6th Parliament · 1st Session
Mr. Speaker took the chair at 10.30 a.m., and read prayers.
The following papers were presented : -
Employment of Returned Soldiers - Recommendations of Federal Parliamentary War Committee.
Ordered to be printed.
Promises (Offices) Leased for Commonwealth purposes outside Government Buildings - Particulars of.
Use op Members’ Services - Return of Soldiers to the Front.
– As we are about to enter upon a long recess, will the Minister representing the Minister of Defence take steps to insure that the fullest use is made of all the members of the House who are prepared to assist in any way the prosecutionof the war to a successful issue?
– I shall bring the question under the notice of the Minister of Defence.
– Can the Minister representing the Minister of Defence tell us what are the arrangements for returning to the front men who, having been slightly wounded, have regained their health and strength? A good many men who were slightly wounded have been sent to Australia, and have not rejoined their regiments, and it would be interestingto know whether the arrangements for enabling recovered soldiers to resume their duties are adequate.
– I shall have the matter brought under the notice of the Minister of Defence.
– I ask the Minister representing the Minister of Defence if the Supply Board of the Defence Department is on the lines laid down by Mr. Anderson, and if it is intended to create a similar Board for the other Departments, or will an infinitely better arrangement be made?
– I shall ask the Minister . of Defence for a reply to the question.
Debate resumed from 10th November (videpage 7384), on motion by Mr. Tudor -
That this Bill be now reada second time.
– The amendments of the Income Tax Assessment Act now proposed are, no doubt, for the most part such as the experience of the Commissioner of Taxes has shown to be necessary, and are more or less unobjectionable ; but to one at least considerable exception must be taken. The condition of affairs under the existing law is somewhat anomalous. It was recently held in, I think, a New South Wales case that the income of a company registered in London, whose dividends were declared in London, was immune from taxation, although its main sphere of operations was Australia, and most of its revenue came from this country. The Bill seeks to rectify that anomaly by providing that revenue directly derived from Australia shall he subject to income tax, which is fair and reasonable. But there is another amendment to which I ask the particular consideration of the Prime Minister, because I think that its far-reaching effect and injustice are not realized. I should like to see the provisions of section 15 recast. That section now enacts that, in the case of a person not resident in or of a company not registered in Australia, selling goods here, the principal shall be deemed to have derived from their sale, taxable income equal to 5 per cent, on the price at which the goods were sold. This rigid, cast-iron assessment is unfair. In innumerable cases, some of which have been brought under my own notice, firms have been engaged for long periods, and in one case present in my mind for upwards of seven years, in endeavouring to establish branches in Australia, and, during the whole time, have consistently incurred losses on their Australian business. Section 15, however, requires that they shall be assessed on a profit of 5 per cent, on the price of their goods sold here, even though no profit at all has been earned. My suggestion is that in these cases the assessments should be on the actual profits, as shown by the balance-sheet and statement of the actual dealings and transactions in Australia. The Commissioner should at least have some discretion in this matter. -If he felt it practically impossible to assess the actual profits, it would be perfectly’ legitimate to allow him to assess them at 5 per cent, on the price of the goods sold, but where he was satisfied as to the actual results of the transactions, he should be able to assess accordingly. The section makes liable for the payment of income tax the person selling the goods, that is, the agent. He is personally liable for the payment of the income tax in respect of them. That seems harsh and unreasonable, but there is this feature about it that the agent is made liable only in respect of contracts and dealings to which he himself has been a party. An amendment is proposed, however, which goes much further. It makes the agent or representative in Australia liable, not only for the transactions to which he has been a party, but also in regard to the transactions of his principals entered into abroad. The amendment declares that goods shall be deemed to be sold in Australia on account of a person not resident here, or of a company, if any person in Australia receives a commission in respect of the sale of them, or is paid a salary for obtaining orders or for influencing their sale. In many cases which have been brought under my notice by merchants, 90 per cent, of the transactions which would be affected by this provision have been the result of contracts entered into abroad without the knowledge of the agent here. Yet the agent here is to be made personally liable in respect of them. The harshness and unfairness of the amendment will be understood when I again emphasize the large percentage of business done by principals without the knowledge of their agents, particularly in those cases where no money passes through the agent’s hands, and he has no means of recouping himself. I am sure that that cannot be intended. It leaves agents with this alternative, to give up their agencies, or to accept an unjust liability. In many cases the principals will repudiate their liability for the tax, and the agents will have to pay it. Principals abroad cannot be made liable for the tax, because we have no jurisdiction over them; but it is going too far to make agents here directly responsible in respect of transactions to which they have not been a party. I’ ask honorable members what would be their feelings if such a law were enacted by the British Parliament, making agents residing in the United Kingdom liable for ali contracts entered into by principals in Australia? Such a law would be the cause of much annoyance and irritation. A section of the community will be harshly and unjustly dealt with by the amendment. Its effect will be more farreaching than was contemplated by the Attorney-General in another direction also. It will have the objectionable result of discriminating and differentiating in its treatment of merchants, it will bring about a process of unequal competition, and it will be a source of irritation to the British merchant who is already experiencing the utmost difficulties because of the amount of labour that has been drawn by the war from the ordinary avocations of life, and because of the serious competition of America. The differentiation will lie in the fact that the merchant who has an agency in Australia will be taxed very much more than the merchant who has no agent, and sends his goods direct to his customers. The goods of the firm that is sufficiently enterprising to establish an agency in Australia are made liable for the Customs duties as they come in, and, in addition to the agent’s personal income tax, he has to pay taxation on the basis of 5 per cent, of the selling price of the goods disposed of. This is a levy on the British merchant who has sufficient enterprise to establish an agency here, whereas there is no such imposition where the Australian merchant is content to send a buyer to England, and have his goods sent out direct from the British merchant.
– How can we get at those people ?
– It can only be done through Customs taxation, but I am not dealing with this matter from a fiscal stand-point. Speaking purely from the stand-point of the taxation of incomes, it is eminently desirable that British merchants should be encouraged to establish their agencies in Australia, because it means additional families spending their money here - it means that these agents will spend their money in Australia on travelling, office rent, and postage, and all the other matters associated with. trade, in addition to their domestic expenditure - it means that we shall have additional taxpayers whom we can tax; and often the business is the forerunner of the ultimate establishment of industries in Australia. All this is lost to us if these firms do not establish their agencies in the Commonwealth. I appeal to the Attorney-General to reconsider this amendment. The section is already harsh enough, and the amendment will intensify that harshness, do injustice to a section of the community, and create an undesirable discrimination. I emphasize the desirability of coming to some reciprocal arrangement as between the Commonwealth and the States in regard to the taxation of State instrumentalities, as strongly urged by the learned honorable members for Angas and Darling Downs. Of course, the fundamental principle of the Federal Constitution is that each State is sovereign within its own power and jurisdiction.
– I have expressed my opinion quite clearly - though the learned honorable member for Flinders does not agree with it - that such power is inconsistent with the Federal idea, but that, unless the States are prepared to act reciprocally, we should not give away the power if we possess it.
– It has been laid down that there is no power on the part of the States to tax Federal instrumentalities, but there does not seem to have been any direct case bearing upon thetaxation of Commonwealth instrumentalities by the State. I do not think that the power actually exists, but, seeing that there is doubt on the point, we should have an authoritative decision by theHigh Court upon it. There should bea reciprocal arrangement, but, at the same time, an effort should be made to ascertain exactly what the law is in this connexion. I approve of the amendment provided for in clause 8. There were other matters on which I wished to speak, but as it is desirable to shorten one’s remarks, I shall not deal further with the Bill. I urge the Attorney-General to reconsider the amendment to section 15 proposed in clause 3.
– I also desire to refer to the provision in clause 3, which has been elaborated at some length by the learned honorable member for Kooyong, because it seems to me the effect of the Bill will be to eliminate agents who are resident in Australia, and substitute for them agentswho do not reside here. That has already been the result of similar legislation in other countries. The proposal in the Bill is the same in principle as the poll-tax imposed by Mr. Seddon in New Zealand some years ago, and which he decided to remove at the instance of the late Mr. Joseph Chamberlain. The result of that poll-tax was to drive nearly all the agencies out of New Zealand. Many of the agents came to Australia. I have been informed by one who was driven out that he does his business from Australia just as well. He simply goes over to New Zealand for a month now and again. The result of the legislation was that the country lost agencies, citizens, and taxpayers, without gaining the slightest good. It will be the same in the Commonwealth. The proposal will drive our Australian trade into the channels in which the Japanese and American merchants are already working.
– That is a new point.
– The Japanese and American merchants do not establish in Australia agencies with samples; they simply send their travellers through the
Commonwealth, now and then to introduce their goods. All the transactions take place over the seas. There are very few Japanese or American agencies run by agents resident in Australia. On the other hand, many British manufacturers have resident agents, and some of them have been in the Commonwealth all their lives, but this taxation will tend to drive them away, though it will not stop the trade. It will stop nothing except the taxation which is now derived from the business transacted by the resident agents and it will drive citizens from the Commonwealth. This legislation has been tried in many places. There are all sorts of means of evading it. South Africa tried it, but as the result of experience it was repealed and a licence substituted. That also proved of no value, and had to be abandoned. From time to time subterfuges have been put up to evade legislation and taxation of this kind. Is it wise to try to tempt our ordinary agents, who are reputable men, and have lived all their lives in Australia, to do this kind of thing, or to drive them out of Australia altogether ? They do a great part of their business on the indenting principle through London agencies, and the London houses of those who purchase the goods. All the transactions are completed in London, and they will still be completed in London. The only effect of this legislation will be to eliminate the local agent and his local establishment, thus throwing a lot of men out of work, and to substitute the peripatetic agent, who passes through, does his business, gets out, and leaves Australia the poorer for it all. If there was some object of a protective character in view, I could understand this proposal. There might be some sense in it if it would lead to the establishment of permanent sections of business in Australia, but that will not be the result. These firms will continue to do their business in London. Many of the old-established businesses dealing in commodities required here hardly need such agencies as are referred to in the Bill.
– I shall be glad to consider the point raised by the honorable member, in Committee. I do not want to do anything harsh or inequitable; but we must consider the revenue. .
– My own feeling is that the Attorney-General would be well advised to eliminate this proposal in the interests of the revenue. I do not think it will produce any revenue at all.
– I have asked the Commissioner to give me an estimate of the amount likely to be involved.
– No such proposal has produced revenue in any country where it has been tried, and what other countries have failed to do, my honorable friend will also fail to do. Besides, is it worth while setting up a turmoil, the only effect of which will be to drive reputable agents out of the country, leaving their trade to be diverted into other channels.
– It will destroy healthy competition.
– I understand the effect of this amendment will be to withdraw the resident agent and substitute the peripatetic agent, who merely passes through the country now and again to introduce his samples. It will not destroy the trade, but it will destroy the sources of taxation which come from the existence of the resident agent here.
.- May I bring before the Minister in charge of this Bill a circumstance affecting a number of Red Cross workers who are going away from Australia to assist in alleviating the difficulties of wounded Australian soldiers. These people have doubts as to whether under the provisions of this Bill they will be regarded as absentees. Their view is that they should be granted privileges similar to those given to the men on active service. They are going out in a voluntary capacity, and I ask the Minister to give an assurance that they will not be treated as though they were absentees. I should like the assurance to be definitely given, because it would be unfortunate should the matter be subsequently looked into, and there be found no provision in the Statute whereby Red Cross workers away from Australia could be regarded by the administrators of the Act as other than absentees.
– The honorable member raised that question last week. I mentioned it to the Attorney-General this morning, and he assures me that these persons will certainly not be treated as &1d s&r i>06s
– I am quite satisfied with that assurance. It was very desirable in the interests of the Red Cross workers concerned that the matter should be cleared up.
