7th Parliament · 1st Session
Mr. Speaker (Hon. W. Elliot Johnson) took the chair at 11 a.m., and read prayers.
– Last night, on the motion for the adjournment of the House, the honorable member for Melbourne (Dr. Maloney) asked me whether, after the mention of a constituency in Hansard, the name of the member representing it could not be inserted in brackets. He stated that owing to changes in the representation of constituencies, he had occasionally, when reading the Hansard report, been put to the inconvenience of haying to refer to the records to ascertain who was the member representing some particular constituency at the time when the speech he was reading was made. In accordance with my promise to the honorable member, I have conferred with the Principal Parliamentary Reporter concerning this matter, and he has furnished to me the following memorandum -
The suggestion that the namesof honorable members should generally follow in the Hansard reports the designation, of their constituencies was considered by the Speaker of the first Commonwealth Parliament (Sir Frederick Bolder), but was not adopted, the Speaker fearing that it would lead ultimately to frequent breaches of the parliamentary rule that members must address one another only by the titles of their constituencies.
I have further considered the matter, and it seems to me that the fear apparently’ expressed by Sir Frederick Holder, when Speaker, that members might get into the habit of referring to each other by name in debate instead of by the titles of their constituencies need not be entertained, as the Speaker or Chairman would intervene to insure observance of the rules of debate. I have issued the instruction that in future what the honorable member has asked for shall be done.
The following papers were presented. -. -
Elections andReferendums - Statistical Returns in relation to the Senate Election and the General Election for the House of Representatives, 1917; and Summaries of Elections andReferendums, 1903-17.
Elections, 1917.- StatisticalReturns showing the Voting within each Subdivision in relation to the Senate Election and the General Election for the House ofRepresentatives, viz. : -
New South Wales.
– Is the Assistant Minister for Defence yet able to redeem the promise, made the other day to certain returned soldiers who have been, dismissed from their employment in the Colonial Ammunition Company’s works, some of them married men, that he would obtain employment for them 1 Does he know where they can get employment 1
– I did not promise to obtain employment for those who cameto see me. Some of them stated that they were returned soldiers, and had been dismissed, while other hands appointed at a later date had been retained, and I promised to have an inquiry made into the matter. This is being done.
– Cannot something be done to provide employment’ for these men?
– I should be glad if something could be done.
asked the- Minister for the Navy, upon notice -
Will he state the amount paid for services rendered by motor launches for patrol work in Sydney Harbor for 1914-15 and 1916-171
– I have not yet received the information asked for, but I shall obtain it for my honorable friend.
asked the Minister for Trade and Customs, upon notice -
Whether, in view of the shortage of shipping space, and the continued loss of one of our beat soil fertilizers) he will cause to be reconsidered the question of boning beef before export?
– Practically all. beef now being exported from the Commonwealth is the property of the’ Imperial
Government, and when exported is snipped on Imperial account, except as to certain specific quantities of frozen beef released by the Imperial authorities for export to destinations other than to the United Kingdom.
asked the Treasurer, upon notice -
Whether he will allow pensions, in oases where the pensioners are inmates of hospitals, to be paid to such institutions for their upkeep instead of the money being retainedby the Government as at present?
– No payment is made by the Commonwealth to State hospitals for the maintenance of inmates who are pensioners. The matter, however, is under consideration.
– With reference to the reported Win-the-War caucus yesterday, and its consideration of the- War-time Profits Tax Assessment Bill, . I ask the Ministar for the Navy if the Government considers the measure as vital to its fate, and is it going to permit amendments to be made in it?
– The Government intends to proceed with the Wartime Profits Tax Assessment Bill, and will consider any intelligent amendment from any quarter whatever.
Debate resumed from 1st August (vide page 707), on motion of Sir John Forrest -
That this Bill be now read a second time.
Mr.TUDOR (Yarra) [11.9].- I am glad to see the Treasurer in his place, because it was stated in the newspapers reeently that he was indisposed, and might not be able to be with us to-day. As an amendment to the question- before the House, I move -
That the following words be added : - “ But in the opinion of this House the Bill is utterly inadequate, and signally fails to place upon wealth its due share of the expenses of the war.”
Although we have now entered upon the fourth year of the war, the Treasurer tells us that’ all the revenue he expects to get from this Bill in connexion with the operations of a period of two years is less than £1,000,000.
– In his Budget speech, the Treasurer stated ‘that he expects to receive £1,000,000, but his earlier statement was that the proposed taxation would return only £900,000. Accepting the larger figure, it means a revenue from war profits of only £500,000 a year, which is utterly inadequate. During the election campaign the Prime Minister described the manifesto of the Labour Party as absolutely spineless. I should like to hear what he would say of this Bill were he now in Opposition. It is so anaemic that, as they would say in some parts of my electorate, it would not have strength to fight its way out of a wet tissue-paper bag. The Bill has been- brought in late; it allows too high a rate of profit; and it provides too many exemptions. The Treasurer in his opening speech told us the rate charged by the British Government for the first year of the war, the financial year ended on the 30th June, 1915. This Bill, however, will affect profits made prior to that date. The Treasurer told us that the British Act allows companies to keep 6 per cent, of their profits untaxed, and private persons 7 per cent. For the first year of the war, 50 per cent, of all profits beyond those rates was taken by the Government, in the next year, I think, 60 or 65 per cent. , and 80 per cent, in the financial year which ended on the 30th June last. In Canada the untaxed profits allowed is only 7 per cent. , and the Government takes 25 per cent, of any profits beyond that, buttaxes a 15 and 20 per cent, excess at 50per cent., and one exceeding 20 per cent., 75 per cent.
– The Canadian rates are less than ours.
– Yes, but I contend that our legislation should follow the British Act. We should not allow such a high rate of profit before taxing the excess. Some honorable members have said that it is proposed to tax not war profits but wartime profits. If the intention be to tax war-time profits, it would be easier to increase the income tax by levying a tax of 10s. or 15s., or even £1, on every £1 exceeding a certain amount of income. The Labour party, in its manifesto, issued prior to the recent elections, proposed a war-time profits tax on the basis of 50 per cent, of excess profits for the year which ended on the 30th June, 1915, and of 60 per cent, for the year which ended on the 30th June, 1916.
– Was that a war-time profits tax or a war profits tax ?
– A war-time profits tax. We advocated a tax of 100 per cent, on excess profits after 1916, for the duration of the war. No person should be allowed to make excess profits in war-time. Our Bill would have allowed a reasonable return on invested capital. A Board of Referees would have been appointed to deal with Australian companies operating outside Australia, and new business and any local circumstances which might cause harshness or injustice.
– Would that Bill have brought’ in more revenue than this Bill will produce 1
– I do not know.
– The policy of the honorable member’s party wa9, I think, to leave everything to the Board of Referees.
– The Treasurer will correct me if I am in error in stating that the proposal for the appointment of a Board of Referees is practically the same in the various measures that have been submitted, and that the alterations which have been made are the result of experience of this class of taxation in other countries. It was intended that the Board of Referees should deal with new businesses, cases of hardship, and with enterprises such as tin mining companies, whose head offices are in Australia, but whose operations are carried on outside the Commonwealth. In order to avoid payment of this tax such companies” are proposing to register outside Australia. I understand that one of them has already transferred its head-quarter’s from Sydney to the Malay States.
I hope that when we go into Committee the Treasurer will accept an amendment providing that the tax shall begin with the financial year ending 30th June, 1915.
– That was never proposed by any Government.
– I am entitled, at all events, to express my own opinion as to when the tax should begin to operate. In the financial year ending 30th June, 1915, there were eleven months of war, and some of the largest profits resulting from the war were made during that period.
-I presume that the honorable member for Capricornia, Mr. Higgs, also shares the honorable member’s view as to the date on which this tax began to operate.
– He has already spoken on the motion for the second reading of this Bill; but my amendment will afford him another opportunity to place his views before the House.
– We shall be glad to hear him repudiate this monstrosity which the honorable member proposes.
– The honorable member may so describe my proposal, but I repeat that we ought to ante-date this tax to the starting of the war. Every one knows that when the war broke out there were large stocks of certain goods held in Melbourne, and in every other State capital, and that as soon as difficulty was experienced, as the result of the war, in t obtaining further supplies, the prices of those goods were increased to an enormous amount. My remark applies not only to groceries, but to such materials as iron. We have all read with interest the reports of a recent debate in the Victorian State Parliament, during which figures were given showing how the prices of certain iron goods have increased. There was no increase in the cost of landing these goods before the war, nor can it be said that there was any increase in the cost to the consignee of goods that were landed here for the first two or three months after the war. They were en route to Australia before the war broke out, but as the difficulty of obtaining supplies increased, the price of these goods to the consumer was lifted, even though large stocks were held by some persons in Australia.. Then again, large consignments were held up for nearly twelve months in South Africa. These had left the country of production before the war, and, therefore, were bought at pre-war rates, but huge profits were made upon them. I am anxious that the Government should, at least, get a fair share of the profits so made.
