government will endeavour to avoid anything of the kind, and that, having regard to the circumstances, Australians will not have much reason to regret their expenditure on defence. No doubt there is some extravagance in connexion with it, but I am sure that we shall have no hig scandal and no serious cause to regret the expenditure we are incurring in connexion with the war. The right honorable member for Swan told the Attorney-General that the Government, under this Bill, were exempting from taxation those who voted for them, and that they were anxious to impose taxation on those who did not vote for them. As a purely political move that might not be a bad thing, but as a fact this Bill provides for the lowest exemption ever fixed by any Australian legislation. We have provided for an exemption’ of £156, because under the awards of Arbitration Courts and Wages Boards, it has been held that £3 per week is the lowest that can be fixed as a living wage.
– Oh, no; we have many lower awards in Victoria.
– I was speaking of the awards made in New South Wales. We have there a Labour Government, and I dare say the spirit of the Labour Government pervades the Judiciary in these matters. The Arbitration Court . there has said that £3 per week is a living wage, and that is one reason why I think the Government have provided for the exemption of £156.
– In Victoria there are thousands of men working for 7s. 6d. and 8s. per day.
– I am sorry that the Victorians cannot rise to the occasion. I hope that the electors will soon return to power a Government that will assist those men. Great Britain first imposed an income tax, I believe, at the time of the Crimean war, and the tax has since been raised or reduced as circumstances have demanded. One of the good features of alI. income tax is that, unlike Customs and Excise duties, or even a land tax, it creates no vested interests. A tax that creates any vested interests can not be increased or reduced as the requirements of the country demand, so that an income tax, from this point of view, is much better than Customs and Excise taxation. I regard Customs and Excise taxation as being necessary, not to raise revenue, but to assist local production, and I hope that honorable members will never consider that such taxation should be imposed merely for revenue purposes. Some attention lias been devoted to the question as to when this tax should come into operation. My reading- of the Bill is that under it assessments will be made on income earned during 1914. I see no objection to that. Some honorable members opposite have said that since the war census is to he taken in respect of the year commencing June, 1914, this tax should apply only to incomes earned as from that date. If they desire to deprive the Government of the right to collect revenue in respect of six months of 1914 they should say so. The Bill will cover the war period from August, 3914, and every one admits that many persons secured a very considerable income between August and December last. If no income was received during the year 1914, because of the drought, no taxation will have to bo paid. ‘The tax will only affect those who received income. Moreover, I cannot understand why there should be any complaint as to the sending in of returns. Every person who was in receipt of an income up to £250 - in some States the sum is lower than that - has already had to send in a return declaring his income to the end of December, 1914, for State purposes.
– What about those who have not had to send in returns?
– They will, of course, have to find out what their incomes were, but not many men will be unable to dc that. If they cannot remember, there are means of obtaining the information.’ I think the Government would do wrong if they fixed a period for which the income returns should be made, other than that proposed. I do not know of any instance where a balance-sheet is made up to the end of June. Most private concerns, most trustees, the big insurance companies prepare their financial statements covering the period from January to December in each year, and when the honorable member for Hunter comes to reflect upon his arguments on this point he will conclude that he was not justified in suggesting that the people he represents are so devoid of intelligence as to be unable to discover to within a pound or two what incomes they made in the year 1914.
– Does the honorable member see any sense in having two returns covering different periods?
– It may be that the Government have some other object in obtaining the wealth census than appears on the surface. I do not know whether or not that is the case, but honorable members must bear in mind that the information desired in the wealth census is more concerned with’ the actual wealth of the community at a stipulated time than with its income over any particular period. I want to say only a word or two now regarding the amount of taxation paid by the people of Australia. In 1912, taxation in New South Wales amounted to only £1 5s. per head, and the sum was about the same in all the States excepting Tasmania, where it was £1 16s. 8d. per head. I should not have referred to this at all had it not been for the reference by the right honorable member for Swan to the municipal tax of 5s. in the £1 on property in Perth.
I do not regard such taxation in the same light as Governmental taxation, because if the money is properly expended, the locality taxed gets the full benefit of the taxation, by the provision of its various municipal services. Municipal taxation is also responsible for much of the unearned increment obtained from property. A person purchasing would have to pay a. much’ higher price for a property situated in a municipality, and enjoying the fruitsof municipal taxation, than if it were situated somewhere in the bush ; so that, really,, municipal taxation such as that referred to by the right honorable member for Swan should be regarded more in the light of payment for services rendered, and ought not to be compared with direct general taxation. The Bill has been framed in such a manner that its conditions may be complied with without difficulty, and where large sums are involved the Government will accept moiety payments. I can only hope that the tax will not berequired for long. If the war continues, there is little doubt that this tax will also continue. The right honorable member for Swan stated that the tax was not necessary, but I think all honorable members feel that it is their duty to do open-handed justice to those who have gone to the front, and their dependants, particularly as the struggle that is now being waged will decide whether Democracy shall govern, or whether the world shall be ruled by an autocratic military caste.
– The honorable member who has just resumed his seat expressed the pious hope that this taxation would not last for long. He also expressed a similar hope regarding the length of the war, so that the necessity for this taxation would soon disappear. Unfortunately, there is all too “much reason to believe that this taxation will not end with the war. To me, it sems only part of a policy of frightfulness in taxation for which the war is made the excuse by honorable members opposite. I have looked carefully into the finances so far as they were revealed by the Prime Minister’s statement, and I confess that I found it very difficult to allocate some of the expenditure referred to there. An examination of the figures convinced me that a great deal of this so-called war taxation is not war taxation at all, but is merely taxation for current purposes of expenditure quite unassociated with the war. Fully two-thirds of the amount involved in this income tax is not required for war purposes at all. The war is merely used as a cloak for the wholesale raiding of the taxpayers’ purses. One feels some diffidence in criticising war taxation measures, realizing that imposts that otherwise might not be considered justifiable must be accepted in time of national financial extremity due to war conditions. I think the House is, however, entitled to more information than we have had regarding the heavy programme of expenditure that has been estimated for the current year, exclusive of purely war expenditure. The right honorable member for Swan, an exTreasurer, a man who has had a great deal to do with high finance and the handling of public moneys, declared that a great deal of the expenditure shown in the Prime Minister’s statement is quite unnecessary. He showed that no attempt has been made to economize in directions where large economies could have been effected without detriment to any national work or to any section of the community engaged in industrial operations, or without in any way arresting the progress of national development, so far as Federal expenditure is concerned. He positively asserts that there is an unnecessary outlay of £7,000,000, exclusive of war expenditure. According to the honorable member for East Sydney, the taxation per head in New South Wales in 1912 was £1 5s., or, taking the average family as five persons, £6 5s. per family. To-day we find, from consulting the 7 ear-Books, that the taxation has increased to £31 16s. 8d. per family, exclusive ‘of the proposed new taxation. It will be seen, therefore, that we are very speedily approaching the time when the power of the people to bear taxation will reach its limit, that the burden has already become very grievous, and that it is already a matter of considerable concern to the heads of families, whose incomes are not elastic or large enough to give a margin above current expenses. I hope that some successful effort will be made to remove the injustice of the method by which it is proposed to levy this tax - that is, not upon the income which has been derived since the outbreak of the war, but upon that which was earned during a period anterior to the war. The year 1913-14, prior to the outbreak of the war, was a particularly good one for many people, because of a sequence of good seasons, and good incomes were earned, but since the outbreak of the war we have had a very bad time. The Prime Minister has called the recent drought a little drought. As a matter of fact, it has proved to be one of the most severe through which Australia has yet passed, and its effect has been to materially reduce the incomes of a large number of people, not only those engaged in primary production, but also a large section who are engaged in secondary industries.
– That drought is still prevalent in Queensland.
– I believe that the people of Queensland are feeling its effects very badly, and yet, in these times of hardship and adversity, they are to be called upon to pay out of their leaner earnings income tax on their earnings in more prosperous times, though the money has already been spent, and though they have made no provision to meet this tax. No one could foresee that an attempt would be made to make this taxation retrospective, or apply it to a year before the necessity for it arose. The very practical suggestion of the honorable member for Henty that the tax should operate on incomes earned from the 1st January to 31st December of the current year should receive careful and sympathetic consideration from the Government. If the Attorney-General cannot see his way clear to accept it, he certainly should agree to date the tax from 1st July, 1914. We should certainly not go back much beyond the period when the war commenced. This is supposed to be a war tax, and it should not, therefore, be retrospective, and apply to a period antecedent to the war. :Furthermore, people should not be called upon to pay from reduced incomes a tax on their earnings during a more prosperous period, and when those earnings have been spent. It is all very well for the Attorney-General to say that the circumstances of these people will be met by allowing them to pav their tax in two instalments if it should be found that payment in one lump sum will inflict a hardship. When persons are not earning incomes, it is just as unjust to require them to pay a tax in instalments as in a lump sum. Payment in instalments will certainly be a mitigation of the inconvenience that will be occasioned, but it will be no removal of the injustice which I am endeavouring to emphasize in this regard. I agree with the honorable member for Hunter that it is very improper to include in the taxable income of the taxpayer portion of the value of the property he may be occupying as his own domicile. By doing this, the tax becomes, not an income tax, but a property tax. A man cannot be said to be deriving income from the premises which he is occupying for the use of himself and his family, and from which he is deriving no rent. He is usually doing so if he is a man of small means as the result of many years of hard struggle, and saving, by depriving himself and his family of luxuries and even necessities, and by the careful husbanding of his resources. He has done a most commendable thing by practising thrift and enonomy in order to provide a roof free of debt for himself, his wife, and children, and should receive encouragement; yet, because he has had the forethought to do so, he is to be taxed, while another person, who, perhaps, has spent most of his spare cash in public-houses, often leaving his wife short of sufficient money with which to provide for household necessities, is exempted. The impost is really a premium to that class of man as against one who has tried to make provision for those dependent on him.
– And that class of man to whom the honorable member refers is to be allowed to deduct from his income the rent which he pays.
– That is a further premium to a man of the thriftless type. That provision in the Bill does not appeal to me. It seems to me that a property which a man occupies as a shelter for himself, his wife, and his family should be exempted from taxation of any kind, more particularly when it is remembered that the owner is required to pay a considerable sum in the shape of municipal taxation and charges for water and other local services. As the honorable member for Hunter has pointed out, this man pays his full share of taxation through the Customs on the things he needs for the purpose of ministering to the comforts and necessities of his household, and should not be mulct in any further taxation in. respect of the pre- mises he occupies as his own home. If the Government are determined to tax a man’s home, let them tax the value of the allotment, and exempt all the improvements. I would have no objection to that being done. I favour land values taxation. I would prefer to see the whole of this taxation raised from land values, and all buildings and other improvements exempted. I would abolish all exemptions from land values taxation, and make all land of any value taxable. I know, however, that any attempt to induce honorable members to take a step of that kind would be useless.
– “Not yet, but later on.”
– The cry is always “ later on.” I favour the abolition of all taxes on industry and on incomes which are earned as the result of industry. A temporary tax on incomes to meet a special emergency may be excusable for war purposes; but, generally, I do not favour the imposition of a tax on incomes derived from productive enterprise. I think that we could go a long way towards reducing any necessity for an income tax by reducing the ratio of Customs duties on many articles not produced in Australia, which taxation inflicts a considerable amount of hardship on those who have to pay excessive prices for the articles which are subject to Tariff imposts. Even in other directions taxes might be considerably reduced with great advantage to the revenue. If Customs duties were reduced, the Customs revenue, instead of decreasing, would increase, because the purchasing power of the people would be greater, and there would be a bigger volume of trade. Personally, I favour the total abolition of Customs taxation, except on narcotics, stimulants, &c. ; but I doubt if I could find any honorable member in this House to support me in that. There are, however, members who favour the considerable reduction of Customs duties, and if the Customs duties were reduced, the Customs revenue would increase, and the need for special income taxation would thus be less.
Mr.Fenton. - What would the honorable member tax ?
– I would tax land values without exemption, raising all revenue in that way.
– That is the Single-tax?
– Has not the honorable member a number of supporters?
Mr. W. ELLIOT JOHNSON.Among Labour members there are some who believe in the Single-tax theory, but they will not put it into practice, so that 1 am like the lone fisherman.
– If the honorable member keeps going, he may win converts.
– I am not without hope. Even the honorable member for Maribyrnong may, in course of time, begin to see the light. But, unfortunately, most of them are blinded by the fallacious fetish of high Customs taxation. However, I have no wish to delay the House by discussing a matter which, as the Parliament is constituted, is beyond the sphere of practical politics. I hope that in Committee amendments will be made which will remove some of the blemishes of the measure to which I have referred, and about which the honorable member for Hunter has spoken.
.- The honorable member for Swan spoke as though the members of the Labour party take great pleasure in the imposition of taxation; but to me the manner in which taxation and the public debts are increasing; is very serious, and I hope that Australian statesmen will take the matter in hand, and solve a problem which has been discussed for fifteen years with very little result. I cannot see that this proposal to raise about £4,000,000 by the imposition of an income tax is justified. Since the war began, we have increased the taxation on land values, we have imposed estate duties, we have increased Customs taxation, and we have increased postal rates, and we are now about to impose income taxation. Approximately, our taxation has been increased to the extent of about £7,000,000 per annum; and it cannot be said that the money is to bo spent on the war, although, ostensibly, the income tax is proposed to meet the interest on the war loan of £20,000,000. and the charge on thu War Pensions Fund. The Labour party took credit to itself when the Treasurer was able to announce a surplus of something like £2,250,000 - a surplus which was denied in some quarters, but was ultimately admitted to be genuine - and if we take credit for a surplus in times of prosperity, we must also assume responsibility for deficits, and for the increasing of taxation. I have stated elsewhere how I think our expenditure should be financed ; but we are -travelling along the old financial road, and are to pay on our war loan a rate of interest which no person in Australia thought that the Commonwealth would ever have to pay, whether borrowing here or abroad. Some honorable members have referred to the measure as temporary; in my opinion, the income tax has come to stay, and will be with us during the century.
– At the proposed rates?
– The rates may be altered. There may not always be the 5s. in the £1 rate, but there will always be a Federal income tax.