– In his advocacy of preferential trade, the Minister of Trade and Customs has from time to time been in communication with representatives of the British Board of Trade, and this particular clause relating to agencies does, on the face of it, seem to go quite contrary to the policy that has been advocated of encouraging trade between Australia and the Old Country. It is by having his agent here that the British manufacturer can best compete with the foreign manufacturer whose goods are on the Australian market. I do not know whether the Minister has considered this aspect of the proposal, but the section is calculated to act directly contrary to the policy that has been advocated.
– The Prime Minister promised that in Committee he would give consideration to the whole matter.
– Very well.
Question resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
– I move -
That the following new clause be inserted: - “ 1a. Section 11 of the principal Act is amended -
by omitting the word ‘and’ between paragraphs (f) and (g) ; and
by adding at the end thereof the following paragraph: - and (h) the official salaries of foreign consuls and the trade commissioners of any part of the British Dominions.’ “
None of the points that have been touched on this morning are affected by this proposed new clause. In the principal Act certain incomes are exempt from taxation - the incomes of municipal corporations, religious bodies, trade unions, the salaries of the Governor-General, and State Governors, &c. It is proposed now to exempt also the official salaries of foreign consuls and the trade commissioners of any part of the British Dominions.
Proposed new clause agreed to.
Clause 2 -
Section 14 of the principal Act is amended -
by adding after the proviso to paragraph (b) the following new paragraph : - “ Provided further that where a company derives income from a source in Australia and from a source outside Australia a taxpayer shall only be taxable on so much of the dividend as bears to the whole divi dend the same proportion that the profits derived by the company from a source in Australia bears to the total profits of the company.”
[11.13). - I move that -
At the end of paragraph (c) the following proviso be inserted: -
Provided also that amounts carried forward by a company to the credit of the profit and loss account shall not be deemed to be accumulated income.
It is proposed to insert this proviso in order to meet a decision of the Supreme Court of New South Wales, in re Chalmers, in which it was held that where the business of a company is managed outside New South Wales, the income is not taxable.
– I desire to bring before the notice of the Attorney-General another amendment that might be made to this section. I have no intention of pressing it to a division, but wish to explain the position as it occurs to me. In the first place I would point out how onerous is paragraph e of the principal Act with which my suggested amendment deals. It is very unusual, but in order to be perfectly straightforward I cannot do better than quote a case with which I am altogether familiar. A friend of mine has a home, which, in former days, was not very valuable, but the value of which has since increased very much. He does not wish to leave it, and prefers to forego a considerable amount rather than do so. Last year, for the privilege of living in his own house he had to pay, by way of Federal and State land taxation and municipal taxes of all sorts, no less than £688. The fact that he elected to pay those charges is an evidence of his bonâ fide desire to remain in his own home. If he chose to sell the old home, he could avoid that outlay, and obtain interest on the capital. He has no desire, however, to do so, and under this amending clause his taxation will be increased by £200 a year. In other words, he will have to pay about £888 a year by way of taxation on the house in which ho lives. It would do the country no good to dispossess him of his home, and it seems to me that some limit should be placed on the amount chargeable under paragraph e of section 14 of the principal Act. I have, therefore, given notice of an amendment fixing a limit of £300, but I do not wish to press it. If the Attorney-General is prepared to meet such a case I shall be glad; if he cannot I shall say no more.
– The amendment of which the right honorable gentleman has given notice differs very widely from the amendment of the principal Act before the House, and relates to a different sub-section. The point raised by him was discussed at some length when the original Bill was before the House. The principle was then adopted that in order that the incidence of the tax might fall fairly, it was necessary to treat as income the amount of rent that would be received from a house owned and occupied by the taxpayer if it were let to another person. The right honorable gentleman has put his case very fairly, but with very great regret I am unable to accept the amendment suggested.
– I should like to explain that if the owner of the property to which I have referred were to let it, he would not get more than £300 a year for it. He certainly would not obtain a rental representing 5 per cent. on its value. At the most he would obtain a rental of £300 a year, whereas the taxation would represent a rental of £1,500 a year.
– I quite agree with my right honorable friend so far as this particular case is concerned, but I would remind him that this law has a general application. It would be most undesirable that a man with a house worth £600 a year should escape taxation while the great mass of the people whose houses are not equal to a rental value of £300 a year should pay taxation upon them. It is to that, and not to this particular case, that I take exception. If I could make a law to meet the case of this one particular person I should have no objection.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 3 -
Section 15 of the principal Act is amended by inserting at the end thereof the following sub-section: - “ (3) Goods shall be deemed to be sold in Australia on account of a person not resident in Australia, or on account of a company not registered in Australia, if any person in Australia receives a commission in respect of the sale of the goods or is paid a salary for ob taining orders for or for influencing the sale of the goods.”
Section proposed to be amended -
– (1) In the case ofa person selling goods in Australia on account of a person not resident in Australia, or on account of a company not registered in Australia, the principal shall be deemed to have derived from such sale a taxable income equal to Five pounds per centum upon the price at which the goods were sold.
– I intended on the second reading, of this measure to deal as clearly as 1 could with some misapprehensions that I think arise regarding the purpose and effect of the clause now before us. The Attorney-General, however, was unable to be present, so that he will pardon me if I deal with the clause a little more fully than I should do in ordinary circumstances. A good deal of doubt and difficulty is likely to arise from the reading of section 15 as proposed to be amended, or even as unamended, in connexion with section 52 of the Act. I am entirely in sympathy with the object which I think the Attorney-General desires to attain. His object I understand to be that, foreign companies and foreign individuals, who directly or indirectly derive a profit from business done in Australia, shall pay income tax upon the profits of that business. That is the broad principle.
– That is so.
– I agree entirely with it. It is in accordance with the principle adopted, not only here, but in other countries. The main provision for giving effect to it under the Income Tax Act is based on profits. The income has to be ascertained in the ordinary way, and the person who is ma de responsible for that is the agent who is carrying on the business here. The agent carrying on the business here is the man who receives the money for transmission to the principal. I think we shall all agree that any branch of a house, or any agent carrying on the business of a foreign principal here, should be obliged, as required by section 52, to make returns, and that the agent should be made responsible for the payment, out of the moneys he received on behalf of his principal, of the income tax payable on that man’s income. The trouble arises, I think, not in this amendment of section 15, but under section 15 itself. I wish to help the Attorney-General to avoid the trouble and, in some cases, hardship that may arise in giving effect to what is really the principle of this provision. The main principle that governs all is that embodied in section 52, under which the agent has to ascertain the profits and to pay the income tax, and is entitled to reimburse himself out of the moneys received for his principal. Section 15 is intended to deal with the same principle; but is applied to a somewhat different class of cases. Where you have not an agent who is, in the ordinary sense, carrying on the business of a principal here, but an agent who is simply effecting sales for principals - acting, perhaps, for a number of firms in a number of isolated cases of sales, but not a representative in the wide sense of the word - then you say with regard to such contracts, “ Where there is no foreign business carried on here, we will arrive at a rough and ready means of estimating the profits by assuming that the profits on the actual sales and contracts amount to 5 per cent.” I agree again with that principle, for it is a fair way of dealing with a practical difficulty. But section 15, unfortunately, I think, makes the individual agent who has made the contract personally responsible to pay out of his own money the income tax on that 5 per cent. That is where the first trouble arises. It is perfectly right that he should pay the income tax out of any moneys in hand, or that he should retain moneys after the Act comes into operation, and he knows what he has to do, to pay income tax due by his principal. But to say that, in respect of the year ending 30th June, 1915, agents who simply effect sales - who are simply the agents for entering into these contracts, while other persons have the handling of the money, shall be personally responsible for the income tax, is manifestly unjust. Such a provision cannot be carried out. I am satisfied that if it remains the Attorney-General, when we meet next year, will find it necessary to propose an amendment to do away with the manifest injustice. On the other hand, if the selling agent be, as in some cases, the man who receives the money for the sale, then he ought to be, and would be, responsible under section 52. That is the whole position.
– ‘Does the honorable member propose to amend section 15 of the principal Act?
– I am not going to propose any amendment, but I wish to make a suggestion. The difficulty to which I have referred as existing under section 15 will be immensely accentuated by this amending clause. The amending clause would extend this personal liability, not merely to the man who effects the sale, but to any man who receives a commission in respect of the sale of goods, or is paid salary for obtaining orders or for influencing the sale of goods. That includes a very wide class of advertising agents, who may have nothing to do with the receipt of the money, and may not be immediately connected with the actual sale which gives rise to the receipt of the money. I suggest that the AttorneyGeneral should strengthen section 52 which applies to every agent. The interpretation clause includes as an agent every person who receives any money, and section 52 makes every person who receives the money of his principal liable to pay income tax. If he is a person carrying on a business, he is supposed to make a return iri the ordinary way, and to pay taxation on his income. But if he is an agent who receives money sporadically or occasionally for sales effected by himself or somebody else, he would accept the benefits of section 15, because he would, say, “ I cannot make out a profit on these sales, but I will pay taxation on 5 per cent.” The man who receives the money is the person who ought to be made responsible for paying the whole of the income tax, whether it is measured in the ordinary way upon a statement of profits, or under section 15 as 5 per cent, on the sales effected. I suggest for the consideration of the Prime Minister that an investigation will disclose that section 52 does cover, not only the man who conducts a business and presents a return in the ordinary way, but also the man who receives money on sales effected by himself or anybody else. If he is liable to pay income tax on that money, it is unnecessary to make liable the person who effects the sale, but does not receive the money. At the same time, it is necessary that the person who effects the sale should supply the Department with a full return. If he also receives the money, he pays taxation, but if he does not he fortifies the Department with the whole of the information on which the person who does receive the money is made liable. If the Act is amended as I suggest, I see no ob- jection to increasing the liability to make returns, so as to include persons employed on salary or commission, or as advertising agents. But the amendment as applied to section 15, creating a direct personal liability on the part of the agent to pay out of his own money taxation on money received by another person, who is liable to taxation, would lead to difficulties which the Attorney- General would do well to consider.
– Section 15 has been the subject of particular criticism. Whilst I do not say for one moment that there is not force in the arguments put forward, yet the revenue must be protected, and the Government must have from one source or another taxation to carry on the business of the country during this trying period. I have heard what honorable members have said, and I noticed particularly the remarks of the honorable and learned member for Flinders in regard to a suggested modus vivendi. If honorable members will pass the clause, I will give my assurance that before the measure reaches another place I shall take an opportunity of consulting the Treasurer and the officers of the Department, with a view to seeing what alteration can be made. If the amount of revenue involved is not considerable, I shall be perfectly willing to not press the amendment in its present form. The matter will be investigated at once, and with a favorable mind.
Clause agreed to.
Clause 4 agreed to.
Clause 5 (Amendment of section 18).
Section proposed to be amended -
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 -
– Paragraph a of this clause provides that deductions shall not be made for the losses and outgoings of capital. A merchant who loses his building or stock by fire or other causes is, or ought to be, covered by insurance; but insurance is not possible in regard to the live stock of a farmer and grazier. If he loses his stock, he loses his entire capital and working plant, and then he is to be asked to find money to pay taxation on the income which he had last year. I believe that under the Queensland Act deductions of losses of capital, even stock, are not allowed, but it must be remembered that the Federal tax is a duplication of existing taxation. There are farmers throughout portions of New South Wales and Queensland, apart from the graziers, who will lose practically everything they possess except their land if rain does not fall shortly, and now we ask them, after they have lost all their working capital, to pay taxation on an income which existed last year. Live stock cannot be insured against drought, and I ask the Attorney-General to consider the possibility of allowing deductions for loss of capital invested in live stock. There are men in the electorate ofRichmond whose whole capital will disappear unless rain comes soon. If a farmer is a tenant, perhaps his live stock is his only possession. He may have £1,000 worthof stock on the farm, and if the drought continues his whole capital will disappear, and then he will be asked to pay income tax on income derived last year.
– I quite appreciate the point put forward by the honorable member, but there is vested in the Commissioner very wide discretion, which gives him power to meet such cases as have been referred to. Section 14 provides -
The income of any person shall include -
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 income) not disposed of at the beginning and end of the year in which the income was derived shall be taken into account.