– The honorable member and his party were in office for a long time after the war broke out.
– I do not complain of such an interjection. I would point out to the House, however, that in’ the first part of the first session of the last Parliament - in 1914-15 - we dealt only with war legislation. In 1915 the then Treasurer, Mr. Fisher, proposed to introduce a War-time Profits Bill, but before he could do so he was appointed High Commissioner, and left for England. The honorable member for Capricornia (Mr. Higgs), who succeeded him as Treasurer, introduced such a Bill, but for reasons with which every honorable member of the last Parliament is familiar, it was not proceeded with. The facts are that early in January, 1916, the present Prime Minister went to England, and that there was a definite understanding between all parties in the House that during his absence no controversial legislation should be dealt with. We dealt only with Supply. There were two adjournments of the Parliament during the present Prime Minister’s absence in England, and on each occasion that the House met I took his place as senior Minister, so that I have an intimate knowledge of all the facts. It was because of this understanding that our War-time Profits Bill was not pushed through Parliament.
– Did not the honorable member for Capricornia (Mr. Higgs) say, when he introduced the Bill, that the additional revenue which it would provide was not required at that period ?
– I do not know whether it was wanted or not. I do know, however - indeed it is common knowledge - that many companies and business firms have paid these excess profits into reserve funds in order to meet taxation of this kind. Practically every company and business firm, knowing that the tax would be ante-dated, has made provision in that way to meet it.
– But surely only antedated to the extent named in the previous Bill.
– It is for the House to say to what extent the tax shall be antedated, but I certainly think that the Trea surer’s proposal, under which some companies will be taxed in respect of one period . of eleven months whereas others will not, is a very clumsy one. It is far better tihat the tax should come into operation, in respect of all excess profits, as from the one given date, regardless of whether companies and business firms balance on the 30th June or on some other date.
– I believe that that will be done.
– I am glad to have that statement.
– We are following the English Act.
– I am rather anxious that we should follow the English Act in another direction, and that is as to the rate of taxation.
– The British tax at the outset was not as high as it is to-day. It has been increased.
– Every Department profits by experience. This was an absolutely new form of taxation when introduced in Great Britain, and no doubt the Imperial authorities have profited by the experience gained. We, too, may profit by their experience. The Treasurer doubtless knows a great deal more about the operation of this tax in other lands than his predecessor did, because he has been able to take advantage of a fuller experience of its incidence.
The Treasurer, in introducing the Bill, said that he anticipated that it would yield only about £900,000 in respect of the two years’ period. If we cannot hope for more than that, then the right honorable gentleman ‘might well have introduced a measure calculated to bring in a bigger return. Since the introduction of this Bill the complete financial proposals of the Government have been submitted to the House. We now know that the only new taxation they contemplate is that for which this Bill provides, and an additional income tax of 10 per cent, with a minimum of £10 on single men and widowers, without children, between the ages of twenty-one and forty-five years.
– I suppose the honorable member thinks that we should have proposed more taxation ?
– I do. I consider that the taxation proposals of the Government are inadequate to meet the needs of the situation. What is more, I believe that many of the supporters of the Government hold the same view, and I trust that they will support my amendment!.
Having regard to the number of exemptions for which the Treasurer has provided in this Bill it is no wonder that he does not anticipate collecting under iti more than £900,000 in respect of the two years’ period. The principle of the Bill should be that any person who has made excess profits owing to the war or during the war period should be called upon to pay a wartime profits tax. Under the. Bill as it stands a profit of 10 per cent, is allowed, and superimposed upon that is an exemption of £200. Thereafter only 50 per cent, of the excess profits is to be taken by the Commonwealth, lt is well known that the output of many firms and companies has enormously increased. A very interesting return based on the Victorian State income figures was recently pub before the Legislative Assembly by Sir Alexander Peacock. I have, a copy of that return in which he selected typical cases showing the profits made in 1914, 1915, and 1916. He was careful, of course, nob to give the name of any individual taxpayer, and the return does not show what particular industry or industries were carried on by the persons or companies concerned. It shows, however, large increases in profits since the outbreak of war, and there is every reason to believe that what has- happened in Victoria has happened in all the other States. I have been unable, unfortunately, to ‘obtain similar information in regard to any other State, but the Treasurer, I feel sure, could obtain from the Commonwealth Income Tax Department’ similar particulars showing the profits made by individual companies or firms in 50 or 100 typical cases throughout the Commonwealth. Such a return would give us some idea of the profits that have been made during the war. I propose to quote forty-one of the 265 cases, the net profits in the whole of which, including any amount set apart for reserve in the respective years, were £3,958,885 in 1914, £4,371,733 in 1915, and £5,479,895 in 1916, showing- an increase of over £1,000.000 on the previous year, and in the two years the increase is over £1,500,000.
– Then the Treasurer’s estimate must be wrong.
– I do not know whether the Treasurer’s estimate is wrong or not. The following table gives the figures in the forty or forty-one cases I have picked out : -
Statement made by Sir Alexander Peacock in the State Parliament House when he Quoted 265 Cases under the » Victorias Income Tax.
The percentage shown in the last column is the increase made in the two years.
– Is case No. 3 a fair average case on the list?
– It is the lowest percentage of the thirteen which I have picked out, and it shows the smallest proportional increase of profits in the period.
– All these people will pay income tax, and on a graduated scale.
– Of course they will.
– And they will he brought in under the Bill.
– And I wish to “ rope “ them in a bit further.
– Are these cases taken from the balance-sheets of certain companies ?
– They are cases quoted- in the State House of Victoria, as set forth in a return which Sir Alexander Peacock had caused to be prepared by the State Income Tax Department. The net profits shown, as I have said, include any amount set apart for reserve in the respective years, because on those profits income tax would be paid, and I presume that war-time profits will be taxed on exactly the same basis.
– I think that kills your amendment.
– No, it does not. I contend that the figures I have quoted show that the Bill before us signally fails to impose a fair share of war taxation on wealth.
As honorable members will see from the table, I have taken the trouble to Work out the percentage of increased profits in some of these cases. In case No. 3 the increase from 1914 to 1916 represents 115 per cent.
– What is the capital and the percentage of profit?
– The table’ quoted by Sir Alexander Peacock does not show how much money was invested in the business or the percentage of profit, nor does it indicate the nature of the industry.
– Does the honorable member not see, that the profits of 1915-16, when the increases took place, are to be taxed f
– The’ 1915 cases will be taxed for only six months of that year under the Treasurer’s proposal.
– The taxation will cover, at’ any rate, eighteen months of the period embraced by the return.
– That is so, unless some of these cases are exempt.
– The comparisons are most unfair, because 1914 was a most disastrous year.
– They might all be pas toral companies. ‘
– I admit these people might all be farmers, and exempt under the Bill; but, on the other hand, they might be manufacturers.
– Are the figures not up to the 30th June, the end of the financial year?
– No; I have read the return exactly as it was prepared by Sir Alexander Peacock.
– The State income tax goes to the 30th June.
– That was altered soon after we altered the period of the Commonwealth income tax. I am confident that 1914 was a calendar year for the income tax.
– What is the use of the comparison unless we have the capital invested and the percentage of profit?
– Under the Bill it does not matter what is the capital or the percentageof profit. The basis is good enough for the Treasurer, after allowing 10 per cent.
– I do not think that it is necessarily 10 per cent.
– In the Bill it is.
– It is the pre-war standard, or 10 per cent, if there is no prewar standard.
– It will always be 10 per cent. I remember meeting some manufacturers who were negotiating the sale and purchase of a business, and the seller said the basis was not to be that on which they returned their incomes for taxation, but must be “a straight go.”
– Is the honorable member himself not concerned in an importing business?
– I am not in any importing business. ‘Any man who says that I am is a deliberate liar !
– We know who. is interested in the business.
– I have absolutely no interest in any importing business, and any man who says anything to the contrary is making a statement that has no foundation in fact.
– If you had, would it matter? *
– A person who was fighting for the honorable member’s party in 1913 made that allegation against me in my own electorate, and I am glad to have an opportunity to-day of answering the statement.
– What is wrong with it?
– The statement was made in a sneering way, insinuating that I had done something that was wrong. I have already answered it off the public platform. All my actions are open to the fight of day, and if any honorable member thinks he knows anything to my detriment let him state it. Honorable members continue whispering, and pretend they know something about my connexion with an importing business, but there is absolutely no truth in* the suggestion. Some candidates on the public platform did their best to damn me politically by making this statement against me.
– Why denyit? You know the business is in your wife’s name.