– How many persons will have to pay the 5s. in the £1 rate?
– That is not an important question at the present time. The outstanding fact is that we are imposing income taxation to raise £4,000,000 of revenue, and I cannot find justification for the proposal. We cannot at present borrow on the London money market, although there is loan money to come to us from Great Britain. The Governments of the States, however, through their Agents-General, are endeavouring to get Mr. McKenna to agree to further State borrowings in London. A few days ago the honorable member for Flinders suggested that the agreement between the Commonwealth and the States, under which the latter receive a per capita payment, should be revised. His suggestion was repudiated by practically every other member of his party. The honorable member for Balaclava, on the other hand, thinks that the question of State debts should be dealt with by a Trust, composed of representatives of the Commonwealth and of the States, and the honorable member for Darwin would deal with the matter by giving the States representation on the Board of Management of the Commonwealth” Bank. According to the honorable member for Balaclava, if the Commonwealth takes over the debts of the States, and a Commonwealth stock is placed on the London market, the State’ will ultimately have to borrow through the Commonwealth. What is to prevent the Commonwealth, if it is going to follow the advice of the honorable member for Flinders and revise the per capita payment agreement, from using the £6,000,000 now paid to the States to redeem State debts to that amount? The Commonwealth could also place its stock on the London market, and that would give it a start of £150,000,000 or £160,000,000.
– What should we gain by doing that ?
– Ultimately, without any agreement being necessary, the States would have to borrow through the Commonwealth, and there would be only one Australian borrower on the London market. The States would find it cheaper to borrow through the Commonwealth than as separate entities. There is a germ of goodness in the proposal of the honorable members for Flinders and Balaclava which might well be developed. Here we are in 1915 talking much in the same strain about the consolidation of State debts as we were talking fourteen years ago, at the beginning of Federation. Another Conference between the States and the Commonwealth has been proposed, but the Prime Minister has stated that it is doubtful whether New South Wales will be represented at it. What is the use of these continual Conferences, in which no finality is obtained? I do not expect that much more will be gained by the coming Conference than has been gained from past Conferences. The honorable member for Swan said that what we on this side desired was to “tax, tax, tax”; and he described the proposed taxation as a levy. Well, I presume a rose by any other name will smell as sweet, and the name makes no difference to the man who has to pay the tax ; but I agree with the honorable member when he says that when we preach economy to the States we should show an example. When any honorable member does advocate economy, he is usually met with the question, “ In what direction would you make reductions?” In answer I shall refer to two items connected with the Defence Department. I know that, as soon as anybody suggests economy in this Department, he is immediately told that all the expenditure is necessary, and one honorable member opposite said that no one would think of reducing it by a penny. I submit, however, that there is room for economy when we find that the ordinary expenditure on defence, apart from war expenditure, shows an increase of £1,136,664 over that of last year. Surely, in face of this fact, there is room for some economy, combined with efficiency. I see no reason why that expenditure should be inflated at this particular juncture, in view of what the people generally are doing towards prosecuting the war. Then, under the heading of new works, which does not include the construction of vessels of the Fleet, there is an increase shown of £814,209. These two items together total £1,950,873; and it must be remembered that this is not war expenditure, but ordinary expenditure. The onus is not on any individual member to point out where reductions may be made; the responsibility rests with those who submit proposals for extra taxation. I feel somewhat alarmed at the way in which taxation is being imposed in the Commonwealth and in the States when I see no disposition in either to economize.
– We should set an example.
– I think we certainly should before we start preaching to other people. In New South Wales in 1907, the loan expenditure was £1,000,000; in 1908, it was nearly £2,000,000; in 1909, it was £3,000,000; in 1910, it was £3,250,000; in 1911, it was £4,000,000; in 1912, it was £5,500,000; in 1913, it was £7,750,000; and in 1914, it was over £9,000,000. New South Wales is borrowing and spending pretty well as much as the whole of the other States put together; and if the present rate of borrowing and taxation goes on, Australia cannot make any progress. Much of this money should be going into reproductive industry; and, therefore, it gives me no pleasure, as a member of this House, to vote for increased taxation of the description proposed, seeing that no attempt has been made to avoid it. The loan expenditure per head is increasing at an enormous rate, and I take New South Wales again as an example.
– Rather a shocking example, is it not?
– I went to New South Wales and inquired into the State activities, and I cannot say that there is much of this money that is not spent in a proper manner. For instance, out of loan moneys, New South Wales has spent 61.65 per cent. on railways and trams; 16.56 per cent, on water supply and sewerage ; and 10.17 per cent, on harbors, or 88.38 per cent, of the whole. In Victoria, out of loan moneys, there has been spent 67.07 per cent, on railways and trams; 15.74 per cent, on water and sewerage ; and 6.65 per cent, on land purchase, or 89.99 per cent, of the whole. I am not complaining so much that the money has not been judiciously spent; but there is expenditure by the Commonwealth that I most certainly think it is not necessary to go on with at the present time. If we practised what we preach, and lived within our income, or made an earnest attempt to do so in a time like this, I contend there would not be the same need, nor the same cry, for heavy taxation. I came into this House as a Protectionist, and when I find a proposal, which will come up later, to impose Tariff duties of 10 per cent, on jute goods, paper, and so forth, I must announce my intention to vote against such revenue duties, and in favour of duties which are protective.
– Where were you last night?
– I was not going to help honorable members opposite with their party move.
– Direct taxation is the only taxation that is possible under a proper Protectionist system, as it is under Free Trade.
– There are items of expenditure to which honorable members opposite have taken exception, including £150,000 for taking the War Census. I have said before that I cannot see the utility of the census; but, of course, it is no use discussing that matter now, because the census is about to be taken. I should like, however, to point out the steps that have been taken by Mr. Lloyd George. The Attorney-General spoke about industrial efficiency, the advantages of organization, and of following the German example in these respects, with a view to the successful prosecution of the war; and I think that, in this regard, a lesson might have been taken from Mr. Lloyd George, whose scheme is as follows : -
The enrolment of war munition volunteers under the scheme proposed by the Minister of Munitions, assisted by a National Advisory Committee, acting on behalf of the trade unions, began on 24th June.
All skilled workers in the engineering, shipbuilding, and allied trades, not already engaged on war contracts, were asked to register themselves, and for this purpose some 200 bureaux were opened iri town halls and municipal buildings throughout the country. An additional 200 were opened at Labour Exchanges.
Any man so registered is liable to be transferred to Government work in any part of the country . . .
Then are enumerated the conditions under which workers are enrolled, the wages they are to get, and the tribunal if there be any dispute. That seems to me a practical and sensible way of organizing the workers for a specific object.
– Does the honorable member think that that is relevant to the question 1
– It is very interesting, and I took advantage of the presence of the Attorney-General to read the extract. However, I shall not delay the Committee further. I merely wished to state my position in regard to the proposal before us. I regret that nothing has been said so far in regard to the other £20,000,000 that we shall soon require. I did notice an article the other day in the Argus, a financial journal, to which, I suppose, I could not teach anything. That newspaper, in reference to the men with wealth, to whom we have to look at this time to help us in our great national struggle, said - -
– It is not permissible for an honorable member to read’ an extract from a newspaper commenting on something that is before the Chamber.
– I do not know that the loan proposal is before the Chamber.
– The question now before us is the income tax.
– I am rather surprised at your ruling, sir, but I shall submit to it, and content myself by saying that the Argus pointed out that if the investors in the community were not satisfied with the interest on the loan - which runs up, by the way, to over 5£ per cent, in some cases-
– The Loan Bill has already been debated and passed, and I cannot allow the honorable member to refer to it now. The honorable member may, of course, make a casual reference to the loan measure, but he must not debate it.
– I merely wished to say that this newspaper pointed out that, if the investors do not think they are getting sufficient interest, notwithstanding the concessions made to them, they - the moneyed people of the community, who are doing what they call a patriotic act at the present time - will take their money to where they can get the highest rate. What does that mean ? It means that while this is called a patriotic loan, those who subscribe to it, if they are able to get 1 per cent, more in Germany, Japan, China, or in any other country, will not hesitate to invest their money there.
– That has always been the rule of their lives.
– It struck me as rather peculiar that the newspaper should call this loan a form of patriotism, and then hold out such a threat. While we fix the price of labour, and are endeavouring, in some instances, to fix the prices of commodities, I do not see why, in a time like this, we should not fix the price of money. We did hope, at one time, that we were going to get money at 3 per cent, on the credit of the Commonwealth, but we are not doing anything of the kind to-day; and, therefore, we have to place what I call unnecessary burdens on the people.
.- Honorable members generally will indorse the remarks of the honorable member for Bendigo as to the need for economy in our public expenditure, and for this Parliament, which represents the whole of the States, to set the example to those States and to the people generally. I have been disappointed that, so far, the Treasurer and the Attorney-General have failed to prove that the new taxation, which is estimated to produce £4,000,000, is imposed for war purposes. Although this revenue is included in the financial statement as money raised for war expenditure, there is no evidence that it is to be devoted to that purpose. It has been already explained that, after deducting the war expenditure from the total expenditure for the year, and then taking from the balance the estimated revenue, there will still be a deficiency of nearly £5,000,000. Thus the whole of the proceeds from the income tax will be required to meet the deficiency on the ordinary expenditure forecasted for the next twelve months, and there will still remain a deficit of about £750,000. That is a most serious position. Certainly a false impression is being created in the public mind. I believe that we could get through the current financial year without resorting to income taxation at all. But people seem to have made up their minds - without having considered the question, and without being in possession of the facts of the financial position - that because this is a war period increased taxation is inevitable, and they are ready to accept such taxation without much protest. No person would complain of having to pay heavy taxation at this period if it were necessary for war expenditure, but it is for the Treasurer to show to the House that this taxation is necessary, and that the proceeds are to be devoted solely to war purposes.
– The House was told that this morning definitely.
– No statement has been made to the House that there is to be any economy or readjustment of the financial statement so as to reduce the large debit balance which is now shown. This taxation is being placed before the people in a misleading manner, because they are being told to patriotically pay taxation imposed for war purposes, when, as a matter of fact, the whole of the money must be devoted to meeting the ordinary expenditure for the year. We are told that the estimated expenditure is £74,043,104, from which is to be deducted £45,748,405 of war expenditure. From the balance of £28,294,654, the estimated revenue of £23,540,000 must be deducted, and then there is left an estimated deficit of £4,754,654. Therefore, after the £4,000,000 earned by the income tax is devoted to the reduction of that deficit, there will still stand a debit balance of £754,000. There is this qualification, however, that the estimated interest ov war loans, £1,200’,000, and the expenditure on war pensions, £500,000, must be deducted from the deficit of £4,754,000 ; but even then, there will remain a deficit of £3,000,000, which will absorb threequarters of the return from the income tax. I regret that this Parliament has not set an example to the States and the people by a reasonable reduction of expenditure. I have previously stated that we could overcome the difficulty by transferring certain of our expenditure for new works to loan account, and the exercise of judicious economy would enable us to apply the whole of the £4,000,000 of income taxation to war purposes only. But as there seems to be a feeling on both sides of the House that some measure of income taxation should be imposed, I hope the Government will endeavour to meet the wishes of honorable members by makins; the tax less objectionable to those who will be required to Day it. Therefore, I trust that the period for which incomes are to be assessed will be altered from the year ended the 31st December, 1914, to the year ended the 30th June, 1915. The income tax return will then be in harmony with the war census return, and those who are required to furnish the latter will find it comparatively easy to discover what has been their income during the year. I would suggest, also, that the residences of taxpayers should be exempted. Every encouragement should be given to thrift and industry, and the first and most worthy purpose of thrift and industry is the building up of a home. If the AttorneyGeneral cannot see his way clear to entirely exempt the home property, he may be willing to exclude the improvements, and tax only the unimproved value of the land upon which the house stands.
– Rent is supposed to be covered by the exemption of £156.
– There is a 5 per cent, charge on the capital value of the land. In these circumstances I do not think there is any exemption allowed. The graziers of the Commonwealth also are entitled to sympathetic consideration. I do not hold a particular brief for them, but we know that they are performing, and will perform in future, a very important function in supplying the requirements of the people, as well as increasing our export trade. If by heavy taxation we crush out the grazing interests, we shall seriously hamper and interfere with those important branches of primary production upon which we rely to give us meat for local consumption at reasonable rates, and which will be important factors in extending the export of primary products, such as wheat and wool, to the markets of the world. Without such exports we shall never have returned that money which is necessary for the development of Australia. As the honorable member for Wannon has remarked, the grazier is already subject to a. wealth tax in the form of heavy land taxation, and it is questionable whether the AttorneyGeneral should not, as an act of simple justice, consider whether exemption should not be granted to the graziers to the extent of the land tax they pay to the Federal Government. A provision was made in the Income Tax Act of Victoria to give certain relief to landholders who paid land tax to the State.
– They should not pay taxation on incomes earned from land upon which they have already paid land tax.
– The amount of the Federal land tax is exempted.
– The amount paid in land tax to the Federal Government is deducted from the total incomes,” not from the amount of income taxation to be paid. I think the graziers are entitled to greater consideration than that.
– Victoria does not allow a deduction of the expenditure on land from which an income is derived.
– There are certain provisions under the old Income Tax Acts of Victoria which allowed a deduction in respect of land tax paid.
– Is that done in the case of any State income tax 1
– Yes, it is done up to a certain amount in the case of the Victorian Income Tax Act. I wish now to refer to the incomes earned in agricultural districts. The incomes of business people and commercial houses, generally speaking, are not subject to such fluctuations as are those of farmers and graziers.
– Does the honorable member lay that down as a general rule 1 I do not think it is a fact.
– I would remind the Attorney-General that last year the bulk of the agriculturists over a large area of New South Wales, as well as of Victoria, South Australia, and Western Australia, received no income at all, owing to the total failure of their crops.
– Did that not have a reflex action on all sorts and conditions of persons ?