I think that proviso will enable the Commissioner to meet the cases referred to. However, the honorable member will not ask me to accept an alteration of a carefullythoughtout amendment put forward by the Commissioner without taking opportunity to consider very carefully its effect. He will realize that the effect of his suggested amendment would not be confined to such cases, but would extend generally, and although it may be equitable and proper to exempt those cases, care must be taken that such an amendment could not be used for the purpose of depleting the revenue. If the honorable member will allow the clause to pass, I will promise that, before it is finally dealt with in another place, the cases he has mentioned shall receive consideration, and if the proviso in section 14, paragraph a, does not afford the relief that is necessary, I will see what alteration can be made.
– I think that the requirements of the honorable member for Corangamite are met by section 64, which provides that a Board, consisting of the Commissioner, the Secretary to the Treasury, and the Controller-General of Customs, may, in cases of hardship, release taxpayers, wholly or in part, from their liability.
– I wish to move -
That the following paragraph be added to the clause: -
by inserting in paragraph & after the word “ State “ the words “ and Federal.”
The object of the amendment is to enable the deduction of Federal income tax when arriving at the taxable income. As I had not an opportunity on the last occasion, I wish to bring the matter up now. Under the principal Act, the payments of Federal land tax and State land tax are allowed to be deducted in arriving at the taxable income. Further, State income tax and municipal taxes may be deducted, but, for some reason or other which I cannot ascertain, the Federal income tax is not deductible. I have consulted lawyers and others, and I cannot ascertain why. The assessment is made on the previous year’s income, and, if the deductions I have mentioned are proper, I see no reason why an exception should be made of the Federal income tax.
– The point raised by the right honorable gentleman has no doubt occurred to many, and it is a standing mystery even to the most intelligent people. However, having been permitted access to the inmost secrets of the Commissioner’s office, I have been able to learn the reason for this exception from the general rule. The object of this taxation is, of course, to obtain revenue, and, technically, there is no doubt that our power to impose taxation includes the power to tax the whole income; that is to say, wo could impose a tax of 20s. in the £1. If taxpayers were allowed to deduct the amount of income tax paid, and a tax of 20s. in the £1 were imposed, a taxpayer would have the right to deduct the whole, and would, therefore, pay no tax. at all. That is the explanation of the position, and when stated in these terms it is perfectly obvious. We do not tax the amount paid in State income tax because that taxation has nothing to do with us; but to make the exemption now suggested would be to exempt the very income that we are taxing, and render the instrument of taxation a piece of worthless paper.
– I am much obliged to the AttorneyGeneral, but I do not think there is much in his argument. If the only object of this taxation is to raise revenue, why have any deductions at all ? When, however, there are deductions, why should an exception be made in a case which is clearly one in the same category as the others. I submit that the explanation is not very edifying, at any rate to me.
.- The same principle as that laid down by the Attorney General is in operation in the case of the Income Tax Act, Victoria. That Act forbids the deduction of the amount paid in the previous year, but allows the deduction of Federal taxes and all other State taxes. We may look at the matter from a different point of view. Let us take the case of a man with an income of £1,000 a year, when it is decided to impose a tax of 10 per cent., representing £100. If the next year this man was allowed to deduct the £100 paid in the previous year, the country would not get 10 per cent. on £1,000. The principle is thoroughly sound, and I agree with the view of the Commissioner.
Amendment (by Mr. Hughes) agreed to-
That the following paragraph be inserted: - “ (l) Sums paid by way of commission for collecting income.”
Clause, as amended, agreed to.
Clause 6 (Amendment of section 19).
.- I desire to call the attention of the AttorneyGeneral to what appears to me to be an omission in the amendment of section 19. That section provides for an exemption, in a certain manner, of £156 on incomes from property and from personal exer- tion; but the new clause provides for an equal division. In the case of a man who had a much greater income from personal exertion than from property, there might not be, with an equal division, a sufficient amount of property to cover the exemption. As I read the clause, such a man would be unable to get the full benefit of the extra exemption on the income derived from personal exertion. All I ask is that the Attorney-General shall look into the matter, and to aid him I shall have pleasure in placing before him two concrete cases for his consideration.
Clause agreed to.
– I move -
That after clause 6 the following new clause be inserted: - “ 6a. Section 27 of the principal Act is amended -
by adding at the end of sub-section 1 thereof the following proviso: -
Provided that in the assessment of a partnership entered into before the commencement of this Act there shall be deducted from the total tax assessable to the partnership so much of the total tax as bears to the total tax the proportion which that part (if any) of the whole income which is distributed to the partners bears to the whole income.’
by adding after sub-section 2 thereof the following sub-section: - (2a) For the purposes of subsection 2 of this section income shall be deemed to be distributed if, in the opinion of the Commissioner, it is held by the trustee for the benefit of a beneficiary, who is a minor, or for the reasonable expenditure of the trust estate.’
by omitting from sub-section 3 thereof the words ‘ to such of the beneficiaries as are taxpayers,’ and inserting in their stead the words to the beneficiaries.’ “
This new clause is proposed in order to limit the effect of a previous amendment made in the incidence of taxation on partners, to partnerships entered into before the coming into operation of the Bill. The honorable member for Maribyrnong, in a letter that he sent to the Department, cited a case of gross unfairness arising through the operation of the clause as it stands. The amendment was intended to make the incidence fall more equitably on partners. It has been pointed out, however, that bogus partnerships might be created in order to get the benefit of the section; and the present amendment is intended to confine that benefit to partnerships made before the commencement of the Act.
.- This clause also affects trustees and beneficiaries, and is, I believe, due to the suggestions of a Trustee Company. It is not quite clear to me, however, that the Bill as amended will touch the case of an ordinary beneficiary, who is neither a minor nor has had sums kept back for repairs and maintenance. For instance, in the case of an estate distributed on 2nd July, a whole quarterly instalment of income would, on the 30th June, he held over technically. I am informed that this is safeguarded by section 28, sub-section 3, of the original Act -
When the income of any person cannot be conveniently returned as for the 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.
But there is no “annual balance” in this sense in the case of a trust estate; there are quarterly payments, and I am in doubt as to whether the words “ annual balance “ will not put such estates out of court, and involve taxation at a higher amount on sums not really, but technically, “ held back.” This, I am sure, was never intended by the Government or by the House; and I ask the AttorneyGeneral to look into the matter.
– I shall do so. The object of the amendment is to relieve hardship in the case of certain trust estates, and although it is quite satisfactory to the trustee company referred to, it may fail to cover some of the points raised. I shall look into the matter before the Bill finally leaves another place, and see what is necessary to be done. The Commissioner says that he can adjust the date of distribution, and that it is not fixed by the return. However, if there be any other points I shall see to them.
Proposed new clause agreed to.
Clauses 7 to 9 and title agreed to.
Bill reported with amendments.
Standing Orders suspended, and report adopted.
Motion (by Mr. Hughes) proposed -
That this Bill be now read a third time.
– As I was not present during the consideration of the Bill in Committee,
I should like to know what was done in regard to a certain proposal.
– The honorable and learned member for Flinders made a suggestion which I said that, with the Treasurer and the Commissioner of Taxes, I would consider, with a view to seeing whether it could be adopted. I promised to regard it favorably.
Question resolved in the affirmative.
Bill read a third time.
Debate resumed from 11th November (vide page 7503), on motion by Mr. King O’Malley -
That this Bill be now read a second time.
– Some of the objections that have been urged against the construction of the proposed railway were caused by want of information which should have been placed before us. The Minister was kind enough to let me see last night the Estimate for the proposed bridge across the Katherine. I understand that a temporary bridge is to be provided, at a cost of £11,000, and paid for out of the vote for the not yet completed section between Pine Creek and the Katherine River. I regret that we have not fuller information regarding this bridge, because £11,000 is a large sum to spend on a temporary structure, which is to be pulled down again as soon as the proposed extension of 60 miles has been made.
– When does the wet season begin there?
– It is to begin very shortly.
– Then we are to build a bridge for the conveyance across the river of material which cannot be used during the wet season ! Why not pass an Act of Parliament postponing the wet season?
– What is the rainfall on the Katherine?
– About 16 or 17 inches. In my opinion, this temporary bridge will, in all probability, serve for the traffic on the proposed line for three or four years to come.
– That is the intention of the engineer.
– Then why was it not made known in the beginning?
– I understand that the railway to the Katherine will be useless until the river has been crossed.
– Yes. Primarily this work will form part of a defence line, but as it will traverse country some of which is inferior, some good, and some excellent pastoral land, and possibly mining country, but not agricultural, it is not likely to carry a large - population for a generation or more, and, therefore, in its construction economy should be studied from start to finish. A sound road should be made, but there should be no extravagance in building orin other directions.
– A defence railway would require a gauge of 4 ft. 8½ in.
– It must be possible to run trains at a high rate of speed on a defence railway; and, therefore, the road should be made as solid aspossible.
– If this is to be a defence railway, why is there to be a lowlevel bridge across the river, which would mean that troops would have to wait until a flood had subsided before they could use it.
– I understand that a temporary bridge is to carry a line on the 3-ft. 6-in. gauge, and that a better bridge will be built when there is a conversion to the 4-ft. 8½-in. gauge.
– It would be a wicked thing to spend £170,000 on a bridge during the war. We must wait until our finances are in a more satisfactory condition.
– How much per mile will the line cost?
– About £5,000 a mile. The honorable member spoke of £14,819 being set down for stations, but I understand that that sum covers not only station buildings, but also station yards, sidings, and all conveniences, and provides for a water supply, which will cost £7,000. More details should have been submitted in the first instance. I should not support a proposal to erect expensive station buildings.
– At Darwin there is only a shed at the station, and no platform, and it is the same right through to Pine Creek.
– Economy should be observed until the increase of population demands more generous expenditure. Sleepers and rails will account for the greater part of the £300,000 set down for the line. The EngineerinChief recommends timber sleepers.
– They would be eaten in three months.
– The best of them would not last twelve months.
– How have the powellised sleepers that we bought lasted?
– They have done well at Marble Bar.
– Last year we voted £50,000 for powellised sleepers for the Northern Territory, and I hope that those sleepers are now on the railway track between Pine Creek and the Katherine River. If they are lasting well, why have we not been informed?
– And we should be informed if they are doing badly.
– Thirty years ago South Australian engineers laid down steel sleepers on the section of the railway from Palmerston to Pine Creek, and I am told by men who undertook that construction, and who afterwards dealt with the maintenance of the line, that, generally speaking, they are about as good to-day as they were when they were first put in the ground. On this point the Public Works Committee should obtain the opinion of Mr. Andrews, the principal construction engineer in South Australia, who spent twenty years in the Northern Territory as Resident Engineer, and knows as much about the country as any man in the Public Service of his State. He is my informant in this regard. From what he has told me, I advise the use of steel sleepers on the section of the line from Katherine River to Bitter Springs.
– We cannot obtain them. America will not quote for them.
– I am aware that they cannot be obtained. The latest quotations are about 19s. per sleeper, when they used to be worth 9s.
– The manufacturers will not supply them at 19s.
– If we use timber sleepers it will be throwing: away money. All along South Australian railway engineers have condemned the use of timber sleepers in the North ern Territory. It is claimed that powellised sleepers might be used. The South Australian engineers have experimented for many years on the treatment of sleepers by creosote and other preserving methods. I am sure that the Public Works Committee will gather from them that the results have not proved sufficiently satisfactory to justify them in recommending the use of powellised sleepers.
– Would it not be better to wait until we can get steel sleepers ?
– That is what I was going to say. Mr. Bell, the Engineer-in-Chief, says that he will use steel sleepers if the Minister will find the money ; but we must remember that these sleepers have advanced 110 per cent. in price, and we shall not be acting rightly if we build railways in that extravagant way. It is infinitely better to wait until we can get sleepers at 9s. or 10s. each. The concrete sleeper has not been sufficiently in use to enable any one to pronounce it as effective for use on this railway.
Mr.Bamford. - The objection to the concrete sleeper is that it will not hold the dogspike.
– Another objection is that the vibration breaks it up.