– I do not mind stating the whole of the facts in regard to my wife’s connexion with the business, which is not a large one, bnt when an honorable member drags in the name of a man’s wife, he is playing the political game pretty low down. If I could not fight fairer, than that I would walk out of politics. I do not think the honorable member’s interjection reflects any credit on him.
– You took all sorts of care not to invest the money in your own name.
– It is not my money. I do not mind fully explaining the matter if honorable members so desire.
Honorable Members. - No, no.
– Well, I shall leave that matter, and deal with the Bill ; but I had a right to reply to the interjections. In quoting the return to which I have referred I said that I did not know the amount of money invested or the nature of the business to which it relates. The Treasurer could, if he desired, obtain from each State Income Tax Department a list, of fifty returns, which need be denominated only by a letter or a figure, showing what profits the companies have been making.
– This Bill will catch them.
– I hope that the measure will produce more revenue than the Treasurer expects.
– Do you wish people to make no money ?
– I do, but they should not make extortionate profits in war time.
– We all agree to that. .
– The taxpayers who have made the profits shown in that retiurn must be either producers, financial institutions, transport companies, or persons dealing with foodstuffs. I regret that we have no opportunity of knowing the types of business to which the return relates, and what commodities arebeing dealt with by them. Honorable members know that when the drought of 1914-15 afflicted the Commonwealth, farmers growing sheep and lambs had to sell their stock at any price they could get because of the lack of grass. That stock was sold at a very low rate in the city markets, and waa put into cold storage. When it was brought out and sold, big profits were made from it. Very little of it was sent oversea.
– A lot of sheep died, and were not sent anywhere. Is iti fair to compare the incomes) of 1914-15, when the pastoralists received practically no return, with those of 1916, when conditions were again normal t
– The Treasurer could obtain from the State Premier the returns for the two years preceding the return I have already given.
– We have the information.
– The Commonwealth income tax was not in operation then, but if the Treasurer would get this information from the State authorities, it would be valuable to honorable members.
– You want more taxation 1
– I do, I make no bones about that.
– You do not know what the taxes amount to now.
– I have read the Bill carefully.
– It is only fair to get the returns for the two previous years.
– That is what I say.
– We ought to know the industries to which the returns relate.
– I do not know that we could get that information.
– We could. It is given in South Australia every year.
– There may be only one firm in a particular class of business. For instance, there may be about two manufacturing chemists in Victoria, two or three in New South Wales, and one in South Australia. If a return were given for any one of those firms, its competitors would know exactly upon what basis that business was working. No harm’ would be done by publishing the nature of the business in cases where it would be impossible to identify the particular individual or company. Even with the return which I have given, people who study the financial columns of .the press will be able to pick out the companies to which the figures relate. Great increases have taken place in the prices of foodstuffs. Mr. Knibbs has prepared for m© the figures for the years 1913 to 1916, and I have taken from the press the information for 1917. I stated yesterday that no person can have any objection to increases in price when the cost of production has increased. The producer is as much entitled to a fair rate of profit as any other individual in the community, but that does not apply to increases which are the result of artificial increases of the prices of land or stock. Where land which has been brought into use for the production of these commodities has been raised from £40 to £50 per acre, when it is really worth only £40, the consumer ought not to be required to pay for the fictitious land value. The figures given to me by Mr. Knibbs are as follow: -
– Tell us the shrinkage in the number of cattle?
– That is not part of his case.
– My time is limited, and I am stating my case to the best of my ability. In most of the prices for sheep there is an increase of well over 100 per cent, in the four years. Prices have been increasing all the time.
– Only agriculturists are exempt; pastoralists are not.
– Are there no farmers in this country who have sheep? . Will they not be exempt?
– They are exempt only in respect of agriculture.
– The Prime Minister, dealing with the referendums in 1915, fifteen months after the war had started, made pointed reference to the people who were making high profits. I take it that no honorable member here desires that men making extreme profits out of the war should be exempt. Instead of letting them off with 50 per cent., I should say “ take 100 per cent.”
– Take the lot!
– I make no bones about it; I would take the lot.
– You care only for your own class. I would like to catch some of your own great gains.
– The honorable member is welcome to any of mine that he can catch; because I have had none.
– Then the honorable member does not care, because he is not interested.
– I am interested in the welfare of the community. I was about to quote the statement of the Prime Minister, the Treasurer’s own leader.
– He is not in the House.
– I quoted it the other day when he was here, and also on public platforms during the election campaign.
– You first take away the wages fund, and then you go down to the Town Hall and wonder why there is unemployment.
– Honorable members opposite seem very much worried. The Prime Minister said -
We all know how the cost of living lias in:creased, so that it is with the utmost difficulty that the bulk of the community are able, even with the greatest economy, to make both ends meet, and making every allowance for the effects of the drought, there can be no doubt whatever that this is clue very largely to manipulation of ‘‘he market by unscrupulous persons. at the expense of the community These persons frequently pose as patriots. They subscribe £50 to patriotic funds, and fleece the public of £5,000 by high prices. I am anxious to get that £5,000. ‘
– The Prime Minister has been after them ever since.
– That is all that has happened - that he has been after them. During the election campaign I was taken to task for calling those people profitmongers. It is a good phrase, but it is the Prime Minister’s, and not mine. He said also -
The Referendums threaten many great in terests; they threaten profitmongers, exploiters, and the great vested interests of capital generally, and these will do everything within their power to defeat the proposals. But they dare not do so openly, and therefore urge the electors to vote against the Referendums because wo are at war.
That is the excuse that honorable members opposite give, in the House. I remember the night when they all did the disappearing trick. There are- not many of us here, but we are not going bo do the disappearing stunt. We intend to stop here and watch events.
– You are not numerous.
– We hope to become more numerous. The Government are doing better work for us than we could have hoped for by their lack of initiative, and by bringing forward anaemic and spineless Bills like this, and leaving out most of the people whom they could catch, as is shown by the figures I produced this morning.
– You want the Prime Minister over on your side. You are lacking in adjectives compared with him.
– I am doing the best I can. It was not my fortune to be born with a silver spoon in my mouth, and I have had to work hard for any position I have obtained.
– And other people have, too.
– I know that, but I was not fortunate enough to have a college education. A State school education was the best I was able to obtain, and, even then, I had to leave school early. Most of the college men are on that side. I do not blame them, but I am sorry that I was not more fortunate in the choice of my parents.
– I would once more ask honorable members to obey the call of the Chair for order. I do not propose repeatedly to call order without taking action. The honorable member is entitled to the full time allotted to him for his speech.
– The honorable member for Kooyong (Sir Robert Best) suggested the other day that the Bill be withdrawn. He pointed out that the New Zealand Act. was to be repealed because it was ineffective, and he had his doubts even about the English Act. Let me quote Mr. Bonar Law, the Chancellor of the Exchequer, whom honorable members will regard as a greater authority on the English Act than even the honorable member for Kooyong. In the Argus of 5th July last appeared a cable regarding war profits in the shipping trade. In this Mr. Bonar Law was reported to have said -
He had invested £8,100 in fifteen shipping companies running. tram,p steamers. Five per cent, on that would be £405, whereas he had received £3,615 in dividends in 1915, and £3,847 in dividends in 1910, after having paid excess profits.
Joseph Palmer and Sons’ monthly share list, compiled to 19th July, 1917 - the last issue - has the following with regard to the Union Steam-ship Company -
Not to go back too far, it will be sufficient to start from the concluding quarter of the year 1005, when Union shares, then £10 paid, were selling at £15. A purchase of three shares at that time would have cost’ £45. Two years later, in December, 1907, the company issued bonus shares in the proportion of one to three, and immediately afterwards subdivided each £10 share into ten of £1. The purchasers of the original three for £45 would, therefore, receive forty of £1 without further cost. These new shares gradually improved in the market to about 45s., when, in February, 1913, the company issued, at 10s. premium, new £1 shares in the proportion of one to four. The. original purchase would now represent fifty shares on the outlay of a further £15 capital. Thus for £60 the holder would have acquired fifty shares worth 42s. each in the market. A few months afterwards bonus preference shares were issued share for share, so the £60 capital had acquired 100 shares (fifty ordinary and fifty preference) in the company. Thence onwards the ordinary shares, which had naturally fallen to 22s. after the preference issue, steadily rose, till to-day the value is 61s. The preference have remained steady at 21s. The original £60 invested has therefore appreciated to £205 up till now. Most of our clients, acting on our advice, sold their preference shares, and reinvested in ordinaries at very nearly the same price. In their case the £60 will have improved to about £300.
– Palmer and Sons are squatters’ agents. That shows how fair they are.
