House of Representatives
1 September 1915

6th Parliament · 1st Session

  1. House of Representatives
  2. 6th Parliament
  3. 1915

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

page 6531

PETITION

Mr. JOSEPH COOK presented a petition from May R. Nott and other women of New South Wales praying that the whole energies of our legislators be directed to bringing the war to a successful issue, and that any attempt to amend the Constitution be postponed until peace be established.

page 6532

CASE OF JULIUS BLAU

Mr KELLY:
WENTWORTH, NEW SOUTH WALES

– I wish to make a personal explanation. In this morning’s Argus is reported a statement about the Blau case made yesterday by the AttorneyGeneral. As it is short, I shall, with your permission, Mr. Speaker, read it, and explain my position concerning it. I do not propose to touch on any new ground, and desire only to make my own position quite clear. The Argus report of the Attorney-General’s remarks is as follows: -

Mr. Kelly had also said that the AttorneyGeneral knew when he allowed Blau to go to America that he was to meet one of the heads of the German scent firm there, and that the money Blau got from the sales of eau de cologne here would be remitted to the exporters in America, who would pay the head office in Germany. It was absolutely untrue that ho knew that Blau would meet the head of the German scent firm in America, and he had never approved of the importation of eau de cologne into Australia.

Of course, I accept the assurance of the Attorney-General that he did not know, but my reasons for assuming that he did know were-first, that he had informed the Minister for the Navy that he had gone very closely into the whole matter before recommending that Blau be allowed to leave Australia j and, secondly, that the papers disclose that on several occasions his attention had been directed by responsible advisers of the Government to correspondence between Blau and an American firm before that) recommendation was given. This is an appendix to the censor’s report, to which the honorable gentleman’s attention was particularly directed. It is an extract from a letter dated 23rd October, 1914: -

From Julius Blau and Sons, Sydney, to Muhlens and Kropff, New York, asking that arrangements be made for Blau to meet either Muhlens or Lemcke from Cologne in America, when he goes there next January.

As to the payment of money to tho German firm, my reason for believing that the Attorney-General must have known that this was the intention is the existence of a letter from Muhlens and Kropff, New York, to J. Blau and Sons, Sydney, dated 15th November, 1914, to which the honorable gentleman’s attention was particularly directed by the Defence Department: - “ We acknowledge receipt of your letter of - 29th .August, and have taken due notice of all your remarks. We at once transmitted a copy of your letter to Messrs. Muhlens, in Cologne.

In accordance with your request, we cabled you on 23rd September as follows : - -‘ Send letters our care and sight draft on London payable to us. - Muhlens and Kropff.’ Of course, it is (self) understood that all remittances for Cologne which you send in our care are for the account of Eau de Cologne and Parfumerie, Fabrik No. 4711, Glochengasse, Cologne, Germany, and for which they will credit your account.”

The attention of the Attorney-General was particularly directed to that letter before permission was given to Blau to* leave Australia.

The honorable gentleman is reported to have said yesterday.: -

Mr. Kelly had further stated that the statutory declaration made by Blau showed that a man named Curtis was Blau’s solicitor, and also Blau’s son-in-law. The statutory declaration said nothing of the kind.

And I did not say anything of the kind. What I said was that the statutory declaration which the Attorney-General read to the House .five days before he stated that he could not be expected to know that Curtis was Blau’s son-in-law, showed conclusively over Blau’s signature that Curtis was Blau’s son-in-law.

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

– By way of personal explanation, I wish to say that when permission was given to Blau to visit America I did not know that he proposed to see Muhlens and Kropff. On the contrary,. Blau, in his statutory declaration, said that he desired to go to America for the purpose of purchasing plant to manufacture in Australia eau de cologne No. 4711. He declared that he would not, directly or indirectly, communicate, or have anything to do with any German, or with the agent of any German firm, and gave a bond for the fulfilment of that promise. Muhlens and Kropff, I understand, are makers of eau de cologne. It is not correct to say that I knew that Blau was going to meat any member of this. firm. Not only did I not know it, but in a statutory declaration Blau was expressly bound to the contrary, and a bond for £6,000 was given binding him not to communicate with the firm. The British Consul in New York and Mr. Neilsen were both asked to take steps to ascertain with whom Blau communicated, and what he did in America. On the file to which the honorable member has had access there are reports from detectives, which set out where Blau went and what he did.

Mr Kelly:

– Those reports stated that Blau had left San Francisco before the detectives were invited to make an investigation.

Mr HUGHES:

– That does not apply to the request for an investigation in New York.

Mr Kelly:

– That is not clear from the papers.

Mr HUGHES:

– The honorable member may not have seen the report to which I refer, but It i& among the papers. It has been asserted that the evidence against Blau of having traded with the enemy warranted a prosecution, but there is no truth in that statement. No case received more careful consideration than this one. And I was satisfied that proceedings under the Trading with the Enemy Act would not be successful. This opinion was strongly held by Mr. Garran, secretary to the Department, who set out his VIews in a memorandum, which is final and conclusive. The memorandum is as follows : -

Blau’s case came before this Department in connexion with correspondence forwarded by the censor. It was carefully investigated; a search was made of Blau’s correspondence; and I formed the opinion that there was no evidence whatever to warrant a prosecution for trading with the enemy. The AttorneyGeneral, with whom I discussed the matter, concurred in this view.

No written opinion was given, because the matter did not come in to the Department for advice.

page 6533

QUESTION

R.K.G., 31/8/1915

Mr HUGHES:
ALP

– Yesterday. Does the honorable member suggest that Mr. Garran is lying?

Mr Kelly:

– Of course I do not.

Mr HUGHES:

– Then what is he grinning at?

Mr Kelly:

– There is one statement in it utterly and inexcusably wrong.

Mr HUGHES:

– If it comes to a question of credibility, my word or that of Mr. Garran will be taken before any of the observations of the honorable member. These .are the facts,, and nothing but the malignity or invention of the honorable member can touch them.

Mr KELLY:

– As a matter of personal explanation, I do not desire to pit my reputation against that of Mr. Garran, who is an officer in the Department of the AttorneyGeneral, and with whom I am not concerned. What I meant by my interjection was that I have myself seen on the file of the Attorney-General that this case was submitted for his opinion, and that repeated requests for an opinion on the case were made by the Defence Department.

Mr Hughes:

– That is not correct.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES

– Will the AttorneyGeneral lay the Blau papers on the table of the House, so that this conflict of opinion as to the facts may be settled ?

Mr HUGHES:

– The Blau papers were made available to honorable members for about a fortnight or three weeks. Honorable members can see them at any” time, but I do not propose to lay them on the table of the House, because they contain information that should not be made public. Further, the case is now before the Court, and comments of any kind upon it are not proper.

Mr Joseph Cook:

– The AttorneyGeneral is like a little slippery eel.

Mr SPEAKER:

– The honorable member must withdraw that reflection.

Mr Joseph Cook:

– Certainly. May I ask if you heard his fearful expression just now when he accused members of the Opposition of wicked malignity?

Mr SPEAKER:

– I do not require the Leader of the Opposition to chastise me in any way. If any remarks were made to which’ the honorable member objects, he had a proper course to follow in order to get them withdrawn ; such remarks will always be withdrawn while I occupy the chair. In the case of the right honorable gentleman himself, his remark was brought under my notice so palpably that I had to call upon him to withdraw it.

Mr Joseph Cook:

– Do I understand that you rule that, unless an observation is brought directly under your notice, it may pass ?

Mr SPEAKER:

– No ; the right honorable gentleman must not run away with that idea.

Mr Joseph Cook:

– Then I bring the reflections cast by the Attorney-General under your notice, and ask that they be withdrawn.

Mr SPEAKER:

– The AttorneyGeneral must have used the words to which the Leader of the Opposition objects in the course of his remarks. The right honorable gentleman should have taken objection to them at the time.

page 6534

COMMONWEALTH BANK

Mr SPEAKER:

– I have received the following from the Governor of the Commonwealth Bank: -

Commonwealth Bank,

Sydney, 31st August, 1915

Sir,

I have the honour to hand you herewith, in accordance with section 20 of Commonwealth

Bank Act 1911, a true copy of the aggregate balance-sheet of the Commonwealth Bank of Australia at 30th June, 1915, and of the Auditor-General’s report thereon.

