House of Representatives
30 August 1917

7th Parliament · 1st Session



Mr. Speaker (Hon. W. Elliot Johnson) took the chair at 2.30 p.m., and read prayers.

page 1521

QUESTION

GERMAN TRADE NAMES

Mr HIGGS:
CAPRICORNIA, QUEENSLAND

– Iask the Prime Minister if the Government has any objection to a discussion on the motion which stands on the business-paper in the name of the honorable member for Wentworth?

Mr HUGHES:
Attorney-General · BENDIGO, VICTORIA · NAT

– The Government proposes to allow that motion to go as formal.

page 1521

QUESTION

DISEASED MEAT

Dr MALONEY:
MELBOURNE, VICTORIA

– Bullocks’ livers, a portion of which were infected with hydatids, were supplied for food on our transports, and were afterwards destroyed, when they had been inspected by a Commonwealth Officer. Will the Minister for the Navy have an inquiry made, and inform the House what abattoirs, if any, allowed this diseased meat to go out for consumption?

Mr JOSEPH COOK:
Minister for the Navy · PARRAMATTA, NEW SOUTH WALES · NAT

– I shall be glad to look into the matter.

page 1521

QUESTION

GERMAN TRADE MARKS - QUESTIONS WITHOUT NOTICE

Mr ANSTEY:
BOURKE, VICTORIA

– I understand, from a Gazette notice, that the suspension of German trade marks has been revoked, and that instead of being suspended they are to be avoided. I ask the Prime Minister what change in practice is caused by this alteration?.

Mr HUGHES:
NAT

– I take this opportunity to say on behalf of the Government that the practice of asking questions without notice, on matters other than those of an urgent character has grown now to such an extent that Ministers must decline to answer’ questions which could be put on the notice-paper. The question just asked comes within that category.

Several honorable members having been asked by Ministers to give notice of their questions -

Mr SPEAKER (Hon W Elliot Johnson:
LANG, NEW SOUTH WALES

– The Prime Minister having intimated on behalf of the Government that Ministers are not prepared to answer without notice questions other than those of an urgent nature, I must ask honorable members to place such questions on the notice-paper.

Mr FINLAYSON:
BRISBANE, QUEENSLAND

– May I ask you a question, Mr. Speaker? Can you inform the House whether the decision which you say has been arrived at by the Government was come to at the Caucus meeting of the Ministerial party this morning ?

Mr SPEAKER:

– That is not a question, which should he addressed to me. I know nothing about Caucus meetings, and, while holding the office of Speaker, do not attend the meetings of the Ministerial party. Tha matter of replying to questions, without notice, is entirely in the discretion of Ministers themselves.

page 1522

QUESTION

COST OF PRINTING

Mr GREGORY:
DAMPIER, WESTERN AUSTRALIA

asked the Prime Minister, upon notice -

  1. ’ What was the cost of printing to the Commonwealth during the year 1916-17, inclusive of all Departments other than the Defence Department?
  2. Could not more extended powers be given to the Printing Committee with a view to the reduction of the printing bill?
Mr HUGHES:
NAT

– The answers to the honorable member’s questions are as follow : -

  1. The total cost of printing, excluding account and other books, for all Departments except the Defence Department was £102,477. Included in thiB is an amount of £39,840 for the printing of postage stamps, postal notes, postal guide, telephone directories, and telegram forms in all the States, and a sum of £20,300 for printing required by tha Taxation,

Census and Statistics, Patents and Trade Marks, and Meteorological Departments. ‘

  1. The matter will receive the attention of the Government.

page 1522

QUESTION

RAILWAYS COMMISSIONER

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA

asked the Minister for Works and Railways, upon notice -

Is it the intention of the Government that tlie Railways Commissioner, when appointed, shall reside at Port Augusta, or will the Railway administration be directed’ from Melbourne?

Mr WATT:
Minister for Works and Railways · BALACLAVA, VICTORIA · NAT

– The matter is under consideration.

page 1522

QUESTION

TENDER BOARD

Mr GREGORY:

asked the Prime Minister, upon notice -

Do the Government intend to give effect to the recommendation of the Committee of Public Accounts that a Commonwealth Tender Board be appointed?

Mr HUGHES:
NAT

– -The matter is receiving the consideration of the Government.

page 1522

QUESTION

DEFENCE DEPARTMENTS: ROYAL COMMISSION

Mr RICHARD FOSTER:

asked the Prime Minister, upon notice -

  1. What were the precise instructions issued to the Royal Commission appointed to inquire into the administration of the Naval’ and Defence Departments?
  2. Will the Commission’s report be available - prior to Parliamentary consideration of the Estimates ?
  3. Will the Government consider the advisability of delaying operations at the naval bases for the present in view of the changing devices suggested bv experience during the present War? 1
  4. Is it a fact that the alterations, referred to may demand a complete revision of existing plans in accord with latest expert ideas?
Mr HUGHES:
NAT

– The answers to the honorable member’s questions are as follow: -

  1. Copy of Gazette, No. 122, of 6th August, 1917, containing the instructions, is attached hereto. 2, It is hoped so. 3 and 4. I shall ask my colleagues the Ministers for the Navy and Works and Railways to give these matters most careful consideration.

page 1522

QUESTION

PUBLIC SERVICE ASSOCIATIONS: AUDITS

Mr SINCLAIR:
MORETON, QUEENSLAND

asked the Prime Minister, upon notice -

  1. Whether officers in bis Department are allowed to accept and retain fees for auditing books of Public Service Associations?
Mr HUGHES:
NAT

– The answers to the honorable member’s questions are as follow: -

  1. One officer of the Department has been given permission to accept a retaining fee for this purpose.
  2. The work is not done in office hours.

The Government does not approve of this practice, andhas ordered its abolition.

page 1523

QUESTION

BRIGADIER-GENERAL ANDERSON

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

asked the Minister representing the Minister for Defence,.Upon notice -

  1. With whatcorps or unit of the Australian Military Forces, and for what periods of time, did Brigadier-General Anderson serve on the active list in the rank of Lieutenant and in the rank of Captain respectively?
  2. When was he appointed Lieutenant and when was he appointedCaptain?
  3. Is the office of Director-General of Recruiting, to which the Minister representing the Minister for Defence stated that Sir E.. C. Geddes, K.C.B., was appointed and granted the temporary rank of Brigadier-General, an office in the Army which confers upon the holder the command of soldiers actively enlisted for service in the war, and actually serving under such enlistment?
  4. Is the office of the Director-General of Recruiting, to which the Minister states Sir A. C. Geddes was appointed in England, of a similar character to the one to which the Hon. D. Mackinnon was appointed in Australia?
  5. Was the office of Deputy QuartermasterGeneral, to which Brigadier-General Anderson was appointed, an effective executive command in the Australian Imperial Force, and did Brigadier-General Anderson, while holding that office, have command over soldiers, actually enlisted in the Australian Imperial Force for service, while such soldiers were actually serving under the enlistment?
  6. Did Brigadier-General Anderson, while holding the office of Commandant, Australian Imperial Force Head-quarters, London, have command over soldiers actually enlisted in the Australian Imperial Force for -service, and while such soldiers were serving under their enlistment?
  7. When and where and by what means did Brigadier-General Anderson qualify for the substantive Tank of Captain in the Australian Military Forces?
  8. Is there any precedent in the Imperial Army for granting the rank of BrigadierGeneral, similar to that granted to BrigadierGeneral Anderson, to command or control soldiers enlisted for active service while actually serving under their enlistment?
Mr GROOM:
Honorary Minister · DARLING DOWNS, QUEENSLAND · NAT

– The answers to the honorable member’s questions are as follow: -

  1. No information available in this office, as he served under the New South Wales Defence

Force before the inauguration of the Commonwealth. It is known, however, he served with the 2nd New South Wales Infantry Regiment.

  1. Second Lieutenant, 13th December, 1886. Lieutenant, 22nd September, 1891. Captain, 27th April, 1894.
  2. Yes, as a temporary Brigadier-General.
  3. No. Temporary Brigadier-General Sir E. C. Geddes, K.C.B., is an officer on the staff of the Adjutant-General at the War Office, and deals with compulsory service.
  4. No. As Deputy Quartermaster-General Colonel Anderson was on the staff of the Commandant, Australian Imperial Force, Headquarters, and General Officer Commanding Australian Imperial Force Troops in Egypt, and later in England, and exercised no executive command.
  5. Brigadier-General Anderson held the office of Commandant, Administrative Head-quarters, Australian Imperial Force in London, and not as stated in the question. As such he exercised no command over troops. That command was exercised by the general officer commanding Australian Imperial Force depots in the United Kingdom.

Brigadier-General Anderson’s executive command was confined to the personnel of his actual staff employed at administrative Australian Imperial Force Head-quarters, London.

  1. It is known that he qualified, but details are not available at Central Administration. They will be ascertained.
  2. Yes, many. The following arc examples: -

Director-General Military Railways, Hon. Major-General Sir E. C. Geddes. (Temporary.)

Deputy Director of Air Craft Equipment, Hon. Colonel J. D. Cormack. (Temporary.)

Director of Graves Registration, Temporary Brigadier-General F. A. G. Ware.

Director of Inland Water Ways, Temporary Brigadier-General A. S. Collard.

Deputy Director-General, Ministry of Munitions, Temporary Brevet- Colon el G. H. S. Brown.

These command or control the soldiers employed in their branches of. administration.

page 1523

QUESTION

PENSIONS FOR SOLDIERS’ MOTHERS

Mr KELLY:
WENTWORTH, NEW SOUTH WALES

asked the Treasurer, upon notice -

Will the Treasurer, whether by administrative order or by amendment of the Act, if amendment be necessary, arrange for married mothers of Australian soldiers killed on active service to rank for pensions as widows in cases where, in the opinion of the Commissioner of Pensions, their husbands cannot be compelled to contribute to their maintenance?

Sir JOHN FORREST:
Treasurer · SWAN, WESTERN AUSTRALIA · NAT

– The matter will be considered in connexion with any future amendment of the War Pensions Act.

page 1524

QUESTION

PERMANENT MILITARY FORCES

Enlistments

Mr GREGORY:

asked the Minister representing the Minister for Defence, upon notice -

Are any members of the Permanent Forces who have not enlisted for service outside of Australia to be participants in any proposed war allowance which may be provided by the Government in the expenditure for this financial year?

Mr GROOM:
NAT

– The answer to the honorable member’s question is as follows: -

The war allowance provided on current estimates is for payment to members of Permanent Forces serving in Australia. To be eligible to serve abroad members of the Permanent Forces would require to be accepted for enlistment in* the Expeditionary Force, and although every effort is being made to give all permanent soldiers the opportunity of joining, certain of them whose services are required in Australia have not yet been permitted to enlist. Others have volunteered and have been rejected for medical or age reasons.

page 1524

GERMAN TRADE NAMES

Motion (by Mr. Kelly) proposed -

That this House is of opinion that any step which will have the effect of popularizing trade names originally owned by German manufacturers will assist those manufacturers after the declaration of peace to dispose of their products in Australia, and that therefore the Commonwealth Government should endeavour to bring about an arrangement among the allied peoples whereby suitable synonyms for all such names be declared by law to be the only names by which the goods in question may in the future ‘ be sold in all countries now at war with Germany.

Mr SPEAKER (Hon W Elliot Johnson:

– Does the honorable member object to the motion being taken as formal ?

Mr Higgs:

– Yes.

Mr SPEAKER:

– That being so, the motion will have to take its assigned place on the business-paper, and cannot be debated now.

Debate adjourned.

page 1524

WAR-TIME PROFITS TAX ASSESSMENT BILL

In Committee (‘Consideration resumed from 29th August,vide page 1516) :

Clause 7 (as amended) -

There shall be levied and paid…..

Upon which Mr. Groom had moved -

That after the word “paid” the following words be inserted: - “ on all war-time profits from any business to which this Act applies arising after the thirtieth day of June, One thousand nine hundred and fifteen, a tax (hereinafter referred to as ‘ war-time profits tax’) at such rate as is declared by the Parliament.” “ (2) The war-time profits arising in a financial year shall be calculated as follows: -

By ascertaining the monthly average of the profit or loss arising in the accounting period ending in the financial year, and separately the monthly average of the profit or loss arising in the accounting period beginning in the financial year;

by multiplying the respective monthly averages of profit or loss (as the case may be) by the number of months of the respective accounting periods falling within the financial year;

by adding together the amounts of the profit or deducting the amount of the loss from the amount of the profit (as the case may be) and deducting from the sum so obtained the prewar standard of profits as defined for the purposes of this Act; and

by deducting from the sum remaining in paragraph (c) hereof the deduction (if any) allowed by the next succeeding sub-section. “ (3) Where the sum remaining under paragraph (c) of the last preceding sub-section -

does not exceed £200, the total sum shall be deducted;

exceeds £200, there shall be deducted the sum of £200 less -

in the financial year ending on the thirtieth day of June, 1916, £1 for every £2 by which the excess exceeds £200:

in all succeeding financial years, £1 for every £4 by which the excess exceeds £200. “ (4) For the purposes of this Act the accounting period shall be taken to be the period of twelve months for which the accounts of the business have been made up for the purposes of the Income Tax Assessment Act 1915-1916, and where the accounts of any business have not been made up for any definite period, or for the period for which they have been usually made up, or a year or more has elapsed without accounts being made up, shall be taken to be such period not being less than six months or more than a year, as the Commissioner determines, ending on such a date as the Commissioner determines. “ (5) Where a business has not been in existence during the whole of the financial year this section shall have effect as if there were substituted for £200 a proportionately reduced amount.”

Mr HUGHES:
Prime Minister and Attorney General · Bendigo · NAT

– I wish to say very shortly that my right honorable colleague, the Treasurer, will take an opportunity to announce to honorable members the amendments which he is now prepared to accept or propose. The Government desire to notify that it is their intention to press on with this measure, so that it may pass through all its stages before the hour at which we rise to-morrow afternoon.

Mr MATHEWS:
Melbourne Ports

– I clearly understood last evening, when progress was reported, that this Bill had to be put into the melting pot, so undesirable had it proved to a majority of honorable members on both sides. Personally, as I have said before, I intend to vote against the whole of the Bill.* I do not think there is any earnest intention on the part of the Government to get the amount of revenue they ought from the abnormal profits earned by some members of the community. I listened with great interest to the many instances given in which it was said certain taxpayers would be unfairly treated; and I admit that it may be so.

Mr Atkinson:

– What would have happened to those taxpayers under the proposal of the Labour Government?

Mr MATHEWS:

– Those taxpayers would, at any rate, not have been treated more severely than other taxpayers under that Bill. We had placed before us yesterday the case of professional men, who are now beginning to earn fees that they did not earn before the war, and who, under this measure, will be taxed with great severity, while other professional men, who have earned large fees for years, will escape. In my opinion both should bo taxed. This peculiar position also applies to business men. Proprietors of picture shows, who have put up buildings during the war, will be taxed, while those whose buildings were opened before the war will go free. The business man who has commenced operations since the war, and has become fairly prosperous, will be taxed, while his competitor, who was in business before the war, will not suffer. Every one should be treated in the same way. The principal objection to the Bill is the number of exemptions that are made. Because of that, the measure is likely to become a laughing stock.

Mr Wise:

– There were exemptions in the Bill introduced by the honorable member’s party.

Mr MATHEWS:

– I admit it; but we did not have time to discuss that Bill.

Mr Wise:

– I presume that it had the approval of the party when it was introduced.

Mr MATHEWS:

– I know that the honorable member holds that belief, but I can assure him that I did not have the opportunity of objecting to that Bill, and, even if I did approve of it then, we have since gained knowledge, and I see no reason for perpetuating the evils it contained. In any case, the question of taxing war profits should have been decided in 1915. I agree with the honorable member for Henty (Mr. Boyd) that retrospective taxation presses very hardly on the community. We know that some men have been doing fairly well, but we also know that the larger the income the greater is the expense. We propose to calculate the profits on the present cost of establishments. My anxiety is to get at many who made profits in 1914-15. For instance, many vessels were sold at that time. That is the trouble in England. Vessels have changed hands so often, and always at enhanced prices, and we calculate the percentage of profits on those enhanced prices, instead of upon the 1914- 15 values. I admit that there are many difficulties in the way. The Treasury officials estimate that the revenue from this taxation will be about £500,000 per annum. I do not see why we should extract this sum from one portion of the community only. We should tax every section that can afford to pay. As a matter of fact, I am surprised that the Bill has come up for discussion to-day. I thought that the Government were going to re-consider it, and present it again in some other form. They have not done so, and we have to accept a measure which will prove to be the laughing-stock of the world, because it purports to be a Wartime Profits Bill, whereas it is nothing of the sort.

Sir ROBERT BEST:
Kooyong

– In criticising this Bill we must have regard to the position of the Government and their anxiety to mitigate the many crudities which were associated with the measure introduced last year by the honorable member for Capricornia (Mr. Higgs). With the exception of the provision in regard to the taxation of professional men, the whole of the anomalies and hardships contained in this Bill were in the measure introduced by that honorable member. Every step the Government have taken has been with a view to the mitigation of those hardships, and it ill becomes honorable members opposite to assail the measure and point with emphasis to certain provisions in it, when those very provisions were fundamental features of the Bill that was brought forward by them last year. I sympathize with the Government in their desire to deal with this measure from the point of view of obtaining revenue. In my criticism of the Bill twelve months ago, and_ during this session, I have never indicatedanything but strong objection to it; but I commend the Government for their efforts to make it a reasonable measure. Criticism such as has fallen from this side of the Chamber would not be justified if it had the effect of depriving the Government of revenue, but every honorable member who has spoken against the Bill, or various features of it, has indicated that he is prepared to see that the revenue expected to be derived from this tax is made good under a more equitable form of taxation, . which has mostly been indicated as being an increased income tax. We have all the machinery available for that purpose, and honorable members feel that it would be a fairer and more equitable means of getting revenue. Undoubtedly the unanimous feeling of honorable members is that if it were possible to tax war profits as such, they would be prepared to go to any extent to do so. I have never discounted the difficulties in that connexion ; it is the one thing at which we should endeavour to aim ; but if it is altogether impracticable, then it becomes a question of taxing the war-time profits. If we resolve to frame an instrument for taxing war-time profits ib clearly should be one that is applicable all round, and one in which the exemptions, ‘ if any, should be few. In regard to the taxation of war profits as such the speech made by Sir Joseph Ward in introducing his Budget in the New Zealand Parliament verifies what I have always said in regard to the serious difficulties in dealing ‘ with war profits alone. The New Zealand Treasurer said -

On investigation it was found here, as it had been found in England, and was afterwards found in Canada, France, and the United States, that the difficulties of ascertaining exactly the actual profits resulting from the war were almost insuperable. - The machinery needed for the purpose was too elaborate to enable the revenue to be collected when it was required.

All experience, including that of the Mother Country, supports that statement. If, then, we are to abandon the taxation of war profits purely, and we are to have a tax of this character at all, the question arises as to whether we are to tax war-time profits. If we are to tax war-time profits the tax should be made to apply all round as far as possible. In the Bill attempts have been made at various exemptions, but I have pointed out previously that the people who will chiefly suffer by taxation of this’ character are the proprietors of new and progressive businesses. The obvious unfairness of an impost of this character has been already emphasized, and the many instances which have been quoted could be multiplied many times. It is obvious that this measure must be directed largely against young and struggling businesses, because the large and wealthy businesses with a high pre-; war standard will not suffer to any extent from such a tax as we are now considering. In New Zealand the Government had twelve months’ experience of a measure similar in all respects to that now before us, and because of the cost of administration and the inequitable incidence of the tax the Government had perforce to abandon (he measure. Sir Joseph Ward, in referring to that experience, said -

In this young country there is a larger proportion of concerns in the process of development than is the case in the older countries, and the tax presses unduly on them.

I should be glad if the Government would benefit by the experience of New Zealand. All the anomalies, hardships, and injustices which will result from the operation of this Bill arise from the fundamental fact that we are endeavouring to graft on to this community a measure which was essentially applicable to the, Mother Country, where it was first introduced. I do not think the Committee is justified in penalizing any comparatively small section of the community, but this Bill especially picks out for taxation manufacturers and small traders. At this period our anxiety should be to encourage in every possible way the expansion of industries, and unless the Government are prepared to give some relief to the sections to which I have referred, Parliament will not be justified in passing this measure at all. The honorable member for Wannon (Mr. Rodgers) and the honorable member for Wimmera (Mr. Sampson) made a suggestion, which I admit would give substantial relief, namely, that all incomes should be exempted up to £1,000, and that thereafter the tax should be imposed in gradations. That is an equitable proposal, and I hope that the Treasurer will see his way to make an alteration in that direction.

Mr Higgs:

– I am afraid it is of no use appealing to him.

Sir ROBERT BEST:

– I am sure that neither the Treasurer nor the Government would knowingly penalize any section of the community.

Sir John Forrest:

– Are you speaking of the professions?

Sir ROBERT BEST:

– I am opposed to the professions being brought within the scope of this measure at all, because of the individual hardships that would be inflicted. The tax on professional men does not affect me; on the contrary, the increased income tax which I advocate would penalize an old-established firm such as my own. Everything said by the honorable member for Flinders (Sir William Irvine) and other honorable members in regard to the struggling members of professions is justified, and instances of hardship such as were mentioned could be readily multiplied. In those circumstances I appeal to the Government, in the interests of the new industries and. those men who will be specially penalized by the Bill, to grant substantial relief in the manner I have indicated.

Sir JOHN FORREST:
Treasurer · Swan · NAT

(By leave). - I should like to take this opportunity of informing the Committee of the amendments which the Government will propose. The Government intend to proceed with the Bill in its present shape, subject to certain amendments, and we hope all honorable members will assist us to dispose of it by to-morrow evening; it has been too long on the stocks already. In regard to the pre-war standard, we shall provide for a minimum profit of £500 in every business, and will allow £300 to each individual owner of a business who devotes the whole of his time to that business.

Mr Tudor:

– Will that be in addition to the £500?

Sir JOHN FORREST:

– Yes. In the case of a partnership £300 will be allowed to each partner who devotes the whole of his time, and a proportionate allowance to partners who devote portion of their time to the business. The general exemption of £200 already in the Bill will remain. This means that no business will be taxed underthis Bill until its profits exceed £1,000.

Mr Fenton:

– That is to say, wartime profits ?

Sir JOHN FORREST:

– Quite so. Then, again, it was proposed by the Government to delete paragraph d of clause 8, which excepts from the operation of the Act-

Any profession, the profits of which depend mainly on the personal qualifications of the person by whom it is earned on, and in which comparatively little or no capital expenditure is required.

After further consideration, however, the Government have decided not to make that amendment, so that professional men will be exempt from the provisions of this Bill, just as they were under the original Bill introduced by the honorable member for Capricornia (Mr. Higgs), who was then Treasurer, , and as they are under the English Act. We have reconsidered the matter, and fresh light has come to us. There can be no doubt that to delete the paragraph in question would be to inflict great hardship on many young professional men. It would deprive them of a considerable proportion of their by no means very large incomes. I hope that this announcement as to the intentions of the Government will remove many of the objections to the Bill that have been voiced, and that we shall now proceed speedily to pass the measure.

Mr TUDOR:
Yarra

.- (By leave). - I am convinced now that the Ministerial party decided at their meeting this morning what form this Bill should take. As the Treasurer has just told us, they have seen the light. During the discussion yesterday the honorable member for Flinders (Sir William Irvine), the honorable member for Henty (Mr. Boyd), the honorable member for Parkes (Mr. Bruce Smith), and the honorable mem!ber for Wannon (Mr. Rodgers) advanced reasons why professional men should not be brought within the scope of this measure. The honorable member for Wilmot (Mr. Atkinson) also urged that the Ministerial parly were so hopelessly divided on the subject that a joint meeting of the two parties in this House should be held to give a direction to this Administration, which, when it came into power, we were told, was to restore responsible government.

Sir William Irvine:

– We used to say the same thing concerning the caucus of the honorable member’s party.

Mr TUDOR:

– Undoubtedly ; and I have no doubt that when honorable members opposite return to the Opposition benches they will say it again.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– As to that-

Mr TUDOR:

– I intend to refer to the honorable member. We see him so rarely that it is only fair that I should give him some attention.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– We ‘have had fifteen years of this.

Mr TUDOR:

– And I hope that the honorable member will have another fifteen years in Opposition. We have heard honorable members opposite pleading for struggling businesses and young professional men.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– The honorable member for Batman (Mr. Brennan) made the same plea.

Mr TUDOR:

– Another argument often used by the anti-Labour party, to which the honorable member for Denison (Mr. Laird Smith) now belongs, was founded upon the cry of “ the poor widow “ - the rock to which they have always clung - so they now turn to the poor struggling professional men, who are to get an exemption of £1,000 per annum. Their arguments used here, and, apparently, also in the Caucus, have had so much effect upon the Government that Ministers now say, in effect, to them, “Don’t shoot, Colonel; we will climb down.” And they have climbed down. The honorable member for Wannon (Mr. Rodgers) urged yesterday that no man should be affected by war-profits taxation except in respect of earnings in excess of £1,000 a year. What about the millions in Australia who do not earn £150 a year?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– This Bill will not apply to them.

Mr TUDOR:

– No ; but they are being robbed by the people who have made huge profits such as those to which Sir Alexander Peacock referred in the State Parliament a few weeks ago, and which were also used here in the second-reading debate on the Bill. Those are the people to whom we desired this Bill to apply ; but the Treasurer is going to allow many of them to escape. I have no doubt that, if the Ministerial party had been a little more persistent at their meeting this morning, they would have secured still further concessions.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member and his party at one time were out to catch combines. It would seem that they are now after the small individuals.

Mr TUDOR:

– We are not; we are after the people who have made, and are still making, huge profits out of the war. A fundamental principle of the Bill should be that any person who has made ‘ war-time profits should be taxed.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– Why did not the Labour Government pass their War Profits Bill when they were. in office?

Mr TUDOR:

– I explained during the second-reading debate why we failed to pass the Bill introduced by the then Treasurer (Mr. Higgs). The Fisher Government caine into power immediately after the outbreak of war, in 1914, and submitted a financial statement at the beginning of December, 1914. The then Treasurer, in his Budget speech, announced that the Government intended to introduce a Bill for the taxation of war profits; but, as there was a general desire on the part of honorable members that only urgent war legislation should be dealt with, it was not proceeded with at that time. Mr. Fisher left this Parliament for England in . October, 1915, and was followed very shortly afterwards by the present Prime Minister. It was during his absence in England that the Labour Government introduced its War Profits Bill. The only speech made upon it was that delivered by the then Treasurer (Mr. Higgs), when introducing it, and he announced that it would not be proceeded with during the absence of the Prime Minister. Every one knows the political history of the country in those days, and if the same state of affairs existed again, I have no doubt that the same course would be followed.

I do not think the honorable member for Parkes would wilfully make a misstatement, but, in the course of the debate last night, he said that when the Labour party were in power, their measures were not discussed in the House by members of the party, for the reason that they had already been “fixed up in the Caucus.” There are now among the Ministerial party several honorable members who were members of the Labour party who can support my statement that such an assertion is absolutely incorrect. At our meetings we merely decided upon certain principles, just as the Ministerial party did this morning in regard to this Bill. We did not go into the details of any Bill. The Treasurer came down yesterday with his schedule of amendments, seven pages of them, under which professions were to be liable for taxation, but now we find they are to be exempted. Goodness knows what arrangement will be come to to-morrow over this matter! It appears to be a case of - “ They’re in, they’re out.” It is hard to say what will be the position to-morrow, but at the present time the professions are excluded from the scope of the Bill.

Sir John Forrest:

– The amendments have not been moved yet.

Mr TUDOR:

– I am aware of that, but the position is as I have stated. The Minister appears to be very “ wobbly “ over this matter. With the exemptions that have been indicated, I doubt very much if even the small sum estimated by the Treasurer will now be received under this Bill, which will not be as effective as formerly, viewed as an instrument of taxation.

Mr GREGORY:
Dampier

.- The remarks made by the Leader of the Opposition are not quite correct. The Government are determined to go on with the War-time Profits Bill, though an important section of honorable members on this side of the House desire to so alter it as to remove certain injustices and inequalities. Honorable members opposite are absolutely careless of inflicting injury on a certain section of the community so long as they can get at people who are making profits. We are all agreed that people who are making huge profits out of the war should be compelled to pay a fair share of the added burden of taxation, but I am afraid they will not be reached by this measure. The object of the Bill should not be to tax the small man who is now making, perhaps, £500 or £1,000 more than in previous years. I do not think that any member on the Opposition side would dare to get on the public platform and advocate taking 75 per cent, of the profits made by such men.

Mr Brennan:

– But the amendments only go half way.

Mr GREGORY:

– Under the old Bill honorable members opposite were absolutely careless whom they robbed. There was not the slightest semblance of justice in the original Bill. The object in this form of special taxation should be to get at the men who are exploiting the public and making huge profits during war-time; and, if possible, this measure should be a War Profits Tax and not a War-time Profits Tax. I am still prepared to fight for that principle. Honorable members on this side are not like honorable members’ opposite, for when our party agrees to any principle, we are not individually pledged absolutely to support the Government, but are free to act as conscience dictates.

Mr Brennan:

– You pass resolutions in Caucus, and then say that you can do as you like!

Mr GREGORY:

– I propose to do that, at all events; and when this question of exempting the professional men is raised, I shall vote against it.

Mr Richard Foster:

– And so will many other honorable members.

Mr Brennan:

– Evidently the Government have a majority of your party for the division, at any rate.

Mr GREGORY:

– That will be proved by the vote. I have no doubt that the honorable member will vote to exempt his own profession.

Mr Brennan:

– I am pledged to vote against this Bill at every stage. That is my policy. I will not have anything to do with it.

Mr GREGORY:

– But I suppose the honorable member would have supported every clause of it had it been introduced by the honorable member for Capricornia (Mr. Higgs). I do not approve of the principle under, which struggling industries are to be called upon to bear a heavy share of the burden. The honorable member for Maranoa (Mr. Page) knows very well that during the past seven or eight years a good number of people have been induced to start in the pastoral industry. Many of them had a hard struggle, with the result that they had to borrow money to -carry on, but within the last two years they have done fairly well. Under this Bill they will have no pre-war standard of profits, and will only get an exemption of 10 per cent, on capital invested, whereas other pastoralists who, for fifteen or sixteen years, have been making average profits of from £10,000 to £12,000 a year, and therefore have a pre-war standard of profit, will probably not pay an extra sixpence under this measure. We all realize the difficulty of the men who have engaged in such businesses in recent years. Those people should be protected from special taxation of this nature. The object should be to tax the big war profits. Those mining companies which have been doing a very remunerative business owing to the increase in the price of base metals should be called upon to pay. I have been looking carefully through the New South Wales mining records, and find that last year the profits were £1,021,000 in excess of those of the previous year. In 1912 the total value of the products was £11,641,000; in 1913, it was £12,095,000; and in 1914 and 1915 it had been reduced to slightly over £10,000,000 each year.

Mr Tudor:

– Was that the profit or the total production?

Mr GREGORY:

– That was the total production. The excess profit last year was £1,021,000. It is quite possible that some big companies except, perhaps, the Sulphide Corporation, do not show a big increase in profits, therefore we cannot expect to get anything; from them in the way of a war-time profits tax. They have secured war profits through the higher prices given for metals owing to the war, and we are justified in imposing this taxation upon them, but it should be based on the increased price of these metals. We are justified, also, in asking that pastoralists should bear this taxation, because of the increased price of wool due to the war. I had some difficulty in following the honorable member for Flinders (Sir William Irvine) as to the way in which we should be able to get at the exploiter in the city, as his profits are indirectly due to the war ; but I think that the difficulty might be got over. The Government have made a promise now to do something to protect the smaller business man by the exemption up to £1,000. I am satisfied that honorable members opposite do not desire to injure him, and that their object is to tax the exploiter. They can rest assured that I am willing to do all I can to bring the exploiter within the scope of this Bill. So far as professional men are concerned, many of them have benefited very largely, owing to others of their class having gone to the war, and, beyond a reasonable exemption, s,o far as their incomes are concerned, J. do not see why they should not be included in this taxation.

Mr PAGE:
Maranoa

.- The discussion of this measure has been much the same as the discussion upon every other taxation measure introduced in this Parliament since I have been a member of it. Every one wants to tax the other fellow, and no one, apparently, is willing to pay just taxation. The honorable member for Kooyong (Sir Robert Best) tried to fix the whole of the responsibility for all the defects of this Bill upon the honorable member for Capricornia (Mr. Higgs), because he happened to be Treasurer in the last Government.