– We have a right to let the public know what is being done by people whose stock is watered in this way. There are companies in this city whose profits have been increasing to such an extent that it is difficult for them to know what to do with them. They have watered their stock time after time. Some of them’ would be included in the list which Sir Alexander Peacock recently had prepared for income-tax purposes, showing the increase in profits.
We have now, I presume, the full finansial proposals of the Government. I could touch on other shipping companies. Honorable members know- what the White Star Company has paid.
– They have lost a lot of ships.
– But they keep on paying more and more in dividends.
– I do hot think the Peninsular and Oriental Company could do that.
– I have no doubt that these companies are well insured. The premiums are high, but the constant loss of ships has made the value of the remaining . shipping go up. In pre-war days a new steam-ship could be launched for £8 per ton. You cannot buy ships to-day for under £75 per ton, and ship-owners themselves expect that the price will soon top £100 per ton. When we see these companies malting inordinate profits, and piling money away into their reserves, we have a right ‘to ask the Treasurer so to frame his Bill as to make wealth pay its full share. That is why I move the amendment. In view of the number of exemptions proposed and the small amount, of excess profits that the Treasurer intends to take, I trust honorable members will see that, if the Bill is not withdrawn, it is at least so amended by the Government in Committee , in the interests of the bulk of the community as to place upon wealth its fair share of the expense of this, the most awful war that has ever happened to mankind.
– The amendment in its present form is not in order, because it is not permissible to add any words to a motion for the second reading of a Bill. If the honorable member proposed to insert the words of his amendment, it would be in order.
– I do not desire to canvass your ruling, but I understood that a similar amendment was accepted on the motion for the second reading of a previous Bill. I have seen in our Votes and Proceedings the record of amendments similar to that which I have moved. I do not object to thereading of the Bill a second time, because I am desirous that we shall have an opportunity of amending it, and I am afraid that if the Bill is knocked out altogether we may not see another Bill of its kind. I desire that the Bill should be read a second time, though, in our opinion, it will fail to achieve the object that should be achieved.
– Our standing orders say - 160. On the Order of the Day being read for the second reading of a Bill, the question shall be proposed, “ That this Bill be now read a second time.” 161. Amendments may be moved to such question by leaving out “ now “ and adding “this day. six months,” which, if carried, shall finally dispose of the Bill, or the previous question may be moved. 162. No other amendment may be moved to such question except in the form of a resolution strictly relevant to the Bill.
No addition may be made to the motion for the second reading of the Bill, but words may be inserted in that motion. The honorable member for Yarra (Mr. Tudor) could move to insert after the word “ That” the words which he wishes to add to the question.
– Then I submit the amendment in the form that you suggest, Mr. Speaker.
Amendment amended accordingly.
– I do not know that the Leader of the Opposition (Mr. Tudor) fully appreciates the effect of the amendment. If all the words after the word “ That “ were left out with a view to the insertion of the words that he has proposed to add, the Bill will be defeated, but he says that he does not desire to defeat the Bill, and wishes merely to attach to the motion for the second reading an. expression of opinion.
– In the event of the amendment being carried, will the Bill be defeated?
– This is what May - 11th edition, page 474: - has to say on the subject -
It must be borne in mind, however, that the resolution, if agreed to, does not arrest the progress of the Bill, the second reading of which may be moved on another occasion. The effect of such an amendment is simply to supersede the question for now reading the Bill a second time, and the Bill is left in the same position as if the question for now reading the Bill a second time had been simply negatived or superseded by the previous question. The House refuses, on that particular day, to read the Bill a second time, and gives its reasons for such refusal; but the Bill is not otherwise disposed of.
There is no proposal not to read this Bill a second time; the proposal is to interpolate in the motion certain words which, in my opinion, if carried, would not have the effect of preventing the second reading of the Bill at a future date; but would prevent it being proceeded with at present.
– The motion before the House is that this Bill be now read a second time. If all the words after the word “ That “ were struck out with a view to the substitution of words expressing the opinion which the Leader of the Opposition (Mr. Tudor) wishes to express, it would kill the Bill. It would not be possible for the Bill to be proceeded with if the amendment were carried.
– It certainly would not.
– Are you cracking the whip?
– Apart from the course that the Government might follow in the event of the business of the House being taken out of its hands, the effect of carrying the amendment would be that the Ministry would be compelled to ‘bring in a second Bill, and this Mr. Speaker would rule out of order, because the Standing Orders prevent the introduction of the same Bill twice in one session. The carrying of the amendment would prevent the consideration of the Bill in Committee, which the honorable member for Yarra declares he desires.
– I submit that the amendment is quite in order. It is stated in May - 11th edition, page 472 - that -
It is also competent to a member, who desires to place on record any special reasons for not agreeing to the second reading of a Bill, to move as an amendment to the question, a resolution declaratory of some principle adverse to; or differing from, the principles, policy, or provisions of the Bill; or expressing opinions as to any circumstances connected with its introduction or prosecution ; or otherwise opposed to its progress.
If the amendment were carried, there would be nothing to prevent -the Government altering the Bill in accordance with the wishes of those who are opposed to the incidence of taxation provided for.
– Could the Bill be altered at the second-reading stage?
– No. The Government would have to take the amendment as a direction from the House, to bring in another Bill.
SirWilliamIrvine. - That would amount to a direction to withdraw the present Bill.
– The amendment is, nob ‘to omit, but to insert, certain words after the word “That.” The effect of the amendment is a matter for the Minister, not for the Speaker, to consider. All that I have to concern myself about is whether the amendment, is in order. I direct attention to the following entry in the Votes and Proceedings of the 21st July, 1915, regarding the War Loan Bill 1915, No. 1: -
The Order of the Day having been read for the second reading, Mr. FISHER moved - “ That the Bill be now read . a second time.”
Mr. ANSTEY moved the following amendment : “ After the word ‘ That ‘ insert the following words : ‘ bonds to the extent of ?20,000.000 be deposited in the Commonwealth Bank, and that the Governor of the said bank be instructed to credit the Commonwealth Government to a like amount, less such charges as are necessary to pay . the expenses of the bank in operating the account of the Government.’ “
The amendment was negatived, and the discussion on the second reading then proceeded. On several other occasions like amendments have been moved to insert words in the motion, “ That this Bill be now read a second time.”
– If the honorable member for Yarra (Mr. Tudor) wished to attack the policy of the Government, he should have done so in a more formal way. To attack the Government in the manner in which he has done is to attack it in regard to part of its policy only. The estimated revenue is £1,000,000; I hope that the return will really be greater. I am not in a position to offer an authoritative personal opinion on the point, and must accept the information which has been given to me, but if the honorable member had challenged the Government in a formal way, the Prime Minister would, of course, be here to defend the policy of the Government. The amendment is a a attack by a side wind, and really places the honorable member in an awkward position. He was a member of the Government which introduced the original measure, which, like those which have succeeded it, was based on the British Act, subsequent Bills having been altered in detail only by successive Treasurers. As the British Act has been in operation for three years, it is entitled to some consideration. The 1 original Bill, based on that Act, was introduced by the honorable member for Capricornia (Mr. Higgs) when Treasurer of a Government of which the honorable member for Yarra (Mr. Tudor) was Minister for Trade and Customs. I gathered from the speech of the latter that he is disappointed because the Government has not proposed more taxation. That, to my ears, is a new complaint. I have never before heard a Government condemned for taxing too little; the complaint to which I have been accustomed is that the taxation is too much. The honorable member complains that our taxation will not hit certain persons and certain classes sufficiently hard. In that I believe him to be mistaken. The Bill, with its defects - and, no doubt, it has some - will strike those persons who have made more money during the war than they were making before the war. That is the principle of the Bill. If you have not done any better during the war than you were doing before the war you will not be taxed, but if you have done better you will be taxed. Notwithstanding what the honorable member for Yarra has said, the Bill will tax those who have made more money during the war than they were making before it broke out. That is the principle of the Bill.
– The honorable member for Yarra gave a long list of persons who would be taxed.
– I do not think that there are many in this House or the country who are really disappointed be cause the taxation proposals of the Government are not more drastic. It shows what a good Government we are when we deal with the finances of the country in such a way that every one is surprised that what was anticipated in the way of. taxation has not been proposed.
– You are postponing responsibilities.
– Our method of finance is to deal with our liabilities asthey occur year by year. I do not thinkany one would say that you should impose taxation this year to meet the prospective liabilities of next year. We impose taxation this year to provide the revenue needed for the year, and next year’s needs will be met in a similar way when they occur. We have tried to finance the war fairly, by encouraging enterprise and helping those engaged in industry to increase the production of wealth. There has been no drastic retrenchment, no dismissal of men from Government employment. There has been no shutting down of any of the avenues of employment and no attack upon any section or class of the community. So far as any evidence of partisan feeling or disunion is to be found in the proposals of the Government, we appear to be one of the most harmonious communities in the world.