– Yes; but the effect upon business houses was not so severe as it was upon the agriculturists. The year now closing is expected to yield a fairly good harvest; but, owing to the depletion of their flocks, it will be impossible for graziers to derive large incomes from their wool and stock returns. Some few years must elapse before their flocks will return to their former level. In the agricultural districts, however, we are hoping that the year will prove a very good one, and that we shall have a large quantity of wheat for export. As against this, it must not be forgotten that during the present year a- great many farmers have had to borrow heavily in order to carry themselves over the drought. The more struggling sections of the farming community obtained loans from the Government for this purpose, and they are looking to their returns from the forthcoming harvest to assist them, not in improving their land, or in purchasing more stock, but in repaying a large proportion of these temporary loans.
– Is the honorable member suggesting that the farmer should not pay any income tax?
– No. The suggestion I make is that, instead of assessing him in respect of the one year alone at the higher rate, we should base our assessment on his average income over a period of two or three years.
– Have not farmers generally throughout Australia had four or five very good years, with the exception of last season?
– They had four or five good years, but they did not immediately precede last season. This Bill will impose heavy taxation on farmers during the present year, although they will have to repay the large loans raised to carry them over the drought. I trust that these suggestions will be adopted. I hope that the proposal that the twelve months’ period in respect of which returns shall be made should be extended from 31st December, 1914, to 30th June, 1915, so as to bring it into harmony with the period covered by the War Census and with the financial year, will be adopted, as well as the further suggestion that paragraph e of clause 13 should be so modified as to exempt the homes altogether, or, if that is not possible, to base the assessments on the unimproved value of the land.
– In respect of what year does the honorable member say the farmer should be taxed ?
– I suggest that we should take the average for two or three years.
– But, apart from that, what year would the honorable member take?
– I think that the suggestion that the tax should cover the war period has much to commend it. If the Government were to date this taxation as from June, 1914, so that the returns would be available in June, 1915, they would do well.
– Why not start earlier - say with the year 1910 - and tax the farmers on their average incomes from that year until 1914 ?
– The AttorneyGeneral knows very well that to do that would be to reduce the whole principle to an absurdity.
– But the honorable member said we should take the average over a period of two or three years.
– I have said that there ought to be certain exemptions in subsequent years, and not that the Bill should be made retrospective, in order to provide for seasonal fluctuations over which we have no control.
– Would the honorable member suggest that we tax the farmer on his income from month to month?
– No ; unlike politicians and public servants, the farmer draws his income, not once a month, but once a year, and he has to depend on the seasons for it. I hope that the AttorneyGeneral will adopt these suggestions, and so afford the farmers some relief.
.- I agree with the honorable member for Bendigo that this tax has come to stay. History teaches us that even when an income tax has been introduced merely as a temporary expedient to meet stress of circumstances, it has remained in operation, and I know of only one country where the income tax was remitted, and even in that instance it was remitted for only a brief period. I wish to protest against the difficult system provided by the Bill to enable a taxpayer to ascertain the rate of tax that he will have to pay. Every taxpayer is entitled to know what he is taxed upon, and the system should be such as to be understandable by any man of ordinary intellect. Being interested in this matter, I asked no less than four Ministers to show me how the rate could be determined . One Assistant Minister made an heroic effort to show me how the rate could be ascertained in any case, but he landed himself and myself in a Serbonian bog of difficulty. I then tackled a mathematician who has shone very highly in the University examinations, but he told me that he could not tell me how the rate could be ascertained in any given case. It was impossible for him to do so, because the formula was built upon wrong premises. The position reminds me of the story of a lawyer, who, seeing two women quarrelling from opposite sides of the street, said, “ They will never agree because they are talking from different premises.” The formula first submitted was wrong, but even under the second formula it is difficult to ascertain the rate of tax payable in any case. The Japan Y ear-Booh shows that there the normal rate of income tax rises from 10/1,000, or 1 per cent., in the case of incomes of from £30 to £50 a year, to 55/1,000, or 5J per cent., in the case of incomes over £10,000. In no country of which I know is there an income tax the rates of payment under which are determined by a formula so intricate as that for which this Bill provides. In my desperation I went to Mr. Knibbs, who justly enjoys a European reputation for his splendid grasp of statistics. I showed him some of my data, and after some trouble he worked out a table which I purpose presenting to the Attorney-General, and with which I hope honorable members will agree. Taking the taxable amount of income at £546, the progressive tax on the last £1 would be 11.71256d. which would be equal to a flat rate of 6.015426d. Then, again where £1,000 was the taxable amount of income the progressive tax on the last £1 would be 20.00d., and this would be represented by a flat rate of tax of 10.533d. This would be a very simple means of overcoming the present difficulty. A Chinese puzzle is not more difficult than the formula; it is built on wrong premises, so that one could never hope to obtain a proper answer. In Japan, where income tax is payable in respect of incomes as low as £30 a year, the normal rate is very low, but the war rate rises until in respect of certain incomes it is 400 per cent, more than the normal rate. For instance, in the case of companies with twenty-one shareholders and members, where the normal rate is 2£ per cent., the war tax is 150 per cent. In another class of cases where the normal rate is 2^ per cent, the war tax rate rises from 80 to 400 per cent, of normal rate. I do not see why we should not have a flat rate in respect of the taxable incomes. In respect of the first £100 in excess of the exemption we might have a tax of 3d. in the £1 on per sonal earnings, and 6d. in the £1 on income from property. On the second £100 we could have a tax of 3½d. and of 7d., respectively, and so on. Any taxpayer could readily follow such a system, but it is absolutely impossible for the majority of people to understand even the amended formula which has been issued. In England, where two super-taxes have to be paid, the formula is very simple. It sets forth that, in respect of incomes over £2,500, the super-tax for every £1 over the first £500 will be 5d., for every £1 above the first £1,000, 7d.; and so on, which is much more easily understood than anything we have. Honorable members will recall the difficulty they had in elucidating the land tax for the benefit of their constituents. In this tax, we speak of “ the curve of the third degree “ and “ the curve of the second degree.” The only third degree that I know of as being comparable to this is that under which unfortunate prisoners are compelled to answer questions put by detectives; though if any honorable members have attempted to work out the formulae presented with this measure, they may be inclined to think that they have undergone something even worse than that. The right honorable member for Parramatta, in the course of his speech, suggested that we were losing population.
– I inferred that, inasmuch as we were paying the States £70,000 less than last year, there must be fewer people in the States.
– The honorable member knows what little practices are sometimes indulged in in the compilation of population statistics. One State, for instance, has a superabundance of visitors at Christmas time, and it fixes its population returns so as to include them. The excess of births over the deaths up to the end of 1914, according to Mr. Knibbs, was 86,000 odd. Taking the same average for the rest of the year, we get an additional 57,000, which makes a total increase of population for the year of 143,000. So that there should, be no decrease, as suggested by the right honorable member.
– I think the figures quoted by the honorable member bear out the statement I made. If 120,000 are away at the war, the 80,000 births deducted from that number give a balance of 40,000, which, at 25s. per head, will account for the sum quoted.
– I cannot convert the right honorable member; but I think our population is greater rather than less. According to the Times of 7th May of this year, the income tax from Great Britain will produce the sum of £.103,000,000. The population of Great Britain is 45,000,000. That of Australia is 5,000,000 - one-ninth of the British total - so that an Australian tax imposed in the same ratio should bring in £11,400,000.
– Is that comparison reliable? The honorable member is taxing incomes and quoting numbers. The accumulated wealth in Great Britain is greater than here.
– According to the Treasurer’s estimate, this war taxation will produce about £4,000,000.
– Plus what the States will get.
– The honorable member, perhaps, will be able to give me, roughly speaking, what the States receive? I think it is about £2,500,000.
– About that, I think - with the new taxes.
– It should be remembered, in connexion with this subject, that up to the end of July last Id. in the £1 in Great Britain realized £2,622,000. The income tax in Italy commences at £16 per annum. In Prussia, where the taxation on incomes is very high, it commences at £45, rising; from 6s. to £4 per cent, on incomes of £5,000. There is also a supplemental tax, commencing with a minimum of £45, at which the tax is only 3s., rising by increases of 5 per cent., on incomes of £10,000, and for every £1,000 over £11,000 per year, the rate is increased to 10s., so that taxation has only to go far enough in order to reach the absolute limit. I remember an occasion when Mr. Justice Isaacs introduced into the Legislative Assembly of Victoria a Bill to amend the probate duties, making them rise by 1 per cent, every £10,000 up to £100,000 and over. I tried to secure the insertion of an amendment under which the duty would be increased in the same ratio above £100,000, but when it was discovered that my amendment would mean that on incomes of £200,000 the duty would be 20 per cent., I had no chance of carrying it, notwithstanding that thirty- two members believed that the duty should go as high as that on incomes of £200,000. The ‘ Attorney-General in the course of his introductory speech, referring to the taxation per head, stated that in the United Kingdom it was £7 5s. 7d.; in New South Wales, £7 16s. 11.; in Queensland, £8 0s. 8d. ; and in Tasmania, £8 5s. 10d., which suggested that the people of Australia were more heavily taxed than the people of Great Britain. But much of this taxation is imposed indirectly, and the man with a family pays more than the man without, whilst the single man escapes scot free, a state of affairs that no real Protectionist desires to see.
– Does the honorable member think the exemption of £13 for each child is sufficient ?
– No, but I will refer to that point later. If we deduct the indirect taxation paid in Australia, which amounts to £4 per head, as compared with the £2 15s. 2d. paid in Great Britain, it will be found that direct taxation in Australia is less than in Great Britain.
An Honorable Member. - But rent is taxed a good deal more in Great Britain than here.
– The point is a pertinent one. Taxation in some of the British municipalities is tremendous, and in the large centres of population rises considerably higher than in Australia. I lived in a house in London upon which the municipal taxation amounted to 15s. in the £1.
– That would be based on 5 per cent, of the capital value.
– If the honorablemember will look at the English municipal directory he will find that the municipal taxation in London and its suburbs ranges from 8s. 6d. to 14s. 6d. in the £1. I lived on one occasion in a house in England where the taxes amounted to three times the rent, and from that point of view I think it may safely be said that Australia is the most lightly taxed community in the world. The municipal taxes in Paris and Berlin are tremendous in comparison. In the course of his statement, when speaking oi the funds of friendly and trade societies, the Attorney-General made reference to incomes enjoyed by religious bodies. If honorable members will walk down Collinsstreet they will find the site of what should have been the oldest house of prayer in Melbourne now occupied by wineries, breweries, and distilleries. The house of prayer was removed lock, stock, and barrel, and over a million of money was made by the transfer. Originally that site was given for a house of prayer, and, indirectly, for the purpose of beautifying the city by the erection of a handsome building upon it. In my view, transactions of that description should not escape taxation.
– They are taxed in Victoria.
– And I hope income made in that manner will be taxed by the Commonwealth. Three years ago I endeavoured to introduce a Bill under which the State debts would be transferred to the Commonwealth, thinking that out of the profits that would accrue from consolidated transactions we should be able to build a fleet that would be able to protect the Australian produce on its journey to England. I recognised that, once England lost her sea-power, she would starve in six weeks. Seeing that no State has become bankrupt or has defaulted, a proposal that I have already put before this Parliament would have enabled the Commonwealth to make a huge sum of money. I was anxious to build up what I term “ Empire Consols,” and, as it is an axiom of Euclid that the whole is greater than its part, the whole of Australia should be a greater asset to the money lender than any portion of it. To the man who invests in consols in order to derive an income from them it matters not whether the bonds he holds are quoted at 82 or 50, because he does not seek to realize upon them. All he needs is the income which is regularly paid. The man who purchases bonds for an investment is anxious to see their price high; but when bonds which have been floated above par are coming due they always sink to par, whereas bonds which may be floated under par rise as the due date approaches until they reach 100. On a previous occasion, when speaking on this matter, I quoted several Victorian stocks. I showed that 3 per cent. stock issued at 92 stood at 82 on the 21st August last; that3½ per cent. stock issued at 93¼ was worth 95, though to-day it stands at 91½; and that 4 per cent. stock, issued at 103¼, was100½, though to-day it is down to 96. So honorable members will clearly see that investors would gladly pay a bonus to have their bonds transferred from any State to the Commonwealth, and the
Commonwealth, by holding these bonds, would have not only the profit of the bonus paid for the transfer, but also the difference between the present market price of the stocks and their par value when the States ultimately pay off their loans. The fact that no State has ever become insolvent is sufficient security. My idea was that His Majesty the King should take the chair at an Imperial Conference, just as the richest member of the Rothschild family took the chair when attempts were being made to prevent the Baring Company from failing. If the question were asked whether the Empire consols would be a gilt-edged security our answer would be “Yes.” If we were asked as to how the profits were to be spent, we would reply, “ On the building of warships to protect the ocean highways from Great Britain to Australia.’’ I do not think that in these circumstances there would be any doubt as to the success of such a flotation. However, my idea, which received commendation from many members of the House of Commons and the House of Lords, was passed by ; but if it had been carried out, I believe that the Commonwealth’s gift, which I then estimated would be £20,000,000, but which, with greater knowledge acquired in later years, I now think would be nearer £40,000,000, would have made an impression even on the German Emperor. The fact that one portion of the British Empire could make a gift of £40,000,000 in order to bring into existence a hugeFleet, would have a good effect in Europe. One outstanding feature of the present terrible trouble is the passing of the belief that gold is the means to an end that it has been held to be in the past. After the most interesting and expert inquiries into money power that has ever been held, the United States of America has made gold simply the unit for issuing notes to the extent of ten to one, where previously they had been issuing at the rate of five to one. Always previously when war was declared people rushed to the banks to get as much gold as they could, in order to keep it in their immediate possession; but I view the present position, and what is confronting us with less despondency than I might otherwise have had, when I see that the banking returns show that there is in the Bank of England, the Bank of
France, the Bank of Russia, and, as far as we can learn, the Reichsbank, more gold than there was before the declaration of war. I want to see the pruning knife used carefully, otherwise trouble may accrue. Had not so many of our young men volunteered and gone to the front, thus making room for others, we would have had a terrible unemployed trouble in Australia, though the destitution and misery that we have are bad enough. I do not think that the exemption of £13 per child, as provided in the Bill, is sufficient, and as one means of bringing about a bachelor tax, for which I shall vote at every opportunity, I would allow an exemption of £52 for each child, thus giving the man with a quiver full an advantage over the man with no children. The single man should be compelled to pay far more in taxation ; and when the opportunity comes I shall support the honorable member for Oxley, who has certainly given the matter of the tax on bachelors more study than any other honorable member appears to have given it. I believe that the newspaper proprietors have approached the PostmasterGeneral. I bring under his notice the fact that Japan charges a registration fee ofd. for every issue of a newspaper. In Japan there is a charge of 10 per cent. on all medicines dispensed. Barristers there are not valued as highly as pilots, for, while the registration fee for a barrister is only 10 yen, that for a pilot is double this amount. The Government should see to the enemy within our gates - for there are enemies within our gates. Any person who makes an unjust profit at this time of war out of food or forage, or any necessity of life, should be taxed heavily. I believe that the Age recently made the suggestion that the excess of any income over that of the previous year should be taken for the benefit of the Commonwealth. Economy can be exercised in regard to the question of disease. Soldiers are sent back from the front for trifling illnesses. It is absolutely ridiculous that they should be returned on this account. In the past men have fought, and fought well, while suffering from the gravest of these diseases; and, though I object to their spread, I do not see why these men should be sent back. If they had remained in Melbourne, they would have been earning their living at just as hard work, while still suffering from that which has occasioned their being sent back from the front, where they could live under much healthier conditions. In view of the large sum which each soldier costs us - more than any soldier has ever before cost - it is an absolutely ridiculous waste of money to send these men back. One form of economy was practised by the honorable member for Flinders. When in the Victorian State Government he reduced the old-age pensions.