– The concrete sleeper will not stand vibration.
– Some eight or nine months ago Mr. Teesdale Smith contracted with the Tramways Trust in Adelaide to lay down a mile of concrete sleepers, and as the agreement was that if at the end of six months they were found to be unsatisfactory, Mr. Teesdale Smith was not to be paid for them, it is evident that he has considerable faith in them. He has a patent which imbeds in each sleeper a very strong spring, which relieves it of the vibration which otherwise would break it up.
– The last word has not been said in regard to concrete sleepers.
– By no means has the last word been said upon them.
– Are concrete sleepers cheap ?
– They cost about11s. each, but, as their life is everlasting, if they should prove satisfactory, they would be cheaper than jarrah sleepers in the long run. For ballasting this line £1,000 a mile has been provided. We cannot expect work to be done in the Northern Territory at within 20 or 25 per cent, of the cost of similar work in a temperate climate, but it seems to me that if ballast can be obtained all along the line, or even anywhere on the 60-miles section, the estimate of £1,000 is an enormous figure.
– In Western Queensland are not the sleepers earth -packed ?
– That is so, but it all depends upon the character of the country, and with an earth-packed line a greater speed than 15 miles an hour cannot be obtained.
– A high speed will not be required on this line.
– One requirement on a transcontinental railway is speed. Furthermore, it is necessary on a railway running into cattle country, otherwise the stock in transit to markets will eat all the profits. This railway ought to be ballasted, and it should be a strong road, but £1,000 per mile is a very big sum indeed. I know that ballast has to be taken 400 miles along the Kalgoorlie-Port Augusta railway at the Port Augusta end, and even in that case the estimate for ballasting did not exceed £800. We should not adhere rigidly to the principle of day labour in the construction of this railway. For year after year we have had dinned into our ears the success of railway construction in Queensland by day labour, but the very first report that Mr. Bell submitted in his capacity as EngineerinChief of the Commonwealth Railways, showed that as a rule railways were built in Queensland, not by day labour, but by the petty contract or butty-gang system. Day labour was only resorted to where conditions were not satisfactory for the application of the small contract system.
– At any rate, there were no middlemen in Queensland railway construction.
– As for the middleman, I can tell the honorable member that if a contractor had in hand the construction of the Kalgoorlie-Port Augusta railway, and was simply to set as his profit the present Government waste and loss, he would be more than a millionaire at the termination of his contract. It is about time that Parliament looked at the position fairly and squarely. We are losing millions of money.
– Does the honorable member base that statement on the profits secured by Mr. Teesdale Smith ?
– Yes, and on the work done on Mr. Teesdale Smith’s piece of construction. My informants were the very navvies whoworked for Mr. Teesdale Smith. They told me that had the Government done that section by day labour it would have cost twice as much. It is about time this National Parliament determined that if the day labour system is to be continued in carrying out our public works it must be prepared to submit to the test of public competition. All our public works should be submitted to public tender, and if the Government Department can beat the middleman - as my honorable friend calls him - or outside tenderer, let it have the work, and if the public Department cannot beat the outside tenderer, let the outside tenderer have the work in the interests of the taxpayer. If there is an advantage on either side it should be on the side of the taxpayer.
– That is what, is done in South Australia. How has the system succeeded ?
– In favour of the public tenderer. Fifteen or twenty years ago contractors were doing remarkably well. They were paid handsome prices for the work, and in consequence the Engineer-in-Chief of the Public Works Department was for several years able to compete successfully with them. But those were the days when the Engineer-in-Chief, and not outside influence, built the railways. Gradually outside influence crept in, and with it returned the day of the contractors. Nevertheless, I could quote tender after tender to show the difference between the public tender and the cost of the work when it was constructed by the Department. If honorable members opposite have such faith in the ability of the Government to do work more cheaply than it can be done otherwise, why do they object to competition by public tender? Competition offers the only possible protection the taxpayers have.
– There is no check otherwise.
– There is no check at all. I know honorable members say that certain works have been constructed by day labour below the estimate, but we have not been fully informed what the estimate was for. If the Engineer-in-Chief and his officers had full control, they would know how to estimate for any particular work, but if presentday conditions apply, and control is from the bottom and not from the top, where can the officials have any authority 1 I want to repeat, and I shall repeat it over and over again, that this country is losing hundreds of thousands of pounds - I am not sure that it is not losing millions^ - owing to the slipshod manner in which work is done, and the absence of official authority. The only remedy is a return to the public tender. If the Government can then beat the outside contractor, let the Government do the work, but if the Engineer submits his specifications and estimates, and obtains the contract, and at the conclusion of the work it is found that his estimate has been largely exceeded, every detail of the extra cost should be submitted to Parliament.
– On a point of order, may I draw attention to section 15 of the Public Works Committee Act, which states -
No public work of any kind whatsoever (except Military or Naval), the estimated cost of completing which exceeds £25,000, and whether such work is a continuation, completion, repair, reconstruction, extension, or a new work, shall be commenced unless sanctioned as in this section provided.
The Act further states that the Committee shall deal with the matter with all convenient despatch and present a report to the House of Representatives as the result of their inquiries. It goes on -
After the receipt of a report of the Committee the House of Representatives shall by resolution declare either that it is expedient to carry out the proposed work or that it is not expedient to carry it out.
By the action taken in respect of this proposal the spirit and the letter of the Public Works Committee Act are being deliberately avoided; and the point I raise is that’, as this railway scheme has been referred to the Public Works Committee, who are now engaged in taking evidence upon it, this Bill is not in order in being on the notice-paper at all. May I show the absurdity of the position. Parliament has referred this work to the Public Works Committee. The Public Works Committee are now taking evidence. This Bill is before the House, and yet the actual, work of constructing the railway is now in progress. If the action that has been taken is agreed to, then the Public Works Committee Act will be ren dered a complete farce. This is the first occasion upon which the Public Works Committee Act has been really needed. It was to meet a situation like this that the Act was introduced. It was the deliberate intention of Parliament that no such work as this should be proceeded with until the Committee had obtained evidence upon it, and the proposal had been discussed by Parliament in the light of full information. I have every confidence in the Committee. I believe “it is a good Committee
– The honorable member is now going beyond his point of order.
– Then I will ask your ruling, Mr. Speaker, as to the effect of section 15 of the Public Works Committee Act upon this proposal ; whether it is in order, and in accordance with law, for the House to discuss this Bill, seeing that the Public Works Committee are already taking evidence, upon the proposal referred to in it.
– The point raised by the honorable member for Franklin amounts practically to a suggestion that the Public Works Committee Act is not subject to repeal. I submit that the Public Works Committee Act does not in any way tie the hands of this House in regard to this Bill. The power possessed by the House when it passed the Public Works Committee Act is still inherent in the House, which can repeal the Public Works Committee Act, or cause to be inserted in this Bill words stating that the Act shall not apply.
– The point raised by the honorable member for Franklin is purely a question of law. A very heavy tax would be imposed upon the Speaker if, as soon as any motion or Bill were introduced, he were expected to put the whole of the Crown Law Offices into operation in order to see whether what was proposed to be done was in accordance with the law. That would not be possible; so that the only duty devolving upon the Speaker is to see that what is done is done in accordance with parliamentary practice and the practice of this House. So far as I have been able to gather, nothing has been done in the introduction of this Bill that is contrary to the practice of this House. If the Government desire to take any course, it is not for me to say whether that course is legal or illegal. That is a matter for other authorities to decide. So far as the procedure is concerned, the Bill is quite in order.
– i would ask the House and the Government to seriously consider what is being done. If it is the intention of the Government to repeal the Public Works Committee Act, let that be done in a Straightforward way.
– The Government propose to do nothing of the kind.
– If ‘the attitude that, notwithstanding the existence of the Public Works Committee Act, the Government can introduce and carry out any work without reference to the Public .Works Committee is to be accepted as correct, then the Public Works Committee is nothing better than a farce, and the Act a sham. Parliament has deliberately passed over this scheme to the Public Works Committee for examination. The Committee have already commenced to take evidence. Simultaneously with the taking of that evidence, work on the railway has begun, and when the report of the Committee comes along the railway will have been almost completed.
– Will the honorable member be satisfied with the undertaking that nothing shall be done to carry out this work until the report from the Public Works Committee is received?
– Yes, i will ; Dur that does not relieve us from the position that has arisen. If the Minister will promise that the House will have an opportunity to consider the Committee’s report before the work is proceeded with, I shall be satisfied.
– I will not say that.
– That it will not be proceeded with until the Minister has received the report? .
– That would not do, because, even if the report condemned the work, the Minister, if he favoured it, could allow it to go on, and thus make a still greater farce of the whole proceedings. This is by far the most important work that has been referred to the Committee, and, with the exception of the Kalgoorlie to Port Augusta railway, is the most important with which the House has had to deal. It will cost the country £10,000,000 to complete the north-south railway.
– We are already committed to that by South Australia.
– But we want to know whether we are following the right route.
– Does the honorable member propose that we shall inspect the route ?
– No; we have appointed the Public Works Committee to do that, amongst other things, and to submit evidence to the House, so that we may have some knowledge of what we are doing. I have the utmost confidence in the Committee, and believe that it will do its work conscientiously and well. We shall make a terrible blunder if we pass over the Committee and allow this work to be commenced before it is reported upon by it. By doing that we shall open the door to any Government to proceed with any work it pleases in defiance of the Public Works Committee Act. I ask the House to insist that this line shall not be proceeded with until we have received the report of the Public Works Committee.
.- I wish to state briefly the difficulties in which one who wishes well of this northsouth line is placed in the present circumstances. In the first instance, we are asked to be parties to a breach’ of the law. There is no doubt that this House has the inherent power to repeal legislation; but it is useless to disregard legislation on the statute-book in a matter of vital importance, while pretending to observe the law. If the repeal of the Public Works Committee Act is required, it should be faced and undertaken in a straightforward, direct, and honorable manner.
– The honorable member must have an “ edge “ on the Committee.
– I have not ; but 1 have some doubt as to whether the functions of the Committee, in considering a policy work like this, are as useful as in considering an ordinary work of executive action in a more accessible place. I am in some difficulty in determining whether this House would not be in a better position to size up the reports of the experts themselves as to these distant railways than we should be if the Committee examined the experts and then gave us the views of the experts-cum-Committee.
– The evidence is published with the report in each case.
– Every one reads the reports, but no one reads the evidence, with the result that the special knowledge of the experts can be obscured - I do not suggest that it is deliberately done - by the method in which it is presented. I have no desire to enter into a wrangle with the members of the Public Works Committee as to the usefulness of their labours. I merely express a doubt as to the wisdom of referring to them these purely policy works, which the Government intend to proceed with regardless of whether or not they are going to be paying propositions. The next point is as to whether, in the circumstances, we should proceed with this line at the present time. The late Liberal Administration decided to build the Pine Creek to Katherine River line upon a 4-ft. 8J-in. extension basis. That is to say, we decided that the line should be built on a 3-ft. 6-in. gauge, so as to link up with the Northern Territory line ; but the sleepers, culverts, and cuttings and curves were to be such as would enable the immediate conversion of the line to a 4-ft. 8^-in. gauge. That was decided in anticipation of the almost immediate unification of the Australian gauges.
– That was a very good policy.
– An excellent policy. The difficulty, however, is that, if we arc to accept the ex-Prime Minister as the mouthpiece of events, the unification of the Australian railway gauges is indefinitely postponed. If it is, then this line should be built on a 3-ft. 6-in. gauge. It is a mere waste of money, if we are to have no unification of gauges, to build a 3-ft. 6-in. line on 4-ft. 8-in. sleepers. The cost of ballasting a 4-ft. 8^-in. line is infinitely greater than that of ballasting a 3-ft. 6-in. line. There is also great doubt as to whether this railway ought not to be earth-packed throughout. Honorable members may talk of the necessity for the quick passage of live stock. The Cloncurry line, however, is an earth-packed railway, with a maximum speed of 15 miles an hour, and it is carrying in the neighbourhood of 300,000 stock per annum to the meat works - an infinitely greater traffic than we shall have on this Une.