As to one or two matters to which the Leader of the Opposition has referred, I may say at once that I am quite in accord with him that the beginning’ and ending of the taxable profit-earning period shall be the same for every one. Further, as .the Bill really declares, any exemption for which the Bill provides will not extend to any other person who may subsequently trade in the goods to be produced.
In considering the question of the adequacy of these taxation proposals, I ask honorable members not to overlook the fact that all profits made by any individual or company in this country will be subject to the ordinary income tax upon the existing graduated scale, no matter from what source the income may come. This war-time profits tax is another tax superimposed upon the existing income tax. Those who have made any war-time profits under this Bill will pay not only this taxation but income tax on the existing graduated scale. That is fact of which we ought not to Ios sight. As to the extraordinary contention that the taxation proposals are not sufficiently onerous, I think that taxation in Australia is steadily moving upwards. A return prepared by Mr. Knibbs shows that in respect; of the year 1915-16 the income tax yielded £4,436,997, and that of that amount persons enjoying an income of £1,000 per annum or more paid 84.2 per cent. ; those who received £200 a year, and less than £1,000 a year, paid 12 per cent., and those taxpayers receiving less than £200 a year, of whom there were some 167,853, paid only 3.8 per cent, of the tax. Some people would have us believe that those who have been more fortunate than others in the race for wealth pay practically nothing by way of taxation, but here we have it that they paid 84.2 per cent, of the £4,436,997 raised by way of income tax in one year. Those unreasonable and unfair critics should at least endeavour to be fair. The Leader of the Opposition has said that our taxation is not drastic .enough. He seems to be anxious to ruin >every one, even when the Government considers the proposed taxation sufficient. 3 would remind him that with a population of slightly less than 5,000,000, we estimate to raise this year a revenue of £35,181,655, as against a revenue of £22,419,798 raised in 1914-15. We have thus an increase of £12,761,857 in three* years. That, however, seems to be not even noticed, so far as the Opposition is concerned.
– All that is spent as soon as it is raised.
– The honorable member, having regard for his astuteness, ought not to make such a remark. The people who contribute the revenue are often not chiefly benefited by its expenditure.
I requested the Government Statistician to prepare a return showing our taxation per head of the population as compared with that borne by the people of the Old Country. In the return furnished by him it is shown that the Commonwealth and State taxation per head in 1915-16 was £6 8s. 5d. in the Commonwealth as compared with £6 6s.1d. per head in Great Britain. It cannot) be said, therefore, that the taxation borne by the people of Australia is not fairly heavy. Then, again, I invite honorable members to consider our war expenditure out of revenue. In 1914-15 our war expenditure out of re venue amounted to £540,217, and it has been gradually rising until in respect of the current financial year it is estimated that it will be £13,109,351. In 1916-17 our war expenditure out of revenue amounted to £8,406,970, while this year we estimate that it will be £13,109,351, showing an increase of £4,702,381 for the year.
– And the Governmentare throwing men out of work in order that they may make such an expenditure out of revenue.
– The honorable member should not make such a statement.
– It is a fact.
– I am glad to say it is not a fact.
– The Government ought to expend the money on reproductive works.
– The honorable member’s party was in power for years. We now have the responsibility of control in accordance with the voice of the people, and he ought to be fair.
In conclusion, I have only to say that the Government have already given careful consideration to other matters to which the Leader of the Opposition (Mr. Tudor) has referred, and that in Committee we shall, place before honorable members certain amendments which, I hope, will go a long way towards meeting many of the objections that have been made to the Bill. We frequently hear it said that people are better off now than they were before the war. I deny that that is so.
– The right honorable gentleman’s own Prime Minister has said it is so. ,
– If he has I can only say that my information has not led me to the same conclusion. If I Vere to follow the precedent of Mr. Bonar Law,’the Chancellor of the Exchequer, who, for the information of the House of Commons, drew upon his own private experience, I would tell the House that my own income is not more than half what it was before tihe war.
,- In his reply to the able speech made by the Leader of the Opposition, the Treasurer has touched on practically everything but the provisions of the Bill itself. I hold the- view that the Bill has been hurriedly prepared, and has not received at the hands of the Government that attention which should be given, particularly at this time in our history, to every financial measure. The defects of the Bill are probably due to the fact, that it had to be hurriedly prepared in consequence of the refusal of the Opposition to debate the motion for the adoption of the AddressinReply. We were so anxious to give the Government every opportunity to proceed with their win-the-war policy that we refrained from debating that motion, with the result that the Government suddenly found themselves called upon to provide new business for the consideration of .the Parliament.
The amendment which has been moved by the Leader of the Opposition is, I am confident, in accordance with the wishes of the people. The electors of Australia would gladly relegate to obscurity the Bill as it stands. No Government who was sincerely desirous of taxing war profits would have brought forward so inadequate a measure. The taxation of war profits is now engaging the attention of practically ever belligerent country. I do not know how any man of intelligence can be expected to accept the statement of supporters of the Government that practically no excess profits have been made in Australia since the outbreak of the war. We have been shown by the Treasurer that our revenue in 1914-15 was only £22,419,798, and that, this year we expect to raise £35,181,655. All this additional revenue has been expended, and there has also been a tremendous expenditure of loan moneys since the outbreak of the war. Is it reasonable, therefore, to say that no excess war profits have been made in the community in which this expenditure has for the most part taken place? Every addition to the expenditure of the Government means an addition to the wealth of the people. Prices of commodities generally have also largely increased since the war, and in these circumstances it is absurd to try to make a body of public men, engaged in the work of providing for the repatriation of our soldiers, come to the conclusion that no war profits have been made in Australia. These men deserve some recompense, and ought,- at least, to be placed in as good a position as they were before the war. If individuals and companies in business were satisfied with their profits in 1913, they ought to be satisfied with similar profits now, for Ave all know that then Australia was extremely prosperous, and that, but for the unfortunate war, the country would, to use a common phrase, “ have stood on velvet.” It is absurd to contend that there are no excess war profits. I am satisfied that the intelligent Democracy of Australia is not of that opinion. The Bill may be one for Committee, but on the second reading it ought to be discussed on broad lines, because, when the individual clauses are under consideration, we are confined to the strict scope of the measure. My own opinion is that the Bill ought to be. withdrawn, and another introduced more in accord with the wishes of the community.
When the Treasurer was asked what revenue he expected to obtain from this taxation, he very promptly replied that he anticipated £900,000 for the two years, or £450,000 per annum. It is proposed, after the first year, to take 50 per cent, of the profits, and subsequently 75 per cent.; and, after- the figures quoted by the Leader of the Opposition, that certainly does not seem exorbitant. Those figures bear the impress of a departmental return, and would seem to show that the officers are not of the opinion that the Bill will not touch all war profits, but only a section. When we bear in mind the enormous profits there disclosed, we cannot wonder that the press of Australia regard the Bill as one which should not be tolerated by an intelligent Parliament. The Treasurer, in his characteristic bluff way, said that we on this side were most extreme in our views .when we agitated for the taking of the whole of the profits; but the right honorable gentleman ought to bear in mind that during this war the best blood of Australia has been spent in the defence of our liberties, and that it is only fairand equitable that those who find themselves in such prosperous financial circumstances - and that chiefly owing to the war - should pay their share of the cost. Similar legislation excited a good deal of opposition in England ; but nothwithstanding “that fact, the British Government, unlike the Commonwealth Government, have refused to allow those concerned 10 per cent., and have fixed 6 per cent, in the case of companies, and 7 per cent, in the case of private persons. Why should we not do the same here? The British Government have provided that 80 per cent, of the profits shall be devoted to the country^ during the war period; and my personal opinion is that the . whole of the profits ought to go into the Treasury. In Sydney lately, Sir Anderson Stuart, who is the President of the Australian Branch of the British Medical Association, informed the public that members of the profession in that city were earning from £9,000 to £16,000 and £17,000 a year. Sir Anderson Stuart is a man who takes a prominent part in public affairs, and his statement, so far, has not been challenged. Of course, no one can object to professional men receiving adequate payment for their work ; and, as in all other businesses, the abler men rise to the top. All the same, those who are not in a position to risk their lives in the defence of the country ought to be prepared, or be made, to give financial support in the present crisis.
The figures quoted by Mr. Tudor are supported by the recorded profits earned in the case of English companies operating in Australia. For instance, to speak of mining companies, the Mount Morgan Company have paid £9,033,000 in dividends on 1,000,000 shares at £1 ; the Wallaroo and Moonta Mining Company have paid £2,435,250 on 160,000 shares at £2 ; and the Broken Hill Proprietary Company have paid £10,169,200 on 1,181,000 shares at 8s. each.
– What figures are you quoting?