Sir John Forrest:

– We have all to bear a great deal of blame that we do not deserve.

Mr PAGE:

– The right honorable gentleman has a lot to answer for, because of what he has done only this afternoon. What does it matter what Bill was introduced by the last Government? The position is that it is the present Government who -have introduced the Bill now before us; and, no matter how sick and heavy the baby may be, it is the supporters of the present Government who will have to carry that baby. I give every member of the Committee credit for desiring to get at every man who has made excessive profits during the war, and out of the war. Like the honorable member for Flinders (Sir William Irvine), I believe that the easiest way in which to do that is to impose a super-income tax. That would get at the whole of them. With regard to the little business men, honorable members sitting behind the Government have dropped the poor widows and orphans now, and have taken up the poor business man who has just started in business, has just got on his legs, and is tottering along. I can only say that I wish that every honorable member opposite had a little business tottering along to the extent of £1,000 a year, for that is what our friends opposite apparently mean by a “ little business.”

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member assumes that all the income is available to pay the tax.

Mr PAGE:

– No, I am not such a fool. The honorable member is one who can make two blades of grass grow where no other man could do so, but he ought not to put words into my mouth which I never uttered. The Treasurer (Sir John Forrest) has climbed down, after listening to the speech made by the honorable member for Flinders yesterday afternoon.

The CHAIRMAN (Hon J M Chanter:
RIVERINA, NEW SOUTH WALES

– Order! That) question is not now involved. A blank has been created, and it is now proposed ‘to insert certain words in that blank.

Mr PAGE:

– The honorable member for Flinders was dealing with this question in the discussion of clause 7 yesterday afternoon, and I am dealing with the same question now.

The CHAIRMAN:

– The honorable member for Flinders made a passing reference to it.

Mr PAGE:

– His passing reference occupied about an hour and a quarter. I shall just make a passing reference to the matter by saying that the honorable gentleman’s speech made an impression upon me. Listening to it, and the remarks made by other honorable members on the Government cross benches, I made up my mind that there was a little comic opera going on in the Ministerial corner. When I saw the honorable member for Flinders about the building so early this morning I came to the conclusion that something was doing. We have the result this afternoon when the Treasurer submits these exemptions.

The CHAIRMAN:

– I thought I had made the position clear to the Committee, When the Treasurer rose to make a statement departing altogether from the rulesof debate, I pointed out that it was necessary that he should ask the Committee for leave to make a general statement which opened up a discussion of the whole Bill. The Leader of the Opposition desired to traverse the same ground, and I asked whether it was the wish of the Committee that he should have leave to do so. Both these honorable gentlemen obtained the leave of the Committee to transgress the rules. I now ask, not only the honorable member for Maranoa, but every other member of the Committee, to confine himself to the matter before the Chair, which does not involve a general discussion of the Bill. In view of the statement made by the Treasurer to-day, and accepted by the Leader of the Opposition, that the consideration of the Bill should be concluded by 4 o’clock to-morrow afternoon, I ask honorable members generally to assist the Chair to get the business through without delay.

Mr PAGE:

– I have no wish to transgress your ruling, and, so far as I am concerned, the Government may have the Bill in an hour’s time. I do not want to “ stone-wall “ it or delay its progress in any way, but other members of the Committee while you have been in the Chair have spoken in general terms, and I desire to say only a few words in reply to statements which it took them hours to make. As you have ruled that a general discussion is not in order, I shall endeavour to obey that ruling.

Sir William Irvine:

– This clause is practically the whole Bill.

Mr PAGE:

– I was just about to remark that clause 7 is practically the whole Bill.

The CHAIRMAN:

– Order! I am very loath to intervene. I desire to be in accord with the Committee so far as I can. It is true that the clause now before the Committee does cover a great deal of the Bill, but not the whole of it. I again direct the attention of the honorable member for Maranoa to the fact that he was proposing to discuss the exemption of professional men. The clause dealing with that has been postponed at the requestof the Committee. It will have to be dealt with later, and then honorable members will have a full opportunity to discuss the question it involves. I ask the honorable member to postpone the discussion of that question until the clause raising it is before the Committee.

Mr PAGE:

– I am very sorry if I have transgressed our Standing Orders, but I must plead that the Treasurer himself was responsible for my transgression. Until you, sir, mentioned the fact, I had forgotten that the right honorable gentleman obtained the leave of the Committee to make a. statement. I know of many men in my own constituency who have suffered severely on account of the ravages wrought by the drought and the blow-fly. These men lost a terrible quantity of stock, which they had to replace at rates 100 per cent, higher than those which obtained previously. These are the individuals whom this Bill will hit, and hit very hard,

Sir John Forrest:

– I do not think so. The measure provides for a pre-war standard, and if two years out of the three immediately prior to the outbreak of war do not suit them they are at liberty t go farther back.

Mr PAGE:

– These men have received the money due to them on account of the sale of their wool and have put that money into their selections and’ stock. They have spent it, and, therefore, they cannot pay the taxation which is now proposed.

Sir John Forrest:

– Perhaps they do not understand that they can get credit for their losses.

Mr PAGE:

– They understand that the right honorable gentleman is out for the “boodle.”

Sir John Forrest:

– If the honorable member will submit their case to me I will have it analyzed.

Mr PAGE:

– I shall have great pleasure in doing what the Treasurer suggests. I know that if their claim can be- substantiated the Taxation Department will go as far as the law will permit it to go towards meeting that claim. It was very amusing to hear the honorable member for Kooyong beating the air as he did yesterday and again this afternoon. But after a very few minutes to-day the Trea-surer said, in effect, “ Don’t shoot; I will come down.” If there is one member of this Committee, who ought to be pleased with himself it is the honorable member for Kooyong (Sir Robert Best).

Mr BRENNAN:
Batman

.- I must congratulate the Treasurer upon the flexibility he has exhibited in regard to this matter. Only yesterday he assured us that he was not going to do certain things merely because he was asked to do them. This clause provided for excluding certain persons from the operation of the Bill. The Treasurer (Sir John Forrest) was told that he ought to include those persons, and, accordingly, he did so. Later on he was told that he ought to exempt them, and he did so.

The CHAIRMAN (Hon J M Chanter:

– Order !

Mr BRENNAN:

– I wish now to say a few words in justification of my attitude towards the Bill. It has been stated in the press that, upon this question, I followed the , honorable member for Flinders (Sir William Irvine). That is a most damaging statement to make concerning me. I would like it to be clearly understood how such an accident happened. I have previously said that this Bill does not commend itself to me because of its inequalities. But I have never asked for the modification of any of its proposals except in so far as they would operate inequitably, either in regard to certain persons who are in receipt of large incomes or certain businesses which are making large profits. I agree -with everything that was said by my leader regarding the position of the Government and their supporters. Earlier in the debate I pointed out that the Bill, in the form in which it had been introduced, would produce insignificant results. But when we came to discuss specific cases under it, I urged that the injustices to which the honorable member for Kooyong (Sir Robert Best) had directed pointed attention should be removed.

Dr Maloney:

– Were those injustices principally confined to the legal profession f

Mr BRENNAN:

– They particularly concerned small businesses and junior men in the medical and legal professions. That is the point which was stressed by the honorable member for Flinders (Sir William Irvine) and the honorable member for Kooyong (Sir Robert Best).

Mr STORY:
Boothby

.- I desire briefly to outline my attitude towards this Bill. The clause which is now under consideration embodies the whole principle underlying the measure. I happened to be a member of the party that supported the .Government which first introduced a War-time Profits Bill. It was brought forward by the then Treasurer, the honorable member for Capricornia (Mr. Higgs). That measure had the support of most - honorable _ members opposite who are now opposing the Bill. I was also a supporter of the Government of which the honorable member for Grey (Mr. Poynton) was Treasurer. He, too, brought forward a somewhat similar measure. Now I am supporting the Government which has submitted this Bill for our consideration. I must confess, however, that I am not satisfied with the Bill. The principle that should underlie all war-time profits taxation is that all extraordinary profits which have been made either by an individual or a business, on account of the war, are proper subjects for taxation. That principle should not be departed from. I fail to discern any just reason for any exemptions whatever. If a business has come into existence simply because of war conditions, will any very great injustice be inflicted upon its proprietor if he is obliged to pay extraordinary taxation? Had there been no war there would have been no business. The honorable member for Flinders (Sir William Irvine), in speaking upon the motion for the second reading of this measure, made the best suggestion that has been put forward in regard to this matter. He suggested that we should not overload the measure with restrictions, but that we should vest the Commissioner with ample power to deal with all cases–

The CHAIRMAN (Hon J M Chanter:

– Order! The remarks of the honorable member are certainly outside the scope of the clause.

Mr STORY:

– Clause 8, if proper effect is given to it, ought to protect all small businesses from being unduly taxed, because it gives the right of appeal to any one who feels that he is taxed unjustly. I rose merely to define my attitude, which is that I am supporting the taxation of war profits, and voting against any exemption for anybody. I do not say I was sorry to hear the Treasurer announce to-day that it was now proposed to exempt professional men, but I go onthe broad principle that any profit that has been made simply because of the existence of war conditions should be taxed.

Sir William Irvine:

– Would that apply to members of Parliament and Ministers ?

Mr STORY:

– If members of Parliament or Ministers are getting increased salaries because war exists, they ought to be taxed. It is only because of the existence of war conditions that there are any war profits, and it is only people who have made profits on account of the existence of war that should be taxed.

The CHAIRMAN:

– I ask the honorable member to confine himself to the amendment. The honorable member is speaking to the original clause, which the

Committee has already decided to delete. A blank having been created, the Treasurer proposes to insert in its place other words and principles, which do not includethe point the honorable member is now discussing. The honorable member will be in order in discussing it when other clauses of the Bill are reached.

Mr STORY:

– I apologize. I was absent from the Chamber for a few minutes, and was absolutely ignorant that part of the clause had been deleted. I am not in favour of any exemptions, and shall vote against any proposal to exempt from the operation of the measure any one who has made profits on account of the existence of war.

Dr MALONEY:
Melbourne

.- I indorse the remarks of the honorable member for Boothby (Mr. Story). In the party to which he and I belonged, I laughed at the Bill that was then introduced, because I did not think it went far enough. I still laugh at! this Bill as amended, and could have wished that the Government had retained the original clause. I should have voted for the Bill with that clause in it much more willingly than I shall vote for it now. I certainly shall not vote against the Bill, because I believe some such measure ought to be passed, but I strongly resent the proposed exemptions. There is to be an exemption of £1,000, but whether that is in addition to the average rate of the three years previous to 1915, I cannot say, nor can I say whether it is in addition to the average of any two years out of those three. Any one trading in Belgium, Servia, Montenegro, Roumania, or that portion of France which is overrun by the belligerents would thank his Creator if he could carry on his business without a penny profit. He would say his prayers daily for the blessing of being able to carry on at all; but here, forsooth, there is to be a general exemption of £500, according to the Minister, an individual exemption of £300, and an additional exemption of £200 in certain cases, or £1,000 per annum in all, on top of the average of any two years out of the three years preceding the declaration of war. I cannot believe that any Government will seriously contend that that is right. Ask the common people, who are meeting in their hundreds and thousands outside, and who have nob a chance of making £300 a year in addition to their average earnings, or of getting the exemption of £500 per year, or the. special exemption of £200 per year. I honour the words of the honorable member for Boothby (Mr. Story). It is an infamy to have any exemptions of this kind. Deserving cases have been brought under my notice, and I can quite understand that certain exemptions might be given to people in Papua and the Northern Territory, where the climate is adverse, not only to the workers, but to those in high positions ; but when one reads of dividends running up to 70 and 75 per cent. paid last year by certain plantations outside of Australia,one cannot help feeling that, after allowing for a fair exemption in those cases, something ought to be paid.

Mr Boyd:

– Under this Bill we cannot tax profits made outside Australia.

Dr MALONEY:

– The honorable member is quite right. I was merely alluding to the wonderful profits made in certain lines. I have no reason to dislike the legal profession individually. Some of my best and most beloved friends are in its ranks ; but I would welcome the day when the profession as a whole was eliminated. I hope that some day the profession of the law will be nationalized, so that a man will not devote all his brain power and energies to get the greatest criminals set free, so that they may prey on the public again. The legal gentlemen present may laugh, but they know it is true, and they know also that some of those whose names shine brightest in the legal firmament have declared that they would never willingly defend as innocent a man whom they knew to be guilty. Many lawyers make large incomes. How different it is in other countries - Denmark, for instance. The honorable member for Denison (Mr. Laird Smith) has before this indorsed some of my remarks about the people of that little nation. Cases have been quoted of lawyers making £300 a year two years before the war, £500 in the year previous to the war, and £1,500 a year during war time; but this is a tax upon excess incomes earned during the period of the war, and no sophistry, no legal jargon, will change the fact that those are war-time profits. If by the glorious circumstance of being here, far away from the scene of the war, we are free from the conditions of those unfortunate countries that have been overrun by the enemy, that is all the more rea son why we should be willing to pay more. I might startle honorable members if I said that the increases of incomes during this time have gone up to 2,000,000 per cent., and I suppose some of those will come under the exemptions.

Mr Boyd:

– Two million per cent.! What are you talking about?

Dr MALONEY:

– Yes, 2,000,000 per cent. from the year before the war up to last year.

Mr Boyd:

– Will you give one solitary case?

Dr MALONEY:

– I am prepared to do so, because I expected that my dear friend would jump at the chance. Perhaps he may be reassured if I tell him that I have had the assistance of two good mathematicians, who have checked the figures, and the opinion of a professor at the University that the statement is right. Being a mathematician, my honorable friend will agree with me that on nothing one can base no mathematical deduction.

Mr Boyd:

– Yours is an increase of 2,000,000 per cent. on nothing.

Dr MALONEY:

– Oh, no! My honorable friend is not going to catch me with salt of that kind. We will take an individual or a firm who made nothing in 1915, and allow an earning of £1, which my honorable friend will admit is a considerable percentage on nothing. This case is known as No. 262 in a list of 265 names taken from the State incometax returns at the request of Sir Alexander Peacock, no names being permitted to be furnished, so I am informed. In 1914, this case, known as No. 262, earned nothing, but we will make the firm a present of £1 as a basis, because mathematicians must have a starting point. In 1916 the firm made a net profit of £20,966. Any honorable member who knows anything about mathematics is aware that he has only to add two noughts to that sum, and he will find that there is an increase of 2,096,600 per cent. for 1916 over 1914.

Mr Boyd:

– These must be Chinese mathematics.

Dr MALONEY:

– I cannot speak in Chinese, and I dare say that my honorable friend does not understand that splendid language. I challenge any honorable member to deny the statement I have made. I am willing to back these figures to the extent of a life governorship in a hospital if my honorable friend cares to take up the offer, granting a starting basis of £1, because otherwise it would be non-calculable. Let me now take a few cases showing the profits. Case No. 3 earned £27,145 in 1914, and £58,957 in 1916, showing an increased profit of nearly £32,000. Surely the profit-makers in that case will not want any exemption. If they have an exemption of £27,000 a year, why do they want any further exemption during the war period ?

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– May I ask whether that is the case of a company?

Dr MALONEY:

– I do not know. I would give the information willingly if it were available, but it is taken, I presume, from income-tax returns, which are secret, and so the makers of the returns can only be indicated by numbers, though the officer under Sir Alexander Peacock could correct a mistake if it were made. I will not trouble about an increase of £16,000 in the profits of another business. Let me take a case where the increase is a big one. A profit of £58,516 in 1914 becomes increased by £49,000 to £107,426 in 1916. In another case a profit of £87,782 in 1914 is increased to £188,644 in 1916; that is an increase of £101,000 during the war, in comparison with the return for the year before the war. Is there any honorable member here who will say that a man or a firm with such a return as that should have an exemption ? Why should not the total sum be taken ? Consider the case of a £3 a week man or the case of girls who have been earning 30s. a week, and in lucky places, up to 45s. a week, and are now thrown out of work. There is no exemption needed for these persons. They belong to the common people. If we are going to talk about using the last shilling, let us start upon the first pence of the last shilling here. I will give one more case, and then I shall have finished with this list. A profit of £30,744 a year before the war increased to a profit of £81,418 during the war. That is an increased profit of £51,000 to one firm or individual, and yet these people talk about an exemption, first of £500, next of £300, and then of £200. That is a total exemption of £1,000.

Mr Mathews:

– There is a 10 per cent. exemption besides.

Dr MALONEY:

– Is there another exemption? God only knows when the exemptions will end, and the Government will finally decide. Let us now see the total of the profits earned. Of these 265 cases, some ten only may have made less profit in the war period than they did previously. In 1914, a total profit of £3,958,885, say, in round numbers, £4,000,000, was made by 265 individuals and firms. In 1915, that profit was increased by nearly £500,000, to £4,371,773 ; and, in 1916, it was further increased to £5,479,895; showing a total clear profit of £1,933,998 in war time as compared with the return for 1914. It seems to me that there is only one way of dealing with the situation, and that is why I agree with the honorable member for Boothby (Mr. Story). The proposed new clause provides that the war-time profits arising in a financial year shall be calculated as follows : -

  1. by ascertaining the monthly average of the profit or loss arising in the accounting period ending in the financial year and separately the monthly average of the profit or loss arising in the accounting period beginning in the financial year.

Why not take the income-tax return which is sent in with a declaration that the statements contained therein are true? Every year two income-tax returns have to be compiled by the taxpayer and sent in, namely, one to the Commonwealth and one to the State. Why one return does not suffice, I do not know; because it would be quite feasible for the two taxing authorities to assess the income tax on one return. Why not require only one return to be furnished instead of compelling every person to perform the intricate task of preparing certain data for a second return ? If any person sent in crooked returns, surely the necessity for punishment is clear enough. It would be simpler to follow the suggestion of Sir Alexander Peacock, who has had almost as much experience of public finance as the right honorable member for Swan.

Mr Boyd:

– He has not been Treasurer for four years, all told.

Dr MALONEY:

– The honorable member is in error. Paragraph b says that the war-time profits arising in a financial year shall be calculated - by multiplying the respective monthly averages of profit or loss (as the case may be) by the number of months of the respective accounting periods falling within the financial year.

Then comes paragraph c - by adding together the amounts of the profit, or deducting the amount of the loss from the amount of the profit (as the case may be) and deducting from the sum so obtained the prewar standard of profits as defined for the purposes of this Act.

The honorable member for Flinders (Sir William Irvine) has said that it would require a lawyer, an accountant, and perhaps a clerk, to make out these returns. This is ridiculous. Coming from one who sits in the Ministerial corner, the statement may have some weight with Ministers. A similar statement has been made to me by a friend who is an accountant, and who promised to go through the Bill and annotate it. After three or four nights of solid work, he gave up the attempt in desperation, and asked me to dinner instead. He told me that the difficulties under the Bill would be far greater than those under the income tax legislation, and that not only those outside, but also those inside, would have trouble in getting at what was intended. The final paragraph of the sub-clause that I have been quoting speaks of - deducting from the sum remaining in paragraph o hereof the deduction, if any, allowed by the next succeeding sub-section.

I candidly own that the meaning of these provisions is beyond my comprehension. I can never vote against a Bill introduced to tax war-time profits, but I protest against these provisions ; and, if a division is taken, shall vote against them, because I think that most of them are absolutely unnecessary, and they are as intricate as it was possible for the parliamentary draftsmen to make them. Mr.’ Justice Isaacs is the one man besides myself who has been a member of this House and has studied the Code Napoleon, or, rather, the translation, of it, and has admired the simplicity of its language. I appeal to the lawyers here to frame this Bill in plain, simple English, which the man with average education can understand. There is not a Frenchman whose education is equal to that of a State school boy who could not express a clear opinion regarding any clause , of the Code Napoleon, the civil code of France; but “t would require some one cleverer than a Philadelphia lawyer to give an opinion on these provisions.

Mr West:

– To what Philadelphia lawyer does the honorable member refer?

Dr MALONEY:

– I understand that the leader of the American bar, at the time when the English jurists were beaten on the Alabama claim, was a very clever Philadelphia lawyer, and that that is how the expression arose. I am sorry that the Government have proposed to amend clause 1. No doubt, Ministers- have been influenced by the pressure put upon them. While not blaming them for a tendency to regard favorably suggestions made from their own side, I think that they would have done better had they stuck to the original clause. I am against all exemptions, and therefore see no reason for determining how exemptions shall be calculated. I trust that the Government will be compelled by outside pressure to keep at least a little bit of the promise regarding the contribution of the last shillingto the assistance of the Empire. So far, we have not contributed the first farthing of the forty-eight of which the shilling consists, and I wish to see at least a halfpenny contributed under this Bill. The friends and relatives of the 360,000 men who have offered themselves for the defence of the country should know that we are in earnest. I would wipe out all exemptions, even those applying to the legal and medical professions. There are in the* latter fewer money making men than in the professions of divinity or law, but there are some.

Mr Groom:

– There are not many money-makers in the profession of divinity.

Dr MALONEY:

– The members of that profession rushed after the chance of getting £18 a week by volunteering to go tothe Front. If an- opportunity be given, I shall vote against all these exemptions. I am in f avour of a tax on all profits over and above the average of the years proceeding the outbreak of war. There should be no exemption of war-time profits. The man who gives £10 or £500 to patriotic funds, and gets the money back in some way, is no true patriot. Those who are making profits by raising rents, by selling diseased food, and by increasing the cost of living, are, in my opinion,, enemies within the gates, and should be dealt with as such.

Mr LECKIE:
Indi

.- I am glad that the Treasurer realizes that the Bill, as introduced, will hit some new and small businesses very hard; but he appearsnot to see the exact effect of the exemption which he has just proclaimed. He says in effect, that when an individual is carrying on a business, he shall be allowed to make a profit of £1,000 before he becomes liable to taxation under the Bill. I understand that that is the position of the man who is in business by himself, but we must also take into account the case of a partnership.

Mr Groom:

– The partners get £600 - £300 each.

Mr LECKIE:

– First we have the £500 exemption, then the £300 for each of the partners for the supervision of the business, and the £200, or £1,300 altogether. Each individual, instead of making £1,000, is allowed to make only £650 before becoming taxable. In a partnership of four, the position is worse, because each partner will become taxable when he has an income of £475. I do not know what the position will be in relation to a company where many people

Are concerned ; but in this regard the Bill, on the face of it, seems altogether inequitable. I still say that a very much better way would be to exempt businesses of very small capital, say, up to £5,000, for both individuals and partnerships. It would not then be necessary to go into figures, for there would be a plain exemption, and people would know where they stood. The proposal, as presented to us, sounded all right, but, unless some alteration is made, it will work very inequitably. However, I realize that on the next clause I shall be able to move an amendment in the direction I desire.

There is one other point in connexion with the clause under discussion, and, that has relation to the £200 exemption. One of the great difficulties of the Bill is that it does not provide for a progressive business, and I suggest that the Treasurer might, for instance, make the exemption £100 for the first year, and increase it by £100 in each successive year, so as to allow for ordinary normal growth quite apart from anything connected with the war. I am thoroughly in accord with the principle that if a man makes exorbitant profits because of the war, the community should have the benefit of those profits; but, at the same time, I have no desire to see small businesses hurt. The Government desire men to start new businesses, with a view to seizing the trade of enemy companies in Australia, and, with that object, companies have been formed since the beginning of the war. Such manufacturing enterprise is only possible because trade is stopped with the enemy countries; and if the Bill is carried out as presented to us it will become impossible.

Mr Poynton:

– Those businesses are the result of the war.

Mr LECKIE:

– Quite so.

Mr Poynton:

– Then why should the profits not be taxed?

Mr LECKIE:

– The businesses are the result of the war, but surely it is in the interests of Australia that such new manufactures and businesses should be firmly established in Australia, so that they may be able to maintain their own when the war is ended?

Mr Archibald:

– Those businesses are making money out of the war.

Mr LECKIE:

– That is so.

Mr Archibald:

– And you think that that is a good thing?

Mr LECKIE:

– No ; but surely it is desirable to have such businesses established here; and their establishment will become impossible if 75 per cent. of their profits are taken.

Mr West:

– A man willnot close up his business if he is making profits.

Mr LECKIE:

– But he will have no profits if they are all taken by the Government. I ask the Treasurer to look kindly on the suggestion I have made to exempt businesses of small capital, and also to increase the exemption in succeeding years, so as to allow for ordinary expansion.

Mr POYNTON:
Grey

.-I wish to indicate my position in regard to this Bill. With the exemption of £500, and the other provisions, a man who shows a pre-war profit of £1,000 will be allowed to earn another £1,000 before he becomes taxable.

Sir John Forrest:

– No.

Mr POYNTON:

– The proposed exemption is £500; £300 is allowed for supervising the business, and under the Bill the other £200 is to stand, so that here, at any rate, we have £1,000. If a man on his pre-war standard had an income of £1,000, he would not be taxable under the Bill until he goes beyond £2,000.

Mr Groom:

– The amendments to be proposed will make the matter perfectly clear.

Mr POYNTON:

– According to the Treasurer’s statement, the Bill does not touch the pre-war standard; and in my opinion the position, as I have outlined it, is an outrage.

Mr Tudor:

– Supposing a man had £5,000 as his pre-war standard?

Mr POYNTON:

– Then, I take it that he would have to earn another £6,000be- fore he became taxable.

Sir John Forrest:

– I think the honorable member is wrong.

Mr POYNTON:

– I am only going by what the Treasurer said.

Sir John Forrest:

– There is a minimum.

Mr POYNTON:

– If there is a minimum, the Treasurer should be able to tell us what is the maximum.

Sir John Forrest:

– I shall explain.

Mr POYNTON:

– If there were no concessions in excess of £500 we should know exactly where we were.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– The difficulty which confronted honorable members was to meet the case of small businesses commenced just before the war, or since the outbreak of the war, which have gradually increased their trade. The effect of the Bill upon those businesses which commenced before the war would be practically to treat as excess profits all earnings in excess of what was earned in the year prior to the outbreak of the war. It was pointed out that by allowing a small pre-war standard for such new businesses and taxing them in this way we would prevent their growth; and the general feeling expressed on both sides of the Chamber was that this was not desirable.

Mr Tudor:

– That feeling was not expressed on both sides of the Chamber.

Mr GROOM:

– It was expressed by individual members opposite and by honorable members on this side of the Chamber, and it was suggested that the Government should take into consideration the question of giving some relief to small businesses which were in operation prior to the war, and to new businesses which have commenced operations since the war, but are comparatively small. The proposal that the Government have decided to put before the Committee is to allow a minimum pre-war standard of £500 as regards all businesses. If a businesshad a higher pre-war standard, it has the option to select it; but it will at least have a reserve of £500 before this tax applies. In addition, there will be a management allowance of £300 for the individual carrying on the business.

Mr Tudor:

– Will it be £300 for each member of a partnership ?

Mr GROOM:

– Yes. In the Bill proposed by the honorable member for Capricornia (Mr. Higgs) provision was made for an allowance for management. There will also be a further exemption of £200 where the pre-war standard did not exceed £500. Consequently there will always be at least £1,000 of a firm’s profits which will not come under the taxing provisions of the Bill, but it is not £1,000 in addition to the pre-war standard. It is my intention to move to amend the amendment by omitting the words -

  1. Where the sum remaining under para graph (c) of the last preceding sub-section -

    1. does not exceed £200, the total sum shall be deducted, and to insert in lieu thereof -
  2. From the sum remaining under para graph (c) of the last preceding sub-section -

    1. in the case of a business in which the pre-war standard of profits does not exceed £500, there shall be deducted the sum of £200.

In small businesses there will be an absolute deduction of £200. All the deductions will have a cumulative effect, resulting in the exemption of a business with a profit of £1,000.

Mr TUDOR:
Yarra

.- This has been a great day. Honorable members on the Government side have mangled the Bill.

Sir William Irvine:

– We have not done anything to it yet.

Mr TUDOR:

– The amendments indicated by the Honorary Minister show that there is to be a cumulative exemption of £1,000. I can sympathize with those honorable members opposite who find that a measure in which they believed is to be mangled out of all recognition. No member on the Government side can say now what shape the Bill will have when it leaves the Committee, or how much revenue it is likely to raise. I have heard the honorable member for Flinders (Sir William Irvine) denounce Governments who could not say what their financial arrangements were. The present Government cannot1 say what will be the state of their finances as a result of the amendments which have been brought down hurriedly this afternoon, and which will have a far-reaching effect on the taxation of the Commonwealth.

Sir William Irvine:

– The effects cannot be far-reaching when the Bill was only estimated to produce £450,000 a year.

Mr TUDOR:

– The effect is far reaching inasmuch as one section after another is being removed from the operation of the Bill. From a Government which is supposed to be a team of all the talents we have had an exhibition this afternoon the like of which has never been seen in this Parliament.

Mr Groom:

– Do you object to granting relief to small businesses?

Mr TUDOR:

– What I object to is granting exemptions to people who have made huge war profits. Small businesses, indeed ! Are they small businesses which are to be exempted to the extent of £1,000 a year, with an allowance of £300 for the second partner, and a similar allowance for the third partner, if there is one !

Sir John Forrest:

– The labourer is worthy of his hire.

Mr TUDOR:

– I do not say that he is not, but if we are to have a taxation of war profits, let us have a real measure and not a sham, which is now being persisted in for the purpose of trying to persuade the people that the Government are taxing war profits, and that wealth will bear its share, whereas neither the Treasurer nor his officers can tell within hundreds of thousands of pounds what will be the effect of the alterations now brought forward. Yesterday the honorable member for Batman (Mr. Brennan) made some remarks about the taxation of professional men, and to-day fifty odd members on the Government side would have us believe that, because of what that honorable member said, they are altering the Bill.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Neither the honorable member for Batman nor you had anything to do with these alterations.

Mr TUDOR:

– I am glad to have that remark from the lecturer in general to the House, the honorable member who tries to tell others their duty, and poses as an exponent of political deportment. When we suggest any amendment in the Bill we are told that the clauses drafted were in the measure introduced by the honorable member for Capricornia (Mr. Higgs). Honorable members tell us that, as the result of experience, New Zealand has abandoned the War Profits Tax. We are wiser to-day than we were in May of last year, when this tax was brought forward by the honorable member for Capricornia. We now have the experience of other countries to guide us, and with the later knowledge that huge profits have been made by pastoralists out of meat and wool, the honorable member for Capricornia, if introducing a Billto-day, would give it a vastly different complexion.

Mr Groom:

– Do you suggest that he would restrict the tax to pastoralists ?

Mr TUDOR:

– No. But I do not think he would have allowed a 10 per cent. pre-war standard; he proposed a 7 per cent. standard, and he did not have a £1,000 exemption for individuals in business. The Government cannot shelter themselves behind the Bill introduced by the honorable member for Capricornia. The Government. of the day agreed to the measure which that honorable gentleman brought forward, but doubtless, as a result of further experience, the measure would have been amended, as all Bills are. We have seen in this Parliament no performance more degrading than the action of the Government in agreeing to exempt profits up to £1,000 a year, when there are millions of people throughout the Commonwealth who are struggling to live on £2 or £3 per week.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Under the Bill introduced by the honorable member’s own party, people earning up to £10,000 a year might have been exempt.

Mr TUDOR:

– Honorable members opposite cannot shelter behind that excuse. Here we have an absolutely new proposal. Where it has suited them to do so, the Ministerial party have broken away from the proposal submitted by the honorable member for Capricornia (Mr. Higgs) when he held office as Treasurer. They quote it only where it suits their book. I am not going to discuss the question of whether this is the wisest form of legislation to deal with war profits, or whether a super-income tax should have been imposed. As a member of the Labour Government which brought forward a War Profits Bill, I was bound to stand behind the Bill, no matter what my own. private opinions might be, but the present t Bill is not the one introduced by the honorable member for Capricornia (Mr.

Higgs) when Treasurer. Honorable members opposite may consider that, in compelling the Government to mangle this Bill at their dictation, they have done a good day’s work; but it certainly will not redound to the credit of a party which was returned to power with a direction to tax war incomes, and is now running away from that mandate.