– They would make much better meat if carried at 30 miles an hour.
– That is not the point now under consideration. We have to consider economy; yet we are deliberately proposing to build a line upon specifications to connect up with the uniform gauge system, although, judging by the ex-Prime Minister’s utterances, there is no possibility of a uniform railway system in Australia for many years to come. We ought not to proceed with this line until we know exactly what is to be done with respect to a uniform gauge, and generally in regard to the Northern Territory railway system connecting both South Australia and Queensland. In these circumstances I shall feel it my duty - although a friend of the north-south line, and of the south-east and north-west extensions - to vote against this Bill.
.- I regret, Mr. Speaker, that the point raised by the honorable member for Franklin was not upheld by you. If this motion goes to a division I shall feel compelled to vote against it. I would not be doing my duty to my constituents and the country if I were to vote for an expenditure of £320,000 on such meagre information as was given us by the Minister in introducing this measure. It has never been my lot to hear a Bill introduced in, I might almost say, such a careless manner, and with such little information and so much levity as marked the introduction of this measure. I am not reflecting on the Minister of Home Affairs in making this statement, for he has only recently come into office. But it will be< my duty always to vote against proposals of this kind when they are not backed up by .information which the House should possess. We have a Public Works Committee in which we have confidence, and which was appointed to report on all works estimated to cost £25,000 or more. In this case, where we have an estimated expenditure of £320,000, they are to be ignored, although we are passing through’ times when every Government is crying out for economy. I am not prepared to do this, and shall never be while I remain a member of this Parliament.
– More particularly as the work has been referred to the Public Works Committee by resolution of the House.
-In such circumstances this proposal should not be tolerated. I do not intend to traverse the ground already covered during this debate. It will be sufficient to point out that the cost of steel sleepers alone, according to the honorable member for Wakefield, has increased by about 100 per cent.
– From 10s. to 19s. each.
– Approximately 100 per cent. This is typical of the increases in the prices of many other materials that will have to be used. At a time like this, when the greatest possible economy is necessary, we should not pledge the country to go on with a proposal of this kind while we shall have to pay these greatly enhanced prices. The only point urged in favour of the course proposed by the Minister is that, unless we proceed at once with the construction of this line, 500 men already in the Territory will be thrown out of employment. I do not believe that. There are sections of the line from Pine Creek to Katherine River yet to be completed, and I believe it would pay the Government to find employment for these men elsewhere in the Commonwealth rather than to proceed with this work at a time when a hugely increased expenditure must be involved. In making his appeal for economy, the honorable member for Wakefield suggested that too much reliance should not be placed on the day-labour system. As one who is as anxious as he is for economy, I would remind him that in Victoria, where we have in power the only Liberal Administration in Australia, the day-labour system has been in force for many years, and that, according to the Minister of Public Works, the State railways are constructed for far less than would be possible under the contract system.
– Is that on the butty-gang system ?
– That is quite different from the method adopted by the Commonwealth Government.
– I think not. I do not want to refer to other States controlled by Labour Administrations where the day-labour system is in operation; it is sufficient to point out that the only Liberal Administration in
Australia has adopted the day-labour system, and has found it to be cheaper than the contract system. I mention this only by the way. We know nothing of the country to be traversed by this line, we have none of the details that we should possessand I feel therefore that I should be lacking in my duty as a representative of the people if I voted for the expenditure of this huge sum of money without a report being obtained first of all from the Public Works Committee, which was specially appointed to deal with such matters.
Sitting suspended from 1 to 2.15 p.m.
.- The proposed extension of the Pine CreekKatherine River railway to Bitter Springs is certainly a very important proposal, and the Government are to be commended for having taken action to continue the present line, which is part of the railway which the Commonwealth promised to construct when it took over the Territory. The question for the House to consider is whether this is the most opportune time to build the railway. The Minister of Home Affairs has told us that one of the principal reasons for undertaking the work at the present time is to provide employment for a number of the men at present engaged in the construction of the section previously sanctioned by Parliament. It is said that there are about 500 men employed on that railway, and that unless the proposed extension is proceeded with a number of the men will be thrown out of employment, and the authorities will be faced later with the necessity of reorganizing the whole gang. When we realize the difficulty and expense of taking men to the Territory, we can quite understand the anxiety of the Minister to have the work put in hand, in order to retain the men who are already there. The Minister of External Affairs has given a guarantee that the laying of the line will not be proceeded with until the project has been inquired into and reported upon by the Public Works Committee. That assurance has considerably relieved the situation. I would point out to the House the difficult position in which the Committee would be placed if asked to report on a railway, the construction of which had already been decided upon by the House. If this Bill is passed, the Department will probably proceed to order material, and make other preparations for the building of the line. At this stage I do not think it would be wise for the Government to purchase timber sleepers for the line.
– Do the Government propose to do that ?
– I do not know; but I should like to hear some evidence as to whether it is desirable to use timber sleepers in that country. I should not like to record a vote either for or against the use of timber sleepers without the fullest inquiry having been made.
– You are Chairman of a Committee whose duty it is to make such inquiry.
– But if the Fill is passed, and Parliament has decided to build the line, and the Government have ordered the sleepers, what will there be for the Committee to inquire about?
– The Bill is only permissive. It says the Minister may build the line; it does not compel him to do so.
– I do not wish to vote for a measure which would give the Government authority to construct a line until there has been the fullest possible inquiry.
– - I have given an assurance that we shall not proceed with the construction of the line until the Committee has made its report.
– But the material will have been ordered.
– Nothing will be ordered.
– If the Minister assures me that no sleepers will be ordered until the Committee has reported on the subject I will be satisfied. I understand that there will not be much trouble with the ballasting, because ballast can be obtained close to the route of the line. Therefore, I cannot see why the railway should cost £5,000 per mile, when there are no engineering difficulties. I understand that estimate is based on the cost of the section at present being constructed.
– Is that not a good reason for voting against the Bill ?
-I think it is a good reason for close inquiry. If the Minister had not given an assurance that nothing will be done until the report of the Committee is received, I would have been inclined to vote against the Bill.
– Earthworks may be put in hand, but no materials will be ordered.
– Suppose the report is adverse 1
– That is scarcely possible.
– I understand that the only work which will be done before the Committee reports will be the clearing and the preparatory earth -works which will keep 100 or 150 men employed.
– We are to break the law to find employment for 100 men.
– We are not breaking the law ; we are making a new law.
– I am prepared to accept the assurance of the Minister that nothing will be done until the report of the Committee has been received.
.- For years I have advocated that a Board should be appointed to carry out a continuous policy of development in the Northern Territory. Had there been one authority in charge of the construction of the railway from Oodnadatta to Pine Creek there would not have been the present trouble. The construction of railways for the development of the Northern Territory is essential. A man told me recently that he has on his station plenty of fat cattle, but he cannot get them to market owing to the lack of railway facilities. About the Macdonnell Ranges there exists one of the finest stretches of country on the face of the earth, but it requires a railway for its development. There are 18,000,000 acres of land with a 16-inch rainfall, and capable of growing wheat or anything else. I understood that we were to have a continuous policy for the opening up of the Territory by railway construction, but to build this line simply in order to keep 100 men employed would be ridiculous. It might be better to bring those men south for the summer and find employment for them here. In my opinion, a great blunder would be made if this work were taken out of the hands of the Public Works Committee. That body was created for a specific purpose, and I am sure that the Minister would be pleased to have from the Committee an opinion based on reliable evidence. I hope that the Minister will not proceed with the railway at the present time. This seems to be just another evidence of the wire-pulling that is taking place throughout the Commonwealth. We know that the proper policy to adopt is to build a railway from north to south in the straightest practicable line, and that by so doing we should avoid all engineering difficulties. Directly the line deviates to the east, it enters broken river country extending for 150 miles, and presenting many difficulties for railway construction. By such a deviation the line is being taken further away from the valuable land on the eastern boundary of Western Australia, the development of which, in conjunction with the Territory, would be adding a new province to the Commonwealth. Instead of that definite policy, there is continual tinkering with the railway proposals, and the line is being gradually edged eastward until some day it will strike the coast of Queensland or the Gulf of Carpentaria. Sir Ian Hamilton expressed the pride he felt when he understood that the Commonwealth intended to build a railway from north to south for defence purposes, and he said that when the line was constructed he would be glad to come to Australia to be present at the opening ceremony. If the Government are anxious to find homes for soldiers at the conclusion of the war, they can find abundant suitable land in the Macdonnell Ranges. Let the Government proceed with the construction’ of the through railway, create a big military station in the north, and say to the soldiers who come to Australia from other parts of the world, “ Make a home for yourselves in the freest country on the face of the earth.”
.- Whilst regretting the irregularities which have occurred in connexion with the introduction of this measure I am bound to support it, because I believe it to be one section of that national line, the construction of which is so essential in the interests of the independence and security of Australia. If we have an assurance from the Ministry that the line will not wander away to the east, but that it will be treated as part and parcel of a great scheme which the majority of the people of Australia will support, I see no reason, having regard to the national danger, why we should hesitate, notwithstanding our great responsibilities at the present moment. I feel that we should have a comprehensive policy of railway construction embodying this great ideal of national security, and it should advance side by side with a big scheme of land settlement, by which we could gradually provide a much better, more effective, and certainly cheaper system of closer settlement for the whole of the States than they are able to provide under their present imperfect and ruinous systems.
We can assist in realizing the ideal of all true Australians by giving effect to such a system. I shall not say anything further on this question beyond that I intend to cast my vote for the proposal, notwithstanding that I believe that we are beginning at the wrong end - that we should build from the south to the north. I only wish now to refer to some criticism by the honorable member for Wakefield in regard to the relative merits of day labour and the contract system. I worked for many years as a small contractor, and shifted tens of thousands of tons of earthwork; and I can honestly say that I have studied the question from the point of view of both the contractor and the worker. Incidentally, I may mention, without being guilty of an idle boast, that I should be willing to meet any member of the Opposition with a pick and shovel in a ten-hour day. Every principle of political economy will be outraged if we assume that, conditions being equal, the State cannot undertake huge enterprises of this character, and carry them out as cheaply and economically as they could be carried out under private enterprise. Even a contractor, whose operations are of a moderate character, must carry out his work under the daylabour system, and the whole matter is one of supervision. If a State has made adequate provision in the form of a proper and permanent railway building plant, there has not to be met the expense that has had to be faced over and over again in the various States, when contractors have to shift their huge plant from one part of the country to another. Further, in any State so organized, there, is no necessity to maintain two staffs of efficient engineers. We can quite understand that contractors endeavour to get the best possible specifications, and to “ shave the wind “ without absolutely bringing their work into what may be called the realm of condemnation. That is the line of least resistance a contractor invariably pursues, even though, in railway construction, it may mean the endangerment of many lives in the future and heavy expense in maintaining a jerry-built work that has passed the supervising engineers. In railway construction the contractor must maintain a staff of good engineers, and the State must also have a staff to see that the work i3 properly clone by the contractor. We have here a duplication of functions which would not be tolerated in any other walk of life. After all, this is only another avenue of socialistic enterprise. No one would suggest that the maintenance of the Army and so forth in the present great war should be conducted by private enterprise; on the contrary, it is recognised that the organization, to be effective, must proceed from the centre. If inefficiency creeps into the day-labour system in railway construction, we may take it that there is something seriously wrong with the supervision. If it is possible for political influence to be brought to bear, the fact only emphasizes the necessity for a permanent Board of able men, to whom a huge plant and the whole work of railway construction could be intrusted. We ought to have continuous railway administration in this regard, for we should not then see overwhelming work for two or three years succeeded by a complete dearth. This latter, of course, means extravagance and ultimate ruin. Under the day-labour system it is possible for politicians to interpose, and it is also possible, owing to lack of proper supervision, for men to give an inadequate return. I have always found that, in order to get good and permanent work, the responsible man should have the whole direction of affairs, and all those engaged ought to know that the length of their employment is governed only by their capacity for work, utterly independent of the good-will or favour of other persons.