– Is the honorable member sure that he did so?
– I do not think that the records show it.
– They do. The grant was reduced from £250,000 to £150,000. I voted against it.
– Is it not a fact that it was specifically stated that the reduction was not to apply to any person who was then getting an old-age pension?
– The honorable member reduced the pension, on the average, by 2s. a week.
– The honorable member for Flinders is now in the chamber.
– I have said this before.
– The statement has been made, and will be made again, but always without proof.
– I handed the honorable member the VictorianHansard at his request. I do not wish to allude to the matter more than is necessary. I simply say that we should not practise that kind of economy which robs old men of their milk, and butter, and meat.
– That was not done.
– It was. The honorable member is only speaking from his own ignorance.
– I am speaking from my own knowledge.
– Will the honorable member resign if I prove that he is wrong ? He knows that he is wrong.
– I know that you are wrong.
– Do I understand the honorable member to say that I brought in a measure taking away or reducing any person’s old-age pension?
– I do not propose to be hit by a technicality. The grant was reduced from £250,000.
– Is it a technicality ?
– Yes, just as when the honorable gentleman said that he brought in the first old-age pensions law.
– I did not say that.
– The honorable member said it in the press.
Sitting suspended from 6.30 to8 p.m.
– Before the dinner adjournment, I was drawn into the discussion of a side issue, and I shall conclude what I had to say regarding it by drawing attention to the fact that the grant for old-age pensions in Victoria was reduced to £150,000, and is now £852,268 a year. Honorable members will be able to understand, by the comparison of those figures, what must have been the sufferings of the unfortunate persons who were affected by the reduction. I refer to the division-list those who wish to verify my statement. They will find there the names that I have mentioned recorded as voting for the reduction. The closing down of public works would add to the unemployment of the community, and, next to the horrors of war, nothing is so terrible as unemployment. The brains of men of genius have taught us to understand the life of the bees and the ants, and we know that there is no room for the unemployed in the hive of the bee or the nest of the ant. Too frequently, however, unjust laws prevail in so-called higher communities. Where the laws are just, happiness and peace have their reign. Notwithstanding the terrible turmoil that is disturbing the world at the present moment, there is one country where all sections are living in peace and in amity - I refer to Switzerland. There the Germans are in a vast majority, the French come next, the Italians third, and, lastly, those who speak a languageknown as Ladin. In Switzerland all live in amity. They stand shoulder to shoulder, ready to oppose any nation that would dare to cross their frontier, and keep a well-equipped army ready to defend it. Why are the Swiss in this position? It is because their laws are based on justice, and subject to the sovereign power of the people. I blame this accursed war for depriving us of the chance to institute child pensions and widows’ pensions. They were promised, and the promise would have been kept under other circumstances. What can be more terrible than for a father or a mother to be unable to give proper food and clothing to children 1 It is as true today as when the great Napoleon said it, that no child comes into this world of its own asking; no child can be born unless its parents have met. Every child is a future unit of the State, and as such has rights of which neither parents nor State should deprive it. The greatest right of all is the right to live, the right to grow with a fair chance of becoming a healthy man or woman. Deprive a plant of sunlight, or give it insufficient food, and it will become weak and fade; and so it is with children. It is proposed by the Bill to allow a deduction of £13 in respect of each child ; but that is not enough, though it is a recognition of a principle which I should like to see extended to the establishment of child pensions. According to the daily press, if one goes to a restaurant in Germany to-day, he must bring with him his own bread, or a ticket for bread. We have not come to that, but we have within our gates those who are making thin the faces of the poor. In my opinion, Angliss should be put into gaol. That is the proper place for any man who breaks the law by raising the price of food. Any man making a profit during war time by raising the price of foodstuffs should be in gaol.
– Angliss is not the only man who has raised prices.
– If the honorable member will supply me with other names, I shall be glad to mention them, too.
– The Government which the honorable member is supporting is giving contracts to men who are going to make mighty big profits out of foodstuffs.
– Let us resolve that all profits over and above the normal be paid into the Consolidated Revenue Fund.
– Does the honorable member think that the Government would get its work done under those circumstances? He must take these men for simpletons.
– Is money the only motive power ? Can nothing be done except for the sake of lucre? All the great leaders of mankind, from the Christ downwards, would disclaim that statement. I know that the honorable member agrees with me that gaol is the best place for those who would make unjust profits at the present time. Notwithstanding the retrenchment of the past - the “ cutting to the bone,” to use the words of a former Premier of the State - the deposits in the Savings Banks of Victoria average only a little more than those in the Tasmanian banks, and we know that Tasmania has occupied an unfortunate position, and that her laws have caused her to lose more population than any other State has lost. Victoria is the last one among the States on a comparison of the average bank deposits of the Commonwealth. This is what the Sydney Daily Telegraph has published concerning those who make war profits -
A war profit, pure and simple, is no more and no less than blackmail levied on patriotism; and when market manipulators conspire to extort this from the people in their hour of trial, they should receive no more consideration than is given to ordinary blackmailers.
No words of mine could be more severe than those, and the sentiment has been reiterated in similar language in other great dailies, among them being one of the great dailies of this State. In 1810 - 105 years ago - Napoleon brought in a law providing that any combination of men who banded together to unduly raise the price of goods should be punished by the imposition of a fine of 20,000 francs, and imprisonment from one to twleve months, and that if the combination were to raise the price of foodstuffs the punishment should be double the fine and the term of imprisonment up to two years. That, perhaps, is the first instance of a law for the putting down of trusts and combines. I hope that before long Parliament will be able to wield the power which the people are to be asked to give to it by voting for the amendments of the Constitution which are shortly to be put before them by referendum. When it has that power, the questions on which I have spoken to-night will be dealt with in accordance with the will of the people.
.- As I have previously mentioned, I am in accord with the principle and equity of income taxation, but as to the Bill, I think that it requires amendment in many important details, and the AttorneyGeneral has circulated proposed amendments which will be valuable. At this stage I shall deal with one or two main principles. We are now at the beginning of September, 1915, and it is sought to base the proposed tax on the incomes of 1914.
If the Government say that the money sought to be raised will be needed during the present calendar year - and we must accept the assurance of the Treasurer on the point, although many honorable members, including the right honorable member for Swan and the honorable member for Wimmera, have advanced good reasons why the tax should be levied on the income of 1915 - we must pass the Bill. I do not think that the whole of the money sought to be raised will be needed for war purposes this year, but even if only a portion of it will be so needed, we cannot refuse to pass the Bill after we have made it as perfect as possible. I agree with’ the last speaker and with the honorable member for Bendigo that the Federal income tax now being imposed will last for all time. The principle of income taxation will be found on application so equitable that it will , be adopted as the basis of all future direct Federal taxation. I am hopeful that, as we progress, other forms of direct taxation that we have imposed may be reviewed, and that the Commonwealth may see the wisdom of leaving to the States the power of the taxation of land. When Federation was initiated by sovereign bargain, the States reserved to themselves the control of the lands and land settlement ; and land taxation is, in my judgment, better exercised by the States because of the fact that they have the control of land policy. It has been wisely said, and in no more emphatic way than by the honorable member for Swan, that it is undesirable to have duplication of taxation, with overlapping of the Federal and State authorities ; and therefore I hope that, on a reconsideration of the financial relationship between the Commonwealth and the States, and in view of the Commonwealth having adopted income taxation, we shall see fit to hand back to the States the exclusive power of taxing the land. We ought not to regard this Income Tax Bill as merely a temporary measure imposed during war time. My own belief is that it will be permanent in character; and therefore we cannot spend too much time in perfecting the machinery, for we all know the difficulty of amending or repealing legislation. As to the fixing of the period ending 31st December, 1914, I believe that retrospective legislation is bad as a policy. I agree with the honorable member for Hunter that, even in the case of tradesmen and workers, the measure will prove most inconvenient, seeing that they have spent the incomes earned during 1914, and have no means of now computing what those earnings were. That objection applies, not only to coal miners, but to other miners, and also to shearers. It has been thought fit in connexion with the war census to call for a statement of income, and in that connexion the financial year ending on the 30th June has been selected. I take it that that war census legislation was intended to act in the nature of a check, amongst other things, upon the income tax legislation; but, under the circumstances, I cannot see of what value as a check it can be if the same term be not adopted in both. Of the incomes earned in 1914, a good portion was earned on foreign capital invested from abroad, mainly from Great Britain, and this, of course, has been distributed, and is, therefore, not available for taxation under the Bill, if the period proposed be adopted. There must be discrimination as to who shall be taxed, and who shall not be, in respect of incomes that have gone outside of Australia, and are beyond our jurisdiction. The incomes which have remained here, and are always the most desirable form of income, will be taxed, while those which have gone, and have eluded us, will escape. Another reason why I personally hope the Government will not insist upon the period named is that, during the early part of 1914, substantial returns were obtained from landed industry. The harvest returns came in during February and March, and the wool returns near the end of the year; but during the latter period, and the early part of 1915, this country had one of the most severe trials it has ever gone through. The incomes that had been earned were spent in the light of the knowledge that they were not subject to any Federal impost, and they were spent in an endeavour to preserve the capital and stock by means of which they were earned. It is, therefore, inequitable that that class of income should now be subjected to taxation. If the period be changed, as I think it should be, an opportunity will be afforded to tax those war incomes, or, as honorable mem bers opposite prefer to call them, those “ war fortunes “ that have been acquired by contractors for the Defence Department - by those who, under Act of Parliament or otherwise, got possession of the wheat and fodder supplies, and so forth. We do not wish to fight the Government on the question of the alteration of the period, but we do hope that they will take cognisance of the fact that, if they persist in their present course, they will punitively affect those whose incomes were exhausted by the drought, and will exempt those who have made great fortunes in consequence of the war. Further, the returns made under the war census will be available as a guide and check against the returns under the Income Tax Bill. Then we have to consider the measure before us as it affects the incomes of the primary producers. I am, and always have been, an advocate of the principle of income taxation, for the reason that, under such an impost, there is no discrimination between forms of capital - between capital invested in land or mining, shipping, or in any other form of industry. That is a point on which I particularly ask the favorable consideration of the Attorney-General. Land is already subject to what might be called a wealth tax, and now it is proposed to impose a tax on incomes derived from the land. As the Government have not expressed their intention to impose a wealth tax, I submit that they should take the view which was taken by the State Legislature of Victoria when it imposed a land tax, and exempt from income tax the incomes of all land-owners the unimproved value of whose land did not exceed £5,000. I know there may be some difficulty attached to this, but I earnestly submit that there should be some rebate, particularly in regard to the last twelve months. If the Government intend to insist on the period fixed, the Attorney-General might have some regard to the fact that; during that time, the incomes earned were more than exhausted in the endeavour to save the stock and preserve its earning power. I suggest that there should be an exemption up to 4½ per cent. - which is the rate of interest on the war loan - of incomes derived from land subject to the land tax, at any rate for the period I have mentioned. To-day there is an unfair discrimination between the man who invests his money in land and the man who puts his money into other forms of business; but if ever there was a time when we relied on the primary producers, it is the present. We cannot expect land to have the earning power in respect to stock that it had before, in view of the diminution of at least 30,000,000 sheep, 2,000,000 head of cattle, and many horses. Under all the circumstances, seeing that land cannot be fully stocked, I earnestly urge the Attorney-General to seriously consider the point, and, if he cannot permanently make the exemption I have suggested, he should, at any rate, make it for the first part of the time covered.
– Does the honorable member mean to say that tlie man on the land is the only one subject to fluctuations ?
– No; and I should not ask for the concession had the present Government not seen fit to regard the man on tlie land as the one person to be assailed. It is true that during the period referred to city property of ? greater unimproved value than £5,000 was also subject to taxation, but it did not suffer to such an extent as did broad acres. With the exceptions I have indicated, I am in thorough accord with the general principle of income taxation. As I say, I believe the measure before us will be a permanent one, and with a modification of the machinery it shall have my support.
.- I wish to repeat, in effect, what I stated a few nights ago in regard to this measure. In the first place, the imposition is unduly heavy upon those who are depending for a living upon returns from investments in this country. I pointed out how, with the additional impost we are imposing, we shall cut down the revenue of one particular estate in New South Wales from £3,900 to £1,400. I can give honorable members the full details of that case, about which there can be no dispute, and I can obtain the particulars of other cases. As the Government have set up a standard - which is, and must be, more or less arbitrary within certain limits - of a return of 4^ per cent, on money invested in Commonwealth securities, such earnings to be free of income tax, I contend that in cases in which the imposition of this tax will reduce the income to less than 4£ per cent, on the capital invested it should cease to operate. That is a fair proposition. Until the
Government have complete control of the capitalistic system of the country - and God knows when they will have it, or when we will trust them with such control - we cannot afford to so harass those who invest their money here as to drive them out of the country. Otherwise we shall be cutting off our noses to spite our faces. I suggest, for the consideration of the Attorney-General, that the operation of the tax should be so limited that it cannot reduce the returns on investments below 4 J per cent.