Mr BOYD:
Henty

.- The oration in which the Leader of the Opposition (Mr. . Tudor) has just indulged, illustrates very clearly the folly of introducing politics into the discussion of a finance measure. The honorable member has been dealing, not with finance, but with politics, and, like most men who become heated when making a political speech, he has given utterance to all kinds of erratic statements. Here we are today struggling with a type of legislation which is quite new to us - a form of legislation that has been tried in other countries and has been abandoned. “We are, so to speak, only feeling our way as we go along. Three different Bills dealing with war profits have been introduced in this House by three different Treasurers, and I venture to say that if the war continues much longer,, and other measures of the kind are introduced, there will be still further variations. Such changes are due to the fact that we are only now beginning to gain the experience- of men who are affected by legislation of this kind.

Early this afternoon, the Leader of the Opposition, declared that the proposal of the Government to exempt from this tax incomes up to £1,000 a year meant that people whose war profits amounted to millions would escape. I propose to show my honorable friend how wild that statement is. It is certainly much wilder than that which he made regarding the honorable member for Parkes (Mr. Bruce Smith). It can also be checked by facts, whereas the other cannot. According to the income tax returns, the total earnings of the whole of the men of this community whose incomes are between £500 and £1,000 a year - the men whom we propose to exempt from the provisions of this Bill- is under £9,800,000 -a year. These are .the men who, according to the Leader of the Opposition, are practically making millions out of the war, and, who, because of this exemption of £1,000 of income will, he says, escape the taxation on war profits. The income tax returns show, as I -have said, that their total annual income is under £9,800,000, and that amount, distributed over the 15,975 persons earning between £500 and £1,000 a year, gives us about £613 per head. What justification is there, in view of this fact, for the statement that millions are going to escape taxation because of this exemption of £1,000?

A point that must not be overlooked in regard to these income tax figures is that they include professional men and others, such as agriculturists, who will not come under this tax at all.

Mr Tudor:

– Is not the honorable member quoting the figures as to men who receive from £500 up to £1,000 a year?

Mr BOYD:

– Yes; and the proposal of the Government is that jio man who does not earn more than £3 ,000 a year shall be liable to this tax.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The income tax return quoted by the honorable member includes all salaried men - men not in business.

Mr BOYD:

– It does. It will thus be seen that the excess profits taxable under this Bill, instead of being millions, will be very few thousands of pounds.

I have an amendment to propose. I move -

That the amendment he amended by leaving out the word “fifteen,” line 4, with a view to insert in lieu thereof the word “ sixteen.”

That alteration, if made, will provide for the tax being levied on profits made since 30th June, 1916, instead of 1915, as proposed, and so will do away with what I have referred to as the, retrospective effect of the Bill. I shall not labour this matter. If, when the honorable member for Capricornia (Mr. Higgs) introduced his War Profits Bill last year, revenue was required from this source, the Government then in office should have gone on with that legislation, and have put it into operation. If we had had the advantage of a secondreading debate on that measure, we should have been in a much better position than we are to deal with this proposition. There certainly would have been far more light on the subject- in the House, as well as outside. Honorable members are not so clear regarding the intricacies of ‘this measure as they would have been if previous measures of the kind had been discussed.

From whatever point we view it, the principle of making taxation retrospective is bad. It is an iniquitous principle, and, once conceded, will be availed of in the future by any Government which feels itself pressed for money. It will be used as a precedent; once we allow such an iniquitous, unjust principle to be embodied in our legislation, there will be no end to it. Any body of men coming into power, and desiring to fill the coffers of the State in times of depression, mightmake a tax retrospective on grounds equally as good as those on which it is urged that we shall bc justified in making this proposal retrospective.

Sir William Irvine:

– When was the War Profits Bill first introduced ?

Mr BOYD:

– On the 18th May, 1916. Mr. Wise. - And the then Treasurer said he desired to give the public notice of the intention of the Government to impose such taxation.

Mr BOYD:

– I do not care two straws about notice. -In the State Parliament notice of an income tax was given for years before the measure was actually introduced.

Mr Tudor:

– It is well known that companies have put by money for this tax.

Mr BOYD:

– A few big companies may have done that, because if they had not taken this precaution, and the Act were made retrospective, they would have been ruined. But how many professional men have put by money to meet this increased taxation ? . My own. view is. that there should be no exemption, and at the proper stage I intend to. move in that direction. If I am beaten-

Sir John Forrest:

– You will be glad.

Mr BOYD:

– If I am beaten it will not be my fault. In a war-time profits tax there should be no exemption, and T am quite opposed to the Bill being made retrospective.

Mr Finlayson:

– On a point of order, can th’e honorable member 13:love i’.n amendment on an amendment that is not before the Committee? The Minister’s amendment has not been accepted yet.

The CHAIRMAN (Hon J M Chanter:

– The honorable gentleman is in error. The Committee decided to create a blank by the omission of certain words with a view to insert other words which have been proposed. The honorable member for Henty is quite in order in proposing to amend the words proposed to be inserted.

Mr FENTON:
Maribyrnong

:- I am rather surprised that the honorable member for Henty should have submitted his amendment, because if business men and companies have made provision for this tax, which has been foreshadowed almost since the inception of the last Parliament, it is strange that members of the legal fraternity, who are judged to bt amongst the keenest .intellects in the community, should have overlooked this matter.

Mr Wise:

– We can exempt them from the retrospective effect of the Bill.

Mr FENTON:

– Like the honorable member for Henty, I do not favour any exemption in a war-profits tax.

Mr Poynton:

– But these people have not been informed it was likely that they would be included.

Mr FENTON:

– They may not have had any intimation. I do not blame the present Treasurer, or even this Parliament, for that; but I have been in favour of a tax of this character ever since the war broke out, and during the 1914 election I declared in favour of it.

Mr Boyd:

– It would have been all right if such taxation had been imposed then.

Mr FENTON:

– I agree with the honorable member for Melbourne Ports (Mr. Mathews) that while it is not desirable to pass retrospective legislation, we are living in abnormal times, and are called upon to do abnormal things.

Mr Boyd:

– Any argument, then, will justify a wrong.

Mr FENTON:

– I do not say it is wrong. I am not in favour of any exemption under this Bill, and, further than that, I see no reason why we should not date its operation from the time fixed by the English Act. The Imperial Parliament put an Act upon its statutebook very early in the war, and dated its operation from the day following the. declaration of war, with the result that the British Government have been receiving rich revenues from that particular tax ever since.

Sir John Forrest:

– Is the honorable member supporting the amendment by the honorable member for Henty?

Mr FENTON:

– No. I point out that the greatest war profits were made during the earlier stages in this war, and under the most unhealthy conditions, practically by taking money out of the pockets of the people during their time of great trouble. Yet under this Bill it is proposed to exempt from taxation the first eleven months of the war period, and the honorable member for Henty now desires to exempt another twelve months. My only regret is that we did not impose this form of taxation immediately the war began.

Question - That the word proposed to be omitted stand part of the proposed amendment - put. The Committee divided.

AYES: 42

NOES: 2

Majority…. 40

AYES

NOES

Question so resolved in the affirmative.

Amendment of the amendment negatived.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That the amendment be amended by leaving out sub-clause 3, with a view to insert in lieu thereof - “ (3) From the sum remaining under paragraph (c) of the last preceding sub-section -

in the case of a business in which the pre-war standard of profits does not exceed £500, there shall be deducted the sum of £200;

in all other cases, where the sum remaining under paragraph (c) of the last preceding sub-section -

does not exceed £200, the total sum shallbe deducted;

exceeds £200, there shall be deducted the sum of £200, less -

in the financial year ending on the 30th day of June, 1916, £1 for every £2 by which the excess exceeds £200;

in all succeeding financial years, £1 for every £4 by which the excess exceeds £200.”

This is one of the amendments which it is necessary to move to carry out the intention expressed by the Treasurer.

Mr Poynton:

– What becomes of the vanishing period?

Mr GROOM:

– That will still apply in all other cases than that specifically dealt with.

Sir Robert Best:

– This will not give £500 clear at all.

Mr GROOM:

– No; that will be provided for in amendments to be moved, at a later stage. iSir Robert Best. - We should have the whole thing before us together.

Mr GROOM:

– It is necessary to move these amendments in sections.

Dr Maloney:

– I understand there is to be deducted £200 from £500.

Mr GROOM:

– Under paragraph a of the proposed amended sub-clause 3, £200 will be deducted in the case of a business in which the pre-war standard of profits does not exceed £500. We shall provide for a general exemption of £500 in a subsequent amendment.

Sir WILLIAM IRVINE:
Flinders

– This amendment raises for the first time consideration of the modifications of the Bill which the Government have proposed to-day. The exemptions or the accumulated exemptions of £1,000 before the tax begins to operate, coupled with the restoration of the Bill to its original form in regard to its non-application to professional men, remove, it is true, a large element of injustice which otherwise would have been present in the cases to which I referred yesterday. Whilst I feel very much gratified with the amendments announced by the Government, I desire to make it quite clear that they do not touch what, to my mind, is the more serious aspect of this Bill, namely the effect it will have in placing an embargo on enterprises and industries which do not come within their scope. But I do not intend to enlarge upon that question, because I have already expressed my views upon it. If the Government intend to say to persons engaged in all kinds of businesses whose profits exceed £1,000, “If you launch out and invest capital in your businesses we shall take from you 75 per. cent. of all your profits in excess of £1,000,” great hardship will be inflicted, and this at a time when we ought to refrain from offering any discouragement to enterprise. That is the position which I merely desired to restate now. I had thought that it might be wise to attempt to secure a test vote of the Committee upon the question of whether the Bill ought not to be confined to the taxation of war profits. That result could be secured by moving the omission of the word “time.” But I feel that an honorable member who moved an amendment in one of the financial Bills of the Government - an amendment which would completely alter its character - would take upon himself a responsibility that I, at present, am not prepared to incur. Whilst I agree that one of the great injustices which would otherwise be inflicted under the Bill, will probably be met by the amendments now proposed by the Government, I cannot admit that those amendments will deprive the measure of one of its most objectionable features.

Mr SAMPSON:
Wimmera

.I desire to congratulate the Treasurer upon his announcement that the Government intend to submit an amendment under which profits will be exempt from taxation up to £1,000. I had previously circulated an amendment whichwould have accomplished very much the same result, though in a more direct way. In the circumstances I shall not move that amendment. I am satisfied that the Bill will seriously prejudice enterprise in the Commonwealth, unless certain adjustments in the rates be effected at a later stage. I certainly desire to emphasize, in common with the honorable member for Flinders (Sir William Irvine), the need for the Government taking into consideration the rates to be imposed under this Bill. I have from the beginning adopted the attitude that, as this is a War Profits Bill, it should be reduced to a Bill to impose taxation upon businesses. If any large profits are to be made in the community they will be made by businesses. Profits derived from personal exertion can be better reached by means of the income tax. I feel quite sure that if we exempt from the operation of this Bill profits up to £1,000 annually, and impose a tax of 75 per cent. on ail profits in excess of that amount, we shall seriously interfere with the enterprise of the community. It is not necessary to recapitulate all the arguments which might be advanced in favour of the Government encouraging enterprise during the war period. We all know that the Government propose to spend hundreds of thousands of pounds in allying science with industry within the Commonwealth. It is absolutely vital that we should encourage all kinds of enterprise if we are going to produce the new wealth which is essential to enable us to pay our way after the war. By collecting a few hundreds of pounds from the small businesses of this country, the Government may easily cripple industry to the extent of millions of pounds annually. I hope that they will take into their earnest consideration the whole question of the rates to be imposed under this Bill, and that a re-adjustment will be made which will permit of high profits being taxed at a heavy rate, and of businesses producing medium profits being taxed in accordance with their ability to pay. I admit that an exemption of £1,000, and the clothing of the Commissioner with discretionary powers in regard to new businesses represent important departures from the Bill in its original form.

I believe that with a Commissioner such as we have, with a thorough grasp of the whole of the principles governing our commerce, and with his wide knowledge of administration, every business under that discretionary power will have a fair deal. This will mean a very big relief in special cases to industries which would be crippled if we took away from them the profits earned during the first two or three years of their establishment. I hope with the honorable member for

Flinders (Sir William Irvine), and the honorable member for Wannon (Mr. Rodgers), that this first step on the part of the Government will mean a modification of the rates when the Rates Bill is brought down, after this machinery measure has been disposed of.

Amendment agreed to.

Amendment, as amended, agreed to.

Clause, as amended, agreed to.

Clause8 -

The businesses to which this Act applies are all businesses (whether continuously carried on or not) of any description carried on in Australia, excepting -

businesses carried on by a municipal corporation or other local governing body or by a public authority, or by a society registered under a Friendly Societies Act of the Commonwealth or a State or Territory and not carried on for pecuniary profit; or by a religious, charitable, or public educational institution; or any company carrying on the business of life insurance so far asregards its life insurance business; and

agriculture, fruit-growing, the maintenance of dairy herds for the supply of dairy products, and (where conducted on land first used for pastoral purposes since the beginning of the present war) pastoral pursuits; and

offices or employments; and

any profession the profits of which depend mainly on the personal qualifications of the person by whom it is . carried on, and in which comparatively little or no capital expenditure is required; and

businesses where the principal business consists of mining for gold; and

businesses commenced since the fourth day of August, 1914, which, in the opinion of the Commissioner derive the whole of their profits from the recovery from waste manufactured products of any materials which are used for the production of munitions of war; but including the business of any person taking commissions in respect of any transactions or services rendered, and of any agent of any description (not being a commercial traveller, or an agent whose remuneration consists wholly of a fixed and definite sum not depending on the amount of business done or any other contingency) .

Sir JOHN FORREST:
Treasurer · Swan · NAT

– I move -

That the words carried on in “ line 3 be left out, with a view to insert in lieu thereof the words “deriving profits from sources within.”

Under a judgment of. the Master of the Rolls in England, a business is carried on at the place where it is controlled by its owner, and it is necessary to make the intention of the Bill quite clear by this amendment, so that profits derived from transactions in Australia by businesses owned and controlled outside Australia may not escape the tax, and. that profits derived outside Australia by businesses owned and controlled in Australia shall be exempt as intended. This amendment will secure that end. The Act will not apply to the profits of a company established and registered in Australia having mines or plantations, or other producing assets outside Australia and Papua, unless it sells the produce of those assets in Australia.

Amendment agreed to.

Dr MALONEY:
Melbourne

.- I move -

That all the words after the word “ Australia,” line 4, be left but, with a view to insert in lieu thereof the words “ without exemption.”

This raises the straight-out issue that there shall be no exemptions.

Mr Tudor:

– If you strike out all the words after “ Australia,” you need not put’ in the words “ without exemption.”

Dr MALONEY:

– “ Without exemption “ expresses in two words the whole of my intentions in regard to this matter. It has been prominently put forward that certain professions are to be eliminated. I am against that. I take it that where there is an increase of profits over the pre-war time there should be taxation under this Bill. The action of the Government in allowing an exemption up to £1,000 makes the Bill of less use. We are really holding out the promise of a feast to the hungry people outside who are watching what we are goings to do with these huge profits, and we are really not offering them even good filtered water. It is simply fooling the people, because every member knows that if a vote of the citizens was taken, they would say immediately, “ Let all the profit-mongers be content with the same rate of profit as they had previousto the war.” They would declare that no one has the right to make unjust or undue profits, and that all excess profits over the average profit made before the war were unjust. If that was agreed to, it would limit) the terrible increases in the price of goods.. There is no real excuse for those increases. The prices of certain drugs have been increased no fewer than eighteen times. That means 1,800 per cent. Those drugs have not been brought into Australia since the war. They were brought in before the war.

Mr Leckie:

– They are not exempt under this Bill.

Dr MALONEY:

– The profits made on those drugs are absolutely exempted up to £1,000. How much corrugated iron has come from enemy countries since the declaration of war? Scarcely a scrap. Why then has the price increased cent. per cent. until the Government had to interfere, and limit the profits of the holders? Farmers are crying out for barbed wire, and cannot fence in their land owing to the increased price of that article.

Mr Richard Foster:

– The Government have not interfered in the case of galvanized iron. Neither the Government nor anybody else can get’ it.

Dr MALONEY:

– The honorable member knows that the stocks here have been unduly raised in price as compared with the prices ruling prior to the war.

Mr Richard Foster:

– Those stocks have gone long ago. The Government have stopped works because they cannot get the material, and nobody else can get it.

Dr MALONEY:

– We made wire netting at Pentridge, and it can be made in Victoria again. Does the honorable member say that iron has not been galvanized in Australia?

Mr Richard Foster:

– No. But I say that we cannot get it on the market.

Dr MALONEY:

– That is what I am maintaining. The stocks of these goods, which were sent in previous to the declaration of war, have not been added to from enemy countries, but they have been unjustifiably raised in price.

Mr Richard Foster:

– The stocks have been added to from Great Britain.

Dr MALONEY:

– I cannot make the honorable member understand the position.

Mr Richard Foster:

– I know the truth of the matter.

Dr MALONEY:

– I only wish to speak of one or two items. Take, for instance, glassware, which is used in lamps more in the country than in the towns. What has been the result here? Since the war began, not one article of glassware has been imported from enemy countries, but the price has been piled up and up. This glassware is made of sodium instead of lead, which English glassmakers use. Enemy countries use sodium as the basis for glass because it is supposed to be a better material, and to give more satisfactory results. The prices of glassware have been increased; therefore, as regards the profits which dealers in glassware have made, they will have an exemption up to £1,000 each.

Next, let me take gold mines. I do not see why gold mines, if they make huge profits, should not pay a tax. I will read out to the Committee a few of the dividends which have been paid, showing the vast sums of money which have been taken out of the ground. And, while I am reading the figures, I ask honorable members to remember the poor miners who have been broken through proper precautions not having been taken to safeguard their health. I maintain that when miners go down into a dry mine, air should be sent down to them under a mask, just as it would be if they went under water.

Some interesting figures appear in Joseph Palmer and Sons share-list for this month. Mr. Palmer is a splendid compiler of mining statistics, and I express my gratitude to him, not only for this record, but for many similar documents which have come into my possession by his kindly courtesy.

In the first place, I will quote the dividends which have been paid by coal mining companies. East Greta has already paid £515,254, which is a pretty good dividend; Bellambi, £466,247, with no liability on its shares; Mount Kembla, £421,366; Newcastle, £323,991; and NewcastleWallsend, £960,000.

Mr Gregory:

– These companies are not exempt.

Dr MALONEY:

– I am speaking of the profits of mining companies. Are copper mining companies exempt?

Mr Gregory:

– No.

Dr MALONEY:

– Then I shall quote the dividends which have been paid by some copper companies. Great Cobar has paid £788,500; Mount Lyell, £3,940,400; Mount Morgan, £9,033,000; Wallaroo and Moonta, £2,435,250.

As regards the dividends derived from tin-mining companies, Mount Bischoff has paid £2,457,000.

Mr Pigott:

– How long has it taken the company to pay that amount?

Dr MALONEY:

– I do not care Low long it lias taken. I am merely quoting the total amount which the company has paid in dividends up to this month.

Mr Pigott:

– These companies may not have paid more than 2 per cent, interest on the capital.

Dr MALONEY:

– I suppose that the profits from silver-mining companies are not exempt

Mr Poynton:

– No; they are taxed.

Dr MALONEY:

– Amalgamated de Bavay has paid £757,500; British Broken Hill, £667,250; Broken Hill Proprietary, £10,22S,600; Broken Hill Block 10, £1,535,000; Broken Hill Block 14, £570,500 ; Broken Hill South, £2,115,000 ; North Broken Hill, £1,582,940; Sulphide Corporation, £2,179,745; and the Zinc Corporation, £1,117,850.

The profits from gold-mining companies are exempt. Leto us see how dividends have been paid. Associated Northern Blocks has paid £718,250; Associated Gold Mines, £717,000; Edna May, £268,414, still going strong; Golden Horseshoe Estates, £3,231,825; Great Boulder, at Kalgoorlie, £5,116,175. Ivanhoe, £3,613,050 ; Kalgurli, £1,573,050 ; and Lake View and Oroya, £1,519,250.

Mr Pigott:

– What is the total amount ?

Dr MALONEY:

– I have not the figures here.

I do not propose to weary honorable members by reading the profits of banking institutions, but it may interest them to know that shares which have been doubled, trebled, and quadrupled in price are still returning a fair interest to. buyers at the current market price. When we think of the dividends paid upon the original capital - that is the amount paid up- we can then double the return, treble it, and quadruple it1. In the celebrated era of Victoria, you could more than double the return. The wealth of New South Wales is greater than .the wealth of Victoria. New South Wales is not only wealthier than Victoria in population, but also in resources. It more than counterbalances the brief flash in the pan which Victoria had when it held the supremacy in gold. The supremacy in Australian gold was taken from Victoria by Western Australia, but the supremacy in coal still remains with New South Wales, which, at a later period, will have a splendid iron industry. It is only too true, as an honorable member has suggested, that these amounts of money were paid long ago. Many of these mines have gone out of existence. The Bill, of course, will affect only the mines that are yielding profits, and it is the duty of the Commonwealth to tax those profits. I am inclined to take a share of the war-time profits of mines, because, as a doctor, I have seen so many human wrecks caused by miners’ phthisis - consumption caused by inhaling into the lungs the dry dust of the mines. A member of this Parliament, a man whose physique appeared unequalled among his fellow members, is in weak health because of the injury done to his system by his work in the past. Have the profits of the banks diminished since the war began? Is not this war unique in history, because the gold reserves of the banks have increased, and so, too, have their deposits? . Was it not the practice during past wars for persons to draw their gold out of the banks and hide it in their gardens, or, like the French peasants, iii their stockings? There is not a bank which at the present moment is not more than holding its own, and I have not heard of any financial institution that has closed its doors. A man who wants larger profits in war time than during peace is not a patriot but a profit-monger, battening on the people’s needs. It is the accursed greed of gold that is increasing prices, and, in some cases, I believe, though I cannot prove it, causing diseased meat to be supplied to the public for food. Has not the municipal council of Melbourne risen in indignation because of the slur thrown on its abattoirs by the statement that diseased meat has been sent from there for the use of our unfortunate soldiers ?

The CHAIRMAN (Hon J M Chanter:

– The honorable member is going beyond the amendment.

Dr MALONEY:

– I maintain that no profits should be exempted from the proposed tax. The Bill should go further. It should be impossible for a firm to increase its profits in war time by £100,000. Such profits have been dragged from the people.

Mr Groom:

– Would the honorable member suggest that a firm should forfeit all its profits?

Dr MALONEY:

– I would take away the total increase in profits made in war time. If the citizens were asked if they would allow extra profits to be made in war time, they would say “No.” Every mother who sees the prices of food increasing knows that profits are being made by ‘the shopkeepers, and, behind them, by the manufacturers and suppliers of meat. We, too, know it. Those who do not believe in unjust war profits will vote for my amendment. Let those who are prepared to give exemptions, even to men whose profits amount to thousands of pounds, ask their consciences if this is right. What is the opinion of the men who are earning £3 a week, or of the girls who get from 30s. to £2 a week for toiling from 8 in the morning until 6 in the evening? Only men starting a new business should receive special treatment in the matter of profits. I would allow such persons a fair return on their capital after deducting all the expenses of management. I should be willing to allow a return of 5 per cent. or even of 6 per cent. The effect of my amendment would be to largely increase the revenue obtained under the Bill, and to make the measure much simpler. Australia has done more for the Empire in this war than any other of the Dominions, but I wish to see the promise to contribute the last shilling put to the test. Should the need arise,. I shall be willing to join with those who have to wait at the Government shops for bread, and I hope that the Governor-General will be there, too. Why should a man whose profits are £1,000 a year more than they were before the war be exempt from this taxation?

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Such a man will not be exempt.

Dr MALONEY:

– At what amount does the exemption cease?

Mr Groom:

– The provision which I wish to insert applies to all whose prewar standard of profit did not exceed £500.

Dr MALONEY:

– In any case, my argument is not met. If there were 265 cases in Victoria of the kind I have mentioned, there must be, at least, 1,000 throughout the State, and, further, at least £8,000,000 of the profits made are excess profits in the two years 1915-16, as compared with profits made in 1913-14. I feel convinced that the public outside will be disappointed with this Bill; but it is hopeless to appeal to the Government to take a vote on the merits of the question, because they know that the result would be absolutely against any exemptions. I have addressed a great number of meetings on this very point, and I can safely say that I am voicing the opinion of thegeneral community when I contend that there should be no exemptions in the case of profits in excess of those of pre-war times.

Mr BAYLEY:
Oxley

.- I am opposed to the amendment, because, to my mind, the strength of the Bill lies in the fact that there are exemptions. The honorable member has endeavoured to prove, by quoting the profits made by mining companies–

Mr Gregory:

– Some of them dead and others bankrupt.

Mr BAYLEY:

– Quite so. The honorable member for Melbourne (Dr. Maloney) mentioned gold-mining companies, though he knows full well that there is no such thing as war profits in the industry, for if there is anything in the world that has a standard value it is gold. True enough, at one time cowrie shells were currency, but now we use gold as unchanging in value. In the secondreading debate, the honorable member, and also his leader, quoted figures given by Sir Alexander Peacock in order to show enormous profits made by a number of companies in Australia, but both neglected to state the capital that was invested. The figures they used in order to show enormous profits proved nothing. The honorable member for Melbourne (Dr. Maloney), when interrupted by an interjection, said, “ I do not want your interjection; I do not care whether you listen or not; I want this to go into Hansard, so that the people outside may see it.” It was evidently not his desire to assist the Government in framing this Bill, but rather to throw dust in the eyes of the people, and assist himself.

Dr Maloney:

– That is unworthy of you.

Mr BAYLEY:

– The honorable member is not alone in that attitude. I do not know of one of the Opposition who has in this Chamber endeavoured to assist the Government, though all honorable members opposite are pledged, as undoubtedly are members on the

Government side, to pass this measure. If the pendulum had swung in the opposite direction, and the present Leader of the Opposition sat on the Government benches, a Labour Government would be submitting this or a kindred Bill for our consideration to-day. They all owe it to their constituents, those men and women throughout Australia, who voted for their return; and we also look to them to assist the Government in framing this measure. However, the Opposition have done nothing but “ stone-wall “ and place obstacles in the way.

The honorable member for Batman (Mr. Brennan) spoke of this as a contemptible Bill, and said that he would vote against it; but I failed to hear one word from him in the way of an offer to assist in drafting a measure acceptable, not only to himself, but to the people of Australia. The Treasurer has told us that this measure is not intended to finance the war - that we are not to get the money per medium of this Bill to pay for the expenses of the war. What we are endeavouring to do is to see that no man or company in Australia is allowed to make undue profits as a result of the war. On the other hand, we owe it to the country to see that new businesses are assisted. If we are to pay our way - if we are to continue as a solvent nation - we must build up, not only our primary industries, but also our secondary industries. At the present time we are absolutely dependent on our primary industries. As a result of the war, and owing to the difficulty in securing freight, and for other reasons, a number of new industries have sprung up ; and we owe it to the men who have risked their all in these enterprises to see that they are not made to suffer. That is not only for the sake of the men engaged in those enterprises, but for the sake of the nation - for the sake of the future. We are here, as citizens of Australia and members of the Australian Parliament, acting in trust, not only for the outside public, but for Australians not yet born. This Bill, in providing for exemptions, is making it possible for new industries to obtain a firm hold, so that when the war is over, and they are brought face to face with overseas opposition and competition, they will be able to hold their own. It gives me very great pleasure to oppose the amendment.

Mr GREGORY:
Dampier

– I do not know whether the honorable member for. Melbourne (Dr. Maloney) is serious in submitting the list of profits or dividends paid by various companies throughout Australia. Apparently the honorable member has picked up a sharebrokers list published for the purpose of advertising the resources of Australia, and containing the names of companies, many of which have gone out of existence, many of which have become bankrupt, and many of which are now seeking State assistance. It is not my purpose to controvert the figures quoted by the honorable member. I merely desire to show how absurd they were as far as such returns affect this measure. Many of the companies referred to will not be exempted. It is not proposed to exempt coal-mining companies, copper mines, and the bis: lead mines of Broken Hill. If the honorable member had put forward reasons for getting at those mining companies which are making big profits, he would have been rendering some assistance to the Committee.

The honorable member for Oxley (Mr. Bayley) has just pointed out that it is our duty to do all we possibly can to promote gold-mining operations which, owing to the war,are much more expensive at the present time. Gold-mining is a speculative industry. Of all the shows opened up, 9.7 per cent. turn out to be failures. Great) difficulty is experienced in securing capital to develop the marvellous auriferous resources of Australia. I wish to quote the case of two mines. They will not be affected by this Bill, but I quote them in order to show how this tax would operate if goldmining was not exempted. The Great Boulder mine at Kalgoorlie was making a profit of about £250,000 a year for about fifteen years prior to the outbreak of the war, but during the last couple of years the profit has fallen to about £230,000 per annum. If gold mines were not to be exempted, the Great Boulder mine would not pay 6d. of this taxation, because the pre-war standard would exceed the present proportion of profits. The other case is that of the Edna May Deeps mine, which has just commenced crushing, and has no pre-war standard of profits. In this case the Government would take 75 per cent. of their profits, less 10 per cent. on the capital invested.

Will people put their money into gold-mining when they know that if they happen to get on to a good thing they will not be allowed to take more than 25 per cent. of their profits above a 10 per cent, standard ? Another case is that of the Edna May mine. Before the war the profit earned by that mine was about £20,000 per annum, but during the last couple of years about £180,000 a year has been distributed to the shareholders. I do not know how the tax could be collected in the . case of that mine, because the profit has already been distributed to the shareholders. The mine might be seized.

Mr Kelly:

– Is it not true that it costs 25s. to extract every 20s. worth of gold?

Mr GREGORY:

– The Western Australian records show that gold-mining is a profitable industry in comparison with the cost of labour employed, but other things have to be considered, particularly the enormous sums of money spent’ on general supplies.

I wish to say a word or two in regard to the exemption of agriculture. During the last ten years the State of Western Australia has been able to induce a large number of people to settle on its land, but within the last five years, owing to bad seasons and exceeding difficulties - of which the ordinary member of Parliament knows very little - encountered by the settlers, an Industries Assistance Board had to be established by the State Government, and about 50 per cent. of the farmers had to appeal to this Board for aid. These farmers have done well in the last two seasons, but surely no honorable member wishes to take from them the little profits they have earned, which will enable them to meet their debts. Any action taken to withdraw the exemption in regard to agriculture would be inimical to the best interests of Australia.

Mr Manifold:

– If the amendment is negatived, will honorable members be precluded from moving to strike out other words in the clause?

The CHAIRMAN (Hon J M Chanter:

– The amendment proposed by the honorable member for Melbourne is that all the words after “Australia” be omitted, with a view to inserting the words “ without exemption.” I have stated to the Committee the question - “That the words stand as printed,” and if the Committee resolves that in the affirmative, no amendment can be made to that portion of the clause. I suggest to the honorable member for Melbourne that he should move that the words “without exemption” be inserted after the word “ Australia,” and if that is carried, he can make a further motion to delete the other words.

Dr Maloney:

– I accept your suggestion, sir, and ask leave to alter my amendment accordingly.

Amendment amended accordingly.

Amendment negatived.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That in paragrapha, after the word “ institution,” the words “ or body “ be inserted.

The intention of the amendment is to remove from the area of taxation all businesses carried on by any religious body. A doubt was raised as to whether the word “institution” did not unduly limit the exemption. Some of the funds belonging to churches are invested in businesses, and the Government are of opinion that this tax should not apply to money owned by churches and invested in ordinarybusinesses for church purposes.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They are coming into competition with other businesses.

Mr GROOM:

– Throughout our taxation measures the churches have been granted an exemption .

Mr Richard Foster:

-Some churches own the freehold of hotels. Why should they be exempt?

Mr Kelly:

– Why is it suggested that churches alone should benefit from the war?

Mr GROOM:

– That is not suggested. Friendly societies, too, are exempted. Some of the investments by religious bodies may or may not be said to represent businesses. We desire to make it perfectly clear that all such investments are exempt from this tax.

Sitting suspended from 6.28 to 745 p.m.

Mr BOYD:
HENTY, VICTORIA · LP; NAT from 1917

.- The Minister has moved an amendment to insert in paragraph a the words “or body” with the object of removing any doubt as to whether the exemption applies to a religious, charitable, or educational institution or body. He stated that he wished to make it clear that the exemption would apply to money lent on mortgage by religious’ institutions.

Mr Groom:

– No; not money lent on mortgage., but money invested in actual business operations.