.-I support the motion for the second reading because it is in accord, not only with the letter, but with the whole spirit of the agreement by which we undertook the control of the Northern Territory. The agreement and the Act clearly show that this railway had to be constructed from Port Darwin southward to a point on the northern boundary of South Australia proper. The Territory was taken over because it was recognised that to leave it unsettled would prove a menace to Australia, and that, unless a railway were built, it could not be developed as pastoral country. My own opinion is that pastoral pursuits must come first and closer settlement afterwards. The section of the line it is proposed- to build will be common to a line from Oodnadatta; whatever route may subsequently be followed, the line from Katherine River to Bitter Spring3 must be .continued. That being so, I hold that we are in honour bound not to delay or interfere with the construction of tho line. I admit at once that the proposal has been brought before us in a very irregular way; indeed, for the last twelve months the whole business of the Parliament has been conducted in a peculiar way. We have had a Tariff before us for twelve months, and yet it has not received legislative sanction. When we finished discussing the last Estimates, the financial year had nearly expired, and apparently we are going to have that experience again. However, I hold that we are justified in overlooking the irregularity, in the hope that the Public Works Committee will obtain for us the necessary information ; and I have sufficient confidence in the Committee to believe that that will be the case. For example, a good deal has been said about a low-level bridge. I think the Committee will find that, for all practical purposes, such a bridge will answer the traffic requirements of the Territory for a good many years. At all events, I am satisfied that if the Chief Engineer recommends a low-level bridge, we ought to be guided by his opinion, because no man in Australia has had more experience of such bridges for railway purposes over rivers where the current in flood time is much stronger and swifter than we have reason to believe it is in the Katherine. From what we have heard about the Macdonnell Ranges inside this Parliament, we might be inclined to think that they must have been the original land of Goshen. 1 shall have to wait for proof before I can believe that this is good wheat country; at any rate, in no part of Australia within the tropic of Capricorn has wheat been grown profitably. In Queensland there are some magnificent pastoral areas in the tropics, and I only hone that the Ranges will prove the wonderful country that they are represented to be. If so, the railway proposed will be eventually a means of profitably opening it up. The next section will also be common to the main route, and we might then fairly consider whether we should make a detour to the south-east, in the way at one time suggested by the honorable member for Swan. Further, when this has been settled, the railway could be carried direct south, to junction with the main line from Port Augusta.
– I hope that, in the interests of Australia, that will not be done. It is another Queensland “ pull “ !
– At any rate, I hope we shall avoid the extreme folly of building a railway line direct over two deserts.
– I do not think that the honorable member for Maribyrnong, who is a member of the Public Works Committee, should be so emphatic.
– I agree with the honorable member for Barrier; I think the honorable member for Maribyrnong might reserve his opinion until he has, at any rate, collected the evidence.
– I studied the question before I was on the Committee.
– But I was in Australia before the honorable member was born. If it is absolutely necessary that we should bind the Government not to undertake the construction of this railway until the report of the Committee has been received, it would be very easy to so provide in a few words in the Bill. That is the course I personally favour, because then the whole responsibility of proceeding with the work would rest with the Government. This railway must be constructed in order to settle the country, and in order that we may get some return from the 200 miles of railway already in existence. The sooner we discard foolish settlement experiments and develop the Territory as cattle and stock country, the better it will be for all concerned. Large meat works are on the eve of completion at Port Darwin, which is the natural -port for the Northern Territory, and every mile of railway constructed south or south-east must assist in the development of the Territory’s natural resources.
– Having had from the Minister the assurance that the construction of the proposed railway will not be commenced until the Public Works Committee has investigated and reported in favour of the proposal submitted to it, I have no hesitation in supporting the Bill. Directly the Committee’s investigation is begun, the Minister and his officials will be able to set about organizing a staff for the construction of the railway in the event of the Committee sanctioning it. In no case can work on the line be commenced at once, but provision for commencing work can be made in anticipation of the sanction of the Committee.
– The Committee may not report favorably.
– Then nothing will be done.
– The House may not adopt the Committee’s recommendation, even if the report is favorable.
– Then no money will be spent. I understand that a considerable amount of work has yet to be done on the line from Pine Creek to Katherine River. The right honorable member for Swan, who has had great experience in the construction of large works, will, I think, agree with me that to stop the construction of this line at the present time would mean a considerable loss to the Commonwealth. The Minister will not commence the proposed work immediately the Bill is passed. I doubt whether any large sum could be spent on the work within six months, even were parliamentary sanction given to it now. I have been informed that it is important to secure continuity of employment for the men now engaged on railway construction work in the Northern Territory. I have been told that most of the men paid the cost of travelling to the Northern Territory, and that they are a first class body. Without the prospect of continuous employment, however, they are likely to accept the first job that is offered to them, and may even leave their present work before the construction of the line to the Katherine is finished.
– How long will the construction of the line to the Katherine take to complete)
– There will be work there for 400 or 500 men for some considerable time, but about 100 men will bo dismissed early in the new year unless the Bill is passed and the Minister can utilize them in making preparations for the continuation of the railway to Bitter Springs. Honorable members seem to forget that the proposal under consideration is an extension which will form part of the main transcontinental line. There will be no controversy as to route until the line has been continued southwards as far as Daly Waters. Then the representatives of Queensland will clamour for a branch connecting with the Queensland railway system, and the representatives of South Australia will urge the continuation of the line straight down.
– South Australia wishes the line to be continued from Oodnadatta northwards.
– South Australia desires that the agreement shall be carried out. The extension from the Katherine River to Bitter Springs will go within 12 miles of a good tin field. I am personally much indebted to the Secretary for External Affairs for the information which he has given me on this subject. He says that the tin mines are about 12 miles from the route of the proposed line, and that a light tramway could be made to connect them with it, or the ore could be carted to the railway. As in any case the main trunk line must run parallel with the overland telegraph line, as far south as Daly Waters, I see no good ground for the objection that has been raised to the Bill, and for the reasons that I have given I shall support the measure.
– I am in favour of continuing the railway, following the telegraph line, to a point a long way south of Bitter Springs, whence, I think, a branch should go through the Barclay Tableland to join the Queensland railway system, and another branch should be taken southwards to Alroy Station, and from there to Oodnadatta, by way of the Macdonnell Ranges. I am sorry that this discussion has arisen, not on the merits of the Bill, but on the procedure that is being followed. No doubt, the Public Works Committee Act requires the reference to the Committee of all works of this kind. The Committee must investigate these proposals, and report on them to Parliament, when it is for the House to decide whether a work referred to the Committee shall be carried out. The assurance having been given that this work will not be commenced until a favorable report has been received from the Committee, I shall not oppose the taking of action by the Government on that report, though it would be a different matter if the report were adverse. The reference of the work to the Committee is primâ facie evidence of the approval of the House. I understand that the Minister will not do anything until a ‘favorable report has been received from the Committee, and, that assurance having been given, I shall support the Bill. This is not, in my opinion, an opportune time for the construction of large public works; but I am so anxious that something should be done for the development of the Northern Territory that I am in favour of the continuation of the railway. I am, of course, desirous that work shall be found for the 500 or 600 men now’ engaged in railway construction in the Territory, though I would not consider it justifiable to expend £320,000 on an extension of the railway merely to find them employment. However, I certainly approve of this work on its merits. As to the crossing of the Katherine, I think that a low-level bridge will do for the present. I understand that the rainfall in that part of the country is about 17 inches, and, although a good deal of it comes at one time, I do not think a low-level bridge would be washed away. Certainly, I would not favour the expending of £170,000 at the present time on a high-level bridge. The primary object in view is the development of the Northern Territory by giving railway communication. The Territory must be connected with the Queensland railway system, and the Commonwealth must also connect it with the South Australian railway system to keep its .bargain with that State. Of the two connexions, I think that that with the Queensland railway system should be made first.
– South Australians desire that the transcontinental line shall be made first.
– There is no better friend to that line than I am. I was Treasurer in the Government which made the contract between the Commonwealth and South Australia, of which I approved. But one or two of the representatives of the States seem intent upon driving its friends into the camp of the enemy. The only really good country near to Port Darwin is that on the Barclay Tableland,” and I would bring the line first southwards through Bitter Springs, Newcastle Waters, Anthony’s Lagoon, and Alroy Station to Camooweal. That is the best piece of country in the
Northern Territory. The building of this line will not interfere with the connexion with Oodnadatta, because, except for a distance of about 150 miles, itwill be on the road to South Australia. If honorable members representing South Australian electorates expect the Commonwealth to build a railway without any regard to the poorness of the country through which it passes, they will not get my support; but I should be sorry to see anything done to prevent this railway being built, as it is part of the policy of developing the Northern Territory to open up the Barclay Tableland. The Minister can get over all the objections to the passage of this Bill by informing the House that he will not proceed with the work of construction until a favorable report is received from the Public Works Committee, and that he will consult Parliament if the report is unfavorable.
– Nothing will be done unless the Public Works Committee report favorably.
– I am satisfied with that assurance, and I shall vote for the second reading.
– As it is quite evident that we shall not conclude the debate this afternoon, I move -
That the debate be now adjourned.
Motion agreed to; debate adjourned.
– In December last, on account of the difficulties created by the adverse season, we found it necessary to remove the duty on wheat, while later on, during an adjournment of Parliament, the Government took the most extraordinary action, which was afterwards validated by resolution of the House, of practically suspending the duties on chaff, bran, straw, and other articles. Honorable members have frequently asked when I proposed to restore these duties. I now do so. In order to restore the Tariff to what it was on the 3rd December last, I move -
That the Schedule to the Customs Tariff 1914 as amended by the Resolutions proposed by the Minister for Trade and Customs on the Twelfth day of December, One. thousand nine hundred and fourteen, and the Ninth day of June, One thousand nine hundred and fifteen, be further amended as hereunder set out, and that on and after the twelfth day of November, One thousand nine hundred and fifteen, at fouro’clock in the afternoon, Victorian time, duties of Customs he collected in pursuance of the Customs Tariff as so amended.
– I understand that we have to wait for business from the Senate. I shall have the bells rung when I intend to resume the chair.
Sitting suspended from3.5 to 8.13 p.m.
Mr. HUGHES (West Sydney- Prime
By leave, I desire to inform the House that the following announcement has been officially released to the press by the Home authorities: -
On September 2nd the transport Southland, from Alexandria, was torpedoed in the Aegean Sea, but beached at Mudros under her own steam at 10 p.m. same day. As precautionary measure, troops were transferred to other transports. There were some casualties, already reported, amounting to nine killed, two slightly injured, and twenty-two missing, believed drowned.
The Defence Department announces that the troops on board included Australian units, and the casualties have been already published. The detail of casualties includes :- 6th Infantry Brigade Head-quarters, 1 colonel died of shock; 21st Battalion, 2 killed; 23rd Battalion, 7. Total, 10 dead. Missing : - Head-quarters, 21st Battalion, 2; 21st Battalion, 10; 23rd Battalion, 4; Divisional Head-quarters, 2; 16th Company A.A.S.C., 1. Total missing, 19.
The Minister of Defence also announces that steps are being taken to ascertain whether other information on the matter can be made available.
Mr. JOSEPH COOK (Parramatta) (8.15]. - By leave. The announcement of the Prime Minister indicates what, to an outsider, seems an extraordinary state of things. He has read to us a mechanical statement of the bare facts concerning “the torpedoing of a vessel when, unofficially, even the details of the occurrence have been perfectly well known for weeks past. There may have been Imperial reasons for withholding the official publication of the news, but they are beyond comprehension. If the unofficial reports be true, any proper relation of what occurred would be warmed by some of the most heroic stories of the war, and it is a pity that these stories cannot be told to the public. I am glad that the Government is taking steps to ascertain whether the details cannot be made public. In my opinion the publication of this tale of undaunted heroism, and wonderful endurance and fortitude, would make a fine and stirring recruiting appeal. I do not know why it should not be made known officially. Is the Prime Minister ;able to say why this bare official statement of the occurrence has been held back for two months? What every one has been aware of for weeks past, down to the very details, is now, in bare outline, being made known officially for the first time?