– Should its incidence become more severe when the return is greater than 4J per cent. ? If the return were 8 per cent., would you make the tax twice as much as on a 4£ per cent, return ?
– I shall be satisfied with whatever the needs of the moment demand, so long as we do not go to the extent of cutting down the returns from investments to less than 2 per cent., as this income tax will do in some cases. Such a proposal is too extreme until we as a community are further advanced.
– Do you say that the general effect of this tax will be to reduce such returns to less than 2 per cent. ?
– The Attorney-General knows me well enough to be sure that I will not make a haphazard statement. I say that there are cases in which that is the effect pf the tax, and where those cases can be proved the measure should permit of a necessary remission of taxation.
– I think such cases ought to come under a special clause, and be at the discretion of the Commissioner.
– I am prepared to accept any provision the Attorney-General chooses to suggest, so long as it gives effect to the view I have stated. One cannot justify his position when he is asked why, as a supporter of the Government, he has agreed to the passing of a tax such as this. Contrasted with the effect of this proposal is the fact that the Government have decreed that a fair return from investments is 4 per cent., free of all taxation. In regard to the period for which the tax should be collected, I am of opinion that the assessment should date from the commencement of the war; I can see no justification for ante-dating it. The retrospective effect of the Bill is indefensible and unnecessary. This tax will furnish all the money the Government require for current expenditure, and for interest on the war loans. Therefore, it is both unjust and unwise to make the Bill operate for a period of six months before we had incurred any obligation in respect of the war. I also object to the provision in clause 15 in regard to the taxation of the income of companies. We are told that the tax is to be levied upon so much of the profits as are not distributed to the shareholders or the debenture-holders. There are many companies which show in their books a certain amount of business transacted during the year, but all of it is time-payment business. I know of a concern the turnover of which is shown on the books to be many thousand pounds, but at the end of the year the firm has not collected more than 10 per cent., or perhaps 20 per cent. of the business done. This clause comprehends all business done irrespective of whether payment has been received or not. That provision is obviously unjust, and when we reach the clause in Committee I shall endeavour to have it amended. I trust that something will be done to enable us to justify, in the eyes of the general community, our action in this House in supporting this measure. We all admit that the tax is a necessity, and the general public is prepared to meet in every reasonable way the added burden of the war expenditure.
.- I notice that the Bill proposes to exempt from taxation the income of the GovernorGeneral, but no reference is made to the incomes of the State Governors. It would be a graceful and loyal act on the part of the Government to extend the exemption to the incomes of State Governors. The Government are to be congratulated on proposing to exempt the incomes of persons on active service. . But they might well go further, and, in the case of a man who has returned wounded and permanently incapacitated, exempt his income to the amount of the pension he receives. In bringing the general exemption down to £156, we shall be skating on very thin ice. I know a great many people who receive an income of £156 a year, but, owing to sickness, practically half their income has been absorbed in paying for medical attention. The Government should insert a provision to protect such people to the extent of the exemption of any amount over 7½ per cent. of a person’s income spent on medical services rendered to him or his family. I think the honorable member for Oxley is on safe ground in advocating a tax on bachelors. It is very difficult for a man with a wife and five or six children to subsist to-day on an income of £156, and I do not think it is fair that the married men should have to bear the greater burden of taxation. In Customs duties the married man pays five or six times as much as the single man.
– A man with five or six children gets a greater exemption than £156.
– He certainly gets an exemption of £13 for each child, but the point I am making is that it is far easier for a single man to keep himself on £100 a year than for a married man to keep his wife and children on £156. I suggest that the exemption in the case of married men should be increased to £200, and in the case of single men reduced to £100. It would not be wise to make a hard-and-fast rule, because often there are extenuating circumstances to be considered. 1 know many young fellows who purposely remain single because they are the sole support of their mothers and sisters, and their position should be provided for. I have a suggestion to make to the Attorney-General in regard to the appeals against assessment. It is always a sore point with people who live in the country that appeals must generally be taken before the Supreme Court or the High Court. In connexion with municipal and shire rates, appeals in regard to amounts up to £20 are heard before the ordinary Police Courts. Appeals against the assessments under this measure should at least be taken before a District Court ; but I ask the Attorney-General to allow all appeals in regard to amounts below £20 to be heard in the ordinary Police Courts. We should endeavour to take justice to the doors of the people. If the Police Courts can be safely trusted to deal with appeals relating to municipal taxation, I do not see why an opportunity should not be given to Federal income taxpayers in country districts to appeal to the same tribunals. Under the Bill as it stands, those resident in New South Wales will have to visit Sydney in order to bring their appeals before the
Court, and will thus incur an expenditure which in many cases would be more than the amount involved. Bather than go to this expense, many would allow themselves to be taxed in a way that they considered unjust. I touched on the financial aspect of this measure during the debate on t]ie Supply Bill, and I shall therefore not detain the House any longer.
.- This is admittedly a measure for raising taxation to meet expenditure in connexion with the war, but I would remind honorable members that in passing it we shall not have solved the problem of war finance. The Bill is designed primarily to meet the income account in connexion with the loan funds out of which we are financing the war during the present year.
– And the war pensions.
– They are included in any ordinary war debit. If it be correct that this is only an instalment of our war charges in the form of taxation, then I submit to honorable members that we need to be specially careful not to exhaust our taxing field by taxation that may be premature, in one sense, in view of the ultimate attacks that will be made upon that field. I am not urging now that this tax is too high. I am not saying now that it is more than ought to be imposed in the circumstances ; I am not attacking the tax in any shape or form. My view of society and of our obligation to the State to which we belong is that when the State is in danger every man’s possessions and every man’s life should be at the disposal of the State. But there is on the shoulders of the Government of the State a counter obligation, and that is to see that these resources are not unduly called upon. In the present case we seem to be putting what the Attorney-General described as the “high water of taxation” upon the backs of the people before we have really reached the vitals of our financial combat.
– And it will be passed on to the workers.
– I shall not discuss that aspect of the case. Honorable members on both sides, I think, appreciate the fact that taxation, like water, will find its own level. No matter on what shoulders a tax be placed originally, it eventually gets down upon the work of the community, and the workers must suffer just as do those who organize and control capital. But the difficulty I see in ellis connexion is that unless we view chas taxation in the light of other taxation that is to come, and unless in consequence we reduce our normal peace expenditure, this community is going ultimately to get into something in the nature of State bankruptcy. In other communities the various forms of taxation are being spread as much as possible. In Canada almost everything is being subjected to stamp taxation. From travelling facilities and amusements to bonds, everything has to bear a war stamp. In this community we have not so far touched’ that field of taxation, and, perhaps, the next action of the Government will involve its invasion. Up to the present in Australia the fault of the Government has not been in the way that taxation in this connexion has been imposed, but in the fact that the first big instalment of extra taxation that was imposed was admittedly not to meet any war expenditure whatever? I refer to the heavy increase in the land tax.
– And the same remark will apply to the probate and succession duties.
– Yes, both, had admittedly nothing to do with the war, but were imposed to meet the increase in the normal peace expenditure of the Departments. I cannot imagine a graver censure upon the action of the Government than their own statements in that regard. After all, the duty of the powers that be, in any State at war, is in the first instance to place the man power of the community in the field, to give it the machinery, the equipment, and the accessories of action in the field, and to organize the resources and wealth of the community. If you squander the wealth of the community upon abnormal peace ends, and if you draw upon that wealth in a way which will disorganize it, then you are immobilizing, and not mobilizing, wealth. In Committee, perhaps, there may be a few observations to make on that aspect of this Bill, and it may be necessary to make one or two amendments in order to avoid that immobilization of wealth’ which every Government of a State at war should endeavour to avoid.
There is one side of this measure which is worthy of consideration from this aspect, and that is as to the period upon which the returns are to he assessed. If the Government tax a prewar date like 1914 - if they go back to a time which has now passed from taxation, and arbitrarily decide to tax it - they will thus throw upon the shoulders of those people who are no longer earning the incomes that they earned in 1914 the responsibility of going to the financial institutions to be financed in order to pay that taxation.
– That will be a common occurrence.
– It will be. Could there be anything worse ?
– Then the people must be very hard up.
– We have in this community a great many people now making a small income who were earning a large income some eighteen months or two years ago, and there are also a number whose incomes have increased since the war.
– A good many incomes went up in the latter part of 1914.
– I venture to say that the incomes of Australia for 1914 would be found, in the aggregate, to be immensely larger than those for 1915 or 1916. That is obviously so. If a community is at war, trade is dislocated, while credit, in the very nature of things, cannot be as sound as before the war. AH that is reflected in the incomes of the community. If the Government tax on the pre-war figure, and compel people to go to the banks and other financial institutions to raise money to pay that taxation, it means that they will be competing with industry for the little capital that there is left for ordinary ends. We have already sufficiently dislocated the money market - and unavoidably so - by going into it for heavy loans. It had to be done, and has been done sanely enough. But this has necessarily carried with it its own dislocation. If, in addition, we have men who have to meet taxation - in itself small enough - but without any ready cash to meet it, they will have to pay a fairly high rate of interest to the banks in order to secure money to carry them over for the time being. That, in itself, will lead to a rigorous private economy, which will undoubtedly react upon the labour market. And so. if we follow the vicious circle round, we shall find the State coming to the assistance of the community in providing against un employment that has been brought about largely by the State’s bad financing. The Government will get over a lot of that difficulty, and relieve this measure from this criticism, by taxing the war period. By taxing the war period, they will be taxing the people who are actually earning money. They will not be driving other people on to the financial market in order to pay their taxation, and we shall have none of the unrest and difficulty which is abroad in the land to-day with regard to this measure. Men will be able to pay, and I believe the whole community will regard it as a duty to pay, this tax as cheerfully as their circumstances will permit. But if the Government impose this serious difficulty on their shoulders, there will be grumbling and trouble, and, instead of mobilizing the wealth of the community and bringing it into the coffers of the State, they will be immobilizing it, and making the distribution of credit even more difficult than it is to-day.
I do not wish to take up the time of the House. The Committee stage is in front of us. So far as I have been able to read the measure, it makes an honest attempt to deal with the very many difficult problems that necessarily confront any draftsman of a measure of this kind when he has to make exceptions in this, that, and the other direction. There is one form of company enterprise for which provision does not seem to have been made, unless I have read the measure wrongly. I refer to land companies, which, of recent years, have been very common in their operations about Sydney and all the State capitals. There has been of recent years a tendency in the direction of land speculation. A company will buy some £20,000 or £30,000 worth of land, and will set out to sell that land upon long terms. The actual profit is put down as a book profit so soon as a sale is effected ; but the company is without funds - it has not had its capital paid back - until each separate agreement for the sale of a block of land has been honoured in full.
– But they are getting interest on their money.
– Quite so. But the difficulty is in drafting a clause that will cover such companies without, so to speak, destroying the effect of the Bill. I refer to this phase of the question now in order to give the Attorney- General time to draft some amendment that will meet the case.
– I have suggested an amendment in that direction.
– I am glad to hear it. It is not going to be an easy matter. Almost any amendment of which one can think is open to some objection of a preliminary character.
– Only moneys actually paid should be “ taxable income.”
– That would largely get over the difficulty; but it is hard, in a measure of this kind, to define capital as against income, unless we make special provision for these companies, iu which case we shall avoid a great deal of the hardship that will otherwise accrue. My only real objection to the form of the measure relates to the date from which the Government have chosen to levy incomes for the first year. If this is a war measure, it should tax incomes earned during the war. Every one will be able, then, to pay without undue difficulty ; and instead of immobilizing wealth, instead of upsetting credit and industry, the tax will be relatively easy to bear, and every one will be happy to do his best to come to the assistance of the State in its hour of need.
.- When this Bill was introduced, I thought that the Government were taking a rather unfair advantage of the people, in that it was not proposed to ear-mark for war purposes the £4,000,000 which it is estimated to yield. Prom statements that had been made by the Prime Minister from time to time, I was under the impression that he intended to use a goodly proportion of that £4,000,000 in squaring the ledger in respect of the ordinary services of the year. I was glad, however, to note the statement of the right honorable gentleman this morning that he intends to devote practically the whole of this money to war purposes. If he does that, I am sure he will do only that which the Government and the party behind them have led the public to expect. The people were led to believe that the Government were putting this forward purely as a war measure. If the people of Australia are satisfied that this money will be utilized solely for wai1 purposes, I am quite certain, from what I have seen during the last fortnight, that they will meet the tax cheerfully. I am sorry that the tax has to be imposed, because it will have the effect of turning a good deal of money out of the ordinary channels of industry and production, and it may lead to unemployment in consequence. I hope it will not, but there is great danger that it may. Up to a few days ago I was hoping that a tax might not be necessary at all, because, in his Financial Statement, the Prime Minister showed an expenditure . on the ordinary services of the Commonwealth of £3,000,000 more than that of last year. In a time like this, when everybody is trying to economize, and to put their affairs in order so as to meet the worst that may befall, public economy should he practised wherever possible. I know the difficulty facing the Ministry. They do not wish to stop any public works, because unemployment will follow; but what I am afraid of is that so much money is being taken from the ordinary channels of production that the effect will be to create more unemployment than would follow a proper system of economy carried out in other directions.- It ought to be possible to transfer men engaged on non-productive work to works that will add to the wealth of Australia - to such works as tho Murray waters scheme, for instance - and, if some such change as this were effected in the employment of men now in the Public Service, it might be that such a heavy tax would not be required. Everybody must admit that a tax reaching to 5s. in the £1 will cause a heavy drain upon the country’s resources, and it may drive some capital away. Besides which, there are many people whose affairs are in such a condition that they will find it very difficult to meet the tay. These people possess incomes within the meaning of the Act, but it must not be assumed that they will be able to meet this taxation through the mere form of writing out a cheque. They may owe money to the bank. Their financial situation may be such that, as has already been pointed out, it may be necessary for them to obtain financial assistance. Anybody who goes on to the market to-day with real property will find it extremely difficult to realize, and I can conceive many cases where similar difficulty will be experienced in raising the money just at the time it is needed. It should be borne in mind also that Australia is not only passing through a strenuous time on account of the war, but we are passing through, a strenuous time because the country has suffered such heavy losses through the drought, and time must elapse before the pastoral and other industries can be put back on to their old footing. We cannot overlook, too, the fact that last year our exports were less than our imports. Imports fell off by no less than £18,000,000, while exports were reduced by £25,000,000; and I am afraid that state of affairs will continue for some time, because even though this year’s harvest may be bigger than last, difficulty is likely to be experienced in the matter of transport, and the charges in other directions are likely to be so heavy that the net results to the producer will not be anything like so good as they would have been had the period been normal. Every effort should, therefore be made to economize wherever possible. If the tax is to be continued year after year, as seems likely, it will press upon the community more and more heavily. As the tax is chiefly for war purposes, as many people as possible should contribute, and I feel sure that most of the men and women in Australia in receipt of incomes up to £150 would bc quite willing to contribute a few shillings by means of a poll tax. I admit that the strongest objection to this tax was removed by the Prime Minister’s statement that all this money would be required for war purposes. It is a sound canon of taxation that no tax should produce a greater sum than the country requires for the particular purpose for which the tax is levied, and I felt that the £4,000,000 likely to be produced by this tax would be considerably more than the Government would need, but, as the Prime Minister says otherwise, I have to admit that the virtue of that objection has disappeared. I do urge upon the Government, however, the necessity of studying economy in every direction, so that, though it may be impossible to reduce the tax now, it may not remain at its present drastic figure year after year. If it does continue as it is, many of the people who do not pay the tax will be the chief sufferers, because they will find themselves absolutely without employment. Nobody desires, and particularly has the Government no desire, to see such a state of affairs as that. Before I sit down, may I suggest to the Attorney-
General- that, in the near future, he should take into serious consideration the desirability of spreading this taxation as widely as possible. I do not suggest that people receiving less than £150 a year should be asked to pay what might fairly be described as an income tax, but, as they have shown their willingness to pay, they should be given the opportunity, and in a time like the present every little will help.