Mr BOYD:

– If a religious body invests its money in a business, in what respect is its position different from that of an ordinary business man ?

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– With whom it enters into competition.

Mr BOYD:

– Exactly. If a religious body enters into competition with men, say, in a small way of business, why should it be placed on a different footing from that of an ordinary business? The Salvation Army used to conduct a printing establishment-

Mr Tudor:

– It still does so.

Mr BOYD:

– I mentioned that fact only by way of illustration. My point is that if religious bodies engage in actual business operations, they should not be exempt. Surely the object of a religious institution is to convey to the people of its faith the form of religion which it teaches. If such organizations could be turned into ordinary business, profitmaking concerns without coming under this form of taxation we might have a fictitious religious organization - like the church of which a former member of this House used to say he was the first bishop- going in for business on a large scale under the cloak of a religious name. Business is not religion, and religion is not business. Religious organizations which enter into’ business competition with ordinary citizens who have to pay such a tax as this have no right to be exempt. If they do go in for business they should be treated as ordinary busi-ness firms are dealt with under this clause. Where they lend money on mortgage they will not be taxed. Surely it is reasonable to ask that they confine their activities to the promulgation of their faith and to matters relating to it without competing against small business men who are handicapped by having to pay union rates of wages, and to observe Wages Board conditions.

Mr Tudor:

– The Salvation Army have to pay union rates of wages in their printing establishment.

Mr BOYD:

– Then if the law in regard to the observance of Wages Board awards applies to religious bodies engaging in business operations, this law should also apply to them. If it applies in one case it should apply in all. If the Honorary Minister will withdraw his amend ment I shall move a prior amendment providing for the omission of the words “ or by a religious, charitable, or public educational institution.” Any religious institution that engages in a business from which it derives large profits should be called upon to pay this taxation upon such profits.

Mr Groom:

– I am prepared to withdraw my amendment temporarily in order that the honorable member may move that indicated bv him.

Amendment, by leave, withdrawn.

Amendment (by Mr. Boyd) proposed -

That the words “or by a religious, charitable, or .public educational institution,” in paragraph a, be left out.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I was inclined at first to agree with the honorable member for Henty (Mr Boyd), but it seems to me that the words “ not carried on for pecuniary profit,” which occur later in the paragraph, avoid the difficulty referred to by him. In Papua the ‘London Missionary Society carry on a boat-building business, the object being not to make money, but to teach the natives carpentry. I have heard from Mr. Abel, the representative of the London Missionary Society there, that they erect small cottages according to models, and build boats, but not for profit. There are no dividends from the business, although their funds for missionary purposes are in that way slightly augmented.

Mr Boyd:

– I read the words “ not carried on for pecuniary profit ‘ ‘ as referring to the sentence immediately preceding them, and not to the subsequent words in regard to religious, charitable, and educational institutions.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I should like the Minister to make that point perfectly clear.

Mr Groom:

– They do not apply to the words which the honorable member for Henty desires to omit.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Then I am entirely with the honorable member in urging that they should be omitted. I fail to see why any organization that is conducting a business for profit should be exempt from this tax, where, as the honorable member has said, it enters into competition with people who have to pay it. Let us assume that A, who may be a very religious man, but does not come within the definition of “a religious body,” starts a business, and runs it for profit. If a religious body enters into the same business for profit, and competes with him, then it seems to me that if the one is to be free from this taxation, the other should be free, or that neither should be exempt. As it stands, this provision will only hold out an invitation to mercantile people to put their business in some form of this sort with the object of avoiding war-time profits taxation.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

7.54(. - I >. invite the Committee to support the paragraph as it stands. The general principle of our legislation has been to provide, as we do, for instance, under the Land Tax Assessment Act, that lands held by any religious, charitable, or educational institution, and the profits from which are de-, voted to religious, charitable, or educational purposes, shall be exempt. We know that the moneys raised by these institutions out of any business enterprise are devoted to religious or charitable purposes, and that is why we exempt them. Such profits are not used for private purposes. In that sense, such organizations do not compete with other forms of business.

Mr Richard Foster:

– -Of course they do.

Mr GROOM:

– No: because the profits are used for the benefit of church organizations generally.

Mr Sampson:

– For the extension of the work of the church.

Mr GROOM:

– The position is not the same as if religious organizations were entering into competition with other businesses.

Mr Richard Foster:

– Very often, they wipe out competitors altogether.

Mr GROOM:

– Such instances arc comparatively limited.

Mr Boyd:

– What is to prevent any company being formed under the name of some religious organization, and carrying on business ?

Mr GROOM:

– Even if that could be done, it is very improbable. Any abuse of the exemption extended to religious organizations would be revealed by the returns, and promptly dealt with.- Tt might just as well be argued that land held by religious organizations should not be exempt from taxation under the Land Ti?’*: Assessment Act, in regard to which Parliament took a strong stand, and insisted upon a wider exemption than was pro posed by the Government of the day. It was urged that lands held by the churches for sacred edifices, residences for the clergy, or schools, and for the benefit of the church funds generally, should not be subject to taxation. Even now, I do not know if the proposal before the Committee is sufficiently wide. Possibly, it may be necessary to ask the Committee to make a wider exemption.

Mr Richard Foster:

– Could you justify an exemption of the land upon which the Auditorium is built?

Mr GROOM:

– I am not aware that it is held by a religious organization.

Mr Richard Foster:

– Yes. That freehold is held by a religious body.

Mr GROOM:

– The income from land so held is usually specifically devoted to church trust funds. I have in mind the case of the Clergy Widows and Orphans Fund, the land for which is held by trustees, and the income earmarked for the particular purpose specified. Under the Land Tax Assessment Act, an exemption from taxation was made in respect of-

All land owned by or in trust for a religious society, the proceeds whereof are devoted solely to the support of the aged or infirm clergy or ministers of the society or their wives or widows or children, or to religious charitable or educational purposes.

The general feeling of Parliament at that time was that, as the incomes from such properties were devoted to the higher purposes of society, they should not be subject to the ordinary taxation. At the present time, appeals are being made throughout the community for the well-being of our soldiers at the Front, and as these appeals are being made in the interests of the higher rather than the material side of life, we should not interpose further difficulties in the way of religious organizations by requiring them to pay taxation under this Bill, that being contrary to the general principles that run through all our legislation.

Mr PAGE:
Maranoa

.- I agree with the honorable member for Henty (Mr. Boyd), and I notice that the Minister was very clever in avoiding the question raised in the amendment. I have no objection to the exemptions specified in the Land Tax Assessment Act; but, from my own experience, I know that religious institutions do occasionally come into competition with, other businesses. I have in mind one such instance in Brisbane, where a church organization was running a “ pub “ for profit. The honorable member for Wimmera (Mr. Sampson), in referring to the land on which the Auditorium is built, suggested that it would not come under the scope of this measure. That land, I understand, belongs to a religious body; but, if the business conducted by the trustees comes into competition with any other business, there ought to be no exemption. If the Minister will provide expressly in the Bill that, if such a business is not run for trade purposes it shall.be exempt, I think the difficulty mentioned by the honorable member for Henty will be obviated.

Mr Groom:

-I might inform the honorable member that when the trustees of the Queensland church property he referred to found that the lessee was conducting an hotel) they refused to renew the lease when it expired.

Mr PAGE:

– Any religious organization conducting a business in competition with any other business, should not escape taxation under this measure. The Minister, as I have said, tried to cloud the issue, for he talked about everything except what the honorable member for Henty referred to.

Mr Groom:

– I said distinctly that if the profits are devoted to church purposes, such properties ought to be exempt.

Mr PAGE:

– As the honorable member for Henty has raised the question, I think the Treasurer (Sir John Forrest) should do something to safeguard the interests of business people who may be brought into competition with religious institutions.

Mr HIGGS:
Capricornia

.- I should like the Government to take into consideration the contention of the honorable member for Parkes (Mr. Bruce Smith). He has referred to an aspect of the question which deserves consideration. If the clause is allowed to remain as it is, people engaged in business may feel themselves called upon to turn: their institutions into semi-religious institutions. It would be rather dreadful to contemplate the honorable member for Parkes clothed in a scarlet uniform as the director of a business institution. His fellow directors might approach the clients of the firm with a query as to whether they were saved, as a preliminary to doing any business at all with them. We might imagine the lady clerks of Howard Smith and Company, or some other company, being required to don the poke bonnet. I think that religious bodies carrying on an industry would not make very much profit from it, and would be unlikely to come under this Bill. I feel pretty certain that they would not make 10 per cent, on the capital they invested in the industry.

Mr MANIFOLD:
Corangamite

– I do not see why a religious body carrying on a business for profit should be exempt from this taxation. I can mention the case of a religious body that is carrying on a station business, in New South Wales, and the Honorary Minister (Mr. Groom) knows as much about the case as I do. In my view, it is not a fair proposition that a religious body should carry on. a cattle station, running it for profit - though I admit that the proceeds would go to the religious body and not to individuals - when they would be in competition with persons engaged in the same occupation alongside of them. The religious body might make profits out of the station business which would probably bring them under this measure, and if they did I see no reason why they should not pay this taxation. If the honorable member for Henty (Mt. Boyd) presses his amendment to a division I shall be prepared to support him.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- I am amused that honorable members should be haggling over the profit that religious bodies are able to derive from business concerns. It is because of the stinginess and meanness of congregations that very often religious bodies are obliged to go outside their churches to get funds to keep their religious institutions going. It ib very often necessary for them to do so in order to increase the stipends of underpaid missionaries who devote their lives to religious work. I hope the Committee will not take the narrow-minded view of this question which has been suggested, but will remember that the authorities of the religious bodies do not enjoy the profits derived in this way, but that they go to the religious communities to which they belong.

Mr PALMER:
Echuca

.- I think there would be some danger in allowing .paragraph a to pass as it stands. What is there to prevent a wealthy person making a will in favour of a religious institution, transferring to those controlling it a valuable business. If that were done, an estate which was previously a taxable estate would cease to be taxable under this measure. In my view, any church running a large mercantile or other business concern for profit should pay taxation under this Bill. The Government should do something to remove the anomaly which will exist if the paragraph is allowed to pass in its present form.

Mr ANSTEY:
Bourke

.- I certainly cannot allow an amendment like this to pass without offering my support to the Treasurer (Sir John Forrest). During my long experience in Parliament, I have never heard such an attack upon the church made by wealthy men as I have listened to this evening. I feel that the Treasurer is in a most awkward position. He is being assailed by gentlemen of opulence in this community to whom he might very properly have looked for support in this matter. I oan quite understand the right honorable gentleman’s position. He is an upholder of the church and of religion in all its forms, and he knows that it can only be sustained by the possession of adequate means. The church can only perform its philanthropic work, its important task, and its works of mercy, if it secures the means necessary for the purpose. Why has the church been compelled, as in the case of St. James’ Buildings, to sell a portion of its property and to let some of its premises for the wine and spirit business? Why should it allow some of its property to be utilized for public-houses or purposes of that character, if it were properly sustained, as itought to be, by the philanthropic and wealthy gentlemen behind the Government ? Honorable members must have noticed the mean spirit of competition which some persons have allowed to enter into the consideration of this question. The honorable member for Corangamite (Mr. Manifold), a wealthy squatter, contemplates the idea of a church running a station in competition with him. What an awful spectacle ! Then there is the terrible suggestion that some great church, in order to carry on its work of philanthropy, may run a milling plant bequeathed to it, and this has excited the hostility of the honorable member for Echuca (Mr. Palmer). What an awful thing it is to consider that a church should run a business in competition with him ! Good God ! let religion perish so long as our profits are preserved I say that in this great crisis, and in this hour of our country’s need, I stand with SirJohn Forrest and for true religion. After sixteen years in the public life of this country, in State and Federal politics, I have reached the hour of my salvation ! During the last sixteen years I have been charged with every crime and iniquity, with being the enemy of religion and the supporter of hotels, gambling, and every other evil, but in this hour of crisis, and of the country’s need, when patriotism should be our watchword, I am opposed to the amendment submitted by the honorable member for Henty (Mt. Boyd). These opulent men surmise that some church is going to run a bond store. The position cannot be tolerated. Honorable member after honorable member opposite has risen in hostility to the Government upon this clause. I intend to support the Treasurer, and if the amendment be pressed to a division, even though it should involve the fate of the Ministry, I shall be found supporting the Government. This is one of the few opportunities of my life-time. Upon this occasion, the Treasurer is supported by a crowd of agnostics, who are opposed to all religion and all morality, whereas he and I have been drawn, together by the common bonds of morality and religion. If the War-time Profits Bill has accomplished nothing more than that, it has certainly accomplished a good work. I shall leave it at that.

Amendment negatived.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

.’ - I move -

That, after the words “or by,” line 7 of paragraph a, the words “ or for the exclusive benefit of “ be inserted.

Mr Anstey:

– How is the question of whether a business is being run for the exclusive benefit of a religious institution to be decided ?

Mr GROOM:

– The Commissioner will decide it.

Mr ANSTEY:
Bourke

.- The paragraph, as it stands, is all right, and the Government ought not to back down upon it.

Sir John Forrest:

– The amendment, I think, will make it a little clearer.

Mr ANSTEY:

– No. The gentlemen who are influencing the Treasurer in this matter are the honorable member for Corangamite (Mr. Manifold) and the honorable member for Henty (Mr. Boyd), who desire to embody in the clause a proposal that if the business be run for an exclusively religious purpose its profits shall be exempt from taxation. I shall support the paragraph, and I consider that there is no justification for altering it.

Mr Brennan:

– The amendment will not make any difference to it.

Mr ANSTEY:

– Yes, it will. I shall divide the Committee on the amendment.

Mr HIGGS:
Capricornia

– I believe the Treasurer (Sir John Forrest) has tried to meet the wishes of the honorable members who have raised objections, and throughout the whole of the debate one must certainly have admired him for the magnanimous way in which he has met every request. One might have thought that such a strong man would refuse to allow any amendment, but he has been most ready to accept all and sundry. This new proposal, however, does not strengthen the clause at all. The clause says, “ or by a religious, charitable, or public educational institution “ ; but in order to meet the wishes of honorable members the Treasurer proposes to add “ or for the exclusive benefit of a religious, etc.,” so that a religious body can conduct its business for some other purpose and escape the tax. If the clause were made to read “ or by and for the exclusive benefit of a religious, charitable or public educational institution “ it would be better.

Sir William Irvine:

– It ought to be “ and.”

Mr HIGGS:

– I am much obliged to the honorable member.

Mr BRENNAN:
Batman

.- I do not know why the Minister troubled with this amendment, which seems superfluous, but which may, read with the rest of the clause, have an effect which he does not intend. Has he considered that it might suggest that all these other bodies which are exempt might be permitted to carry on business as agents for other persons, while themselves immune from taxation? We can only suppose that the words are inserted for the purpose of differentiating between religious institutions and the other businesses mentioned in the clause, but it might have the effect of allowing a “ company carrying on the business of life insurance “ to safely carry on another business as agent for another person or corporation, and thus get the benefit of the exemption.

Mr FENTON:
Maribyrnong

– Does any wording of this character appear in the land tax or any other Act? If the words are to be inserted I rather agree that “ and “ should be used instead of “ or.”

Mr Groom:

– No.

Sir John Forrest:

– Surely you can take the word of a legal man, who ought to know.

Mr FENTON:

– I thought the honorable member for Flinders (Sir William Irvine) supported the honorable member for Capricornia (Mr. Higgs).

Mr Groom:

– In the Land Tax Assessment Act the words “all land owned by or in trust for a religious society” are used. We are following that idea here.

Mr FENTON:

– Is there any necessity for the insertion of these words ?

Mr GROOM:
Hon- orary Minister · Darling Downs · NAT

– There is a necessity, because in some instances a business may be run by a trustee or committee of management for the exclusive benefit of a religious institution.

Mr Anstey:

– How does that meet the original objection raised by the honorable member for Parkes (Mr. Bruce Smith) ?

Mr GROOM:

– Because we are confining “ business “ in this case to those businesses which are run by a religious or educational institution, or by a trustee or committee for the exclusive benefit of a church or educational institution. The only fear honorable members seem to have is that a church may lend itself to some outside agency for the purpose of wilfully evading the provisions of the law, which is unthinkable.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– You could have left the clause in its original form.

Mr GROOM:

– No, because that would not have covered cases such as I have just mentioned.

Sir William Irvine:

– When a business is managed by trustees or a committee for an institution, it is managed by the institution.

Mr GROOM:

– It may not be. We want to make perfectly sure that the clause will cover the case, and it is better to err on the side of safety, as the question has been raised.

Amendment agreed to.

Mr POYNTON:
Grey

– I desire to know if the Government are willing to confine the exemption of life insurance businesses to companies which are conducted on the mutual principle, and are not proprietary ?

Mr Groom:

– The Government does not propose that–

Mr POYNTON:

– The clause as it stands exempts all life insurance companies.

Mr Groom:

– That is quite correct.

Mr POYNTON:

– I think it is a very wrong thing to do. Proprietary insurance companies ought to pay this tax as well as other people. Where the profits axe distributed among the members of a mutual company, there are reasons why it should be exempted from the tax, but in the case of a proprietary company the persons whose lives are insured do not participate in the profits, and, therefore, we ought not to allow an exemption from the tax to the company. We have as much right to bring proprietary companies under the operation of the Bill as any other companies which are run on business lines. I move -

That before the word “ company,” in paragraph a, the word “ mutual “ be inserted.

Mr Sampson:

– Will not the honorable member add these words, “ which distributes the whole of its profits “ ?

Mr POYNTON:

– Let us deal with this amendment first.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I ask honorable members not to make this amendment. I believe that in Australia there are only a few proprietary companies, and some of these are partly mutual in their operations. In the Canadian Act, life insurance companies are exempted, and there is good reason for making the exemption. In time of war tremendous liabilities have to be met by all life insurance companies.

Mr Page:

– Do not all the companies load the policies?

Mr GROOM:

– All life insurance companies are being hit very hard by the results of the war. I am informed now that in Australia there is practically only one proprietary life insurance company, and that it is partly mutual and partly proprietary. I ask honorable members to bear this aspect of the case in mind.

Mr TUDOR:
Yarra

.- It was my intention to move an amendment with the same object in view. There is no reason, so far as I can see, why a proprietary life insurance company should escape the payment of this tax. Mutual insurance companies distribute the whole of their profits among the policy-holders, and, therefore, if we insert the word “mutual” in paragraph a it will distinguish such companies from those which distribute their profits among the shareholders. I do not see very much reason why all life insurance companies should not be brought under the Bill, but I admit that there is far more reason for exempting mutual companies than for exempting private companies. I recognise that the amendment, if made, may impose a heavy tax on proprietary companies, but it should be remembered that the companies will not bear the whole of the burden. At the start of the war, and so late as 1915, some companies required a man who submitted a proposal for life assurance to declare that he had no intention to enlist. I believe that a company of which the honorable member for Flinders (Sir William Irvine) is a director, had that condition inserted in the agreement which had to be signed by a proposer.

Sir William Irvine:

– It certainly is not so at the present time.

Mr TUDOR:

– It may or may not be so now. But I have an agreement in which the person insuring his life had to declare that he had no intention to enlist.

Mr Page:

– What is the date of that agreement ?

Mr TUDOR:

– It is dated 1915. After solemnly and sincerely declaring five other things, the person insuring had to declare, “ I have no intention to enlist for Naval or active Military service outside of Australia.” I know that a man has to pay about £10 per £100.

Mr Atkinson:

– No; £5.

Mr TUDOR:

– It happens to be £10 per £100, because I have paid it on behalf of a man who enlisted for active service.

Mr Atkinson:

– In the case of the Australian Mutual Provident Society such persons pay 5 per cent. extra.

Mr TUDOR:

– With all the life insurance companies the loading is about the same, namely, £10 per £100.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– With some companies it is £5, and with others £10.

Mr TUDOR:

– We ought not to exempt a proprietary life insurance company. I hope that the Committee will agree to the amendment, and if it is made, no doubt the Government will have it put into legal form.

Mr KELLY:
Wentworth

.- I think that the suggestion of my honorable friend can be improved upon. I believe that proprietary companies distribute some of the profits to the policy-holders, being partly mutual and partly proprietary.

Mr West:

– The Citizens Life Assurance Society does.

Mr KELLY:

– Exactly. No one wishes proprietary companies to get an exemption from this tax so far as their private profits are concerned. Why should we not add to this paragraphs these words, “ and to the extent that it distributes its profits amongst its policy-holders “ ?

Mr Poynton:

– I have that amendment ready to move after this amendment’ is made.

Mr KELLY:

– In that case I. suggest that the honorable member should not put in the word “ mutual.” Any life insurance company would then be exempt from the tax to the extent that it distributed its profits amongst the policy-holders. If it distributed all its profits it would be entirely exempt.

Mr. RICHARD POSTER (Wakefield) (8.44]. - I hope that the honorable member for Grey (Mr. Poynton) will adhere to his amendment exempting only those companies which are conducted on the mutual principle. I believe that so far as relief from taxation has been given in any State, the relief has always been confined to the mutual companies, and withheld from proprietary companies. I do not think that there is any justification for exempting from taxation the profits of a business conducted on proprietary lines, but it is advisable to encourage and assist institutions which are operated on a mutual principle.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I am informed by the Commissioner that ‘there is in Australia one company that is partly proprietary and partly mutual. Itseems to me that the wishes of the Committee would be met if we exempted from the operation of the Bill any company carrying on the business of life assurance so far as regards ite life insurance business, and’ excepted so much of the profits of its business as are available for distribution amongst shareholders. Honorable members do not object to Che distribution of funds amongst policy-holders, but they are of opinion that individuals who are making private gain out of life insurance should be taxed on their profits. It is difficult, on the spur of the moment, to frame in technical phraseology an amendment which will do exactly what is needed, but I give the Committee my promise that if it will accept the proposal I have just made, I shall have the Bill recommitted with! a view to an amendment to give effect to it, and this being so, I ask the honorablemember for Grey (Mr. Poynton) to withdraw his amendment.

Mr Poynton:

– I do so on the assurance given by the- Minister.

Amendment, by leave, withdrawn.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

. - There are cases for which the Minister has not provided. There are insurance companies in this country in which there are no shareholders, although there are founders on the American principle. These companies were started under the arrangement that *he management should receive a commission in the form of a percentage, and that percentage now gives very large incomes to persons who are not shareholders in the ordinary sense. The business of the company is mutual up to a point, but beyond that point the profits are distributed among the founders. The prototype of these companies is American. Honorable gentlemen muso recollect the scandals that arose in America in regard to the Equitable Company, young people being in possession of millions of dollars as the result of an arrangement made at the infancy of an institution which grew to enormous proportions. The companies to which I refer are Australian.

Sir John FORREST:

– What are their names?

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I am prepared to furnish that information to the Treasurer. We do not wish to exempt persons such as I have mentioned from the payment of this tax, though we are willing to exempt the policy-holders in companies doing a purely mutual business.

Mr ATKINSON:
Wilmot

.- The amendment suggested will, it seems to me, be ineffective because, in any case, the tax will be paid not by the shareholders, but by the persons whom we wish to protect, the policy-holders. The proprietary companies, at regular intervals, distribute so much among their policyholders. If they know that they will be called on to pay taxation under the Bill, they will distribute a smaller amount among the policy-holders.

Mr Archibald:

– How can we preventthat?

Mr ATKINSON:

– I do not know that we can prevent it.

Mr Boyd:

– The companies are not making larger profits now than they did before the war, so that the Bill will not affect them.

Mr ATKINSON:

– I have no objection to the amendment, but I am afraid that it will not achieve the object in view.

Mr FENTON:
Maribyrnong

.- I hope that the Minister will get his officers to look into the insurance business generally. Within the last few years the so-called insurance companies have been undertaking business which has a very wide scope. I know one purely Australian concern, though it is built up on ideas which originated in other parts of the world, which allows a man totake out a life insurance policy, and borrow to build a house at the same time.

Sir William Irvine:

– Is it a mutual company ?

Mr FENTON:

– I cannot say. Companies whose business is conducted to make profits for individuals should come under the operation of the Bill. A few years ago a big mutual company was swallowed up by a proprietary company. I presume that that is one of the institutions which is conducting its business on lines that are partly mutual and partly proprietary. I believe that a considerable portion of the profits of some of these companies is finding its way into the pockets of wealthy shareholders in America; and as we are considering insurance companies, it would be worth while to have a thorough investigation into the whole question. There are certain businesses in this country, which, under the name of insurance, are really businesses carried on by private individuals who are “out” to make profits. These people, I am afraid, may escape the tax.

Sir John Forrest:

– This is only a temporary measure.

Mr Groom:

– Are these companies run by shareholders?

Mr FENTON:

– Yes.

Mr Groom:

– We propose not to exempt them.

Mr FENTON:

– Then, under that proposition, they will be “ roped in.” There would not be much difficulty in obtaining further information before the Bill finally passes.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- While I am entirely in accord with the general purpose of the Bill to tax wartime profits, I approve of the exemptions as set out in the Bill. I should, however, like to see one class of mutual company added to the list, on exactly the same lines, and for the same reasons, that a desire has been expressed to exempt policyholders in life insurance companies. I refer to the great co-operative companies that are working in Australia, and which, I hope, will increase very materially in the future. I am a great believer in the co-operative principle, and I very much regret that a large number of people who do not understand it imagine that these companies are working for profit in the same way as -a proprietary company. According to the principle on which these companies operate, the shareholders, as shareholders, have no right or title to the profits beyond a small dividend. In many of these companies the articles of associationlay it down that, no matter what the profits may be, there shall not be more than 5 per cent. paid to the actual shareholders - that, with that exception, the whole of the profits must go back to the suppliers of the article with whom the company operates.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They pay a higher price to the suppliers.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The suppliers are not necessarily shareholders.

Mr Fenton:

– The bulk of them are.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The point is that, as shareholders, they have no right or title to these profits at all.

Sir William Irvine:

– How would they calculate their profits ? Would they not deduct the prices of the milk ?

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– The whole trouble at this particular time arises from the fact that when the war broke out these companies were dealing in a perishable product, the greater part of which had to be exported. They did not know what was going to happen - they did not know whether or not the bottom was going to fall out of the market - and they, as business men, financed their concerns on very conservative lines. That is to say, they paid out to their suppliers a less price than they would have done if things had been normal.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The whole thing is purely mercantile. By not having” dividends, they are able to give a higher price for milk.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Of course, but that is the co-operative principle. Just as policyholders in mutual insurance companies are better off than policy-holders iri proprietary companies, so the suppliers to these co-operative concerns are in an infinitely better position than those who supply to proprietary concerns. When farmers supply cream to a proprietary company, that company pays as little as possible for it, and takes the whole of the profits made.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The tax will be levied on the individuals.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– If the individuals are taxable. As I was saying, these cooperative companies, under the circumstances, did not pay as much to their, suppliers as they otherwise would have done; and, for the same reasons, in many instances retained the funds in hand. As a matter of accountancy, these deferred payments - because they are nothing else in reality - have been put into profit and loss account. If we decide not to exempt these companies, they, instead of letting this money go into profit and loss account to be paid in bonuses to the suppliers, will simply put it from month to month into a suspense account, which will ultimately be distributed. I dare say that, as a matter of strict accountancy, that should have been done in the first instance; but that principle has not been adopted by our great co-operative com;panies. In consequence of the limitation of dividends to 5 per cent., the suppliers know that, with the money going into profit and loss account, they are safeguarded.

Sir John Forrest:

– Are you going to move an amendment!

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– I am going to ask the Treasurer to consider, before this clause is further dealt with on recommittal, whether these companies are not really entitled to the exemption J am suggesting. If the country only realized what can be done under the co-operative principle, and the Government would endeavour to do what is possible under the peculiar facilities provided by the pools that have been created to assist the cooperative movement, so far as the primary producer is concerned, great benefit would accrue to Australia.

Sir JOHN FORREST:
Treasurer · Swan · NAT

– I shall be glad to give the matter further consideration, in order that we may deal with it when the clause is re-committed. I have, however, given it a good deal of attention already, and I have come to the conclusion that the suggestion made is not one that we should accept. So far as I could ascertain these companies are not really co-operative, but are ordinary trading concerns, inasmuch as they are not limited to trading within themselves, but trade with anybody. No doubt, they trade with a good many people who are shareholders, but not all are shareholders with whom they do business; and I hardly think we can show them any more consideration than is given by the Bill. The Government have already agreed to exempt the supplier of dairy products, and it is a pretty wide proposition that his product should be exempt wherever it may go. It is provided in the proposed new sub-clause 2 that the exemption of a business shall not extend to any business which supplies to, or purchases from, that business any commodities. The exemption will not be extended to persons who buy from dairymen and sell again. The operations of the co-operative societies of which I have knowledge are not limited to dealings with the persons who supply the cream. They are trading concerns, although- they do most of their business with their shareholders. We are treating dairymen very liberally in exempting their industry altogether, and when they dispose of their products through other channels, whether they are co-operative concerns or not, they should not ask that the exemption should also apply to those channels. However, I shall be glad to give further consideration to the matter.

Mr CORSER:
Wide Bay

.- There are about twelve co-operative butter and cheese factories in the Wide Bay electorate. They do not get their returns from London in time for the halfyear’s balance-sheets, and the practice has been to make a proportionate payment to the producers and retain the balance and distribute it in the shape of bonuses when the final account sales are obtained from London. Although the distribution is postponed, the bonus is really part of the return to the producers that should have been distributed to them on co-operative lines. If the Treasurer (Sir John Forrest) insists on excluding these concerns from the exemption, they will have to take the risk of making an immediate distribution of all that is likely to come to the producers for the sale of their produce. In this way they may get into financial difficulties. As the Treasury is not likely to get much revenue from these concerns, they might . very well be exempted. At any rate, we should do all we can to encourage these co-operative concerns to safeguard their financial interests.

Mr BOYD:
Henty

.- I move, as an amendment -

That paragraph (b) bo left out.

This is the paragraph which exempts agriculture, fruit growing, the dairying industry, and pastoral pursuits. My action in regard to the Bill will be determined by the fate of this amendment. I have already outlined my view that there should be no exemptions in a war-time profits tax. So far I have been unsuccessful in having it carried into effect, and I shall probably be unsuccessful on this occasion also, because so many honorable members representing agricultural constituencies do not care what penalties are imposed on others so long as their constituents’ interests are exempted. The honorable member forWannon (Mr. Rodgers) has said, “All in or all out.” If there are to be no exemptions, we are all on the same footing, but if honorable members representing agricultural constituencies propose to exempt their people, leaving the cities and non-agricultural communities to carry the burden of this taxation, it is just as well to know where we are on the matter. If my amendment is not agreed to, I shall modify my opinion in regard to other exemptions. I hold the belief that professions should be taxed, and I shall seek to have them taxed if honorable members exclude the agricultural industry. There might be a justification for exemptions under a war profits tax, but there is no justification for them under a war-time profits tax. Of course, we shall be told that agriculture is the fundamental industry of the Com monwealth, and I admit that we should encourage it in every way.

Mr Sampson:

– How can we expect a representative of a city constituency to understand the needs of the agricultural community ?

Mr BOYD:

– How can we expect a representative of an agricultural constituency to vote to have his own people taxed no matter what profit they are making? If the value of wheat rises from 3s. 2d. on the farm to 4s. 9d. through the operations of a Pool organized by the Government, is not that increase of1s. 7d. a bushel a war profit? If it is not a war profit, what is it?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– They have not averaged 4s. for their wheat yet.

Mr BOYD:

– Then I will say 4s.

Mr Sampson:

– Sixpence per bushel less than the cost of growing it.

Mr BOYD:

– And, of course, they all die in poverty.

Sir John Forrest:

– They work hard for their money.

Mr BOYD:

– I am not opposed to encouraging agriculture in every shape and form. The man who goes into the backblocks is worthy of every consideration; but if this is a war-time profits tax, the man who makes a profit on his farm ought to be in the same position as the man who makesa profit in his business. Allowing that his profit is the result of his own exertion, in what respect does the farmer differ from the small agent or broker, or the professional man, who, we are told, works long hours to attend a greater number of patients, but does not charge higher fees? Theirs is personal exertion of the same kind as that of the farmer. I am moving this amendment so that I may be able to determine my conduct in regard to other exemptions. If the majority of members of the Committee are going to exempt their constituents, I shall attempt to exempt as many of mine as I possibly can. In the businesses that will be required to pay this tax ‘the owners have to take risks, and frequently make heavy losses, just as agriculturists do (when they experience bad seasons, and any reasons that can be advanced to justify the exemption of agriculturists can be made to apply with equal force to the men whom this tax will most affect.