– There could be no reason for holding back the information in Australia. One can only wonder why it was held back on the other side of the water.
– Probably the intention was to keep the news from the enemy.-
– I fear that, in many cases, the enemy knows a great deal more about these matters than we do, but if he were made aware of the details to which I refer, he would take small com- ‘ fort from this, occurrence. However, we are thankful to get authoritatively even as much as we have got.
– I have given, of course, all the information that we have been authorized to publish.
– I am glad that the honorable and learned gentleman is endeavouring to ascertain if the details of what took place may not be published. I hope that permission for their publication will be given. The sooner the better.
– With the permission of the House I wish to lay on the table, for insertion in the Hansard report, the answers to some questions which appeared on to-day’s business-paper, which I was not in a position to give at the proper time.
– I have no objection to the suspension of the sitting, and am willing to attend to-morrow morning, but I wish to make a few remarks on a matter of serious importance.
– I should not detain the House more than ten minutes with what I have to say.
Bill returned from Senate without request.
Bill returned from the Senate with an amendment.
That the Senate’s amendment be considered in Committee forthwith.
In Committee: (Consideration of Senate’s amendment) -
Clause 4 -
Section 15 of the principal Act is amended by inserting at the end thereof the following sub-section : - “ (3.) Goods shall be deemed to be sold in Australia on account of a person not resident in Australia, or on account of a company not registered in Australia, if any person in Australia receives a commission in respect of the sale of the goods or is paid a salary for obtaining orders for or for influencing the sale of the goods.”
Leave out clause 4; insert following new clause: - “4. Section 15 of the principal Act is amended -
by adding at the end of sub-section 2 thereof the words “to the extent of the tax payable on goods sold by him after the thirtieth day of June, One thousand nine hundred and fifteen “; and
by adding at the end thereof the following sub-section: -
Goods shall be deemed to be sold in Australia on account of a person not resident in Australia, or on account of a company not registered in Australia, if any person in Australia receives a commission in respect of the sale of the goods or is paid a salary for obtaining orders for or for influencing the sale of the goods.”
– I move -
That the Senate’s amendment be agreed to.
The effect of this amendment is to modify the amendment of the principal Act, contained in the clause as it left this Chamber, in such a way as to limit the responsibility of an agent, so far as the payment of the tax this year is concerned, by freeing him from personal liability for payment. Without committing myself as to what is to be done in subsequent years, I have to point out that since this matter must necessarily come up for review at the close of the current financial year, we shall have an opportunity, in the light of further experience, of considering whether it is advisable to insist upon the clause even in its present form. The amendment meets most, if not all, the objections to the clause that were raised in this House.
– I regret that the Prime Minister has not seen fit to further re-cast this clause, since it still contains some very objectionable features. The amendment made by the Senate will certainly limit the liability of an agent by making him responsible only in respect of those contracts into which he himself enters. It is possible, but by no means certain, that in respect of such contracts he would have some means of indemnifying himself; where he is a party to a contract, there is a greater possibility of his having money belonging to a principal out of which he may indemnify himself than there would be if he were made liable to pay income tax in respect of a contract to which he was not a party. If he has moneys within his own control belonging to the principal the clause, as amended, will enable him to protect himself. But, as I have told the Committee, 90 per cent, of the transactions in respect of particular lines and goods are the subject of contracts entered into abroad, and, under the clause as passed by us, an agent would have been liable in such cases for the payment of income tax on profits so derived. I admit that that provision has been so modified that an agent will now be liable for only those contracts which he enters into himself, unless he happens to have moneys belonging to a principal, out of which he is authorized by section 52 to make the necessary deductions in regard to contracts entered into by the principal abroad. That, of course, is subject always to the condition that he is the agent of the principal. According to section 52, moneys in the hands of an agent here are subject to certain deductions for income tax. That is quite right. But this modification by no means meets the case. Even the new clause which we are now asked to accept has the objectionable feature that it discriminates between merchants. Sixty-five per cent, of our imports are from Great Britain, and it will be a source of the gravest irritation to British merchants. It discriminates in this way : that merchants who have agents here are penalized, whereas those who have no agents here are free of the liability to which I have referred. That is very objectionable. It should be our policy to encourage importers to establish direct agencies here. Many agencies established here have been struggling for years, more particularly against American and foreign importers, so that by passing such a provision as this we shall make a serious mistake. The establishment of agencies here is frequently the forerunner of the establishment of factories in our midst. That has occurred in a number of instances which have come under my own notice. It is a great mistake, therefore, to discourage the establishment of agencies in this way. Those who have not agencies here will not be liable to the same penalties as those who have. The Prime Minister’s argument is not a substantial one. He fears that if the clause were omitted altogether the revenue would suffer. As the result of inquiries from members of the mercantile community, I am convinced that the revenue will suffer whether the clause remains or not. Those who will be subject to the liabilities of this Bill will do away with their direct agencies here, and substitute for them peripatetic travellers, having no particular location, who will do the same class of business for them, but will not be subject to the provisions of this clause. Thus, even if the clause be passed, the evasion of taxation will be easy, while the operation of such a provision will be to our detriment, because it will mean the removal of agencies already established in Australia.
.=-While I agree with the first part of this amendment of section .15 of the principal Act, relieving agents from the payment of income tax, in certain cases, I do not agree with paragraph 6. The Prime Minister is trying to tax merchants carrying on business abroad, who are earning revenue in Australia. An agent who is carrying on business for an English company is earning his money here, and paying taxation in Australia. The representative of an English firm who is only drawing a salary is also living here, and is being taxed upon his salary. In what respect is a merchant so represented here differently situated from the merchant abroad who sells his goods to a big firm in Australia ? There is no difference in the position of the two.
– It does not meet the trouble.
– Honorable members opposite, including the honorable member for Kooyong, were consulted before this amendment was made.
– We listened to all your suggestions, but it seems that there is no pleasing some people.
– I do not know who has been consulted in reference to this proposal and who has not, but the fact remains that the difficulty is not touched by the amendment of the Senate.
– Why should not a merchant be taxed ?
– And will this clause make him pay a double tax?
– While it pays he will keep it open.
– Then somebody else will do the business.
– The Japanese have very large agencies here.
– Will that make any difference to the consumer ?
– Similar threats are always made in connexion with new legislation. We are invariably told that capital will be driven out of the country. I say that we should tax the travelling bagman.
– Then let us amend the clause in the direction indicated by making the net a little finer.
– It will not work out in that way.
– It will cause us to use more Australian goods.
– He looks at matters from a different point of view sometimes.
– I wish to remind the Leader of the Opposition of what I have already suggested to the Committee. I pointed out that this question will have to be reconsidered when we come to impose the duty for the new year, and that, in the light of the experience we shall then have had or’ the operation of the amendment, we may be able to agree to a considerable modification of it. But as it now stands it can hardly be said to be objectionable, so far as agents are concerned. It has been in force in the various States for a long time, and has not produced any of the results which honorable members opposite have predicted. A similar provision is embodied in the Victorian Income Tax Act and in the New South Wales Income Tax Act. I know that commercial travellers and agents are imbued with the idea that it is something new, and that it is a provision which menaces them. As a matter of fact, it is an old provision.
– The provision in the State Act to which the Prime Minister refers is an entirely different one.
– Then the honorable gentleman will waste a few more hours, that is all.
– I have yet to learn that the honorable gentleman has spoken to me about it. He may be an idiot; perhaps he is.
– But that is on 5 per cent.
– Not one word that has fallen from the Prime Minister deals with the objection raised by this side. I admitted from the beginning that so far as the immediate liability of the agent is concerned, it will be modified by the first portion of the Senate’s amendment. What I took exception to, and what the honorable gentleman carefully avoided, is that part of the amendment which discriminates as between merchants. I have pointed out that the second part of the amendment will penalize merchants who have established agencies here, and those who have not been enterprising enough to do that will not be affected. The clause as proposed to be amended will unfairly tax the more enterprising man who establishes an agency in Australia. We should be anxious to encourage the establishment of agencies here, because that introduces people who must be subject to our taxation. It is said that if the provision be not agreed to the revenue will suffer ; but the tax can be evaded successfully under this provision, whilst we shall in the meantime suffer the disadvantage of the withdrawal of agencies.
– I agree that the amendmentwill create a discrimination which should not exist. Our business now is to provide money for the services of the State. We must obtain it from those who are; able to pay it. An income tax is the-, fairest method of obtaining money, but there should be no discrimination, and only a small exemption, if anyI fear that the amendment willinvolve a discrimination, and that if it is interpreted strictly the result will be that those who have agents here will be compelled to pay the tax, whilst those who only send travellers here will escape it. I want both to pay. In my view the provision should be made as wide as the Tasmanian Act, under which the taxation is imposed on the business done in Tasmania without respect to who does the business. ‘I should like the Prime Minister to redraft the whole clause on the basis of the Tasmanian provision, under which the taxation depends entirely on the income earned.
Goods shall be deemed to be sold in Aus tralia on account of a person not resident in Australia, or on account of a company not registered in Australia, if any person in Australia receives a commission in respect of the sale of the goods or is paid a salary for obtaining orders for or for influencing the sale of the goods.
.- The trouble is that the Prime Minister does not pay any attention to what is being said. He has not listened to the arguments addressed to him.
– Will the honorable gentleman show me how to meet this. I shall endeavour to meet it in any reasonable way. This provision is in the Victorian Act. I am satisfied to follow that.
– They are supposed to pay under the Act, but I cannot say whether the Commissioner of Taxes makes them pay.
– Do they break the law ?
– Give him twelve months to think about it.
– Does the right honorable member agree with the suggestion of the honorable member for Grampians that both classes of agents should be made to pay?
– The right honorable member cannot frighten us with a statement of that kind.
– Who will find the last shilling and the last man for the war. These are the heroes !
– Then he will not pay much taxation.
– I wish to say once more clearly to the Committee that the clause, as amended by the Senate, is free from the objectionable features pointed out by my right honorable friend. I give the Committee my positive assurance that the House will have an opportunity of reviewing this matter when we are putting on the tax for the next year.
– I think that honorable members on both sides have the same object in view, although they do not see eye to eye as to the means of achieving it. That object, I take it, is to enable the Government to obtain all the revenue it requires without any undue dislocation of business. I have nothing of which to complain. The objection which I raised yesterday to the clause has been fully met by the Government, and although I share some of the apprehensions of the right honorable member for Parramatta, I do not know that I can go to the length that he does. I do not think the AttorneyGeneral is quite right in saying that this provision is to be found in the Victorian Act. ‘ The provision in the Victorian Act imposing income tax upon b” per cent, profits is limited to goods actually sold in Victoria, whereas this clause incorporates, as being sold in Australia, goods that are not, in fact, sold here, provided their sale was brought about by an agent advertising in Australia, or through his efforts.
– If a merchant nad a traveller paying occasional visits to Australia, would not the effect be the same?
– If the Prime Minister, as he says, is only following the Victorian Income Tax Act, let him adopt the words of that Act.
– But the agent is paid his commission here?
– But the agent here is paid his commission.
– And he will pay income tax on his commission.
– No doubt the insertion of the words suggested by the honorable member would make the clause more flexible. I agree with his statement that the provision in its present form might have the effect of penalizing trade carried on here by firms who have established agencies here, and of allowing other firms who conduct their business through “ the medium of peripatetic travellers to more or less escape taxation. There is that danger. Our object is to levy income tax on the profits on all goods sold in Australia.
– Whether the proposal now made will give relief or not will depend on the discretion of the Commission, which, from experience, we know is exercised for the protection of the revenue. How , the Commissioner is to discriminate between one agent and another and one class of goods and another I do not pretend to say. I am afraid that he will not do so, and that, while the suggestion now made may appear to afford relief, there will not be very much relief given under it. Perhaps it is better than nothing. The honorable member for Flinders has explained what actually takes place. The transaction is completed overseas and not here, and the proposal made may eliminate the agents of firms doing business in Australia.