.- In the schedule of the Bill it is proposed to tax the undistributed income, or profits, of companies on a flat rate. I have already brought under the notice of the Attorney-General, by letter, the position in which co-operative dairy companies will find themselves if the Bill, as at present drawn up, becomes law. I do not know whether the Attorney-General is aware of the method by which these companies finance themselves, particularly in regard to their export trade. They make an advance on the butter consigned to London and sold on consignment. In doing that, they deduct the amount from the price considered to be the parity with London quotations at the time of consignment, and put that by as a reserve fund to guard against loss on that or future shipments, and at the end of the export season they pay that sum out by way of bonus. It appears to me that under the Bill these funds will be taxed as profits. They are not profits.
– They are not losses.
– No; but they are simply temporary reserves.
– Which we reach under our flat rate.
– Yes; but I submit that they should not be subject to the tax, because they are not created in the same way as the profits of an ordinary company are created. They are actual deductions from the amounts which are paid to the suppliers, and are held in order to guard against loss on shipments. To strike, the exact amount which should be paid on butter which is sold six weeks hence on a market which is constantly rising and falling is very difficult, and in consequence these internal reserves are built up each season, and distributed at the end of the sea’son. The trouble is that the tax may be levied at the time when they are in existence. I do not wish to take up any time to-night, but I would like the Attorney-General to take this matter into consideration, because, in the aggregate, the sum involved amounts to a very considerable one for all the co-operative companies in Australia. In the case of the Byron Bay Company, it runs into a good many thousand pounds each year. It is not a profit, it is simply a temporary reserve built up for a specific purpose, and the moment the export season is over, if there be no losses, it is distributed to the suppliers. Sometimes when sales are balanced in London against the actual payment made to the suppliers, an actual loss is shown which wipes out the whole of the reserves, but, as ageneral rule, over a number of years it is found that we pay in Australia something below the London parity, and, in these circumstances, the portion of the pay which has been deducted from the suppliers’ cheques is paid over to the supplierspro raid on the quantity supplied by them plus any surplus on London sales. It is not a pro rata distribution to the shareholders of the company unless they happen to be suppliers. The reserve is really a trust fund held by the company on behalf of the suppliers, and is finally paid out to them pro rata on the quantity supplied by them during the export season.
– It is a fund utilized for the purpose of earning a profit, and is necessary to the trading functions of the company.
– No; it is simply held for the time being. If, after the sales are made in London, it is found that they are equal to the amount which has been paid, plus the cost of shipment, insurance, and so on, the reserve is wiped out by paying over to the suppliers the amount already deducted. On the other hand, if there be a loss, the reserve fund meets it. I shall be glad to see the AttorneyGeneral privately, and explain exactly what is done, and what I desire to have exempted from the flat rate of1s. 6d. What I propose is perfectly fair. It is not possible to have similar reserve funds in proprietary companies. They are only possible in co-operative concerns.
Question resolved in the affirmative.
Bill read a second time.
In Committee :
Clause 1 ( Short title).
– Will the Attorney-General postpone the Committee stage until tomorrow? I confess that I have not looked into the schedule of amendments which he has circulated to-night, and the passage of the measure will be facilitated if he will allow honorable members an opportunity to look over it. He cannot complain of the debate on the Bill. He has never seen a measure of such importance and magnitude discussed so shortly as this Bill has been. Honorable members have no desire but to put the Bill through, but they need a little time to look over the amendments which have been circulated.
– Much of the principles of the Bill was discussed in Committee of Supply.
– If the AttorneyGeneral will consent to a resumption of the consideration of the Bill in Committee to-morrow, he will not regret doing so. The whole business of the community is affected by the measure.
– If honorable members will consent to deal with the War Pensions Bill, the War Census (Postal Matter) Bill, and the Sugar Purchase Bill,I am willing to agree to the suggestion.
Clause agreed to.
Clause 2 agreed to.
Bill received from the Senate, and (on motion by Mr. Jensen) read a first time.
In Committee (Consideration of Senate’s amendments resumed from 18th August, vide page 5862) :
Clause 3 (Definition).
Senate’s Amendment. - After “ amended “ in line 11, and before paragraph a, insert the following new paragraph: - (aa) by omitting the definition of “Dependants “ and inserting in its stead the following definition: - “ Dependants “ means the wife or widow and children, or ex-nuptial children of a member of the Forces, whose death or incapacity results from his employment in connexion with warlike operations, and includes such other members of the family of that member of the Forces as were wholly or in part dependent upon his earnings at any time during the period of twelve months prior to his enlistment, or who would, but for such incapacity, have been so dependent, and parents who, though not dependent upon the earnings of the member at any time during the period of twelve months prior to his enlistment, are, at any time within five years after his death, without adequate means of support; and where the member -
Clause 14 (Pensions payable for limited period in certain cases).
Senate’s Amendment. - At end of clause add- “ (3) A child to whom a pension has been granted, who, on attaining the age of sixteen years, is, in the opinion of the Commissioner, unable to earn a livelihood, may then be granted a pension at such rate as may be assessed by the Commissioner, but not exceeding the rate specified in column two of the Schedule opposite the rate of pay of the member:
Provided that an application for the pension shall be made to the Commissioner or a Deputy Commissioner within six months of the child attaining the age of sixteen years.”
Upon which Mr. Jensen had moved -
That the amendments be agreed to.
And upon which Mr. Thomas had moved -
That the Senate’s amendment No. 1 be amended by leaving out the words “ by omitting.”
– The amendment of the honorable member for Barrier was moved to induce the Government to provide that all widowed mothers should be made eligible for pensions unconditionally.
– They are eligible now, if dependent.
– Yes. The Government, having given due consideration to the request, feel that at this juncture it cannot be complied with. Were all widowed mothers thus made eligible for pensions, fathers, and, perhaps, other near relatives, would have to be treated in the same way. Under the honorable member’s proposal a pension would have to be given to any widowed mother who might claim one, even though she might be rich enough to need no assistance whatever. As the war pension legislation is quite new, it may require amendment in the near future, as injustices may be discovered by its administration, which an amending Bill would have to be introduced to.provide against. The country is confronted with a huge expenditure on pensions to soldiers, and to the dependants of soldiers, and, although those who will be helped will be justly entitled to all that we can give them, we feel that, at present, we cannot do more than we have done. The Act will be under the control of the Commissioner for Old-age Pensions, and there will be Deputy Commissioners in each State. The Commissioner is empowered to deal specially with cases in which particular hardship is being suffered. I ask honorable members to accept the Senate’s amendments as they stand.
– The Minister says that, in all probability, this legislation will require still further amendment in the near future. That is characteristic of the measures of the party now in office. Their Bills are brought forward before proper care and attention has been bestowed on them, and hardly have they been introduced before sheafs of amendments to be proposed by Ministers are thrown on the table. I have not known any other party to introduce legislation in such slip-shod fashion.
Senate’s amendments agreed to.
Resolution reported; report adopted.
– I move -
That this Bill bo now read a second time.
The Attorney-General, in speaking on the War Census Bill, said that it would be arranged that returns and other matter connected with the taking of the war census would be carried free by the Post Office. Citizens will be able to procure the necessary cards, and, after filling them in, can post them to their destination without expense. The measure will have only temporary force.
– This is another proposal to compel the Post Office to do something for nothing. That great institution, like the Police Department, is becoming one of the great burden bearers of the State. I see nothing to object to in the Bill, and congratulate the Minister on the great legislative triumph which he has in contemplation.
Question resolved in the affirmative.
Bill read a second time, and reported without amendment.
Standing Orders suspended, and Bill read a third time.
In Committee (Consideration of GovernorGeneral’s message) :
– I move -
That it is expedient that an appropriation of revenue be made for the purposes of a Bill for an Act to authorize the borrowing of money from the Commonwealth Bank, of Australia.
– ls no sum of money mentioned in the message?
– That is not necessary in this case. As honorable members know, the Attorney-General has, with great industry, and I think I may say with great success, arranged the purchase of the sugar crop in Australia, and for the importation of sugar from oversea to enable us to meet the demands for twelve months. To fulfil the financial requirements it will be necessary for the Treasurer to make funds available, probably to the extent of £500,000, and that is the whole purpose and intent of the Bill.
– Are the funds to come from the Consolidated Revenue ?
– Yes. The principal provisions of the Bill are as follows : - ‘ 2. - (1) The Treasurer may, from time to time, borrow from tlie Commonwealth Bank of Australia moneys for the purchase of sugar by the Commonwealth and for the payment of Customs duty on sugar imported by the Commonwealth, but so that the indebtedness of the Commonwealth to the Commonwealth Bank under this Act shall not at any time exceed Five hundred thousand pounds.
He must pay in as well as take out.
That is, if we are in debit we shall have to pay, and we may need £100,000. Sometimes, of course, we may be in credit, and this Bill is a simple provision to deal with the matter, providing, as it does, for the financing of the arrangement that has already been made under agreement.
– The whole proposal strikes me as a very novel one in many ways. We are asked to agree to machinery for financing an agreement which has never yet been submitted to the decision of the House. That agreement has been made by the Attorney-General in his office, without authority from anybody.
– It is only halfamillion !
– I understand that £5,000,000 or £6,000,000 is involved in the whole transaction, which has been carried out without any authority.
– Not without authority; I have the authority of the Government.
– The transaction is entirely on the honorable gentleman’s own responsibility, as representing the Government, without consulting the House in any way. Honorable members will recollect that in the referenda, which are to be submitted to the people again, the AttorneyGeneral lays it down as a fundamental principle that he shall get the consent of Parliament to any transactions of this kind, and yet we find him carrying out this one without consulting Parliament. The honorable gentleman does not even propose to get the agreement ratified by the House.
– Until the House has passed this motion we cannot sign the agreement, and we have not signed it.
– The House has no power over tlie agreement in any way.
– It has; the honorable member is thinking of two different things.
– Is it not a fact that the agreement is already signed and sealed ?
– Not the agreement for this.
– Has the agreement for the whole transaction been made subject to the approval of Parliament?
– No; the agreement has not been made. The honorable member is thinking of two different things. He is thinking of the agreement which has been made in regard to the local crop, and which did not involve any liability at all on the- Commonwealth. What is before us is a different “thing - for the imported sugar.
– Has the agreement with the Colonial Sugar Refining Company been signed ?
– Not in regard to this sugar.
– Has the agreement with the Queensland Government been signed 1
– No, it has not.
– But you propose to sign the agreement, I presume ?
– If you agree to the Bill.
– The Bill says nothing about the agreement, but only deals with the Commonwealth Bank, and authorizes the Government to get an overdraft.
– That is right.
– Is there no preliminary question to be settled by the House - that is, as to whether it approves of the agreement and the terms of it? Should this matter not have been first submitted to the House by at least a specific motion, if not a Bill? I am not so sure that a transaction running into millions ought not to have been embodied in a Bill with the agreement as the schedule. Honorable members will recollect that the Murray Waters Agreement appeared as a schedule in a machinery Bill.
– This has to do with the importation of sugar.
– The same course was taken with the agreement regarding the Northern Territory. The AttorneyGeneral has become so accustomed to being the Pooh Bah of Australia that he has forgotten altogether that there is such a thing as Parliament. He has become so habituated to the association and atmosphere of the great companies - this great octopus - that he and the man who conducts the great Trust settle all the business between themselves, forgetting Parliament altogether.
– You have evidently put on a new “ record “ ! This is quite a new departure. However, it is very good - go on !
– May I remind the honorable member that we are still living in a free Parliament?
– Hear, hear; that is what I say.
– I am afraid that during the last twelve months the Attorney-General has been trying to run the Commonwealth all on his own. He has gone into the sugar business, the freight business, and the metal business, and he has become, in his own estimation, so much an expert that he has entered into this agreement, signed, sealed, and delivered, without once thinking of consulting the Parliament of the country. Could honorable members opposite have a more perfect instance of pure, undiluted autocracy? Was there ever in the world a better instance ?
– What about Noah and the ark ? Was he not an autocrat ?
– Here is a proposal dealing with £6,000,000 worth of material.
– It will be a very profitable autocracy for the people.