Sir JOHN FORREST:
Treasurer · Swan · NAT

– I must say a word or two in regard to the extraordinary utterances of the honorable member who has just resumed his seat. I have always regarded the honorable member f or Henty as a sensible, level-headed . man; but today, contrary to his wont, he has taken up more of the time of the Committee than has anybody else, and, although I am accustomed to listen to him with interest and approval, I find myself entirely out of accord with the arguments he has used to-night. I am surprised at, and disappointed with, the remarks of the honorable member. My own opinion is that all the primary industries of the soil should be exempted, because, in this time of war, if there are any classes of people whom we should encourage to produce more wealth, in order to get us out of our troubles, they are the .agriculturists and the pastoralists, and I would even go so faT as to include’ those who mine metals. Those are the industries which are essential to the country’s progress. What would be the use of all the people in the towns if there were no producers in the country? I cannot see that we have any greater duty at the present time than to encourage, in every way possible, greater production from the soil. In arguing that there is no difference between the man in the town and the men upon whom we depend to develop the soil and produce primary wealth, the honorable member for Henty adopted an attitude with which I cannot agree. I am not going to say that there are not many advantages attaching to rural occupations, but it cannot be denied that judged by the standard of comfort in our cities and towns, the people on the land have to submit to many uncomfortable conditions. They work early and late, and often for but little reward. Their industry is subject to all the disappointments of climate and drought, and to pests and plagues of every kind. The honorable member for Henty has been on the wrong track several times to-day. I am sorry to say this, because I have a great regard for him; but I cannot understand why he should ask us, as representatives of the people, to vote against a proposal for the encouragement of agriculture and dairying.

Mr Boyd:

– I have not done that.

Sir JOHN FORREST:

– But the honorable member would have us strike out this exemption.

Mr Boyd:

– That is quite a different thing.

Sir JOHN FORREST:

– I would remind the honorable member ‘that in this Bill we are not unmindful of the interests of people in other walks of life. We propose to exempt professional men as well as certain businesses and institutions, so that it cannot be said that we are looking after the interests of only one section of the community. If there is one class which more than any other I would exempt from this taxation, it is the agricultural community of the Commonwealth.

Mr TUDOR:
Yarra

– I have been greatly impressed by the earnestness of the speech just made by the Treasurer in support of these exemptions. Had he fought in the same vigorous way for some of the fundamental principles of his Bill it would not have been mutilated as it has been. The right honorable gentleman has been prepared to give up practically every provision in the Bill to which any of his party has taken exception, but as soon as it is proposed to narrow down the scope of the exemptions he at once makes a big fighting speech. No one can say that the right honorable gentleman ha3 fought so strongly for any other clause in the Bill as he has done for the retention of the exemptions as they stand. He says’ now that he would not only exempt the farmers, but others; thus giving us an indication of how he views such legislation. I congratulate him upon the speech he has made, but shall have very much pleasure in voting for the amendment.

Mr CORSER:
Wide Bay

.- The honorable member for Henty (Mr. Boyd) has been discussing the position of agriculturists from a purely Victorian stand-point, and apparently knows nothing whatever of agriculture as carried on in other parts of the Commonwealth’. That is the only conclusion to which I can come, since otherwise it would be difficult to account for the attitude he has taken up. I would invite him to consider for a moment what has happened to the’ great sugar industry in Queensland.

Mr Boyd:

– Oh!

Mr CORSER:

– The honorable member and others may laugh when I refer to the Queensland sugar industry, because they know nothing about it. It seems to be necessary that some one should educate them as to the facts relating to that industry. Its annual output amounts, or should amount, to something like £6,000,000, and there are about 6,000 producers, and no less than 50,000 people directly or indirectly engaged in the industry. Is it reasonable that such an industry should be treated ‘ as the honorable member for Henty would have us deal with it? In 1914-15, the agricultural districts of Queensland suffered the severest drought ever experienced by them, and in 1915-16 a great number of the sugar mills in Queensland did not turn a roller owing to the notorious Dickson award. This year the sugar producers are trying to recover some of the losses of the last two years. If they are not to be exempt from the provisions of this Bill, what encouragement will be given them to carry on an industry which, from a defence point of view, is more important to Australia than is any other? How can we hope to people the great northern seaboard of Queensland unless we encourage the sugar industry? Notwithstanding its importance from a defence point of view, there are some honorable members who would be only too pleased to destroy it. I do not think there is the slightest danger of this amendment being carried, but I appeal to honorable members to consider the position of the agricultural industry from the stand-point, not of Victoria, but of the whole Commonwealth.

Mr FENTON:
Maribyrnong

.- I intend to support the amendment moved by the honorable member for Henty (Mr, Boyd). There are a number of well-to-do farmers in Australia who, I believe, would take a delight, as true patriots, in assisting, by paying this taxation, to bear the burden of these exceptional times of stress.

Mr Boyd:

– These primary producers - the farmers-:- pay the highest income tax of all, save certain companies.

Mr FENTON:

– I have spent a considerable part of my life in farming communities, and do not hesitate to say that, notwithstanding periodic drought visitations, the farmers of Australia, as a class - or, at least, those who understand their business - are among the most successful men in the community. It is often urged that the man on the land is more severely hit by droughts than is any other section of the people. That is a popular fallacy. Let honorable members ask the business men in any town in the Mallee or in the Wimmera who are hit most severely during a period of drought, and their answer will be that they are. The Government, however, are not proposing to exempt business men in farming constituencies, although a drought affects them just as seriously as it does the farmers.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– That is not a fact.

Mr FENTON:

– Those who have had any experience of rural life know that a storekeeper in the midst of an agricultural community in time of drought is practically the mainstay of the district. There is to be no exemption for such men, but the successful farmer is to be exempt. Some farmers go in for mixed farming, and do not depend wholly on wheat production. The honorable member for Werriwa (Mr. Lynch) will bear out that statement.

Mr Lynch:

– Then they will come under the Bill as pastoralists.

Mr FENTON:

– Yes, but under the heading of “ agriculture “ will be those engaged in chaff production, wheat, oats, and barley, and potato growing. I have in mind the case of a man engaged in the hay-growing business on a scale large enough to keep two* Buncle chaffcutting machines working all the year round. He also has his straw press, and sends the product along to the paper mills. There are others who are following the dairying industry, and perhaps keep a few sheep, but in the latter case, I suppose they would come under the provisions relating to pastoralists. Many of such men are very successful, and it is not fair to others that they should be exempt from this tax.

Mr Sampson:

– Hundreds of thousands of tons of wheat have been destroyed by the mice.

Mr FENTON:

– We know quite well that there have been heavy losses, but if is impossible to legislate for every hard case. The honorable member must admit that, year in and year out, many farmers do very well. This is proved by statistics, which show that they pay considerable sums of money in the way of income tax, and that is the best possible proof that those men can well afford to pay n war-time profits tax. In the constituency represented by the honorable member for Henty, a great deal of intense culture is ‘carried on by market gardeners, who may be seen going home any morning of the week, asleep, on their waggons, because they are working practically day and night. Is the honorable member for Henty prepared to say that all who make profits out of vegetables should come under the provisions of this tax, just the same as any others? If farmers have made profits during wartime, why should they be exempt?

Mr Tudor:

– But they get £1,000 exemption.

Mr FENTON:

– Tes, and that will exempt large numbers of our rural population altogether. I believe that, as a rule, the farmers will not thank Parliament for exempting them from the operations of this measure. The producers of this country, through the operations of the Wheat, Lucerne and Wool Pools, have been assisted over the most difficult time in our history, and they will come out of this crisis very well indeed. In view of that fact, I believe they will be glad to contribute towards the revenue under the provisions of this Bill. The honorable member for Henty has all the logic on his side, and I intend to support him.

Mr MANIFOLD:
Corangamite

.- I am rather surprised at the action taken by the honorable member for Henty (Mr. Boyd), and at the support given to him by the honorable member for Maribyrnong (Mr. Fenton), who talked about a certain farmer who had an immense chaff-cutting plant, and was conducting operations in a large way. Let mc tell him that in many cases the farmers will not be able to afford to cut their hay this year.

Mr Fenton:

– Then they will not be taxed.

Mr MANIFOLD:

– When the farmer does get a return, as might be the. case next year, he will have to make up two years’ profits, because under this Bill he will not be able to strike the average of profit. I might remind honorable members that wheat farmers can suffer just as much from an excess of rain as from lack of it, and this year thousands of acres will not be worth harvesting, because farmers in some districts have had too much rain. If a farmer, because of adverse circumstances, has a serious setback in one year, he looks to recoup himself the following year, and if he makes £1,500 out of, perhaps, 1,000 acres of wheat, surely he is entitled to that profit ?

Mr Fenton:

– He will have the prewar standard of profits in regard to good harvests in previous years.

Mr MANIFOLD:

– In many cases previous seasons have been bad. Let me quote another case of a man who may go in for potatoes or onion-growing, and perhaps has no pre-war standard of profits. He will have to go down upon his hand and knees to weed the ground in the case of onion-growing, and he might make £120 per acre gross, and about £90 per acre net this year. Next year, unfortunately, he may be obliged to throw the whole of his produce on the manure heap, and, unluckily for him, he will not be allowed to strike an average of profits under this Bill. Many men have been ruined at the business of onion and potato growing, and in some cases have gone in for dairying. At the present time potatoes are hardly worth sending to market, and yet these men are not allowed to strike an average.

Mr Fenton:

– I agree with you on the question of average profits.

Mr MANIFOLD:

– The Treasurer (Sir John Forrest) refuses to allow an average to be taken. I was very pleased to hear him say that he would exempt the pastoral industry if he could. There is nothing to prevent him doing so. I do not believe in exempting the pastoral industry. I believe that it should pay, and before the clause is passed I intend to move that the words, “ (where conducted on land first used for pastoral purposes since the beginning of the present war) pastoral pursuits and “ be left out. I do not see how this measure can apply even to persons in the back country. If a man has gone to the back country to open up an industry during the war, I am satisfied that he can be making but very little income yet, and this Bill will not affect him. If a division takes place on the amendment, I trust that agriculturists and dairy farmers will be exempted.

Mr FINLAYSON:
Brisbane

– Whatever our views may be as to the wisdom of imposing a war-time profits tax on agriculturists, I am quite sure that honorable members are unanimously of the opinion that primary producers deserve the first and most serious consideration. What we have to decide is whether there are any special disabilities under which agriculturists labour that entitle them to be freed from a tax which is imposed on other classes of the community. Can they claim that they are under certain disadvantages which entitle them to special consideration ?

Mr Page:

– No man in Australia takes the same risks as does the man on the land.

Mr FINLAYSON:

– We can admit that the primary producers are subject to considerable risks peculiar to their occupation. They suffer from uncontrollable circumstances that’ other sections of the community are not subject to. But there is another side to the matter, and it is that other sections of the community have to contend with peculiar disabilities connected with their callings.

Mr Pigott:

– But not to the same extent as the agriculturists.

Mr FINLAYSON:

– I do not believe that the farmers of Australia are such a poverty-stricken class of people as some honorable members seem to think. The argument of the honorable member for Corangamite (Mr. Manifold) proved, not that those who are engaged in primary production should. be exempt, but that they are so poor that the tax will not affect them, and, therefore, their case need not be considered.

Mr Kelly:

– Is the honorable member aware that it is proposed to leave out the whole of paragraphb ?

Mr FINLAYSON:

– Yes. I have a personal interest in primary production, but from observation in going about this country it has appeared to me that the primary producers are by no means the worst-off section of our community. There are many thousands of people engaged in industrial occupations who have greater difficulty in making ends meet than have the primary producers.

Mr Corser:

– They do not work so hard.

Mr FINLAYSON:

-I am very doubtful about that; but to compare the hours and conditions of labour of primary producers with those of industrialists is to compare things which are not analogous. I am satisfied that any one who has visited both would prefer the farmer’s home to the industrialist’s.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If the industrialists are exempt. why make the comparison ?

Mr FINLAYSON:

– Because my biggest objection to this taxation is that I believe that in its incidence it will prove so unequal and unjust that it will injure specially the secondary industries of the country. To show that the primary producers of Australia are not the povertystricken class that some honorable members would have us believe, I have here a, copy of the VictorianYear-Book for 1915- 16, in which there is a summary ofthe income tax returns. I take the figures for six divisions - the professional, the domestic, the commercial, the transport, the industrial, and the primary producers. The table sets out the number of income taxpayers, and the amount they pay. In the last column the average contribution of each of these classes is given, and I find that the professional class pays, on an average, £5 6s. l0d. per head; the domestic class, £7 0s. 5d. ; the commercial class, £6 15s. 2d. ; the transport class, £2 12s. l0d. ; the industrial class, £5 13s. 6d.; and the primary producers, £10 10s. 5d.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– That includes graziers.

Mr FINLAYSON:

– I know that whatever figures were quoted some objections would be urged against them. I do not claim that the figures 1 have quoted show that the primary producers are the most affluent in the community.

Mr Sinclair:

– I think that they prove that the farmer is honest in making out his returns.

Mr FINLAYSON:

– The obverse of, that is that the other sections of the community referred to are not honest in making out their returns. That is not a fair charge, nor can it be substantiated. I do not claim that the farmers are all saints neither do I admit that the members of the other sections of the community are all sinners. There are the figures for one State, and I think they may be regarded as fairly representative of the position in the other States.

Mr Higgs:

– Victoria is a rich State.

Mr FINLAYSON:

– The other States are not too badly off. I think that the farmers’ homes there are just as attractive, quite as well furnished, and as comfortably built, as are the farmers’ homes in Victoria. But, altogether apart from the figures which I have quoted, I would point out that the farmers do not claim to be exempt from the taxation which is levied upon other sections of the community. I believe that our primary producers are as willing to be taxed as are any other sections of the people. Why, then, this endeavour to throw the mantle of security over them ? If these men were so badly situated’ that they required to be protected, they would be deserving of special consideration.

Mr Corser:

– Take the case of a farmer who gets only one good crop in three years.

Mr FINLAYSON:

– My honorable friend is attempting to blind us to the fact that, in considering the success or failure of agriculture, it is necessary to view it over a period of years, because climatic conditions so vitally affect it.

Mr Page:

– The honorable member is putting up a fight for the farmers.

Mr FINLAYSON:

– All my interests in life are associated with the primary producers.

Mr Page:

– Selling their produce.

Mr FINLAYSON:

– If they had not a few honest gentlemen to sell their products, they would be in a very bad way indeed. The farmers are not by any means an unintelligent class. They are well read, and know the pros and cons of affairs quite as well as do most people. One thing, however, they do not understand, and that is how to market their produce. Rut they are excellently served in this respect by those who handle that produce for them. The present is the only occa- sion upon which the Treasurer has exhibited a desire to advocate the policy that should underlie this Bill. This afternoon, proposals to grant all sorts of exemptions seemed to appeal to him in a most remarkable way.

Sir John Forrest:

– I said the same thing last year, and also the year before.

Mr FINLAYSON:

– The granting of these continual exemptions will so diminish the revenue which will be derived under the Bill as to render it an easy task for the Government to prove that war-time profits do not exist.

Mr Lamond:

– The same proposal was embodied in the Bill introduced by the Government of which the honorable member for Capricornia (Mr. Higgs) was Treasurer.

Mr FINLAYSON:

– The honorable member for Capricornia was aware of my opposition to that Bill in advance of its introduction. I repeat that the revenue which will be collected under this measure, in view of the growing list of exemptions, will be so small that the Government will be able to say, “We had the machinery, we spread the net, and yet this is all the fish that we caught.” They will be in a position to declare that the result is proof postive that the profits which the Labour party alleged were being made do not exist. This Bill was intended to provide one of the methods whereby the people making profits should be made to pay taxation upon them. Wealth was to bear its share of the burden. We are now having a wonderful exhibition of how wealth is to bear its share.

Sir John Forrest:

– We ought all to pay.

Mr FINLAYSON:

– If the Treasurer will adopt that principle in his Bill, I will come over and sit beside him till the measure is through.

Sir John Forrest:

– I said that all you rich people over there ought to pay.

Mr FINLAYSON:

– We have no rich people amongst us since the “King” left us.

Mr Pigott:

– Where are all the rich people ?

Mr FINLAYSON:

– The honorable member ought to know. They did not support us. because they knew that the legislation which would be introduced by the Labour party would place the burden of taxation on the shoulders of those best able to bear it. The Bill will not accomplish the purpose which the Government seek, nor that which the public seek, namely, the prevention of extraordinary profits in war time. Therefore, sooner or later, the Government will have to come down with a practical measure which will make those who have the means pay their proper share of our war expenditure.

Mr RICHARD FOSTER:
Wakefield

– The exemption which we are now discussing was first introduced by honorable members opposite through the honorable member for Capricornia (Mr. Higgs), who was Treasurer at the time. It is all very well for them to say, “ We do not believe in this Bill, and did not believe in it then.” But they never raised their voices when the first War-time Profits Bill was introduced.

Mr Tudor:

– There was no debate upon it.

Mr RICHARD FOSTER:

– They would not raise their voices to-day but for the change which has taken place in the personnel of this Chamber. There is no need for me to occupy the time of the Committee in “advocating this exemption, because it is one which ought to commend itself to everybody, and particularly to honorable members opposite. It is sound economics that we cannot assist the industries of any country better than by protecting the interests of the primary producers. There are certain honorable members, however, who judge of the general conditions of agriculture by the results achieved by a few favoured individuals who occupy the choice spots in Australia. But I would point! out! that, as far as wheat-growing generally is concerned, only a very small proportion of our wheat yield is grown in the garden spots of Australia - on ‘the richest soil, and under the most favoured climatic conditions. The bulk of our wheat is grown on the second class country; and a good deal on the third class country. That fact is abundantly evidenced by the quantities of manure that are used in its production. We should not be rejoicing over the production, which takes place on the poorer areas of Australia but for the extensive use of fertilizers. Last year the areas outside Goyder’s line of rainfall in South Australia produced the heaviest! yields of wheat. In New South Wales, owing to the prevalence of rust, the returns were very much smaller. What applies to- South Australia, in particular, applies also to some of the drier areas of Victoria. In the drier areas of South Australia we had absolutely bigger crops than in the better country with a better rainfall. What is the position, so far as this tax is concerned, of farmers on poor areas outside Goyder’s line of rainfall, that had an abundant rainfall and a record harvest last year? They have no pre-war standard to bring them ‘relief, because the previous drought was a drought of five years in extent.. Those farmers would have to pay a considerable amount under this Bill, if not exempted, and would have to pay what is not their own, because all the money they have received from this record crop has been distributed to liquidate the debts of the past five years, and they would have to get money from the banks. Even with this abundant year the farmers in those dis tricts have not recovered their position and wiped out their liabilities for the past five years. It will take another year equally good to do that. I ask the honorable member for Henty (Mr. Boyd) if he does not believe that it is in the interests of this country and of those individual farmers that they should have consideration by means of the exemption proposed, seeing that if we took from those men the profits of last year we would drive them from the land ? God only knows that, so far as agriculture on second and third class land in this country is concerned, men who, are doing what they have been doing for the community for twenty or thirty years deserve, not only everything they have got, but the very best consideration and sympathy of this Parliament.

Mr WEST:
East Sydney

.- I am satisfied that if the farming community had an opportunity of filling these galleries they would say, “ Oh, God, save me from my friends!” Ever since the honorable member for Henty (Mr. Boyd) proposed his amendment, nearly all those on the Government side have endeavoured to show that the farmers are so poor, and their circumstances so bad, that they lead a most miserable life. I say to honorable members opposite, “If you want to do anything in the interests of Australia, do not preach stinking fish. Put the true position, and tell the people of Australia and the world that the primary producers of this country are not in the state that you have endeavoured to paint.” I am going to vote with the honorable member for Henty, and honestly believe that those farmers who would be liable to pay their proportion of taxation under this Bill would do it as willingly as would any business man in the city or out of it, in order to assist to win the war. I might as well plead for an exemption for contractors. I have been a contractor myself, and in some years I- have put in for. work week after week and been beaten by a few pounds. In other years I succeeded in getting several profitable contracts. If I followed the same logic as honorable members opposite have used in their appeal for the farmers, I ought to appeal to the Committee to exempt the contractors who live in East Sydney. But, after all, this Bill will tax only those whose income was over £1,000, whether they are farmers or city men. Does any honorable member want to make the people believe that a farmer who gets over £1,000 is not prepared at this period of our history to assist the Treasurer (Sir John Forrest) over his financial difficulties? Honorable members opposite, who say that the farmers are not prepared to do that are not expressing the true spirit of our primary producers. Some reference was made during the evening to the question of strikes, but let me tell my honorable friends opposite that nobody strikes’ so much as the dairy farmers and others interested in dairy produce.

Mr Pigott:

– Oh!

Mr WEST:

– My honorable friend has not lived as long as I have. When he has, he will have more brains than he has now. He knows nothing about Australian conditions. Sydney has been repeatedly stuck up for milk unless the dairy farmers could get so much per quart for it. It has been repeatedly stuck up by cooperative and other concerns because they would supply butter only at a certain price. The farming community and the co-operative stores handling bacon have stuck up various cities in Australia until such time as bacon could be sold at a certain price. That is just as much a strike by the primary producers and distributers of foodstuffs as anything else.

The TEMPORARY CHAIRMAN (Mr Atkinson:
WILMOT, TASMANIA

– I ask the honorable member not to pursue that phase of his remarks further.

Mr WEST:

– It seems peculiar that honorable members on the other side were allowed to refer to strikes. I am only showing that there are strikes even among the dairy producers. If honorable members opposite could show that the Bill was going to punish the farmers, nobody would be more willing than myself to assist them, but we all know that the Bill touches no one until he receives over £1,000 a year. I should be failing in my duty as the representative of a city constituency if I did not plead for the same consideration for the contractor, whose possibilities of loss are just as great, as is now asked for the primary producers. It becomes absolutely boring to hear honorable gentlemen opposite continually referring to the farmers as though the farming community was hopelessly depressed. The farming community have been well considered and looked after by our Legislatures, both State and Federal. All the railways that have been built into the interior have been built for the benefit of the farmers. The honorable member for Wide Bay (Mr. Corser) speaks on behalf of the sugar-growers, but if their profits are not over £1,000 a year they will have no tax to pay under this Bill. If the exemption were reduced to £500, I believe that some members of the farming community would be quite willing to pay the tax. I know many farmers, and am familiar with the scope of their operations, for some members of my family are engaged in farming. I believe that if some farmers were in the gallery this evening they would not think much of their representatives who have been appealing to the Committee for their exemption from this taxation.I feel confident that they would not indorse some of the statements which have been made from the other side. In my opinion, the farmers are quite prepared to submit io this taxation. I made up my mind not to say a word on this measure, butI could not be silent after hearing the appeals made for the. exemption of a body of men who would be annoyed if they knew what has been said of their position at the present time. I hope that the Government will accede to this proposal, because if they do not they will inflict a hardship on other sections of the community. There may be ulterior motives behind the opposition to the amendment. I cannot say what the motives of its opponents are. I will never give a vote against the interests of the primary producers, and on their behalf I appeal to honorable members generally to accept the amendment. I feel confident that those who represent farming constituencies will be commended for affording an opportunity to farmers who are making a profit of over £1,000 a year to assist the finances of the country in this critical stage of its history.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- I could have understood this amendment coming from a member of the Opposition, for instance, from the last speaker (Mr. West), or from the honorable member for Maribyrnong (Mr. Fenton), but I can hardly understand the amendment coming from the honorable member for Henty (Mr. Boyd), except that he represents a body of constituents who have ceased to spin, and sent him here with a majority of 16,000 odd. At the beginning of his address he gave us everything but correct figures. I think the reason which prompted the Government to exempt agriculturists from this tax was the fact that in every one of the belligerent countries a premium is being offered to the wheat-grower to increase the area of production. Great Britain herself has fixed a very high price for her wheat tor a term of years - for five years, I believe. As I said the other day, the Commonwealth Government, with commendable foresight, recognising that the farmer would be scared by the absence of shipping into giving up agriculture, very wisely fixed the minimum price of 4s. per bushel f.o.b., in order that :he market might be kept up. The honorable member for Henty indicated that the farmer had had a luxurious ‘Mme because he had received 4s. 9d. per bushel f.o.b.

Mr Boyd:

– I did not say anything of the kind. Why do you not quote exactly what I said ?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member used the figures 4s. 9d., with particular stress On the fact that the farmer had had a good time.

Mr Boyd:

– I came down to 4s. ner bushel to please you.-

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member came down to 4s. per bushel on being corrected; but, as a matter of fact, under the No. 1 Pool the farmer had 4s. lid., and under the No. 2 Pool he has had 3s. per bushel. So far, he has not had an extra good time. Prior to that, the honorable member might have said that th.3 farmer lost the reward of two years’ work. First, the farmer lost a year in preparing the soil, and then he lost the whole of the following year. Not only did he lose his crop, but he had to maintain in unproductive base. He carried on, and he has to get three years’ reward practically out of one crop. I was hopeful when the Treasurer (Sir John Forrest) was speaking, that he would inform the Committee exactly how far the average wheat-grower would receive a benefit under she clause. As a matter of fact, the average wheatgrower will not receive a full measure of exemption. We know that the farmers cannot pursue wheat-growing for a number of years continuously without grazing. They have to put large areas under grazing, and all the land which will be devoted to grazing will fall within the scope of this measure. So that what appears upon its face »> a munificent exemption! to the wheatgrower is only a partial exemption. I should like the Treasurer to say exactly how the Commissioner proposes to compute the return from an agricultural property. I am sure that an intelligent system will be devised, but if this information had been furnished it would have stopped a lot of the random talk from the other side by honorable members like the last speaker (Mr. West), who imagined that a mau in possession of 1 his c round is to be exempt. We know that is not so. I personally hold the doctrine that in war time we should all contribute. I am not very keen, personally, on exemptions. I rather subscribe to the idea that the whole community should contribute their fair quota to the maintenance of the war and the upkeep of the country Special inducement should be held out at the present time to the growing of wheat, because, in the absence of shipping to export our produce, there is the possibility of agriculture being checked because of the destruction of wheat by weevil and in other ways, and the loss of all profit from the industry. I am inclined to think that the £1,000 exemption is a fair one, and will meet the position pretty well. I am not much in favour of exemptions in a measure of this description; but, certainly, if the professional classes are to be exempted, tie producing community should also be exempted. It is a pity that the Government did not provide for a straight-out exemption of £1,000 all round, providing for taxation on a graduated scale of profits exceeding that sum. I would have been prepared to vote for that. I say, without disrespect to the Government, that the exemption from taxation of the profits of pastoral pursuits conducted on land first used for this purpose since the beginning of the war, is a mere placard. The area of land, that is thus coming into use is negligible, and practically gives no income to any one. In the early years, a grazing proposition, like a business proposition, gives practically no return.’

Mr Corser:

– In New South Wales and in Queensland land has been brought into use for the first time during the present war.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Very little country is being broughtinto use now for the first time for pastoral pursuits. A little land may be taken up on the east-west railway, but with sheep worth 30s. each off shears, and cattle worth £14. and £15 each, this is not the time for such enterprises. The exemption will do no good . to any one ; but it furnishes the opponents of the Bill with the ‘argument that the Government are seeking to favour a section of the community. It has been wisely contended during the discussion that taxation should not be levied on those who have had no previous notice. Now, for the last two years, the insurance companies have had notice that they would not be taxed, and have, no doubt, disposed of the profits which the Bill makes liable to taxation.

Mr Groom:

– We are dealing with life assurance now for the first time.

Mr Poynton:

– Life assurance businesses were not included in the original Bill.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

-Then I am mistaken on that point. I contend that, inasmuch as Australia needs all the foodstuff she canraise, to export to Great Britain, and that we ought to settle as many people as we can on the land, and, further, that while this Bill will be in operation many returned soldiers will take up land, an exemption should be given to agriculturists, though I trust that the exemption of pastoralists, to which I have called attention, will be struck out.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– The honorable member for Wannon (Mr. Rodgers) asked for an illustration of the way in which a mixed farming and grazing business would be treated. The Commissioner has supplied me with a typical case. A man may carry on the business of wheat-growing and sheep breeding, occupying in all 1,000 acres of what is arable land. If he tills half of this area and grazes stock on the other half, his capital may be estimated at; say, 500 acres at £4 an acre, or £2,000 for the agricultural part of his business, and another £2,000 for the pastoral part of his business, plus the value of his stock, say, 500 sheep at 30s. each, £750. The £2,000 of capital would be exempted.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Then such a man would have to show in his return each year how much land he was using for agricultural purposes, and how much for grazing.

Mr GROOM:

– Yes, because the areas so used would vary from time to time.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There are periods when they “ spell “ the land.

Mr GROOM:

– The Commissioner will have the administration ofthe Act.

Mr.Fenton. - Suppose half the land was dairying and half agricultural ?

Mr GROOM:

– Then it would be exempt altogether.

Mr PIGOTT:
Calare

.- I have known the Opposition take up an inconsistent attitude on previous occasions, but never a more inconsistent attitude than they show to-night. I have not had the pleasure of attending any Labour Caucus meetings, but if I had, I am sure I would have found every member who has spoken in favour of the amendment then advocating the exemption of agriculturists.

Mr.Fenton. - Nothing of the kind !

Mr PIGOTT:

– The first Bill was introduced by the honorable member for Capricornia (Mr. Higgs).

Mr Fenton:

– And we were going to knock that measure to pieces.

Mr PIGOTT:

– All the “ knocking “ is done upstairs. However, judging from some remarks made here to-night one would think that the farmers were under a compliment to the rest of the community for the price they are getting for their wheat. The honorable member for Henty (Mr. Boyd), when he speaks of 4s. 9d., forgets the freight and other deductions that have to be made, and that the price is 4s. 9d. f.o.b. in Sydney. I remind honorable members that’ the amount the farmers have received is by way of advance, and they have to pay 5 per cent. interest on overdraft, not only to the Commonwealth Bank, as we are led tounderstand, but to all the banks that came to their rescue. The amount of 4s. 9d. was received by the farmers in 1915-16, but so far they have received only 3s. for 1916-17 ; and, altogether, the net amount is 3s. 5d. I have been closely in touch with farming interests in New South Wales, and in my electorate, in 1916-17, there was, I think, not more than 6 bushels an acre garnered owing to the excessive rainfall. There were visitations of hailstorms and so forth, and harvesting was extended to March or April. You may take the price at 4s. f.o.b. for farmers’ wheat, but there has to be deducted the dockage, and some farmers were charged on this account ls. 3d. and ls. 6d. per bushel, in many cases receiving only 2a. 6d. and 3s. We find that the average yield in 1916-17 was 10 bushels, and in 1914-15, for the whole of Australia, it was 2.58 bushels. Then, if a farmer makes a big profit this year of, say, £1,000, he may, next year, owing to drought, make a loss to an equal amount. If we exempt agriculturists from this tax we shall only be following the example of other countries, especially Great Britain. When honorable members say that Australian farmers are getting a big price for their wheat flow, they ought to recollect that, in America, it is $3£, or 14s., while the Imperial Government have guaranteed 7s. 6d. a bushel for the next five years.

Mr MATHEWS:
Melbourne Ports

– I do not “intend to vote for,the amendment. I cannot say that I am considering the farmers in my electorate when I take that stand, but I desire to be consistent. First of all, producers of the soil were exempt, and then, in consequence, other exemptions were made ; and now we are asked to inflict a penalty on the farming section of the community. In any step of the kind, I do not intend to assist, because I believe the Bill will be useless as a means of gathering in the expected revenue; and, in my opinion, this is merely a silly attempt to patch the measure up. I do not say that the honorable member for Henty (Mr. Boyd) has any other motive than a desire to do his best for the country ; but his effort at this stage lib produce more revenue by means of this taxation does seem peculiar. As I say, I do not intend to support the amendment unless the whole field is left open, so that we may do away with all exemptions. The honorable member for Corangamite (Mr. Manifold) said to-night that if the Government desire to be fair, the taxation ought to-be on an average. Big profits may have been made in 1915- 16, while the two following seasons may prove to be bad ; and to call upon producers to pay the tax on the 1915-16 crop is not fair.

Sir William Irvine:

– They should be entitled to a refund.