– I am quoting the latest figures available. In the case of Broken Hill Proprietary, the price of their zinc has risen from £20 per ton before the war to £58 a ton at the present time ; and, even allowing for any extra cost of labour, that, in my opinion, represents excessive war profits. Then, again, the price of lead and tin has increased by 30 to 50 per cent* as compared with pre-war prices; and I honestly believe that it is the desire of the people of this country that some of these excess profits should be used for the benefit of the country.
I should now like to refer to the position of nineteen insurance companies doing business in Australia. The list is a long one, but I think that it ought to he placed on record.
Sitting suspended from 1 to 2.15 p.m.
– It is a deplorable fact that very few public men take any real interest in the financial position of the Commonwealth. That remark applies to honorable members on both sides of the House. The party to which I belong has been very lax in regard to financial questions, although they constitute the- most important of our parliamentary business. At the present time, an interest bill of something like £9,000,000 per annum has to be met; and when . we see so little provision made for meeting it out of revenue, one is almost forced to think that the Government propose to pay the interest bill from loan account.
– You know that is not right.
– With such a Bill as this before us, it is diflicult for people to think otherwise. Even the Budget statement of the honorable Treasurer gives no indication of the raising of revenue to pay this enormous amount of interest. I know the Treasurer says that-the Government do not intend to pay interest from loans; that is a pernicious system that would not be entertained for a moment by anybody. Looking through the reports of the debates in the House of Commons, I find that there, too, very few members took sufficient interest in the finances to discuss the Budget; and the only criticism offered seemed to be on the ground that there was too great a tendency on the part of the Chancellor of the Exchequer to ask posterity to shoulder the financial burden of the war. I notice that honorable members on more than one side of the House expressed regret at the lack of interest taken in financial problems. I feel sure that in the Commonwealth greater attention will have to be paid to this important subject. Members of the British House of Commons have presented to the Prime Minister “ a round robin,” in which the Government is asked to appoint a Committee to investigate all expenditure and discover, if possible, where leakages occur. I believe that the Commonwealth might do well to adopt that proposal. The figures which the Treasurer puts before us must be accepted by the House, because we have no other authority from whom to get authentic information. Whilst I can lay no charge against any particular Department, we do know that there has been a good deal of extravagance in connexion with the expenditure in the Defence Department. Some of it, I admit, is unavoidable. In various camps I made inquiries, and the replies I received convinced me that by attempting to interfere with the officers responsible for the expenditure, I might do incalculable harm to the men. There does seem to be a need for the appointment of some Committee such as that suggested in the Imperial Parliament.
Looking through the financial journals, I came across an interesting table, which shows how some people have a very good share of this world’s goods, while many thousands of people in the world are penniless. Perhaps the reproduction of those figures in Hansard may lead honorable members to take a greater interest in the financial issues that must come before us. The Economist of 2nd June last publishes this table -
The figures gave a bird’s eye view of the financial position of those various organizations up to 1916, and the Economist remarks, in regard to them -
Such a statement would not be made by a commercial journal with a view to injuring the stability of the company, or causing any great rush on the shares of the Commercial Union. However desirous honorable members may be to encourage people to invest in commercial concerns, it should be recognised that a limit must be placed on profit making, whether in war time or at any other time. If those making excessive profits in war time only realized the position, I feel confident that they would admit that it would be only just for them to pay a greater proportion towards the cost of the war than they have been paying hitherto. However strongly members may feel about this Bill, they must admit that it will not carry out what the people thought to be the intention of the Government as expressed in their election pledges. In view of the sacrifices made by those who have gone to the war, and those who have given their sons to the war, those in possession of great wealth should not hesi-tate to assist their country at this period. The cost of the war can be met only by those who have something taxable, particularly those who have made excessive profits. For some years there has been a large circulation of public money, both loan and revenue, in Australia, and some people must have got it within their coffers. In some cases the liquid assets of the banks are double what they were two years ago. They do not keep liquid assets simply for the purpose of putting them on their balance-sheets.
On the question of prices, wool before the war was ls. 3d. to ls. 3½d. per lb., and sometimes much lower. ‘ Since the war it has gone up to 2s. 8d. Working that’ out on the wool clip of Australia, most nien will be satisfied that a large amount of profit is being made by wool-growers over and above what they made prior to the Avar. Any members who know how the commercial houses conduct their businesess must know that they work on the basis of a certain percentage of profit on cost. A house working on a 25 per cent, basis would mark an article costing them 5s. at 6s. 3d., but if the same article cost them 12s., they would mark it at 15s. It is of no use for honorable members opposite to try to throw dust in the eyes of the public, because there must be a vast increase in the profits made by these businesses, with prices 30 per cent, or 40 per cent, higher than they were before the war. No one disputes that wages have risen, but an increase of as much as ls. is often put on the cost of an article where the increased cost of labour is not more than1d. or l½d.
Nobody believes the Treasurer’s statement that he can get only £450,000 per annum from a war profits tax. That may be so under this abortion of a Bill, but a proper war profits tax, carrying out the intention of the people of Australia, would produce more like £3,000,000 to £4,000,000. If this measure is licked into shape, and made more like what the people intended that it should be, its own father will not know it. Unless that is done, this Parliament will not be doing its duty. If people cannot go to the war, or cannot send others to represent them at the war, they should not grumble at Parliament taking their excess profits from them. I am prepared to render all the assistance I can to pass any amendment that will help to lick the Bill into shape, but, as it stands, it is hopeless to expect it to do what the people want.
Possibly the Government have now been forced to recognise that they really have no win-the-war policy, and are going to ask members on this side of the House to show them how they should win the war. It would be better for the Government to do- that instead of paying, as they are doing, so much attention to the interests of their own friends. That charge may be justly laid at the doors of those who framed this Bill. The Sydney Daily Telegraph, the Melbourne Age, and one of the Western Australian papers have not received this measure at al] kindly, although they were champions of the Government before the election. Those three papers are beginning to recognise, and one of them has admitted, that the people made an error on the 5th May. The Treasurer, if he were well advised, would withdraw the measure at once, and bring in a Bill more in accord with the wishes of the people. If he did, a large majority of the ‘House would help him to pass it at once. I do not know whether to vote against the second reading or not. If I did, members on the other side would say, “ Look at the Opposition we have got,” and would use it as a trump card, but, after all, it would be far better to give them that trump card ‘than to run the risk of being accused on this side of not understanding the true position. After all, the members of what Disraeli called “Her Majesty’s Opposition” - in this House I suppose it would be “His Excellency’s Opposition “ - are just as much members of the House as the Government supporters are, although they have not the numbers, or the power, or the same opportunities to get information, and I believe some members opposite think they ought not to get as many privileges. Nevertheless, we who sit in Opposition have duties laid on us, and if the Government cannot produce a better War Profits Taxation . Bill, they ought to go out of. office and give those on this side an opportunity to show how to conduct the business of Australia in the way that Australia expects it to be conducted.
– If I do not apply myself to reply to the weighty arguments of the honorable member for East Sydney (Mr. West), he will, I hope, understand that -this is not due to any want of respect to him. It is due entirely to the fact that I was only able to hear occasionally what he said, and find a great difficulty in connecting the flashes of lucidity which I heard, separated as they were from one another, to my ears, by chasms of darkness.
Although the Leader of the Opposition disclaimed such a purpose in moving the amendment, he must recognise that- such an amendment on such a Bill amounts to a vote of censure on the Government. It is not in form a vote of censure, but every member of experience- and few members have more experience than has the honorable member for Yarra. (Mr. Tudor) - knows that such an attack on one of the important financial measures of the Government could not be accepted in any other way, if carried.
– That would be no harm.
– I heard that interjection, and it is a revelation. I had no idea that beneath that calm and dignified exterior there lurked such ambitions as that remark indicates. The Leader of the Opposition had no sooner launched his amendment, which declared that the measure was totally inadequate because the amount of money to be provided by it was so very small, than he proceeded entirely to demolish, by the figures he cited, the foundation on which his amendment was based. He went so far as to prove that his own statement, on which the amendment was based, was wildly distant from the actual truth. Assuming for a moment that his figures - I shall refer to them presently to show how entirely unreliable they are, and how it is impossible to base on them any real estimate or conclusion relative to this debate - are to be relied on, what is the conclusion to be drawn from them? The honorable member has courteously allowed me to see a copy of them. From it I gather that the proposed tax will take from 265 persons in Victoria alone the modest sum of almost £2,000,000, whereas the Treasurer estimates the receipts from all the taxpayers of “ Australia at about £1,000,000. Figures such as these are fallacious if any legitimate or relevant conclusion is attempted to be drawn from them. In the first place, without knowing the occupation of the persons set down in the list, it is impossible to estimate the taxation that they would be called upon to pay under the Bill. They might, for instance, all be pastoralists, and tie year 1914 would not be the year chosen as that furnishing the pre-war standard of their income. We need much wider information than the figures convey to enable us to form an opinion as to the correctness of the Treasurer’s estimate. I do not intend to deal with the amendment, because I do not regard it as a seriously meant motion of want of confidence. It has been brought forward more to meet a demand made outside.