I have the honour to be, Sir,

Your obedient servant,

Denison Miller,

Governor

page 6535

AUDITOR-GENERAL’S REPORT

In accordance with the provisions of Section 20 of the *Commonwealth Bank Act* 1911,I have to report that the Aggregate Balance Sheet of the Commonwealth Bank of Australia for the Half-Year ended the 30th June, 1915, has been examined by officers under my direction, as well as by myself. The several items of the accounts, as above set forth, have been verified with the books and vouchers, with the securties held by the Bank, and with Statements certified by the respective Managers and Accountants of the Bank. I have obtained all the information and explanations required by me. The said Balance Sheet has been prepared in the form prescribed by the Regulations under the Act, and, in my opinion, it exhibits a correct view of the affairs of the Bank. I have also to report that the sum of £5,700,623 18s. 2d. above set forth was held by the Bank in Gold, Coin, and Bullion for the Treasurer of the Commonwealth. (Sgd.) J. W. ISRAEL, Auditor-General for the Commonwealth. 31st August, 1915. We certify that the foregoing copy of Balance Sheet and Report has been compared by us with the original document and found to be a true copy. {: .page-start } page 6535 {:#debate-5} ### H. T. ARMITAGE {: .page-start } page 6535 {:#debate-6} ### D. B. MURDOCH Papers laid on the table, and ordered to be printed. {: .page-start } page 6535 {:#debate-7} ### QUESTION {:#subdebate-7-0} #### KALGOORLIE TO PORT AUGUSTA RAILWAY Mr. Gilchrist's Allegations {: #subdebate-7-0-s0 .speaker-KFP} ##### Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA -- Has the Prime Minister given any further consideration to the sworn allegations made by **Mr. Gilchrist** concerning the Kalgoorlie to Port Augusta railway, and has he seen the announcement in the *Age* this morning that the Caucus of honorable members opposite has decided to order an inquiry into them? {: #subdebate-7-0-s1 .speaker-F4N} ##### Mr FISHER:
Prime Minister · WIDE BAY, QUEENSLAND · ALP -- The honorable member should address his question to the Minister of Home Affairs. For my own part, I say that it is not a storm in a teacup, but in a thimble. {: .speaker-KFP} ##### Mr RICHARD FOSTER: -- Then may I ask the Minister of Home Affairs what he has to say in regard to the matter ? {: #subdebate-7-0-s2 .speaker-JM8} ##### Mr ARCHIBALD:
Minister for Home Affairs · HINDMARSH, SOUTH AUSTRALIA · ALP -- In answer to the honorable member's question, I may as well state the actual position. I ask leave to make a statement to the House. Leave granted. {: .speaker-JM8} ##### Mr ARCHIBALD: -- Some weeks ago **Senator de** Largie called my attention to the fact that he had received a letter containing damaging statements concerning the Kalgoorlie to Port Augusta railway and its management. {: .speaker-KFP} ##### Mr Richard Foster: -- At which end of the line? {: .speaker-JM8} ##### Mr ARCHIBALD: -- At the western end. I told **Senator de** Largie that I could take no notice of the letter, and that he would need to come before me with something on which I could take action. A few days afterwards he handed to me a sworn declaration, which I read and returned to him, but, later on, when I asked him whether he would be good enough to supply me with a copy of the sworn declaration, because I was anxious to consult the Engineer-in-Chief, **Mr. Bell,** and the officer in control of transport and traffic, he declined to do so. On the Saturday morning before I left for Adelaide, **Mr. Bell** called on me, and I thereupon dictated to a clerk, as best I could from memory, what I had read in the sworn declaration, and asked **Mr. Bell** to look into the matter, and supply me with a report upon it on my return from. Adelaide, because I thought it was a matter that required careful investigation. It has been stated in the press that the allegations are not very accurate. Much appeared in the sworn declaration, but, so far as I remember, it applied to only seven points. I feel very sore about this matter, not so much on my own behalf, as on behalf of the Engineer-in-Chief and **Mr. Poynton.** The EngineerinChief, before he came over to the Commonwealth, had seen long service in Queensland, and on no occasion has there been an inquiry into the conduct of the business intrusted to him. It is true that **Mr. Bell** came over to the Commonwealth at a time when the conditions were pretty muddled; and he, together with **Mr. Poynton,** feels it very keenly that an inquiry of this character should have been asked for, when neither myself, as the head of the Department, nor he was in a position to know what the charge really was. It was only fair that I should have received the copy of the memorandum and sworn declaration. {: .speaker-JWG} ##### Mr Fowler: -- Why did not **Senator de** Largie give you a copy? {: .speaker-JM8} ##### Mr ARCHIBALD: -- The honorable member had better ask **Senator de** Largie. {: .speaker-JWG} ##### Mr Fowler: -- Did **Senator de** Largie give any reason for refusing it? {: .speaker-JM8} ##### Mr ARCHIBALD: -- He gave no reason. {: .speaker-JWG} ##### Mr Fowler: -- Did you ask him why he refused it? {: .speaker-JM8} ##### Mr ARCHIBALD: -- I may be wrong, but my experience of the world is that not much good results from kicking up a noise and having a wrangle. {: .speaker-F4S} ##### Mr Joseph Cook: -- Not when you are on that side, certainly! {: .speaker-JM8} ##### Mr ARCHIBALD: -- However, the matter is under the consideration of the Cabinet at the present time, though what action the Cabinet may take I cannot say. I should like to add that one portion of the statement made reflects on the brake-power on the east-west railway as not being sufficiently safe; and this is a serious matter that no one can treat lightly. The following is a report that has been furnished by **Mr. Henderson,** who for long was a trusted officer on the Victorian railways, and whose opinion ought to be of value : - >At present the proportion of vehicles running on the Kalgoorlie-Port Augusta railway fitted with Westinghouse brake equipment is as follows: - > >Locomotives, all fully equipped. > >Cars and freight construction stock, 30 per cent. > >In this regard the Commonwealth railways are in a better position than that in which the State railways operated normal traffic until comparatively recent years. > >The equipment of freight stock throughout the States has been gradually taking place during the last fifteen years, and several of the States have not yet fully equipped their rollingstock, notably Queensland and Western Australia. > >Ithas not been the practice in the past to equip stock used for construction purposes with Westinghouse brake, but, in view of the long leads on the Kalgoorlie-Port Augusta railway, it was determined that, in order to provide the greatest possible measures of safety during construction and general traffic on the open portions of the line, to equip the whole of the vehicles with the Westinghouse brake as early as possible. To enable this to be done, complete Westinghouse brake equipment was ordered on 7th December, 1914, but owing to the Empire being in a state of war, considerable delay has been experienced in obtaining this material. However, advice has now been received that consignments have reached Port > >Augusta and Kalgoorlie, and the fitting up of the stock is taking place with all possible speed. {: .speaker-JWG} ##### Mr Fowler: -- Who is this Gilchrist? {: .speaker-JM8} ##### Mr ARCHIBALD: -- He was at one time a clerk in the Victorian Railway Department, and came over to the Commonwealth. At first he was employed in the office in William-street, but, owing to his work not being very satisfactory, he was transferred by **Mr. Bell** to Kalgoorlie. There, again, his work was not satisfactory, and he was recalled to Melbourne. **Mr. Bell,** with the idea of giving the young man a fair chance, tendered the best advice to him he could, and desired that he should return to Kalgoorlie to " make good." However, Gilchrist enlisted for service. My own impression is, if I have a right to express it, that this is only one of several instances in which **Mr. Bell,** if he has committed an error of judgment - for which, however, I do not condemn him - has erred in doing his best to give a man a ' ' good show ' ' before taking the step of removing him from the Department. It would, however, have been a good thing for the Department if this man had had his "walking ticket" long ago. {: #subdebate-7-0-s3 .speaker-KLM} ##### Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936 -- In justice to a man, whom I do not know from a crow, but whose letter appears in to-day's *Age,* while it is also stated that a statutory declaration made by him has been lodged at the office of that newspaper, I desire to ask the Minister of Home Affairs whether **Mr. D.** L. Gilchrist was not requested by **Mr. Deane** to join the service of the Commonwealth Railway Department ? {: .speaker-JM8} ##### Mr ARCHIBALD: -- I have no knowledge of the matter. I ask the honorable member to give notice of his question. {: #subdebate-7-0-s4 .speaker-JUV} ##### Mr McWILLIAMS:
FRANKLIN, TASMANIA · REV TAR; ANTI-SOC from 1906; LP from 1910; NAT from 1917; CP from 1920; IND from 1928 -- In view of the unsatisfactory statements that are being made regarding the East to West railway, will the Prime Minister consider the advisableness of referring the whole question either to the Public Works Committee, or to a Select Committee appointed for the purpose? {: .speaker-F4N} ##### Mr FISHER: -- I should have preferred this question to be addressed to the Minister of Home Affairs, but I am prepared to answer it. Having regard to the magnitude of the work, I think that there has been less trouble in connexion with it than has occurred in respect of the construction of any other line of which I know. I am glad that since the work was first entered upon there have been Administrations from both parties in this Parliament, so that honorable members on both sides know what are the difficulties associated with it. There may be administrative and other difficulties arising here and there, but taken as a whole, the work has been carried out expeditiously, and fairly cheaply considering the remuneration paid to the employees. {: .page-start } page 6537 {:#debate-8} ### QUESTION {:#subdebate-8-0} #### NEW ZEALAND TARIFF {: #subdebate-8-0-s0 .speaker-KEV} ##### Mr FENTON:
MARIBYRNONG, VICTORIA -- Has the Minister of Trade and Customs noticed that, since the delivery of the Budget speech of **Sir Joseph** Ward, intimating that it was intended to increase the Customs duties in the Dominion, prices of a number of articles have gone up, and that there is now in the New Zealand Parliament a Bill having for its object the prevention of the exploitation of the public by certain merchants there? I should like to know from the Minister of Trade and Customs whether there has been any undue increase in prices in Australia since the Tariff was laid on the table of this House, and, if so, whether he has any power to deal with the matter? {: #subdebate-8-0-s1 .speaker-KWL} ##### Mr TUDOR:
Minister for Trade and Customs · YARRA, VICTORIA · ALP -- I have not noticed the statement regarding New Zealand. The Parliament of the Dominion is in an entirely different position from that of our own, since the former is sovereign over the whole country in which it enacts its laws. I am not sure whether, since the increase in the duties in Australia, prices have been increased, but I believe they have in a number of cases. The Commonwealth Parliament has no power in this connexion, no matter to what extent prices may be raised. {: .page-start } page 6537 {:#debate-9} ### QUESTION {:#subdebate-9-0} #### MAIL CONTRACTS {: #subdebate-9-0-s0 .speaker-KR8} ##### Mr SHARPE:
OXLEY, QUEENSLAND -- Does **Mr. Anderson** in his report refer to Deputy PostmastersGeneral being asked by the Central Office for certain information *re* mail contracts, and state that New South Wales took weeks to supply the information ? Does he also state that in another State, the information was supplied in two days ? Will the Postmaster-General say in what State the latter was the case ? {: #subdebate-9-0-s1 .speaker-KUF} ##### Mr SPENCE:
Postmaster-General · DARLING, NEW SOUTH WALES · ALP -- I cannot answer the honorable member's question off-hand. {: .speaker-F4S} ##### Mr Joseph Cook: -- It must be Queensland. {: .speaker-KUF} ##### Mr SPENCE: -- Ifc would not be fair to single out any one State, when other States have been equally alert. It was only when I received the report that I knew that in New South Wales there had been unnecessary delay in obtaining reports from inspectors, while in other States the authorities had acted promptly on the information in the Department. I think that, perhaps, South Australia was the quickest to reply, while Queensland did very well. {: .page-start } page 6537 {:#debate-10} ### QUESTION {:#subdebate-10-0} #### LOSS OF THE ENDEAVOUR Payment of Compensation {: #subdebate-10-0-s0 .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Is the Minister of Trade and Customs aware that the widows and children of those who were lost in the *Endeavour* have not yet received any of the money which the Commonwealth agreed to pay them ? {: #subdebate-10-0-s1 .speaker-KWL} ##### Mr TUDOR:
ALP -- I am certainly not aware that such is the case, because I know of some women who have been paid. The money is available, and if the honorable member will give me any particular cas© I shall have it looked into. {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I shall give the Minister the letter containing the information on which I asked the question. It refers to the widow of the commander. {: .speaker-KWL} ##### Mr TUDOR: -- The matter shall be attended to immediately. {: .page-start } page 6537 {:#debate-11} ### QUESTION {:#subdebate-11-0} #### EXPEDITIONARY FORCES Recall of Medical Officers: Pay of Returned Soldiers {: #subdebate-11-0-s0 .speaker-KNH} ##### Mr MATHEWS:
MELBOURNE PORTS, VICTORIA -- As Parliament is likely to adjourn to-morrow, will the Minister for the Navy lay upon the table all papers in connexion with the recall of certain medical officers from the hospital at the front? {: #subdebate-11-0-s1 .speaker-KK9} ##### Mr JENSEN:
Minister for the Navy · BASS, TASMANIA · ALP -- I shall bring the honorable member's question under the notice of the Minister of Defence. I do not expect he will have any objection to complying with the request. {: #subdebate-11-0-s2 .speaker-KLM} ##### Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936 -- Having regard to the fact that even returned wounded or injured soldiers cannot live without food, will the Minister for the Navy request the Minister of Defence to arrange that the two unfortunate men whose cases were brought under the notice of the House through the Melbourne *Herald* and myself should receive the amount of 6s. per day which has been repeatedly stated in this House will be paid to every wounded or invalided soldier returned to Australia? {: .speaker-KK9} ##### Mr JENSEN: -- I shall bring the question under the notice of the Minister of Defence. {: .page-start } page 6538 {:#debate-12} ### QUESTION {:#subdebate-12-0} #### APPLICATION OF PROCEEDS OF INCOME TAX {: #subdebate-12-0-s0 .speaker-F4S} ##### Mr JOSEPH COOK: -- Replying to a question by me yesterday the Prime Minister stated that the £4,000,000 estimated to be raised by means of the income tas would be devoted to war purposes. If the revenue from that tax is to be allocated to war purposes, how does the Treasurer propose to reduce the difference of £3.000,000 or £4,000,000 sterling between his estimated income anu outgoing for the ordinary services of the year? {: #subdebate-12-0-s1 .speaker-F4N} ##### Mr FISHER:
ALP -- I refer the right honorable member to the financial statement I submitted to the House. No one can answer a question of that kind satisfactorily at the present time, but our accounts will be correctly balanced, without departing from the arrangements I have indicated. {: .page-start } page 6538 {:#debate-13} ### QUESTION {:#subdebate-13-0} #### BI-MONTHLY SCHEDULE {: #subdebate-13-0-s0 .speaker-KEX} ##### Mr FINLAYSON:
BRISBANE, QUEENSLAND -- Can the Minister of Home Affairs say when we may expect the next bi-monthly schedule, which is already overdue, to be published ? {: #subdebate-13-0-s1 .speaker-JM8} ##### Mr ARCHIBALD:
ALP -- I think the schedule should be in the hands of honorable members in the course of a couple of days. {: .page-start } page 6538 {:#debate-14} ### QUESTION {:#subdebate-14-0} #### NEWSPAPER CENSORSHIP {: #subdebate-14-0-s0 .speaker-KEA} ##### Mr KELLY: -- Will the Minister for the Navy have inquiries made into the statement appearing in the *Argus* this morning, in regard to news matter not directly referring to the war, that the censor on three occasions forbade publication of news in the *Argus* which was allowed to appear in the *Age%* Will the Minister inform the House to-morrow whether that statement is a fact? {: #subdebate-14-0-s1 .speaker-KK9} ##### Mr JENSEN:
ALP -- Yes. {: .page-start } page 6538 {:#debate-15} ### QUESTION {:#subdebate-15-0} #### COMMONWEALTH WAR LOAN {: #subdebate-15-0-s0 .speaker-L4X} ##### Mr PARKER MOLONEY:
INDI, VICTORIA · ALP -- Has the Prime Minister any later information to give the House as to the latest demonstration of the confidence of the public in the Government by way of subscriptions to the war loan? {: #subdebate-15-0-s1 .speaker-F4N} ##### Mr FISHER:
ALP -- I hope to be able to make a statement to the House this afternoon. {: .page-start } page 6538 {:#debate-16} ### HOUR OF MEETING Motion (by **Mr. Fisher)** agreed to - >That the House, at its rising, adjourn till 10.30 a.m. to-morrow. {: .page-start } page 6538 {:#debate-17} ### RIVER MURRAY WATERS AGREEMENT BILL Motion (by **Mr. Fisher)** agreed to - >That leave be given to bring in a Bill for an Act to ratify and provide for carrying out an agreement entered into between the Prime Minister of the Commonwealth and the Premiers of the States of New South Wales, Victoria, and South Australia respecting the River Murray and Lake Victoria, and other waters, and for other purposes. {: .page-start } page 6538 {:#debate-18} ### QUESTION {:#subdebate-18-0} #### INITIATIVE AND REFERENDUM {: #subdebate-18-0-s0 .speaker-K5D} ##### Mr KING O'MALLEY:
DARWIN, TASMANIA -- Will the Prime Minister state when he proposes to bring in a Bill to place the initiative and referendum on the statute-book ? {: #subdebate-18-0-s1 .speaker-F4N} ##### Mr FISHER:
ALP -- At an early date, and during the present session. {: .page-start } page 6538 {:#debate-19} ### QUESTION {:#subdebate-19-0} #### ALLOWANCE POST OFFICES {: #subdebate-19-0-s0 .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- Has the PostmasterGeneral yet looked into the schedule of payments to the keepers of allowance post offices, and, if so, will he say whether he intends to continue reducing the allowances ? {: #subdebate-19-0-s1 .speaker-KUF} ##### Mr SPENCE:
ALP -- I am sorry that the honorable member and other members do not give me specific instances. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- I have mentioned one particular case. {: .speaker-KUF} ##### Mr SPENCE: -- These general statements by honorable members do not help me. Months ago I obtained a list or allowance office-keepers in Victoria, and I instructed .that there should be no reduction of the allowances. I have suggested that in other States the reduction should not be enforced, although it might be strictly in accordance with the schedule. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- But they are enforcing the reductions. {: .speaker-KUF} ##### Mr SPENCE: -- I cannot check these cases unless honorable members give me specific instances. I am stopping the reductions and am inquiring whether the allowances cannot be readjusted on some more satisfactory basis. It is difficult to get an opportunity of personally looking into the question, because of the extent to which parliamentary business has kept me occupied lately. {: .page-start } page 6539 {:#debate-20} ### QUESTION {:#subdebate-20-0} #### BRITISH CONCESSIONS TO UNITED STATES {: #subdebate-20-0-s0 .speaker-JRP} ##### Mr BOYD:
HENTY, VICTORIA -- In this morning's newspapers there appears a cablegram to the -effect that the British Ambassador at Washington, **Sir Cecil** Spring Rice, announces that Great Britain will permit German and Austrian goods for the American Christmas trade to pass the naval blockade if proof of the purchase is submitted to the British Embassy. In view of this statement, which carries on its face the fact that payment for these goods will be allowed, and that the money so paid will be used to prosecute the war against the Allies, I desire to ask the Prime Minister whether he will take into consideration the advisability of sending a cablegram to the British Government stating that Australia disapproves of such a policy? {: #subdebate-20-0-s1 .speaker-F4N} ##### Mr FISHER:
ALP -- In no circumstances am I prepared, on behalf of the Commonwealth Government, to make any statement founded on a press report relating to such a matter. When official information on the subject is in our possession, we shall be bound as a Government to give it consideration, and to tell this Parliament what action we propose to take. I am sure that the honorable member recognises that it is the duty of this Government to heartily support everything done by the British Government, even if we differ from them, until they do something that we feel is done mistakenly. {: .speaker-JRP} ##### Mr Boyd: -- But this sort of thing is only playing al war; it is not fighting. {: .speaker-F4N} ##### Mr FISHER: -- I decline to accept the published statement as setting out the policy of the British Government. Even if it did I should still decline to make a statement as to what we should do. {: .speaker-KEA} ##### Mr Kelly: -- It is of no use, to speak about it here. {: .speaker-F4N} ##### Mr FISHER: -- No. {: .page-start } page 6539 {:#debate-21} ### QUESTION {:#subdebate-21-0} #### EXPEDITIONARY FORCES Military Chaplains: Deferred Pay: Hospital Control est Egypt : Alllocations of Pay: Antecedents of Military Officers. {: #subdebate-21-0-s0 .speaker-JNV} ##### Mr BAMFORD:
HERBERT, QUEENSLAND asked the Minister for the Navy, *upon notice -* {: type="1" start="1"} 0. Whether the Minister will say how many chaplains have been appointed to accompany the Australian troops either to the front or on the voyage of the transports? 1. On what dates were applications made by those who were appointed? 2. Did all those applying receive appointments ? 3. What were the respective ages of those to whom appointments were given? 4. On what date was the regulation issued that chaplains must be of robust physique, and not more than forty-five years of age? 5. Were appointments made upon the recommendation of any individual, or of any committee or any organized body; if so, by what individual, committee, or body? {: #subdebate-21-0-s1 .speaker-KK9} ##### Mr JENSEN:
ALP -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. The following is the number of chaplains who have been appointed to the Australian Imperial Force: - 2 and 3. Applications of clergymen desirous of appointment are made to, and dealt with by, the Chaplains-General of the Anglican, Roman Catholic, Presbyterian, and Methodist denominations, and in the case of the Baptist, Congregational, and Churches of Christ, by the governing heads of these religious bodies. No information is therefore available in the Department as to the dates on which applications were made by those appointed, and as to whether all clergymen who apply receive appointments. {: type="1" start="4"} 0. The ages of chaplains appointed range from 27 7-12 to 61 1-12 years. 1. On 24th July, 1915, a cablegram was received from the military authorities at the Dardanelles requesting that Chaplains selected for continuous service should be robust and between the age limits of 30 and 45 years - and Chaplains-General have been asked to conform with these conditions in the selection of chaplains. 2. Appointments are made on the nomination of the respective Chaplains-General of the Anglican, Roman Catholic, Presbyterian, and Methodist denominations, and in the case of the Baptist, Congregational, and Churches of Christ, on the recommendation of the governing bodies of these denominations, with whom the selection rests. {: #subdebate-21-0-s2 .speaker-KFC} ##### Mr FLEMING:
ROBERTSON, NEW SOUTH WALES asked the Minister for the Navy, *upon notice -* {: type="1" start="1"} 0. Where a soldier leaving for the front nominates his brother to receive his deferred pay to hand to their mother, and the brother also enlists, having allotted his deferred pay to his mother but having neglected to do the same with that of his brother, what course should the mother adopt to obtain such pay? 1. ls there not some better way than that suggested in letter A. 15 ( 11 ) 829," dated 20th August, that " it will be necessary for an order to he obtained from the original allottee, or failing this, fresh allotment should be made by the soldier in favour of his mother if he so desires"? {: .speaker-KK9} ##### Mr JENSEN: -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. Deferred pay is not assignable, and is not payable until completion of service or the death of a member. 1. Under a recent amendment of the Defence Act the Minister may deduct from the pay of a member of Australian Imperial Force such sum as he thinks fit for the support of a dependant. The mother should apply through the District Paymaster for an allotment of pay from each of her sons, when the matter will receive immediate attention. The powers of the Minister here referred to are usually applied only in cases where distress is shown and evidence on this point should in the particular case under notice be furnished with the application to the District Paymaster {: #subdebate-21-0-s3 .speaker-JRP} ##### Mr BOYD: asked the Minister for the Navy, *upon* *notice -* {: type="1" start="1"} 0. Whether Surgeon-General Williams is still in Egypt in charge of the hospitals? 1. If so, for what purpose is Colonel Fetherston being sent to Egypt? {: .speaker-KK9} ##### Mr JENSEN: -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. No. Surgeon-General Williams is performing duties in England in connexion with invalided Australian soldiers. 1. With a view to securing the highest degree of efficiency, Colonel Fetherston has been detailed to visit Egypt and other centres of operation for the purpose of inquiring and reporting to this Government in regard to Australian medical services, and as to the arrangements for the transport of sick and wounded in Egypt and the Mediterranean. He is authorized to carry out, under the respective Directors of Medical Service, such rc-organization of the Australian Medical Services as may be necessary. {: #subdebate-21-0-s4 .speaker-KFE} ##### Mr GREGORY:
DAMPIER, WESTERN AUSTRALIA asked the Minister for the Navy, *upon notice -* {: type="1" start="1"} 0. ls it according to instructions that the wife of a sergeant, who had gone to the front and who had left an order that she should receive 9s *lid.* per day from his pay, is receiving only 4s. per day pending word being received by the Department from Egypt? 1. Will he instruct that the full amount shall be made payable in all cases, subject to the demand being in duo order? {: .speaker-KK9} ##### Mr JENSEN: -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. The question evidently refers to the difference between the pay of a private (appointed Acting Sergeant to reinforcements until the reinforcements concerned are absorbed into its parent Unit) and the pay of Sergeant. The answer to the question is, therefore, Yes; with the exception that the additional amount earned (which is not pay proper, but extra duty pay) may, as regards the amount earned before embarkation, be paid with any issue of allotment money. This reduces the outstanding amount to probably that earned during the voyage only. 1. No demand in the case , of an Acting Non-Commissioned Officer would be in due order if made for a sum greater than the sum which may be allotted by *a* private, for the reason that such acting ranks may revert to privates at any time, and will do so on the termination of the voyages unless vacancies exist in the Units to which they belong. In the latter event, and if they are successful in obtaining permanent promotion to Non-Commissioned Officer rank, an increased allotment would be accepted. **Mr. FLEMING** (for **Mr. Orchard)** asked the Minister for the Navy, *upon notice -* {: type="1" start="1"} 0. Whether the Captain F. H. Sabiel, whose name appears in the list of medical men appointed to the New South Wales Expeditionary Forces by the Federal Executive Council on the 18th instant, is a relative of the German chemist of that name carrying on business in Hunter-street, Sydney, and against whom a demonstration was recently made? 1. Have the authorities inquired into the parentage and antecedents of Captain J. Blaubaum, whose name appears in the same list? {: .speaker-KK9} ##### Mr JENSEN: -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. Son. 1. Yes. {: .page-start } page 6540 {:#debate-22} ### QUESTION {:#subdebate-22-0} #### MECHANICS FOR MUNITION WORKS {: #subdebate-22-0-s0 .speaker-JTC} ##### Mr BURCHELL:
FREMANTLE, WESTERN AUSTRALIA asked the Minister for the Navy, *upon notice -* {: type="1" start="1"} 0. Whether his attention has been drawn to the statements in the daily newspapers of Monday last that competent mechanics capable of manufacturing munitions are being drawn from Australia, and that the Railways Commissioners of New South Wales are encouraging these men leaving Australia by promising that leave of absence would be granted? 1. If so. what action the Government intend taking to see that suitable men are not allowed to leave Australia, but are retained here for our own munition manufacture? {: #subdebate-22-0-s1 .speaker-KK9} ##### Mr JENSEN:
ALP -- The answers to the honorable member's questions are - {: type="1" start="1"} 0. The Defence Department is aware that representatives of British firms are endeavouring to secure competent mechanics for munition work in England, but it is not aware of any encouragement being granted by the New South Wales Railways Commissioners. 1. Arrangements are being made to enrol all men employed in manufacture of munitions in an Industrial Corps, but it is impracticable to prevent departure for England if they are desirous of going. {: .page-start } page 6540 {:#debate-23} ### QUESTION {:#subdebate-23-0} #### EMPLOYMENT OF RETURNED SOLDIERS {: #subdebate-23-0-s0 .speaker-KFJ} ##### Sir JOHN FORREST:
SWAN, WESTERN AUSTRALIA asked the Prime Minister, *upon notice -* >Whether, in view of the decision of the Government to give preference of employment to returned soldiers, it is proposed to rescind Statutory Rules 1915, No. 127, giving preference of employment to industrial unionists? {: #subdebate-23-0-s1 .speaker-F4N} ##### Mr FISHER:
ALP -- It is proposed to amend Public Service Regulation 121 (Statutory Rules, 1915, No. 127), by adding the following sub-regulation : - lc. Notwithstanding anything contained in this regulation preference for temporary employment shall be given to sailors and soldiers who have served abroad with satisfactory record in the Naval or Military Forces of the Commonwealth. {: .page-start } page 6541 {:#debate-24} ### QUESTION {:#subdebate-24-0} #### CASE OF JULIUS BLAU {: #subdebate-24-0-s0 .speaker-KEA} ##### Mr KELLY: asked the Minister of Trade and Customs, *upon notice -* {: type="1" start="1"} 0. Is it a fact that he was advised by the Attorney-General, prior to a recent importation of goods to the order of Julius Blau and Sons, that the goods in question should be refused admission? 1. Is it a fact that the goods were admitted as being entirely of American manufacture, guaranteed under British consular certificate? 2. Is he now aware that **Mr. George** A. Mitchell,an officer of his Department in Sydney, reported on6th July that "an examination of the attached copies of invoices shows that a correct British consular certificate of origin has not been obtained"? 3. Has he made an effort since the above report was brought to his notice to investigate the certificate in question; if so, when and how? 4. Was the certificate in question stamped on the invoices or appended thereto. If the latter, can the certificate be identified as the actual certificate on which the goods were passed by the Customs? 5. On how many previous occasions have unlawfullyimported goods been seized by the Department subsequent to importation? 6. Why are the above importations of Julius Blau and Sons not subject to seizure? {: #subdebate-24-0-s1 .speaker-KWL} ##### Mr TUDOR:
ALP -- In view of proceedings contemplated in this matter, it is not considered desirable to reply to the questions at this stage. {: .page-start } page 6541 {:#debate-25} ### INCOME TAX ASSESSMENT BILL *In Committee* (Consideration resumed from 31st August, *vide* page 6430) : Clause 3 (Definitions). {: #debate-25-s0 .speaker-KCO} ##### Mr GLYNN:
Angas .- I think it would tend to expedition in debate if the Attorney-General would point out to the Committee any substantial alterations that have been made in the clauses that have been adopted from other Acts. It is very difficult for any honorable member to compare this Bill with the Acts upon which it is based. There are six State Acts, not necessarily in line one with the other, and there is also the Imperial Act, upon which this Bill has been founded. In the definition clause, for instance, there are a number of definitions that differ from definitions in the other Acts, whilst there are other definitions that are not contained in the other Acts at all. Some of the State Acts do not define income. In this Bill income is defined so as to include income derived by way of " Interest upon money secured by mortgage of any property in Australia." The case might occur in which a company secured a big loan advanced by an English company upon securities nine-tenths of which were in the United Kingdom and one-tenth in Australia. Under the terms of this Bill, which income would be taxable as income " derived in Australia " ? Similarly, in regard to the definition of "income derived from personal exertion." The definition clause in this Bill includes " income derived in Australia." If that definition is compared with clause 9 it will be found that there is a difference in the terms used. One says " derived in Australia," and the other, " derived from sources in the Commonwealth." {: #debate-25-s1 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I will endeavour to do what the honorable member suggests. I thought I might briefly indicate the more important amendments that have been proposed, but perhaps it will be preferable that I should deal with them as they come before the Committee. I move - >That the definition of "Absentee " be left out, with a view to insert in lieu thereof the following definition: - "Absentee" means a person who does not reside in Australia, and includesa person who has been absent from Australia during more than half the calendar year in which the income the subject of the assessment was derived, unless he satisfies the Commissioner that he resides in Australia; but does not include a public officer of the Commonwealth or a State who is absent in the performance of his duty." The alteration is not vital, but the new definition, which has been passed after careful consideration, is preferable to that in the Bill. {: #debate-25-s2 .speaker-KCO} ##### Mr GLYNN:
Angas .- The amendment shows the relevance of a question that I put to the AttorneyGeneral. When the Imperial Bill was being discussed, there was a good deal of trouble regarding its definition of " residence," and the measure was amended at the instance of the Commonwealth. I called the attention of the High Commissioner to the fact that the definition in the Bill included persons who were only temporarily in the United Kingdom, perhaps on a visit. An amendment was moved, and **Sir John** Simon explained in the House of Commons what was meant by it. Is the definition now proposed one drafted by the Attorney-General himself, or is it based on the Imperial definition ? In these matters we ought, when the policy is the same, to have similarity of expression, so far as that may be possible. {: .speaker-KFK} ##### Mr Groom: -- Is not the new definition taken from the Land Tax Assessment Act? {: #debate-25-s3 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- An absentee for the purposes of income tax assessment will hardly be covered by the definition of absentee for the purposes of land tax assessment. I do not know whether the proposed definition is or is not based on Imperial legislation, but it covers the ground, and I am satisfied that it is a good one. We shall be unable to get through this measure with reasonable despatch if reference is made to every State provision. I understand the advantage of adopting definitions which have been generally recognised and accepted in other legislation and in judicial decisions, but there is a limit to the comparing of our proposals with the provisions of other legislation. {: .speaker-JRP} ##### Mr Boyd: -- Will the definition cover members of Australian business firms travelling abroad in the interests of their business whose whole income is derived from Australia, or will they be treated as absentees while absent from the Commonwealth purchasing for Australian houses ? {: .speaker-DQC} ##### Mr HUGHES: -- I think that such persons are clearly not absentees. {: .speaker-JMG} ##### Mr Atkinson: -- Will a person who is abroad on an ordinary trip be regarded as an absentee? {: .speaker-DQC} ##### Mr HUGHES: -- No. The question of domicile is one of fact and intention. The mere fact that a man was away from Australia for two years would not make him an absentee within the meaning of the definition. Amendment agreed to. {: #debate-25-s4 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- In Australia there are large companies which have on their share lists companies outside Australia which hold some of their shares. {: .speaker-DQC} ##### Mr Hughes: -- Holding companies? {: .speaker-KFK} ##### Mr GROOM: -- Not necessarily. One company sometimes acquires shares in the business of another company. I take it that when a company outside Australia holds shares in a company in Australia, the latter will be the agent of the shareholders of the foreign company. {: .speaker-DQC} ##### Mr Hughes: -- It may be; but not necessarily. They may appoint another agent. {: .speaker-KFK} ##### Mr GROOM: -- The company in Australia would have to see to the distribution of dividends to its shareholders abroad, and would also be responsible for the income tax on the incomes of the individual shareholders of the foreign company. That would create a great deal of difficulty, because the company in Australia would have to obtain information regarding the shareholders of the company or companies outside Australia which held its shares. It would have to ascertain the proportion of the foreign company's dividend payable to each of the foreign company's shareholders, and be responsible for the income tax on the income of each one of these shareholders. I mention the matter now so that the Attorney-General may consider it before we come to deal with the position of companies. {: .speaker-DQC} ##### Mr Hughes: -- Can the honorablemember show us a way out? {: .speaker-KFK} ##### Mr GROOM: -- I think so, but I should like the Attorney-General to look into the matter with a view to finding a way out himself. {: #debate-25-s5 .speaker-KXG} ##### Mr WATT:
Balaclava .- There is another phase of the agency question to which I ask the attention of the Attorney-General. Clause 23 defines other functions of companies, one of them being to act as agents for debentureholders. We can discuss the merits of the taxation of debenture interests more fully when we come to that clause; but I ask now is it the determination of the Government to tax debenture interests regardless of every consideration to the contrary. I think it can be shown that if we pass the definition of agents, such taxation will operate with drastic effect on capital employed on reproductive enterprises in Australia. I hope that the Attorney-General will consider later representations showing how certain classes of debenture interests may be safely exempted. If we do not exempt them, we may affect prejudicially certain big employing interests. {: .speaker-DQC} ##### Mr Hughes: -- We have given great consideration to the position of debentureholders in companies registered, say, in London, whose income is earned in Australia. {: .speaker-KXG} ##### Mr WATT: -- Only part of it may be earned in Australia. {: .speaker-DQC} ##### Mr Hughes: -- We had better discuss the matter upon the proper clause. {: .speaker-KXG} ##### Mr WATT: -- It hangs on the definition of agent. {: .speaker-DQC} ##### Mr Hughes: -- I admit the difficulty of the position, but can honorable members show me a way in which we can be fair to debenture-holders without unfairly depriving the Commonwealth of revenue ? {: .speaker-KXG} ##### Mr WATT: -- I do not say that the revenue will be the same, because a certain class of interests would be exempted from, taxation; but I think that we can deal fairly with the Commonwealth interests. {: .speaker-DQC} ##### Mr Hughes: -- The suggestions of honorable members seem to me like the knocking of holes into a bucket. By the time we get our fiscal bucket to the trough, it will not be able to hold any water. {: .speaker-KXG} ##### Mr WATT: -- What we are endeavouring to do is to make, not a colander, but a well-soldered bucket. If the honorable member is wise, he will not try to fill it too full. I have no intention of doing anything to defeat the Bill, because, as I have said, I believe in income taxation, and I think that Australia ought to pay an income tax, if it be equitably imposed. {: .speaker-KFJ} ##### Sir John Forrest: -- Only one in forty will pay income tax. It is not a general tax. {: .speaker-KXG} ##### Mr WATT: -- I have not said that it is a general tax. We do not wish to injure Australia by unnecessarily driving away capital. Amendment (by **Mr. Hughes)** proposed - >That after the definition of " Mortgage " the following new definition be inserted - 'Partners' includes persons who are in receipt of income jointly." {: #debate-25-s6 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- Has the Attorney-General inserted this amendment for any special reason ? {: .speaker-DQC} ##### Mr Hughes: -- No. {: .speaker-KFK} ##### Mr GROOM: -- The effect of the amendment will be to make persons partners when they are not really partners. {: .speaker-DQC} ##### Mr Hughes: -- But their liability is not increased. {: .speaker-KFK} ##### Mr GROOM: -- The Attorney-General proposes to insert a new clause dealing with partners which is of a very doubtful character. The mere fact that persons will be jointly in receipt of any sum of money will compel them to accept all the liability of partners, who under the Bill are to be deemed as a single person, and, in addition, must submit returns as to their separate interests. I have never heard of such a proposal. It is probably fair to make each person jointly entitled to receive a sum of money liable in accordance with his proportion of the money, but the mere fact that two individuals are entitled jointly to receive any sum will make them partners, and that definition will run through the Bill. {: .speaker-DQC} ##### Mr Hughes: -- Let me have your definition of " partners," and I shall consider it. {: .speaker-KFK} ##### Mr GROOM: -- If the honorable member desires it, I shall supply him with a legally strict definition of "partners," but the Bill before us declares persons to be partners when they are not really partners. {: #debate-25-s7 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- It is necessary that there should be no evasion of the Act, and that in all cases there should be some persons to whom tax commissioners may look for payment of the tax, and as recourse in law is given to the party who pays the tax to recover from the other party who fails to pay, I fail to see that, although we may go beyond Hie ordinary meaning of a partnership, we are doing an injustice to any person. The mere fact that the Bill provides a new definition of partners for the purpose of the measure is no argument against it. If honorable members can show me where injustice may be done by the proposal I shall have tlie Bill altered. {: #debate-25-s8 .speaker-KXG} ##### Mr WATT:
Balaclava .- I think that if the Attorney-General will look at his proposed new clause dealing with partnerships he will see prospective, if not absolutely real, injustice. There are all the elements of double taxation in the amendments now before the Committee, coupled with the clauses the AttorneyGeneral proposes to insert later on. Partners, as subsequently defined in the clauses which are dependent on the definition now before the Committee, are to be assessed as if their income was derived, by a single person. {: .speaker-DQC} ##### Mr Hughes: -- If, when we reach the partnership clauses, a case can he made out, we shall alter the definition. {: .speaker-KXG} ##### Mr WATT: -- That arrangement will suit me. The merits of the argument rest on the new clauses governed by this definition. {: #debate-25-s9 .speaker-KCO} ##### Mr GLYNN:
Angas .- The Attorney-General does not intend to have double taxation. ,This is avoided by clauses 25 and 24. In the case of a partnership the obligation to make an income tax return is thrown on each partner, but under clause 24 the amount of the income distributed will be creditedI think that the principle is all right, but it will need considerable explanation, which I hope will be given when that part of the Bill is reached. Amendment agreed to* Clause, as amended, agreed to. Clause 4 - {: type="1" start="1"} 0. The Commissioner of Taxation shall, subject to the control of the Minister, have the general administration of this Act. . . {: #debate-25-s10 .speaker-KXG} ##### Mr WATT:
Balaclava .- I suggest the elimination of the words "subject to the control of the Minister." I know that these words appear in the Commonwealth Land Tax Assessment Act, and have not caused any trouble, but the States, in regard to their Income Tax Assessment Acts, have excised all Ministerial control. The danger of giving Ministerial control over the administration of income taxation is that a politician will be in receipt of all information relating to the incomes of the people. Such a state of affairs is not desirable, and for that reason in most of the States the administration of income taxation has beer removed from any suggestion of political influence or political knowledge. {: .speaker-KFK} ##### Mr Groom: -- In Queensland the Commissioner also submits his report to Parliament. {: .speaker-KXG} ##### Mr WATT: -- I think that that course is also advisable. Just as the Governor of the Commonwealth Bank to-day submitted his report through **Mr. Speaker,** the Commissioner of Taxation should render direct to the House of Representatives, which is the taxing Chamber, his returns as to the taxation and his reports upon its incidence. To give the matter point, I am prepared to move to excise the words "subject to the control of the Minister." The States which have h»d a wider experience in regard to the taxa tion of incomes have placed its control entirely in the hands of Commissioners, and I think that we should adopt their practice. {: .speaker-DQC} ##### Mr Hughes: -- I shall look into the matter before the Bill passes from the Chamber, and if necessary this clause can be recommitted. {: .speaker-KXG} ##### Mr WATT: -- Does tie AttorneyGeneral promise to recommit the Bill after he has given the matter consideration? If so, I am willing to let the matter pass for the time being. {: .speaker-DQC} ##### Mr Hughes: -- Yes. Clause agreed to. Clauses 5 and 6 agreed to. Clause 7 (Report by the Commissioner) . {: #debate-25-s11 .speaker-KFK} ##### Mr GROOM:
Darling Downs .- This clause also involves the point raised by the honorable member for Balaclava. Under the State Acts, the report goes straight to Parliament, and not to the Treasury. I take it that this clause will also be recommitted ? {: .speaker-DQC} ##### Mr Hughes: -- Yes; if necessary. Clause agreed to. Clause 8 - (Officers to observe secrecy). Penalty: One hundred pounds. {: #debate-25-s12 .speaker-KXG} ##### Mr WATT:
Balaclava .- I suggest that the penalty should be raised. {: .speaker-K5D} ##### Mr King O'Malley: -- To £1,000. {: .speaker-KXG} ##### Mr WATT: -- I do not wish to make the penalty quite so high as that. I am afraid it will not be possible to get convictions if we become so draconian as the honorable member appears to be this morning. Most of the State Acts provide a penalty of £500, and we ought to make it at least £250. {: .speaker-KFK} ##### Mr Groom: -- In Queensland the penalty is £100, with the alternative of imprisonment not exceeding six months. {: .speaker-KXG} ##### Mr WATT: -- In the original Act of Victoria, the penalty was- £200, and I think it has since been raised. It is a very grave offence if an officer, having taken the oath of secrecy, divulges, for his own benefit or that of any other person, information obtained in this way. {: .speaker-DQC} ##### Mr Hughes: -- I shall accept the suggestion that the penalty be £250. Amendment (by **Mr. Watt)** agreed to - >That the words, " One hundred pounds," be left out, with a view to insert in lieu thereof the words "Two hundred and fifty pounds." Clause, as amended, agreed to. Clause 9 - {: type="1" start="1"} 0. Subject to the provisions of this Act income ta.x shall bc levied and paid in, and for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during the period of twelve months ending on the thirty-first day of December preceding the financial year in and for which tlie tax is payable..... {: #debate-25-s13 .speaker-KFJ} ##### Sir JOHN FORREST:
Swan .- I move - >That the words "thirty-first day of December " be left out with a view to insert in lieu thereof the words " thirtieth day of June." As honorable members know, the object I have in view is that the tax shall be levied on incomes received for the year ended 30th June last. In the same way as we put lighthouses as close to the danger as we can, so we should put the date of the assessment of incomes as close as possible to the time when the revenue is required for use. The amendment is desirable, inasmuch as it will bring the Bill in accord with the war census regulations, which were framed after a good deal of discussion, not only in this House, but by the War Committee. Unless it be for some statistical purpose - which, of course, is important - there can be no reason at all. in my opinion, why the 30th June should not be fixed. {: #debate-25-s14 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- The Government are unable to accept this amendment; but, in order that we shall waste no more time than is necessary, I suggest that the clause be postponed to a later hour of the day. {: #debate-25-s15 .speaker-KXG} ##### Mr WATT:
Balaclava .- I do not think the Attorney-General is dealing quite fairly by the Committee in announcing the definite decision of the Government not to accept the amendment, and then suggesting a postponement. This is one of the critical points of the Bill ; and I am hopeful that throughout the discussion we shall preserve an amicable feeling in the Committee. {: .speaker-KFK} ##### Mr Groom: -- The amendment is really a compromise. {: .speaker-KXG} ##### Mr WATT: -- It is a compromise on the suggestion of the honorable member for Henty! {: .speaker-DQC} ##### Mr Hughes: -- The most striking suggestion was that made by the honorable member for Wannon. {: .speaker-KXG} ##### Mr WATT: -- That we should not tax at all. {: .speaker-DQC} ##### Mr Hughes: -- The honorable member suggested a sort of alternative, modified, gracious tax which would not fall on owners of land. {: .speaker-KXG} ##### Mr WATT: -- He desired, I suppose, that farmers should be exempt and yet taxed ? {: .speaker-DQC} ##### Mr Hughes: -- That is so. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The honorable member for Balaclava was not here when I spoke, but, of course, he knows all about the matter 1 {: .speaker-KXG} ##### Mr WATT: -- If we consent to a postponement of the clause will the AttorneyGeneral withdraw the statement that the Government will not accept the amendment, so that the question may be discussed on its merits ? {: .speaker-DQC} ##### Mr Hughes: -- We have already had long argument about it. {: .speaker-KXG} ##### Mr WATT: -- Not in the House. I know that I put the matter just roughly, as did other honorable members; but the merits have never been discussed in detail. This is one of the business ends of the tax - the question where we shall start and finish for the first period. {: .speaker-DQC} ##### Mr Hughes: -- I make the suggestion for a postponement in order that there may be an opportunity to consider the clause and the amendment. {: .speaker-KXG} ##### Mr WATT: -- Then let us have the arguments adduced before the postponement, so that the Attorney-General may know what is in the minds of honorable members. {: .speaker-DQC} ##### Mr Hughes: -- My attitude just now is that we cannot accept the amendment, but if the clause be postponed there will be an opportunity for honorable members to say all that thev desire to say. {: .speaker-KXG} ##### Mr WATT: -- But it is of no good postponing the clause if the Government is adamant, and, regardless of the reasons put forward, say that they cannot accept the amendment. {: .speaker-DQC} ##### Mr Hughes: -- The attitude of the honorable member is adamantine too {: .speaker-KXG} ##### Mr WATT: -- No, it is not. {: .speaker-DQC} ##### Mr Hughes: -- Is the honorable member open to change his opinion ? {: .speaker-KXG} ##### Mr WATT: -- I am. {: .speaker-DQC} ##### Mr Hughes: -- Then I am certainly open to change mine. {: .speaker-KXG} ##### Mr WATT: -- That is a fair attitude on the part of the Attorney-General, though I do not think that the honorable gentleman's arguments will convince me. If the Attorney-General is prepared, in that dispassionate and judicial way that characterizes him. to listen to the arguments we shall advance. I believe he will accept the amendment at once. {: .speaker-DQC} ##### Mr Hughes: -- I do not say that I shall not do so. In my opinion the policy that the Government have adopted is the correct one; still, there may be something to consider. {: .speaker-KXG} ##### Mr WATT: -- In that spirit I accept the suggestion for a postponement. Clause postponed. Clause 10 - >The following incomes, revenues, and funds shall be exempt from income tax: - > >the revenue of a municipal corpora tion or other local governing body, or of a public authority; > >the income of a society registered under a Friendly Societies Act of the Commonwealth or a State; > >the income of a trade union; > >the income of a religious, scientific, charitable, or public educational institution ; > >the income derived from the bonds, debentures, stock, or other securities of the Commonwealth issued for the purposes of the War Loan Act (No. 1) 1915; and > >the salary of the Governor-General. {: #debate-25-s16 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I move - >That after the word " State," line 8, the words " and not carried on for pecuniary profit " be inserted. This amendment is to meet the case, not of friendly societies as such, but of friendly societies that are registered under the Friendly Societies Act; that is, trading societies which, in some States, have taken advantages of the Friendly Societies Act. It will not affect friendly societies as such. {: #debate-25-s17 .speaker-JXA} ##### Mr CHARLTON:
Hunter .- In what position will co-operative societies stand under this clause ? I mean cooperative societies, the members of which are shareholders, who have a little capital, and who divide the profits each quarter? {: .speaker-DQC} ##### Mr Hughes: -- Give me a concrete case. {: .speaker-JXA} ##### Mr CHARLTON: -- What I want to know is whether theseprofits will be regarded as part of the income of each individual shareholder, or whether the accumulated profits will be taxed before division ? {: .speaker-DQC} ##### Mr Hughes: -- Co-operative societies, as such, are not exempted. {: .speaker-JXA} ##### Mr CHARLTON: -- Are the societies taxed on their accumulated profits? {: #debate-25-s18 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- Co-operative societies, for the purpose of this taxation, do not differ from other companies. On that part of the income that is distributed, companies are not taxed, while on that part which is not distributed, they are taxed at the flat rate of1s. 6d. in the £1. Amendment agreed to. {: #debate-25-s19 .speaker-KFJ} ##### Sir JOHN FORREST:
Swan -- I suggest that between the words "trade" and "union," in paragraph c, we should insert the words " or employers." There are unions of employers as well as unions of employees, and they should be in the same category. If it is right to exempt the funds of a trade union, it is equally right to exempt the funds of an employers union. {: .speaker-DQC} ##### Mr Hughes: -- There is no such thing as a trade union of employers. But there are registered organizations of employers. {: #debate-25-s20 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- Is it the intention of the AttorneyGeneral that the words " trade union " shall be interpreted according to the general acceptance of the term in the various States? In Queensland a trade union is defined as - >Any combination, whether temporary or permanent, for regulating the relations between workmen and employers, or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, whether such combinations would or would not, if this Act had not been passed, have been deemed to have been an unlawful combination by reason of some one or more of its purposes being in restraint of trade. Does the Attorney-General intend the interpretation of the term under this Act to be as wide as that definition? {: .speaker-DQC} ##### Mr Hughes: -- Will you tell me of any Income Tax Act in Australia or Great Britain that does exempt employers unions in the way you suggest? {: .speaker-KFK} ##### Mr GROOM: -- The question is not as to what is contained in other Acts, but as to what is a fair and just thing to do. The Attorney-General is proposing an exemption of certain organizations. If the exemption is good for one side it is good for the other. Perhaps the AttorneyGeneral might accept the interpretation contained in the Commonwealth Industrial Conciliation and Arbitration Act, which makes provision for organizations of both employers and employees, and gives them the same rights and imposes the same liabilities. {: #debate-25-s21 .speaker-DQC} ##### Mr HUGHES:
West Sydney · ALP -- I have no objection to including employers who are associated for the same purposes as employees. But " trade unions " has a common law meaning which is not, I think, applicable, and does not include employers. If a number of employers associate for the purpose of mutual protection, provided their organization is carried on along the same lines as that of a trade union, I see no reason why they should not have the same immunity from taxation. But I am inclined to think that the amendment suggested by the right honorable member for Swan would not have that effect. There are in this country two classes of trade unions, one of which is, and the other of which is not, registered under any State or Federal Act for the purposes of arbitration and conciliation. Both those classes are included in this Bill, but it does not necessarily include a registered organization that is not a trade union. I apprehend that a trade union within the meaning of this paragraph would be an association registered under a Trade Union Act, and I do not think that any organization of employers is so registered. If the right honorable member for Swan will allow this point to stand over, I will recommit the Bill, and prepare a definition which will put the employers on the same footing in this respect as the employees. {: #debate-25-s22 .speaker-KXG} ##### Mr WATT:
Balaclava .- I suggest that the Attorney-General should give a wider sweep to the exemption than is contained in the clause, or is suggested by the right honorable member for Swan. There are organizations which are not trade unions or employers' federations, and which are not dealt with by the exemption clause as it is now framed. In most of the States a general provision has been made which I think might be with safety embodied in this measure. The Victorian and Queensland Acts exempt all trusts, societies, associations, institutions, and public bodies not carrying on any trade, or nob being engaged in any trade for the purpose of gain to be divided among the shareholders or members thereof. The Bill proposes to exempt religious, scientific, charitable or public educational institutions; but that exemption will exclude a number of organizations that ought to be exempt by specific or general provision. {: #debate-25-s23 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- The exemptions in some of the existing Acts go a little fur ther; but most of them not quite as far as is proposed in this Bill. I propose to insert an amendment to exempt provident societies. That exemption will cover a fairly wide field, and will free from the operation of the tax a number of those associations to which the honorable member for Balaclava has alluded. We shall exempt friendly societies, trade unions, and religious, scientific, charitable or public educational institutions ; and I do 11Ot think there are any other bodies that ought to be exempt. {: .speaker-KFK} ##### Mr Groom: -- There are certain associations formed for the promotion of industry - such as the Chamber of Commerce, the Chamber of Manufactures, and the Chamber of Mines. {: .speaker-DQC} ##### Mr HUGHES: -- I am not inclined to go any further than the provision I have already promised to make. If the organizations referred to by the honorable member for Darling Downs have any income at all, it is very small, and if such incomes are taxable - which I doubt - tha amount they would pay would be negligible. {: .speaker-KEV} ##### Mr Fenton: -- Does the AttorneyGeneral propose to exempt all societies and corporations formed under the Provident Societies Act ? If so, will the Commercial Travellers' Association be exempt ? {: .speaker-DQC} ##### Mr HUGHES: -- Provident societies are to be exempt. I do not "think that clubs are exempt; why should they be? {: #debate-25-s24 .speaker-JMG} ##### Mr ATKINSON:
Wilmot .- There are bodies known as Municipal Associations, which are composed chiefly of the officers employed by municipal corporations, shire councils, and other local government bodies, and I am anxious to know how they will stand in relation to the tax. I cannot say exactly what are the benefits attaching to membership of these associations, but there are some benefits. {: .speaker-DQC} ##### Mr Hughes: -- If the associations to which the honorable member refers are a sort of benefit society to which men make contributions, and from which they receive payment in the case of sickness, old-age or unemployment, then, under proposed new paragraph *g,* they will be exempt. I have been a member of many of these municipal associations - such as progress associations - and my recollection is that they never have any revenue. {: .speaker-JMG} ##### Mr ATKINSON: -- The association I have in mind has some revenue. How that revenue is employed I do not know but I do know that it is not used for the personal gain of the members, and I think that it should be exempt from taxation. {: #debate-25-s25 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I am not going to say that such an association should not be exempt, but I think that we ought not to waste the morning in the discussion of mere academic points. There are many of these bodies such as municipal progress associations and organizations of municipal officers which, at the end of the year, in nine cases out of ten, have a debit. We have all belonged to such bodies, and have had to put our hands into our pockets to make up such deficiencies. Why waste time talking of them ? In any case, there is an exemption of £156, and there is an open door for them since they could distribute their income, if they had any, amongst their members. {: #debate-25-s26 .speaker-KFJ} ##### Sir JOHN FORREST:
Swan -- I wish to ask the Attorney-General what will be the position of clubs under this clause? Many clubs have a considerable income, but they generally use it all. {: .speaker-KCO} ##### Mr Glynn: -- They will be taxed only in respect of their balance. That is the principle of the Bill. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- In other words, the honorable member says they would be taxed only on their profits. That would not be very considerable as a rule, but since members of clubs are taxed individually, I do not think they should also be taxed collectively. If, as the honorable member for Angas says, they will be taxed only in respect of their profits, my objection will be removed, because my experience is that their profits are very small. {: #debate-25-s27 .speaker-K99} ##### Mr W ELLIOT JOHNSON:
Lang , - I move - >That after the word " religious," paragraph rf, the word " temperance " be inserted. Temperance societies are working for social reform, and do not come under any of the other headings of this Bill. Their chief object is to get rid of one of the social evils that plague humanity, and since their income is not used for personal profit, but for tlie public good, it should be exempt from taxation. If the Attor-ney-General prefers to put the proviso in some other clause of the Bill - so long as it goes in - he can put it where he pleases. {: #debate-25-s28 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP .- The last statement made by the honorable member will meet the case. He said that we could put his amendment where he proposed, or anywhere else. I adopt the latter alternative, and propose to place it on the cover of the Bill. {: .speaker-K99} ##### Mr W Elliot Johnson: -- I said that it could be inserted anywhere else in the clause. {: .speaker-DQC} ##### Mr HUGHES: -- I am sorry ; I believe in temperance, but I do not know how we can distinguish between a temperance organization and a political organization. The question of whether temperance is good or not has never been finally settled by a final court of appeal. We have in our midst a large and flourishing organization, not inconsiderable in the number of its members, and certainly very considerable in influence, the members of which laugh at the idea that temperance is good. I think it would be wise not to make this amendment, since it would open the door to the exemption of the funds of all sorts of organizations. There are many other institutions, such as the Child Study Society and the Eugenics Society. The latter, I venture to say, with all respect to my honorable friend, is more calculated to do lasting good to the community - and I speak now as a temperance man - than all the temperance societies in the world. {: #debate-25-s29 .speaker-KXG} ##### Mr WATT:
Balaclava .- I suggest that the Attorney-General, by adopting the proposal made earlier in the debate, that we should exempt " all associations not conducted for pecuniary profit," would meet all such cases as have been mentioned. {: .speaker-DQC} ##### Mr Hughes: -- I shall think over the proposal. If such an amendment were made it would cover that now before us. {: .speaker-KXG} ##### Mr WATT: -- In view of that promise I suggest that we need not discuss this matter further at the present time. If the amendment moved by the honorable member for Lang be carried, it will make it obligatory upon some of us to submit amendments to exempt our own particular organiations, The exemption of the Single Tax Association, for instance, might be pressed. On the other hand, if the general exemption suggested earlier in the debate were made, honorable members would not be placed in an invidious position. I hope the amendment will be withdrawn. {: #debate-25-s30 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I do not wish to put the honorable member for Lang in a false position. I am willing to consider whether a general clause exempting institutions not engaged in trading for profit shall be inserted. If such a provision be inserted it will obviously include institutions such as those referred to by the honorable member. Amendment negatived. Amendment (by **Mr. Hughes)** agreed to - >That tho word " and," paragraph e, be left out. {: #debate-25-s31 .speaker-KXG} ##### Mr WATT:
Balaclava .- Under paragraph / the salary of the Governor-General is exempt from income tax. I suggest that the salaries of State Governors should also be exempt. {: .speaker-KFK} ##### Mr Groom: -- Does the AttorneyGeneral claim that they are liable? {: .speaker-KXG} ##### Mr WATT: -- I do not know, but such salaries are exempt under our State laws. I therefore wish to move - >That after tho words " Governor-General," paragraph *f,* the words " and the salaries of the Governors of the States " be added. {: .speaker-KCO} ##### Mr Glynn: -- They are not exempt under all the State Acts. {: .speaker-KXG} ##### Mr WATT: -- The Victorian Act exempts the salary of the State Governor. {: .speaker-KFK} ##### Mr Groom: -- And so does the Queensland Act. {: .speaker-KXG} ##### Mr WATT: -- I do not think we should tax the salary of any of the representatives of the Crown. {: #debate-25-s32 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- Under the Customs Act, State Governors are given the same privilege as is extended to the Governor-General in regard to certain allowances. The AttorneyGeneral by consenting to this amendment, therefore, will be conceding to the State Governors - assuming that we have power to tax them - exactly what has been conceded to them under that Act. {: #debate-25-s33 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I rather question whether the Government has power to tax these salaries at all. In any case it seems invidious that the salary of the Governor-General should alone be exempt, and therefore I have no objection to the amendment. But I desire to submit a prior amendment. I wish to move - >That after paragraph e the following new sub-section be inserted: - " *If)* the income of a provident benefit or a superannuation fund established for the benefit of the employees in any business." {: #debate-25-s34 .speaker-KVO} ##### Mr STUMM:
Lilley .- I desire to submit this point to the AttorneyGeneral. In sub-section e it is provided that " income derived from bonds, debentures, stocks, or other securities of the Commonwealth issued for the purposes of the War Loan Act " shall be exempt from taxation. The Committee have already passed an amendment of the Inscribed Stock Act, exempting these securities from State taxation. Does not the Attorney-General consider pr,na we ought, in fairness to the State Governments, to also exempt income derived from State securities from this taxation and make the exemption reciprocal ? {: .speaker-L1P} ##### Mr Wise: -- Only income from this loan is exempt. {: .speaker-KVO} ##### Mr STUMM: -- I think the exemption goes a great deal further than that. I think all debentures and stock issued by the Commonwealth will be exempt from State taxation. The effect of the war loan will be to depreciate to a very serious extent all stock and debentures issued by the State Governments, and I do not think that is desirable. Therefore I ask the Attorney-General to consider whether it is not desirable to suggest to the States reciprocal action in this matter. {: #debate-25-s35 .speaker-KXG} ##### Mr WATT:
Balaclava .- I hope the Attorney-General will not consent to the proposition just put before him by the honorable member for Lilley. There appears to be a vast amount of misconception on this point. Clearly it does not matter one way or the other in the long run if a particular Government issuing bonds or inscribed stock does or does not exempt the accruing interest from income taxation. If it does not exempt it simply has to pay a higher price; if it does exempt it is able to secure its money at a lower price. The same end is reached in either case. That is why the State Governments have always declined to tax their own bonds, knowing that the taxation would be of no effect if they did. I think honorable members will agree with that. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- That is the States' argument. {: .speaker-KXG} ##### Mr WATT: -- It is the individual's argument, too. That has been the view of Treasuries and Treasurers ever since income taxation, running concurrently with tlie local bonds or inscribed stock, was introduced into Australia twenty years ago. The honorable member for Lilley has suggested that if we do not make a concession of this kind we shall depreciate the face value of the State bonds now in the hands of their holders. That is so. But when we issued the Commonwealth war loan yesterday under the authority of this Parliament, we also depreciated every stock in Australia - State, municipal, trust, debentures or anything else. Because we do that - because the nation's need demands that .we should make a special gilt-edged, ear-marked stock - we cannot in this manner seek to temper the wind to the shorn lambs of the community. If we did that we could not possibly draw the line at State debentures. We should, have to make the same concessions in respect of all municipalities, local corporations discharging public functions, harbor trusts, tramway trusts, all of which handle large revenues, and are responsible for vast sums deposited by bondholders, or shareholders. We cannot possibly *go only* as far as the honorable member for Lilley suggests. We must go the whole hog. If we do, we shall exempt from taxation an immense amount now in the hands of wealthy individuals that should be drainable into the Treasury if this National Parliament says so, during this period of emergency. The Australian taxpayer or moneyholder may have lent as much as £100,000,000 or £200,000,000 t0 the State Governments, and to the various corporations and public bodies, municipal and otherwise, constituted under their authority. {: .speaker-JTC} ##### Mr Burchell: -- Was not that money lent on the understanding that no taxation would be levied on the interest? {: .speaker-KXG} ##### Mr WATT: -- No, it was not. It was lent, as everybody knows who invest? money in Government bonds, or in mortgage, or in business, or in real estate, on the understanding that if the nation demanded taxation under the authorities constituted by the British and Australian Parliaments, the bondholders would have to pay. If a man buys a big house, he does not know -when he does so whether his rates will be increased, or whether a war will break out and demand increased taxation. Everybody is subject to that contingency, and these holders of bonds are in precisely the same position. Every bond in Australia, and every other security, relatively, is depreciated by this big gilt-edged security, which from one point of view will return 5 per cent, to the lender. I remember when the priceof Victorian 3 per cents, was £103 in London and £102 10s. here. That is not the position to-day. We cannot, out of any desire to show pity to the holders of bonds - and this proposal will not show any pity to the State Governments - exempt them from the rate of taxation that the country needs. {: .speaker-KFP} ##### Mr Richard Foster: -- Has the honorable member no pity for the State Governments ? {: .speaker-KXG} ##### Mr WATT: -- This has nothing whatever to do with the State Governments. It is the holders of the State bonds to whom we are asked to show pity. {: .speaker-KEV} ##### Mr Fenton: -- Is it not the fact that the State Treasurers and Premiers have agreed that this special loan needs special treatment ? {: .speaker-KXG} ##### Mr WATT: -- I do not know, but I think they would be upholding their trust worthily if they did so consent. {: .speaker-KFJ} ##### Sir John Forrest: -- They have no power to consent, except on the authority of their Parliaments. {: .speaker-KXG} ##### Mr WATT: -- I am not referring to any constitutional consent, but to that acquiescence which is sometimes registered in the correspondence passing between the various Governments. Probably with regard to sugar action may have been taken that is outside the constitutional power. The same remark may be applied to acquiescence in the wheat deal. If there is acquiescence from all the Governments, or from most of them, that must be a valuable factor in the minds of the people; but I will go a step further. If we give immunity to all these bonds, we shall be placing the butt-end of taxation on the holders of other securities in this country, who are mostly farmers, traders, manufacturers, and employers, who wilt have to pay, and the wider the area of exemption is spread -the fewer there must be to pay the taxes that the Commonwealth finds itself obliged to impose. I hope that during the luncheon interval the Minister will consider the advisability of not making this suggested gift to the holders of State bonds - a gift that would really be a gift of a very considerable privilege to the wealthy people of Australia. {: #debate-25-s36 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP .- I desire to state what is the position of the Government in this matter. If honorable members will look at the sub-section, they will see that it only exempts the Commonwealth war loan. It does not exempt any other scrip or security of the Commonwealth or of any State. {: .speaker-KFK} ##### Mr Groom: -- Does the Minister claim that the Government have the right to tax State securities under this Bill ? {: .speaker-DQC} ##### Mr HUGHES: -- What on earth has that to do with the position ? If we have not the power, what is the use of our bothering about the proposition put forward by the honorable member for Lilley ? What I say is that we certainly have the power to tax our own securities, and the honorable member may be able to gather from that the intention of the Government which, shortly, is this - that, so far as our power goes, we shall tax all securities, Commonwealth or State, excepting the Commonwealth war loan. That is our policy towards State securities. We shall otherwise tax all Government securities. *Sitting suspended from. 1 to 8.30 p.m.* {: #debate-25-s37 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- The honorable member for Lilley contends that incomes derived from bonds, debentures, and stocks issued by State Governments should be exempted from Commonwealth taxation. It is clear that the relationship between the Commonwealth and the States in the matter of taxation is reciprocal. If the Commonwealth can tax interest on State bonds and debentures, the States can tax. interest on Commonwealth bonds and debentures. The High Court has declared that the States cannot tax the incomes of Commonwealth officials without the consent of the Commonwealth, the decision being based on a doctrine with which the honorable member for Darwin is well acquainted, because of his close and intimate knowledge of the American Constitution, obtained at first-hand by hearing it discussed in the Courts, and by working under it in America. We are living under a Federal Constitution, with two sovereign powers, each complete within the ambit of its own authority, and the doctrine to which I refer was laid down to protect their integrity. Its application to the taxation of incomes from debentures and Government stock generally has not yet been dealt with by the Courts of Australia, but it behoves us to recognise the reciprocal relationship of the Commonwealth and the States in the matter. The Queensland income tax law exempts from taxation incomes arising or accruing from debentures, stock, or Treasurybills issued by the Government of the State, and the Western Australian law is almost identical, incomes arising or accruing to any person from Western Australian Government debentures, inscribed stock, and Treasury-bills being exempted. The States generally exempt from taxation incomes derived from their own securities. {: .speaker-JNV} ##### Mr Bamford: -- But not incomes derived from the securities of other States. {: .speaker-KFK} ##### Mr GROOM: -- They deal only with their own securities. The Commonwealth, following on the same lines, has exempted Commonwealth securities; but the Attorney-General has stated that, although he does not think it has the power, the Government will claim the right to collect income tax on incomes derived from State securities. {: .speaker-JM8} ##### Mr Archibald: -- The tax is being imposed for war purposes. {: .speaker-KFK} ##### Mr GROOM: -- Under sections 52a and 52b of the Commonwealth Inscribed Stock Act, stock certificates, stock certificates to bearer, scrip certificates to bearer, Treasury bonds and coupons, and transfers of stock and Treasury bonds are. exempted from stamp duty or other tax under any law of the Commonwealth or a State, and interest derived from stock or Treasury bonds is similarly exempted. This exemption applies not merely to war loans, but to all Commonwealth securities. The honorable member for Balaclava has pointed out that the States exempt their securities from income tax, because, if they did not, they would have to borrow at higher rates of interest. For the same reason, the Commonwealth exempts its securities. Should we tax State securities the States when next they borrow will have to pay higher rates of interest, and they will naturally claim the right to tax our securities, in which case we shall have to pay higher rates of interest. What will the Australian people gain from that position of affairs? The honorable member for Lilley suggests that the Commonwealth and States should mutually exempt each others' securities. {: .speaker-K8L} ##### Mr Thomas: -- Is there not a great difference between a loan raised for purposes of defence and a loan raised to construct, say, a railway? {: .speaker-KFK} ##### Mr GROOM: -- The proceeds of the income tax this year are not required wholly for war purposes. Chief Justice Marshall pointed out in the United States that the power to tax implies the power to destroy, because a tax can be made as high as the taxing authority likes to make it. If the States have a right to tax our instrumentalities, hey can, by making the taxation very high, impede and hinder our borrowing operations. It is because tlie power to tax carries with it the power to destroy that our High Court held that the States cannot tax Commonwealth instrumentalities. The High Court has ruled that the Commonwealth and States are both sovereign authorities, each in its particular ambit. {: #debate-25-s38 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- As I was saying before the lunch adjournment, the phraseology of the sub-clause exempts the Commonwealth war loan, and nothing but the Commonwealth war loan. The attitude of the Government, which is charged with the full responsibility of carrying on the war, is that it must not give up any power of taxation that it possesses. It will not agree to give up any of its powers of taxation ; but I said yesterday, as plainly as I could, that it was incompatible with the nature of the Federal pact that the partners to it should tax one another. If honorable members look at the matter fairly, they will see how incompatible taxation by one partner of the securities of the other partner is with a Federal form of government which postulates that each party shall be sovereign within its own sphere. If one party has the power to tax the securities of the other, it has likewise the power to tax the *corpus* of the wealth itself, and, as my honorable and learned friend says, once the right to tax is established, there would be nothing to prevent our taxing the State of Victoria out of existence, or to prevent the States taxing away all property the Commonwealth has to its credit. It may be said that reasonable men would not go so far - I do not say that they would; but I do say that since it is obviously incompatible with a Federal form of government, we must assume that the principle laid down long ago by Chief Justice Marshall still stands, and that it is not constitutional for a State to tax the securities of the Commonwealth, or for the Commonwealth to tax the securities of the State. That is the position, in my opinion. The Treasurer naturally and very properly is desirous of adhering to every power that the Commonwealth has in the way of taxation, but at the same time I express my opinion in regard to the taxation powers of this Parliament, and that is that we cannot tax State securities. {: #debate-25-s39 .speaker-JRP} ##### Mr BOYD:
Henty .- Despite the fact that the Treasurer desires not to give up any powers of taxation which the Commonwealth may possess, in view of tlie statement just made, which apparently agrees with the opinion just given by the honorable member for Darling Downs - that the Commonwealth and the States, owing to their peculiar constitution, are not entitled to tax one another - and in view of the decision of **Mr. Justice** Marshall, on a point raised under the Federal Constitution of the United States of America, are we not putting the taxpayer in a very unfair position by forcing him to go to the High Court to get another decision from one of our own Justices as to whether the taxation sought to be imposed is *ultra* *vires?* Surely a deliberative body such as this should look the facts fairly in the face, and determine not to put any citizen under the obligation of having to test legislation which the Attorney-General admits will be found to be *ultra vires'1.* Our honest course is to accept the amendment, and thus avoid placing our citizens in a false position. The States have agreed to exempt our war loan from their taxation. {: .speaker-DQC} ##### Mr Hughes: -- But they have not agreed to exempt our other securities. {: .speaker-JRP} ##### Mr BOYD: -- If we have no legal power to tax them, they have no legal power to tax us. It is unfair to ask citizens to pay taxation which they are not legally obliged to pay. We will be robbing these people of interest to which they may be justly entitled, and when we have the leading legal men of the House expressing an opinion of this kind, surely the position is that we should give practical effect to that opinion ? {: #debate-25-s40 .speaker-K5D} ##### Mr KING O'MALLEY:
Darwin -- If the Commonwealth has no constitutional power to levy this tax, and the States have no constitutional power to tax us, I cannot see why we should put, perhaps, a poor man in the position of having to brief a lawyer at a heavy fee, or obey the notice of the Commissioner of Taxation to pay up. I think we have a splendid opportunity to commence a federation or nationalization of the Australian debts, a matter which we have preached for years, but which we have not yet set about doing. We have come to the hurdle, but have never jumped it. At least if we have tried to jump it we have stumbled and lost a shoe. While I sympathize with men who have put their money into State bonds, it is well known that when the rate of interest rises the value of money rises, and in consequence the value of bonds on which there is a fixed rate of interest must fall, the income from the bonds remaining unaltered. The effect of the Commonwealth War Loan will certainly be to reduce the value of State bonds, but why cannot we do in Australia what was done in America with State bonds? A pool which was called "The Blind Dog" was started, and when the bonds of a State fell below par the State bought them in and cancelled them. We could do the same in Australia. But why should we grieve about the position of the man who invests his money in State bonds? He is a pretty cunning rooster. I remember when we were buying Canadian bonds thirty years ago. Investors were waiting to see whether the rate of interest would be increased, and a gentleman in London told me not to buy until the rate of interest increased, which it did. If the gentlemen who hold State bonds are not satisfied, let them sell them or exchange them for Commonwealth bonds based on the parities of the two stocks. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- There is no means of doing so. {: .speaker-K5D} ##### Mr KING O'MALLEY: -- Certainly they will not change at par, but they can do so on the parities of the margin of exchange. If I buy a property in Melbourne, and it falls in value, who makes good to me the loss? This tax should be levied in a just way, and should not cripple capital in any shape or form, because, without capital, we cannot carry on the great activities that produce the wealth which pays the tax. The question is whether we have the power to tax State bonds. Legal gentlemen say that we have not. Then why should we be worrying about it. But while I am on my feet I might as well say that, even at this late hour, I would like to see the Commonwealth set about consolidating the State debts, so that we could go into the world's market with one bond and one security. We should be careful as to the way in which we levy this taxation, because hundreds of business men in Australia have had their incomes greatly reduced. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- This taxation will affect the value of £300,000,000 worth of State stocks. {: .speaker-K5D} ##### Mr KING O'MALLEY: -- Why should we cry out about gentlemen who have invested their money in State bonds and drawn their interest? {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- Because we have asked the States to exempt our loan. {: .speaker-K5D} ##### Mr KING O'MALLEY: -- I am not asking them to exempt us. I agree with the honorable member for Balaclava, and ask: "Who will pay the tax if we exempt all these men of money?" I sympathize with the wealthy men because they are now poor men, but I sympathize more with the poor man who produces the wealth to keep the rich man going, for, as the available amount of capital shrinks, the rate of interest, which is paid out of the production of the labour of the poor man, is increased. {: #debate-25-s41 .speaker-KFJ} ##### Sir JOHN FORREST:
Swan -- It seems to me that we are overlooking the reason for allowing the exemption we provide for those who purchase stock or bonds in the Commonwealth War Loan Why are we allowing this exemption? It is because we desire to induce those who have means to invest in the stock. That is the reason why the States have exempted their bonds from taxation, just as we have exempted Commonwealth bonds It is done in the interests of the State or Commonwealth, as the case may be, and not in in the interests of the investor ; and there is no other reason why there should be an exemption. It is, of course, an advantage to the persons who invest, but that is a secondary motive in the minds of those who impose the taxation. It would be a grave step for the Federation to impose taxation on the proceeds of State stock bought under legal authority on the understanding that it would not be taxed - it would be a grave step even if we had the undoubted power to take it. It would cause the States to break faith through the action of the Commonwealth : and I hope that nothing of the sort will occur. I do not think that we have tlie power to tax State instrumentalities, any more than that the States have the power to tax our instrumentalities. The Attorney-General said that it would almost mean that we might destroy the States by taxation; but I am compelled to say that the honorable gentleman, since he has been in office, has been marching very rapidly in that direction. If he should continue at the same speed there will be very little left to the States; and there is no doubt whatever that the object his party has in view is to destroy the States and erect- {: #debate-25-s42 .speaker-10000} ##### The CHAIRMAN: -- Order ! {: .speaker-KFJ} ##### Sir JOHN FORREST: -- Yes, I say to destroy the States - that is, and for a long time has been, their object. {: .speaker-10000} ##### The CHAIRMAN: -- The right honorable member cannot discuss that matter on this clause. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- There never was any intention on the part of the framers of the Constitution that the Commonwealth should be able to impose taxation on State instrumentalities; any idea of the kind was absolutely absent from the minds of those who took part in the Federal Convention. I think that even the very suggeston to tax State bonds would injure us, not only here, but in the great centre of finance. It must be remembered that some £200,000,000 worth of State bonds are held by people outside Australia. Are we going to impose an absentee tax on those bondholders? I warn honorable members to be cautious what they are about, because it might be that those investors would be subject to such a tax. {: .speaker-KEV} ##### Mr Fenton: -- It is a very fair tax, is it not? {: .speaker-KFJ} ##### Sir JOHN FORREST: -- To tax them would amount to a breach of faith; but I suppose that does not trouble honorable members opposite. Some people are very fond of taxation ; but I ask the honorable member for Balaclava what would be the effect of placing a tax on the incomes from the £100,000,000 worth of bonds issued by the State which he so ably represents here. {: .speaker-KXG} ##### Mr Watt: -- We could not tax those people. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- If we can tax such people in Australia, I think we could tax tlie States bondholders outside Australia. {: .speaker-KXG} ##### Mr Watt: -- How could we get at the individual bondholders in London? {: .speaker-KFJ} ##### Sir JOHN FORREST: -- I do not know, but we see how far the honorable member is marching towards them when he advocates that such taxation should be imposed in Australia. {: .speaker-KXG} ##### Mr Watt: -- How could we find the holders of transferable documents ? {: .speaker-KFJ} ##### Sir JOHN FORREST: -- I understood the honorable member to say that he is in favour of State bondholders being taxed, and, if he be in favour of such a course, it is one, in my opinion, against the interests of Victoria. The effect would be to absolutely depreciate State securities, not only to future, but to present, holders. Apart from all this, however, there is no justification for this taxation. Let us act as if we were really a federated community, and not as if the Commonwealth stood above the States ready to pounce upon and destroy them at every opportunity. {: .speaker-KEV} ##### Mr Fenton: -- All the same, we ought to stand above the States. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- For some reason that I cannot understand, honorable members opposite seem to be in antagonism to the people and the Governments of the States, and only think of the supremacy of this Parliament. {: .speaker-KTU} ##### Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917 -- No one on this side has suggested that we should take anything off the 25s. per head paid to the States - that came from the other side. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- I do not think so; but, at any rate, if some honorable member has thrown out a hint to that effect, it is not fair to fasten such a view on the whole of the honorable members on this side. Personally, I am absolutely opposed to such a thing. However, if the law is as the Attorney-General believes it to be - that we have no power to impose this taxation in connexion with State securities - the sooner we make that fact as clear as possible the better, so that the public may know exactly where we stand. {: #debate-25-s43 .speaker-KJE} ##### Sir WILLIAM IRVINE:
Flinders -- I agree with the honorable member for Darwin that we ought, long before this, to have taken over the State debts. That is a power and a responsibility imposed on us by the Constitution, but the provision has resulted, so far, in nothing but Premiers' Conferences. {: .speaker-KFJ} ##### Sir John Forrest: -- It would have been done but for the Labour party. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I do not know about that, but we have been touching the matter with our hands in kid gloves, without realizing the responsibility of this Parliament. So long, however, as the debts remain not taken over, it is an invidious thing to attempt to make any discrimination between them and the debts which the Commonwealth creates. I do not think that .it is the desire of the Attorney-General or the Government to have that discrimination. For instance, supposing we had taken over a portion of the State debts, would it be suggested for a moment that we should discriminate as to that part of them for which we were the debtor to the British creditor ? We should not do so. {: .speaker-KXG} ##### Mr Watt: -- We are doing it; we are exempting only the present war loan, and we may have others. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I do not say that I believe that it is the desire of the Attorney-General to make any discrimination, and certainly it would be a very bad and injurious policy, so long as we allow the States to appear before the public as debtors under their own public obligation. As I understand the AttorneyGeneral, his interpretation of the Constitution is that, in effect, we do not, by this Bill, tax State bonds. {: .speaker-DQC} ##### Mr Hughes: -- I said that we have not the power. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I do not entirely dissent from what the AttorneyGeneral says, but I shall state to the Committee what seems to me to be the exact position from a constitutional point of view. This is just one of these points which is so doubtful that, unless we make it clear in the Bill, we shall throw on some unfortunate individual or individuals the whole burden of lengthy and costly litigation. It is quite true that, so long ago, I think, as 1829, or a little later, Chief Justice Marshall decided in that well-known and frequently-cited case, *Weston* v. *Mayor of Charleston,* the great principle that no State can impose a tax on Federal bonds. It was decided by him as a branch of that principle for which he was originally responsible, and which' has been applied in every direction in the judicial determinations of the United States of America since that time - the principle of the doctrine of instrumentalities, as it is called. This doctrine is that the State has no right to exercise any of its powers so as to hamper the instrumentalities of the Federation, and that the Federation has no right to hamper the instrumentalities of a State. Bear in mind that this is not an express obligation under the Constitution, but is implied from the very nature of the Constitution. The doctrine was subsequently actually applied in 1896, in the case of *Pollock* v. *Farmers Union,* in reference to the taxation of interest on bonds. It was held that the Federation has no right to tax the interest on State bonds, and that the State has no right to tax the interest on Federal bonds. So far, that is entirely in support of the view of the AttorneyGeneral; but I remind him that we have a High Court in Australia, and also a Privy Council at Home; and that the High Court in Australia 'has, in constitutional matters, usually on broad principles, followed the lines laid down by the Supreme Court of the United States of America. It has not done so, however, on all occasions. In the earlier cases, the High Court did adopt, apparently, to the fullest extent, the doetrine; but, as the Attorney-General well knows from reports of recent cases, it has gradually receded to a considerable extent from its full acceptance. I could mention a number of decisions, but I do not wish to detain the Committee. The High Court would certainly not go to the length which, five or six years ago, I should have said it would in applying such a doctrine to the taxation of interest on State bonds. I should like to add that the High Court is not the only body that has to determine these matters. There is under the extraordinary provisions of our Constitution a double channel of appeal ; and another - and certainly one of the most extraordinary provisions ever included in a Constitution so far as the usual practice is concerned - is that it is the privilege of the defeated party to choose which shall be the Court of Appeal. As a matter of fact, in some cases it might be to the advantage of a litigant to lose the case in the lower Court in order to have the privilege of selecting the Court of Appeal. {: .speaker-KXG} ##### Mr Watt: -- That is a nice state of affairs the lawyers have j»ot us into ! {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- We lawyers are responsible for a good deal, but I must say that we are not responsible for everything in the Constitution ; and I decline to take any responsibility. {: .speaker-JRP} ##### Mr Boyd: -- I think that lawyers are responsible for a good deal of the Constitution. {: .speaker-KXG} ##### Mr Watt: -- Does the honorable member decline responsibility because the work was done for nothing? {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I was not at the Federal Convention, but work that is done by lawyers for nothing is not worth much. No nian can say in which of these final tribunals the question will ultimately be decided. Even if the question goes to the High Court, it is impossible to predicate now, as it might have been a few years ago, that the High Court would probably adopt Chief Justice Marshall's application of the doctrine of instrumentalities to State bonds. But if the ultimate decision should go to the Privy Council, as the defeated litigant may choose to make it go, I should feel a good deal of confidence in predicating that the decision would be against the whole doctrine of instrumentalities. In most of the cases which have come from Canada, and in which an attempt has been made to rely on the implied doctrine of instrumentalities, the Privy Council has given that doctrine very short shrift indeed. We should decide now in the Bill what our policy is to be, in order to prevent the question being tested by lengthy and costly litigation. If the Bill is left in its present form, and the question is left to be decided on the implied doctrine of instrumentalities, we shall be inviting litigation which will end iu either the High Court or the Privy Council. If it ends in the High Court, it is uncertain what the result will be, and if it ends in the Privy Council, I feel a good deal of confidence in saying that that tribunal would not uphold the implied doctrine of instrumentalities, and State bonds would be declared taxable. Unless there is some strong reason why we should make a discrimination, we should make clear in the Bill what our intentions are. **Mr. CARR** (Macquarie) r.3.18].- In my opinion it is only reasonable that income derived from State bonds should be exempt from Federal income tax just as income derived from Commonwealth bonds is exempt from State taxation. I agree that we should offer special inducements to those who have money to invest in the Commonwealth war loan, and we have done that by offering an extra per cent., and in some cases 1 per cent., above the interest paid by the States. That inducement is sufficient. The levying of taxation on income derived from State bonds would be a most invidious distinction, and would be simply fostering that antagonism which has already been much too pronounced between the States and the Commonwealth. Besides, the Attorney-General does not think that the Commonwealth has power to tax State bonds. That being so, we shall be only doing the right thing by the States if we specially exempt their bonds in this measure. By so doing we shall avert the prolonged and costly litigation to which the honorable member for Flinders referred, if it is left to the Courts to decide whether income derived from State bonds should pay income tax. Not to exempt State bonds would be both unjust and an act of egregious folly. {: #debate-25-s44 .speaker-L1P} ##### Mr WISE:
Gippsland .- The position has been stated with great strength and clarity by the honorable member for Balaclava. It is all very well to talk about the prevention of litigation as a reason why we should exempt State bonds, but there is a higher principle which should be brought into play, and that is the principle of fairness to all the people who have made investments throughout Australia. As the honorable member for Balaclava pointed out very forcibly, for a number of years the State Governments have been handing over a great deal of the work, which they had previously performed, to municipalities, harbor trusts, tramway trusts, and other such bodies. The Governm'ents have given those individual bodies power to raise loans, and they have raised loans upon what is, after all, a State instrumentality. Why should we exempt the present holders of State bonds, and make them a present of something they did not anticipate when they subscribed for these bonds, and yet compel payment by all the holders of the vast number of debentures that have been issued throughout Australia by municipalities and trusts under the sanction of Parliament? {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The number of such holders is infinitesimal in comparison with the number of holders of State bonds. {: .speaker-L1P} ##### Mr WISE: -- Has the honorable member the slightest idea to what value municipal bonds alone have been issued in Victoria ? {: .speaker-JRP} ##### Mr Boyd: -- The rate of interest on those bonds is very much greater than that on the State bonds. {: .speaker-L1P} ##### Mr WISE: -- People have been induced to invest money in those bonds, and now it is proposed that those stocks shall be depreciated by the Commonwealth making a present to the holders of the various State Government bonds. Besides, if we exempt the tremendous amount of income that is derived from State securities, from what source are we to collect the Federal income tax1! Such a proposal simply means that the people who are left, after all these exemptions have been made, will have to pay very much heavier taxation than the Bill at present proposes. {: .speaker-KXG} ##### Mr Watt: -- Those people are the working partners of the nation, and the others are the sleeping partners. {: .speaker-L1P} ##### Mr WISE: -- Exactly. Certain members of this House are particularly interested in the holders of land, and are always taking care that those people are not unduly taxed. Now they propose that the land-owners shall be ultimately made to pay heavier taxation on the incomes earned from land in order that the sleeping partners within the community - the men who simply invest their money in Government securities - may be allowed to draw their incomes without paying any income taxation on them. Why should the man who invests in land, and draws his money from rents, be compelled to pay taxation, whilst the other man who does nothing with his money but draw interest from Government securities, go scot-free. The honorable member for Balaclava pointed out also that the Bill does not propose to exempt all Commonwealth securities, but only those bonds which are raised under the War Loan Act. There Is a special reason for making that exception. We desire to offer exceptional inducements to people to subscribe money for the carrying on of the war. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- We are extending the exemption to other securities. The Inscribed Stock Act exempts all stock issued under it. {: .speaker-DQC} ##### Mr Hughes: -- I question that. {: .speaker-L1P} ##### Mr WISE: -- The particular exemption mentioned in this Bill applies only to bonds, debentures, or other Commonwealth securities issued under the authority of the War Loan Act. I think we had better confine our exemption to that limit, and leave the other securities alone. Honorable members will be greatly surprised to discover where the proposal to exempt all State securities will land them. {: #debate-25-s45 .speaker-KMM} ##### Mr MANIFOLD:
Corangamite -- I do not know anything about the legal point as to whether State bonds can be taxed. That question will be settled at a later date. As to the harvest which the lawyers will get out of this measure, the omission of any specific exemption of State bonds will only add one sheaf to the load which the lawyers will reap. I predict that the legal profession will grow fat on the litigation that must result. I can quite understand the position taken up by tlie right honorable member for Swan. He does not desire anybody to be taxed at all. He is anxious to allow as many people as possible to escape the taxation, and the result will be that the poor individuals who are left will have to pay a very much higher impost. Who will derive the benefit from the exemption of income derived from State bonds? Not the State Governments, but the people who have invested their money in those bonds, and, as the honorable members for Balaclava and Gippsland have remarked, those people are the sleeping partners in the State - the men who do not endeavour in any way to develop the country, but invest their money in the easiest and surest way. I am entirely opposed to the exemption of State bonds. If the States were issuing a new loan, and this exemption were to be given in connexion with it, then, of course, tlie States would gain to a considerable extent, because they would either fix the interest at a lower rate or they could demand a higher price for the stock. Shall we say that because cer.tain people have seen fit to put money into State securities, as other people have invested in municipal and harbor trust securities, we are going to differentiate between the two and say to the former that because he has put money into State bonds he shall not be called upon to contribute anything towards the war expenses of the Commonwealth? If that is to be done, the war taxation on the other sections of the community will be very heavy indeed. Why should we exempt one class from taxation, and make the burden very much heavier on the other classes? {: #debate-25-s46 .speaker-KCO} ##### Mr GLYNN:
Angas .- I do not think we should exempt incomes derived from State bonds. I never did believe that there was any system in the financial policy of the States under which they sought to give some preference to their securities, unless in a concession by way of interest. They should have stood on the general solvency and capacity of the States, rather than adopt the irregular method of giving a benefit in one direction for which they have to pay in another. To some extent one can understand the special inducements offered in connexion with the war loan of £20,000,000. The Commonwealth wishes to put the best possible aspect on its securities, in order to prevent the possibility of the reputation of the Commonwealth being affected to any extent in the eyes of financiers on the other side of the world. I can sympathize, therefore, with the desire of the Government to get the consent of the States not to tax the incomes derived from this particular loan. But I do not think that we are called upon to free, if liable, a very large body of security-holders in each State of liability to an income tax which is imposed to meet a very pressing necessity. We should be really giving to them something which they neither expected nor asked for. A State can give advantages in regard to State securities only, and the Commonwealth is called upon to offer advantages only in regard to its own securities. There is something to be gained from this particular loan which justifies the Government in asking the States to consent to the income from our bonds being made free from State income tax. I understand that an arrangement to that effect either is contemplated or has been made. {: .speaker-KEV} ##### Mr Fenton: -- Would such an exemption apply to the bonds of municipal and -corporate bodies? {: .speaker-KCO} ##### Mr GLYNN: -- I do not say so, though on American cases it would. Yesterday I gave the House a number of the American decisions, which exempt from Federal taxation the municipal as well as State securities. It was held that such an exemption is by the law of the Constitution reciprocal - that neither Federal nor State Government can tax the agencies, and, by consequence, the bonds or incomes of the other. I endeavoured to point out that it was possible that the Privy Council may hold that the doctrine of instrumentalities does not apply to our Constitution. The High Court have taken one view, while the Privy Council have shown an inclination to take the other. The Privy Council expressed the opinion that the doctrine of instrumen talities did not apply to the peculiar conditions of our Commonwealth. I confess that I could never quite accept their reasoning in the matter. Some competent legal authorities indulged in some strong language after the decision of the Privy Council on, it was thought, illogical deductions from assumed premises by which they arrived at their conclusion. The Privy Council would have given a decision contrary to that of the High Court in the Baxter case but for the fact that the intention of the Commonwealth to permit, by Act of Parliament, the taxation of Commonwealth salaries - which was the point in dispute - had been declared. In view of that fact the Privy Council thought that they were not called upon to give a decision in the matter. They considered it was not necessary, in the light of our contemplated legislation, especially in view of the fact that another Court of appeal - the ultimate Court of appeal so far as Australia is concerned - had taken a different view. {: .speaker-KJE} ##### Sir William Irvine: -- In their decision in the land tax case, the High Court have gone a long way back on that judgment. {: .speaker-KCO} ##### Mr GLYNN: -- The honorable member was not present when I spoke yesterday. I then took exactly the view now expressed by him. I said it was possible that the Privy Council, in the light of recent decisions of the Supreme Court of Canada, in which they repudiated the doctrine of instrumentalities - reversing a long line of other decisions to the contrary - might, on any appeal, carry out the opinion that was expressed in the Baxter case. {: .speaker-KJE} ##### Sir William Irvine: -- It is quite possible that the High Court would do the same thing. {: .speaker-KCO} ##### Mr GLYNN: -- Yes ; but we should not leave this matter in doubt. I do not think we should exempt State securities. We should leave the States, as at present, to their legal remedies. At the same time, we should come to some arrangement which would save the public the expense of litigation. I do not think it is fair, should any one be so unpatriotic as to challenge, in respect of the war loan, this right of exemption, to leave the matter to private litigation. The States and the Commonwealth should agree to tax one another's securities, with the exception of any war loan. The de- cision of the Supreme Court of Canada was that such taxation is perfectly valid as long as it does not discriminate against the State or against the Dominion's securities in particular. In other words, if the discrimination follows the lines of a general law such as ours, then, from the point of view of power, it is unexceptionable. This is a very difficult subject, and I recognise that there is something, perhaps, to be said on the other side; but the inclination I have is to suggest that we should leave the position of the States as at present, and endeavour to find some remedy under which the common policy would be, not exclusion, but, as I think it should be, equal taxation. {: #debate-25-s47 .speaker-JSC} ##### Mr BRENNAN:
Batman .- I have listened with great interest to the proposals that have been made for an extension of exemptions in connexion with the Commonwealth war loan, but I am not animated by any such tender solicitude for the investors. My concern is to inquire upon what just basis there can be any exemption from taxation in respect of interest derived from the war loan. The right honorable member for Swan asked what was the reason for the exemption, and he assumed that it was designed, not to give a bonus for the benefit of any particular class of individuals, but to stimulate a patriotic desire to advance this loan for war purposes. The honorable member for Balaclava, however, forcibly pointed out that no special bonus was required to make the loan an attractive investment. Apart from any exemption from taxation, it is an exceedingly attractive investment. I am told that the first issue has been subscribed twice over. That is precisely what one would expect. {: .speaker-KJE} ##### Sir William Irvine: -- The honorable member does not suggest doing away with the exemption in respect of the first issue ? {: .speaker-JSC} ##### Mr BRENNAN: -- I would not suggest that it should be withdrawn : but it is certainly indefensible in principle, and that fact should be considered in relation to any future issues. I would not withdraw the exemption in respect of the first issue, since it was offered on the understanding that there would be an exemption from income tax; but we should keep before us the fact that in principle the exemption is indefensible. A very tender solicitude has been shown for the mortgagee in this matter. It is worth while considering who is the mortgagor. Who will have to repay this loan ? Is it to be repaid only by the investor? On the contrary, it will have to be repaid, either directly or indirectly, by the poorest as well as the richest in the Commonwealth, and I cannot comprehend, therefore, why there should be a special exemption in respect only of those who make a profit out of the business. We cannot escape from the fact that the war loan of £20,000,000 has to be borne indiscriminately by the Australian people. The Prime Minister is borrowing the money. He is not getting it out of any Pandora's box, and he cannot repay it in any such picturesque way. He has to obtain the money from the people, and from the whole of the people. I am, therefore, unable to understand why those who have an exceedingly good investment, an investment so good as to attract every person who has money to invest, should alone be considered in this respect. There is no occasion to stimulate the subscription. That has already been proved, and since the loan has to be repaid by the poorest as well as the richest, there is no just basis for any exemption. {: #debate-25-s48 .speaker-JUV} ##### Mr McWILLIAMS:
Franklin -- I agree with one remark just made by the honorable member for Batman that a mistake was made in providing for any special exemption from taxation in respect of the war loan. It would have been far better to issue it as a straight-out loan, with a fixed rate of interest, and without any exemption from taxation. Several honorable members have said that, having regard to the terms of the prospectus, it would be immoral now to tax income earned by investment in the war loan. They plead, however, for the taxation of some £17,000,000 or £20,000,000 of loans raised by the States last year. If those who lent the States that money had known that this tax was to be imposed, they would not have been obtained at the price at which it was raised. The Australian States owe, roughly, some £400,000,000. {: .speaker-KGG} ##### Mr Hannan: -- What are their assets? {: .speaker-JUV} ##### Mr McWILLIAMS: -- They are far more than sufficient to cover their liabilities. That, however, is not the point. The point I wish to emphasize is that it ill becomes any one to decry those who have lent the States this money. Practically every railway in Australia has been constructed out of borrowed money. Loan money lias proved the very life blood of Australia, so far as its development is concerned. The State railways are in themselves more than a sufficient asset to put against the whole of the moneys we have borrowed, and it would be a bad day for Australia if we were not able to bring capital into the country for reproductive works. There are two other points to consider. In tlie first place, how are the Government to ascertain who holds these State bonds ? They are liquid assets, ' and circulate as securities, practically as freely in the world's markets as pound-notes and sovereigns. They pass from hand to hand, and from firm to firm ; so that, unless we adopted some very elaborate system of bookkeeping which would cost more than the return from it, it would be practically impossible to follow the great bulk of the Australian bonds which are held abroad. {: .speaker-KEV} ##### Mr FENTON:
MARIBYRNONG, VICTORIA · ALP; UAP from 1931 -- But every local holder will have to pay taxation on the interest he earns every twelve months. {: .speaker-JUV} ##### Mr MCWILLIAMS: -- The percentage of Australian bond-holders resident in the Commonwealth is very small. The great bulk of the bonds that have been issued in respect of Australia's indebtedness are held abroad. The AttorneyGeneral will have the greatest difficulty in locating and following those bonds, owing to the almost daily circulation to which they are subjected. We are proud to know that Australian bonds are regarded all over the British Empire, and especially in the Home country, as so good a security that they are matters of almost daily negotiation. Some £17,000,000 or £20,000,000 worth of Australian debentures fell due last year. Next year some £7,000,000 or £8,000,000 fall due, while in the following year some £25,000,000 will become payable. What would be the result of taxing those State securities? The moment the States tried to renew those loans this tax would be added to the interest so that the people we are seeking to protect would have to find the money. In other words, we should be simply taking the money out of one pocket and putting it into another. Any tax imposed upon those bonds would be collected from the people of Australia as they fall due. We should be able, perhaps, to trace one-third of them, but the remaining two-thirds, being floating securities that pass from firm to firm, would escape taxation, because we should be unable to follow them. {: .speaker-L1P} ##### Mr Wise: -- Not a penny will escape. {: .speaker-JUV} ##### Mr MCWILLIAMS: -- How are the Government to discover who has them? {: .speaker-L1P} ##### Mr Wise: -- By the sworn returns. {: .speaker-JUV} ##### Mr MCWILLIAMS: -- We might just as well try to follow bank notes or sovereigns as try to follow those bonds. In addition to what I have said, we should find that whilst future bond-holders would protect themselves by securing an enhanced rate of interest, the bonds that were issued last year, and have a life of thirty years, would have to pay this tax - if it were applied to State securities - in respect of the whole of that period. We should thus be simply increasing the price that we should have to pay for those loans when they had to be renewed. Tlie Committee ought to put the question beyond all doubt by declaring in the Bill itself whether or not State bonds shall bear this impost. {: .speaker-L1P} ##### Mr Wise: -- We could only say that they shall not pay the tax. {: .speaker-JUV} ##### Mr MCWILLIAMS: -- Varying decisions on this point have been given by the High Court, so that we shall simply be leaving the matter to chance unless we expressly exempt State securities from taxation. In the case of *d' Emden* v. *Pedder,* the High Court upheld ' the doctrine of Instrumentalities. Under this decision it was held that the State Government could not insist on stamp receipts for Federal officers' salaries, on the implied law that tlie State could not tax Commonwealth services. Under a recent Customs case, however, the High Court decided that the New South Wales Government should pay import duty upon a quantity of iron rails required for its own services. Then there is the recent Land Tax case wherein it has been decided that taxation cannot be imposed. So that there are three cases - one decided on the law of Instrumentalities, one decided against the power to impose taxation, aud a third in favour of it. Whatever attitude the Committee decides to adopt, it should certainly make the position as clear as possible, so that there can be no mistake, and so that some individual may not find himself involved in costly litigation passing through the Supreme Court, the High Court, and, perhaps, to the Privy Council, in order that the law may be made unmistakable. {: #debate-25-s49 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- Refreshing arguments have been submitted by the honorable members for Balaclava and Gippsland as to why investors in State loans should not receive special consideration, and it seems to me that they might well have applied their arguments to investors in this loan. I do not suggest that at this period, interest on the war loan should not be made exempt from taxation, for the prospectus has fixed that, but I quite fail to see the justification for its exemption, particularly during a war period. By the exemption not only is the productive value of the State loans - which amount to between £300,000,000 and £400,000,000- lessened, but the capital is also depreciated. I would have no objection to this depreciation had it been the natural consequence of the increased necessity for capital in other directions ; but by granting a special exemption in favour of a patriotic war loan, the Government have placed all other investments of capital at a discount. I never could see any reason for this special exemption, particularly as it is impossible to foresee what additional taxation will be required before the war is over. Amendment, by leave, withdrawn. Progress reported. {: .page-start } page 6561 {:#debate-26} ### QUESTION {:#subdebate-26-0} #### COMMONWEALTH WAR LOAN {: #subdebate-26-0-s0 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- I ask leave to make a statement to the House. Leave granted. {: .speaker-F4N} ##### Mr FISHER: -- The Governor of the Commonwealth Bank, who has had charge of the flotation of the Commonwealth war loan, writes to me as follows: - Commonwealth Bank, Melbourne, 1st September, 1915. Commonwealth of Australia - £5,000,000 4½ per cent. War Loan 1925. **Sir,** I have the honour to advise that the number of applications received and amounts applied for the above loan, as telegraphed from the various States, are as follow: - It is evident the banks have supported the issue in proportion of £5,000,000 to £20,000,000, and have applied for one-quarter of the amounts they were prepared to take up in the loan of £20,000,000. The public have responded generously, although the launching of a loan of £5,000,000 in Australia was new to them. The applications from places more than one day's postal distance from the capital centres have yet to come in, and will later on be added to the total. Thanks are due to the press for the very consistent support given. I trust the result will be deemed to be satisfactory. I have the honour to be, sir, Your obedient servant, Denisonmiller, Governor. I am sure honorable members will not consider me tedious if I submit a list of the larger public subscribers - There are a number of private investors whose applications cover larger amounts than these public institutions, but I thought it was only fair to these institutions that I should make available this information. It is evident that the amount subscribed will be substantially over £13,000,000- practically two-thirds of the total amount of the loan of £20,000,0000. I do not think I am exaggerating when I say that the people of Australia have risen to the occasion in a most patriotic way. The country has reason to be proud of the position it occupies, both in regard to the action of its soldiers who have gone away, and in regard to the conduct of those who remain behind. {: .page-start } page 6562 {:#debate-27} ### INCOME TAX ASSESSMENT BILL *In Committee* (Consideration resumed, *vide* page 6561). Clause 10 (Exemptions). {: #debate-27-s0 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- I do not propose to pursue my argument any further except to point out to the honorable member for Gippsland that when he compared municipal bonds with State bonds he could hardly have known their precise relationship. There are in Australia 939 municipal bodies possessing a total valuation of £31,906,000. Therefore their borrowing in relation to State borrowing must be a matter of small concern. I congratulate the Government and the country on the splendid response that has been made to the flotation of the war loan, which is only another evidence of its favorable terms. I can hardly conceive of anybody, particularly in this war period, declining to subscribe to an investment that carries with it immunity from all taxation, even a tax upon wealth. I can only call attention to the position of that section of the community that will have to bear not only existing taxation, but the additional taxation this £20,000,000 will render necessary on account of the special immunity it grants to the holders of this stock. I have in mind the section of the community that suffered so severely during the recent drought. Not only have they not earned income, but they have suffered loss of capital. Those who have not suffered these losses are to be exempt from taxation. The arguments of the 'honorable members for Balaclava and Gippsland seem to me splendid reasons why no exemption should be given in regard to the war loan. One regrets that the result of what is proposed may be to depreciate State stock. No one wishes to see State or Commonwealth stock depreciated, either in this market or in the Home market. We are content to stand the risks of our investments, whatever they may be, but all should be on the same plane in regard to taxation. {: #debate-27-s1 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- It was promised that if I would report progress last night I would not regret it, but we have been here since half-past 10 this morning, and are now only as far as clause 10, and have postponed the only clause involving a real fundamental difference of opinion. It is not too much, therefore, to ask honorable members to get on a little more quickly. The Government have stated that it intends to stand by its proposal. I admit that, as the honorable member for Flinders has said, there is a possibility of the High Court, or of the Privy Council, taking a different view of the Commonwealth powers from that taken by the Bill ; but the position of the Treasurer is that, in view of the tremendous liabilities imposed by the war, we ought not to abandon this sphere of taxation, except under compulsion. In my opinion, the Commonwealth has not power to tax incomes derived from State securities; but I agree with the Prime Minister that we should not 'abandon the claim to tax that income until it is shown that we have not the power to do so. {: #debate-27-s2 .speaker-KEA} ##### Mr KELLY:
Wentworth .- This question is hedged about with very considerable difficulty, and I think that the wisest course at this stage would be not to move an amendment. I find it bard to decide that State bonds should be free from Commonwealth taxation, but if there is any real doubt as to our ability to tax them, it would be, not only a graceful act, but a wise one, to declare them exempt from taxation. If there is a doubt, amounting almost to a certainty, as to our inability to tax, we may,, by insisting on taxing, put the community to heavy expense in legal proceedings solely for the benefit of the lawyers. Should a vote be taken, I shall feel it my duty to support the Government, but I should like Ministers to obtain the best advice, and if it be found that there is a reasonable fear that State securities cannot be taxed, to exempt them without necessitating an appeal to the Courts. {: #debate-27-s3 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- I cannot help feeling that we aresetting up a class of favoured stockholders and giving a preference that I, for one, do not like. It does not seem either Federal or neighbourly. Then there is this other view, that we are benefiting the holders of Commonwealth stock, who receive interest at the rate of 4£ per cent.,, and are doing nothing for the holders of State stock, whose rate of interest is 1£ per cent, lower. If we continue in this direction, State securities may become practically unsaleable. {: .speaker-KXG} ##### Mr Watt: -- The Commonwealth is floating a loan; the State loans are already floated. Why should we make a gift to the holders of State securities? Future lenders would be in a different position. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- The position is full of difficulty, but if the strong partner in the Federation were to strike the Federal attitude, I think we should find a way out. It is a safe rule when in difficulty to get back to principles, and reciprocity is of the essence of Federal relations. But I would dislike extremely to attempt to modify the financial proposals of the Government. Ministers should arrange some amicable agreement with the States. They have made their proposal before consulting the States. The States have been kept at arm's length, and have been encouraged to keep us at arm's length, which is quite un-Federal. In my opinion, it will be best to leave State securities untaxed until an agreement has been arrived at between the Commonwealth and the States. I do "not know that we should tax State securities any more than the Imperial Government should tax us on the loans that it has made to us. But' as this is a War Bill, I hesitate to interfere with the Government proposal. As we are exempting our own clients, the lenders to the Commonwealth, we might very well exempt the clients of the States, and I think that we could do that without losing very much revenue. My feeling is in favour of securing an arrangement under which both parties will be treated fairly and equitably. {: #debate-27-s4 .speaker-KVO} ##### Mr STUMM:
Lilley .- To bring the discussion to a head, I move - >That after the figures. "1915" in paragraph *e,* the following words be inserted: - "and income arising or accruing from debentures, stock, or Treasury-bills issued by the Government of a State in the Commonwealth." £ fail to see how assent to this amendment can stand in the way of an arrangement being come to between the States and the Commonwealth. In fact, it seems to me that it would constitute a very good argument for carrying these negotiations further than they have ever been carried. I do not contend that any body of men should escape contribution to the taxation that will be necessary to meet war expenditure. I am for a reciprocal ar rangement. I am against the costly litigation which is inevitable if we do not settle the matter. Already to-day we have had some very weighty opinions from the lawyers in the Chamber, but they are not in agreement, and their differences raise a considerable amount of doubt. To imagine that it is the " big bugs " only who have invested in State loans is a big mistake. I know that in Queensland a number of working men have invested in the bonds which that State has issued. They have deposited their money in Savings Banks, and have invested some of their deposits in Treasury bonds, and their investments are materially affected by the issue of the Commonwealth war loan, and will be still more affected if we adopt the principle of taxing the incomes which are derived from these investments. Already the Commonwealth has gone out of its way this session to further invade the province of the States. This has been done by the amendment passed to the Commonwealth Inscribed Stock Act. If we seriously desire to do a fair thing to the States, and bring about a reciprocal arrangement, we shall assent to the proposition that the States shall not tax income from Commonwealth bonds, and that the Commonwealth Government shall not tax income derived from State bonds. {: #debate-27-s5 .speaker-KFP} ##### Mr RICHARD FOSTER:
Wakefield -- I support tlie amendment. It would have been better had a conference between the Prime Minister and the State Premiers been held prior to the introduction of this Bill. In fact, I had the idea that a partial conference had been held. If any understanding has been arrived at honorable members should be made acquainted with it, because it would possibly influence the Committee in its attitude towards the clause of the Bill under review; but, in the absence of information as to any such consultation, I am bound, in the interests of the States, to insist on a reciprocal arrangement. The Commonwealth has invaded the whole of the area reserved for State taxation, not subsequent to the outbreak of the war, but prior to that. I admit that the necessities of the war are tremendous, but I cannot admit that the necessities of the Commonwealth are greater than those of the States. {: .speaker-JM8} ##### Mr Archibald: -- The States are not responsible for carrying on the war. {: .speaker-KFP} ##### Mr RICHARD FOSTER: -- Indirectly they are. The obligations cast on us by the war have to be paid for by the industries and primary productions of the Commonwealth, the control of which is left almost entirely to the States. It is the States who have to promote and increase the industries and primary productions of the Commonwealth. I am not so much concerned about the application of this principle to existing State securities as I am about the loans that may have to be floated in the very near future. Money must be found almost immediately in more than one State, but what chance have the States to get it when the Commonwealth Government is offering such immense advantages to investor's in its loan? {: .speaker-KFJ} ##### Sir JOHN Forrest: -- The Commonwealth stock depreciates the value of State stocks. {: .speaker-KFP} ##### Mr RICHARD FOSTER: -- N/ot only is it doing that, but it is also forcing the States to pay a tremendously bigger price on the stock that must be issued by them if they are to secure the money which they need - a price which will be higher than has been offered for the past thirty years. Such a result cannot be good for the community. I hope that the Attorney-General will inform the Committee as to whether there has been any consultation with the State Premiers in regard to this matter, and whether some, if not the whole, of the States have agreed to the attitude adopted by the Commonwealth Treasurer in this regard; because if that "is the case it will remove a responsibility from those who represent the States where the financial pressure is such as demands sympathy and assistance rather than the present attitude of the Government. In the absence of such information, I hope that the Committee will remember how the resources of the States have been invaded by double-banked taxation, and that, in plain language, we are possibly leaving some of them almost strangled. {: #debate-27-s6 .speaker-L77} ##### Mr HAMPSON:
Bendigo .- According to honorable members, the concession which the Commonwealth has given in regard to its war loan has resulted in depreciating the value of State stocks and in raising the rate of interest generally; but instead of denouncing the method adopted, they suggest that the same concession should be made in regard to State loans, whereas, in my opinion, the proper method is not to apply the principle to any of our loans. I do not think that it should have been applied to the war loan. {: .speaker-KFJ} ##### Sir John Forrest: -- Yet the honorable member a moment ago cheered the result of it. {: .speaker-L77} ##### Mr HAMPSON: -- The cheers were general from both sides of the chamber, but no cheers came from me. It is called a 4 per cent, loan, whereas, for the big investors, the interest is really *b* per cent. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- At one point it is 5f per cent. {: #debate-27-s7 .speaker-10000} ##### The CHAIRMAN: -- The honorable member must not discuss the loan. {: .speaker-L77} ##### Mr HAMPSON: -- The success which has accrued as the result of the inducements which were offered by the Treasurer prove to my mind that there was no need for those concessions. They were given largely because of fear or funk as to the success of the loan. We determine the price of wages and the price of commodities; and in a time of war I think it right that we should fix the price of money, and at a price considerably lower than has been done. Instead of asking the people for money at 4£ per cent., we should have asked for it at 3 per cent. {: .speaker-10000} ##### The CHAIRMAN: -- Order ! The honorable member is again discussing the loan. {: .speaker-L77} ##### Mr HAMPSON: -- Well, at any rate, that is my opinion. {: #debate-27-s8 .speaker-KFC} ##### Mr FLEMING:
Robertson ;The debate has arrived at a position which usually characterizes discussions on financial matters, the indefiniteness and uncertainty of the legal advice tendered having put laymen in the position of not knowing where they are in regard to the Bill. We are told that if an appeal is taken to the High Court a decision will be given one way, but if the appeal goes to the Privy Council the decision will probably be the other way. The AttorneyGeneral has said that this exemption will apply" to the war loan only ; but I call attention to the following sections of the Commonwealth Inscribed Stock Act as amended on the 16th of last month - 52a. Stock certificates. - Stock certificates to bearer, scrip certificates to bearer, Treasurybonds and coupons, and transfers of stock or Treasury-bonds, shall not be liable to stamp duty or other tax, under any law of the Commonwealth or a St,ite 52b. The interest derived from stock or Treasury-bonds shall not be liable to income tax under any law of the Commonwealth or a State. This shows that the exemption covers, not only the war loan, but also all issues and liabilities of the Commonwealth. We have been told that if the exemption is not extended to the States, the value of their securities will depreciate. In my opinion, the State stocks will depreciate in value to a very great extent; and as the indebtedness of the States is extremely heavy, those which are not possessed of sinking funds or redemption moneys will be in a very difficult position. A fall in ' the value of stocks would not be so bad for Victoria and Western Australia, which have large funds for the purpose of redeeming loans, because the State Treasurers can purchase their bonds, and thus take up loans at a much lower rate of interest. But what about New South Wales, which is the most involved of all, and. which has no redemption moneys ? It is most unfair for the Commonwealth to propose to exempt its own loans and liabilities in such a way as to reduce the value of State securities. If all the States had redemption moneys, I should be prepared to support the Bill as it stands; but seeing that the State with the greatest liabilities has no such fund, and will suffer with the others, I propose to support the amendment. {: #debate-27-s9 .speaker-KYD} ##### Mr POYNTON:
Grey .- I intend to oppose the amendment. I do not see why, if we exempt State securities, we should not also exempt the securities of municipalities, harbor trusts, tram trusts, and so forth, which are all State activities. The Leader of the Opposition has urged that it is the same people who pay ; but if that be a fair argument, I point out that it is the same people who will pay the Commonwealth income tax, and, therefore, we ought to have an exemption all round. Notwithstanding what the last speaker has said, this is a war tax, and stands on an absolutely different footing from any other imposed in Australia before. Would the exemption be of any advantage to the States? The argument of the honorable member for Wakefield would lead us to believe that it is the Slates which hold the bonds. {: .speaker-KEA} ##### Mr Kelly: -- The only advantage to tlie States would be on conversion. {: .speaker-KYD} ##### Mr POYNTON: -- But the honorable member for Robertson has pointed out that, if the value of State securities is depreciated, conversion can be effected on cheaper terms. {: .speaker-KFJ} ##### Sir John Forrest: -- Then why do we make any exemption in the case of Commonwealth bonds? {: .speaker-KYD} ##### Mr POYNTON: -- Because this is a special war measure. On general principles, I am not in favour of any exemption in the case of our own bonds. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- This is an income tax which will continue. {: .speaker-KYD} ##### Mr POYNTON: -- I grant that it will be so. I cannot see why a man, if he gets an income from bonds, should not pay tax on that income. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- Apply that to the Commonwealth loan and I am with you. {: .speaker-KYD} ##### Mr POYNTON: -- Ours is a special loan - there is not another ' on the same basis. It may have been a mistake to make any exemption in the case of that loan. By whom are these bonds generally taken up ? {: .speaker-KFP} ##### Mr Richard Foster: -- By the Savings Banks, small trustees, and so on. {: .speaker-KYD} ##### Mr POYNTON: -- Some of the Savings Banks may take up the bonds. The private investor in bonds is one of the most timid of mortals, and it is not he who has sent money out-back in order to develop Australia. I know of a case in Adelaide where such investors would not take any risk outside; and why should they be treated more favorably than men who do take the risk? It is the individual, and not the State, who is affected by taxation. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- But what if the State stock comes down 5 per cent. ? {: .speaker-KYD} ##### Mr POYNTON: -- An investor in State bond's should take his risk like any other investor. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I am talking of the State. {: .speaker-KYD} ##### Mr POYNTON: -- If one investor finds that his shares in a company have come down in value, while the shares of another investor in another company have risen, that is no reason why the former should be exempt from taxation. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I have admitted all that as a general principle. {: .speaker-KYD} ##### Mr POYNTON: -- I am absolutely opposed to giving this concession. {: #debate-27-s10 .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 .- I do not wish to give a vote on the amendment without stating exactly where I stand. Personally, I do not believe in the exemption of Government securities from ordinary taxation. It is only another way of paying additional interest, and the exemption of the Commonwealth war loan means that we shall pay the biggest rate of interest to the biggest man. I do not think that that is a principle which we can support on any ground. But we issued this particular loan on a prospectus in which we gave a definite promise of exemption, and we cannot go back on that promise. This exemption means that we shall give 5½ per cent, to the largest investors; and for this. I see no justification. But we cannot draw back now. I think, however, that we ought to reconsider the Inscribed Stock Act, which grants exemption in the case of all Commonwealth securities, and purports to exempt all Commonwealth securities from State taxation also. I cannot for the life of me see why an investor in State securities should be placed on a different basis from that of an ordinary investor in any other security. I do not care what the class of security may be - land, mercantile enterprise, or State bonds - it immediately depreciates when an income tax is imposed. Such a tax takes away from the income, and to that extent depreciates the value of the stock. It seems to me that the amount we are quarrelling over is a very infinitesimal one. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The honorable member forgets the effect on the borrowing power of the States. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- I admit that if the States, in future, issue loans which will be subject to Commonwealth taxation, the States will have to issue their future loans at a rather higher rate of interest. {: .speaker-K5D} ##### Mr KING O'MALLEY:
DARWIN, TASMANIA · ALP -- So will the Commonwealth. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- Quite so . The greater bulk of the State securities are not held in Australia, nor is the interest paid in Australia; and under no circumstances can those securities be liable to this taxation. Even if there be a third held in Australia - which there is not - the amount is only between £60,000,000 and £70,000,000. {: .speaker-KFJ} ##### Sir John Forrest: -- It is £100,000,000. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- Practically all the State loans floated in Australia have been taken up by the Savings Banks and the big commercial banking companies, and the actual amount of securities they hold is comparatively small. In the case of the Savings Banks, who hold the. bulk of them, the interest they receive is used to pay the interest to their depositors, and the only portion of the securities which by any chance could possibly be subjected to the income tax is that small profit left in the banks after they have paid the depositors. Exactly the same remark applies to the other commercial banking institutions which have taken up bonds. As a matter of fact, the actual amount of State securities which can be subjected to taxation will amount, in the aggregate, to not more than £15,000,000 or £20,000,000. {: #debate-27-s11 .speaker-L0P} ##### Mr SAMPSON:
Wimmera .- We can quite understand that there is a big principle involved in the exemption from taxation of the whole of the interest on public borrowings. State and Federal. In view of the increased State activities, and consequent increased borrowing, both Federal and State, I think we shall at no distant time have to revise our legislation in this regard. The more these Federal and State activities are multiplied - the greater the number of Government businesses entered into, and the greater the borrowing - the smaller must be the percentage of private enterprises. If we make it a rule to exempt from income tax the interest on borrowings both State and Federal, we shall, in the course of time, have a large avenue of revenues taken away, with the result that the interest levied on those engaged in private enterprises will be proportionately increased. Therefore, I can quite understand that we shall require to have a revision of our legislation in this connexion. Now, however, we are dealing with a practical question of the present day. We have already decided that this Commonwealth loan is to be free from taxation, and, that being so, we should do the same in regard to State loans. It is the duty of the Commonwealth to protect the credit of the States in the same way as it protects the credit of its own Exchequer. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The Commonwealth has invited the States to allow it to take over all their loans. {: .speaker-L0P} ##### Mr SAMPSON: -- Quite so; and if we had done our duty as a National Parliament, those debts would have been taken over before now.Under the circumstances, we must regard all State loans up to the present time as really and essentially Commonwealth loans; and if we are going to exclude from income tax an important portion of our Commonwealth loans, why should loans that we must take over within a reasonable time be the subject of a special kind of taxation ? Any differentiation of treatment would be inconsistent, and without justification, while it would seriously hamper the States in their borrowing for public works in the interval before the State debts are taken over. {: #debate-27-s12 .speaker-JMG} ##### Mr ATKINSON:
Wilmot .- If this question did not relate to anything more than the war loan of .£20,000,000, I should possibly appreciate the force of the argument 'that State debenture-holders should not escape this income tax. But there ;is more 'than that involved in this proposal. The Inscribed Stock Act exempts all Commonwealth bonds, and tha* exemption will have a serious effect upon the States when they endeavour to raise fresh loans. We must regard all the loans raised by the States as loans to the people of Australia just as much as are loans raised by the 'Commonwealth. This Parliament should -endeavour to conserve the interests of the whole of the people, and we shall not be doing that unless we give due consideration to what has happened previously. Loans totalling £300,000,00.0 have been raised by the various .States. Those loans should have been taken over by the Federal authorities long ago. But if we apply this income tax in such a way as to so depreciate the State securities that the States will be glad to hand over the loans to the Commonwealth, we shall be doing something that is detrimental to the interests of the people. I cannot see why the amendment should . not be accepted by tlie Government, and if the question goes to .a division, I shall vote to protect the States. In so doing I .shall consider that I am only protecting the interest. of the people of Australia. {: #debate-27-s13 .speaker-L1P} ##### Mr WISE:
Gippsland -- An amendment having been moved, I- can only express surprise that it does not extend further than is proposed. Some of tlie honorable members who are loudest in support of the exemption of State bonds are those who have been strongly championing the interests of State Savings Banks. In Victoria there have been large issues by the State Savings Bank, and the money has been used for tlie purpose of financing many ^people who have borrowed on mortgage. Tho bonds of the State Savings Bank are nob exempt, nor is there any proposal to) exempt them. The proposed exemption is limited .to debentures and stocks issued by the State Governments. This mater was brought forcibly to my mind when the honorable member for Lilley spoke of the working man being an investor in Government securities. The small investor mainly is the man who invests in Savings Bank bonds, because when .hia deposits in the bank reach the amount at which interest ceases, the manager urges him to take up 'the bonds which bear '4 per cent., and are current for a certain number of years. Those gentlemen who are most concerned in preserving the interests of the 'State Savings Banks do not propose to exempt those bonds at all. {: #debate-27-s14 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- :I should like to ask the AttorneyGeneral 'whether the Government have had any conference with the States) in .regard to these business arrangements, and particularly with' regard to exemptions. I feel very strongly that in all these matters .there ought to be concert, agreement, and arrangement. We ought to do nothing that will interfere with the) raising of the money necessary for the development of State instrumentalities and activities, and I cannot see on what ground we stand when we put a ring fence around our own stocks, exempt them from taxation, and tax all other stocks. To put the case in a nutshell, the money borrowed in ordinary circumstances for building the transcontinental railway is exempt from taxation ; tho money with which a State railway is built is taxable. {: .speaker-DQC} ##### Mr Hughes: -- That is not so. So far as this Bill is concerned, the only stock that is exempt is war loan stock. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- But the Inscribed Stock Act exempts all other Commonwealth stock. {: .speaker-DQC} ##### Mr Hughes: -- That does not alter the policy of the Government, which is to> exempt only ona .stock, and that the Commonwealth war loan stock. Our policy is not to exempt any other stock, State or Commonwealth, despite the Inscribed Stock Act, which will be brought into conformity with our policy. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Does the AttorneyGeneral mean that the Government propose to create two classes of stockholders, one class to be taxed and the other to be exempt? {: .speaker-DQC} ##### Mr Hughes: -- The Commonwealth reserves to itself the right to tax all securities which it is not debarred from taxing by the Constitution. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- And, meanwhile, the policy of the Government is to carry out the provisions of the Inscribed Stock Act? {: .speaker-DQC} ##### Mr Hughes: -- Despite that Act, the policy of the Government is, as I have said, to exempt only one stock, Commonwealth or State, and that is the Commonwealth war loan stock. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- If that is the policy of the Government, have they any Bill ready for the amendment of the Inscribed Stock Act? Why do the Government not make one complete financial transaction of the whole thing? The honorable member's interjection raises a huge crop of difficulties. Already the Government have borrowed many millions under the Inscribed Stock Act, which says that on the bonds so raised income tax shall not be paid. Do the Government now propose to commence afresh with another Inscribed Stock Act, and tell future borrowers that they shall pay income tax ? If so, the effect will be to force up the price of existing stock. The policy of the Government is the taking over by the Commonwealth of the State debts, and by referendum the people gave them authority to do that years ago. Suppose the Government commenced by taking over only half of the State debts. Would the Government exempt that half? The Government should make one big financial transaction, but they are not dealing with the general financial question at all. Meanwhile they are having another hack at the States, and they cannot grumble if the States strike back. The Commonwealth is the big partner in the national firm. Reference has been made to the smallness of tlie amount involved in this exemption, but if the Commonwealth is to get comparatively nothing out of State securities, why not exempt them? {: .speaker-DQC} ##### Mr Hughes: -- We have been, discussing this question for four hours. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- It is a question which, if rightly considered, ought to be discussed for four days. In regard to the conduct of all these measures, the Go vernment seem to have the notion that we on this side have nothing to do but run behind them. If we do anything else we are indulging in party politics. Their programme is crammed full of partisanship. But I revert to my argument: suppose the Commonwealth take over the State stocks to-morrow, will the Government continue tlie taxation of those stocks or will they put them on the same footing as the present war loan? They are creating more difficulties than they are solving in endeavouring to reach the little bil of taxable interest in connexion with State bonds. If the Government follow the line of safety, amicability, and harmony, they will leave those bonds alone. In the meantime, they should endeavour to come to some arrangement with the States in regard to the whole financial position. It is incontrovertibly true that the Government are going to smash down the value of State securities. They are certainly doing that. Why should they? Why should they create a privileged few within the Federal arena to the disadvantage of those in the State arena? I should have been better pleased if the amendment had not been moved, because I do not like to interfere in this way with war legislation; but since it has been submitted, I shall have to vote for it. My opinion is that State securities should be let alone so far as taxation of this kind is concerned until some final adjustment - some fair reciprocal arrangement - has been made. {: #debate-27-s15 .speaker-JWC} ##### Mr CARR:
Macquarie -- I wish to make my position clear. I intend to vote for this amendment, because, as has been well said, the taxation of State securities is but another offence against the States, which, within their sphere, are sovereign. That is the position. I do not like it; but it exists, and I am not going to close my eyes to it. The immediate effect of the taxation of State securities at this juncture will be to compel the States to break faith with those who have' lent them money. The States borrowed that money on the understanding that the income derived from it would not he liable to taxation. -The Commonwealth now propose to tax it. Another point is that as soon as an attempt is made to renew these loans, those who are lending the money will demand an enhanced rate of interest, sufficient to cover this taxation. That being so, it will become im- mediately a tax on the State Governments, and, through them, on the people of the States. In other words, it will be a tax levied directly against them, and will place the States at a disadvantage as compared with the Commonwealth. I admit that the war loan should be made attractive, but the additional½ per cent, which is being offered over and above the rate of interest that has been paid by the States should make it sufficiently attractive, and render it unnecessary to make the invidious distinction for which the Bill as it stands provides. We have also the fact that the Attorney-General says that he does not think that in law, the Commonwealth can collect this tax on State securities. It is proposed, therefore, to throw the onus of proving that it cannot be collected on persons who may not be in a position to provide the funds necessary to test the question. My main objection, however, is that the effect of this taxation of State securities will be to still further antagonize the States. Question - That the words proposed to be inserted be so inserted (Mr. Stumm's amendment) - put. The Committee divided. AYES: 22 NOES: 34 Majority ... ... 12 AYES NOES Question so resolved in the negative. Amendment negatived. Amendment (by **Mr. Hughes)** agreed to - That the following new paragraph be inserted : - *" f.* The income of a provident, benefit, or superannuation fund established for the benefit of the employees in any business, and." {: #debate-27-s16 .speaker-K99} ##### Mr W ELLIOT JOHNSON:
Lang . -I move - That the following new paragraph be inserted: - *"g.* The income derived from interest from Savings Bank deposits." It has been represented to me that many persons in receipt of bare wages, which probably would not exceed the amount of income exempted from taxation, have small sums placed on deposit in Savings Banks, and that, under the Bill as it stands, the interest on those deposits would be taxable. The money has been temporarily placed in the bank by these people prior to its investment in homes for themselves. They put what they have in the Savings Banks until their savings are sufficient to enable them to pay a deposit on a home for their own use. I am told that the number of people so situated is very considerable, and that it would be a hardship to collect income tax on the small amount of interest they receive from these deposits over and above the return they secure from their ordinary avocations. Amendment negatived. Amendment (by **Mr. Watt)** agreed to- That after the word " Governor-General," in paragraph *g,* the following words be inserted : - " and the salaries of the Governors of the States." {: #debate-27-s17 .speaker-JWC} ##### Mr CARR:
Macquarie .- I desire to submit an amendment of which I have given notice to the AttorneyGeneral, to the effect that where the tax will affect returns from investments not exceeding4½ per cent, it should not be operative.I take this course more as a lead to the Government than anything else. For though I do not think my amendment will be accepted, some protection should be afforded to those people upon whom this tax will bear so heavily that their returns will be reduced to less than 2 per cent. I gave a specific instance of what I have in mind to the Committee a few days ago, and I can give further details to the Attorney-General of an instance wherethe return from propertyhas been reduced from £3,900 to £1,400 - and upon this income tax has to be paid in England. It is a return of less than 2 per cent. It is anomalous that the Government should itself pay interest at the rate of 4½ per cent., and tax the interest on other investments that amount to less than 2 per cent. If that is persisted in, it will mean that the country will not pay its way. The possibility of injustice being done to investors demands more careful attention than it has yet had from the framers of this measure. The danger to Australia is immense, because if people discover that taxation has such an effect as in the caseto which I have referred, they will never dream of encouraging industry by making investments here. I have yet to learn that the Government proposes to run every industry and undertaking in the country. Unless it does, it must leave the field sufficiently open to others, and give them some inducements to invest. I should like to see inserted in this measure a provision fixing the minimum interest return upon which taxation shouldbe paid -a minimum higher than 2 per cent. I do not suggest that the minimum sbould be 4½ per cent., though that wouldbe little enough in some cases. I recognise, however, that a return of £10,000 a year on an investment of £250,000 is certainly a fair mark for taxation, though it represents only 4 per cent. {: .speaker-L77} ##### Mr Hampson: -- Would the honorable member limit interest to 4½ percent. ? {: .speaker-JWC} ##### Mr CARR: -- I am not prepared to say what the limit should be, but I certainly think investments should not be taxed down to 2 per cent, if the country isto share in the trade expansion that may be expected to occur at the conclusion of the war. For want of a better standard, I have taken that set by the Government in offering 4½ per cent, free of all worry and risk, and after the tax is adjusted as I suggest, if it can be shown that the return on property is by this tax brought down to less than 4½ per cent.., and that the owner is deriving an income of less than £1,000 a year, he should be regarded as having contributed sufficiently to the development and protection of his country. I believe cases such as that I speak of are of frequent occurrence. A dozen, occurring in a fairly narrow circle, have been reported to me, so that it may reasonably be assumed that throughout Australia there are several hundred instances where the impositionof this tax will reduce returns on investments to less than 2 per cent. I would like to know whetherthe Attorney- General will either modify the suggested amendment or offer some alternative suggestion. I move - That the following paragraph be added : - " (h) Where it can be demonstrated to the satisfaction of the Commissioner that the tax, as imposed according to schedule, will reduce the returns from investments to less than 4½ per cent, per annum, the tax shall cease to operate at that point." {: #debate-27-s18 .speaker-K5D} ##### Mr KING O'MALLEY:
Darwin -- I support this amendmentbecause the Labour party, above all other parties,was bottomed on inexorable justice. {: .speaker-KFK} ##### Mr Groom: -- What's that ? {: .speaker-K5D} ##### Mr KING O'MALLEY: -- The Labour party was founded on the Gibraltar rock of moral justice. The Labour party is not just, and it is not Christian, if, by any side wind, or by side-stepping, or by tango dancing of any kind, it seeks to plunder the weak individual; and when we reduce a man's income to 2 per cent, on mortgaged property that is constantly depreciating in value, it is indirect confiscation. There is no question about that. I am not speaking for the property men ; they are able to take care of themselves. I am not speaking for the " boodleiers." The " boodleier " is able to protect himself because money is power, and power is self-defence. We should not have needed this war loan if the Commonwealth had adopted the banking system which . I drafted. It seems to me that the worst managed businesses in the world are governments. The only industry in the world that works day and night and pays no dividend, is politics. We should not tax a man's estate so heavily that the effect will be felt upon industry and employment, and we cannot produce wealth unless we get it from the extension of our industries. There is another big question to consider also in this connexion. What will be the economic condition of Australia and of the British Empire when the war is over? We are at present expanding our industries artificially. Each time that we equip a soldier for the war wedo that, and the present activity will have to be replaced by something else when the war is over. That will need capital. We shall begin to feel the pinch when we have stoppedborrowing, and have commenced to pay interest on our debts out of revenue. Eight years after the American Civil War, 2,000,000 men were carrying the swag in the United States of America, and it was only the great prairie lands in western America that saved the country. Without that outlet, there would have been riots. We must prepare for the home-coming of our soldiers, and we cannot do that unless we organize the finances of Australia, and mobilize our credit and instruments of exchange, and make our resources available. The directors of a private corporation can sit round a table and plan great operations ; but the members of a Government, no matter from what party they may have been chosen, seem to be intellectually ossified, and you talk to them without result. {: #debate-27-s19 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The amendment is not exactly on the lines of my suggestion of last night. I asked the Attorney-Generalto take a view similar to that taken by the Victorian Legislature when, having imposed an income tax, it imposed a land tax also, and exempted from the operation of the income tax land of an unimproved value of £5,000. This amendment of the honorable member for Macquarie would deprive the country of too much revenue. But the Attorney-General has an opportunity of giving those who pay the Federal land tax; immunity from income taxation in respect of 4½ per cent, of the capital that they have invested in land. To do that would be to remove the unfair discrimination against the land-owners, and to put them in the same position as those who possess cold cash. They would then be treated as the Ship ping Trust, the Colonial Sugar Refining Company, and the great octopus-like combines with which the Labour party- is going to. deal are being treated. It is proposed, however, to put on the land-owners who now pay Federal land taxation a Federal income tax. Theland-owners cannot and do not combine. {: .speaker-L0P} ##### Mr Sampson: -- And cannot pass on taxation. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- That is so. In times of drought and calamity, they lose part of their capital, and in. good times they cannot pass on taxation. Moneylenders, landlords, and others may pass on the burden of Government imposts, but many property-owners cannot do so. Amendment negatived. {: #debate-27-s20 .speaker-JWC} ##### Mr CARR:
Macquarie .- I desire to further test the feeling of the Committee by moving - That the following paragraph be added: - {: type="a" start="h"} 0. The income from any form of investmentwhich does not exceed 3½ per cent. This is a very important matter, and will greatly affect the country in the future. Money is becoming scarce, and there will soon be a big demand for it all over the world. To get it we must offer special inducements, and we cannot do without it, unless the Government is prepared to run the country as a commercial concern, which it is not, and which I do not think it could do. My proposal is intended to avert such disasters as I have indicated. Properties worth £75,000 are now being taxed down to a return of less than 2 per cent., although earning good rents. This may suit the ill-regulated notions of some persons, but it is not in accordance with my idea of what is right. We cannot afford this depreciation of profit. {: #debate-27-s21 .speaker-KEA} ##### Mr KELLY:
Wentworth .- The intention of the honorable member for Macquarie is a laudable one, but no Government can fix the return of money. If we were to say now that 3½ per cent, would be a fair return, next year we might have to alter the rate, and continually increase it as the war went on. The principle underlying the amendment is the establishment of an irreducible minimum of profit, which is impossible. The only sane procedure is for the Government, as far as possible, to abstain from interfering with, and to encourage in every way, legitimate enterprise. That is a view that I have enunciated for many years past. The Government has not fixed 4½ per cent, as the rate of return from money. Before issuing its loan prospectus, it consulted its advisers, and then determined that it would have to give 4½. per cent, in order to get the money that it needed. It is the lawof supply and demand that is determining the price of the war loan, as it determines the price of other things. Prices cannot be regulated satisfactorily by Acts of Parliament. {: #debate-27-s22 .speaker-KXG} ##### Mr WATT:
Balaclava .- The Attorney-General has not replied to the arguments used in support of this or of the last amendment, but I take it that he will not accept the amendment now before the Committee. In my opinion, there is no relation between the return that a man gets from his capital and the question of exemption from taxation. Whether a man gets a return of 2 or of 20 per cent., he pays taxation at the one rate, so long as his net income is sufficiently large to be taxable. It is now proposed that a man shall not be taxed on a return from capital of less than 3£ per cent. Such a provision would render exempt from taxation many of the wealthiest men in Australia, who, being content with low returns, take no risks, and would hit those enterprising men who are willing to take risks, and sometimes get a return of 15 per cent, or 20 per cent. The honorable member, in effect, wishes to give immunity to the " fat " man who is doing business on the most conservative lines. I do not say that that is his object; but my knowledge of business informs me that that would be the effect of his amendment. I hope that he will not press an amendment so foreign to the intentions of the measure. {: #debate-27-s23 .speaker-JWC} ##### Mr CARR:
Macquarie .- The position of which I complain is caused by this tax coining on top of other taxes, which, in some instances, are not allowed for. We do not know what its. effect will be. Under some circumstances, a tax of 5s. in the £1 would be quite justifiable, but when other taxation brings the burden up to nearly 15s. in the £1, something should be done to prevent the depletion of incomes which is thus caused. This is necessary, not so much for tlie sake of individual sufferers, as in the interests of the future development of the country. Amendment negatived. Clause, as amended, agreed to. Clause 11 agreed to. Clause 12 - >Th is Act shall not apply to any person who is on active service (luring the present war with the Military or Naval Forces of the Commonwealth or any part of the King's Dominions so far as regards income derived from personal exertion and earned prior to the commencement of this Act or during the present state of war. {: #debate-27-s24 .speaker-L1P} ##### Mr WISE:
Gippsland .- The principle underlying the clause is one with which, I think, all honorable members will agree; but the provision does not go far enough. It is proposed to exempt from taxation income earned by personal exertion by those on active service. The majority of these young men are not earning a taxable income by personal exertion; but some of them may be in receipt of income from small investments in property. During this crisis a man is called upon to make one of two sacrifices, the sacrifice of life or body or the sacrifice of property, but I do not think that any man should be called upon to make both. The man who is prepared to risk his life or risk returning from the war with a maimed body, which will be to him a lingering death, is making all the sacrifice that the country could expect from him, and should be free from money contributions during the period of the war. The well-to-do man who may leave his business under the management of some other person may possibly derive £1,000 a year from it, and it will be income derived from personal exertion though he is at the war; but the man who is a barrister or a medical man may lose the whole of his income while he is away at tlie war. What is the use of the exempMon to the latter, and why should the former be exempt, and the man drawing income from property be not exempt? My desire is to see that the man who is on active service, risking his life in the defence of the country, should be exempted from taxation on any income that he may derive during the war. I therefore move an amendment - >That the words " from personal exertion " be left out. {: #debate-27-s25 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I trust that the amendment will not be agreed to. The honorable and learned member for Gippsland does not appreciate the intention of the clause. It must be remembered that the income. upon which the tax will be levied will be that derived during the year ending the 31st December, 1914. The clause has relation, not particularly to income earned by persons now at the war in return for their services, but to the income earned during the assessable year by persons such as doctors who gave up their business and their means of livelihood to go to the war. According to the mover of the amendment, the man who risks his life should not be called upon to make any sacrifice of property, but I disagree with that view. This war calls on men to sacrifice all that they have, including their lives. The proposition set up by the honorable and learned member is not only foreign to Democracy, but is also opposed to the principles *upon* which all taxation rests. He says that if a man has an income of £30,000 a year he can evade all taxation by going to the war, thus receiving in return for his services £6,000 a year, while his fellow soldiers receive 6s. a day. That was never intended. What we ask is that there should be equality of sacrifice and equality of payment for service. Take the case of a great surgeon who during 1914 made £15,000, but who goes to the war and earns in a year £500, which, had he remained at home, he could earn in a week. He has with noble self-sacrifice abandoned his lucrative practice; surely he ought not to be taxed on what he earned before he went to the war. But service at the front does not hinder the man who has his money invested in property from earning income from that property. If any part of a man's income is earned from personal exertion he is entitled to exemption to that extent. The income of a solicitor arises wholly out of personal exertion. It is the same with barristers, doctors, and many business men. Their income being derived from personal exertion will be exempt if they go to the war. But if a man who puts £5,000 in an investment and goes to the war is not to be taxed, while the man who stays behind is taxed, it would be unfair. There is no warrant for exempting a man in those circumstances. The only justification for exempting a man arises when he is precluded from earning an income. The intention of the clause is to apply to definite cases of the kind of which I have spoken, and not to draw invidious distinctions between different classes of society. {: #debate-27-s26 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- I had prepared an amendment on the same lines as that moved by the honorable member. The Attorney-General has given us an inversion of the principle of patriotism. He speaks of a man going to the war in order to see how much the country will give him for doing so, by way of exemption from taxation, and not to see how much he can do for the country. The man who will not suffer loss of income by going to the war is the one who can still carry on a lucrative business by means of agents or employees. The man in Melbourne who is carrying on a big lucrative business will not close it up. He will carry it on by means of agents; yet he is to be exempted. On the other hand, a man with a limited amount of capital, whose business cannot be carried on without his personal attention, sells everything he possesses and invests the proceeds for the benefit of his relatives. That man is to be subject to the tax. The man who invests his money in property, not run as a business, is to be subject to taxation, while the owners of great business concerns, run by managers for their particular benefit, are to be exempt. That means importing into tlie Bill an invidious principle. We discriminate between our soldiers by exempting one man because his income is derived from personal exertion, and subjecting another to taxation because he has income derived from another source. {: #debate-27-s27 .speaker-KI9} ##### Mr LIVINGSTON:
Barker .- The man who is game enough to go to the front and fight should be free from taxation and his income should be protected. Why are we collecting this money but to assist such a man at the front? I hope that the amendment will be carried. I am surprised to hear the arguments which the Attorney-General has used against it. {: #debate-27-s28 .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 .- I cannot understand why the AttorneyGeneral will not accept the amendment. The distinction made is absurd. Where is the principle which the AttorneyGeneral says is involved in it? {: .speaker-DQC} ##### Mr Hughes: -- Does not the honorable member draw any distinction between income derived from personal exertion and that derived from property? {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- There is a distinction between the two; but if a man puts a bailiff or a manager in charge of his farm, and pays him wages to work the property for him during his absence, it is regarded as personal exertion, and the income is exempt; whereas, on the other hand, if he decides to lease the property to some other person while he is away, the income which he derives is taxable. If a man takes his life in his hand and goes to the war he should be free from what is, in effect, penal taxation. We are endeavouring to see that those whom our men at the front are protecting should do something towards their fair share in the war. That is the principle, and it represents what we are endeavouring to do. If a man is brave enough to go to the front, I do not think we should subject him to taxation of this description. Mr.FENTON (Maribyrnong) [6.0]. - I understand that the principle ofthe Billisthat in the case of those who go to the front, the only exemption is as to the salary that is paid to them as officers or men. {: .speaker-DQC} ##### Mr Hughes: -- Or on what they earned before the war during the period of taxation. {: #debate-27-s29 .speaker-KEV} ##### Mr FENTON: -- There are many thousands of men at the front who, with the exception of their homes and families, have no property to defend ; but there are numbers of others who are amongst the richest men in the community. I do not care for any discrimination, whatever may be the business or profession followed. I think that the only incomes that should be exempted are those up to £156, and any earned in the execution of duty as anofficer or a soldier. Any income that a soldier leaves behind, whether it be earned by a *locum tenens* in a profession or by a representative in a business, ought to be taxed if it is beyond the exemption. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- But such incomes are exempted under the Bill. {: .speaker-KEV} ##### Mr FENTON: -- I disagree with the clause, and I think that it ought to be struck out; though I do not care about theproposed substitution of the honorable member for Gippsland. {: #debate-27-s30 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- We are told that there are no parties now, and that the desire of the Opposition is to help the Government to carry on the government of the country; but if we get much more help of the kind, we shall not be able to carry on any government at all. Obviously no Government can be carried on without revenue. I say again, that there is a fundamental distinction, recognised in every country in the world, between incomes derived from personal exertion and incomes derived from property. There are men now fighting in the ranks of the British Army who have incomes of £100,000 a year and over, and yet they gladly pay every tax that is levied on wealth in the United Kingdom, although the Tate is higher than in any country in the world. Why should we introduce this innovation, startling and monstrous as it is, which offers to rich men who go to the war complete immunity from the taxation necessary to prosecute thewar ? The right honorable member for Swan is responsible for the law providing for a levy *en masse;* if that principle were applied, with the exemption now suggested, everybody would be free from taxation. We are all in this war for what we are worth - those who have money pay money, and those who have no money give personal service. I hope that honorable members will notaccept the amendment. I should like to show an additional reason why incomes from personal service should be exempt. There is one surgeon who, although his income from personal exertion is larger than that of any other man in his profession here, is typical of many members of this great and noble profession who have volunteered their services for the war. This surgeon, in the taxable year, earned an income of, I think, £16,000, and this he gave up for a yearly salary less 'than one week's fees. Arewe then to repay him by taxing the £16,000 he earned in the eight months before he went to the front? That would be monstrous. The question is not whether we should tax him on what he is being paid now, but whether we should tax him on what he earned last year. This clause will exempt all those persons whoearned large taxable salaries last year, but who are now in receipt of ordinary military emoluments. {: .speaker-KEV} ##### Mr Fenton: -- Has this surgeon left his practice partly or wholly in charge of a *locum tenens,* with whom he is to divide the income ? {: .speaker-DQC} ##### Mr HUGHES: -- There is no one who could carry on this surgeon's work. No doubt the practice will be divided amongst many others, but nobody could do his work ; his services are ratedvery highly, though not too highly. Amendment negatived. Clause agreed to. Clause 13 - >The taxable income of any person shall include - > >profits derived from any trade or business and converted into stockintrade or added to the capital of or in any way invested in the trade or business : > >Provided that for the purpose of computing such profits the value of all live stock, produce, goods, and merchandise (not being plant used in the production of taxable income) not disposed of at the beginning and end of the year in which the taxable income was derived shall be taken into account; > >dividends, interest, or profits credited, to any member, shareholder, or debentureholder of any company. > >five per centum of the capital value of land and improvements thereon owned and used or. used rent free by the taxpayer for the purpose of residence or enjoyment and not for the purpose of profit or gain, less the interest paid on a mortgage of that land, if the taxpayer satisfies the Commissioner that the mortgage was entered into in good faith.. . . . {: #debate-27-s31 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- I wish to direct the Attorney-General's attention to paragraph *b.* I know that a new clause is tobe proposed, but there is a point which, I think, deserves some consideration in connexion with debentureholders outside Australia. A company, incorporated in the UnitedKing- dom, carries on business in Australia, and. it has issued debentures in England which are secured on the assets of the company. The interest earned in Australia is trans- mitted to the Old Country, and, according to clause 23 the company is the agent: of the debenture-holders. Under the clause relating to agents generally, the company in Australia is liable for the payment of. the income tax due from the debentureholders, and is bound, according to the Bill, to deduct from the interest the amount of the tax. But ithas been decided, in the case of *Spiller* v. *Turner,* reported in Chancery Division 1897, vol. I, that the debenture-holders are entitled to the full amount of the interest, without any deduction for taxation. {: .speaker-DQC} ##### Mr Hughes: -- No deduction can be made under any law other than the law of England. {: .speaker-KFK} ##### Mr GROOM: -- Quite so. The finding was as follows: - >Held, that the contract between the preference and ordinary shareholders, being an English contract, the rights under it of preference stockholders, not domiciled in the colony, were not affected by the colonial Act, and that they were, therefore, entitled to their6 per cent., without any deduction in respect of the colonial duty. Clearly the intention of the AttorneyGeneral was to make the debentureholders pay; and I agree with that as a general principle ;. but, in thecase I have cited, the company in Australia will really have to pay the income tax supposed to be imposed on the debenture-holders. This, of course, is rather a serious matter for the company here, and is not in accord with the intention of the Government. The only way outI can suggest is to insert a provision exempting existing debenture-holders, leaving all future debentureholders subject to the law. This would possibly place the company in a position to negotiate. {: #debate-27-s32 .speaker-DQC} ##### Mr HUGHES:
Attor ney-General · West Sydney · ALP -- I quite understand the difficulty, hut it is impossible to exempt these debenturerholders. No doubt the company will be liable, but it. does not follow that the debenture-holders will in all cases, or in any, have recourse to the law. There might be some alteration of the Articles of Association, or some understanding arrived at; but, in anycase, we cannot make the exemption. In Great Britain no regard is paid to where the income is earned ; it is sufficient that it is received by a person resident in Great Britain. England's fiscal arm covers a very wide field. We cannot afford to exempt debenture-holders from the operation of this clause. A remedy may be possible by an amendment of the Imperial Act.I have considered that possibility, and when I have had an opportunity of deciding precisely what amendment is necessary, I shall be prepared to recommend the Government to approach the Imperial Government, with a view to suggesting such an amendmentof the Imperial law. {: #debate-27-s33 .speaker-KCO} ##### Mr GLYNN:
Angas -- I think the Attorney-General has taken the. proper, course. Several people have asked me as to the effect of the taxation upon debentures and I have expressed the same opinion as the Attorney-General, namely, that this is a tax upon income realised in Australia, and it is a question for the Imperial Government to decide as to: whether they can afford relief to the company which, at present, is liable to pay the taxation. The time is really ripe for some Imperial amendment. There have been conflicting decisions as to the extent to which Imperial taxation falls on income from abroad, and also as to what extent English corporations can be taxed in respect of income that has not reached England. One of the latest decisions was in regard to an Egyptian case. An English company had some agencies in Egypt, and a point arose as to whether, under the incorporation in England, the company could be made liable in respect of income realised in Egypt, and not transmitted to England at all. -According to the last papers I saw, tlie House of Lords decided that, under the conditions of the particular articles of association, income realized in Egypt was not taxable in England. That case illustrates the length to which the Imperial Government goes in its taxation. I regret that we have no information as to what the effect of this taxation mav be on loans from abroad on such securities as debentures cover. It is alleged that the taxation will mean a serious obstacle to the obtaining of advances. To what extent that is true, I cannot say. However, I cannot see a remedy, and the only course open to us is to approach the Imperial Government in the matter. Amendment (by **Mr. Hughes)** agreed to- >That the word " taxable," line 1, be left out. {: #debate-27-s34 .speaker-KRN} ##### Mr SINCLAIR:
Moreton .- I move - >That the words " live stock," line 10, be left out. The clause provides that live stock not disposed of must be taken into stock, valued, and treated as income. The result will be, in many cases, to subject a stockowner to a super-tax. Taxation will be paid in respect of such stock in the, first year of the operation of the tax, and also at any subsequent time when the stock is sold. Stock is the plant used in connexion with a farmer's business operations, just as much as scaffolding is in the operations of a builder. A dairyman who is building up his herd, particularly after a period of depletion such as has recently been experienced, hopes to later earn an income from his stock. But the clause, as drafted, will require him to pay a tax on tlie stock in the first year, and in every subsequent year, when there is any increase in the number of his stock. I think the amendment is a reasonable one, and I hope the Attorney-General will accept it. {: #debate-27-s35 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- What is the real intention of this proviso ? Under the Victorian law, some years ago, land-holders had the option of adopting one of two systems. Either the income from their stock would be taxed on a balance-sheet basis, or they could be taxed according to the stock in hand at certain fixed dates. Does the Attorney- General propose as a basis of this income tax to adopt both methods? {: #debate-27-s36 .speaker-KFC} ##### Mr FLEMING:
Robertson .- This proviso seems "rather confusing. A man may be paying taxation on something that may never materialize. He may have to pay taxation on the increase of his flocks and herds, and before they can materialize into money, and that money be put into the bank, the stock may die. When I was a member of the State Parliament of New South Wales, I contested this point with the Income Tax Commissioners for two years, and finally they conceded that my contention was correct, namely, that they should not raise taxation on increases of stock until such stock materialized. Our method was to submit a certain valuation for the stock. That valuation was carried over every year. .Suppose sheep are valued at 5s. per head. The owner included in his return the number of stock he owned at the end of every year at that particular value, no matter what their market value might be. Only by so doing is it possible to get a regular and proper return for income tax purposes. {: .speaker-DQC} ##### Mr Hughes: -- Does the Commissioner fix the value of the sheep ? {: .speaker-KFC} ##### Mr FLEMING: -- In the case of my own people, we interviewed the Commissioner and arranged that we should set down the sheep at a fair average price. The trouble is that a sheep may be worth 30s. this year, and a couple of years later be worth only 8s. 6d. or 10s. If the value is constantly being changed up and down, it may be that, in the year when the values of stock rise enormously, the taxpayer's income is very limited. I think it would be better if the Attorney-General were to agree to the whole of this proviso being struck out. {: .speaker-DQC} ##### Mr Hughes: -- Why should live stock, be treated differently from anything else? A man may have a ton of copper, which is worth this year £75; next year it may be worth only £55, or perhaps £95. After all, that is what happens to sheep and cattle, with the exception that younganimals always increase in value. {: .speaker-KFC} ##### Mr FLEMING: -- The difference is that in a dry period a man may lose all his stock. He may pay taxation on his. increase, which fades away before it can be materialized. In other words, he pays, taxation on something from which he has never had any advantage. {: #debate-27-s37 .speaker-KI9} ##### Mr LIVINGSTON:
Barker .- I hope the amendment will Se agreed to- >Last September live stock was absolutely unsaleable. Most of the animals that were alive then are dead to-day, and the people who would be called upon to pay an income tax in respect of that stock have no money with which to pay. This clause really means the imposition of a double tax. The last clause was absolutely unfair, but this one is worse. The AttorneyGeneral does not understand very much about the pastoral section of the community, and he ought to take advice from those who do. {: #debate-27-s38 .speaker-KJE} ##### Sir WILLIAM IRVINE:
Flinders -- In the ordinary sense the profit derived by a man from trade or business would consist of the money he had made by his transactions during the year. But as I understand the proviso, it is intended to modify that profit by taking into consideration the difference in the value of his assets as at the beginning and end of the year. {: .speaker-DQC} ##### Mr Hughes: -- That is so. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I take that to apply also to decreases in value during the year. {: .speaker-DQC} ##### Mr Hughes: -- Of course. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- In other words, a man is treated, both as to increases and decreases in the property which he possesses at the beginning and end of the year, as making either a profit or a loss. {: .speaker-KFC} ##### Mr Fleming: -- The stock-owner pays on the increase of his stock, and before the next year the increase dies, and he gets no rebate from the Government. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- The assessment must be taken in respect of the year in which the income is earned. Although the assessment is made for a certain period, long before the tax is paid the man may have lost even the_ capital with which he had earned his income. If the suggested .allowance is to be made in respect of live stock, why should we not apply it to all business transactions? *Sitting suspended from 6.30 to 8 p.m.* {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I oppose the amendment mainly on the ground that there appears to be no distinction whatever between live stock and other forms of goods or merchandise included in this clause. The principle of the clause, I take it, is that the measure of income is regarded as being the difference in value between the beginning and the end of the year of assessment. But while that is so, and while therefore I am opposed to the amendment, I wish to place before the Committee some reasons why I think the whole principle of this proviso is wrong. The basis of income is the money that comes to a man in the course of the year of assessment. That is the true principle on which income may be estimated. Whether the taxpayer be a grazier, a shopkeeper, or a manufacturer, the money that comes to him in the course of his business is the basis of his income. He is entitled to deduct from that his expenditure in gaining that money. In some of the States of Australia, the practice has been adopted, mainly in connexion with farming pursuits, of basing a man's income upon something that really does not come in at all - namely, the increased value of his stock-in-trade or some portion of it. That has led to great difficulty. It is a cumbrous and unsatisfactory mode of administering the Income Tax Act, and in my opinion has enabled many to escape the payment of income tax on what is really the increase in value of their property. It is easy for a man to cheat the Income Tax Commissioner when he is told to estimate the value of his property for income tax purposes. It is really not the measure of the income tax at all, or at least it ought not to be. It should not be suggested, although it is in this proviso, that tlie proper course for a merchant to pursue is to estimate the value of his stock a't the beginning and at the end of the year of assessment, and to say that any additional value represents income he has received. It may be that he has not, in fact, received any of that increase in value. And so with a man who lias a dairy herd, and who buys and sells stock during the year of assessment, whilst he also receives money from the sale of the products of his herd. The proper and natural way of estimating his income is to take the whole of the money that comes in both from the sale of his stock and from the products of his business as a dairyman - from the sale of his milk, cream, and so forth - and to allow him to subtract from that the money he has paid in maintaining his dairy herd and in carrying on his business. {: .speaker-KFC} ##### Mr Fleming: -- How would the honorable member value his dairy herd? {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I would *not.* That is a wrong principle. {: .speaker-KFC} ##### Mr Fleming: -- But the value of his capital must be determined. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- Why should it be ? That principle, which has been followed in New South Wales; has worked badly. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- It has been abandoned in Victoria. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- It was followed in Victoria, but was found to work not merely to the annoyance of taxpayers, but to the detriment of the Government, in that it produced smaller returns. It was therefore- decided to absolutely abandon it. In its place there has been adopted the natural principle of saying to a. farmer,. "What money did you get in during the year ? What did you receive from the sale of milk and cream, or from the sale of stock?" A man who is carrying on a dairying business must, of course, keep up his. herd- ; but I agree entirely with the- first part of this clause> which iu effect provides that income is none, the less income- for tlie. purposes- of taxation merely because it is applied to the increase of the taxpayer's capital. If a- man applies his income to the increase of his capital,, .that income should be accounted as taxable; but if,, on the other baud,, instead, of increasing his capital in the ordinary course of business he simply maintains his stock-in-trade, why should the Commissioner go into a. valuation, at all. It is absolutely unnecessary, and; in nine cases out of ten offers a means' of evading the tax. {: .speaker-KFC} ##### Mr Fleming: -- How would the honorable member arrive at the natural increase in values ? {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- This is not a property tax, but an income tax. {: .speaker-KFC} ##### Mr Fleming: -- But the natural increase is charged up under- the Income Tax Act of New South Wales. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- That is why I say that the whole principle is bad. If a farmer has an ordinary increase of stock, and keeps it during the year of assessment, that increase is not income. It will become income in the following year when he sells- it, and he will then have to pay income tax upon it. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -. - Otherwise a man so situated is taxed twice. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I am not at all sure that tlie honorable member is' nob right. Where the tax is based upon values, the Commissioner says, " This man's income has been increased by the additional value of his herd," although he has not, perhaps, sold a horn, and the man is thus taxed on something that has never actually come in during the year of assessment. Next year, if he sells that additional value, or portion of it, he is taxed again on his income, which is only properly income in that year. {: .speaker-KXU} ##### Mr Patten: -- The whole of this proviso is bad. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- Quite so. I therefore suggest to the AttorneyGeneral that it would be better from the point of view of the Commissioner,, as well as the taxpayers, to strike out the whole matter of valuation, which, is, after all, merely a quagmire without any solid ground. Let us assume that a man has the same flock of sheep at the end of the year of assessment that he had. at the beginning, but that their market value- lias increased by 2s. or- 3s. per sheep. If we adopt the principle of values, then the Commissioner says in this artificial way: "'This- man- has made £-1.00 as the result of the increase of values." The fact may be that he. has notsold one sheep; and- therefore ham not made- a farthing,, and when he comes- to sell he may actually lose that £100 or more. If a stock-owner or a. grocer enlarges his business out of his income,, it is. only right to say that that income is not,, because of his. action, relieved, from taxation.. Income is the difference between the money a- man- gets in during the year of assessment, and the money he has to expend in order to get it in. {: .speaker-DQC} ##### Mr Hughes: -. - The proviso is necessary to a large extent, in order to ascertain that. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I think not. If tlie principle- which. I suggest meetswith the approval of the Committee, thewhole difficulty will be overcome by making a slight alteration in the first part of the clause, and providing that profit derived from any trade or- business, and applied towards the- increase of capital, shall1 be included as taxable income. We could1 then leave out the proviso, which- rests upon value. In all these cases the Commissioner of taxes has to- exercise a certain amount of discretion1. All that Parliament ought) to- d'o is to define the principle on which he shall' act. It is a mis- take to try to define too literally the precise steps he must take. If we define what the principle is - namely, that income shall be the .money that comes in during the year of assessment, after providing for outgoings, and that if a man applies it to increasing his capital, he shall still pay income tax upon it - then it will be an easy matter for the Commissioner in each case to ascertain what is the proper measure to apply to it. {: #debate-27-s39 .speaker-KCO} ##### Mr GLYNN:
Angas -- The draftsman of this Bill had in mind, I think, the method that is adopted in South Australia. I confess that I am somewhat confused as to the meaning of this clause, but in South Australia the Commissioner takes the value of the stock at the beginning of the year, and the value at the end, and regards any difference as having been turned into cash. {: .speaker-KJE} ##### Sir William Irvine: -- But is that right? {: .speaker-KCO} ##### Mr GLYNN: -- In South Australia that is thought to be the best way of ascertaining the profits of a pastoralist or farmer who deals in live stock. Where the money coming in from sales is alone taken into account, there must be something to which to refer in order to ascertain whether a loss or a profit has been made. It would be wrong, for instance, to regard as income the amount for which a farmer sold some of his stock in the middle of the year of assessment. The income would be the difference between what it cost him to purchase and maintain his stock, and what lie got for it. I do not know whether the .South Australian system works quite smoothly, but it has been found sufficient. In tlie *,.as* of land, of course, the position is different. A farmer does not deal in sales of land, but he does deal in sales of stock, in the produce of land, and in increases in the value of land. {: .speaker-JPC} ##### Sir Robert Best: -- - Suppose the value depreciates between tlie beginning and the end of the year. {: .speaker-KCO} ##### Mr GLYNN: -- That is taken into account the following year. If there is a loss during .the year, there is, of course, no income, but if during the next year there is a profit then you have a smaller value to start with at the beginning and a -bigger one at the end of the year, so that the matter- is fairly well balanced. I do not know whether this is what the Government have in mind in proposing this clause, or whether, as regards tha proviso, they are confusing differences in value and profits made by ordinary operations of purchase and sale. 'In tha case of land, the increase is what is made by -way of profit minus expense. In 'the case of stock, it is in tlie value of the actual increase. In the one case, it is not the value of the land at the beginning of the year compared with its value at the end, but the amount actually secured from the land, minus the expense. Similarly with stock, the income cannot be reckoned as the difference in the value of the stock at the beginning df the year as compared with what it is at tlie end of the year, but what has actually been realized. I am not saying that this method is the best, though it may seem to be the best in the mind of -the draftsman. The method, as adopted in South Australia, gives, on tlie whole, approximately correct results, but if an attempt is made to ascertain the income from the actual sales of the year, then account must be taken of what it cost to maintain the stock. There are difficulties in the way of ascertaining profits through purchase and sale, and another method has been suggested. I do not know which is the better. All I can say is that the matter is one which requires very careful consideration. **Mr. MATHEWS** (Melbourne Ports)] [8.17]. - I think the honorable member who has just spoken is somewhat in error as to the way the income tax returns are compiled in South Australia. I think he will find that the principle carried1 right 'through the operation is that the tax is imposed in accordance with the increase in numbers. Any sale or profit is shown in the return, and any increase in stock is also taken into consideration. 3D do not think .a man ought to be called upon .to pay income tax on any increase in the value of his land. Everybody knows that land fluctuates, but there is) no .attempt .to tax in this .manner in any income tax system I know of, where such a return is insisted upon. If a man sells his land, he makes a return, and is taxed* If this clause is inserted with the idea 'of putting a tax upon the value of stock, there is great danger of reducing, rather than increasing, values. If we are going to allow fluctuations of values to be charged for in the income tax, and at the same time allow deductions for losses, endless trouble will 'be the result. {: #debate-27-s40 .speaker-DQC} ##### Mr HUGHES:
West SydneyAttorneyGeneral · ALP -- I hope the Committee will not amend the clause in the direction suggested. The criticism I have to direct against the Committee is that it is not a Standing Committee, but a Moving Committee recruited from time to time with new and enthusiastic gentlemen, who drop in casually from time to time, give us the benefit of their opinions at great length, but who do not recollect that we have been here all day endeavouring to do a little business. It is assumed that there is something about this proposal new and mysterious, but it is as old as the hills, and as simple as a, b, c. It is the basis upon which all the State Governments fix their taxation. In the South Australian Act the taxpayer is asked to give the total value of his stock-in-trade on hand on 31st December, and the total value of his stock-in-trade on hand at the end of the following year. By that means the Commissioner of Taxes is supplied with a ready means of ascertaining how much capital has passed into income. The system does not, as honorable and learned gentlemen seem to suppose, cause any confusion as between the corpus of the estate and the income. {: .speaker-KJE} ##### Sir William Irvine: -- I did not suggest that. {: .speaker-DQC} ##### Mr HUGHES: -- I think some honorable members seemed to imply that this was an attempt to discover how much capital had passed into income, and tax that capital as if it were income. If a man has more capital at the end of the year than he had at the beginning, he should be able to explain where it came from. And in like manner if he has less the reduction may have been due to the fact that his animals are poorer, or that there has been a drought, or it may be due to a hundred tilings. But there must be some measure of ascertaining what his real income is. {: #debate-27-s41 .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I am inclined to lean towards the form in which the clause now stands ; but it seems to me that a difficulty will arise. I understand the honorable gentleman to say that where a man's stock has increased in value, so that the increase may be regarded as part of his capital put into a reserve fund, he will have to pay on that as income; but I should like to know what the honorable gentleman expects will be done in a case where a man's stock increases in number but decreases in value. Will he be able to make a deduction as against a nonproductive year? {: .speaker-DQC} ##### Mr Hughes: -- The object of this clause was not to ascertain the amount of wealth a man had, but the amount of his capital, as a means of ascertaining the amount of his income during the year. If, for example, the number of the man's stock has declined, but its value has increased, I do not think either of the points that have been raised will be material. The point to be ascertained is, what income has the man received . during the year? If either of these points will help to ascertain that, they are material; otherwise, they are not. {: #debate-27-s42 .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 .- I do not think the Attorney-General appreciates the point that has been put. The difficulty, as it occurs in .New South Wales, is that we are taxing a man twice on tho increased value of his stock. Suppose a farmer or land-owner has to make up his return on the 30th November next. He may at that time have a large increase in the number of his lambs; they may be on the point of going to market. He will have to include this increase in his return as part of his income. {: .speaker-DQC} ##### Mr Hughes: -- I am not responsible for that. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- Suppose that on the 7 th December he sells the whole of that stock. The sum he receives will be regarded as income, and will appear as income in the next year's return. In consequence, the man will be taxed twice on the same value and on the same stock. {: .speaker-DQC} ##### Mr Hughes: -- If it is income, he will be taxed on the difference between the selling value and the value at the time the return was made. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- All I can tell the Attorney-General is that this will give the farmers an immense amount of trouble. They will have to keep more or less elaborate books, which few farmers at present do, and they will have to consult agents and pay agents' fees, in order to get their returns made out. {: #debate-27-s43 .speaker-KFC} ##### Mr FLEMING:
Robertson .- May T once more explain the position as it strikes a stock-raiser. If the AttorneyGeneral intends to follow out the scheme as stated in the Bill, unless a fixed value is put upon stock, and unless the Stock-owner returns the number of his stock each year at the same value, the stockowner will bo landed in very grave difficulties. If a man starts the year with 10,000 sheep, which he values at 8s., by the end of the year he may have his flock increase by natural means to 15,000, and he will return these at the same price per bead as that given in the first return. In such a case, he would pay on the natural increase. But the trouble is that the 5,000 lambs may die before he can realize oil them, and, consequently, the man would be called upon to pay on what is not income. If, on the other hand, the price is altered, and the valuation is taken for each year, it will nearly always happen that in the particular year when the prices have been the highest, the income will have been the lowest. In the case of a drought, for instance, the greater the loss the higher the price of stock. But it cannot be said that that value will represent the income of the owner. If the system of taxing the profits on stock as suggested is adopted it will mean a double tax on the same property, or a tax upon something upon which the owner cannot realize. If the suggestion of the honorable member for Flinders were followed we might be able to deal out justice to the stock-raiser. But either of the methods which the AttorneyGeneral seems to think he may adopt will result in downright injury to the stock-owner. I hope that the Attorney-General will see the effect of the provision, and accept the proposal of the honorable member for Flinders, which clears up the whole ground. {: #debate-27-s44 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- I know that the suggestion put forward would be a change, but in the interests of the country it would be a very wise change, because if a man keeps on building up flocks and herds, or an orchard, he *ii* really multiplying the taxable reserves of the State, and so ensuring a larger income for the State in succeeding years. Tn other words, he is building up a fund for the benefit of the State, to be expressed in taxation in subsequent years. We cannot estimate the annual increase in the case of an orchard which is giving no return. A man certainly puts in his labour, and thus builds up capital, but it is a. capital which is going to express itself in income which the State, at a 1 later stage, will tax, and by which it will benefit. It is really only deferring Mie tax, and in the meantime increasing it for future years. We shall get it all later on, with compound interest. Where incomes and outgoings fluctuate according to market values, there must be some working basis for the taxpayer. What the State requires is a certain portion of the actual income derived during the year, bub the method set out in the Bill seems to create an income where there is none, whereas the method suggested by the honorable member for Flinders appears to be the- only means of getting at all the income that is taxable. At tlie same time it will assist in building up future taxable resources. It may be, as the AttorneyGeneral suggests, "as old as the hills," but surely a party of progress will not stretch the argument too far. The method suggested by the honorable member for Flinders will give more revenue in the long run, and not less in the meantime. {: #debate-27-s45 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I hope that honorable members who are so kindly assisting me in this way will come to some common understanding among themselves as to what they really wish. The principle laid down in this scheme of taxation must be applied to all classes of industry. Honorable members assume that there is something inherently different in the circumstances of an industry in which the forces of nature are directly obvious - as in the live stock industry - and that this form of industry should have special treatment. As a matter of fact, all classes of industry give on an average about the same return to capital. If they did not, there would be a rush of capital to the most remunerative form of industry, and the equilibrium at once restored. For instance, take the shipping industry. At the end of the year the ship-owner has earned so much, but his stock in trade has depreciated. He has paid so much for repairs and so much towards a depreciation fund. His ship is not worth as much as she was at the beginning of the year. **His** income thus is less the amount put aside for depreciation and repairs. These amounts are deducted, and the residue of income is taxed. And the position of a stock-owner who has .10',000 sheep at the beginning of the year and 15,000 at the end of tlie year is in essentials the same. Honorable members claim that the increase .should not be taxed because the State will get that taxation by-and-by. If we translate the sheep into terms of money, at the end of the year .tlie stock-owner has £15,000 instead of £.10,000; he has a larger amount of capital, and so able to earn a larger income.; he is that much 'better off. Part of the income earned during tlie year goes to depreciation, because the flock has depreciated during the year, and a certain sum must also be allotted to something which is analogous to repairs; but the balance must be regarded as income, and therefore taxable. There is no other method of assessing income in the State Acts. {: .speaker-KXG} ##### Mr Watt: -- Some do not assess it in that "way. {: .speaker-DQC} ##### Mr HUGHES: -- The New South Wales provision is as follows: - In any case in 'which profits or moneys derived from any business have been converted into stock-in-trade, or added to the capital of, or in any way invested in, such business, a complete statement of the amount of such profits or moneys so converted, or added, or invested, shall be made by such person in the prescribed form in his returns. {: .speaker-KJE} ##### Sir William Irvine: -- We agree to that. {: .speaker-DQC} ##### Mr HUGHES: -- All that 'the clause in the Bill provides is that the taxpayer shall make a return of his stock, and the tax will be levied on it after allowing for that proportion of the value of the stock which belongs to income and that proportion which belongs to capital. The proviso is a means by which the Commissioner can ascertain the exact position of the taxpayer. {: #debate-27-s46 .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I do not agree with some of the criticisms offered to the clause. I think that it is a good clause; but there is an omission . It provides that the value - not the number - of a man's stock shall be taken in one year and in the next year, and that if the owner, instead of selling his surplus as profit, chooses to add it to his former stock, it is still to be regarded as income - not on the number, but on the value. My point is whether, when a man has added to his former .stock, and the value of the whole has gone down after he has paid his income tax, he will, in the next year, be made an allowance for that decline in value? If that is the case, there will be no difficulty, because, where a man, instead of taking his profit, has chosen to build up his flock, and pay income tax on the addition to it as if it were income, and there comes a great decline in value - value being made the best under this Bill, and not numbers - the only way in which we can compensate him is by allowing him to account for that decline in value in submitting his next year *'s* assessment. If a man has stock valued at £1,000, and the next year it is shown that his stock has increased so as to be worth £1;500, he will be called upon to pay tax on the £500, because he has added to his stock. But if, in the next year, after he has paid his income tax, tlie value of the increased number is reduced again to £1,000, he will be in the position of having paid income tax on £500 which has been lost to him by the depreciation. If the Bill provided that a deduction could be made on account of depreciation in value, there would be no difficulty; but there is nothing in the Bill to authorize the Commissioner to make such a deduction. {: .speaker-DQC} ##### Mr Hughes: -- Certainly not; each year is a watertight compartment. {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- The AttorneyGeneral, I am sure, sees the difficulty in tlie case of a man who, having paid on something that has vanished, has no means of redress. {: #debate-27-s47 .speaker-KMM} ##### Mr MANIFOLD:
Corangamite -- This is a rather difficult proposition, and I think that honorable members on this side are leading themselves into what may be a trap. Personally, I lean towards the proposal as it stands in the clause, provided that a fair value is placed on the stock at the commencement of the year. If that be done, and the value is ;the same at the end of the year, whatever surplus there is will be income. If we take the case of a man who has 10,000- sheep, the ordinary increase of which is 3,000 lambs, "there is a total of 13,000 ; and if they are valued at 10s., we have an apparent surplus or income of £1,500 for the year. But trouble arises if there should be a drought, and the added number of sheep die. Then the whole of the income is gone, and with it a considerable number of the stock. The result is that the man will pay tax in- one year' on an income that he lias never realized. The trouble could be got over, I think, by taking an average over three or four years from the income tax returns; and thus arriving' at the taxable income. Mi". Bruce Smith. - Does the honorable member think that farmers keep details of their last three years' transactions'? {: .speaker-KMM} ##### Mr MANIFOLD: -- Probably every farmer in Victoria1, since the State income tax was imposed, has kept a record, or somebody has' kept it for him ; and, if only for that particular reason, I' rather favour this form of taxation. Then, if we take the same number of sheep and lambs, we- may find that, owing to a bad season, a mau has to sell 6,000 sheep, realizing probably £3,000. He would then find the Commissioner- assessing him at .£3,000, £1,500 of which would' come under the scheme as adopted by the. AttorneyGeneral, while the other £-1,50.0 would be capital. {: .speaker-KJE} ##### Sir William Irvine: -- 3Sot quite; the other. £1,500 would be. necessary to malar tain his capital. {: .speaker-KMM} ##### Mr MANIFOLD: -- The honorable member for Flinders suggests a statement of what money has- been realized, and what has been paid out, and that one be deducted from the- other in order to ascertain the- income. **Sir- William** Irvine: - So long- as the man retains- his capital) of course {: .speaker-KMM} ##### Mr MANIFOLD: -- But it is not proposed to get a statement of the capital. {: .speaker-KNF} ##### Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917 -- That could be done by regulation. {: .speaker-KMM} ##### Mr MANIFOLD: -- -I suppose we could do -.my thing by regulation ; but if we adopt the suggestion made from this side there will be no record of the capital. {: .speaker-KXU} ##### Mr Patten: -- Except in the War Census. {: .speaker-KMM} ##### Mr MANIFOLD: -- That does not, matter. If a statement is made of the money that goes out and the money that comes in, and a man has sold a certain, amount of stock which represents hiscapital, the Commissioner will say at once that all over and above the annual increase is moonie. Considenable losses of stock have already been experienced in Queensland;- and the injustice that may arise can be realized. Many of the calves which were running with their mothers are dead on a number of the stations in that State; but if the assessment of income had been made up to the 31st December they would have been returned as increase, and have necessitated the payment of income tax. {: .speaker-F4S} ##### Mr Joseph Cook: -- Would not a deduction be allowed in the following year? {: .speaker-KMM} ##### Mr MANIFOLD: -- The trouble is that that income tax would have been paid on a certain number of cattle that were not there - on an income that had not been received - and as I have said, the fairest way would be to strike an average over three or four years. If there is to lie no statement of the amount of capital that a man has in stock, the Commissioner will doubtless do his best to tax a certain amount of money which is partly capital'. {: .speaker-DQC} ##### Mr Hughes: -- I shall discuss this point with the Commissioner with a view to- getting an average. {: #debate-27-s48 .speaker-KR8} ##### Mr SHARPE:
Oxley .- Does the' Attorney-General consider the value of the good-will' of a business taxable under- the Bill, or is- it to be regarded as an addition to tlie capital in the business ? {: #debate-27-s49 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 ...- Under the clause as it stands there are two bases of computation. The first is the grazier's income as ordinary trading profit - the difference between his sales and purchases. The next, under the proviso, is the- difference between the- value of the stock in- hand at the beginning of the year and the value' at the end of the year-. This time, I think, I mav be credited with wishing to help- the AttorneyGeneral. Suppose we take- the year that the Government have fixed, and assume that on the 1st January, 1914, the Value of all the stock in the Commonwealth was £150,000,000'. The AttorneyGeneral' will' admit that on the 31st December, 1914, that stock had diminished' by over one-third or, probably, one-half. This means that there would have been absolutely, no incomes from stock, so that that basis is valueless for the Treasurer. {: .speaker-KXG} ##### Mr Watt: -- That would apply, to June.. 1915, as well. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- Yes, but the AttorneyGeneral is claiming that any comments on the measure from this side are not intended' to assist the Government, and' I' am giving a clear illustration that the Government on the basis mentioned' would' have absolutely no tax from such incomes in 1914. The honorable member for Flinders has shown clearly that the Government in this proviso make an attempt either to anticipate an income in the following year or to levy a tax on capital, as was also pointed out by the honorable member for Grey. Then we come to the consideration whether the value of the stock should be arbitrarily fixed on the 1st January, on the inception of the Bill, and carried right through the period, as, according to the honorable member for Grey, is done in South Australia. That basis, however, I should regard as a mistake. The argument I have advanced also applies to wheat and all other produce which may be unsold. In the interests of the revenue, the Government would be well advised in taking the balance, or trading proposition, as the basis for this taxation. {: #debate-27-s50 .speaker-KNH} ##### Mr MATHEWS:
Melbourne Ports -- As a city representative I desire to be fair to those who represent pastoral districts. In common with others who watch affairs, I recognise that stockraisers experience many disadvantages, and I should like 'to see justice done to them. I cannot understand, however, why stock-raisers should be placed in a different category from that of men in other forms of business. {: .speaker-KFC} ##### Mr Fleming: -- Because of the natural increases. {: .speaker-KNH} ##### Mr MATHEWS: -- That is one advantage they have. While an ordinary business man is sleeping his capital stock is not increasing; and honorable members will agree that the losses in pastoral stock caused, to a considerable degree, the increase in prices. A man with 2,000 head of sheep or cattle worth £1,000 on 31st December last, might lose 400 of them, but yet find at the end pf the year that the i.,600 left were of as- much value as the 2,000 had been. The proprietor of one of our big drapery emporiums, for instance, may at the beginning of the season spend £100,000 in stocking his place. {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Say, with crinolines. {: .speaker-KNH} ##### Mr MATHEWS: -- Yes, and if those crinolines go out of fashion he might find himself at the end of the season left with half of them on his hands. A man who is in business suffers a depreciation of his stock, and he does not have the advantage of a natural increase which the stock raiser enjoys. The representatives of the graziers and stock raisers have, so far, failed to convince me that those people should be treated any differently from any other class of business man in regard to business losses. Until some stronger case is made out for tlie amendment, I shall support the AttorneyGeneral. {: #debate-27-s51 .speaker-L0P} ##### Mr SAMPSON:
Wimmera .- As the Attorney-General has promised to discuss this matter with the Commissioner, I should like him to inform the Committee later on what basis of valuation the Commissioner will be willing to adopt. The success or failure of this clause will depend largely on its administration. I do -not think it is possible to arrive at a man's real income unless there is a valuation of the stock at the beginning of the year, and also at the end of the year, with a view to ascertaining what has been the increase or decrease. But if a standard value per head were adopted for stock in different parts of Australia, an assessment could be made on the increase or decrease in the number of the stock. That would greatly simplify the administration of the Act. If there is a difference in values per head in January as compared with December, the taxpayer and the administrators of the tax will be in difficulties. But if a standardized value were adopted, the incomes from different classes of stock derived during the year would be represented by the difference iri" the number of stock owned by the taxpayer. I do not see any other way of obtaining a satisfactory assessment unless two valuations are made. {: #debate-27-s52 .speaker-KXU} ##### Mr PATTEN:
Hume .- One is almost inclined to say " Save me from my friends" when " honorable members commence to talk about the standardizing of stock for the purposes of an income tax., If the price of stock is to be standardized, it will be only natural for the Commissioner to fix the highest standard possible in order to increase the receipts from the taxpayer. I consider the proposal absolutely impracticable. I assure the honorable member for Melbourne Ports that the farmers and graziers do not desire to be treated in any way differently from the ordinary trader or merchant. Personally, I have no objection to an income tax, because, on the face of it, one has to earn the income before the tax can apply. But I do feel a little disconcerted by the provision in this clause which requires practically a return of capital tobe made in order to arrive at the income. I have listened with care to the ingenious argument of the AttorneyGeneral in comparing live stock and gold. Gold cannot die, but live stock can and does, and so the honorable gentleman's parallel vanishes at once. Whilst I am quite in favour of paragraph *a,* I am opposed to the proviso with regard to both live stock and produce. If the Commissioner is going to take into consideration the value of live stock and produce not disposed of, he will find himself in endless difficulties. Take the case of a mixed farmer who desires to pay taxation on his legitimate income. In the earlier part of the year he may have a number of stock and two or three stacks of hay. If this proviso is enforced that stock and hay will be included in the return, but it does not necessarily follow that before the end of the year he will sell either the stock or the hay. He may have to cut up the hay and feed it to the stock. What will happen in the following year? In what way is the hay to be shown on the return, and what compensation is the farmer to receive for the disappearance of his stack of hay on which he has paid income tax, but for which he has received nothing ? I suggest that the Attorney-General should strike out the whole proviso, and leave the matter to the discretion of the Commissioner. Amendment negatived. Amendment (by **Mr. Hughes)** agreed to- >That the word " taxable " wherever occurring be left out. {: #debate-27-s53 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I move - >That paragraphb be left out, with a view to insert in lieu thereof the following: - " (b) dividends, interest, profits, or bonus credited or paid to any member, shareholder, or debenture-holder of a company, but not including a reversionary bonus issued on a policy of life insurance; > >Provided that where a company distributes to its members or shareholders any undistributed income accumulated prior to the commencement of this Act, the sum so received by the member or shareholder shall not be included as part of his income. {: #debate-27-s54 .speaker-KXG} ##### Mr WATT:
Balaclava .- This opens up the question of the debenture holders' interest to which reference was made earlier in the sitting. The Attor ney-General suggested that if we could show him a safe way to prevent evasion of the tax he would consider the exclusion of the debenture interest. I assume that what the Attorney-General has in mind is that if we omitted the interest of the debenture holders the companies would convert their sharehold interest into debenture interest. That can be prevented by remitting only the interest on debentures existing prior to the passing of this measure. I suggest that that course should be adopted, for this reason: There are many companies which have a large debenture interest. I know of one company which has a debenture interest of £90,000, and another of £70,000, all of which is devoted to the highest form of productive enterprise in Australia. Those companies are to be made in a subsequent clause agents for the debenture holders. They will not be able to vary the interest they are required to pay under the contract with the debenture" holders, and as a consequence of that agency condition, they will have to pay the tax upon that interest. This is not a simple problem. The Attorney-General has apparently considered it, and I hope he will see his way clear to exempt all debenture interest in companies which have drawn such debenture money from the Old Country prior to the passing of this measure. It cannot be suggested that such companies could have put the debenture interest into that form in order to evade this tax. because such debenture interests have existed for years. Will the AttorneyGeneral consider, before the Bill passes out of Committee, the provision of such an exemption, with a covering clause to prevent evasion? {: #debate-27-s55 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- This question arose on another clause while the honorable member was temporarily absent from the chamber. As I then stated,the matter is very difficult; but it is impossible for the Government to forego the income tax that might fairly be expected from this very large class of taxpayers. It is true that, according to the decision of the English Courts, it is probable that a debenture-holder could recover the full amount of his debentures from the company. I can do no more than suggest that the Government might propose to the Imperial authorities such an amendment of the English law as would place these companies in a fair position. {: .speaker-KXG} ##### Mr Watt: -- They will not do that. {: .speaker-DQC} ##### Mr HUGHES: -- I. do not know whether they will' or will not,. Ma-. Watt. - If they made an exception in, this case, they would have to do it in many others. {: .speaker-DQC} ##### Mr HUGHES: -Until they themselves say so, I propose to inform the Committee, that this is all that the Government intend to do.. If the British authorities say that they will not do what we suggest, then, we shall, he face to face with another position, which we shall have to consider. {: #debate-27-s56 .speaker-KXG} ##### Mr WATT:
Balaclava .- I am grateful to the Attorney-General for his explanation ; taut it offers cold comfort tothe interests to which we refer. I think he will do me the credit of saying, that I do. not desire- to destroy the actual revenueproducing qualities of this tax, but that I wish to help as far as possible theimposition, of it upon an equitable basis. It is plain that if a. suggestion! of the kind' mentioned by. the Attorney-General were' made to the Imperial authorities,, they could not consent to it without embracing within the exception numberless other interests oversea. The British Government,, as we know, tax a vast amount of. incomeearned in other- countries - tributary countries to the: Motherland - and when, the revenue therefrom comes in, the taxpayers, in. their schedules yield tribute: to< the' British Exchequer.. What- is the good ofexpecting, the British, authorities: to specially exempt from taxation of: this kind, money lent by British holders on. debentures to oversea enterprises^' {: .speaker-DQC} ##### Mr HUGHES:
Attorney-General · WEST SYDNEY, NEW SOUTH WALES · ALP -- I only propose to prevent the debenture-holder having recourse on the company. {: .speaker-KXG} ##### Mr WATT: -- Under this- Bill, we make the company the agent of the debentureholder.. If the Income Tax Commissionerlevies upon these companies, the effect of the- agency provision will be to make them pay the tax on this debenture interest. There will be no recourse by the companies on the debenture receiver of this interest, so that it is tantamount to a tax upon the companies, just as if this were shareholders' money. It is idle to say that we propose to make representations to the' British authorities in the hope that they may make an exception of this form of income. They will not. {: .speaker-DQC} ##### Mr HUGHES:
Attorney-General · WEST SYDNEY, NEW SOUTH WALES · ALP -- I do not know. {: .speaker-KXG} ##### Mr WATT: -- I think tlie AttorneyGeneral is convinced, in his own. mind that: such a request would be futile. {: .speaker-DQC} ##### Mr Hughes: -- No. {: .speaker-KXG} ##### Mr WATT: -- I have known- many such requests to be made through the channels of the States, but a deaf ear- has always, been turned to-them. The British authorities have their own policy to pursue, and . they do not make exceptions to please the Governments or the Parliaments- of the different Dominions. Such exceptions would ill fit their general policy with regard to their great incomes- from oversea. There have been a number- of attempts on. the- part of the- States- to- do; that which the Attorney-General is now trying to do for the first time; but all have failed. The New South Wales Legislature enacted" such' provisions as these, but found' that they could not be- equitably enforced. They remained a dead letter for years, and1 in more recent legislation have- been swept off' the statute-book. The Victorian- Treasury attempted the same thing in years of great need, but when the interests involved laid before the Government of that day the incidence of such taxation, and the injury it would' inflict upon existing interests, it was- abandoned. Weare now attempting in this Parliament' to do what others have- failed to do. This particular form of taxation, if pursued, will do precisely what the AttorneyGeneral in. the early stages of this discussion, described as an, evil'. He said that he desired to avoid' the. taxation of capital' in such a way as to be injurious to employment, -and' so forth. That must be1 the view of all. If' the- AttorneyGeneral prosecutes his endeavouras ferociously as the- clause would imply, the effect will be to drive debenture money out of Australia-, or to make it unpayable for companies here< to> reach, out for debenture' money. It is sometimes not possible, and sometimes not: agreeable to the' English lender to join a company in a shareholding interest; and very often companies, promoted with sufficient capital for their first" endeavours - pastoral, agricultural, and manufacturing companies - have subsequently to approach the oversea investor with a request for additional capital in the shape of debentures. This is a high form of finance which has proved advantageous to many of the biggest interests of Australia, and should be encouraged rather than discouraged:. The clause., as it stands; will inevitably discourage it, and. so reaches that danger point to which tlie Attor-ney-General himself alluded,, in that it will drive capital out of the country :or prevent that increased introduction of .capital for which we, all hope. {: .speaker-DQC} ##### Mr Hughes: -- The honorable member was quite agreeable that this should be done in regard to all future debentureholders. {: .speaker-KXG} ##### Mr WATT: -- -J agreed to what the AttorneyGeneral proposed merely by way of compromise, because he said that if the 'door were opened fully - without a chain being attached to it - it would lead to widespread evasion. I believe that this tax, in its widest reaches, will remain in force for only two or three years, and I, therefore, gave the honorable gentleman a chance to do what really would not injure us in the near future, but would protect the interests of those whose money we have at present. I hope that the AttorneyGeneral will consider favorably the partial or complete exemption of this particular form of interest from this taxation, otherwise it will press very heavily upon and cripple many of the companies concerned. {: #debate-27-s57 .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I understand that it is proposed to treat interest paid on debentures as income, and to throw on the company concerned the responsibility for the -payment of 'income tax upon that income. The honorable member for Balaclava has pointed out that a company, having once paid income tax on the debentures, and not being able to recover it from the debentureholders in England, would thus pay it twice over - once to us and once to the Income Tax Commissioners in Great Britain. I understood him to complain that if a company could not recover from the debenture- holder, or if it could - and "that, perhaps, is the better way of illustrating the point - investors at Home would hesitate to put money into Australian companies in debenture form. {: .speaker-DQC} ##### Mr Hughes: -- I do not see how it would apply if the companies could not recover. {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- If they cannot recover, then it is proposed to throw the payment of the tax upon the companies, and so reduce the profits distributable. If the Government are unable to recover the tax from the debenture-holders at Home, it will come out of the profits of the companies. The Government will, therefore, be making the companies, or their shareholders, pay twice over. {: .speaker-KXG} ##### Mr Watt: -- On a mortgage? {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Yes. I do not think the Attorney-General intends to do that. It would be obviously unfair. The .honorable member for Balaclava has properly pointed out that if debentureholders are discouraged from putting capital into companies in the Commonwealth, the effect will be just as if we were to impose a sort of incubus upon people who are going to lend money to the Commonwealth. If we were to say to 'people about to take up a Commonwealth loan, " We are going to deduct from the interest payable a certain rate of income tax," we should have to increase the rate of interest in order to stand the same chance as others in the money market. Therefore, unless the AttorneyGeneral is deliberately aiming at making these companies pay income tax twice over - on their profits' and also on the interest of the debenture-holders - ! fail to see how he can maintain this part of his Bill. {: #debate-27-s58 .speaker-KEA} ##### Mr KELLY:
Wentworth . -I cannot help thinking that it would be worth the Attorney-General's while to take into consideration the effect of this provision - apart altogether from such a promise as he has anticipated - when the time comes that Australia will want her share in that small residue of the world '9 capital that will be left after the war. Australia has for the last year or two been dependent, so far as the balance of capital coming in and going out of the country is concerned, upon loan importations. As the Attorney-General must know from his consideration of the financial position confronting us, the amount of Government loans that will come into Australia after the war will be reduced to a minimum. If to that natural difficulty we add this artificial one we shall be deliberately discouraging persons in England from lending money to Australian companies to give employment in Australia. Again, a private person being unable to 'finance himself in Australia may finance himself from England. If the Government now proposes to say to this individual, " Because we cannot get at the man to whom you are paying interest upon this loan, we are going to get at you, and make you pay, not only the tax upon your own income, but also a tax upon the income that another person has made out of you," what will the effect be? That, to a private individual,. would be so manifestly unfair that nobody would dream of doing it. But we are proposing to do it in the case of companies; and its effect, as proposed, will be far more unfair to the country 'than to the company. Confronted as we are with a period during which loan moneys will be almost unprocurable privately - when the whole world will be competing for what little capital has not gone up in smoke and shell - I cannot imagine a more foolish proposal. {: .speaker-KXG} ##### Mr Watt: -- English capital has done a vast amount for this country, and it ought to do more in future. {: .speaker-KEA} ##### Mr KELLY: -- It must be remembered that half of Europe will have to be rebuilt after the war, and every penny piece that can be ' secured out of the wreck of credit and capital at the finish will be so much to the advantage of the Australian people. . Yet 1 am afraid that this procedure will do the very thing that we are all anxious to avoid. It will be a placard to tlie world that we do not want private capital in Australia. I suggest to my honorable friends opposite that this is not the time to put such proposals into effect. It is a time when we should encourage by every means at our disposal all the debenture capital we can get to come to Australia. In the name of common sense and prudence do not let us hold out this discouragement to capital that will be more urgently needed in the future than it has ever been needed in Australia's previous history. {: #debate-27-s59 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- A very touching reference has been made to the future of Australia, and the probability, which I readily admit, of capital being very scarce, and we are urged to accept the amendment of the honorable member for Balaclava, which proposes to exempt existing debenture-holders. The honorable member proposes to tax future debentureholders as a remedy for a condition of things that will only arise in the future. The proposal of the honorable member for Balaclava is not a remedy at all. {: .speaker-KXG} ##### Mr Watt: -- That is not my proposal. {: #debate-27-s60 .speaker-KJE} ##### Sir WILLIAM IRVINE:
Flinders -- I find some difficulty in understanding the attitude of the Government in regard to this proposal. The principle underlying this Bill is to tax either persons or companies resident in Australia - to get at the. Australian tax-payer. {: .speaker-DQC} ##### Mr Hughes: -- To tax incomes earned in Australia. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I do not know whether this Bill will carry that out. If it is intended to tax the interest on debentures in the hands of debentureholders in Great Britain, there is grave doubt whether this Bill will secure that result. {: .speaker-DQC} ##### Mr Hughes: -- I think the honorable member is right. That is why we are making the company the agent for the debenture-holder. {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- It is just as well, however, that the Committee should know exactly where we stand. Clause 23 states that "a company, which has at any time before or after the commencement of this Act, borrowed money on debentures, shall be deemed to be the agent for each debenture-holder so far as may be necessary for the purposes of this Act." That, standing by itself, does not impose any tax on a debenture-holder, and I should like to know what particular clause does. Clause 13 certainly does not. It merely says that the taxable income of any person shall include debentures. You must first of all get the person who is taxable, and I can see no clause making the English debentureholder liable. First of all, you have to catch your taxpayer, and when you look for a definition of taxpayer " you find that it may be compared with the definition of " archbishop " as the person who performs archiepiscopal functions in that it means a person chargeable with income tax. I leave that, however. What I want to say on the question of policy is that if it is really the intention of the Government, in addition to taxing the companies here up to the hilt - for it must be remembered that we are taxing companies not only upon their income, but we are also proposing to tax shareholders on the income which is distributed - to follow the debenture-holders and tax persons who are in no sense subjects of Australia in respect of the money they have lent us for the purpose of carrying on our business, we shall be adopting an absolutely suicidal course, which at the present, of all times, will do more to hamper industry and reduce employment than any other course. I quite agree with the Attorney-General that it would be absurd to do away with the tax upon debentures already granted, and not upon debentures granted in the future; but the adoption of the principle of taxing persons who are in no sense subject to our laws, and who do not contribute ordinarily to our taxes, but who have in their own country to pay full taxes, upon the capital which, in the future, they may provide for us, will be doing more than anything else to injure the future prospects of Australia. We shall have to look for more and more capital in the future; we shall have to search for it, not. only in Australia, but in every quarter of the globe, and we shall have to pay higher rates of interest. Therefore, to tax these people who are under no obligation to us would be absolutely suicidal. {: .speaker-KZA} ##### Mr West: -- Do I understand the honorable member to say that interested debentureholders should not be taxed? {: .speaker-KJE} ##### Sir WILLIAM IRVINE: -- I say this: The main purpose of this Bill ought to be to tax Australians to bear Australia's burden, and we ought not to attempt to tax people outside by any artificial machinery. The very worst policy we could possibly adopt would be to tax the people whom we shall have to invite to supply us with future capital. {: #debate-27-s61 .speaker-KXG} ##### Mr WATT:
Balaclava .- There is another phase of this question to which I would direct tlie AttorneyGeneral's attention, apart altogether from the question of debentures. There are many companies in Australia promoted by English capital which, under this Bill, will have to pay on the flat rate of ls. 6d. It will be hardly possible to tax individual shareholders on the divided results, because the division will be made at the other end of the world. I take it that they will pay what is equivalent to 7£ per cent., whereas if the tax were imposed on Australian shareholders, they would be subject to the exemption of £156 a year, or pay on the lower rate. That is a phase of the question that I think the Attorney-General should think over with his officers, because, as we desire to secure more English capital, we shall have to deal as lightly as we can with interests of that kind. But there are other companies, known as franchise companies, which will be seriously affected by this proposal. These companies have acquired rights to run trams, or conduct electric light or other enterprises, under Acts of Parliament, and they have to draw from their profits - which are often meagre at the start, and increase as their trade goes - a sum sufficient to liquidate their capital, because, at the end of their franchise, they have to hand over their properties in good running order, free of charge. The sum they pay to that liquidation fund to wipe out their capital debt ought to be regarded as rent paid to the municipalities which grant the franchise. If that is not done, these companies, which are performing useful functions in their own special direction, will be severely taxed. {: .speaker-DQC} ##### Mr Hughes: -- Is that done under any State income tax proposal? {: .speaker-KXG} ##### Mr WATT: -- In some States the companies have fought the matter successfully, and in other States a solution of the problem has been arrived at by which sums are set aside in order to wipe out the capital indebtedness. {: .speaker-DQC} ##### Mr Hughes: -- If the honorable member says that it has been agreed to in some States, and that in most of the States there is a *modus vivendi,* I will agree to it. Amendment agreed to. **Sir JOHN** FORREST (Swan) [9.46. - I move - >That paragraph o ho struck out. This is the sub-clause which includes in any person's income ' ' 5 per cent, of the capital value of land and improvements thereon owned and used, or used rent free by the taxpayer for the purpose of residence or enjoyment, and not for tlie purpose of profit or gain." A property in the city of Perth is obliged to pay State land tax, Federal land tax, and 5s. in the £ municipal taxation on the rental value, which is often arrived at under Statute and placed at a very high figure, far greater than the amount which would be obtainable from the property as rent. I think this is quite a sufficient burden for the property to bear without the additional imposition of income tax of 5 per cent, of its value. {: #debate-27-s62 .speaker-KEA} ##### Mr KELLY:
Wentworth .- As the purpose of the Bill is to put all taxpayers, whether they own the houses in which they live, or rent them, on terms of equality, I cannot support the amendment. Of two partners each earning £1,000 a year-, one- owning his home and tire other- renting a dwelling, one pays all the taxes to which, the right honorable gentleman has- referred in the- shape of the rent he- pays, and yet is required to pay income tax, whereas the other would escape the tax. The amendment would create inequality among taxpayers. {: #debate-27-s63 .speaker-KFC} ##### Mr FLEMING:
Robertson .- I support the- amendment, in the Invalid and Old-age Pensions Act wo have decided that old-age pensioners are not to be charged with the value of their homes-, and this undoubtedly sound principle should be- extended *as* far as we can take it. What is the chief cause of the decay which was. setting into our. civilization before the great war of which we speak and think, so badly, but which in the end may yet prove a blessing ? I have endeavoured, to get figures to show the drift of people from homes to flats, and. hotel life, but they are unobtainable.. Great Britain lias been buiLt up on tlie principle that a man's home is his castle. Home life and domesticity have- been the rock on whicli the British nation has stood, but the whole tendency of recent civilization has been to get the people away from the country to the- cities, and from their homes to hotels and flats, anywhere but their homes, or anything but what home life means. I have heard that this provision exists iu some of the State Acts. {: .speaker-KFJ} ##### Sir John Forrest: -- It is not in the Queeusland Act nor in the Western Australia Act. {: .speaker-KFC} ##### Mr FLEMING: -- It is in that of Victoria ; but whether it is or is not in other Acts is no argument against the amend. ment. No one will deny that the chief trouble we have in Australia to-day, as well, as that which exists in older countries, is that people are not only drifting to the towns, but also losing the love of home life. The truest standard on which any nation can build is the love of home lift. A shifting population easily becomes a shiftless populace. Some effort should be made to bring people back to the old ideal of home life, and because I believe that the drift to which I have referred is the surest sign of a nation's decay, I consider that Parliament should do all it can to get people back to- more healthy forms of living. I support the- amendment because I believe that it will conduce to that end. Mr; W. ELLIOT JOHNSON (Lang) inducement should be given to encourage men, especially working men, to get rid of the exactions of landlords, and acquire their own homes. This sub-clause has a penalizing, tendency upon every person who endeavours to get a roof over his head free- from the obnoxious visits of a landlord every Monday morning. The acquisition of a small home by an ordinary wage-earner is a matter that takes many years to accomplish, and all the time a man is endeavouring to free his home he has to pay a considerable amount in the shape of interest on a mortgage, and. rates and other taxes upon the property. If the Attorney-General is not prepared to accept the amendment submitted by the right honorable member for Swan, he might at least modify the sub-clause so as to remove its harsh incidences. There should be an exemption up to a certain amount so as to cover the case of those who are simply acquiring roofs over their heads in order to avoid having to pay rent for the rest of their lives, and in order to provide for those who are dependent on their earnings, but I ask the Attorney-General to consider the question of exempting improvements, while leaving the tax to be paid on the capital value of the land alone. {: #debate-27-s64 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- This proposal is very much like the poor widow with whom we are so familiar, and the poor farmer who occasionally meets us in other walks of life. The right honorable gentleman who moved the amendment, no doubt with the best possible motives, is apparently unaware that about eight .out of ten people in this country do not own their houses, and that about 50 per cent, of those who do nominally own the houses in which they live have premises of so low a value as not to be taxable. On the other hand, a large number of people own very fine houses, and the right honorable gentleman calmly proposes to exempt them altogether. {: .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- Some people- own two houses. {: .speaker-DQC} ##### Mr HUGHES: -- The honorable member is alluding to myself, and I shall harrow the feelings of this poor, unfortunate Committee by a recital of my own position, by which honorable members will see how I stand as a typical toiler. I mortgaged one house for £1,000 in order to buy another- at £1,650,. and I have a mortgage of £1,000 on the one, 'and £1,000 on the other. No arrow that the right honorable gentleman can fire from his quiver can gall me worse than that. Take the average man with a home, who says, "This is mine." What he really means is that he* has one part, and -the mortgagee has the other nine parts. {: #debate-27-s65 .speaker-KFK} ##### Mr GROOM:
Darling Downs .. - I think that the amendment moved by the honorable member for Swan should be supported. The policy in many of the States is to encourage working men to .acquire their own homes under Working Men's Dwelling Acts ; and in Queensland at the present time there are, I think, about 5,000 who own, or are acquiring, houses. {: .speaker-DQC} ##### Mr Hughes: -- What is the average value of those homes? {: .speaker-KFK} ##### Mr GROOM: -- I think the allowance is as high as £400 for the value of the (building, though I am not sure, as I have not seen the Act for some time, but there has to be added the value of the land. If the clause as it .stands is passed, the value of the £156 exemption will be destroyed, .and the further effect will be tlie discouragement of men to acquire their .own houses. If the AttorneyGeneral will net go the whole way we .desire, ,he might .allow an exemption equivalent to -the rental :of such .a house. {: .speaker-DQC} ##### Mr Hughes: -- The honorable member proposes to treat a man with a house in exactly the same way as a man who has not a house. {: .speaker-KFK} ##### Mr GROOM: -- We ought to encourage nien to acquire their own homes, instead of discouraging them in the way proposed by this clause. {: #debate-27-s66 .speaker-L77} ##### Mr HAMPSON:
Bendigo .- We have had some pitiful appeals from honorable members opposite as to the effect this proposal is going to have in discouraging the acquirement of homes by working men. A man who receives £3 a week is not taxed so far as his wages are concerned.; but if he has .a home of his own worth £500 he is not badly off - the majority of workers and people are (not in that position - and he is allowed to deduct the amount he has to pay in rates and taxes. Now, 5 per cent, on £500 is £25, and if a man pays £5 in rates and taxes, he will have So pay income tax of 3d. in the £1 on £20., or 5s. In con nexion with the war we were told that we were going to spend our last man and our last shilling, and yet we have this incidence of the income tax seriously represented as an interference with the desire of people to acquire their own homes. {: #debate-27-s67 .speaker-KTT} ##### Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917 -- I do not see any reason for deprecating an appeal to sentiment. The poor man is just as amenable to sentiment as the rich man, and the honorable member for Bendigo does not help his cause by the attitude he has taken up. There *is* .quite as much sentiment in the cottage as in the mansion; and I advise the honorable member to, generally, take a rather more sane -view. This is an "Income Tax Bill, and .not a .Bill .to impose a tax on capital ; and *I* take it 'that the proposal to put 5 per cent, on the capital value of land is made on "the assumption that there is .an increment of 5 per cent., on which .the tax should be paid just as by a previous clause the tax has to be paid on ; the increment in stockintrade or live stock. I take .it .that it is not intended to tax capital value except on .account -of the .increment which takes place. While .there may be an increment in the case of land, the Attorney-General ought to remember his own. argument about ships, which he described as .decreasing in value, however much 'they might be kept in repair. .That same argument applies to houses; ,and if a building will only last fifty years, it .cannot be increasing to the 'extent of 5 per cent., so as to make it a fair subject for taxation. While I do mot advocate that the clause should be struck out, I think " improvements " should be exempted, so as 'to confine the increment to the land, -which will take place as time goes on. {: #debate-27-s68 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 ,- 1 agree with the Bill as it stands. In .the suburbs of our .cities there are many homes -worth, perhaps, £8,000, which sum at 5 per ,cent. means £400. The owner of such a house would, 'under the amendment, get *'an* exemption of £156, plus £400, or a total of £556 ; and this .1 regard as unfair discrimination. The idea in the State Acts is an exemption representing the -cost of .living, including rant ; and that deprives the honorable member for Robertson of his argument that men will .not .be encouraged to build their homes. I believe that the principle embodied in this tax is right, and provision has already been made for the taxpayer's home if the exemption of £156 is sufficient. Amendment negatived. {: #debate-27-s69 .speaker-KFK} ##### Mr GROOM:
Darling Downs -- Paragraph *c* exempts beneficial interests in incomes derived under any settlement, deed of gift, or instrument of trust. In a large estate held in trust there are seven beneficiaries holding life interests only. That is to say, the estate is held for seven different people, each of whom has a life interest therein. In order that those persons may not suffer an injustice, it is suggested that a clause should be inserted to allow of each interest being treated separately. {: .speaker-DQC} ##### Mr Hughes: -- Each interest will be treated separately so far as it is a distributed interest. {: .speaker-KFK} ##### Mr GROOM: -- Will those seven beneficiaries be treated under paragraph *c* as having a separate interest, and each pay a tax in respect of his own interest, instead of the whole seven interests being joined together ? {: .speaker-DQC} ##### Mr Hughes: -- I think that clause 24 deals with that case to some extent. {: .speaker-KFK} ##### Mr GROOM: -- Suppose each of the seven has an interest equal to £500. If the estate were treated as a whole it would be taxed on an income of £3,500, instead of each interest of £500 being separately taxed. {: .speaker-DQC} ##### Mr Hughes: -- I will not make a definite announcement off-hand, but I will look into the matter. {: .speaker-KFK} ##### Mr GROOM: -- I think the intention of the Bill is to tax only the individual interest. {: .speaker-DQC} ##### Mr Hughes: -- That is so. Amendments (by **Mr. Hughes)** agreed to - >That the word "and" in paragraphf be left out. > >That the following new paragraph be added: - "and (h) a cash prize in a lottery." Clause, as amended, agreed to. Clause 14 agreed to. Clause 15 (Taxable income of a company). **Mr. HUGHES** (West Sydney [10.23]. - I move - >That the clause be left out, with a view to insert in lieu thereof " 15. (1) For the purpose of ascertaining the taxable income of a company, there shall be deducted from the total income, in addition to any other deductions allowed by this Act, so much of the income as is distributed to the members, shareholders, or debentureholders of the company: > >Provided that in the case of a life insurance company there shall also be deducted so much of the income as consists of premiums paid upon the policies issued by the company: > >Provided also that a company, notwithstanding any contract, agreement, or arrangement entered into by it, may, with the approval of the Commissioner, charge *pro rata* the amount of the tax actually paid by it against those beneficially interested in the income of the company. > >Where, in the opinion of the Commissioner, a company has not in any year distributed to its members or shareholders a reasonable proportion of its income, there shall be included in the income of each member or shareholder, without in any way diminishing the liability of the company, so much of the income of the companywhich is not distributed in that year as bears to that income the proportion which the interest of the member or shareholder in the paid-up capital of the company bears to the paid-up capital of the company. > >The Commissioner shall furnish to the Treasurer annually, for presentation to Parliament, a report of all cases in which action has been takenunder the provisions of subsection (2) of this section, with a statement of the reasons therefor." The amended clause excludes the premiums paid to life assurance companies, and provides that where there has been what amounts to a merger of companies, and notwithstanding any contract subsisting between the several parties to that combination or merger, the taxation shall be so allotted as to fall on the parties to the contract proportionate to their interest in the income of the company. That alteration applies particularly to insurance companies. {: #debate-27-s70 .speaker-KJE} ##### Sir WILLIAM IRVINE:
Flinders -- With regard to two matters mentioned by the Attorney-General, I do not think there can be any objection, but sub-clause 2 contains a provision of which I should like some explanation. The principle of this company taxation appears to be that we tax the taxable income which is not distributed in dividends at the higher or company rate - to that I take no exception - and that we tax the shareholders with regard to income that is distributed at a lower rate. That is quite right. But sub-clause 2 proposes, in addition to those two forms of tax, that where a company has not distributed what the Commissioner may consider a reasonable amount, a third tax, to be paid by the shareholders, shall be imposed. I cannot understand the reason for that provision. {: #debate-27-s71 .speaker-DQC} ##### Mr HUGHES:
West Sydney · ALP -- I admit that a wide discretion is left to the Commissioner. There are a number of proprietary companies in Australia, aud also many limited liability companies with a small number of shareholders that are in effect also proprietary companies, the bulk of the income of which is received by three or four persons. It would be very easy to escape that higher taxation, which ought properly to be placed on incomes of a certain class, by not distributing the income. We might have made a statutory provision that the provision should apply when the company consisted of a minimum number of persons, but it was obvious that any device of that sort could be evaded by creating a number of dummy shareholders. The object is perfectly clear, and the clause operates as I have explained. The discretion is to be exercised only for the purpose I have indicated. When the Commissioner makes his report, Parliament will have the opportunity of reviewing the extent to which the discretion has been exercised, and will be able to see, in the light of experience, whether the powers given to the Commissioner have been abused, and what have been their benefits. {: #debate-27-s72 .speaker-KJE} ##### Sir WILLIAM IRVINE:
Flinders .- With the object which the AttorneyGeneral has in view I am in entire sympathy. I think it is quite right to provide that if a company does not distribute its dividends, but places them to a reserve, it should be taxed at the higher rate, but I think the object is effected in sub-clause 1 by taxing the company on the undistributed profits and the shareholders on the amount of profits distributed amongst them. But after the company has been taxed at the higher rate upon its undistributed profits, and the shareholders at the lower rate upon the distributed profits, a third tax is imposed on the shareholders as to the portion of those profits which has been already taxed at the higher rate. I ask the Attorney-General to investigate this point. {: .speaker-DQC} ##### Mr Hughes: -- I will. {: #debate-27-s73 .speaker-KXG} ##### Mr WATT:
Balaclava .- In sub-clause 1 of this amended clause appear the words, "so much of the income as is distributed to the members, shareholders, or debenture-holders of tlie com pany." Do those words include policyholders who are not shareholders or members of a company? Take the case, for instance, of a proprietary life insurance company whose policy-holders are not members in the strict reading of the term. I ask the Attorney-General to consider whether such policy-holders shall be included. {: .speaker-DQC} ##### Mr Hughes: -- I will look into the point. {: #debate-27-s74 .speaker-JWC} ##### Mr CARR:
Macquarie .- I wish to ask the Attorney-General whether he proposes to make any special provision in respect of companies that are doing business on the deferred payment basis? Where such transactions are entered in their books, are they to be regarded as business completed during the year of assessment, or are the companies to be rated only in respect of the amounts that have been paid on those transactions ? {: #debate-27-s75 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- So far as I know, there is only one State which makes any difference between cash and deferred payments. It is not a proper distinction to make. The distinction made in the Bill is as between good debts aud bad debts. All sales, whether for cash or on credit, iu any one year are credited to that year. If any of them turn out to be a bad debt, then that bad debt is written off in the year in which it proves to be so. The Rill makes provision for that. {: #debate-27-s76 .speaker-KEA} ##### Mr KELLY:
Wentworth .- I do not think that the position outlined by the Attorney-General will meet the case which the honorable member for Macquarie has in mind, and which relates to the position of land sale companies. Let us take the case of a company which acquires £10,000 worth of land, and sells it on very easy terms. The debt is a good one at the date of the sale, but at any moment may become a bad debt. The purchasers may not complete their contracts. It is extremely likely that, at times like the present, such companies will have to forego the punctual payment of instalments of the purchase money in respect of many suburban allotments; but, under the Bill as enunciated by the AttorneyGeneral, they will be required to pay income tax just as if they had received the money. Tlie suggestion made recently by the honorable member for Macquarie was that in such cases the money actually received should be regarded as the basis of profit. If that be taxed, then we shall tax what the companies have actually received. {: #debate-27-s77 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP .- When I replied to the honorable member for Macquarie I had not land sales in mind: but I think the principle is the same, whether the deferred payments relate to the sale of land or anything eke. The principle adopted in the Bill is to credit to each year the sales of that year, whether they be for cash or on deferred payment terms. I readily understand that a number of people might forfeit their holdings .after only partially paying for them. That position, of course, will have to be considered. I take it that it would be a case for the exercise of the discretionary power of the Commissioner., and that he would have to ,use his common sense. I can think of nothing else. When I sell a man a piece of land on twenty years' terms, I do very much more than obtain the instalment for the year in which the sale is made. I obtain a security on which a bank will lend money if the .security is a good one. It is, therefore, perfectly proper that we should credit the transaction to the year in which it takes place. We propose to do that. {: #debate-27-s78 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- There are many companies trading in Australia whose head offices are in London. Provision is made for .such companies in several of the State Income Tax Acts, "but this Bill is entirely silent with regard te them. I wish to ask the AttorneyGeneral how it is proposed to apportion their earnings in Australia *1* {: #debate-27-s79 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- The honorable member has put to me a rather difficult question. I would refer him to clause 14, which, to a large extent, covers the point raised by him. There are cases that it would not cover ; but I think that the Bill, as a whole, will be found to meet them. {: #debate-27-s80 .speaker-JWC} ##### Mr CARR:
Macquarie .- I am not .prepared to accept the AttorneyGeneral's easy dismissal of the question I have raised. He says that if a company sells a large area of land on the deferred payment system, accepting a small deposit in respect of each block, it secures a negotiable credit in the shape of the sale note of the land. I do not know of any financial institution whicli would consider any such proposition unless 40 per cent, or 50 per cent, of the purchase money had been paid up. In my electorate recently, £10,000 worth of land was .sold in one day, and 5 per cent, accepted by way of an instalment of the purchase money. That 5 per cent, represents all that will be received by the company this year. Is that company to be taxed on the basis of a £10,000 sale? {: .speaker-DQC} ##### Mr Hughes: -- It will have a mortgage over the land, and will be in exactly the same position as any other mortgagee. {: .speaker-JWC} ##### Mr CARR: -- The Attorney-General 'assumes that the company is charging interest, and that it is to pay income tax as if it had received the whole of the money ? {: .speaker-DQC} ##### Mr Hughes: -- Yes. {: .speaker-JWC} ##### Mr CARR: -- I hardly follow that reasoning. In many of these cases the interest paid is a negligible quantity. In some cases the land is sold at an upset price. Its value is, of course, an open question, and it is quite possible that those who make purchases secure a bargain. It is hardly reasonable, however, that the vendors should be charged income tax on the basis of a £10,000 transaction when the amount actually paid in respect of the year of assessment is only £500. {: .speaker-JRP} ##### Mr Boyd: -- It is only a transference of capital; it is not income. The Income Tax Commissioner would not levy taxation upon it. The company would be merely getting back its capital. {: .speaker-DQC} ##### Mr Hughes: -- That is quite right. {: #debate-27-s81 .speaker-KEA} ##### Mr KELLY:
Wentworth .- Are we to understand from the interjection made by the Attorney-General that he regards these preliminary payments, until they exceed the- purchase money of the land in the first instance, as repayments of capital ? {: .speaker-DQC} ##### Mr Hughes: -- I did not say that. {: .speaker-KEA} ##### Mr KELLY: -- That would be tlie readiest way out of the difficulty. In the case to which the 'honorable member for Macquarie has referred,' £10,000 worth of land was sold. Letus assume that it cost, in the first place, £7,500. Although only 5 per cent, has been lodged by way of deposit on the contract, the company will have to pay income 'tax on £2,500 in the course of the year. It has not the sovereigns with whicli to pay that tax. The Attorney-General said that it could go to a bank and liquidate its anticipation of profit, but 'I do not think that it could do so at this juncture, and it is not desirable that such companies should be asked to do so at the present time. This is an important question from the point of view of such companies, and to some of them it means bankruptcy. I ask the AttorneyGeneral to take the matter into consideration, and see whether he cannot proceed in these cases upon the basis of taxing the actual receipts in respect of the year of assessment. {: #debate-27-s82 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 .- The companies to which I have referred as having their head offices in London, and as doing business in Australia and elsewhere, issue a balance-sheet in London in which they show their entire capital and earnings. The Commissioner could ascertain the capital employed in Australia, and could say that the ratio of profit in Australia shall be in the relation that the capital here bears to the entire capital of the company. Why should not that be made the basis of the assessment of incomes? {: .speaker-DQC} ##### Mr Hughes: -- The matter will be looked into. {: #debate-27-s83 .speaker-JRP} ##### Mr BOYD:
Henty .- There is no cause for the anxiety displayed by some honorable members regarding the taxation of land companies doing business on the deferred payment system. It seems to me to be clear that, under the Bill, the Commissioner would not regard the revenue received in the circumstances described as being income any more than he would treat as such money received for the sale of a house. {: .speaker-JWC} ##### Mr Carr: -- The Attorney-General said that he would. {: .speaker-DQC} ##### Mr Hughes: -- What I wished to point out was that it is necessary to distinguish between the corpus and the income. The honorable member for Wentworth sought to carry my interjection further than I intended. I wish to make it quite clear that the sale of a house or of a piece of land does not necessarily mean income. It may or may not. {: .speaker-JRP} ##### Mr BOYD: -- Where a profit is made on the transaction, the position is different; but the mere proceeds of the sale of a house are certainly not income, and cannot be regarded as such. {: #debate-27-s84 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- Does the Attorney-General propose to make any modification of this clause in its relationship to building companies.? {: .speaker-DQC} ##### Mr Hughes: -- Building companies could have been considered at clause 10. They will be treated as ordinary companies, and taxed on income. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- But what is income ? {: .speaker-DQC} ##### Mr Hughes: -- The honorable member will see if he consults the definition. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- I want to put before the honorable member the case of a company that had accumulated £80,000 from its sales since 1904, and that distributed this sum last year when curtailing its business. Will that £80,000 be liable for tax? {: .speaker-DQC} ##### Mr Hughes: -- The honorable gentleman cannot expect me to answer off-hand ; I must know all the circumstances. One such case has been considered, and it was. then felt that in future cases the income tax would have to be imposed. In this particular case the settlement took place before the imposition of the tax, and it was decided that the tax should not be. imposed. I cannot give any definite opinion on the case mentioned by the right honorable gentleman, but if he will let me have something setting out the facts, I may be able to give him an answer. {: #debate-27-s85 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I desire to amend the proposed new clause by inserting the following proviso at the end of subclause 2 : - " Provided that where a company dealing with exported butter distributes, within twelve months after the export of any consignment, any funds held in reserve for the purpose of insuring regularity of price on that consignment, tax shall not be levied on those funds in the hands of the company. This matter was put before me at considerable length by the honorable member for Richmond. I have submitted it to the Commissioner, and I am satisfied that the exemption would be reasonable and proper under the circumstances. I ask the Committee to accept the amendment. Amendment amended accordingly and agreed to. Proposed new clause, as amended, agreed to. Progress reported. {: .page-start } page 6595 {:#debate-28} ### SUSPENSION OF STANDING ORDERS {:#subdebate-28-0} #### New Business Motion (by **Mr. Fisher),** by leave, agreed to - >That so much of the Standing Orders be suspended as would prevent the introduction of new business after11 o'clock p.m. {: .page-start } page 6596 {:#debate-29} ### SUGAR PURCHASE BILL {:#subdebate-29-0} #### Second Reading {: #subdebate-29-0-s0 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- I move - >That this Bill be now read a second time. In the" few remarks I made in an earlier stage of this measure, I pointed out that this Bill was intended to provide authority for the Treasurer to obtain an advance up to half-a-million in case of any emergency, for the purpose of carrying out the agreement entered into between the Commonwealth, the State Government of Queensland, and the Colonial Sugar Refining Company to provide payment for the sugar produced in Australia and imported under the terms of that agreement. The Attorney-General has promised the Leader of the Opposition that he will submit the agreement later, and I understand there is no opposition to this proceeding now. It is necessary that I should have authority to finance this transaction, and the course now being followed seems to be the only safe and practicable one. It is not likely that more than £100,000 will be required by way of advance, but I think the sum named in the Bill will not leave too great a margin in a transaction involving several millions. The Commonwealth Bank will finance the transaction, and I do not think its result will be anything but beneficial to the Commonwealth. I agree with the remarks made by the Leader of the Opposition that it is desirable in most transactions of this kind that a schedule of the agreement should be presented to the House at the time action is contemplated; but this is a peculiar transaction; it had to. be entered into early, and in the interests of the Commonwealth the agreement could not be published. {: .speaker-KFP} ##### Mr Richard Foster: -- This will not be taken as a precedent. {: .speaker-F4N} ##### Mr FISHER: -- No. {: .speaker-F4S} ##### Mr Joseph Cook: -- I take it the right honorable gentleman will bring down the agreement later and get the approval of Parliament. {: .speaker-F4N} ##### Mr FISHER: -- Yes. This transaction had to be concluded quickly, otherwise it would have been valueless. {: .speaker-KFC} ##### Mr Fleming: -- Has the right honorable gentleman any idea what interest payments will be necessary? {: .speaker-F4N} ##### Mr FISHER: -- I do not think more than £100,000 will be required, and whatever is lost in interest will be debited to the transaction, and not to the Commonwealth. The Governor of the Bank, I am sure, will protect the interests of the consumers as well as the interests of the Commonwealth. {: #subdebate-29-0-s1 .speaker-KFJ} ##### Sir JOHN FORREST:
Swan -- I have not had an opportunity of seeing the agreement, nor have I yet been convinced of the necessity for this transaction, notwithstanding the statement of the Prime Minister that the finances of the Commonwealth will not be in any way injured by it. It seems to me that this is an undesirable interference with the sugar industry of Australia, and I urge the Government not to continue to do so unless it is absolutely necessary for the trade and business of the country that they should. I am afraid that too much of this sort .of thing is going on. Unnecessary interference with' business and producing interests can only have a very injurious effect in retarding enterprise and by placing people in positions of uncertainty. This seems to be another Socialistic enterprise for which no necessity has been shown, or even attempted to be shown. It is pretty certain that the sugar and wheat enterprises, and the fixing of prices generally, will have a very lasting and injurious effect on the commercial business of Australia. I must express my disapproval of the action of the Government in entering on these vast enterprises without the authority of Parliament. If the Attorney-General and his colleagues are to be allowed to rush into an enterprise involving millions of money, without telling Parliament about it, or if they are to ask us to consent to Bills involving large responsibilities without our knowing anything about them, we might just as well not be in existence as a Parliament. Why did not the Commonwealth Bank do this without any authority from Parliament, if it is such good business, as it is said to be? The Bank has the guarantee of Australia behind it. {: .speaker-F4N} ##### Mr Fisher: -- I would not allow it. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- The right honorable gentleman could not, I think, prevent it. The Governor of the Bank is not under a ' Minister, though I admit that he may be willing to be under the present Treasurer, because he is the protege of the right honorable gentleman. {: .speaker-F4N} ##### Mr Fisher: -- I would have something to say about the way in which the Government should do its business. It could not go to the Commonwealth Bank without my approval. {: .speaker-KFJ} ##### Sir JOHN FORREST: -- The Commonwealth Bank could have done this; it has assisted companies before now, and it could assist them again. At any rate, protest is of little use. We are faced by a solid Macedonian phalanx, who do not speak, but vote as they are asked to do. Ministers with their solid majority are destroying responsible Government, and if this state of affairs is to continue, our meeting in Parliament will become a mere farce. If the people of the country choose to stand it, let them do so, but our meeting as representatives of the people in a Parliament is useless, because a solid majority in both Houses arranges everything in Caucus beforehand, even to the smallest detail, and when honorable members on this side urge that certain things should be done, they ascertain that the Caucus has arranged otherwise, and honorable members opposite are as silent as dumb, driven cattle. {: #subdebate-29-0-s2 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- In allowing this Bill to pass, I wish to put on record once more my protest against these Socialistic enterprises of the Government being put through in war time. Last night the AttorneyGeneral made it clear that this' Bill was in pursuance of the Socialistic programme of the party opposite. Ministers might leave this kind of warfare over until the war is finished, and not intrude their Socialistic propositions at such a time, or exploit the war sentiment for the purpose of these measures. {: .speaker-KGG} ##### Mr Hannan: -- There are two wars : As a nation we are warring against Germany, and as a people we are warring against exploiters. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- All I know about the exploiter is. that, during the next twelve months, honorable members are going to make the people pay for sugar the price' that this so-called exploiter made them pay .in the past. They are not going to give the people any relief. {: .speaker-L77} ##### Mr Hampson: -- The people in Australia are getting the cheapest sugar in the world. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- The people were getting the cheapest sugar in the world before. The honorable member's Socialistic Royal Commission pointed it out, and told them that they had better not go into this enterprise, that they had better leave it alone, and that if they meddled with it they- would make matters worse. {: .speaker-KXK} ##### Mr Webster: -- Why indulge in this talk at this Bour of the night? {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Why have we these Bills brought forward at this hour of the night, and while the war is raging ? If honorable members will interrupt they must stay here longer. I must say what I have to say even if we have to stay here all night. I predict that when the twelve months are finished, honorable members will have done no good, and they will have made the people pay more for their whistle. They cannot give the people any cheaper sugar than the Company was giving them, and the result of it all is that honorable members will take money from the pockets of a lot of small men in Australia and put it into the pockets of the big people. Do they know that this Bill has received a blessing in the Legislative Council of Queensland from a lot of the big men interested in the sugar of that State, their opponents who are interested in sugar ? {: .speaker-KXK} ##### Mr Webster: -- And your friends. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- No; they are now the friends of honorable members on the Ministerial side. They claim that honorable members are doing them a good turn, and they are glad to see this legislation, but if they are going to get more out of the business, where is tlie money to come from, except out of the pockets' of the small man ? How are we to get cheaper sugar for the small man, and more money for the big man in the industry, I should like to know ? Is it going to drop as the gentle rain from heaven? Is there some mysterious purse of Fortunatus out of which this money is to pour ? The claim that we can get something for every one out of this transaction is absurd. However, I make my protest as strongly as I can against our proceeding with these Socialistic enterprises at this time and in these circumstances, and I call attention to the secrecy of the business, to the flouting of Parliament in regard to it, to the bureaucracy that is being set up in this country, and to the real Czardom which is prevalent just now. I wish to know what all these mouthings of Democracy amount to when we are really setting up bureaucracy. {: .speaker-KGG} ##### Mr Hannan: -- What does the right honorable gentleman mean by his reference to secrecy ? Does he maintain that it would have been in the public interest to make known the conditions of the transaction ? {: .speaker-F4S} ##### Mr JOSEPH COOK: -- If the honorable member knew anything about tlie matter, he would not allow the proposal to go through." If his supporters outside knew the details of the business they would not allow it to go through, but honorable members do so because they know nothing about it. However, my duty is done. I make my protest, and leave it there. {: #subdebate-29-0-s3 .speaker-KEX} ##### Mr FINLAYSON:
Brisbane -- The Leader 'of the Opposition cannot be accused of inconsistency in regard to the attitude he has adopted. He has said no more to-night than we expected him to say, and no more than he has always said in regard to such matters. The very reason that he has urged why the scheme should not be carried out is the very reason that is being put forward by his political friends in other countries for the adoption of similar schemes. He has said that it should not be adopted in war time, but the very fact that the war is in existence has compelled other countries to take similar action. {: .speaker-F4S} ##### Mr Joseph Cook: -- We were told last night that this is not done because of the war, but in order to carry out the party programme. {: .speaker-KEX} ##### Mr FINLAYSON: -- I am talking of what the right honorable gentleman has said. He is protesting against these socalled Socialistic measures because they are being put forward during the war. {: .speaker-F4S} ##### Mr Joseph Cook: -- No; I protested against making the war cover these proposals. That is a very different matter. {: .speaker-KEX} ##### Mr FINLAYSON: -- I heard the right honorable gentleman say that he protested against such schemes being brought forward in war time. {: .speaker-F4S} ##### Mr Joseph Cook: -- I objected to the party of the honorable member, exploiting the war sentiment for its own purposes. {: .speaker-KEX} ##### Mr FINLAYSON: -- That was what I was going to say with regard to the position of the right honorable gentleman. He is undoubtedly taking advantage of the war sentiment in Australia in order to make the people believe that this Bill is unnecessary. While talking against raising party questions, he is raising party questions as fast and as loudly as he can. The necessity for this Bill is not occasioned by the war, but by the urgency of tlie position. On the ether hand Socialistic enterprises are asked for by his friends in other countries because of tho war. In fact, the countries affected by the war are sown broadcast with Socialistic measures compared to which this is a mere item. The right honorable gentleman asks whether we have noticed that cur political enemies in Queensland are thanking us for the introduction of this Bill. Of course they are doing so. Not only are the large growers and planters in Queensland and New South Wales gratified, but also, which is more to the point, hundreds of small sugar cane farmers in Queensland are gratified because at last they are beginning to see a glimmer of light and hope in respect to the future of the industry. To-day more cane than ever before is being planted because of the confidence created in the future of the industry by this measure. That is the secret of the support given to this measure; those interested see that at last this Government, at any rate, have the courage, to do things, though whether they will succeed or not remains to be seen. {: .speaker-F4S} ##### Mr Joseph Cook: -- Then you aro the friends of the big man as well as of the little one? {: .speaker-KEX} ##### Mr FINLAYSON: -- We are the friends of the farmer, who, at this juncture particularly, needs a friend, and a " friend in need is a friend indeed." That the Colonial Sugar Refining Company has been able to give the people cheap sugar is not due to any philanthropy on their part, but is simply due to the circumstances of the times. The honorable member is wrong in suggesting that because the company has given us so-called cheap sugar up to now - sugar which, according to the law of supply and demand, ought to have been cheaper - it would have continued to do the same. Indeed, the reason for this Bill is that there was every prospect of a specific statement on the part of the company that it would be necessary to raise the price because of the shortage of supplies. This Bill has been introduced to protect the people against fictitious prices and exploitation; and the Government are to be congratulated on the opportunity that has been presented, and on the courage they have shown in facing the situation. If this legislation be only for one season, when danger, trouble, and difficulty threaten, not only the general public, but also the growers, this action of the Government deserves the support of every man in the House, no matter on which side he may sit. There has been plenty of talk about the shortage of wheat, and the necessity for the support and protection of those concerned in its production, but I believe the Bill before us will do more to encourage and restore confidence in the sugar industry, especially amongst the small growers, than any means I know of; and without it, I am very doubtful whether it would have been thought worth while continuing operations. I think that the Opposition might have been courteous enough to allow the measure to go through, without trying to make the people believe that it represented an experiment in business - some launching out in trading operations - when they knew quite well that it was a special measure to meet a particular trouble, and, at the most, a temporary one. Question resolved in the affirmative. Bill read a second time, and, the Standing Orders having been suspended, passed through its remaining stages without amendment. {: .page-start } page 6599 {:#debate-30} ### PUBLIC SERVICE BILL {:#subdebate-30-0} #### Second Reading {: #subdebate-30-0-s0 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- I move - That this Bill be now read a second time. The primary purpose of this Bill is to meet the case of such members and intending members of the Service as are participating in a naval or military capacity in the events of the war. Honorable members will agree that these officers should not be prejudiced in their positions by reason of absence from their civil duties. Certain clauses of the Bill - 5, 11, and 13 - are designed to cover contingencies of this nature. The remaining sections are for the most part either formal in character, or are necessary as providing legislative approval where innovations have been brought about by order or regulation. Others again make slight alterations in the intention of the principal Act. Dealing first with the sections which have arisen out of the war, clause 5 provides that in making appointments to the Public Service a preference shall be given to such successful candidates at examinations who have served with satisfactory record in any Expeditionary Force raised under the Defence Act 1903-1915. This makes statutory provision for what I believe every honorable member has in his mind. Clause 11 makes provision for the granting of leave to members of the Expeditionary forces, and to those called up for active service in Australia. The section is necessary to permit of such leave being counted as part of the officer's term of service in his position. {: .speaker-F4S} ##### Mr Joseph Cook: -- Otherwise they would lose their seniority. {: .speaker-F4N} ##### Mr FISHER: -- Clause 13 provides that any person who, as a successful examinee, is eligible for appointment to the Public Service, will continue to be so eligible until nine months after the termination of the war. Instructions have been issued to the effect that no permanent appointments be made until the termination of the war. Persons who have already qualified by examination, however, will not be passed over. Their names will be retained on the register for nine months after the cessation of hostilities. As to the remaining clauses of the Bill, clause 2 will overcome a difficulty in the interpretation of the words " officer or" class of officers," which have been held to mean " permanent officer," the occupant of an " office " to the exclusion of temporary and exempt employees. As to clause 3, particulars of service of officers of the Commonwealth who had been transferred from the Service of a State were formerly included in the stafflist published annually. This was done by virtue of section 9 of the principal Act. By Cabinet order such information was deleted from the current list in anticipation of legislative approval now provided for. A substantial decrease has been effected in the size of the staff list, and a corresponding economy in its production. This is practically to eliminate useless work and formality. Clause 4 deals with the minimum wage of £126 per annum, consequent upon an officer attaining the age of twenty-one years, which was approved by Order in Council in January, 1913. The additional £16 per annum has been paid, however, as an " allowance," pending amendment of the Act. It is desirable that a permanent wage should take statutory form, and allowances are not really practicable. At present appointment to the Clerical Division by competitive public examination is limited to persons whose age does not exceed twentyone years. It is proposed by clause 6 to extend the age-limit to twenty-five years, for the reason that in certain States difficulty is being experienced in obtaining a sufficient number of suitably qualified officers. Clause 7 provides - firstly, that an officer employed in a territory of the Commonwealth may be appointed to a corresponding position in the Commonwealth Public Service. These employees will be placed on the same footing with regard to appointments as officers ' in the Services of the several States. I think honorable members will admit that the time has come when this should be done. By this clause also members of the Permanent Naval Forces will be rendered eligible for appointment to the Department of Trade and Customs in the General Division. Men possessing a knowledge of seamanship are required in connexion with the staffing of the Lighthouse, Quarantine, and Navigation Branches. The section will provide a source of supply of launch hands, caretakers, lightkeepers, &c. Clause 8 deals with the matter of temporary employment. Six months is fixed as the maximum period of temporary service at any one time. The section, however, empowers the Commissioner in particular cases to extend this period if so desirable in the public interest, and if he is satisfied that no other suitable person is available for the work to be performed. The proposed amendment will enable a temporary employee to continue in his duties without recourse to the exemption provisions of the Act. The advantage of this would be two-fold - the long process now followed of obtaining the Governor-General's approval would not be required, as the Commissioner would have power to regulate extensions of temporary employment, thus effecting considerable saving in departmental and Executive Council work; and provision would also be made for regular review of continued temporary employment, thus serving as a check on Departments which would be bound to furnish satisfactory reasons for continuance of such employment. Clause 9 has reference to the consequences of the conviction of an officer of a criminal offence. As section 66 of the principal Act at pre- sent stands, an officer who has forfeited his office under the provisions of this section is entitled to be paid salary up to the date of forfeiture, notwithstanding that he had been suspended from the performance of his duty from a previous date following upon the committal of the offence. It is desirable that an officer in such a case should be placed in a similar position to an officer dismissed from the Public Service under section 46 of the Act, who, unless ordered otherwise by the Governor-General, receives no salary from the date of suspension. In that regard, I can quote to the House a case of which I have personal knowledge. During my previous administration, an officer connected with the Customs Department stole certain belongings of people in quarantine. He was convicted of theft by a police magistrate in Sydney, but a Board of Commonwealth officers, by a majority of two to one, acquitted him of any offence unworthy of an officer of the Commonwealth, and he was still entitled to remain in the Service. The Government had to pay his salary; but, as long as I remained in office, he was not allowed, and never will be allowed, to perform any public service. {: .speaker-KFJ} ##### Sir John Forrest: -- Where is he now ? {: .speaker-F4N} ##### Mr FISHER: -- I cannot say; but I hope he is not in the public service, even if we are paying him £1,000 a year. A Commonwealth law which permits an abuse of that kind is intolerable. He was caught red-handed, in possession of a valuable piece of silver plate belonging to some person in quarantine. {: .speaker-KGG} ##### Mr Hannan: -- There is a contrary case, in which an officer was suspended by his departmental head. He was acquitted of any offence, but the Department refused to reinstate him, or pay him the pension to which he was entitled. {: .speaker-F4N} ##### Mr FISHER: -- There are few cases of that kind. {: .speaker-KFJ} ##### Sir John Forrest: -- What became of the man who stole the Commonwealth notes ? {: .speaker-F4N} ##### Mr FISHER: -- I do not wish to discuss individuals, except the one I have referred to, whose case was notorious. By clause 10, the words " 26th day of January " are substituted for " Commonwealth Day." Section 72 of the principal Act provides that " Commonwealth Day " be observed as a public holiday. No such day has been proclaimed, but the 26th day of January, " Foundation Day," is generally regarded as the holiday peculiarly Australian in character. It is thought desirable that this date should be specified in lieu of " Commonwealth Day." Payment for time worked on proclaimed public holidays will be made possible by this clause. "Under the principal Act, officers who have remained on duty on holidays are entitled to time off in lieu. The present system is harrassing, and makes for an accumulation of leave, which in many cases cannot be worked off. ' By clause 12, penalties are provided in the case of persons guilty of fraud and' impersonation at examinations. I recommend the Bill to the House. {: #subdebate-30-0-s1 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- I second the motion. Question resolved in the affirmative. Bill read a second time. *In Committee:* Clauses 1 to 3 agreed to. Clause 4 (Minimum wage). {: #subdebate-30-0-s2 .speaker-KGG} ##### Mr HANNAN:
Fawkner .- In a few recent decisions by **Mr. Justice** Higgins, the minimum wage for public servants has been fixed at £1*38. That being so, I do not see why we should not recognise the principle involved in those decisions, and insert the same minimum in this Bill. **Mr. FENTON** (Maribyrnong) [11.371. - If the officers of the Clerical Division were to form a union or an association, and appeal to the Arbitration Court, and the President were to award a fixed minimum wage of £138, I presume that minimum would become law in spite of the provision contained in this clause. It appears as if the Public Service Commissioner is trying his utmost to abrogate the awards of the Arbitration Court by an increase of the technicalities or intricacies of examination, and unless the men pass those tests they will not be entitled to the wage awarded by the Court. The Public Service Commissioner's inspectors have on many occasions tried to evade the decision of the Court, and one of them made a statement in the Arbitration Court, for which he was severely rapped over the knuckles, by **Mr. Justice** Powers, which reflected on the officers who were appealing for the protection of the, Court, and which was not borne out by one atom of evidence. The men were told by this Parliament to go to the Court and obtain an award, by which the Government would be prepared to abide; but when an award has been given certain men are called upon to pass a very severe examination - not a practical test, to which one would not object. {: .speaker-KFJ} ##### Sir John Forrest: -- The Bill was introduced by your own party. {: #subdebate-30-0-s3 .speaker-KEV} ##### Mr FENTON: -- This Parliament having passed an Arbitration Act, those who administer the Government Departments should obey the awards of the Court. Under the awards we shall have one set of officers receiving a minimum of £138, and now the Government propose, in thi. clause, to fix a minimum of £126. There will be trouble in the near future unless more attention is paid to the awards of the Court. If officers of the Department are to set out to defy the Court, it is time honorable members of this House took steps to protect the men in the Public Service. I have told the public servants that an industrial tribunal had been created to which every workman could go and state his case, and after the Judge had heard the evidence for both sides he would be in a position to judge on the merits of the case. {: .speaker-KFJ} ##### Sir John Forrest: -- Then you have a strike. {: .speaker-KEV} ##### Mr FENTON: -- No award given by the Arbitration Court of the Commonwealth has been violated by the men. {: .speaker-KFP} ##### Mr Richard Foster: -- Because they get all they ask for. {: .speaker-KEV} ##### Mr FENTON: -- The honorable member is jealous because the workmen are obtaining from the Court their just dues. The Court having fixed the minimum at £138, it is only fair that our Statutes should maintain that standard. I repeat to the Prime Minister that unless the Government are prepared to see that the officers carry out the awards of the Court, there will be trouble. {: #subdebate-30-0-s4 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- The two honorable members who have just spoken have raised two questions: Firstly, is the remuneration high enough; and, secondly, what are the privileges of the officers? The remuneration fixed in this clause is the amount which it is considered possible to pay at the present time for these particular services. As regards the right of the officers to approach the Arbitration Court, they have the same right as every outside union; and the law provides that the decision of the Court, subject to the action of this Parliament, shall fix the rates of wages. Therefore, the rights and privileges of officers are not infringed, but secured by this Bill. Clause agreed to. Clauses 5 to 9 agreed to. Clause 10 (Holiday). {: #subdebate-30-0-s5 .speaker-JTC} ##### Mr BURCHELL:
Fremantle -- Under section 72 of the principal Act it is provided that "Commonwealth Day" shall be observed as a public holiday in the Commonwealth public offices. This clause proposes to substitute for the words " Commonwealth Day " the words " twenty-sixth day of January," so that whether Foundation Day is celebrated on the 26th January or not, public servants will be required to take a holiday on that specific date. {: .speaker-F4N} ##### Mr Fisher: -- I think not. There is a provision in. another Act that should a public holiday fall, for example, on a Saturday or Sunday, it shall be observed on the following Monday. {: .speaker-JTC} ##### Mr BURCHELL: -- I think it would be better not to make this amendment of the principal Act as we should thus provide for the public offices being closed on whatever day is commonly observed as " Commonwealth Day." If the Prime Minister is satisfied, however, that these words will not confine the holiday to the specific date stated, I shall say no more on the subject. The clause also provides that no payment or other compensation shall be granted for attendance during any holiday or half-holiday unless the holiday or half-holiday, as the case may be, is a public holiday or half-holiday " throughout the State." By the use of the words " throughout the State," there is a possibility of an injustice being done to officers stationed in a district where a local holiday is proclaimed. In many districts a purely local public holiday is proclaimed, and is observed by all persons in private employment. Government officials are also expected to observe it, but if they are required to be on duty no special remuneration is provided for them. I suggest that the use of the words " throughout the State " should be reconsidered, since their inclusion will do an injustice to a number of painstaking officers. {: #subdebate-30-0-s6 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- I do not think there is the slightestdoubt that where " Commonwealth Day " falls on, say, a Saturday or a Sunday, it is observed on the following Monday, and that the proposed amendment will not have the effect suggested by the honorable member. Coming to the second point raised by him, I might inform the Committee that in one State there are no less than 144 holidays. These public holidays are becoming an absolute scandal. In some districts in the State in question, if a cock-fight is arranged there must be a holiday. {: .speaker-JTC} ##### Mr Burchell: -- But would the Prime Minister penalize public servants in other States because of that? {: .speaker-F4N} ##### Mr FISHER: -- No. {: .speaker-KWL} ##### Mr Tudor: -- In one State five public holidays occur in the one week. {: .speaker-F4N} ##### Mr FISHER: -- The position in respect of public holidays at the present time is an absolute scandal. This clause does not take away the right of the Government to grant a holiday to public servants in any of the States. If members of the Public Service are allowed all Commonwealth and State holidays, I think there can be no cause for complaint. {: #subdebate-30-0-s7 .speaker-KEX} ##### Mr FINLAYSON:
Brisbane -- There are two matters relating to this clause to which I desire to direct attention. In paragraph *b* it is proposed to amend section 72 of the principal Act by providing that where a public servant is required to remain on duty for the whole or any portion of a public holiday, he shall be granted an amount equal to a day's salary if a full day's attendance has been required, and a proportionate amount if less than a full day's attendance has been required. I suggest to the Prime Minister that he should insert words providing that there shall be payment for a minimum of not less than three and ahalf hours. It is ridiculous to require public servants to remain on duty for only an hour or a couple of hours on a public holiday, and to pay them for the one hour or two hours' service. By fixing the minimum I have suggested we should insure the payment of not less than half a day's salary to these men. There are many cases where men are brought back for an hour or two on, a public holiday to provide a temporary convenience, and the whole day is spoilt for them. We should' guarantee in such cases a minimum of at least half a day's pay. The other matter to which I desire to call attention relates to the payment of officers for what are known as days in lieu of holidays. The clause is retrospective so far as holidays that have been earned are concerned. Officers who work during holidays earn what are known as " days in lieu," and these have mounted up to such an extent that there is no hope of working them off. The Department decline to pay for them, and the position has become a scandal. Many of these " days in lieu " have been earned in respect of purely local or district holidays, but under the clause as it stands, seeing that the words " throughout the State " are used, they will be lost to the men. There will thus be a repudiation of such " days in lieu " which have beenearned. I am sure that that is not intended by the Prime Minister. I therefore suggest that after the words " throughout the State," the words " or part of the State " be inserted, so as to make it quite clear that all " days in lieu " owing to members of the Commonwealth Public Service shall be recognised. {: #subdebate-30-0-s8 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- If this provision is found to be retrospective, as suggested by the honorable member for Brisbane, it will receive further consideration. In one district twenty holidays were observed in the year, and some of them were proclaimed because of local race meetings. These holidays have become an intolerable nuisance, and the abuse of the system - it is nothing but an abuse - has gone so far that, in some cases, public servants have arranged a little dog show in order to secure a holiday. I ask the honorable member not to press his objection. Clause agreed to. Clauses 11 and 12 agreed to. Clause 13- {: type="1" start="1"} 0. Notwithstanding anything contained in the principal Act . . . any person who, having successfully passed any prescribed examination . . . . is at the commencement of this Act eligible for appointment to the Public Service, shall continue to be so eligible until nine months after the termination of the present state of war..... {: #subdebate-30-0-s9 .speaker-JSC} ##### Mr BRENNAN:
Batman -- This clause is very good as far as it goes. {: .speaker-F4N} ##### Mr Fisher: -- I propose to amend it by omitting the words "is at the commencement of this Act," and inserting in lieu thereof the words " on the first day of August, 1914." That will take the provision back to two or three days prior to the war {: .speaker-JSC} ##### Mr BRENNAN: -- And will include those who are at present eligible? {: .speaker-F4N} ##### Mr Fisher: -- Yes. {: .speaker-JSC} ##### Mr BRENNAN: -- These men will be eligible after the war for permanent appointment, but I wish to know whether they are to be continued in the meantime in temporary employment. {: #subdebate-30-0-s10 .speaker-F4N} ##### Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP -- The question raised by the honorable member is a fundamental one. All those who are ready to be examined, or who have successfully passed their examination, but have not joined the Defence Forces, will continue to be eligible for appointment to the Commonwealth Service. They will retain the positions and emoluments they now enjoy, according to their ability, but they will not be permanently appointed to those positions until nine months after the close of the war. They will have practically all the rights and privileges that they would have had had they been statutorily appointed, with the exception that they will not be permanent officers until nine months after the close of the war. The object is to secure that those officers who have been away shall not be prejudiced in their positions because of the fact that they have been absent from the country. That is the whole object of the measure. To make it clear, I will move - >That the words " is at the commencement of the Act " be left out, with a view to insert in lieu thereof the words " was on the 4th day of August, 1914." Amendment agreed to. Clause, as amended, agreed to. Title agreed to. Bill reported with an amendment. Standing Orders suspended, and Bill passed through its remaining stages. {: .page-start } page 6603 {:#debate-31} ### WIRELESS TELEGRAPHY BILL {:#subdebate-31-0} #### Second Reading {: #subdebate-31-0-s0 .speaker-KUF} ##### Mr SPENCE:
PostmasterGeneral · Darling · ALP -- I move - >That this Bill be now read a second time. It is intended, under the provisions of this Bill, to secure the removal of the radiotelegraph branch now under the Postal Department, to the control of the Minister for the Navy. Honorable members will appreciate the desirability of this change, inasmuch as the Department is almost entirely associated with maritime affairs. There are nineteen radio stations round the coast of Australia whose principal work is in connexion with shipping. There are also three stations on the islands in the Pacific that have been recently acquired, in addition to which there is the high power station on Woodlark Island, all of which will come under the provisions of the Bill. Future legislation is contemplated which will have for its object the establishment of a wireless service in connexion with all Inter-State shipping; and it is also proposed to hand over to the Minister for the Navy the conduct of matters now dealt with by the Navigation Department. In the meantime, particularly during the period of the war, it will be an advantage to have this Department, which is not in any way interwoven with the Postal Department, under the control of the Naval Minister. There willbe no difficulty, and I am quite satisfied that the change will be beneficial in its effect. {: .speaker-KRN} ##### Mr Sinclair: -- How will this Bill affect the rates for wireless telegraphy? {: .speaker-KUF} ##### Mr SPENCE: -- There will be no interference. This Bill does not deal with that question at all. It is simply concerned with the transfer . Question resolved in the affirmative. Bill read a second time. *In Committee:* Clause 1 agreed to. Clause 2 - >Sections 4, 5, and 6 of the Wireless Telegraphy Act 1905 are amended by omitting the words "The Postmaster-General," and inserting in their stead the words " the Minister for the Navy." {: #subdebate-31-0-s1 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- This proposal simply means that the control of wireless telegraphy will be passed over from a business Department to the purely Naval Department. Why this should be, I do not know. I can quite understand the desirability of the Navy taking charge during war time, but not afterwards, and it would be preferable if the Bill gave control to " a " Minister rather than it should make this the exclusive function of a war Minister. Wireless telegraphy, it must be remembered, is becoming increasingly important as an adjunct to the Telegraph Department. {: .speaker-L1P} ##### Mr Wise: -- The control ought to be in the hands of " the Minister for the time being administering the Act.'' {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Quite so. I presume, even with the Naval Minister in charge, the Postmaster-General will continue to have control over the business side. {: .speaker-KUF} ##### Mr Spence: -- No. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Is the Naval Department about to set up a separate telegraph office, then? {: .speaker-KUF} ##### Mr Spence: -- The radiotelegraph Department is a section by itself. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Is the Navy going to control the commercial side? {: .speaker-KUF} ##### Mr Spence: -- Yes. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- I do not think it should. I admit that the Navy ought to have control during war time, but I do not think it ought to control the business side, particularly after the conclusion of the war. The suggestion by the honorable member for Gippsland offers a much better arrangement. I know there has been friction in this Department, but that should not be an insuperable difficulty. {: #subdebate-31-0-s2 .speaker-KUF} ##### Mr SPENCE:
PostmasterGeneral · Darling · ALP -- Dual control is unsatisfactory at any time, and it is likely there will be dual control if the honorable member's suggestion is carried out. Under the circumstances, I think this transfer should be made as proposed, and if it is desirable to make a further change later, it can be done when the other matters to which I have already referred come up for consideration. {: #subdebate-31-0-s3 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- I appeal to the PrimeMinister not to allow the business or commercial control of wireless to pass absolutely into the hands of the Admiralty officials. If we do, it will be a bad day for wireless telegraphy. I, therefore, suggest that the clause should be amended by substituting " Minister for the time being administering the Act" for "Minister for the Navy." As long as the Minister for the Navy has control for war purposes he has all that he will need, and in. peace times the Department that is now controlling it will resume its control. **Mr. FISHER** (Wide Bay- Prime- I agreewith the suggestion of the right honorable gentleman, but I would point out that in war time it is essential that wireless should be in the hands of a body of men who are clothed with greater responsibilities regarding certain communications that reach us than Post Office officials can possibly have. Though they may be unbusiness-like, naval officers, by their training, are able to keep things secret. Furthermore, wireless will not bo a commercial business for many years. It is primarily concerned with the defence of the country just as much as guns or torpedoes are. {: .speaker-L1P} ##### Mr Wise: -- All our communication with Papua depends on wireless. {: #subdebate-31-0-s4 .speaker-F4N} ##### Mr FISHER:
ALP -- Honorable members can see that for the present there is some justification for transferring the control, but I accept the suggestion that has been put forward. Amendment (by **Mr. Spence)** proposed - >That the word " Navy " be left out, and the words "time being administering the Act" be inserted in lieu thereof. {: #subdebate-31-0-s5 .speaker-KEX} ##### Mr FINLAYSON:
Brisbane -- I feel nervous about allowing power to get into the hands of the Military or Navy, and I think that the transfer of the control of wireless telegraphy to the Minister for the Navy should be limited to the period of the war, because it still has a commercial aspect. Consideration is now beinggiven to its employment as an extension to our telegraph system, in order to overcome the wide spaces of Australia. How is the Telegraph Branch of the Postal Department to work in with the Navy or with the Department of any other Minister who happens to be administering the Act if there is to be this overlapping? {: .speaker-JM8} ##### Mr Archibald: -- There will not be much extension of wireless telegraphy while the war is in progress. {: .speaker-KEX} ##### Mr FINLAYSON: -- The answer given by the Minister supports my argument that the period of control by any other Minister but the Postmaster-General should be limited to the war. {: .speaker-F4N} ##### Mr Fisher: -- The Prime Minister will be responsible, or whatever Minister is administering the Act for the time being. {: .speaker-KEX} ##### Mr FINLAYSON: -- Does that mean that when the necessity for the transfer of control ceases at the termination of the war there will be a re-arrangement? {: .speaker-F4N} ##### Mr Fisher: -- Yes, or in any other circumstances that may necessitate it. Amendment agreed to. Clause, as amended, agreed to. Title agreed to. Bill reported with an amendment. Standing Orders suspended, report adopted, and Bill read a third time. {: .page-start } page 6605 {:#debate-32} ### INCOME TAX ASSESSMENT BILL *In Committee* (Consideration resumed from page 6595) : Clause 16 (Taxable income of a mining company). *Sitting suspended from 12. 24 to 1 a.m. (Thursday) .* Amendment (by **Mr. Hughes)** agreed to - >That the clause be left out with a view to insert in lieu thereof the following new clause: - " 16. In connexion with income derived from mining operations (other than coalmining) carried on in Australia the following provisions shall apply: - > >the return required by this Act to be made by the person deriving the income in the first place shall show the total income so derived during the calendar year in respect of which the return is compiled; > >the capital expended by the person carrying on the mining operations in necessary plant and development of a mining property from which income has been received (less the distributed and undistributed income derived prior to the year One thousand nine hundred and fourteen by that person) shall be divided by the estimated number of years during which payable mining operations may be expected to continue under normal conditions, and the quotient thus obtained shall, in addition to any other deductions allowed by this Act, be deducted from the income; > >where separate and distinct mining operations are carried on by the same person either alone or in association with any other person and a profit is made on some and a loss is made on others, that person shall be entitled to deduct the sum of the losses from the sum of the profits, and the balance of profits (if any) shall be included in the income of that person. Clause 17 - >In calculating the taxable income of a taxpayer the total income derived by the taxpayer from all sources in Australia shall be taken as a basis, and from it there shall be deducted - > >all losses and outgoings, including commission, discount, travelling expenses, interest, and expenses actually incurred in Australia in gaining or producing the gross income: > >Provided that where a taxpayer employs his sons or daughters over the age of fifteen years in his business such sum as the Commissioner considers reasonable shall be deducted for their services; > >all rates and taxes, including State and Federal land taxes and State income tax, actually paid by the taxpayer during the year in which the taxable income was received; > >every premium or sum paid by the taxpayer on the insurance on his own life or that of his wife or for a deferred annuity or other provision for his wife or children, or in respect of any fidelity guarantee or bond, which such taxpayer is required to provide in the exercise of his business: > >Provided that in no case shall any deduction be allowed under this paragraph beyond the sum of Fifty pounds inthe aggregate; > >sums expended for repairs to or on that part of any property occupied for the purpose of producing taxable income and for the repair of machinery, implements, utensils, rollingstock, and articles employed by the taxpayer for the purpose of producing taxable income: > >Provided that the sums shall be estimated on the annual average sums expended for such purposes during the year in which the taxable income was derived and the two years immediately preceding it; > >such sum as the Commissioner thinks just and reasonable as representing the diminished value per centum of wear and tear, during the year in which the taxable income was derived, of any machinery, implements, utensils, rolling-stock, and articles used by the taxpayer for the purpose of producing taxable income: > >Provided that where a deduction has been allowed under paragraph >Provided further that where in any business income is set apart by the taxpayer by way of a fund to cover depreciation under any of the headings mentioned in this paragraph, theamount so set apart for the year in which the taxable income was derived shall, subject to the approval of the Commissioner, be the sum to be deducted for depreciation; Provided that payments shall not. be allowable as deductions under this paragraph unless verified to the satisfaction of the Commissioner; and Amendments (by **Mr. Hughes)** agreed to- >That the word " taxable," be left out wherever occurring after line1; that after the word " wife," line 27, the words " or children " be inserted. {: #debate-32-s0 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I omitted to ask the Attorney-General whether the amount of the tax payable under this Bill will be deducible from the income taxed. Provision has already been made for the exemption of State land and income taxes, and the Commonwealth land tax. {: #debate-32-s1 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- The amount payable under State land or income taxation may be deducted and the remaining income is assessable for the purposes of this income tax. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- But why not the amount payable under this Bill in future years ? {: .speaker-DQC} ##### Mr HUGHES: -- We could not do a thing like that. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- Whynot? {: .speaker-DQC} ##### Mr HUGHES: -- We exempt the amount paid on account of other taxes for the purpose of levying this tax; but how in the name of all that is sacred could we exempt this tax for the purpose of levying it? {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I mean in future years. {: .speaker-DQC} ##### Mr HUGHES: -- The taxation follows the assessment, and is then concluded; and then comes the next year, when the tax has to be paid again. {: #debate-32-s2 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The Attorney-General fails to appreciate the fact that the terms in both the State and the Commonwealth taxation are correlated ; and if there is an exemption in the one case, there is good reason for an exemption in the other. **Mr. JOSEPH** COOK (Parramatta) fi. 6 a.m.]. - I am not so sure that there is not something in the point raised by the honorable member for Wannon. {: .speaker-L1P} ##### Mr Wise: -- I think that the honorable member is perfectly right. {: #debate-32-s3 .speaker-F4S} ##### Mr JOSEPH COOK: -- A person's income from the first year is his income less this tax. and is the net income on which he ought to be taxed next year. {: .speaker-DQC} ##### Mr Hughes: -- Suppose, for the sake of argument, we take the year 1914; how are we going to make any exemption? {: .speaker-F4S} ##### Mr JOSEPH COOK: -- No tax is paid in that year, and, therefore, the income is not reduced by the amount of the tax paid, but it will be so reduced the next year. {: .speaker-DQC} ##### Mr Hughes: -- When a man has paid his tax on the income for this year, he is done with this year, which has nothing more to do with the income. Next year, in determining what income has to be taxed, there is deducted the State land and income taxes ; but we could not deduct the Commonwealth tax. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Why not ? The State income tax is in the same category. {: .speaker-DQC} ##### Mr Hughes: -- The principle of the Bill is to tax on a given income. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- And that is the income after the deduction of all the outgoings. The profits of a company are the profits that remain after the land and income taxes have been paid. These are paid first, and then the profits are distributed ; and if there is no income, it is not fair to have 'taxation. {: .speaker-DQC} ##### Mr Hughes: -- I confess I cannot understand the suggestion. {: #debate-32-s4 .speaker-L1P} ##### Mr WISE:
Gippsland .Why should a person be allowed to deduct the State income tax and not the Federal income tax ? The same reasoning applies to the one as to the other. A taxpayer is allowed to deduct both the State and the Federal land taxes, but, it appears, not the Federal income tax. {: #debate-32-s5 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 . - A deduction is allowed in respect of depreciation in value of everything material to the production of an income excepting improvements effected on freehold. It is requisite, in order to produce any income from land, to employ capital in providing plant, and so forth, and the Government allow an exemption in respect of depreciation in plant, but not in respect of improvements which are vital to the main portion of the capital. I think both should be placed in the same category. {: .speaker-DQC} ##### Mr Hughes: -- So far as that point is applicable to this Bill, it is dealt with in clause 13 and in clause 17, paragraphs *d* and *e.* {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I do not know that those clauses cover the point. Paragraph *d* deals with money spent on repairs, but depreciation may take place when no money at all is spent. {: .speaker-DQC} ##### Mr Hughes: -- That is provided for in paragraph *e* of clause 17, under which such sum may be allowed as the Commissioner thinks just and reasonable as representing the " diminishing value per centum of wear and tear." {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The AttorneyGeneral has, I submit, taken the quotation apart altogether from the context. In Queensland, 5 to *1* per cent, is allowed for the depreciation of improvements. {: .speaker-DQC} ##### Mr Hughes: -- I will discuss the matter with a view to deciding whether any deduction ought to be made on the lines of the allowance in the Queensland Act. Amendment (by **Mr. Hughes)** agreed to- That in paragraph e the words " no further deduction shall bc allowed under this paragraph " be omitted, with a view to inserting " the Commissioner shall take into consideration the sum allowed under that paragraph in determines the sum to be allowed under this paragraph." Amendment (by **Mr. Hughes)** agreed to- >That the word " and " in paragraph *h* be omitted. {: #debate-32-s6 .speaker-KMM} ##### Mr MANIFOLD:
Corangamite -- Paragraph *h* allows deductions of contributions exceeding £5 towards the war funds, but no provision is made for exempting contributions to charitable institutions. These institutions are likely to experience a very bad time in the next two or three years, and if contributions to them were exempted it might be an inducement to the public to render very necessary assistance. {: .speaker-DQC} ##### Mr Hughes: -- The honorable member's suggestion covers a very wide field. {: .speaker-KMM} ##### Mr MANIFOLD: -- It does, but public charitable institutions are defined in most of the State Acts. {: .speaker-DQC} ##### Mr Hughes: -- I discussed this matter at considerable length with the Commissioner. I would not like to definitely promise that such contributions will be exempt, but I will consider what we can do. {: #debate-32-s7 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- The whole of the dividends received from mining companies is treated as income, and I suggest that the full amount of calls paid should be deducted. Many mining ventures prove unremunerative when opened up, and there is no return of the capital invested. {: .speaker-DQC} ##### Mr Hughes: -- I will consider the suggestion. The whole amount of the calls is deducted in Victoria, but not in any other State. Amendment (by **Mr. Hughes)** agreed to- >That the following new paragraph be inserted: - and *(j)* sums set aside or paid by an employer of labour as or to a fund to provide individuals personal benefits, pensions, or retiring allowances to employees: > >Provided that the deduction shall not be allowed unless the Commissioner is satisfied that the fund has been established or the payment made in such a manner that the rights of the employees to receive the benefits, pensions, or retiring allowances have been fully secured." Clause, as amended, agreed to. Clause 18 agreed to. Clause 19- >A deduction shall not, in any case, be made in respect of any of the following matters: - > >Any loss or expense which is recoverable under any contract insurance or indemnity. . . . Amendment (by **Mr. Hughes)** agreed to - >That in paragraph c the word " of " be inserted before " insurance." Amendment (by **Mr. Hughes)** agreed to - >That the word " taxable " wherever occurring be left out. Clause, as amended, agreed to. Clause 20 (Deduction of losses from profits) . {: #debate-32-s8 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- This clause provides that when a person conducting more than one business makes a profit on the one and a loss on the other, he shall be entitled to deduct the loss from the profit. Where a taxpayer derives part of his income also from investments or produce of property, will that income be subject to a deduction of any losses he has incurred on, say, a mining business? {: .speaker-DQC} ##### Mr Hughes: -- No. There is a special clause which provides that the losses of mining companies shall be set against the gains, but, of course, when calculating the income for the year, the taxpayer must set down what he has really made, and he cannot set off the losses of one investment against another. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- In the case of income produced by property, is the taxpayer not entitled to set off his losses against his profits? {: .speaker-DQC} ##### Mr Hughes: -- Suppose a man made £500 by one investment, and then lost £600 at the races, what would the honorable member do? {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I would not be concerned with that man. I think it is reasonable when a taxpayer employs a proportion of his capital in property, and another proportion in the carrying on of business, he should be entitled to set off the losses on the one against the income from the other. Clause agreed to. Clause 21 - {: type="1" start="1"} 0. Every person whose principal place of business is out of Australia, and who, either as owner or charterer of any ship carries passengers, live stock, mails, or goods shipped in Australia shall, by his agent or other representative in Australia, when called upon by the Commissioner by notice published in the *Gazette* or by any other notice, make a return of the full amount payable to him (whether such amount be payable in or beyond Australia) in respect of the carriage of the passengers, live stock, mails, and goods to a final destination..... Amendment (by **Mr. Hughes)** agreed to- >That the words "to a final destination" be left out. Clause, as amended, agreed to. Clauses 22 and 23 agreed to. Amendment (by **Mr. Hughes)** agreed to- >That the following new clause be inserted : - "23 a. - (1) Partners shall be assessed and liable in respect of the income derived by them as partners as if it had been derived by a single person, without regard to the respective interests therein or to any deductions to which any of them may be entitled under this Act, and without taking into account any income derived by any one of them separately or as partner with any other person. > >Each partner shall, inaddition, be separately assessed and liable in respect of - > >his individual interest in the income, together with > >any other income derived by him separately, and > >his individual interests in the income derived by any other partnership. > >Partners shall in no case be deemed in respect of their joint assessment to be absentees; but any of the partners who is an absentee shall be separately assessed and liable under this section as an absentee." {: #debate-32-s9 .speaker-KYD} ##### Mr POYNTON:
Grey .I wish to obtain some information regarding this clause. It seems to me that under it a profit of £2,000 made by a partnership of two individuals would be taxable as if it were the income of one person, and consequently would pay at a higher rate, whereas each partner would receive only £1,000. {: .speaker-F4S} ##### Mr Joseph Cook: -- Does not the clause simply mean that the total income of the partnership shall be taxed? {: .speaker-KYD} ##### Mr POYNTON: -- Let us consider it from that point of view. Take the case of a partnership of seven persons, which shows at the end of the financial year a profit of £7,000. If the profit is to be treated as if it were the profit of one individual, then it will be taxable at a very high rate; whereas, if it were dealt with on the basis of an income of £1,000 in respect of each of the seven partners, it would be taxable at only the rate of 10d. in the £1. Under the South Australian Act, partnership returns must be made, but are not taxable. The members of a partnership have also to furnish an individual return showing the profits they derive from their business as well as any other income enjoyed by them; and it is upon that basis that they are taxed. Under this clause, however, the income of a partnership, it seems to me, would be treated as if it were the income of one person, with the result that it would be taxable at a higher rate than if it were distributed amongst the individual members of the partnership. {: #debate-32-s10 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I do not think that the honorable member's interpretation of the clause is correct. If he examines clause 24, he will discover how the profits of a partnership are really taxed.Reduced to plain English, that amounts to this: Under clause 23a provision is made for the taxation of the undistributed profits of a partnership, and they are taxed at the full rate, whatever they may be. But the distributed profits are distributed as set out, so that each man is taxed upon his share of the partnership profits as if it were income derived from a business carried on solely by himself. He is taxed at the rate he would pay if, instead of being a member of a partnership, he were in business for himself. On the undistributed profits he is taxed at the partnership rate. {: #debate-32-s11 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- This proposed new clause, if read with clause 24, in the light of the explanation made by the Attorney-General, would be perfectly lucid if it were not for the fact that in the interpretation clause "person" is declared to include a "company," and that "person" is the term employed in clause 24 which the Attorney-General has used to elucidate clause 23a. {: .speaker-DQC} ##### Mr Hughes: -- The honorable member for Wannon is quite right. When we come to clause 24, I shall move an amendment that will meet his objection. Proposed new clause agreed to. Amendment (by **Mr. Hughes)** agreed to- That the following new clause be inserted: - "23b. - (1) Any person who derives income as a trustee shall be assessed and liable in respect of income tax as if he were beneficially entitled to the income: Provided that where he derives income in respect of different trust estates for different beneficial owners who are not for any reason liable to be jointly assessed, the tax payable by him shall be separately assessed in respect of each of these estates: Provided also that whore a trustee also derives income beneficially, he shall be separately assessed for that income, and for the income of which he is trustee, unless for any reason he is liable to be jointly assessed independently of this section. {: type="1" start="2"} 0. A trustee shall in nocase be deemed to be an absentee; but any of the beneficiaries who are absentees shall be separately assessed and liable as absentees." Clause 24- {: type="1" start="1"} 0. 1 ) In the assessment of any person who derives the income in the first place...... Amendment (by **Mr. Hughes)** agreed to- >That after the word " person," line 1, the words " (other than a company)" be inserted. Clause, as amended, agreed to. Clause 25 - {: type="1" start="1"} 0. For the purpose of assessment and levy of income tax every person whose total income derived from all sources in Australia during the calendar year One thousand nine hundred and fourteen, and during each succeeding calendar year amounted or amounts to the sum of One hundred and fifty-six pounds shall, when called upon by the Commissioner by notice published in theGazette, furnish to the Commissioner in the prescribed manner a return setting forth a full and complete statement of all such income derived by him. . . . 1. When the income of any person cannot be conveniently returned as for the calendar year fixed by this Act, the Commissioner may accept returns made up to the date of the annual balance of the accounts of such person. {: #debate-32-s12 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- This clause provides that for the purpose of assessment and levy of income tax every person whose " total income " amounts to £156 per annum shall, when called upon, furnish a return setting forth a full statement of all such income derived by him. I wish to ask the AttorneyGeneral whether the word " net " should not be substituted for the word " total" income. A man may be able to show a gross profit of £500 on his business, and yet have a net income of only £100. {: .speaker-DQC} ##### Mr Hughes: -- No; in this case we are dealing with the total income. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I would remind the Attorney-General that the exemption for which the Bill provides is a net income of £156 per annum. {: #debate-32-s13 .speaker-JUV} ##### Mr McWILLIAMS:
Franklin -- This clause opens up the question of exemptions. If this is a war tax, there is certainly no reason why a single man should enjoy an exemption of £156 per annum, or £3 per week. In speaking thus, I am not referring to cases where single men have mothers and sisters depending on them. But there are hundreds of thousands of single men in receipt of £2 10s. and £3 a week who are better able to pay a direct tax than are many married men with large families who are receiving nearly twice as much. According to the latest figures published by *Knibbs,* the number of men in Australia who have reached the age of forty-five years and have never married is 26,000 in excess of the number within the same age limit who have married. These figures came as a surprise to me, and I think will cause some astonishment to the Committee. If this is a war tax, and we are assured that it is, a single man who is in receipt of £156 a year or less, and has no calls upon him, should not be exempt from payment of the tax. A man earning £3 a week having no claims upon him beyond his £1 or 25s. per week for lodgings is infinitely better off than a man with a wife and family, who has to meet doctors' bills, Customs duties, educational expenses, and the host of other charges that fall upon the man who has to maintain a home. More than half the men of Australia reach the age of forty-five years without marrying, and I do not think they should receive any special privilege. The exemption is not a bit too high in the case of married men with families, but it would be a good thing if the single men earning good wages were brought within the operation of this tax, and made to pay something for the maintenance of the war and those who are going abroad to fight for them. In any case, I think that the amount of exemption should be considerably reduced in the case of single men. {: #debate-32-s14 .speaker-KNH} ##### Mr MATHEWS:
Melbourne Ports -- I think this is the proper section upon which the date from which the assessment shall commence should be considered. The clause, as it now stands, covers the calendar year 1914. My suggestion is that the tax should relate to the same period as that covered by the wealth census, and date from 1st July, 1914, to 30th June, 1915. As clause 9 has been postponed, we could insert a corresponding alteration there, otherwise it may be necessary to recommit this clause. {: #debate-32-s15 .speaker-KFE} ##### Mr GREGORY:
Dampier -- I would like to hear what the view of the Attorney-General is in regard to the proposal to make unmarried men between the ages of twenty-one and forty-five years of age contribute their share of taxation. I think it is desirable that all single men not serving at the front, and who are between these ages, should be asked to pay taxation in some form or other. If I thought the Attorney-General would approve of it, I would submit an amendment securing this end. I have no desire to press such an amendment if the Attorney-General will not agree to it, but I do think, in view of the efforts that are now being made to carry the war to a successful conclusion, and in view of the large number of single men in Australia who are not enlisting, that some provision calling upon them to pay their proportion to this tax should be inserted in the Bill. {: #debate-32-s16 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I am sorry that I am unable to accept an amendment on the lines suggested by honorable members. Much may be said in favour of not exempting unmarried men, but the matter has been considered at some considerable length, and, amongst other things, there is a very real difficulty in the collection of taxation on smaller incomes. Even at £156 the tax is almost infinitesimal, and hardly worth collecting. If the tax were made to apply to lower incomes the difficulty would be increased. {: #debate-32-s17 .speaker-KR8} ##### Mr SHARPE:
Oxley .- I have no desire to detain the Committee at any great length on this subject, as I have already brought it before the notice of Parliament. I am sorry, however, that the Attorney-General has not given more consideration to the suggestion offered by the honorable members for Dampier and Wilmot. During the war period the Government has, in many instances, followed the lead given by the House of Commons in regard to its legislation, and I think the Commonwealth might listen to the arguments used for the purpose of endeavouring to persuade the British Parliament to adopt this form of taxation. The unmarried portion of the community of Great Britain contributes only about onetwelfth of the £60,000,000 raised by indirect taxation, and I am confident that if the matter were dealt with in a practical way in Australia, the Government would receive at least half-a-million more by the inclusion of the unmarried within the scope of this measure. As the AttorneyGeneral appears to have set his mind against any suggestion whichhas this end in view, we cannot deal with it now, but the opportunity may occur later of asking the Government to take the step suggested. The Government ought to reduce the exemption upon the unmarried por tion of the community. There are about 500,000 unmarried people, and probably 300,000 will be exempt under the provisions of the Bill as it stands. Amendments (by **Mr. Hughes)** agreed to - >That in subclause 1 the words " calendar year, One thousand nine hundred and fourteen " be left out with a view to insert in lieu thereof the words "year beginning first of July, One thousand nine hundred and fourteen and ending thirtieth of June, One thousand nine hundred and fifteen," and that the words "' calendar year " be left out with a view to insert in lieu thereof the words "year beginning first of July." Amendments (by **Mr. Hughes)** agreed to - >That the word " calendar," sub-clause 3, be left out. Clause, as amended, agreed to. Clauses 26 to 33 agreed to. Clause 34 - {: type="1" start="1"} 0. A taxpayer who is dissatisfied with the assessment made by the Commissioner under this Act may, within thirty days after service by post of the notice of assessment, lodgean objection in writing with the Commissioner against the assessment, stating fully the reason for the objection. 1. The Commissioner shall consider the objection, and may either disallow it, or allow it,either wholly or in part. 2. The Commissioner shall give to the objector written notice of his decision on the objection. 3. A taxpayer who is dissatisfied with the decision of the Commissioner may, within thirty days after the service by post of notice of the decision of the Commissioner, ask the Commissioner to treat his objection as an appeal, and forward it, either to the High Court or a Supreme Court of a State, as required by the taxpayer. 4. If the assessment has been reduced by the Commissioner after considering the objection, the reduced assessment shall be the assessment appealed from. 5. An appeal under this section may be heard bya single Justice of the Court. {: #debate-32-s18 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I should like to assure the AttorneyGeneral that, as the result of the operations of the Federal Land Tax, many objections have been taken to the valuations imposed, notwithstanding that a gentleman who stands exceedingly high in the Public Service of this country is engaged on its administration. Appeals from the decisions of the Administrator and his valuers can only be made to the very highest tribunals, which are costly, cause great delay, and are often beyond the means of the ordinary taxpayer. Provision is made under section 60 for the establishment of a Board. Will the AttorneyGeneral favorably consider the constitution of Courts presided over by a Judge as provided in the Land Tax Assessment Act for the purpose of hearing appeals ? {: #debate-32-s19 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I have an amendment drafted with that object. I move - >That sub-clauses 4, 5, and 6 be left out, and the following inserted in lieu therof: - > >A taxpayer who is dissatisfied with the decision of the Commissioner, may, within thirty days after the service by post of notice of the decision of the Commissioner, ask the Commissioner to treat his objection as an appeal, and forward it either to the High Court, the Supreme Court, or a County or District Court of a State, or such other Court as is specified inthat behalf by proclamation, as required by the taxpayer. > >When the appeal is to the High Court or a Supreme Court, it shall be heard by a single Justice of the Court. > >An inferior Court of a State shall not have jurisdiction under this section unless it is constituted or presided over by a Judge authorized in that behalf by the GovernorGeneral. > >If the assessmenthas been reduced by the Commissioner after considering the objection, the reduced assessment shall be the assessment appealed from. Clause, as amended, agreed to. Clauses 35 to 39 agreed to. Clause 40 (Penal tax). {: #debate-32-s20 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 The proviso to this clause practically vitiates the effect of clause 8, which imposes secrecy on the officials in charge of the administration of the Act. It provides that the Commissioner may in particular cases remit penalties, and that in each year he shall furnish Parliament with a report of all such remissions, with a statement of the reasons therefor. If this is done the secrecy under which confidential and other information is given to the taxation officers will be lost. If we omit the proviso we can intrust the Commissioner with a power that he will exercise with discretion. {: .speaker-DQC} ##### Mr Hughes: -- There may be some reasons why names should not be given, but nothing confidential need be disclosed. The Commissioner will simply lay facts before Parliament. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- Circumstances may compel the inability to pay the tax, yet these circumstances are possibly to be exposed to publication in the press. {: .speaker-DQC} ##### Mr Hughes: -- I shall consider the matter. Clause agreed to. Clauses 41 and 42 agreed to. Clause 43 (When tax not paid during lifetime). {: #debate-32-s21 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- I ask the Attorney-General whether he can say how the increased rate which has to be paid under this clause will affect the probate duty. Will the probate office make a proportional rebate in respect to any amount which may be found to be payable as an additional income tax, which at the time of the death of the taxpayer was a liability upon the estate that was not apparent ? {: .speaker-DQC} ##### Mr Hughes: -- I shall look into the point. Clause agreed to. Clauses 44 and 45 agreed to. Clause 46 (Recovery of tax paid on behalf of another person). {: #debate-32-s22 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 Here we approach the question of partnership. The Minister gave a very satisfactory explanation to the honorable member for Grey, and amended the Bill. This is a similar case. One partner is liable to pay the tax due by another partner, and machinery is provided by which the one may recover from the other. {: .speaker-DQC} ##### Mr Hughes: -- It is the invariable provision in all such legislation. We shall follow the individual partner except in extraordinary cases. {: .speaker-JRP} ##### Mr Boyd: -- Under the Victorian Act the senior partner is responsible for making the return, but is not individually responsible for the payment of the tax. {: .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- That is the point I wish to pursue, and it is the point which the Attorney-General conceded to the honorable member for Grey, but' if the Attorney-General will give consideration to the matter I shall be satisfied. {: .speaker-DQC} ##### Mr Hughes: -- I shall do so. Clause agreed to. Clause 47 agreed to. Clause 48 (Public officer of company). {: #debate-32-s23 .speaker-KRN} ##### Mr SINCLAIR:
Moreton -- The penalty for not appointing a public officer of a company is fixed at £50 for every day the failure or neglect continues, but circumstances may arise by which a foreign company may be unable to appoint a successor to its public officer. I think the clause should be so modified that the company should have every opportunity to prove that there has been no neglect to make the necessary appointment. {: .speaker-DQC} ##### Mr Hughes: -- I shall look into that matter. Clause agreed to. Clause 49 (Agents and trustees). {: #debate-32-s24 .speaker-KZT} ##### Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917 -- If the Minister will discriminate between the representative as executor and the representative as senior partner, he will meet the point that I raised on clause 46. In any case, if clause 46 applies to partners this clause appears to be re dundant. Clause agreed to. Clause 50 verbally amended and agreed to. Amendment (by **Mr. Hughes)** agreed to- >That the following new clause be inserted: - " 50a. A covenant or stipulation in a mortgage of land, which has, or purports to have, the purpose or effect of imposing on the mortgagor the obligation of paying income tax on the interest to be paid under the mortgage - > >if the mortgage was entered into before the commencement of this Act - shall not be valid to impose on the mortgagor the obligation of paying income tax to any greater amount than the amount (if any) which would have been payable by the mortgagor if his taxable income consisted solely of a sum equivalent to the amount of interest to be paid under the mortgage without taking into account any income tax payable on that interest; and > >if the mortgage was entered into after the commencement of this Act - shall be absolutely void." Clauses 51 to 54 agreed to. Clause 55 - >Notwithstanding anything contained in the last preceding section, any person who fails or neglects to duly furnish any return as, and when, required by this Actt, or the regulations, or by the Commissioner, shall, if a taxpayer, be liable > >If the Commissioner considers that the circumstances of any case warrant action being taaken to recover the penalty provided by the last preceding section such action may be taken by the Commissioner..... Amendments (by **Mr. Hughes)** agreed to- >That after the word " Commissioner " line 5 the words " or fails to include any assessable income in any return" be inserted; and that after the word " section " line 10 the words " or by the next succeeding section " be inserted. Clause, as amended, agreed to. Clauses 56 to 61 agreed to. Postponed clause 9 - >Subject to the provisions of this Act, income tax shall be levied and paid in and for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during the period of twelve months ending on the thirty-first day of December preceding the financial year in and for which the tax is payable. Amendment (by **Sir John** Forrest) agreed to - >That the words "thirty-first day of December " be left out, with a view to insert in lieu thereof the words " thirtieth day of June." Clause, as amended, agreed to. Title agreed to. Bill reported with amendments. Motion (by **Mr. Hughes)** agreed to - >That the Bill be recommitted for the reconsideration of clauses 3, 4, 12, 17, and proposed new clause 3a. *In Committee* (Recommittal) : Clause 3 (Definitions). Amendment (by **Mr. Hughes)** agreed to- >That in the definition of "Absentee" the word " calendar " be left out, with a view to insert in lieu thereof the word " financial." Clause, as amended, agreed to. Motion (by **Mr. Hughes)** agreed to - >That the following new clause be inserted : - "3a. This Act shall extend to the Territory of Papua." Clause 4 - >The Commissioner of Taxation shall, subject to the control of the Minister, have the general administration of this Act. . . . Amendment (by **Mr. Hughes)** agreed to - >That the words " subject to the control of the Minister" be left out. Clause, as amended, agreed to. Clause 12 - >This Act shall not apply to any person who is on active service during the present war with the Military or Naval Forces of the Commonwealth or any part of the King's Dominions. Amendment (by **Mr. Hughes)** agreed to - >That after the word " Dominions " the words " or of an ally of Great Britain " be inserted. Clause, as amended, agreed to. Clause 17 - >In calculating the taxable income of a taxpayer, the total income derived by the taxpayer from all sources in Australia shall be taken as a basis, and from it there shall be deducted - {: type="a" start="h"} 0. contributions exceeding Five pounds in the aggregate in respect of each object of contribution made during the continuance of the present war to any public fund established in Australia for any purpose connected with the present war. Amendment (by **Mr. Hughes)** agreed to- >That the word " Australia," line 10, be loft out, with a view to insert in lieu thereof the words " any part of the King's Dominions, or in any country in alliance with Great Britain." Clause, as amended, agreed to. Bill reported with further amendments. Standing Orders suspended. Reports adopted, and Bill read a third time. {: .page-start } page 6614 {:#debate-33} ### OFFICERS' COMPENSATION BILL Assent reported. {: .page-start } page 6614 {:#debate-34} ### SUPPLY BILL (No. 2), 1915-16 Bill returned from the Senate without request. {: .page-start } page 6614 {:#debate-35} ### WAR CENSUS (POSTAL MATTERS) BILL Bill returned from the Senate without amendment. {: .page-start } page 6614 {:#debate-36} ### SUGAR PURCHASE BILL Bill returned from the Senate without amendment. {: .page-start } page 6614 {:#debate-37} ### INCOME TAX BILL *In Committee of Ways and Means:* Debate resumed from 19th August *vide* page 5970), on motion by **Mr. Hughes** - >That an income tax be imposed . . (vide pages5851 and 5970). Question resolved in the affirmative. Resolution reported. Motion (by **Mr. Hughes)** proposed - >That so much of the Standing Orders be suspended as will prevent the passing of the Bill through all its stages without delay. {: #debate-37-s0 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- I desire the third-reading stage to be deferred until the next sitting, so that I may look over the schedules before they finally leave this House. {: .speaker-DQC} ##### Mr Hughes: -- The schedules have not been altered. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- We have never had an opportunity of altering them. They have never been considered by the Committee. {: .speaker-DQC} ##### Mr Hughes: -- Certainly they have. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- They have never been subjected to Committee scrutiny. They were circulated in the House, but never discussed. {: .speaker-DQC} ##### Mr Hughes: -- They were discussed at considerable length. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- At any rate, I ask the honorable member to defer the third-reading stage. Motion, by leave, withdrawn. Resolution adopted. *Ordered -* >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. Standing Orders suspended, and Bill read a second time. *In Committee :* Clauses 1 to 5 agreed to. Schedules. {: #debate-37-s1 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- A very serious question arises as to whether we should proceed with the assessment of this tax by this method of mathematical curves, or proceed by steps as has been the rule heretofore. The proposal contained in these schedules is quite novel in the history of income taxation in this country, and, I imagine, in any other country, and I am not sure that it would not be simpler to proceed by the old method of gradations than by this method of the mathematical curve.I desire to satisfy myself on that point before the next sitting. {: #debate-37-s2 .speaker-DQC} ##### Mr HUGHES:
AttorneyGeneral · West Sydney · ALP -- I am sorry that the right honorable member will not agree to the passing of the Bill to-night. I have a lively recollection of the schedules having been discussed at considerable length, and the Committee may recollect that I amended the formula. There can be no doubt that the method of calculation here proposed is far superior to the steps and stairs gradation, under which the man in receipt of, say, £500 pays one rate, whereas the man receiving £501 pays a much higher rate. That system is grossly unfair. Under the system adopted in the Bill, the increase of taxation proceeds with even gradations on each additional pound of income. The second schedule is difficult to understand, and for that reason we have had examples worked out in order to show the taxpayer what he will actually pay on different amounts. I have no hesitation in declaring my preference for this method of calculating the tax. It is infinitely fairer than theother, and it does not induce those attempts at evasion which are very common and natural under the other system. Schedulesagreed to. Title agreed to. Bill reported without amendment; report adopted. {: .page-start } page 6615 {:#debate-38} ### PAPERS The following papers were presented: - >Lands Acquisition Act - > >Right of carriage-way over land acquired at Guildford, Western Australia - For Defence purposes. > >Land acquired under, at- > >Broadmeadows, Victoria - For Defence purposes. > >Kalgoorlie, Western Australia- For Postal purposes. {: .page-start } page 6615 {:#debate-39} ### REFERENDUM (CONSTITUTION ALTERATION) BILL Motion (by **Mr. Hughes),** by leave, proposed - >That leave be given to bring in a Bill for an Act to amend the Referendum (Constitution Alteration) Act 1906-1912. {: #debate-39-s0 .speaker-F4S} ##### Mr JOSEPH COOK:
Parramatta -- As far as I can judge, this is a very important set of alterations. {: .speaker-DQC} ##### Mr Hughes: -- Not at all. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- What about 6b in clause 3? {: .speaker-DQC} ##### Mr Hughes: -- That point is arguable. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- If the AttorneyGeneral proposes to cut the pamphlet down to a strict explanation of the technical matter contained in the Bill I will have nothing to do with it. {: .speaker-DQC} ##### Mr Hughes: -- That was the understanding in the first place. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- That means that one may not make an argument as to time, circumstances, placet, appropriateness, or anything else, but must confine himself to a dry explanation of the Bills themselves. {: .speaker-DQC} ##### Mr Hughes: -- Certainly. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- I will have nothing to do with the pamphlet under those circumstances. We should not be able to urge an argument as why the referenda proposals should not be proceeded with at the present time. {: .speaker-DQC} ##### Mr Hughes: -- You should confine the argument to the merits of the proposal. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- But we declined to have anything to do with the merits of the proposals, and, therefore, when this Bill is passed, we shall not be able to say anything to the people in that regard. {: .speaker-DQC} ##### Mr Hughes: -- I do not think you would be entitled to put that argument into the pamphlet. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- The honorable member had better rule to that effect also. {: .speaker-DQC} ##### Mr Hughes: -- If the right honorable member does not approve of the Bill, let him say so, and we may be able to come to some understanding in regard to it. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- I object to the first reading of this Bill because it seems to me that the pamphlet for which it provides will be of no use to the public. We cannot have anything to do with such a pamphlet. {: .speaker-DQC} ##### Mr Hughes: -- That is arguable. The Bill, amongst other things, provides for a Board, consisting of the Chief Electoral Officer, the Clerk of the Senate, and the Clerk of the House of Representatives. The right honorable member can have any other Board, so long as it is a non-party one. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- But the Bill instructs the Board to rule out of the pamphlet everything that is not a mere technical description of the Constitution Alteration Bills. It would be absurd to distribute such a pamphlet. The Bill, as it stands, would rule out entirely all reasons for and against the proposals. {: .speaker-DQC} ##### Mr Hughes: -- No. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- It simply confines the pamphlet to an interpretation and explanation of the proposals. {: .speaker-DQC} ##### Mr Hughes: -- An explanation of the merits of the proposals. I read what **Mr. Deakin** had to say when we agreed to the issue of a pamphlet in connexion with the last referendum, and on referring to that speech, the right honorable member will see what the understanding was. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- If the Government propose to follow the understanding arrived at on a previous occasion, well and good ; but it would be absurd to go to the expense of distributing a pamphlet intended to furnish arguments and appeals to the people as to why these proposals should or should not be carried, if it is to be only a dry, legal explanation of them. {: .speaker-DQC} ##### Mr Hughes: -- It need not be dry, and it need not be legal. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- This Bill means that we shall not be allowed to deal with anything but the merits of the proposed laws. {: .speaker-DQC} ##### Mr Hughes: -- What else should be dealt with? {: .speaker-F4S} ##### Mr JOSEPH COOK: -- The whole of the circumstances in which the Bills are being considered. {: .speaker-DQC} ##### Mr Hughes: -- That can be dealt with on the platforms of the country. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- I. decline to do that, and let this pamphlet go out. This Bill means that the Government are going to avail themselves of the only method they have to shut our mouths entirely to anything beyond a dry interpretation of the proposed laws. I strongly object to that. {: .speaker-DQC} ##### Mr Hughes: -- The right honorable member is not asked to do anything more now than to agree that the Bill be read a first time. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Why should I allow something to which I am totally opposed? {: .speaker-DQC} ##### Mr Hughes: -- If the honorable member does not like to do that, he need not. {: .speaker-F4S} ##### Mr JOSEPH COOK: -- Then I object. {: #debate-39-s1 .speaker-10000} ##### Mr SPEAKER: -- I put the question that the Attorney- General should have leave to move the motion, and that leave being granted, he was allowed to speak, {: .speaker-F4S} ##### Mr Joseph Cook: -- I was under the disability of not having the Bill before me. I was informed that it merely dealt with the date on which the pamphlet should be prepared. {: .speaker-10000} ##### Mr SPEAKER: -- I read the title to the Bill from the Chair, and asked that the Attorney-Generalbe given leave to introduce it. If the Leader of the Opposition had objected in the first instance, the Attorney-General would not have been allowed to speak, but since that leave has been granted, and since the honorable member himself has spoken, I must put the motion. Question resolved in the affirmative. Bill presented by **Mr.** Hughes and read a first time. House adjourned at 2.52 a.m.(Thursday).

Cite as: Australia, House of Representatives, Debates, 1 September 1915, viewed 22 October 2017, <http://historichansard.net/hofreps/1915/19150901_reps_6_78/>.

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