Mr MATHEWS:

– That- is so. Seeing that the tax is to be gathered from 1915-16 only, even if we had a law of average, it would make no allowance for the losses sustained in 1914-15. If the Committee agrees to the proposal of the honorable member for Henty, we should start afresh, and do away with all exemptions. I do not propose to place taxation on the farming community unless I have full opportunity to do away with all the exemptions, and as I shall not have that opportunity, I cannot vote for the amendment.

Mr SPENCE:
Darwin

.- The honorable member for Henty (Mr. Boyd) seems to have forgotten the attitude which he took up earlier in the discussion of this Bill. He expressed himself most strongly against any retrospective legislation. I point out to him that each Bill has notified certain sections of the community that some would be taxed, and that others would be exempted; and among those who were notified that they would be exempted were the agricultural portion of the community. To remove this exemption would be to impose retrospective taxation upon that section of the community. The honorable member for Brisbane (Mr. Finlayson) considers that we should wait to hear the opinions of the farmers. No section of the community is desirous of intimating that it is ready to be taxed. It is too late to discuss the principle of exemptions. The Bill already provides for exemptions; and if there is any class in the community that should share in those exemptions, itis that section which is engaged in producing wealth from the land. No doubt, the man who makes an excessive profit in war time is acting wrongly towards the community, but the primary producer is in such a position that he cannot control his profits. He may work very hard, and do his best, and yet’ meet with utter failure through a bad season. Then, again, when he gets his produce to - the market, the law of supply and demand operates so largely that he has no control over the price that he secures. It must not be forgotten that farmers were induced to put in crops for the purpose of giving assistance during the war, and members should approach this question with some degree of justice and fair play. The Irish blight has destroyed the crops of a large number of small potato-growers in the Darwin district; and if they happen to have a good season in the coming year, they ought not to be taxed upon the basis of the increase over the returns secured last year. The primary producers are the very class of people who ought to be exempted; and I am surprised that the honorable member for Henty, who is usually logical, and looks at the fair side of things, should seek to impose upon them a tax that is unexpected and utterly unjust. They do not escape taxation. They have to pay land tax and income tax. I hope that the honorable member will see his way to withdraw the amendment which he knew from the start he had no hope of carrying, because honorable members regard it as a settled thing that the primary producer should be among those exempted from the operations of this tax.

Mr LYNCH:
Werriwa

.- I said the other night that I saw no reason for any exemptions except that the difficulty of fixing the incidence of the tax justly on different sections of the community could be most inexpensively met by providing exemptions, bub the debates on this Bill have shown the absolute necessity for exemptions. The tax has been made retrospective to some extent; and difficulty arises from the fact that people have consumed something in the shape of a higher standard of living out of the profits already made, or have reinvested them in some form that does not readily admit of realization. Furthermore, we would endanger new industries by not providing some form of exemption. I would never claim exemption for the farmer on the ground of the poverty of the farmer when an exemption of £1,000 is provided. The claim of the farmers to exemption rests upon higher grounds. Very few farmers would be touched by the provisions of the Bill, even if they as a class were not exempted, because the exemption of £1,000 would cover the majority. There may be a number of men carrying on mixed farming, grazing as well as agriculture, who would come under the Bill, because the agricultural section might build up the grazing portion of their work to a standard’ beyond the £1,000 exemption. As I say, the claim of the farming industry to exemption rests upon a much higher standard. Every class of the community is interested in making the burden of the primary producer as light as possible. Nowithstanding the fact that the man on the land can hold his own, even in the time of war, whether it be due to greater reward given to individual effort in the cities, or to the greater attractions of city life, the tendency is for people to get to the cities. If a spirit of generosity be expressed in all measures relating to primary production that may tend to produce a contrary effect, and send the people to the country instead of to the cities, it will be of inestimable benefit to all. I hope to see the time When we shall be so progressive that we shall not be satisfied with guaranteeing a fair price to the primary producer, but will also insist on cheapening in every possible way all the facilities and requirements essential to the work of primary production. I am hopeful that the principles of pooling -and guaranteeing which we were compelled to adopt for the salvation of the country, as well as of its primary producers during the war, will be carried into effect even after the war is over. I believe the producers will be willing to grant a quid pro quo by giving to Australian consumers advantages which they cannot afford to give to foreigners. Wheat can be produced much more cheaply than some honorable members have said, and if the producers are given that assurance and assistance which an enlightened policy will commend, I am sure the farming interests will respond and give to the Australian consumers as cheap a loaf as they have ever had. But they can only do that if they are relieved from the robberies and injustices that are being perpetrated against them. Whilst I am not very much enamoured of the principle of exemptions in a tax of this kind, I do think there is a grave difference between the men who produce wheat during the war and those middlemen who purchase from them their certificates at 3s., and reap a profit of ls. per bushel. But as the principle of exemptions has been introduced we should not place on the same plane the speculating middleman and the actual primary producer.. I am sorry to see the attitude taken up by the mover of the amendment, because I believe it is the honest desire of every honorable member to do all that is possible to make our people progressive, and give such an impetus to primary production that we shall be able, to escape from the unfortunate position in which we found ourselves at the beginning of the war, and in which we still remain, of having a his, proportion of our people supported by borrowed capital, and not by the actual production from our own industries!.

Question - That paragraph b proposed to be omitted be so omitted - put. The Committee divided.

AYES: 6

NOES: 34

Majority . . 28

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Mr MANIFOLD:
Corangamite

– I move -

That the words “ (where conducted on land first used for pastoral purposes since thebeginning of the present war) pastoral pursuits; and,” in paragraphb, be left out.

I do not know to what land these words could possibly apply. Any man who goes into the back country and opens up land for pastoral pursuits at a time like this is not likely to derive any profit from his industry. These words are, therefore, mere surplusage, and I ask the Committee to omit them.

Sir JOHN FORREST:
Treasurer · Swan · NAT

– These words were inserted in the clause at my suggestion, because I thought they would be in the nature of a placard calculated to give encouragement to those who go into the back country to enter upon pastoral pursuits. I felt that it would show such people that we had some sympathy with them. As honorable members are aware, when I occupied a position of more freedom and less responsibility, I was always in favour of the primary industries of the soil - especially the agricultural and pastoral induatries-being exempt from this taxation. When I accepted the responsibilities of office, however, I found that there was a doubt as to the possibility of going so far. Although I am strongly in favour of encouraging increased production, I was unable to exempt the pastoral industry altogether from this taxation; but I thought that the insertion of these words would show that, in the event of the war being prolonged, people could avail themselves of any opportunity to enter upon the industry without being liable to this taxation. I have come to the conclusion, however, that they are a placard, and nothing more. I know from my own knowledge that profits are not to be made in a moment from pastoral pursuits where the land has not been used for such purposes before. That being so, and as the words may be open to some misrepresentation, I do not think they are worth retaining. They might possiblybe open to the criticism that they are a concession to a primary industry, whereas, in fact, they are not. I shall, therefore, accept the amendment.

Amendment agreed to.

Mr MANIFOLD:
Corangamite

– I move-

That after the word “ profession,” paragraph d, the words “ or calling “ be inserted, and that after the word “ qualifications “ the words “ special education or training “ be inserted.

My object is to exempt the wool buyers. In the pre-war years, competition with German buyers was tremendously keen, with the result that British wool-buyers were unable to compete in the Australian market to any great extent, but after war broke out they came into their own to some extent, and with orders from British firms were ableto make considerable purchases here. Since the wool has been acquired by the Commonwealth Government on behalf of the Imperial Government, however, the wool-buyers’ business has gone, as they have no capital invested in the business, but acted on orders received by cable from Great Britain.

Mr Richard Foster:

– My amendment would exempt them for last year.

Mr MANIFOLD:

– I wantto make it absolutely clear that the wool-buyers of late have been practically working tor the Government. Up to the time that the wool was acquired by the Government, their income increased to a considerable extent, but if they are now going to be brought under the operation of this Bill they will be suffering an injustice, because since wool was acquired they have had no income at all.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Not from woolbuying perhaps, but they may have gone in for some other occupation.

Mr MANIFOLD:

– No, because many of them have given the whole of their time to the work of assessing wool bought on behalf of the Imperial Government.

Mr Richard Foster:

– Without pay ?

Mr MANIFOLD:

– They get a small amount, but nothing like the income they earned on commissions shortly after the outbreak of the wax.

Sir JOHN FORREST:
Treasurer · Swan · NAT

– I have listened with attention to the remarks of the honorable member for Corangamite (Mr. Manifold), and I know the facts, because they were placed before me by the gentlemen concerned. I sympathized with them at the time, but it seems to me things have changed a good deal of late, and I do not now see any justification for placing them on a footing different from other persons, because they will be able to avail themselves of the pre-war standard, which may extend back to six years before the war. We have already made an arrangement fixing the pre-war standard exemption at £500, and with other emoluments their pre-war standard exemption will be £1,000. “Under these circumstances, it seems to me that we must have some general rule, and the general rule which applies to all agents and new businesses might fairly be applied to wool-buyers. I regret I cannot support the honorable member.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I am familiar with the case as cited by the honorable member for Corangamite (Mr. Manifold), and I know that the woolbuyers referred to have rendered a great service to this community. There is more Involved in this question than the mere exemption of these professional men. Wool-growing is the greatest industry in this country, representing a value of £40,000,000, and I doubt if there are half-a-dozen absolutely expert judges of wool who qualified in Australia. Prior to the war every nation sent its keenest experts to participate in our wool sales, and the competition resolved itself into a contest between nation and nation. The scheme evolved by these professional men is recognised as technically the most perfect yet produced for the valuing of wool. These gentlemen, as I have said, have, therefore, rendered a very great service to the Commonwealth, equal in value, I think, to between £20,000 and £30,000. I agree with the proposal that they should be included in the professional class, not on the ground of commercialism, but on the ground that they have rendered highly professional skill to this country.

Mr BOYD:
Henty

.- I appeal to the Treasurer (Sir John Forrest) to report progress. We will have all day to-morrow to continue the debate, and I feel sure we will make more rapid progress than we are doing at present. If this clause is passed, the Government will have gab the two most contentious clauses of the Bill through. They will make no more progress by sitting all night. That will only tend to put honorable members in a bad temper.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– They put the fight into us, and now they are retreating.

Mr BOYD:

– The honorable member need make no mistake about me. I am nob retreating. If fight is wanted, I shall be here all the time. I ask the Treasurer to agree to report progress after this clause is passed.

Mr TUDOR:
Yarra

.-Some time ago I made the same suggestion to the Treasurer and other Ministers. I can speak as one who has taken part in every all-night sitting but one which has occurred in this Parliament. I am sorry now to have to say so, but at one time I looked upon that as rather a record. I say now that it is one of the worst things that we could do. I suggest to the Government that they should report progress after this clause is passed, and, if necessary, sib right on to-morrow after 4 o’clock to get the Bill through. So far as I am concerned, the Government may have the Bill to-morrow, and honorable members on this side will be prepared to help them to get it through.

Sir WILLIAM IRVINE:
Flinders

– If the Government intend to go on with the Bill, I should like to say something about the amendment.

Mr Joseph Cook:

– We are going on.

Sir WILLIAM IRVINE:

– I wish to remind the Committee that the amendment moved by the honorable member for Corangamite (Mr. Manifold) raises a wider question than that merely of the position of the wool-brokers to whom he referred. There is a great deal in his contention. I think the Committee has not fully taken cognisance of the difference in the position under this Bill of professional men and those whose incomes are derived from personal exertion and of those who make their profits out of business capital. I point out that those whose profits are made out of business capital are given an option. If their pre-war standard is low, they are given the option of a percentage standard on their capital.

Sir John Forrest:

– If it suits them.

Sir WILLIAM IRVINE:

– Quite so. But no such option is given to a man in a profession or calling whose profits are derived from personal exertion. ‘ The amendment proposes to include amongst professional men certain others who are not strictly professional men, but who, for similar reasons, may claim to be brought within that class. I am supporting the amendment on the ground that it covers persons whose incomes are derived from personal exertion. “Under the Bill they are being placed, not on the same plane as the man whose profits are derived from business capital, but on a much lower plane, because they are not given the option, if their pre-war standard is low, of taking 10 per cent, on their capital. The wool-brokers do not make money out of capital, but out of their personal skill. If they made excess profits out of capital, they would have the option, if their pre-war standard was low, to discard that, and say that they would take the 10 per cent, on their capital. A man whose income is derived from personal exertion hae not that option.

Sir John Forrest:

– But there is an exemption of £1,000 in such cases.

Sir WILLIAM IRVINE:

– -That would affect the wool-buyer merely up to £1,000. I am dealing with a general principle.’ Suppose that one of these men was making £1,000 before the war, and is making £1,500 now, we do not, under this Bill, give him’ the option which we give to a man in exactly the same position, but engaged in a capital business, of saying, that he will not take the pre-war standard, but will take the 10 per cent, on his capital. The Committee should understand that the man deriving his profits from personal exertion is tied to the pre-war standard, whereas the man who derives his profit ‘ from business capital is entitled to choose the 10 per cent, standard, which might be mud higher.

Mr LAMOND:
Illawarra

.-! shall support the amendment. There are many workers who are not included in the ranks of professional men but whose qualifications are exactly those of professional men. In my judgment, the wool-buyer bears the same relation to thu pastoral industry as do professional men to their various callings.

Mr Page:

– The wool-buyers are well able to look after themselves.

Mr LAMOND:

– I dare say that they are. But they are not able to defy the* law.

Mr Page:

– The honorable member wishes to make the wool-grower pay the tax whilst allowing the wool-buyer to be exempt. By jove, it is red-hot!

Mr LAMOND:

– I certainly think that the class indicated in the amendment should be included in the exemption, but I am not in favour of continuing that exemption beyond the two years period.

Mr PAGE:
Maranoa

.-This is about the hottest proposition that has been put forward’ in connexion with the Bill. Some honorable members have been taking the honorable member for Henty (Mr. Boyd) to task for having submitted certain amendments this afternoon. Yet it is now seriously proposed to tax the individual who has to contend with all the- pests connected with the pastoral industry, whilst allowing the wool-buyer to escape taxation. I fail to see the fairness of any such proposal. Where the question of professional skill comes in, is beyond comprehension. The honorable member for Wannon (Mr. Rodgers) stated that there were only three or four men in Australia who understood woolI say that there are thousands.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I made no such statement. I said there were only three or four keen experts of wool.

Mr PAGE:

– Every man who has been at the game for ten years naturally becomes an expert, because, in the absence of skilled knowledge, his pocket will be affected.

Mr Story:

– Could he be in the business for ten years without knowing anything about it?

Mr PAGE:

– He could if he had plenty of money. If the half-dozen keen experts referred to by the honorable member for Wannon (Mr. Rodgers) are to escape this tax, so also should the woolgrowers. In reply to his statement that there are only half-a-dozen men in Australia who are keen wool experts, I tell him that there is one such expert in this chamber - I refer to the honorable member for Hume (Mr. Falkiner). He can -tell wool, not only from its appearance, butalso from its touch. His breed of sheep, I suppose, is the finest in Australia. What does it matter to us to whom the grower sells his wool, so long as he gets the best price for it? The people who send their representatives out to Australia to purchase wool for them, pay them a commission for their services, and, if they prove unsuitable for the work, they are not employed again. Consequently, they become expert wool buyers. These gentlemen are as keen in making a bargain in wool as other people are in the matter of other commodities.

Mr West:

– They are like the brassplate farmers.

Mr PAGE:

– No, they are not. They understand what theyare after, and they get it at the cheapest possible price. Some of them are in a better position to pay this tax than are many of our woolgrowers.

Mr MANIFOLD:
Corangamite

– I am perfectly certain that the honorable member for Maranoa (Mr. Page) does not understand the position. My main contention is that the business of wool-buyers has disappeared.

Sir John Forrest:

– ‘Then they will have to pay nothing.

Mr MANIFOLD:

– Since the wool clip was purchased by the British Government, the wool-buying business has vanished.

Mr Page:

– But these men are getting paid for appraising the wool.

Mr MANIFOLD:

– I am not dealing with the men who come from the Old Country to purchase wool, but with those who carried on business here. Prior to the outbreak of war German competition was so keen in this market that the British wool-buyer could not make his purchases.

Mr Groom:

– Does the honorable member mean to say that Britishers were not buying ?

Mr MANIFOLD:

– The continental buyers from Italy and other countries were knocking the Britisher right out of the market. The Britisher had no prewar standard. But when the war broke out the British buyer came into his own, and was able to purchase. For the year 1914-15 he is not taxable, but he will be taxable for the year 1915, and up till October, 1916. Under this Bill the Government propose to take 50 per cent. of his profits in excess of £1,000 for the first twelve months of that period, and 75 per cent. of his profits for the balance of it. It must be remembered, too, that these men do not carry on their businesses for a profit of £1,000 per year. , But the point I wish to make is that no matter what profits may have been made they have’ lost their businesses. They have to live until the war is over on the profits which they made during the fifteen months that I have indicated.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- The gentlemen referred to by the honorable member for Corangamite (Mr. Manifold) are, as far as anybody can be so classed, professional men. The honorable member for Maranoa (Mr. Page) has taken me to task for my remarks upon this question, but his observations were directed to an entirely different individual.

Mr Boyd:

– Are we not going to get the Bill through to-night?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member has had his say, and has not achieved much. The individual to whom I referred is not a broker or a woolbuyer, but a man who has to leave Australia in order to obtain a special education in regard to the different qualities of wool. In the acquisition of that knowledge he has to journey all round the world. There is not a representative of a British firm in Australia to-day who has obtained his knowledge within the Commonwealth.

Mr Page:

– There are keener men here in regard to sheep than are to be found anywhere else.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– For months in Australia we were unable to appraise sheep skins. Why? Because nobody here understood the business. Those who were able to do this work previously were mainly the representatives of enemy firms. Finally we had to secure the services of men who have a general knowledge of wool,. and who by looking at it can say whether it is of good quality. These men are professionals. I know one of them who is connected with the Central Wool Exchange, and another who lives in Geelong, and who is associated with the greatest wool firm in Australia. Now, wool is the raw material of all the manufacturing countries of the world. It is those who get this raw material who are the keen professional experts. From their special training and knowledge they are entitled to rank as professionals, and certainly do not come within the category referred to by the honorable member for Maranoa.

Mr BOYD:
Henty

.- I think that we should overcome the difficulty with which we are confronted if we defined the term “professional men.” If there are. only three or four individuals in Australia who can accurately appraise wool, obviously they must be professional men. But we have more professors than that at our universities. If there are so few men who are competent to undertake this work, we ought to include them in the professional class.

Mr Kelly:

– Does the honorable member suggest an adjournment to enable them to be classified t

Mr BOYD:

– I am quite indifferent as to what happens now. We have been in attendance here since half-past 2 o’clock this afternoon, and probably we shall not conclude our labours until 4 o’clock to-morrow afternoon. The honorable member for Corangamite (Mr. Manifold) adduced some very good reasons why wool-buyers should be exempted from this tax. He pointed out that, prior to the war, these men had not made very large incomes, but that, because of the abnormal conditions which have since operated, they have earned big professional incomes. Now, however, that the Government have taken over the control of the wool clip, their position is entirely different.

Sir John Forrest:

– I do not think that this is good business. These tactics are unworthy of the honorable member.

Mr BOYD:

– Nor is it good business for honorable members to sit here all night discussing a Bill of this character. When we have done ten hours’ work it is not good business to compel us to sit all night. The Treasurer will not make any more progress by adopting tactics of that sort than he would have made if he had allowed us to go home at a reasonable hour. The amendment of the honorable member for Corangamite aims at dealing with a class of professional men who today find themselves in a .very difficult position.

Sir John Forrest:

– The honorable member was opposed to this clause entirely.

Mr BOYD:

– That was a long time ago. I was opposed to it when I thought we were going to get a decision on a great principle. I did not then know that the question was going to resolve itself into one of honorable members seeking to exempt their constituents from the tax. Now that the Committee has shown the cloven hoof, has shown that, its members, are interested in securing ‘the exemption, of their constituents from the operation of this measure, we must review the situation, to see whether we cannot all join in* the scramble.

Mr Kelly:

– That is not justified,

Mr BOYD:

– If it is not justified by the last vote, I should like to know whatcomment is justified. The present amendment has been proposed by a member who has a life-time’s experience in the growing and classing of wool. He states that certain men who were earning large incomes in the years immediately following the outbreak- of war are now without a job, because the Government has taken over their business.

Sir John Forrest:

– They still do thai work of appraising wool.

Mr BOYD:

– A number of them are out of work.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– They are all em-! ployed.

Mr BOYD:

– The only questions tha* concern us are : Have they earned profits on which they should be taxed, and does their occupation differ in kind from that of other professional men against whom the honorable member for Wakefield (Mr. Foster) would arouse the fury of the Committee, though he would not, under any circumstances, have his farmers taxed ? The amendment of the honorable member for Corangamite will create difficulty by calling upon the Commissioner to determine who is and who is not a professional man. We might obviate the difficulty by defining the status of a professional man. We might say, for instance, that every University graduate should be considered a professional man, or that any person possessing the diploma of a university or a high school should be so classed. But there are others. Are not the ladies of the ballet professionals?

Mr West:

– Would you give the walking delegate a show?

Mr BOYD:

– Is he a professional? Are politicians professionals?

Sitting suspended from12 (midnight) to 12.45 a.m. (Friday).

Mr BOYD:

– Will the Government indicatehow far they wish to go with the Bill to-night?

Mr Groom:

– To the report stage.

Mr Joseph Cook:

– The honorable member for Henty must see that we could not consent to an adjournment at the present moment. There is a whole sheaf of amendments to be considered, and if we do not deal with some of them tonight, it will be mechanically impossible to dispose of them in the few hours allotted to a Friday’s sitting, and the Senate will then have no business to discuss when it meets on Wednesday next. The Bill has been thoroughly considered, both here and outside. It has been before the country for a month, and it is time that it was disposed of. The honorable member for Henty is trying to punish the Government for some supposed crime; but I do not know of any action in connexion with this Bill which should excite his ire. I appeal to him to let us get the measure out of the way. Members who come from other States wish to be free to leave Melbourne to-morrow night to return to their homes, and to fulfil their week-end engagements. It is at their request that we are pushing on with the Bill now. We are consulting what we believe tobe the convenience of honorable members generally.

Mr BOYD:

– I would be the last man here to wish to injure this Government; but I say that it is unreasonable that a Bill containing so many intricate machinery clauses, and such important principles, should be pushed through the Committee in the manner proposed.

Mr Joseph Cook:

– The Bill has been before Parliament for a month.

Mr BOYD:

– It is only yesterday and to-day that it hasbeen under consideration in Committee. Since the second reading the Government have given notice of a great many amendments. The Committee stage is the important one, and honorable members should be given an opportunity to deal with a measure of this kind at a time when theyare fresh - not in the small hours of the morning. I have no desire to stay here all night. As nearly all the proposed amendments, and the contentious provisions of tie Bill are affected by the early clauses, I suggest that the Government might consent to an adjournment when we ‘have passed clause 14, and thus got rid of parts 1, 2, 3, and 4. The latter portion of the Bill contains probably twenty-five or thirty clauses, on which there will be no discussion.

Mr Joseph Cook:

– Then why not finish the Bill to-night?

Mr BOYD:

– As an alternative suggestion, I am willing that all the clauses up to clause 14 be postponed now, and the rest of the Bill dealt with to-night.

Mr Richard Foster:

– No. I wish Melbourne members had more consideration for representativescoming from the other States.

Mr BOYD:

– The honorable member is not prepared to make any concession. During the years that I have been in this Parliament I have occupied as little time as any other member; butthis is a Bill which affects a considerable number of my constituents, and it is unfair to accuse me of trying to block it because I contend that it should be discussed under fair conditions.

Mr Richard Foster:

– The honorable member desires that we shall sit tomorrow night instead of to-night.

Mr BOYD:

– The Bill should be through by 4 o’clock to-morrow afternoon. Is it unreasonable to ask that a Bill of this nature should be given three days’ consideration in ‘Committee? Ministers themselves did not see the full bearing of all its intricate provisions when they introduced it.

Mr Page:

– No such Chinese puzzle has ever before been presented to Parliament.

Mr BOYD:

– My statement is proved by the sheaf of amendments of which the Government have given notice. The reason that there is no work for the Senate to do is not a good enough reason for rushing the Bill through in the way the Government desire.

Mr Sampson:

– I rise to a point of order. Are the remarks of the honorable member relevant to the amendment ?

The TEMPORARY CHAIRMAN (Mr Atkinson:

– What the honorable member for Henty (Mr. Boyd) is saying is not relevant, but. by leave of the Committee, the Leader of the House made a statement, and I am allowing the honorable member some latitude in replying, in the hope that the proceedings may be shortened thereby.

Mr BOYD:

– This House is responsible for financial legislation, and if the Government desire to get measures through quickly, the Senate ought to be given some work to initiate and send down here. The amendment before us will probably extend the operation of the Bill beyond what the honorable member for Corangamite (Mr. Manifold) intends. “ Calling “ is a very wide term which may mean anything. For instance, it may include schoolmasters; and I mention them because they can legitimately claim to be in a profession. I suppose honorable members, in their minds, include in the professions barristers and solicitors, doctors, and, perhaps, civil engineers, accountants, auditors, actuaries, architects, and a multiplicity of others. The Minister for Works (Mr. Watt) said that we might also include persons who had diplomas; and if that be the intention of the Government, we ought to have a declaration from the Minister in charge defining what pursuits are to be included in the word “ profession.”

Mr BRENNAN:
Batman

– I have waited with patience, which I hope will be appreciated by honorable members, for an opportunity to record the results of very mature reflections on this clause.- I cannot help feeling that the honorable member for Henty (Mr. Boyd), in his zeal to express in every particular the view he holds, has been rather inconsiderate of the claims of other honorable members to say a word or two; and I cannot commend the Leader of the House for attempting to rush the Bill through in the way he is doing to-night. It is a measure which has engrossed the minds of the Cabinet; and, considering that it has necessitated the preparation of three volumes, counting the original Bill and the various amendments, to place it before us, the least the Government ought to do is to allow us to come to the discussion of the really serious phases of it with acute minds, refreshed by proper rest. As the Bill generally presents no difficulties to me, this particular clause presents none; nor does the amendment, because its object is to extend the area of the exemptions. That serves to illustrate in a very striking and emphatic manner my whole attitude towards this measure from the beginning. Every proposal from either side to limit the mischief of the Bill - that is to say, to limit its operation - will receive my hearty support. I am ready to remain here all night so long as honorable members are ready to add exemptions; in fact, I am prepared to pursue that process until, in an orderly and natural manner, we have altogether eliminated the Bill. That, although a somewhat tedious course, would, perhaps, be the most dignified for the Government to take. This particular amendment is designed to exempt wool -brokers.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– It has nothing to do with wool-brokers.

Mr BRENNAN:

– Wool-classers?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– No; representatives in Australia of the buying houses at Home.

Mr BRENNAN:

– Those of us who had the benefitof the very illuminating speech of the honorable member for Corangamite (Mr. Manifold) are clear that, although he employs a word of very extended meaning, his object is none the less of a very definite and precise character, in so far as he intends to apply this definition to a class of persons whom he considers to be particularly deserving of relief.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Persons who are professionally informed as to the finished article on the other side of the world.

Mr BRENNAN:

– The honorable member for Wannon (Mr. Rodgers) would persuade me, of course, that those persons who are the subject of his paternal care, and the subject or object of the fraternal or paternal care of the honorable member for Corangamite, should, therefore, be the subject and object of my care. That is not so at all. I am not concerned in the least with the professional or practical standing of those gentlemen in connexion with the wool industry. I. do not admit their special rights to exemption, and I do not argue for them; on the contrary, I would be prepared to say that those who have spoken on their behalf have not made out a case for the special treatment of persons associated with the squatting interests.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– They have no association with the squatting interests.

Mr BRENNAN:

– I appreciate the position of the honorable member for Wannon, as I do that of the honorable member for Corangamite. Those gentlemen represent certain wealthy interests in the community. They are sent here to uphold the interests of the squatters, and those associated with the large landowning interests, directly or indirectly.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– You have the wrong brief this time.

Mr BRENNAN:

– They do their work eloquently and well. I have no brief for those people whose claims they are advocating, and I am not supporting their exemption on the ground set out, but on the much firmer, and, as I conceive, the much juster, ground that the whole Bill is inequitable in its incidence. It is designed to select a small section of the people for taxation, disregarding those persons with large incomes who could well afford to pay; and it is not a Bill which can possibly commend itself to me as a Labour man. For that reason, I shall take every opportunity, and I gladly accept and embrace the opportunity presented by the amendment, to limit the sphere of mischief of this measure. We, as a Parliament, meeting and deliberating in such serious circumstances as those of the present time, are expected to hastily dispose of a measure embracing no fewer than fifty-six clauses, some of them of a very intricate character.

Mr West:

– Unheard of before in our Legislature.

Mr BRENNAN:

– Exactly . We are asked to dispose of this Bill between midnight and breakfast time. As one who believes in a fair day’s work, and in doing it well and conscientiously - as one who thinks that parliamentary duties should not render altogether impracticable the discharge of ordinary civil and domestic obligations - I maintain that we should not be asked to remain here all night.

I do not wish to be caught napping like the honorable member for Henty, who, in his discursiveness, found himself unable at, or just preceding, the expiration of his time, to adequately marshal his points. I propose, therefore, to sum up, while there is yet time, my attitude in regard to the amendment providing for the insertion of the word “ calling.” In connexion with our industrial laws, the definition of that word is of the greatest importance. The best judicial minds of the Commonwealth, and, on two or three occasions within my knowledge, the best judicial minds of the Privy Council, have been engaged in considering the scope and significance of the term.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The honorable member for Corangamite proposes to add, later on, certain qualifying words.

Mr BRENNAN:

– They rather beg the question than explain what is involved in the term “calling.” The honorable member for Corangamite does not seem to be much concerned about his amendment. Representing, as he does, a wool-growing district, I am surprised that he should treat the matter so lightly as practically to throw his amendment on the table and to leave it there for what it is worth.

I sincerely hope that the Minister will reconsider his determination to push the Bill through in this hurried way. If anything I have said will induce him to withdraw the Bill, I shall be satisfied. If he is not going to do so, and does not intend to limit the scope of its mischief in the way suggested by this amendment, then the least he can do is to give the Committee an opportunity to further consider it in daylight. I do not regard this matter so much from the point of view of my own party, because it will be remembered that on the motion for the second reading of the Bill we submitted an amendment declaring it to be inadequate. We all regard it as being so full of defect as to be scarcely worthy of acceptance. While some of us expect some measure of good from it, others of us think it would be better to’ reject the whole.

The honorable member for Henty (Mr. Boyd) and others on the Ministerial side think that this Bill is one of transcendent importance to their own constituents. They regard it as a Bill designed to touch with artistic lightness the pockets of the capitalists, and one which, ifa mistake were made in it at any point, might incidentally cause suffering or actual financial loss to those who send them here. It is in a spirit of friendliness towards them that I beg of the Government to allow it to stand over for another day, at all events, so that we might give it the consideration it undoubtedly merits if it is to be passed at all. I do not wish to be understood to say that the Bill has merits which I can commend; but if it is to become law let us, at least, see that it is made as perfect or as harmless as the best brains of this Committee can make it.

Although the word “ calling “ proposed to be inserted is vague in character, I am satisfied with it for the reason that it, at least, will limit the scope of the Bill. At a time when every one is talking of equality of sacrifice, and asserting that no sacrifice we can make is too great, it is monstrous that we should deliberately exclude from the operation of this taxation measure those who have been able in this time of stress and anxiety to receive, unhindered and unchecked, large incomes, while others less fortunate are made to bear the burden. It is monstrous that those who have been enjoying for many years large incomes should go unscathed, whilst small struggling business men, now, for the first time, getting their heads above water, and professional men, able, for the first time, to compete with their seniors with any measure of success, are to be taxed to the bone. As one gentleman put it very truly to me, any increase in income - any increase in reward of whatever kind - which he has secured during the last two or three years has been obtained, not because of the war, ‘ but in spite of it. It is proposed, however, to tax him, while his colleague, who has enjoyed forthe last five or six years an income of from £5,000 to £6,000 per annum, absolutely escapes taxation imposed under this Bill. For these reasons, I am consistently against the Bill, and am in favour of the amendment which the honorable member for Corangamite has moved. If he calls for a division, he may rely upon my wholehearted support. I only hope that similar amendments will be moved.