– To show that His Majesty’s Opposition is working.
– Yes ; and therefore I propose to address myself, not to the amendment, but to the provisions of the Bill itself. Although I have had a great deal of experience in the, construing of Acts and Bills, I have never had more difficulty in ascertaining the meaning of a measure of equal length than I have experienced in dealing with this Bill. Metaphorically, I have struggled through it with a wet towel round my head. The Treasurer may regard it as an easy measure to understand; I do not; though occasionally gleams of light and hope have illumined my darkness and despair. In one regard, the more I look at the Bill the more I like it. ‘
– That is from a lawyer’s point of view.
– The honorable member anticipates me. I have come to the conclusion that if the Land Tax Act may be regarded as the earlier rains, this may be compared with the ‘ later rains ‘ ‘ sent by a beneficent Providence to revive the humble and drooping industry of which I have the honour to be a member. . My attitude towards the Bill should therefore be one of thankfulness for the promise of a bountiful harvest. Nevertheless, I consider it my duty to say a few words regarding it from a public point” of view. ‘ The more I consider the measure the less I blame the draftsman for its extraordinarily involved provisions. As honorable members know, every involution and twist in a drafting of an Act is the foundation and spring of endless litigation; but the tortuous indirectness of the language of many of the provisions of this measure is due, not to want of skill on the part of those who drafted it, but to the fact that they have been asked to inclose within the form or shell of a War-time Profits Tax Assessment Bill what is, and must be, a War Profits Tax Assessment Bill. In outer form and semblance this is a War-time Profits Tax Assessment Bill, and machinery is provided for comparing periods before the war with periods during the war, but close investigation shows that its many variations from the English Act. are intended to make it what it ought to be, a War Profits Tax Assessment Bill.
If this be a War-time Profits Tax Assessment Bill, that is, a. measure imposing a tax, nob on those who have made large profits- out of the war, bub on all who through good luck, or for other reasons, have been in a better position during the war than they were in prior to its outbreak, why are exemptions proposed? If the Bill is based on the principle that in a time of war all who are getting larger incomes, no matter from what source, or for what reason, than they had in normal times should be taxed, why should it be applied only to a small section and hundreds of thousands be exempt?
– Does the honorable and learned member say that hundreds of thousands are exempt?
– Yes, in Australia as a -whole, I think. However, let me say many thousands. I add my protest to those which have been made from both sides of the House against many of the provisions of the Bill. However much we may differ on other matters, I think that we are all agreed that persons ought not to be allowed to make profit’s out of a war which is threatening the very existence of the country. That is the only justification you ‘have for proposing to take away anything like 75 per cent, of a man’s profits, but it is a complete justification. But surely no one would suggest, when there are men who, by good luck, or for other reasons, are enjoying much larger incomes now than they had three years ago, those of one class only should be singled out, and 75 per cent, of their excess income taken from them. Although the Bill is called a War-time Profits Tax Assessment Bill, its justification is that it taxes not’ war-time profits, but war profits, and our object should be to make it as nearly a War Profits Taxation Bill as we can get it. I do not object to the exemption of persons who have increased their professional earnings by rendering additional services. I do not think that there are many in my profession to whom the exemption would apply. There is no reason why you should take from those who give additional service to the community the additional remuneration that they have thereby gained.
– Would that apply to members of the medical profession?
– Yes. I say that all classes of persons, no matter what their occupation, who have made simply war profits, should return a large proportion of them to the State. The only doubt in my mind is whether the Bill provides the most effective machinery for bringing that about. The measure, although entitled a War-time Profits Tax Assessment Bill, provides endless exemptions, and gives the Commissioner power to alter and modify, to raise and lower standards, and in other ways to impose taxation, not on war-time profits, but on war profits. We ought to make it easier for that to be done without injustice. In Committee, I shall suggest certain amendments which will simplify the measure, and make it more effective for this purpose. Speaking from a large experience of the law, I say that the method of meeting a difficulty by avoiding any statement of principle, and endeavouring to forecast all possible cases and deal with them in an Act of Parliament, is the most ineffective and dangerous that can be adopted. The true method, especially whore very large discretionary powers have to be left to those who are to administer the law, is to enunciate in the clearest and most distinct way the principle on which the law is founded. Honorable members, by referring to clauses 10, 11, and 12, will see what enormous discretion is given to the Commissioner. He can determine what special circumstances exist ; he can vary the prewar standard of profit; he can calculate the amount of capital in any manner he pleases. That in itself opens up an enormous field of oppression, from which there is no appeal.
– The Commissioner will have power to determine the financial stability of a business.
– As the honorable member points out, this power to determine the financial stability of each business will make the Commissioner practically the controller of every man’s enterprise for the time being. I do not deny that to a very large extent these powers must be given. I am only pointing out that this Bill, with all its complicated provisions, will not do away with the necessity of vesting the Commissioner with enormous power.
– We are using these powers every day,
– The powers of the Commissioner under the Income Tax Act are nothing like those to be given the Commissioner under this Bill.
– I was referring to the powers which the Treasurer possesses to inquire into the business of companies.
– The power to inquire into a company’s affairs in order to gain information is one thing, but the power given to the Commissioner to ruin a man or to allow him to go, according to the idea he forms of his business, is quite another thing.
These powers are enormously wide, but I do not complain of that. In any case, the Commissioner must be given wide powers. The problem before him of determining what are, in effect, war profits, requires that he shall have enormous powers. We must have a Commissioner whom we can trust, and a Board of Referees in whom we have implicit confidence. Having; got those men, we must give them almost unlimited powers. I am sure that the Treasurer will give full consideration to the suggestion I am about to make, because I know his difficulties, and those of his honorable colleague (Mr. Groom), who has been assisting him, in meeting all the objections that have been raised.
– I have myself discovered some of the difficulties which the honorable member has mentioned.
– I felt sure that the right honorable member would have done so. Since he first took this matter in hand - even before the Bill was put in its present form - I- am sure he has found endless difficulties cropping up, and having to be met in order that justice may be done.
– Every one in Australia seems to have a grievance under the Bill.
– Quite so. A great many of those grievances will prove eventually to have had no substantial foundation. They have already been met.
– It is the common experience in connexion with taxation measures.
– But is it not a fact that even since this Bill was presented to the House representations have been made to the Minister as to numbers of cases in which, if allowed to remain as it stands, it would work an in j ustice ?
– Such difficulties have to be met every day and every hour in the week.
– Exactly. This is one of those measures, in connexion with which many difficulties are bound to arise, because of the failure to state in it the real principle on which it is founded. The principle itself should be stated in the Bill, and we should leave the working out of that principle, for the most part, to the discretion of those who have to administer it. Where an attempt is made to build up, little by little, in the Bill, a complicated and necessarily imperfect scheme,- in order to do justice in every case, the Government must always be faced with such difficulties. If we were to sit until Christmas and devote our attention solely to the consideration of this Bill, with -the object of meeting cases of hardship that have been mentioned as likely to occur, we should not even then arrive at a complete scheme of taxation, such as could be embodied within the Bill itself.
The Minister may attempt, during the passage of this Bill through Parliament, to add a little to this clause and a little to that, to make a slight exception to the provisions of certain clauses, and to add new clauses, to meet cases of undoubted hardship, but even then he will not have dealt with one-half of the real cases of hardship that are likely to arise. Instead of meeting all of them by these express directions, he may so hamper the discretion of the Commissioner and those who have to administer the law as to force them to do an injustice in thousands of cases. That is the difficulty that is always attached to this mode of attempting to meet such a problem. On the other hand, if a definite principle be clearly set out in the Bill - if we create the machinery to give effect to it, and leave those who have to administer the law free to give effect to the principle - the position will be improved.
My suggestion - and it is only a mere outline that I shall give at this stage - is this : A great deal of the machinery of this Bill is essential. We must provide for the appointment of a Commissioner and a Board of Referees. We must provide for the establishment of a pre-war standard, and the mode of ascertaining the pre-war standard. Further, there must be general directions as to the method of computing war profits, and provision must be made for determining what is capital. In short, we must have the general skeleton framework of this Bill “ as it is, although it might be put in a much more condensed form. Once you begin to fill up that skeleton - to load up the Bill itself - with a lot of definite provisions as to how particular cases of hardship are to be met, .then you will not meet one-tenth of the difficulties which will arise. On the contrary, the hands of those whose duty it will be to meet them will be tied.