– Will it? We may see in the sequel. May I remind the honorable member for Fawkner that he is just twelve months too early in venturing that opinion ? It will be time when the twelve months are up. to put that matter to the test; at any rate, we cannot do it now. Great is the faith of honorable members over there, and apparently great is their faith just now in the Sugar Company.
I suggest that a transaction of this kind ought to receive the approval of Parliament, and that this agreement should be made a schedule of a Bill, as in all other similar agreements since he and I entered Parliament, and for all time before. The honorable gentleman should not make agreements all on his own, ignoring Parliament, and only coming to Parliament when he desires an overdraft from the bank to complete the business.
– If the agreement is bad for Australia, how is it that the Colonial Sugar Refining Company’s shares have gone down £5 in value since it was made ?
– If that be so, all I have to say, after looking at the agreement, is that I fancy those shares are going up again.0 I venture to tell the honorable member that when the Sugar Company declares its next dividend, he will see no diminution in it, and that there will be more to put to reserve than has ever been the case in its existence before.
– Then what are you bothering about?
– From what I can see the agreement is an excellent one for the company. I have not seen it lately, but, if I recollect aright, it is proposed to give Mr. Knox about £3 3s. a ton, plus another £1, of which the Government will get 10s. back; altogether we shall pay £3 12s. or £3 13s. a ton for the refining and handling of the sugar. So far as I can find out these are very liberal terms indeed. I do not know how this may affect the price of sugar, and I only hope that part will be all right ; but, assuredly, so far as I can see, Mr. Knox is going to be all right under the agreement. I do not know whether the AttorneyGeneral has any particular or special reason for not submitting this transaction for the approval of the House; but as I have already said, what he has done, and is still doing, is beyond all precedent. If this kind of thing can be done by a Minister without Parliament, then Parliament is no longer necessary, but has abrogated its control.
– He did the same thing in regard to the freights.
– And he appears to be doing it with the entire concurrence of his party.
– I did not know about this, and I do not approve of it.
– Then why not say so?
– Give me a chance.
– I do not wish to harass the Attorney-General in anything he is doing, but I strongly surest he ought, at least, to pay this Parliament the compliment of consultation as to the terms of the agreement before he calls upon us to finance it for him - before he asks us to give him the financial machinery with which to operate it.
– How could we discuss the details of a business deal here?
– When the honorable member secures the approval of the referenda proposals how will he deal with all the other big concerns ? Is it not laid down in one of the Referenda Bills that Parliament is to control these matters, and decide whether monopolies shall be taken over? Why not apply the same principle to the proposal now before us? For the time being the Government are nationalizing tlie sugar business, but why are they not, in the terms of their own referenda proposals, consulting Parliament? I am perfectly willing to give the Attorney-General every credit for his part in this matter. I know he has acted to the best of his knowledge and honestly, but it is a strange procedure to be adopted by a Labour Minister above all others to take the responsibility upon his own shoulders, and put the transaction through without consulting Parliament in any way. It is time that honorable members recollected that this is a National Parliament, that we are living under responsible government, and that we are supposed to be keeping our parliamentary institutions as closely in touch with the people as possible. We are living under a democratic form of government, under which the people are supposed to say how the public money shall be spent, and how public business shall be done. But the Attorney-General is throwing to the winds those democratic principles, and of his own motion, and for no reason whatever, is ignoring Parliament concerning the principles of this agreement and all its details. If the honorable member takes my advice he will spend a few hours in regularizing this immense transaction by putting it in- proper form, and getting parliamentary sanction for the agreement. If he does that, the way will be open for the House to give him all the financial assistance to carry it through for which he is now asking. I regret that these matters are brought forward in this way, and so suddenly. The one point I mention has only occurred to me on the spur of the moment; there may be other points which a little consideration would make apparent. I assume that the honorable member desires whatever assistance the House can give in all these matters. He is not through with this business yet, and he may, before he is done, require the assistance of the House in connexion with many of these details. He is entering upon new ground, and blazing new tracks, and I suggest to him that it would be much better to take the House into his confidence, to let the public know what steps he is proposing, and receive the approval by the public, expressed through their representatives in this Chamber, of the immense agreement he now asks us to ratify indirectly by agreeing to this financial provision. The cart is before the horse in this matter, and if honorable members on the Government side are prepared to allow transactions to be put through in this fashion, I may remind them that they are laying down a precedent for which they will be sorry in years to come.
– The right honorable member for Parramatta professes to be the champion of Democracy and of responsible government, but he is about as well fitted to stand as a champion of either as Satan himself is to stand as a champion of Christianity. The honorable member professed to be very anxious to assist me with his advice. He says that I ought to be overwhelmed by the immensity of this agreement. The honorable member has not the faintest conception of what he is talking about. He does not know what agreement he refers to, or what sugar is concerned. Somebody has told him something about sugar, somebody else something about the Colonial Sugar Refining Company, and he has put the two statements together and made a speech. The agreement has no more to do with the matter before the House than the jam eaten this year has to do with next year’s sugar crop. Until half-an-hour ago the right honorable gentleman was overwhelmed by a desire to conserve the time of the House, but for 25 minutes by the clock he has been talking about responsible government, about my being a Poo Bah, and other interesting and fascinating subjects. If the right honorable member would pay himself and the House the compliment of understanding what he is talking about before he rises, and speaking only of what he understands, the business of this House would run on greased wheels. But the honorable gentleman rises, puts on a new record, is astounded by his own brilliancy, and moves on from one irrelevant’ statement to another. Political adversity can have for him no terrors. If he were well screened at a cinematographic show he would earn millions.
– I rise to order. I think it is time this tirade of personal abuse ceased.
– I withdraw the remark; it was an inexcusably foolish artistic error on my part. The right honorable member would not be a success on the cinema. What is before the House is a proposal which authorizes the Treasurer to enter into an arrangement with the Commonwealth Bank for an overdraft up to £500,000 for the purpose of enabling the Commonwealth to import sugar to supply the shortage that will certainly arise as from the end of February next until the local crop is reaped about the end of July. This transaction is confined to the importation of sugar, and does not include refining and distribution of the article. There has been no agreement for these purposes made in respect of thissugar, but an agreement is ready to be made as soon as Parliament approves of it. This Bill relates only to the purchase of foreign sugars. As a matter of fact, probably no money will be necessary ; but in order to obtain the sanction of the House, and to place the Treasurer in a position to meet any phase of the transaction that may arise, it has been thought necessary and proper to obtain authority for this loan. The Leader of the Opposition said that the Government ought to have taken the House into their confidence earlier. I do not agree with the honorable gentleman. He seemed to be under the impression that this Bill had relation to an agreement for refining the sugar. As I have said, it has not. And I do not think it compatible with the interests of the Commonwealth that we should notify the world of our intention to buy sugar. I say most emphatically that? operating as we are in the markets of the world, it would have been most impolitic and inexpedient to have notified to every sugar-seller in theworld that the Commonwealth Government were buyers of sugar. I can conceive of nothing more fatal to the interests of this country than such a disclosure. When the Government enter into a business, they must conserve the interests of the shareholders, and the shareholders in this business are all the citizens of Australia. For the first time in the history of this continent, whatever profit there may be in a sugar d?al will be for the benefit of the people of Australia, and will not go to the Colonial Sugar Refining Company. The right honorable member said that the agreement, in relation to refining and distributing the local-grown sugar, is a very good one for the company. It may be. I am satisfied, however, that it is a very good agreement for the Commonwealth, and that the sugar-grower in Queensland will get more for his sugar than he would have otherwise received. He is assured of a fixed price; it will not be dependent on any fluctuation of the price of refined sugar. But the agreement is not only good for the producer, but for the con”sumer. There is to be a uniform price of £18 per ton for the whole crop, and the people of Australia will get cheap sugar. “Whatever margin of profit there may be in the transaction will go to the taxpayers of the country, and to that extent lessen the amount of taxation. Otherwise, the profit would have gone to the Colonial Sugar Refining Company, and increased its dividends. I have not troubled to ascertain whether the shares of the company are rising or falling, but I am satisfied that the arrangements with the Colonial Sugar Refining Company are such that the right honorable member is unable to find any fault with them. Otherwise he would have done so with great sound and fury. This transaction gives to the producer a fair and reasonable reward for his labour, and insures to the consumer a necessary commodity at a fair and reasonable price. It represents the putting into force of the new Protection policy. I am sorry that these ideas do not meet with the approval of the right honorable member for Parramatta and his friends. They never will. They are, in effect - and I have no doubt the right honorable member realizes it fully - the writing on the wall. They mean the substitution of national control “of industry for private control of industry. They mark, in a manner no thinking man can afford to neglect, the passing of private enterprise. This war has changed the outlook of the world. It will profoundly affect the future of civilization. Old landmarks are already buried beneath the dust of conflict. The unfitness of private enterprise to grapple with great emergencies has been amply proved. The British Government, that bulwark of private enterprise, had to buy sugar and wheat for the people of England because private enterprise was quite unable, or could not be trusted, to do so. War contractors, so the honorable member for Henty said to-night, are making great fortunes. The Commonwealth comes into this business to prevent any one making a great fortune out of sugar. We are following the example of the British Government, but the Leader of the Opposition had not one word of condemnation for the British Government in this regard. He was not aware that the British Government had purchased 500,000 tons of sugar. His narrow purview does not permit of his grasping more than one fact at a time. What has the Old World been compelled to do? It has been compelled to take control of the manufacture of munitions, and the position ia South Wales to-day is that the British Government is urged to nationalize the mines, because private enterprise regards war as a further opportunity for exploitation. Governments, representing the people and being their trustees, are in duty bound to step in and protect the people. We have done that in this case. The Leader of the Opposition may say what he pleases; the proposed agreement is very much at his disposal, but it is not to be made public until the interests of the Commonwealth are effectively safeguarded.
– The Attorney-General, as he always does when he finds himself in a difficulty, has just made a very interesting speech. He has practically said to his party, “ Come along, boys ; get into the Socialistic gala coach, and let us away to the new Jerusalem.” It is in this way that he overcomes all his difficulties. He makes his party laugh, and so succeeds in carrying his autocratic proposals. Be it so. The value of his speech lies in the fact that it has shown that he is using the war and the war sentiment to carry forward his nationalizing proposals. That is the outstanding feature of his speech. He ridicules his colleague who mentions war, and points out that to-day it is necessary that national services shall be- substituted for private enterprise.
– In every civilized country engaged in war that has had to be done.
– No; the honorable gentleman has uttered statements concerning the Old Country which show his utter and absolute ignorance of what is going on there. I have not yet heard that the munition enterprises of the Old Country are being nationalized. I have heard that agreements are being made with private enterprises to make shells for the Government.
– The Government have taken them over.
– They have not, and do not intend to do so.
– They have taken control of them.
– I would advise my honorable friend to stop his ignorant bluff in this Committee. We have heard enough of it.
– I ask the Leader of the Opposition to withdraw that remark.
– The AttorneyGeneral has made a dozen accusations of ignorance against me.
– It is not parliamentary to use such an expression as the Leader of the Opposition has just employed. The right honorable member occupies a very responsible position in this Parliament, and I ask him to assist the Chair by withdrawing the remark.
– I withdraw it; but for fifteen minutes I sat here listening to a tirade of personal and impertinent abuse addressed to myself by the Attorney-General.
– Had the AttorneyGeneral done what the Leader of the Opposition says he did, I should have called him to order. As a matter of fact, I did call him to order on one occasion.
– The right honorable gentleman for twenty-five minutes abused me.
– Order ! An honorable member is entitled to be heard in silence.
– I did not make an interjection while the AttorneyGeneral was speaking, nor did I indulge in one personal word during the whole of my previous speech.
– The right honorable member did.
– I did not; on the contrary, I paid the AttorneyGeneral quite a number of personal compliments.
– Will the right honorable member let me say this-
– I do not want to bother with the honorable member. I wish to make my speech.
– The right honorable member is going to make a speech? Certainly.
– It is time that this impertinence ceased. Why should I be subjected to it the whole time I am on my feet? The Attorney-General, Mr. Chairman, takes not the slightest notice of what you say.
Several honorable members interjecting,
– I await the cessation of this grinning on the part of honorable members opposite.
– Order ! The right honorable gentleman is now inviting reprisals.
– Cheshire cats!
– Order ! I ask the honorable member for Parkes to withdraw that remark.
– I withdraw it.
– On a point of order, sir, I wish to draw your attention to the fact that the honorable member forParkes, who ought to know better, has made a very inappropriate remark by referring to honorable members on this side as “ Cheshire cats.”
– Will the honorable member be seated ? Without the intervention of any honorable member, I called upon the honorable member for Parkes to withdraw the remark.
– On a point of order, sir, should not the honorable member for Parkes stand in order to withdraw the remark to which exception has been taken ?
– That should be done, and I hope that the honorable member for Parkes, as an old parliamentarian, will set a good example to the Committee.
– All this talk, I suppose, is purely non-party so far as honorable members opposite are concerned. They will not even allow me to speak.
To get back tomy point, the Attorney-General has succeeded admirably to-night in taking the cover off many things. The war has covered them during the last twelve months. Everything proposed by the Government has been on account of the war. That has been their great shield. To-night, however, we have it on the Attorney-General’s own showing that he has taken this step in the interests of his Socialistic propaganda. He has demonstrated how Socialism in practical operation becomes an absolute and perfect autocracy. Here we find him deliberately setting Parliament aside - ignoring it, and taking action on his own account. This is a very serious thing to happen in a free community such as we have in Australia. In the AttorneyGeneral we have the Czar of Australia acting entirely of his own volition, ignoring Parliament, and, apparently, ignoring his own party. Some of them, it would seem, know nothing whatever of what he has done. All this is necessary, he says, because he is operating in a foreign market. This speculator in sugar is operating in a foreign market, and we are not to know what he is doing ! It may be successful business - it may be a successful speculation in respect of sugar and other things - but it is not good Democracy, nor is it good parliamentary government. It may be satisfactory from his point of view, but I venture to suggest that it is a kind of thing which, if repeated, will cause the National Parliament to become a byword. The Attorney-General tells us that he has made a wonderful bargain. For the first time this great business expert, who knows all about this thing, and says that no one else does, has made an agreement under which, he says, Mr. Knox is going to secure better terms. He tells us that he does not mind if Mr. Knox does. That gentleman is getting something more out of it, and the growers, the refiners, and the people are getting more out of it. Where in the name of heaven is it to come from ? If we are to get cheaper sugar, higher prices for the company, higher returns for the grower, higher returns for everybody, who is going to foot the bill ?