The TEMPORARY CHAIRMAN (Mr Atkinson:

– Order! The honorable member’s time has expired.

Mr LECKIE:
Indi

.The amendment moved by the honorable member for Corangamite (Mr. Manifold) is dangerous in principle, -because it might lead to a considerable amount of controversy as to the definition of a “ calling,” and I suggest that his object would be achieved if the Government, at a later stage in the Bill, would provide for the exemption of several small businesses of that character. Although the merits of the case quoted by the honorable member for Corangamite may be perfectly established,’ there are many experts in other callings besides that of wool appraising, and they would have just as strong a claim for exemption as the wool-buyers. As far as possible, a Bill of this nature should deal with general principles. The amendments introduced by the Government have certainly improved it, but I still believe the measure will cause hardship in certain directions. The honorable member for Corangamite would be well advised if he withdrew the amendment, on the understanding that at a later stage the Government might be persuaded to insert a provision to cover small businesses of £2,000 or £3,000 capital. The amendment simply covers half-a-dozen men, and it seems to me to lay down a dangerous precedent which the Committee should not indorse.

Mr Manifold:

– With the permission of the Committee, I iwill withdraw my amendment.

The TEMPORARY CHAIRMAN (Mr Atkinson:

– Is it the pleasure of the Committee that the honorable member for Corangamite have leave to withdraw his amendment?

Mr Boyd:

– No.

Mr. FINLAYSON (Brisbane [1.44 a.m.]. - The amendment moved by the honorable member for Corangamite (Mr. Manifold) would, if agreed to, place the Committee in a very ridiculous position. I have looked up the dictionary provided in the members’ room for a definition of “ profession “ and “ calling,” and I find that the Students’ English Dictionary defines “ profession “ thus -

Act of professing; open avowal or acknowledgment; a declaration; a representation or protestation; the business which one professes to understand and to follow; calling; vocation; a calling superior to a mere trade or handicraft, as that of medicine, law, architecture, &c.; the collective body engaged in such calling.

The definition of “ calling “ is given as follows : -

A vocation ; profession, trade, usual occupa tion or employment; a collective name for persons following any profession; state of being divinely called.

Webster’s Unabridged Dictionary is equally emphatic. It gives this definition of “profession” -

That of which one professes knowledge; the occupation, if not purely commercial, mechanical, agricultural, or the like, to which one devotes one’s self; a calling in which one professes to have acquired some special knowledge used by way either of instructing, guiding or advising others, or of serving them in some art; calling; vocation; employment; as the profession of arms; the profession of chemist. The three professions, or learned professions, is a name often used for the professions of theology, law, and medicine. “ Calling “ is defined thus -

One’s usual occupation; vocation; business; trade.

And the synonyms are -

Employment, profession, engagement.

With these undoubted authorities as a guide it is clear that the honorable member for Corangamite is utterly foolish in suggesting that there is a difference, between a profession and a calling, and his amendment therefore is obviously absurd from the dictionary point of view.

This raises the question ofwhat is to be defined as a profession. “ Law “ and “medicine” have been referred to, but “ theology “ has not been mentioned. Webster calls attention to the fact that the profession of arms and that of a chemist might equally come under the designation of a profession, and if we exclude lawyers from the operation of this Bill, by what reason do we include architects? If we exclude a doctor, why do we include a civil engineer? If, according to Webster’s definition, a soldier is included as a member of a “profession,” and therefore under this Bill would be excluded from the tax, why do we include and make liable for the tax men who ordinarily engage in a much more useful occupation? The soldier has his uses at special times, but this Bill would recognise under the general title of profession a whole multitude of men engaged in occupations that, so far as the debate has gone, are not included in what we understand as professional duties.

Recently we have heard a great deal about equality of sacrifice aphrase which has fired the imagination of the people more than anything else. I question if even the “ Win-the-war “ phrase would have captured the imagination of the people had it not been associ ated with misleading and altogether foolish statements about “ equality of sacrifice “ as applied to physical force, but not in a financial sense. The Bill is designed to raise revenue. Money is wanted, and I have no hesitation in reaffirming that’ the people are ready, to the utmost of their ability, to pay what may be necessary to carry on successfully our operations in this war. The ostensible purpose of the measure is ‘to find new sources of revenue along certain lines, and yet it is proposed to exclude a number of gentlemen, a number of trades, callings, professions, and occupations, and the effect of all these exemptions will be to destroy the scheme of equality of sacrifice. My attitude in regard to the Bill is perfectly clear; at all events, it is to myself. I maintain there should be no exemptions, and no consideration for any man’s individual position. A general rule should apply, and no attempt should be made to single out certain classes for exemption. I am quite willing to admit that members of the legal fraternity can put up a very strong plea for exemption in regard to rising barristers; but the same argument may be applied to young doctors; to architects, to artists in music, literature, and the many other professions, all equally useful to the community. I refuse to believe that gentlemen engaged in these professions are unwilling to pay their fair share of war taxation, and that being so, why have we this proposal to exclude them ? I am quite prepared to admit also the inequality of the operation of this measure, but that is only an incident in connexion with the whole Bill, and is not specially applicable to this particular clause.For instance, I know it will be unfair if young doctors, lawyers, architects, and artists are hit by this Bill, while others, who have been established in the same line of business for years, and have been enjoying a fairly steady income, escape the tax; but it is one of the peculiar features of this impost. The Bill has an inequitable basis, and I cannot see how it is possible to make it apply, even in an all-round way, without doing injustices in several directions. No more glaring injustice can be met with than is proposed under this clause, namely, to exempt certain sections of the community, and, so far as I have been able to follow the debate, no explanation has been given by the Minister as to who shall be designated as engaged in a profession/ For my part, I should refuse to allow any exemptions, because I am opposed to the principle of singling out certain sections of the community.

I have already started my distaste for the principle of the Bill, because it is not possible to define war-time profits with the same certainty as in Canada and Great Britain. The first qualification of” a juSt taxation measure is that it shall be fair and equitable, and operate in a similar way upon everybody occupying similar positions, but in- this case inequality is immediately established by the distasteful divisions already referred to. I admit that a case has been put up that the Bill shall not be retrospective in regard to professional gentlemen, because it has all along been suggested that they should be free.

Mr Richard Foster:

– I have given notice of a clause to provide that they shall come in this year, and not in the preceding year.

Mr FINLAYSON:

– That will overcome the difficulty to a certain extent. Members of the profession generally are at least entitled to that consideration, for they had reasonable ground to assume that they would not be liable for this tax, and therefore they may not have made provision for it.

Mr Brennan:

– Can you see any just principle in a scheme, to tax junior men with comparatively small incomes and allow those with large incomes to escape?

Mr FINLAYSON:

– The honorable member is now raising in another form a question that I have already tried to answer. I frankly admit the inequality of the tax from that point of view. It will undoubtedly press heavily upon some men who are entitled to sympathetic consideration, and it will altogether relieve from taxation others who are least entitled to consideration.

The TEMPORARY CHAIRMAN (Mr Atkinson:

– I must ask the honorable member to confine his remarks to the amendment.

Mr FINLAYSON:

– I have been endeavouring to do so all the time, and I thought I was succeeding fairly well. The mere fact of exempting “ professions “ necessarily exempts “ callings.” The two terms are quite synonymous, and therefore I do not see the slightest reason for introducing the amendment. I merely rose to convince the Committee, from the unimpeachable authorities I have quoted, that the inclusion of the words which it is proposed to insert is absolutely unnecessary.

Amendment negatived.

Mr RICHARD FOSTER:
Wakefield

– I move -

That after the word “ required,” paragraph ti, the following words be inserted, “ Provided that this exception shall only apply to the profits arising in the financial years 1915-16 and 1916-17.”

My object is to meet the objection of some honorable members who believe in exempting professions, and who, in support of their views, urge that it would be unfair to enact retrospective legislation in regard to it.

Mr Fenton:

– It seems to me that the honorable member will do anything to rope in the professional element in the community.

Mr RICHARD FOSTER:

– I will not. In my opinion, the Committee have not realized what is meant by the exemption of professions. During this debate, two classes of professional men in particular have been mentioned, namely, the medical and legal professions. The Minister in charge of the Bill ought really to have informed us how far the proposal to exempt professions will extend. I believe that the Government recognise that, under the heading of “professions,” doctors, lawyers, dentists, architects, accountants, civil engineers, surveyors, and draftsmen, would be exempted. All these callings are classified under our Public Service Act in the Professional Division. But, in addition, clergymen, authors, and artists would come within the same category, and the list might be even further extended. In my judgment, the case made out for these exemptions is a very weak one. We have been told that the cost of educating a man so as to qualify him for admission to the bar, or for the practice of medicine, is exceedingly heavy, and that, as the members of these professions make their incomes by reason of this special training, they have a valid claim to be exempt from the operation of the Bill. But I do not admit that it costs more to train a young man for one of these professions than it does to train him for other callings. I consider that it is more costly for a parent to train his son for a business career, and to provide him with the necessary capital to embark upon it, than it is to train him for one of the professions. It has been urged that professional men succeed because of special qualifications which they have gained at very great cost. I maintain that that argument applies equally to the successful business man. It has also been contended, by those who favour this exemption, that the tax would press very heavily on young men who have just entered upon medical practice, or who have quite recently been called to the bar, and who, consequently, have no pre-war standard of income. But the same reason might be advanced in regard to a man who has just ceased to be an employee, and who has embarked upon business on his own account. I wish to know whether there is any solid reason for exempting these professions. They are not exempted from any other form of taxation, and they do not come within the same category as do the exemptions which have already been allowed, because, so far, we have merely exempted industries, and not individuals.

Mr Brennan:

– There are no war profits in these professions.

Mr RICHARD FOSTER:

– In the case of medical men, war profits are distinctly involved. A very considerable proportion of the medical men of Australia, including some of its leading luminaries, have gone to the Front, and their practices have been undertaken by the doctors who remained behind. It is an acknowledged fact that a good many medical men in the Commonwealth have largely increased their incomes on this account. This applies, not merely to medical men in the city, but to many erstwhile country practitioners, who have been attracted to the cities, and who have thus jumped into lucrative practices, such as they had never dreamed of acquiring during their lifetime. Thus many medical men have increased their incomes as the direct result of the war. I want to know whether this Democratic Parliament, and this supposedly Democratic National party, are going to set up a class privilege ?

Mr Fenton:

– As the honorable member himself did this afternoon.

Mr RICHARD FOSTER:

– I did nothing of the kind. I pointed out clearly that I was endeavouring to protect an industry and not an individual. I did not seek to introduce any class distinction. I shall certainly divide the Committee upon the amendment.

Mr KELLY:
Wentworth

– The honorable member who has just resumed his seat asked whether there was any solid reason why this exemption should be made this afternoon. He advanced many reasons in the public interest why agriculturists should be exempted from the operation of the Bill. He urged that they should be exempted, not because they were the special pets of this Parliament, but because it. was in the national interests that they should be exempted .

Mr Richard Foster:

– And not because of any social influence?

Mr KELLY:

– I do not know what the honorable member means.

Mr Richard Foster:

– I do.

Mr KELLY:

– If the honorable member knows what he means he ought to say what it is. This afternoon he asked me to support a proposal in favour ofanother exemption on the ground that it was in the national interests that it should be granted. Yet, when I proceed temperately to put what I conceive to be the national interests he insults me.

Mr Richard Foster:

– If the honorable member regards my remark as an insult, I withdraw it.

Mr KELLY:

– I do not desire any particular benefits for these professions. I do not belong to them; but it seems to me that the only profession which will be materially affected by the tax is the medical profession. I admit at once that the incomes of a number of gentlemen in. that profession have been considerably increased as the direct result of the war. I will go a stage further, and say that it is in the national interests that the work which they perform shall continue to be carried on while so many members of the profession are absent at the Front. The community as a whole benefits as much from the medical profession as it does from the agricultural industry.

Mr Richard Foster:

– I agree with that whole-heartedly. I have a great admiration for members of the medical profession.

Mr KELLY:

– Then the argument of my honorable friend against the exemption of the members of that profession at once falls to the ground. If it be necessary that doctors shall remain behind in

Australia to carry on their important work for the community-

Mr Richard Foster:

– The honorable member must admit that we are dealing with a profession which earns larger fees than does any other profession.

Mr KELLY:

– I am dealing with a profession which has not raised its fees since the war began.

Mr Richard Foster:

– I should think not. It ought never to do that,

Mr KELLY:

– Does ‘my honorable friend say that storekeepers have followed the same rule?

Mr Tudor:

– The medical profession is the one profession which gives its best to the poor for nothing.

Mr KELLY:

– Exactly. I know a surgeon in Sydney who makes larger fees than any other surgeon there, but who makes them by getting up at an hour so early, and by finishing his heavy day’s labours at an hour so late that he has aged ten years during the past three years. Yet he finds time to devote a portion of his day to working for the poor for nothing. If we decide to confiscate half of his excess profits, probably he will not continue to use his life as he has been using it. He will perhaps argue: “Evidently the community does not) want me ito do what I have been doing. In future, therefore, I will do only half what I have been doing, and thus, without loss of income, and with less labour, I shall escape the tax.” Will that benefit the Australian public? I think not. Therefore, we should exclude the medical profession.

Mr Richard Foster:

– Do they wish to be excluded? I do not believe that they do.

Mr KELLY:

– I have not personally consulted any of them on the subject, but I do not know why it should be assumed that, although farmers wish to be excluded, medical men do not. Is it that farmers are as a class more selfish?

Mr Richard Foster:

– The honorable member does not often associate these two classes.

Mr KELLY:

– We must do so in this connexion because of the contradictory attitude of my honorable friend. He said this afternoon that he would exempt agriculturists because they are the hardest worked persons in the community. Why should he become heated when we mention other overworked persons whose services are quite as essential to the welfare of the Commonwealth ? I believe that we should in the public interest exempt doctors. Those who have remained here are doing the work that was previously done by twice their number. It is in the interest of the public that that work should be done. So long as- the doctors do not increase their fees, and while they are willing to devote a large part of their time . to attending persons who cannot afford to pay them, I do not think that we should trouble about the amount that they may earn. It has been suggested that those who have remained have done so in order to get the work of those who have gone away ; but no statement could be more unfair. Many of the doctors who are still here are desirous of getting away, and are awaiting their turn to go. It will be more difficult for them to go if they are called upon to pay this year heavy taxation which they did not anticipate. I do not think the tax will interfere much’ with other professional men, the bulk of whom are making less now than they did before the war. The one profession that we cannot afford to deal with unjustly is that which looks after the health of the community.

Mr MATHEWS:
Melbourne Ports

– I shall not vote for the amendment. It seems to me that with one and another member getting u,p, it is proposed to exempt every calling. The Ministry ought to accept the evidence afforded by the discussion that the Bill meets no one’s views, and that it will not do what is desired. It is useless, however, to try to patch it up, and, to my mind, it might as well be put through as it stands, because it is impossible to make it better.

Sir WILLIAM IRVINE:
Flinders

– I agree that it is impossible to make the Bill logical, but the exemption of professional men is necessary to prevent injustice, though, perhaps, not more justified on logical principles than the exemption of certain business men. However, I ask the Committee to deal “with the proposed exemption on its merits. Attention has been directed to the cases of doctors who are gaining bigger incomes , now because many of their fellows have gone to the war.

Mr Kelly:

– What they gain in pocket they lose in health.

Sir WILLIAM IRVINE:

– That probably is so. There are, however, many men who are earning now more than they earned before the war, because of their advance in their profession. Is it to the interest of the community to strike their efforts with sterility, and to say to them that, although their higher earnings may not be due to the war, the difference between their present and their pre-war income will be taken from them ?

Mr RICHARD FOSTER:
WAKEFIELD, SOUTH AUSTRALIA · ANTI-SOC; LP from 1910; NAT from 1917; LP from 1922; NAT from 1925

– We are saying that to business people.

Sir WILLIAM IRVINE:

– The increase in the income of business people is in most cases due to values increasing because of the war. But is it wise to say to doctors, barristers, and other professional men who by their own exertions have improved their status since the war, “It is useless for you to try to meet the wants of the public, because we intend to take away the greater part of any increase in your income obtained by additional effort.” It will, of course, obviate some of the extreme hardships that have been spoken of, if the tax be not made retrospective. But is it to the public interest to partially paralyze professional men whose service the public need, and are willing to pay for?

Mr WISE:
Gippsland

.A question that arises in this discussion is whether profits made by personal exertion should be taxed. The Government have decided to tax them. The business of any person taking a commission in respect of any transactions or services rendered, or of any agent of any description is to be liable to taxation. If that proposal were abandoned, I should be prepared to support the exemption of professions, but I see no reason for exempting incomes from some forms of personal exertion, and not others.

Mr.Kelly. - Are not commissions on transactions generally based upon documents ?

Mr WISE:

– The big commissions made by stock agents on the sale of stock are to be taxed, and I cannot see why professional earnings should be exempted. I think, however, that it would be unfair to make the tax retrospective, seeing that the classes under discussion were exempted in the original Bill.

Mr FENTON:
Maribyrnong

– When first I understood that the honorable member for Wakefield (Mr. Foster) would propose this amendment, I felt that I could support him with considerable heartiness. It has been my opinion that we should impose the tax on all on whom it could be imposed. If an injustice is likely to be inflicted, the Commissioner will be able to deal with the case. We should have no hesitation in making subject to taxation practically all profits earned during these abnormal times. A doctor has asked me why he should be taxed on his increased earnings, when, because of the absence of another man at the war, he is looking after not only his own work, but that of a city practice as well. Probably many members of the medical profession are doing the same thing. But I feel that I cannot support the proposal to treat some classes of professional men differently from others. In these times, every one should be compelled to contribute as far as possible to the revenue. The honorable member for Flinders (Sir William Irvine) spoke feelingly of the members of his profession, but as he has pointed out, the passing of Bills of this character, with so many intricate and illogical provisions, must provide a good harvest for the lawyers, some of whom, perhaps, may have to pay taxation on the excess profits due to this very measure. The honorable member for Flinders pointed out some hard cases, but unless a man has made war-time profits, he will not be taxed. I see no reason why all members of the community who have been in receipt of war-time profits should not be brought within the compass of the measure.

Mr Wise:

– Do you think it is fair to tax those men without notice?

Mr FENTON:

– It will be found that a considerable portion of the community will claim that they are taxed without notice.

Mr Wise:

– This wasin your own Bill of two years ago.

Mr FENTON:

– The Opposition has been often twitted on that point. As a party man, I assented to the principle of a war-profits tax, but beyond that I did not go. In regard to the details in the first Bill, I made up my mind to oppose many clauses and seek many amendments ; and my opinion on those point’s is the same, to-day. I would not exclude anybody from such a measure; and, seeing that the mover of the amendment has not included those who make up his own electors, I cannot see my way to support him.

Mr LAMOND:
Illawarra

.. - The last reason given by the honorable member for Maribyrnong (Mr. Fenton), that because an honorable member has done something he would deprive the Commonwealth of revenue needed for the conduct of the war, andwhich it ought to get from those who make profits because of the war, is about the lamest excuse he could give for avoiding his duty.

Mr Brennan:

– It was not his only reason.

Mr LAMOND:

– It was the last reason the honorable member gave. It seems that we are in the same difficulty that we met in regard to agriculturists and others. This legislation has been kept so long before the public that something practically amounting to an agreement with the people has been made. The exemptions in the Bill introduced by the honorable member for Capricornia (Mr. Higgs) have been before the public for over a year ; and naturally it has been assumed that a war-time profits measure, when passed, would contain similar provisions, particularly when’ similar provisions were incorporated in the second Bill that came before the last Parliament. The difficulty in regard to professional men is that in neither of these Bills was there any proposal to tax them ; though why, I cannot say. It seems to me that if the object is to appropriate to the Commonwealth profits made by reason of the war, there is no class of the community on whom the measure should fall more than on professional men, who earn much larger incomes, and more easily, than small business people, who will have to pay a heavy toll. I listened to the appeal of the honorable member for Wentworth for the medical profession.

Mr Kelly:

– I did not appeal for the medical profession nearly so much as for the Australian public.

Mr LAMOND:

– But with a view to the public relieving the profession from a tax that should rightly fall on it, unless strong reasons to the contrary can be shown. If it be that the medical profession is not earning the largely increased sums of which we have heard, the tax will not affect it; but if it be true that some medical men are earning twice the incomes they did before the war, then they have every right to contribute to the revenue under this Bill.

Mr Kelly:

– They are doing a lot of work ; that is the point.

Mr LAMOND:

– That is the point to which I wish to direct the attention of the Committee. Medical men are not the only people who, in these times of strain and stress, are doing double work. During a good deal of the war time I was in management of a fairly big business, and I can say that the stress was infinitely greater than in any of the troublous times before the war. And my own experience was quite mild compared with the difficulties that confront a great many business managers at the present time, with almost every source of supply cut off, and the cost of everything they use going up so rapidly that they can hardly look a week ahead. If strain and stress is felt in. this way by the general community, and strain and stress is a reason for exemption, then the better plan would be to tear the Bill up. The medical profession is a very useful one, though there are’ people of some eminence in the community who profess to believe that it is very largely a hallucination that doctors are much good to one; but if a plea is made for the exemption of medical men on the ground of their usefulness, what about the bakers, butchers, and other people who do the work without which the community could not live ? Many honorable members have shown during the debate that they have forgotten the whole object of the Bill. It cannot be a logical Bill, because the wit of man cannot devise a means of discovering war profits as war profits, and thus we have a War-time Profits Bill, which really means that every excess of profit made during war time shall be appropriated to the public revenue. We have already provided for cases in which we admit there is injustice, and have done what is possible to reduce the number of those cases, though we cannot claim to have eliminated them. But there are much more striking injustices than any indicated as likely to occur by embracing the highly-paid professions.

Mr Kelly:

– If. the honorable member does not desire doctors to get more money by virtue of more work done, does he think that doctors should, refuse to do the extra work, and so avoid the trouble of paving the tax, or does he think they should charge less fees to the rich people than they were charging before the war?

Mr LAMOND:

– I shall leave that to the doctors. I have heard it said that there are some doctors who saw an opportunity to make themselves rich at the expense of those who are doing their duty in the military service.

Sir William Irvine:

– There are very few.

Mr LAMOND:

– I know there are but few; but there are some, and, as we have special cases presented for exemption, we ought to have some special cases to show why others should be brought within the operation of the Bill. I give every credit for the work done by the medical profession in the war, and I am very loath to believe that here is any volume of medical support for the contention that doctors should be exempt, while other people less able to bear the burden are asked to put their hands into their pockets. The contention of the honorable member for Maribyrnong (Mr. Fenton) that because the amendment excludes professions from the tax for two years, he would not bring them under it at all, is an insufficient reason for his attitude.

Mr Fenton:

– Did you vote for bringing the farmers under the tax ?

Mr LAMOND:

– No, I did not, for the same reason that I would not vote to bring professional men under the tax if the proposal were in the. terms of the amendment of which: the Government gave notice. When I first saw the measure I gave notice to the Treasurer that I intended to move an amendment, but he himself gave notice of one to bring in professional men. When, however, it was brought under my notice that both the other Bills excluded the professions, I could see that professional men, having earned the money, had probably spent it. I have a rooted objection to retrospective legislation; and one of the defects of this Bill, though, unfortunately, it is unavoidable, is that it is retrospective, and that the people who have to pay these taxes have not had notice of the amount they are likely to be called upon to contribute.

Mr Kelly:

– Would the honorable member support a proposal to recommit the provision as to agriculturists for the purpose of making them pay in the future ?

Mr LAMOND:

– I take the same view in regard to agriculturists as I do in regard to others. I believe that the concessions which we have secured, as a result of the protests made here during the past two or three weeks, have so liberalized the Bill in its incidence on the lower paid sections that I would now bring all sections under its operations. I do not think that any injury would be done to the agriculturists by the operation of the measure, which fixes the maximum of £1,000 a year. I would much rather have been able to vote for a Bill bringing all war profits of over £1,000 within its compass; but we are hampered in this regard by what was done last year, and we have to take on ourselves the thankless task of passing a Bill which is retrospective in its action, and which, because of that fact, must do injury to some sections of the community.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I do not wish to go over the arguments, but simply to intimate that the Government cannot accept the amendment. I remind honorable members that in Canada the professions are excluded, and that the wording of the clause in the Bill itself is exactly the same as in the English measure.

Mr Richard Foster:

– You are not adopting the Canadian Bill in many respects.

Mr GROOM:

– I am pointing out that we are adopting the British Act. In Canada, it was not considered right to include the professions–

Mr Finlayson:

– The positions are not analogous.

Mr GROOM:

– In Canada, the position is absolutely analogous, and there the professions are regarded as outside the range of ordinary businesses which make their profits out of capital. With the exception of that portion affecting agents, the general scheme of the Bill is to tax businesses, and businesses, as a rule, have capital set aside for the earning of profits. The honorable member for Wakefield (Mr. Foster) said that, in starting a young man in business, there was greater expenditure necessary than in starting him in a profession. That is quite possible ; but the money spent in the education and training of a professional man provides for him his capital. Upon his energy and ability he has to rely, and the only way in which he can give tangible form to the results of his efforts is to set aside each year a portion of his earnings for the benefit of his dependants. On the other hand, the business man’s capital is there, and will continue after the close of the war. In the case of the business man, the Bill means only a suspension for a short time of the profits on his capital, and subsequently his earnings go on; but, in the case of the professional man, a portion of his capital would be taken away for ever.

Mr FINLAYSON:
Brisbane

– The honorable member forIllawarra (Mr. Lamond) suggested that concrete cases might be given of medical men who have an interest in war-time profits, such as to render them liable under this Bill.

Mr Lamond:

– No. I asked for instances where medical men objected to come under the Bill.

Mr FINLAYSON:

– Oases have been brought to my knowledge of doctors being able, because of the special war circumstances, to secure war profits.

Mr Lamond:

– Quite a number of them.

Mr FINLAYSON:

– Quite a large number of lodge doctors are also engaged in military duties ; and, in one case, a gentleman, who had been contributing for years, was unable to obtain the services of the doctor because the latter was on military duty at the hospital. The same thing occurred when this man’s wife became ill later on; and this meant an expenditure for other medical advice of anything from £10 to £12. Obviously, the medical man was receiving fees from two sources, and was not giving that attention to his patients they properly expected.

Mr Groom:

– The doctor may have been called up for service.

Mr FINLAYSON:

– I am not complaining, but pointing out that such cases would seem to render it fair to make medical men liable to pay the tax.

Mr Lamond:

– By reason of the lodge doctor being called up, the other doctor collected extra fees.

Mr FINLAYSON:

– And the lodge doctor collected fees from the friendly society for which he was not rendering service. My attitude is not at all changed by any arguments I have heard, and I still think there should be no exemptions under any circumstances whatever. I cannot follow the Minister in arguing that, because Canada and the United Kingdom have excluded professional men, we, therefore, should do the same. It has been pointed out repeatedly that, while Canada and the United Kingdom could very properly, and almost necessarily, impose a measure of the kind, we here are in an entirely different posi tion. Whatever profits are being made here during the war period are not because of the war - are not the result of supplying war material or equipment - whereas Canada ‘ is simply flooded with orders for such material, and it is the same in the United Kingdom. The Canadian case is no argument, unless it is shown that the basis of the Act in Canada is reasonably similar to the basis in Australia. This is one of the cases where it is suggested we should follow the practice of the Home Government, when circumstances do not in the slightest degree warrant that course. The United Kingdom does not expect that kind of thing from us; and it is rather admitting a weakness when we so slavishly follow the example of the Mother Country. Their position is different, and our legislation therefore might reasonably follow different lines. I do not think the Honorary Minister (Mr. Groom) has established a sound argument for the exclusion of professional men by pointing out that they have been excluded from the Canadian and British Acts..

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I cannot support the amendment that has been moved by the honorable member for Wakefield (Mr. Foster). After all, it is only a compromise, inasmuch as it provides that professional men, after being exempt for two years, shall be brought within the scope of the Bill. If it would be right to bring them in at the end of that period, it must be right to bring them underthe Act as from its commencement. As this debate drags on, it becomes more and more evident that we started off wrongly. In connexion with every new point raised, we find honorable members occupying a somewhat illogical position. This is the result of laying a foundation that will not stand the weight of argument, or support the measure as we desire to build it up. I would have preferred a proposal to fix a minimum, after which it should be a case of “all in,” with gradations of taxation according to the capacity to pay. If we were not providing for other exemptions, I do not think we could logically say that professional men should be excluded. We have to ask ourselves whether, at a time like this, we make a call on the professional ability of the community to help us in the preparation of war material, and in equipping and protecting the health of our men for war purposes, and, if so, whether we give them any special reward for their services. The” argument advanced by the honorable member for Wakefield applies not to those who will bear the tax, but to those who will escape it. This tax will be felt by only the younger professional men, who do not occupy the prominent positions to which he has referred.

Mr Richard Foster:

– That is not so. It is well known that some of the frontrankers in the medical profession have nearly doubled their incomes since the war.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There may be something in that contention, but most medical men of eminence have entered into an arrangement with their brother professionals to share the additional practice which they enjoy by reason of their absence. 1 would remind the honorable member that shortly after the outbreak of the war the most eminent members of the medical profession in this city held a meeting at which it was urged that this community, in times of peace, had done well for them; that they had enjoyed the rewards that flowed from high skill in their profession, and that they should ask themselves how they could best show their appreciation.

Mr Richard Foster:

– Commercial men have done the same thing.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Quite so; but I say that medical men have given of their skill and their tame - and rightly so - to the country during the war, and that many of them have entered into a distinct arrangement to preserve the practices of brother professionals while they are at the Front. They also dealt with the question of national service within the profession. Most of the elder men. at the meeting to which I have referred supported national service as applying to themselves.

Mr Poynton:

– And that proposition was turned down.

Mr Sampson:

– There was a majority for it, but not a three-fourths majority.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The fact that a majority supported it shows that they did not wish to commercialize the opportunities which the war had given them to enhance their returns. The majority of them decided to submit themselves for national service, so recognising their indebtedness to the community, and expressing their willingness to surrender their practice whenever called on to do so in the interests of their country. Yet the honorable member for Wakefield urges that they should be specially roped in.

Mr Richard Foster:

– No. I say that they should not be specially excluded from the scope of the Bill.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– My honorable friend, to be logical, should vote against all other exemptions. I should be prepared, if we could start from the beginning, to wipe out all exemptions and–

Sir William Irvine:

– To provide for a super-income tax.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Yes; a super-income tax. with a special income tax in respect of war profits, if we could reach them. This proposal in respect of gentlemen who cannot be shown to have specially received a war profit comes very illogically from the honorable member for Wakefield (Mr. Foster), the majority of whose constituents have been exempted from the operations of this Bill. I would have much preferred a proposal of “ all in.”

Mr Tudor:

– The honorable member would not vote for an “ all-in “ proposal even with the £1,000 exemption, which the Government expressed its willingness to give.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Certain exemptions had already been made. The honorable member for Wakefield is usually logical, but is not displaying for men who have’ served the country well that consideration which might reasonably have been expected from one who has secured the advantage of an exemption for the majority of his own constituents.

Mr TUDOR:
Yarra

.- I should not have risen at this stage but for statements that have been made by some honorable members concerning the vote they gave a few hours ago on another part of this very clause. It is only about twelve hours since the Government announced their intention of providing for an exemption of £1,000. Twenty-four hours ago the honorable member for Wannon (Mr. Rodgers) said that with an exemption of £1,000 he would be willing to vote for “ all in.”

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I said I would if the Government would exempt all incomes below £1,000, and then start with a graduated tax on incomes above that minimum.

Mr TUDOR:

– We need not go over the debate again, and I dare say the Government desire that there shall be no further reference to their humiliation. On this amendment I intend to vote, as I have on every other occasion, to bring as many persons as possible within the scope of the Bill.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– And the honorable member for Batman (Mr. Brennan) is voting to exempt as many as he can.

Mr TUDOR:

– Quite so. We are each -entitled to our own views. I should like to correct an obvious mistake which has been made by several honorable members in regard to the War Profits Bill, which was introduced by the Government of which I was a member. It is not for me to say now what action I took in Cabinet in regard to that measure; but it is quite wrong to assert, as many honorable members opposite have done, that the Bill was submitted to our Caucus.- It was never before the Caucus at any time. At least a dozen members of the Ministerial party know the facts, and would be glad to contradict me if they could.