– That is to say, the section is not operative.
– I say the principleis here.
– Does the honorable gentleman say that it will affect the trade or the agent?
– I do not think that it will affect bonâ fide agents at all. If it affects them prejudicially to the extent of acting as a deterrent to trade the provision will not be allowed to remain. Let us have a trial of it for four or five months, and see what will happen.
– That is so.
– If we do not get any taxation the honorable gentleman can be quite sure that we shall not permit a section which is found to be inoperative to remain on the statute-book.
– No, for this year nothing will be done.
– Yes; the Government will do so, if necessary.
.- The honorable member for Parramatta has said that honorable members of this Parliament are not giving attention to the work. They do give attention to the work, but the honorable gentleman repeats himself so often that he becomes tiresome, and honorable members cannot stay here to listen to him. I do not understand the suggestion that firms maintain agents here in order to benefit Australia. They do so because it pays them to do so, and the expenses of their agencies have to be borne by the Australian consumers of their goods. Many imported articles would be cheaper than they are but for the expenses connected with keeping up the Australian agencies for their sale. I know of one English firm that for the last thirty-five years has been represented by a paid agent in Australia who draws a very fair salary. The establishment of this agency has, in my opinion, been detrimental to Australia, because the agent acts in concert with the officials of cer tain State Departments with whom he is on very friendly terms, with the result that departmental supplies are keptso short that when tenders are called for fresh supplies the time allowed is so brief that only the English firms that have the goods already prepared can comply with the conditions. One result is to defer the manufacture in Australia of these goods. The interest shown by the honorable member for Parramatta in these agencies is remarkable, but I am afraid it is not due to the reasons he has advanced. In my opinion, all the difficulty in connexion with this matter can be met by the exercise of the ordinary discretionary power of the Income Tax Commissioner. The honorable member for Kooyong has been referred to as a good Protectionist, who is still opposed to the proposal made by the Government. I do not forget that he is also a lawyer, and must have regard for the interests of the firms of whom he is the legal representative.
Bill returned from the Senate without amendment.
Bill returned from the Senate without amendment.
Motion (by Mr. Hughes), by leave, proposed and agreed to -
That leave of absence be granted to every member of the House of Representatives from the determination of the last sitting of the House in the year 1915 to the date of its first sitting in the year 1916.
Motion (by Mr. Hughes) agreed to -
That the House, at its rising, adjourn until 3 p.m. on a day to be fixed by Mr. Speaker, which day of meeting shall be notified by Mr. Speaker to each member by telegram or letter.
Manufacture of Paint: Encouragement of Local Industries - Members of Parliament and Defence Service - Censoring of War News - Old-age and Military Pensions - Wheat Freights - Export of Molybdenite - Metal Exchanges - Federal Capital Expenditure - Weight of Bags at Cordite Works
Motion (by Mr. Hughes) proposed -
That the House do now adjourn.
– I desire to impress upon the Minister of Trade and Customs the necessity for fostering in every way our local industries. We have in Australia to-day paint manufacturers who have to compete with the imported article which is retailed to the public in tins of handy sizes. On such paint there is a duty of about ?5 per ton, but owing to certain disabilities suffered by the local manufacturers that protection is very largely removed. One of the principal constituents of mixed paint, as sold to the public, is Soya bean oil, which, being an edible oil likely to come into competition with olive oil, is subject to a duty of 2s. 6d. per gallon. The Department of Trade and Customs, with the laudable desire of encouraging the paint industry here, agreed that the duty on Soya bean oil used in the manufacture of paint should be reduced to 3d. per gallon, subject to the oil being denatured. It was found that fish oil could not be used in denaturing the Soya bean oil, since it has an offensive aroma, so that resort had to be had to linseed oil, on which there is a duty of 6d. per gallon. The Customs Department demand that the manufacturers shall pay not only a duty of 3d. per gallon on the. Soya bean oil, but the extra duty of 3d. per gallon on linseed oil used in the mixing of paint, so that there is a total duty of 9d. .per gallon to be paid on the linseed oil, which is equal to a duty of 4?d. per gallon all round. The effect of this is that the protection of ?5 per ton enjoyed by paint manufacturers is reduced to something like 15s. per ton, so that it is impossible for local manufacturers to compete with the imported article. By way of illustration, I would point out that the Minister lately imposed a duty on the frames used in the manufacture of portmanteaux, because such frames are now being made here. That was a wise course to adopt, but it has resulted in reducing the Protection enjoyed by local leather bag-makers, so that they are entitled to receive some further consideration. The Department has considered this question of the duty on paint, and on the oils used in its manufacture; but it is, after all, the first duty of Customs officials to see that the revenue is protected, and they impose conditions - for which, of course, the Minister must be held responsible - which bear rather harshly on the local manufacturers. To those who are not deeply interested in the success of Australian industries, this may seem a small matter to bring up at the close of the session; but I would point out that the manufacture of paint is fraught with big possibilities to Australia, and that a very good article is being produced here. I ask the Minister to consider this case, and to make an effort to grant some further consideration to those engaged in the industry.
.- - I suggested yesterday that the Government should make use of honorable members who are prepared to assist practically in the defence of Australia. In view of the fact that the Prime Minister who, we all know, is the present driving force of the Government, is about to visit the Old Country, I wish to emphasize this point. It seems to me that, so far, the Government have not made anything like the full use of the “many in the Commonwealth who are prepared to give of their best to the country’s cause. No doubt there are a number who believe of the war, as did the sports of Gordon’s poem, that it is all over bar shouting, but it is not. The Government should encourage every person who is prepared to give his services to the Empire to come forward and do so, but so far there has been no such attempt; on the contrary, decided discouragement has been shown. In this morning’s press we were told that the Postal Department is still going to great expense in distributing the referenda pamphlets, suggesting one of two things - that the Government have overlooked this wasteful expenditure - if so, it is time it waa stopped - or that they are not in earnest in regard to withdrawing the referenda. Possibly they are under the impression that the Legislative Councils of the States will reject the agreement, and that it will in that case be necessary to go on with, the referenda. We are told that there are tons of these pamphlets still to be sent out, and that special delivery men have been engaged for the purpose.
.- - I hope that the Prime Minister will have a safe trip to England and back. There is probably no one in the Commonwealth who would be able to represent us in any Imperial Council better than he will be able to do. A little while ago I raised the matter of the torpedoing of the transport Southland, as to which a statement has appeared in this morning’s press. My complaint is that in connexion with that statement there is no account of what every one knows happened at the time. We ought to be told of the heroism that was shown by Autstalians Every young man on that boat showed courage and discipline equal to that which would be displayed by veterans. Why cannot that fact be published ? Why is it necessary for the Government to send to Great Britain to ask if a statement which has been received here, and is creditable to the people of Australia, can be published ? It is unfortunate that the two statements could not have been published at the same time. What harm could there be in let ting people know that Australians volunteered to return to that boat and remained on it for forty minutes when every one thought that it was sinking, and eventually beached it? When an officer asked for volunteers, it was Australians who volunteered; it was young Australianswho lined up and stood to their posts like veterans. It was a display of heroism that has never been surpassed. A little while ago there appeared in the Australian newspapers a cabled account of the British Fleet, and in the* middle of the account there was a line to the effect that some matter had been excised by order of the censors. I asked in the House whether this excision was done on the order of British or Australian censors, and the Minister for the Navy told me that he v/ould make inquiries. Next day, however, apparently as the result of my question, the censor allowed the deleted matter to be published, showing that it was an Australian censor who had given the order. The words censored spoke very highly of Australia and the Australians. It seems to me that a little common sense should be exercised in this matter. The other day I raised a question in regard to pensions, and the Treasurer had not the courtesy to reply. What I desired to know was this : If a mother has no means other than an old-age pension, is that pension to be deducted from the pension to which she is entitled if her son is killed at the front ?
.- I regret having to occupy the time of honorable members at this hour of the session, but I am justified in doing so by reason of the non-fulfilment of certain promises made to me by the Prime Minister, and because of the unsatisfactory nature of his replies to some questions put by me. The honorable gentleman distinctly promised that certain papers would be laid on the table of the Library, more than a fortnight ago. They have not been placed there yet. He also gave replies to certain questions which I put to him, and, in view of information with which I have been furnished, I have every reason to doubt the veracity of those replies. We have had several strong Socialistic schemes initiated by him-
– Sufficient for the day is the trouble thereof.
– Keep to wheat.
– Does the honorable member seriously make the statement that I knew that a quantity ofmolybdenite had been removed from a certain vessel ?
– If I have that statement before me-
– I told the honorable member before, and I tell him again, that I have no information whatever of such an occurrence, and the agent distinctly denied it.
– The honorable member is a desperate Socialist?
– Sole agents?
– What is a unit ?
– It was not fixed by me at all ; it was fixed by the British authorities.
– The honorable gentleman either does not know what he is talking about, or he is deliberately misleading the House.
– The Government cannot lose control of these metals.
– The Government must have control until after the war.
– I want to bring under the notice of the Treasurer an injustice which I consider is being inflicted upon the widows of our fallen soldiers. It appears now that if a widow earns a few pounds her pension is cut down by one half. I am not going to make any reference to what occurred in this House recently, when cer- tain members made a strenuous fight to have a widow who had lost a son’ on active service placed in the same category as the wife of a fallen soldier. We did not succeed, but i hope that our Treasurer, when he feels his feet in his new position, will not allow this injustice to continue.
– What does the honorable member mean by the creation of a Department, within a Department?
– It is too much.
.- The honorable member for Melbourne Ports referred to the duty charged on oil for paint making, and has suggested that the Department is not administering the Tariff in this respect as it might be administered in the interests of Australian industries. As honorable members are aware, there are some items which have been specially placed in the Tariff for the purpose of allowing departmental by-laws to be framed to assist Australian industries, and amongst them is oil when denatured, so that it cannot be used as edible oil. I have always done the best I could to administer the Tariff in the interests of Australian industries. I shall go into the matter again, and if, while protecting the revenue I find it is possible by any amendment of the regulations to do more in this direction, I will see that it is done. The honorable member for Maribyrnong dealt the other day with the question of the admission of machine tools for assisting Australian industries. There is at the present time a very lengthy list of such tools specially provided for in the Tariff, and I will see whether it can be added to. I agree that, especially at the present juncture, we should do all that is possible to keep our industries forging ahead. The honorable member for Melbourne Ports has complained that bag frames have been taken off the free list, and the explanation for that is that these frames are now being manufactured here. Honorable members may rest assured that the Tariff will be administered as far as possible in the interests of Australian industries.
– In connexion with the arrangements for the wheat harvest, I should like to ask the Prime Minister to say to what extent he proposes to utilize the ordinary agencies. He will recollect that last year the whole of the buying was put .into the hands of three agents. Is that to be attempted again this year, or are the ordinary channels and agencies to be availed of 1
– I shall bring under the notice of the Minister of Defence and the Minister for the Navy the matters connected with the Defence Department which have been referred to by the honorable members for Barrier and Maribyrnong. With regard to the pensions matter, I can assure honorable members that the questions they have raised will receive my serious consideration. Though my knowledge of human nature is somewhat extensive, I can see that it is likely to be greatly added to by the administration of the Old-age and Invalid Pensions Act, the Maternity Allowance Act, and the War Pensions Act.
– In reply to the point raised by the Leader of the Opposition, I may say that all the wheat of the present season’s crop will pass through the scheme.
– I do not think you ought to exclude any reputable agent.
– Or anywhere else.
– But when did you amend the regulation?
– Did you say that there was no regulation about these prices ?
– Is not that a regulation?
– Has it not the force of law?_
– That is wolfram?
– May I ask the honorable member a question ?
– I would like to say a few words by way of explanation, sir.
– I know that, sir; but may I not make an explanation?
Cite as: Australia, House of Representatives, Debates, 12 November 1915, viewed 22 October 2017, <http://historichansard.net/hofreps/1915/19151112_reps_6_79/>.