An Honorable Member. - The taxpayers.
– No. The AttorneyGeneral says the scheme is going to finance itself; that it is not going to cost the taxpayers a farthing. They are all going to get something out of this transaction. Where is the money coming from ? It is not going to drop from the clouds. These various persons cannot get something out of this arrangement unless the money comes from somewhere else.
– The Attorney-General made no reference to the increased profits of the company.
– He said he did not know whether the company was going to make more or less out of it.
– It is just as well for the correction to be made.
– The honorable member said that everybody was going to get something more out of this arrangement - the people, the grower, the refiner, the labourer.
– I said nothing of the sort.
– He said, also, that Mr. Knox is going to lose nothing, and I want to know, therefore, where all this largess is coming from. Mr. W. M. Hughes may be a great man - I believe he is in his own estimation.
– Order! The honorable member must not address members of the House personally.
– The AttorneyGeneral - I beg his pardon. I know nothing about these things, and can conceive that he may know everything ; but I do not think he is sufficiently the miracle-worker to be able to make money come into people’s pockets unless it is coming from somewhere else. That is all I have to say. There would have been no personal allusions but for those made by the honorable member himself.
– You are incapable of making a speech without personal remarks.
– Order !
– Ditto, sir, ditto ! I am sorry that, in the performance of my duty, I have had to insist on the parliamentary control of public business. That is all I am contending for now. It is all I have ever contended for. I have asked that this agreement, before being acted upon and financed, should be submitted to the people’s Parliament for ratification and approval. The AttorneyGeneral never touched upon that point. Instead, he commenced to abuse me for making the request. I think the honorable member might have given me a reply different to the one he did. I do not desire to weary the House on this subject. I have made my point, and I insist upon it, that a transaction of this kind, running into millions sterling, should receive parliamentary approval, and I appeal to the Attorney-General to take the old-time course of consulting Parliament and getting its approval to the whole transaction before he seeks financial cover for it.
– I think that the .Attorney-General somewhat obscured the issue when he introduced the question of Socialism into “this matter. Whatever there is of Socialism is merely incidental to the unique situation by which we are faced. We all know that in time of war, when the ordinary avenues of trade are dislocated, it becomes very difficult for private concerns to carry on their ordinary operations. Where trading operations extend over the world, it is obviously easier for a Government to conduct negotiations than for a private concern to do so, and it is because this is the case that the Government have undertaken to conduct these negotiations in the interest of the country. Yet, in doing this, the Government will have to fall back upon the machinery built up year by year by those who have controlled the sugar industry. Their machinery has been virtually commandeered, no doubt on terms satisfactory to those engaged in the sugar industry, but as a Socialistic experiment the business is nothing to boast about. We were virtually in extremis in regard to our supplies of sugar. Whatever the country, the Government would take action in time of war, because every one knows the difficulty of getting ordinary supplies in war time. It is satisfactory that in such a time there is a tendency, particularly on the part of those who control any given commodity, to fall into Une and help the Government from patriotic motives. That is what is being done now, as I understand the position. The point I wish to bring forward is that Parliament is being asked to vote halfamillion of money without knowing exactly what it is for. I, for one, am of opinion that we should not do that, and I think that the Leader of the Opposition was justified in opposing the proposal. We are told that the agreement cannot be made public until it has been completed, or is near completion. I am perfectly alive to the fact that many negotiations have to be conducted secretly. It is quite right that they should be, but the credit of the Commonwealth should be good enough for the Prime Minister to reach a certain stage in his negotiations, and secure the option over what he requires, then he could submit his agreement to Parliament so that members may know what they are doing. I, for one, do not approve of voting half-a-million of money without knowing clearly what it is for, and what we are being asked to do.
.- I desire to ask whether the Attorney-General is going to deal with’ this proposal fairly and equitably in regard to payment of the wharfage rates imposed at the different ports in Australia. If the AttorneyGeneral is going to finance his scheme by reducing the rates at the different porta in order that he may make both ends meet, he will not be financing this contract on the same basis that the Colonial Sugar Refining Company would have done. On account of what I may call a flaw in the Victorian State Act, the Attorney-General is able to bring imported sugar into Victoria free of wharfage rates. He will have to pay wharfages rates in the other States, so that, whatever saving he will make on thisitem will be at the expense of those who control the Harbor Trust in this city. At Sydney - where practically the same Act is in existence, but where the Government lets the wharfs instead of charging a rate upon the goods landed - the Attorney-General will have to pay wharfage rates. Because of the different method employed by the Harbor Trust in Victoria he will escape. I would like to know what justification there can be for seeking to reduce the price of sugar by depriving a local body of income that it ought to receive. A sum of no less than £25,000 is involved, so that the matter is one of some importance. If the Attorney-General’s object is to nationalize the sugar industry during the period of the war, he ought to nationalize it on a decent financial basis.
– On fair terms all round.
– Exactly; and whatever expenses have been legitimately incurred by the company that has hitherto carried on the business ought to be accepted by the Government who have taken control. Otherwise those honorable members who are supporters of the AttorneyGeneral’s proposals will know that the Government has not incurred all the costs that the company had to incur, and no fair comparison will be possible. Besides which the Government will be depriving a local body of £25,000 through an interpretation put upon a legal enactment. I think the Attorney-General ought to give an undertaking that he will treat the whole of the States equally in the matter of wharfage rates.
– I would like to say a word on the point raised by the honorable member for Henty. The position of the Commonwealth Government in regard to wharfage is this : Under the State Act of Victoria, His Majesty’s Governments are exempt from wharfage dues.
– His Majesty’s Government - which means the State Government.
– Being exempt, I took it that I was not authorized to pay money belonging to the Commonwealth to the Harbor Trust. In my opinion, I ought not to pay away Commonwealth moneys unless by law I am compelled to do so. I take it that the honorable member for Henty, as a member of the Victorian Harbor Trust, has his constituents to consider. He represents the people of Victoria, so far as that is concerned. I was representing the people of the Commonwealth. I take it that it is my bounden duty not to pay out Commonwealth money unless I am compelled to do it by law. Mr. Hagelthorn, the Victorian Minister for Public Works, saw me in regard to the matter. He said that he proposed to amend the law so as to make every Government except that of the State of Victoria pay. I had told him that if the State amended the law I would pay; but I informed him that I thought that every Government should pay, and that he could not say that the. Commonwealth approved of the amendment he proposed unless it applied equally to all Governments, including that of the State of Victoria. I told him that if the law was amended we should pay, but not otherwise. The Commonwealth Treasurer is not authorized, and would not be entitled, to pay away money unless he is compelled to do so by law. However, the point has ceased to be important, because it is proposed to amend the State law. Returning to the Bill, I desire once more to say that it relates to the purchase of sugar oversea, and not to refining sugar, and so an agreement is not necessarily involved.
– Raw sugar?
– Yes. This Bill has nothing to do with the refining of the sugar. This is merely the authority to buy. The Leader of the Opposition, apparently, did not realize that he was speaking of a transaction in which we are buyers of sugar from different sellers all over the world. When we come to consider the question of refining and distributing that sugar we must have an agreement with the refiners, but that is not the question before us now.
– It should be the first question decided.
– I hope that the right honorable gentleman understands the purpose for which this £500,000 is needed. It is for the purpose of purchasing sugar, and not for the purpose of refining it.
– Is the raw sugar of any use until it is refined ?
– Let us have one thing at a time. The authority of Parliament is required for the purpose of purchasing sugar. If we cannot come to a satisfactory arrangement with any refinery, we shall have to contemplate eating raw sugar, but that is not the point to-night. We are now asking Parliament to give authority to raise an overdraft with the CommonwealthBank in order to enable us to purchase sugar.
– I do not need information of that kind.
– Then I need not say any more.
.;- I do not oppose the motion, but I wish to point out the inconsistency of the Government. We have seen honorable members on the Ministerial side hold up their hands in holy horror against any proposal to put a tax on tea. Yet this measure, if it means anything at all, means the imposition of a tax on sugar. I am essentially a Protectionist, but not one who advocates Protection for the sake of raising revenue. It is well for us to know what we are doing. Owing to the Prime Minister’s little drought, there has been a shortage in the Australian sugar crop of about 130,000 tons, and sugar must be imported. The object of the proposal before us is to enable the Government to bring that sugar in, and pay duty on it. It means the imposition of a duty of something like £780.000 on the poorer people of Australia. What is the difference between taxing tea and kerosene and taxing sugar, which is just as much a necessity in every family? A proposition was made to the Prime Min- ister some time ago by the sugar producers of Australia which would have enabled the public sugar to be supplied at a lower rate than has been paid for it. The shortage will cover a period from February to July. If the Government’ had felt disposed to help the working men in Australia, they could have acceded to that request, and removed the duty for that period. It would not have affected the sugar-producers one iota. I have, as a Protectionist, every right to insist on the sugar industry receiving a fair amount of protection - more than it has now; but I realize that when the Customs duty does not afford protection, it is time to remove it and let the people get the benefit of the remission. This Bill does not come under the heading of a war measure. It is a taxation measure that will fleece the people to the extent of £780,000 from February to July. If the Government can reconcile their present attitude with their professions to the effect that they are the saviours of the people by sheltering them from heavy burdens, I fail to see -the consistency of their argument. The honorable member for Corangamite reminds me that the sugar-growers offered to make an arrangement whereby the people would receive sugar at 3d. per lb., or less, from February toJuly; but that proposition was turned down for a Socialistic fad, because the Government did not wish to lose the revenue. In the past they have not received much revenue from imported sugar; but now that the crops have been depleted to the extent of 130,000 tons, they grip the opportunity of raising revenue to the extent of £780,000 through the Customs duty. It is a scandalous proposal, and unworthy of a Government who claim to be the friends of the people.
– I am surprised that a Bill of this sort has been placed before us without information having been previously submitted in regard to the necessity for it. We have been told by the Attorney-General that it was very questionable whether the sugar business would come before the House at all. He was asked definitely whether it would be necessary to submit a Bill to this Chamber in regard to the purchase of the sugar crop. His reply was that he did not think it would be because no question of an appropriation of public money was involved in the transaction. How does he reconcile the introduction of this measure with that statement? He told us on 16th July last that he had been able to purchase 140,000 tons of sugar without any difficulty and without any money. How does he reconcile his present action with that statement, seeing that the Commonwealth Bank is to advance half-a-million sterling in connexion with that transaction ? What is the difference between the Commonwealth Bank advancing the money and the Treasury advancing it?
– The right honorable member ought bo recognise that to divide responsibility is a step in the right direction.
– I know that the honorable member does not approve of this flouting of Parliament when it is’ in session, although I can well understand the Government taking decisive action when Parliament is in recess. If we are going to admit that the Attorney-General has a right to enter upon negotiations, involving this country in a vast expenditure, without the authority of Parliament, when it is in session, then we shall admit that we are not required to control the expenditure of the Commonwealth at all.
– Whatis this Bill for?
– To cover a transaction which the honorable gentleman has entered into, and the details of which we do not know.
– I have told the right honorable gentleman three or four times that that is not so. The Bill is intended to confer upon the Government the authority, and to provide it with the money, with which to purchase raw sugar.
– And therefore not sugar in the ordinary sense.
– What has that to do with the point raised by the right honorable member for Swan ?
– Has not the Attorney-General purchased the sugar crop ?
– We are going to purchase it when you have granted us the money.
– I repeat that the Attorney-General has acted in a manner which is quite unprecedented ; that he has flouted Parliament by illegally entering into negotiations involving a large expenditure without consulting it.
Question resolved in the affirmative.
That Mr. Fisher and Mr. Hughes do prepare and bring in a Bill to carry out the foregoing resolution.
Bill presented by Mr. Hughes, and read a first time.
Northern Territory: Work at Pine Creek.
Motion (by Mr. Hughes) proposed -
That the House do now adjourn.
.- There is a matter that I wish to bring under the notice of the Minister of Home Affairs. A day or two ago I submitted to him a telegram in reference to work at Pine Creek, and received a reply from him. My telegram stated that firemen were being imported from Queensland when suitable married men were waiting on the spot for the job. To that the Minister replied -
I desire to inform you that the local autho rity in the Northern Territory, having asked for a driver and a fireman, our list of applicants was referred to, and a driver resident in the Territory was appointed,subject to passing tests for eyesight, &c.
No fireman resident in the Territory was on the list, and the local authority, not mentioning one as being locally available, one resident in Queensland, who was on the list, was appointed.
I wired the latter part of that reply to my informant, and to-day received the following answer -
Ten local applicants for fireman, experienced. One man promised fireman’s job from resident engineer, then turned down for imported man, not a fireman. I believe local publican is driving with practically no experience. Please demand inquiry why local applicants were held back. (Sgd.)robertmurray.
These men are in the Northern Territory, and have no representation in this Chamber. Apparently the officers have just referred to the list which has been taken as showing the place from which the firemen are selected. Consequently, a man may be sent from Queensland, when there are ten local applicants for the job. I do not blame the Minister in this matter, but I scarcely think that his officers can be treating him fairly. I trust Chat he will have an inquiry made with a view to ascertaining whether this man Murray is speaking the truth. It is scarcely fair to those who are on the spot, and who know what is required from A to Z, to import firemen from Queensland who would have to “ find their feet “ before understanding what is required there.I hope that the Minister will inquire into the matter so that I may reply to this gentleman, and, if possible, see that justice is done to local applicants.
– I shall look into the matter again, and refer it to the Engineer-in-Chief. If my memory serves me, a list was kept, and the next applicant on the list was one from Queensland. I cannot conceive that there is a number of eligible men near the work. They are a remarkably quiet lot if they have not brought their claims before the officer in charge.
Question resolved in the affirmative.
House adjourned at 11.6 p.m.
Cite as: Australia, House of Representatives, Debates, 31 August 1915, viewed 22 October 2017, <http://historichansard.net/hofreps/1915/19150831_reps_6_78/>.