I submit to the Treasurer that it would be better to cut out a great many of the provisions introduced to meet cases of hardship, as well as others which he contemplates proposing, in order to meet the suggestions made by various honorable members, and to deal with the whole question on this broad basis: “Under clause 17 returns will be sent in by those from whom the Commissioner desires to obtain them. I gather from the wording of the clause that the Commissioner, very properly, will not require every one who pays income tax to send in a return. That would be monstrous. He will send notices to those whom he desires to furnish returns as to war profits. He will obtain returns from those who are engaged in businesses in which there is any chance of war profits being made, and he will have the excess profits estimated according to the machinery of the Bill. But the hands of the Commissioner and of the Board of Referees should not be tied in any way by directions embodied in the Bill itself as to how particular cases of hardship or difficulty are to be met.” These returns will be sent in, and it will be assumed that prima facie the profits made in excess of the pre-war standard are war profits. But every taxpayer who sends in a return should have the right to show, either in the return or subsequently, the reasons why in his opinion the whole or portion of those excess profits are not in any way connected directly or indirectly with the war. By way of illustration, let us take the position of the wool industry concerning which we have heard so much of late. Take the case of a sheep-grower who sends in a return of the profits he has made as compared with his profits for the pre-war period. Let us assume that he says, “ My profits this year are £10,000 in excess of the pre-war standard.’ Prima facie, that increased profit is due to the war, but while I admit that the price of wool has increased, and that therefore so much of my profits as come from the sale of my wool have arisen through the war, I do not admit that the rest, or a considerable portion of the rest, is due in any way to the war. It arose from the fact that I have been breeding up or increasing my flocks1.” That is a very simple illustration. Would not the suggestion I make be the simplest way of meeting the difficulty?
– But how would the honorable member get over the difficulty of dealing with the excess profits of a manufacturer or the owner of a big city emporium ?
– There are difficulties to be met, but I do not think there would be any difficulty in that case.
– I do not think that there is any. difficulty in dealing with the wool-growers under the Bill as it stands.
– The Treasurer has made so many exceptions, and intends to make so many more, that he will probably be able to meet the. difficulties in connexion with the position of wool-growers; but there may be other difficulties which he cannot meet in the Bill itself. There are others whose interests must be attended to. Take the case of a warehouseman who has made a great deal of money during the year of accounting. Let us take the case of a softgoods warehouseman in Flinders-lane, whose income, say, is £10,000 in excess of the prewar standard. He may say, “ I admit that you are entitled to tax me in respect of certain profits which have arisen from the war because I held stocks of certain goods, the price of which has increased since the outbreak of war.” The Commissioner may say that so far as those goods are concerned he has made an excess profit of 25 or 40 per cent., and then ask him, “ What other exemptions do you claim?” Supposing he says, “The rest of my profit is due, not to the war, but from the fact that I have improved my business in some ways, have exercised more skill in ‘ connexion with it, and have had better work, and consequently a larger turnover. Every business is either growing up or coming down, and I have been fortunate enough to be among those whose business is increasing. I will pay you taxation in respect of what are legitimate war profits, but you ought to relieve me from this war profits taxation in respect of the rest of my excess profits.” Why should not such a contention prevail?
And so with a manufacturer or any one else. Let him make his returns under this Bill. Let him choose his pre-war standard, and let it be assumed as against him in the first place that any excess of profits on the pre-war standard represents profits arising from the war. Give him an opportunity, however, of showing that any portion of those profits does not consist of war profits. Put the onus of proof on him. Let him be called upon to satisfy the Commissioner, and if he is dissatisfied with the Commissioner’s decision he will be able to appeal to the Board of Referees.
– The Commissioner would have to lay down working rules just as we are trying to do, however imperfectly, in this Bill.
– I agree that the Commissioner would have, from time to time, to lav down rules with regard to the various classes of business with which he had to deal. It is right that he should. What is more, he will be continually altering and adjusting those rules to meet’ new circumstances. We are attempting to do something which should be left to the Commissioner. We are attempting to embody in a hard and fast Act of Parliament rules which could not be altered except by an Amending Bill, and then could be altered only in respect, of a few details. We are trying to embody in the Bill what should virtually be left to the discretion of the Commissioner in administering it.
– The honorable member would allow the Commissioner to do what the Commissioner of Income Tax does when he standardizes values and forces taxpayers to make a big profit, or, perhaps, a big loss. .
– I do not think so. I would retain in the Bill the machinery we have for allowing a man to estimate what his profit is.
– If we provided that every taxpayer should be entitled to make a deduction from excess profits on the ground that it represented profits due, not to the w,ar, but to more efficient methods of business, would not every taxpayer be claiming such an exemption?
– Such claims ‘ might be made, but it would be for the Commissioner to determine them. I do not think the honor-able member for Grey (Mr. Poynton) is following me quite clearly. I gave one or two examples; and if he will cite any particular instance, I shall endeavour to meet him. I have spoken of the woolgrowers and the softgoods warehousemen ; and perhaps the honorable member may be able to give me another ‘example of where the scheme will not work.
– If there is the prewar arrangement, it is straightforward enough under the Bill.
– The actual machinery for the assessment is all right, if you do not hamper it with all these particular provisions. In Committee I propose to, . at all events, endeavour to have it clearly stated that this is to be a tax on war profits. That will not alter the scope of the Bill, which, although in name a War-time Profits Tax Bill, is in essence a War Profits Tax Bill, so far as it is just. If it is not a War Profits Tax Bill, it ought to be so amended as to make it one, for that is the only way in which to justify any of the exemptions.
– We should have to investigate every case to see whether it was or was not one of war profits..
– That is not so.
– It is now a Wartime Profits Tax Bill.
– You call it so. but it is not a War-time Profits Tax Bill. Can the Treasurer suggest any earthly reason, if we are imposing a tax, and a very heavy one, on war-time profits, why there should be any exemptions?
– That is another matter; a similar measure has been two years in force in England.
– It is not the same measure.
– It is exactly the same principle.
– There are very great differences.
– And very important omissions.
– Quite so; and, even if the law in England were as stated, we cannot be guided entirely by that; but, under the circumstances, must do our best for Australia. If we persist in saying that this is to be deemed a Wartime Profits Tax Bill, then we do away with all justification for any exemptions. To leave out the element that these profits have been made as a result of the war is grossly unfair to the community. If we proceed to tax all who have happened to make more profit than previously, then it must strike every sensible man that the proper way would be by means of a surplus income tax. I do not advocate that, because it is not what the Government promised the country to do. Though we call it the War-time Profits Tax Bill, it is really a Surplus Income Tax Bill, with the unfairness that it means a huge surplus tax on a small section of the community.
– Only on those who have made the money.
– Only on a small portion of those who have made the money. It is really imposing an income tax of 75 per cent, on one section of the community and leaving the other sections free. The fact needs only to be stated to make the Bill absolutely indefensible. So far as concerns the people who have to pay, we are practically saying that every improvement made in a business belongs to the Crown; and the adoption of such a principle must be fatal to the progress and advancement of the community. The real object of almost every clause - of the powers of the Commissioner, and of the exemptions and exceptions - is to make this measure, as nearly as possible, a War Profits Tax Bill. I hope the Government will not close the door to the proposal I shall suggest in Committee, to make the Bill, in effect, a War Profits Bill.
– Would it not be necessary to give the Commissioner the same wide discretion under your own direct proposal as under the present indirectproposal ?
– I do not think any wider, but certainly as wide. The honorable member is right; but the discretion of the Commissioner would not be hampered - he would have a simple definite problem before him in each case. He would, subject to appeal, make rules applicable to the particular cases. As the honorable member for Parramatta said, in practical administration by a Department, a Commissioner or a Board of Referees, with unlimited discretion to determine what are war profits, the controlling power, in a very short time, practically lays down certain rules for those cases which have common elements. But there is the difference that under this Bill the officer would be bound to look at all the complicated directions in the Act, which might in many cases defeat his own powers.
– After all, the success of the measure depends entirely on the administration.
– It ought to rest entirely with the administrator, but his hand ought to be free; he should get directions which would enable him to administer it on one definite principle. I understand that the Government desire to submit a motion at this stage, ‘and, therefore, I ask leave to continue my speech on a subsequent occasion.
Leave granted; debate adjourned.
Mr. SPEAKER reported the receipt of a message from the Senate requesting the concurrence of theHouse of Representatives in the following resolution : -
That, in the opinion of the Senate, if the consent of the Imperial Government can be obtained to the action being taken, it is desirable that an official representative of Australia should be accredited to the United States Government at Washington.
Duties on Spirits and Beer.
.- I move-
Cite as: Australia, House of Representatives, Debates, 10 August 1917, viewed 22 October 2017, <http://historichansard.net/hofreps/1917/19170810_reps_7_82/>.