Mr Lamond:

– It was before the Cabinet to which the honorable member belonged, and he was bound by it.

Mr TUDOR:

– Of course I was, and I am going to vote to bring under this Bill as many persons as I can.

Mr Poynton:

– Professional men were exempt under the Bill introduced by the honorable member for Capricornia (Mr. Higgs).

Mr TUDOR:

– That is so; but now that I am free from Cabinet responsibility I shall vote to bring as many as possible under this measure. And this Bill is nothing like the one introduced by a former Treasurer, the honorable- member for Capricornia (Mr. Higgs). Those “ poor farmers,” who are clearing £1,000 a year, plus 10 per cent, and pre-war profits, should be brought in. It was urged yesterday that the poor struggling professional man, who is earning £1,000 a year, should also be exempt. There are cu this side of the House honorable members who are prepared to support many exemptions merely with the object of bringing ridicule on the whole Bill. If the Government are prepared to make these further exemptions, then the responsibility resits with them, and not with me.

Mr SAMPSON:
Wimmera

– It must be borne in mind that the exemptions ‘already provided for make this no longer a War-time Profits Bill in the strict sense of the term. * We have for special reasons exempted many industries. While we are anxious to obtain revenue from those, who have made profits as the result of the war, we desire to preserve our industries, and it should also be our desire to exempt from the operation of the Bill ‘those whose incomes are derived from personal exertion, and not from the employment of any considerable capital. The more equitable system of taxation to apply to them is that of a super-income tax, and such a tax must be imposed later on. We have exempted agriculturists and others engaged in certain primary industries, because we believe it to be in the interests of the Commonwealth that they should be encouraged. Agriculturists- have not yet emerged from the destructive effects of the drought. Then again, we intend to exempt small businesses earning up to £1,000 a year, since we do not desire to destroy all incentive to the building up of new businesses which- are most essential to this country. All these considerations have weighed with us in excluding special forms’ of industry from the operation of this law. We have exempted primary industries in order that as much new wealth as possible may be produced. We have exempted small businesses because we do not want to destroy personal exertion and that incentive which is necessary to the expansion of our productive and commerical interests. I believe that the professional and salaried classes should npt come within the scope of a War Profits Bill. My objection to the proposal is that it will exempt only professional men, whereas all salaried classes within the community should be exempt.

Sir William Irvine:

– All salaried classes coming under the. heading of ‘ employment ‘ ‘ are exempt.

Mr SAMPSON:

– We should go further and exempt all whose incomes’ are obtained by their own ability and exertion, and not by the employment of any considerable sum of capital. Y$e should exclude all forms of personal exertion where large amounts of capital are not employed to produce the income. If we - do not exclude the professions, considerable hardship will be inflicted on medical men, whose businesses have grown not as a result of the war, but as a result of their own ability, and the additional services which they are rendering to the community. I know of one medical man who has agreed ito carry on, and divide the profits with his partner, who has gone to the war. I know also of an accountant in Melbourne, whose partner was killed at the war, andin order that justice might be done to the widow and family, the Melbourne partner has promised to pay an amount equal to half the profits of the business to the widow for a number of years. If this Bill is passed as it stands, that man will be taxed on the double salary, and will have practically no income for himself. I hope the Committee will take a reasonable view of the whole position, and that the tax will be levied on an equitable basis.

Mr GREGORY:
Dampier

– I am in favour of the amendment moved by the honorable member for Wakefield (Mr. Poster), and I point out that the argument that the persons referred to have received no notice of this tax is now overcome ; also that nothing in the nature of retrospective legislation is contemplated, as far as they are concerned. I cannot see why professional gentlemen should be exempted, but I am somewhat doubtful as to the definition of the word “profession.” The Minister in charge of the Bill has assured me that it is all right, but I notice that Mr. Knibbs has included all sorts of occupations under this heading. Why should we exempt a class of men who have lived all their lives with a silver spoon in their mouths? If we exempt professions, we might with equal justice exempt many other small businesses, because the persons engaged in them are making just the same sacrifices. I know of many business men who have thrown up their ordinary occupations, and have given their services to the country during the war. Why should they not be exempted? I supported the amendment to exempt the agriculturists from a national stand-point, and I point out that when a similar measure was introduced in the Old Country, the people following this occupation were exempted because there was a general recognition that the farmers should be given every inducement to develop their industry. I think the same course was followed in Canada and in New Zealand. When the original Bill was introduced in this House, agriculture was exempted, but I cannot see any justification for an exemption of the professions. My vote will go against the amendment, but. I have promised to pair with the Treasurer (Sir John Forrest) to-night.

Question - That the words proposedto be inserted, be so inserted (Mr. Richard Foster’s amendment) - put. The Committee divided.

AYES: 0

NOES: 0

AYES

NOES

Aye…. . . 9

Noes . . . . . . 19

Majority . . . . 10

Question so resolved in the negative.

Amendment negatived.

Amendment (by Mr. Boyd) negatived -

That after the word “ gold,” in paragraph e, the words “ and coal “ be inserted.

Mr LECKIE:
Indi

.- I move -

That the following paragraph be added: -

businesses whose capital does not exceed f5,000.

The Minister in charge of the Bill quoted the Canadian Act as a reason why some other exemption should be made, and I would like to remind him that, under the Canadian legislation, the exemption for businesses is fixed at £10,000. It seems to me that we might do well to follow the example of that Dominion. Large businesses established for many years will have the security of a pre-war standard, and will not be touched to any great extent by this measure. Naturally, therefore, all those connected with such businesses welcome the Bill as it stands, because they realize that their younger competitors, with no pre-warstandard of profits to safeguard them, will be crippled by it. Many men engaging in the pastoral industry enter into obligations on extended terms, and depend upon their profits to pay their instalments, but if they were included, their profits would be absorbed. Likewise, a man engaged in the manufacturing industries might purchase his machinery on time payment, and be dependent upon current profits to fulfil his obligations. Surely it is in the interests of the nation that new and successful businesses of this nature shall be established ? If we provide for an exemption of £5,000, we shall be doing something to obviate many grave hardships which will otherwise be imposed upon struggling commercial men. I am not wedded to the exemption of £5,000, and would be prepared, if necessary, to accept a smaller standard. When a man embarks upon a big business he does so as an investor, and if he gets a return of 10 per cent. upon his capital he is doing a very good thing. But I would point out that in the case of partnerships or small proprietary companies the exemption granted under this Bill will amount to only £400 or £500. The individual who owns a business has been granted an exemption of £1,000, but where there are two partners in a business the exemption will amount to only £650, while if there are four partners it will representonly £475. To provide against inequalities in this connexion I ask the Government to accept the very mild compromise which I have submitted.

Mr Groom:

– I was attending to another matter when the honorable member put the position in regard to partnerships. Will he be good enough to re-state it?

Mr LECKIE:

– Certainly. If there are four partners in a business the exemption allowed will be £500, Then each partner will be granted an exemption of £300; and there is a further exemption of £200. So that for each partner there is really an exemption of only £475, whereas in the case of an individual owner of a business the exemption has been fixed at £1,000. I have no desire to delay the passing of the Bill, and I will not occupy further time if the Minister will agree to the exemption for which I am contending.

Mr Groom:

– I cannot do that.

Mr LECKIE:

– Does the Minister intend to persist in this gross injustice?

Mr Boyd:

– Why should not a partner in a business be treated as if he were working for himself?

Mr LECKIE:

– Exactly.

Mr Tudor:

– The Minister’s position is a difficult one owing to the absence of his colleague who was in charge of the Bill.

Mr LECKIE:

– Unless my proposal be accepted I am confident’ that the measure will inflict such hardships on a number of persons that it will not continue to be operative for more than a year.

Mr Boyd:

– I think that we ought to adjourn until the foul atmosphere has been driven out of the Chamber.

Mr Groom:

– I cannot consent to that.

Mr Boyd:

– Then I call attention to the absence of a quorum. [Quorum formed.]

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I cannot accept the amendment proposed by the honorable member for Indi (Mr. Leckie). If his proposal were adopted many businesses which are earning profits in excess of £1,000 a year would be exempted from the operation of this Bill. We have already granted a definite exemption, and the case put by the honorable member was a purely hypothetical one. I ask him whether he can point to any business in which four partners are interested and in which the profits amount to only £500 a year?

Mr Leckie:

– I did not say that there are such businesses; but there are thousands of small proprietary businesses which will be injuriously affected by the Bill.

Mr GROOM:

– We have provided an exemption of £1,000 for the owner of a business, and if there are two partners interested in any business we allow each of them an exemption of £300.

Mr Leckie:

– If there are two partners the exemption is £650.

Mr GROOM:

– We are satisfied that the clause will work satisfactorily, and I cannot accept the amendment.

Mr BOYD:
Henty

.- I quite sympathize with the honorable member for Indi (Mr. Leokie), who has put a fair and equitable proposal before the Committee. The Honorary Minister (Mr. Groom) has not advanced a single reason why it should not be accepted. The question we have to decide is: “Are we going to tax businesses apart, from the individuals who own them, or are we going to tax the individuals?” If we intend to tax the individuals, clearly the exemption made to the single owner of a business ought to be -granted to two, three, or four partners who are interested in a business. If we make an exemption of £500, and there are two partners in a business, each will get an exemption of only. £250, whereas if there are four partners in it, each will get an exemption of only £125. The Minister has merely stated that he cannot accept the amendment. Upon his own responsibility he has refused to accept a reasonable proposal. Is his unsupported statement to be accepted as the mature opinion of the Cabinet? If it were proposed to tax the man who is making the profits-

Mr Groom:

– It is the business which is making the profits.

Mr BOYD:

– What utter rubbish. How in the name of God could a business make profits in the absence of the individual controlling it? The cry has been, “ Get at the profiteers who are making huge war profits.” But a firm does not make profits apart from the individual who controls it, and when three or four persons are members of a firm they should be treated in the same way as one man controlling his own business. If we give an exemption of £500 to a man controlling his own business, why should we allow an exemption of only £200 for two partners, or of £150 where there are four partners ? The Committee is entitled to more mature consideration of the proposal of the honorable member for Indi than has been given to it by the Minister. Had the Treasurer (Sir John Forrest) been here, I think he would have been prepared to accede to the request. Is the Minister prepared to recommit the clause subsequently?

Mr Groom:

– If I come to the conclusion that the amendment ought to be made.

Mr SAMPSON:
Wimmera

– It seems to me that the proposal of the honorable member for Indi (Mr. Leckie) is a better one than that of the Government. If an exemption of £5,000 in capital were allowed, the controllers of a business could exert their capacity and energy in building it up, and instead of earning 5 per cent., make 10 or 20 per cent. on the capital invested. We need to encourage this building up of businesses.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Have it as an alternative to the Government proposal. If it were made a substitute for it, injustice would be done to men earning incomes, but not possessing capital.

Mr SAMPSON:

– I agree that we should have both. The Canadian ex emption is £10,000, which, on a 10 per cent. basis, is equivalent to income amounting to £1,000 per annum. We do not wish to impose heavy war profits taxation on businesses other than the big businesses that make large profits by reason of the increase of prices during the war.

Mr TUDOR:
Yarra

.- I am opposed to increasing the exemptions. A clause which the Government circulated earlier in the evening, and have since withdrawn, might meet the present case.

Mr Groom:

– It was withdrawn only for modification.

Mr TUDOR:

– The clause to which I refer empowers the Commissioner to extend the £300 exemption if he thinks proper. To my mind, that is far enough to go, and if a division is taken I must vote against any further exemption. We have given an exemption of £1,000 clear profit, though I do not think any member of the Government is sure whether 10 per cent. profit will not also be allowed, before there is any taxation. There has been no Bill presented in this Chamber in regard to which a Government has been less sure of its ground. That is proved by the large number of amendments that have been circulated. It will be interesting to see the final draft of this measure.

Amendment negatived.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That the following words be added : -

With respect to a business which, under this section, is exempt from the provisions of this Act, the exemption shall be limited to that business and shall not extend to any business which supplies to or purchases from that business any commodities.”

The object of the amendment is to limit the exemption to the particular business that is exempted.

Amendment agreed to.

Mr BOYD:
Henty

.- I move -

That the following new sub-clause be added : - “ (3) This Act shall not apply to any person who is on active service during the present war with the Military or Naval Forces of the Commonwealth, or any part of the King’s Dominions, or of ally of Great Britain so far as regards income derived from personal exertion, and earned prior to the commencement of this Act, or during the present state of war.”

This is an exact copy of section 13 of the Income Tax Assessment Act. I spoke to the Minister as to this amendment, and he was of opinion that it was unnecessary. After thinking the matter over, however, I came to the conclusion that, as this Bill is an attempt to equal up the differences between those who have offered their lives for their country and those who have stopped behind, and ought to pay, this amendment might very well be accepted. The valuable suggestion has been made that this provision, if adopted, should apply only to men in the fighting line; and, though this might prove somewhat difficult, it is certainly worth attempting.

Mr Tudor:

– But what about a business that is being carried on by a manager or partner.

Mr BOYD:

– If a man is prepared to take the risk of sacrificing his life for his country, surely his business should be exempt. We wish to tax the man who has done nothing to assist in the war; and, therefore, I think we ought to exempt the property of those who have gone to the Front.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I am very pleased to support the proposed new sub-clause, and I may say that, on a previous occasion, I suggested an amendment of the kind. I can only repeat the argument I used when advocating a similar exemption in the case of the income tax, namely, that it ought not to be confined to income from personal exertion, bub extended to income the produce of property. There seems to be an idea abroad that if a man derives an income from property, he is a bloated capitalist, and entitled to no consideration. I remind honorable members, however, that there are on active service men who, in order to reasonably provide for their families or dependant’s, have sold or rented their farms, and thus brought themselves into the class to which exemption is denied, while another man may have a fleet of ships in commission, and be free of the tax. Produce from property is either interest or money lent, rent, or interest as a beneficiary in an estate. If the proposed sub-clause be passed as moved, discrimination will be made between men in the trenches, and very often in favour of the wealthy man as againstthe poor man who has converted his world’s goods into money, and invested it, or has let his property. I hope that the amendment will be enlarged so as to include income from property.

Mr Groom:

– Under the Bill investments are not included, except in the case of a business which is purely an investing business.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I think the honorable member is right, and I am asking for something the Bill cannot reach. I shall, therefore, content myself with wholeheartedly supporting the amendment.

Mr PIGOTT:
Calare

.- I shall support the amendment. When the second reading of the measure was before us a similar suggestion was made by the honorable member for Wannon (Mr. Rodgers), and also by myself. A man can risk no more than his life, and we should certainly look after the property of soldiers, and see that every advantage and benefit is conferred upon the men who are now standing between us and certain destruction. I am delighted that the honorable member for Henty (Mr. Boyd) has been so much alive to the interests of the lads at the Front; and I may say that I had intended to make a similar proposal.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– This matter was considered by the Treasurer (Sir John Forrest), but the Bill, of course, was framed on the English measure, which makes no exception of the kind. In fact, all our legislation has been more generous to the soldier than that of any of the other Dominions. We exempt him from income tax, and in case of death no probate duties are imposed, whereas such is not the case in England. I point out that the tax under discussion applies only to excess profits, and does not touch the normal income earnedbefore the war. But even if the principle of the proposal were accepted, there are points that require consideration. There may be three partners in a very large business which is earning heavy excess profits; and the desire, I take it, is to exempt only the individual.

Mr Boyd:

– Hear, hear !

Mr GROOM:

– Therefore, I think it will be necessary to have the sub-clause drafted so as to permit of a refund to the partner of an amount represented by his interest.

Mr Boyd:

– Will the Minister also see whether he cannot provide that the amendment shall apply only to men in the firing line ?

Mr GROOM:

– In the case of the income tax we have in a very wide way exempted all men who are on active service ; and it has been suggested to me that in the case of the present amendment it might be considered advisable to confine it absolutely to those who are, or have been, in the firing line. I shall submit the proposed amendment to the Treasurer for his consideration, but, no matter what his decision may be, I shall try to get it drafted in such a way as to carry out the intention of the mover, and will also, if so desired, give the ‘Committee an opportunity to reconsider it on a recommittal of the clause.

Mr MANIFOLD:
Corangamite

– I think the Minister is taking on a pretty big contract. If any persons should be exempted it is those on active service, and not those who have gone to good paid billets; and when we talk of “war service “ the term coversmen who have never intended to go near the Front. We shall also haveto include in the exemptions, not only soldiers, but transport drivers, Army Service men, and the medical branch. Transport drivers and stretcher bearers at the Front face just as much danger as do the men in the trenches; but I would sooner see them all taxed rather than see the men in soft billets escape.

Mr Boyd:

– I shall not proceed with the amendment at this stage.

Amendment, by leave, withdrawn.

Clause, as amended, agreed to.

Clause 9 -

The profits arising from any business shall be separately determined for the purposes of this Act, but shall be so determined on the same principles as the profits and gains of the business are or would be determined for the purpose of Commonwealth income tax, subject to the modifications set out in Part IV., and to any other provisions of this Act:

Provided that where a person carries on more businesses than one, and this Act applies to some or all of such businesses, he may deduct from the sum of the profits on which, apart from this proviso, war-time profits tax would be payable by him -

the loss (if any) on any of such businesses to which this Act applies; and

the excess (if any) of the losses over the profits of all of such businesses (if any) to which this Act does not apply.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That the words “ from the sum of the profits,” line 12, be left out, with a view to insert in lieu thereof the words. “ proportionately from the profits of each business.”

Where a man carries on several businesses he has the right to set the loss in one against the profits of another; and the object of the amendment is to make the adjustment proportionately.

Mr POYNTON:
Grey

.According to the original Bill, if a man with more than one business made a profit in one of them he was liable to taxation, although he had made a loss on the other. I saw the injustice of this, and caused an amendment to be made, but that amendment did not cover all the circumstances as does the amendment now proposed.

Mr MANIFOLD:
Corangamite

– Has the Minister considered the point I raised about the cattle stations away out-back, and the necessity for some relief being afforded ? Should they not have some relief ? The Treasurer (Sir John Forrest) promised that some relief would be given, and I think that the matter could be dealt with at this point.

Mr Groom:

-It can be dealt with later on..

Amendment) agreed to.

Amendments (by Mr. Groom) agreed to-

That the following words be added to the proviso: - “if either of these losses have been recouped out of the profits of a business to which this Act applies.”

That the following further proviso be added: - “ Provided, further, that the profits or losses in any business to which this Act does not apply shall be calculated in the same manner as the profits or losses in any business to which this Act applies.”

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That the following new sub-clauses be added: - “ 2. The war-time profits tax payable on the profits derived by a business carried on by partners shall be payable by the partnership, but, for the purposes of this section, the tax shall be deemed to have been paid by each partner in proportion to his interest in the profits. “ 3. A person who carries on more than one business in partnership shall be deemed to be carrying on separate businesses for the purposes of this section, and shall, if the loss on any business carried on by him either alone or in partnership is recouped by him out of the profits of any partnership business which pays tax, be entitled to a refund from his share of the tax paid by the partnership business of the difference between his share of that tax and the amount that would have been payable by hint in respect of his share of the profits if the loss made by him had been deducted from his share of the profits of the partnership business paying tax in calculating the amount of tax payable by that partnership.”

This will enable a person who carries on more than one business in a partnership to set off a loss in the one business against the profits in the other.

Mr GREGORY:
Dampier

– Under the proposed new sub-clauses where a man is interested in two businesses and makes a loss in the one and a profit in the other, he can set off the loss against the profit. I wish to bring before the Committee the case of a man having an interest in two businesses whose position will not be improved by this provision. The case is that of a business in Perth, in which two persons have an interest. Believing that it did not offer them sufficient scope they started a business in Melbourne, which was anything but profitable, but their Perth business continued to give a reasonable return. One of the partners then came to Melbourne, with the result thatthe business here became profitable whilst there was a falling off in the returns from the Perth house. Under this proposal they will have to pay the war-time profits tax on their Melbourne business, but will be unable to put againstthe profits of the Melbourne business the reduction in the profits of the Perth business.

Mr Watt:

– Why not ?

Mr GREGORY:

– They can only set off a loss, and not a reduction of profits. There are two partners in the Perth business and three in the Melbourne business.

Mr Groom:

– The honorable member’s, object is to provide, so far as this measure is concerned, for the amalgamation of a partnership carried on by two persons with a partnership carried on by them in conjunction with a third individual, although the two businesses are different.

Mr GREGORY:

– Yes. If these subclauses be inserted I should like to move as a further amendment -

That the following sub-clause be added : - “ In the case of a person so carrying on business in partnership, one of which partnership businesses pays tax, and the others do not, and the aggregate income of such person is not in any year greater than the pre-war standard of profits as defined in section 15, subsection (3) hereof, he shall be entitled to a refund of his share of the tax paid by the partnership, business, or businesses.”

Mr Watt:

– That is quite a different thing.

Mr GREGORY:

– Under my proposal the man in question would pay his fair share of war-time profits taxation according to the pre-war standard, whereas without it he would suffer by reason of his having an interest in two different businesses. I do not think that is the intention of the Government. I shall not press my proposed amendment, accepting the promise of the Minister that he will give it consideration.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– The principle that we are trying to incorporate inthe clause is that of the right to set a lossagainst a profit. The honorable member’s; proposal, however, would introduce an entirely new principle - the principle of aggregating the return from the two businesses. I cannot promise to accept the amendment, but I shall consider it, and submit it to the Treasurer.

Mr Gregory:

– Very well.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 10-

  1. Where it appears to the Commissioner, on the application of a taxpayer in any particular case, that any provisions of Parts IV., V., and VI. of this Act should be modified in his case, owing to -

    1. A change in the constitution of a partnership; or
    2. the postponement or suspension, as a consequence of the present war, of renewals or repairs; or
    3. exceptional depreciation or obsolescence of assets employed in the business due to the war; or
    4. the necessity in connexion with the war of providing plant which will not be wanted for the purposes of the business after the war; or
    5. liabilities incurred in a business at the instance of the Commonwealth Government in pursuance of the wartime policy’ of the Government ; or
    6. the establishment of the business since the war or the fact that the business has only commenced to be remunerative in the accounting period ; or
    7. any other special circumstances speci fied in the regulations, the Commissioner shall have power -
    1. to allow as deductions such sums (which apart from this section would not be deductible) as he thinks necessary in order to meet the particular ease;
    2. to vary the pre-war standard of profits to such an extent as he thinks necessary in order to meet the particular case ; and
    3. to calculate the amount of the capital employed in the business in such manner as he thinks necessary in order to meet the particular case :

Provided that where the reason for the modification is that the business has been established since the war or has only commenced to be remunerative in the accounting period, the modification shall not be greater in extent than is sufficient to ensure the financial stability of the business.

  1. A taxpayer who is dissatisfied with the decision of the Commissioner under this section may require the Commissioner to refer his case to the Board of Referees constituted under this Act, and the Commissioner shall refer the case accordingly.

Amendment (by Mr. Groom) proposed -

That the word “war,” paragraph (f), be left out, with a view to insert in lieu thereof the words “ fourth day of August, one thousand nine hundred and fourteen.”

Mr GREGORY:
Dampier

– Under paragraph e the Commissioner is given power to modify the taxation in regard to - liabilities incurred in a business, at the instance of the Commonwealth Government, in pursuance of the war-time policy of the Government.

That seems to be an extraordinary provision. I should like to know what business would be started at the instance of the Government, and in pursuance of its war-time policy. We should not agree to such a provision unless some justification for it is given by the Minister. Unless an explanation is forthcoming I shall move to omit the paragraph.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I understand that there are definite cases where companies have undertaken liabilities at the instance of the Government in connexion with the manufacture of metals. The provision is intended only to meet the case of some particular industry required in connexion with the war.

Mr JOSEPH COOK:
ParramatttaMinister for the Navy · NAT

– As I understand the paragraph referred to by the honorable member for Dampier (Mr. Gregory) it is intended to meet cases where the Government have specifically asked companies to extend their capital and their plant for the purpose of manufacturing munitions of war.

Mr Sampson:

– And to provide for possible future cases.

Mr JOSEPH COOK:

– Quite so. They have had to put out fresh capital at the request of the Government, and in these circumstances are entitled to some modification if a case can be made out for it to the satisfaction of the Commissioner. That, I think, is perfectly legitimate. Special circumstances may arise requiring close consideration by the Commissioner, and if a case can be made out these companies or persons are entitled to some relief.

Amendment agreed to.

Amendment (by Mr. Groom) proposed -

That the words “ the business has only commenced to be remunerative in the accounting period,” paragraph /, be left out, with a view to insert in lieu thereof the words “ owing to the recent commencement of the business there has not been one pre-war trade year.”

Mr POYNTON:
Grey

.It has been said again and again during the consideration of this Bill that we are tied down to a pre-war standard of 10 per cent. I wish to call the attention of the Committee to the fact that under paragraph ii the Commissioner is given power - to vary the pre-war standard of profits to such an extentas he thinks necessary, in order to meet the particular case.

That power is not confined to new business, but is general. The paragraph bears out what I have said from the first, that the Commissioner is vested with absolute power to vary the pre-war standard where he considers it desirable to do so in the interests of . the stability of the business.

Mr Leckie:

– There is a sub-clause controlling that provision.

Amendment agreed to.

Mr SAMPSON:
Wimmera

– I regard this clause as one of the most important in the Bill, and I do not think that any provision so far made, will meet the circumstances of all the cases that will come before the Commissioner, whose duty it will be to prevent undue hardships being inflicted upon any section of the. community, and especially upon those persons engaged in new and small businesses.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I point out to the honorable member that discretion is vested in the Commissioner, who will see that any modification of the provision as applied to such businesses will be sufficient to insure their financial stability.

Mr SAMPSON:
Wimmera

– We might assume that the Commissioner will take a broad view of the position in order to enable a new business to pay its way; but I cannot see how the financial stability of a small or new business can be considered as being adequately protected unless the Commissioner takes into consideration the question of its possible development, in which many factors must necessarily enter, such as the capital involved, the capacity of those controlling it, and the field for expansion. I should like the Commissioner to have plenty of room to move in.

Sir WILLIAM IRVINE:
Flinders

– I agree with the honorable member for Wimmera (Mr. Sampson) that . the discretionary power to be given to the Commissioner is one of the most important features of the Bill, because it will make possible that flexibility in administration so necessary to prevent hardship or injustice in relation to businesses that have become remunerative since the outbreak of the war. Many businesses, carried on at a loss for many years before the war broke out, only became remunerative after the declaration of war, and I understood this clause was originally framed to meet those cases. A great deal of money has been expended in connexion with certain farms and small pastoral properties in erecting rabbitproof fencing and otherwise improving the properties, which have only become remunerative of late years. There may be many such cases, and they are not adequately provided for in the clause.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I agree with the view expressed by the honorable member. I can see that the amendment will restrict the power of the Commissioner, and I shall ask the Treasurer to reconsider the clause with a view to its recommittal.

Mr BOYD:
Henty

– I desire to draw attention to. sub-clause 2, which states -

A taxpayer who is dissatisfied with the decision of the Commissioner under this section may require the Commissioner to refer his case to the Board of Referees constituted under this Act, and the Commissioner should refer the case accordingly.

Which Board of Referees is indicated - that mentioned in clause 26, or that referred to in clause 55 ?

Mr Groom:

– The Board of Referees mentioned in clause 26.

Mr ARCHIBALD:
Hindmarsh

– For the last two or three hours members of the Committee have shown more anxiety to safeguard new businesses than to look for war profits.

Mr Poynton:

– It does not look much like conscription of wealth.

Mr ARCHIBALD:

– It looks as if the Committee has neglected war profits in this struggle to look after new businesses, and in my judgment that is not a nice spectacle to present to the people of Australia. Honorable members appear to be prepared to go oh all day and all night in this struggle to study the interests of a certain section of the community regardless of war profits. That is the view I take of the debate, and that is the view, I think, which the people outside will take also.

Mr LAMOND:
Illawarra

– I do not agree with the view expressed by the honorable member for Hindmarsh (Mr. Archibald).

Mr Poynton:

– I do, solidly. It is a scandal that members of the Committee should endeavour to burke taxation in this Bill.

Mr LAMOND:

– One of the most important pledges given by this party to the country was that it would use every possible means to extend industry so as to provide employment for men when they come back from the war.

Mr Fenton:

– Surely there is another way of doing that than at the expense of war profits.

Mr LAMOND:

– I cannot see the economy or utility of taking from any industry that has been established, money that is necessary to its continuance when, later on, we should have to re-establish the industry. The Commonwealth has to accept the responsibility of doing something to develop and extend the industries which are necessary to a successful prosecution of the war.

Mr Fenton:

– We cannot do that by means of a taxing Bill.

Mr LAMOND:

– But we can kill the industries which have been established by means of a taxing Bill. The whole question which arises here is whether the term “financial stability “ is sufficient to insure the maintenance of industry. If it is not, the Commissioner should be vested with power to see that every industry now in the Commonwealth is preserved.

Clause further amended verbally, and, as amended, agreed to.

Clause 11 -

  1. Where capital has been increased during the accounting period, a deduction shall be made from the profits of the accounting period of the greater of the following sums: - (a). The statutory percentage per annum on the amount by which the capital has been increased; or

    1. the percentage per annum (on the amount by which the capital has been increased) of the profits standard on the average capital of the pre-war trade years by reference to which the profits standard has been arrived at.
  2. Where capital has been decreased by withdrawal during the accounting period, an addition shall be made to the profits of the accounting period of the greater of the following sums: -

    1. The statutory percentage per annum on the amount by which the capital has been decreased; or
    2. the percentage per annum (on the amount by which the capital has been decreased) of the profits standard on the average capital of the pre-war trade years by reference to which the profits standard has been arrived at:

Provided that where it is shown to the satisfaction of the Commissioner that the capital has been decreased during the accounting period through compulsory dispossession, the profits of the accounting period shall not be increased as provided by this section.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That after the word “Where”, line 1, the words “ capital has been increased “be left out, and that after the word “period”, line 2, the words “ increased capital has been employed in the business “ be inserted.

The object of the amendment is to prevent an injustice being done to the taxpayer. As the clause now stands the deduction from profits could be allowed only when the capital had been increased during the accounting period. If it had been increased since the last pre-war trade year, but before the accounting period, the deduction could not be allowed.

Sir WILLIAM IRVINE:
Flinders

– I quite agree with the object of the amendment. As the clause stands the taxpayer has his pre-war standard, which was based on the profits earned by him perhaps three years ago. In the absence of some amendment he would get no benefit from any capital which he had invested in the business between that period and the accounting period. But I do not think that the amendment will give effect to the desire of the Minister.

Mr Groom:

– The whole matter will be looked into again, and I will see that the position is put beyond doubt.

Amendments agreed to.

Amendments (by Mr. Groom) proposed : -

That in sub-clause ( 3 ) , the words “ capital has been decreased by withdrawal “ be left out, and that after the word “ period “ the words “ decreased capital has been employed in a business owing to the withdrawal of capital” be inserted.

Mr POYNTON:
Grey

– Attached to this clause is a proviso which was inserted at my instance, and which reads -

Provided that where it is shown to the satisfaction of the Commissioner that the capital has been decreased during the accounting period through compulsory dispossession, the profits of the accounting period shall not be increased, as provided by this section.

Apparently, the framers of the Bill arrived at the conclusion that a reduction of capital should be treated as a withdrawal of capital. Consequently, where less capital was employed during the accounting period than during the pre-war period the business concerned was debited on the accounting period with 6 per cent. , whereas now it will be debited with 10 per cent. So that if a man lost stock as the result of drought or floods he would, in the absence of these amendments, be penalized to the extent of 10 per cent., notwithstanding that the loss was not due to any fault of his own, or to any withdrawal of capital. The amendments proposed are intended to make the position clear.

Amendments agreed to.

Clause also verbally amended, and, as amended, agreed to.

Clause 12 agreed to.

Clause 13-

  1. The war-time profits tax shall be assessed by the Commissioner.
  2. The tax may be assessed on any person for the time being owning or carrying on the business or acting as agent for another person in carrying on the business, or, where a business has ceased, on the person who owned or carried on the business or acted as agent in carrying on the business immediately before it ceased, and where there has been a change of ownership of the business, the Commissioner may, if he thinks fit, take the accounting period as the period ending on the date on which the ownership has so changed and assess the tax on the person who owned or carried on the business or acted as agent for the person carrying on the business at that date.
  3. Where a company is wound up after the commencement of this Act, the liquidator of the company shall give notice to the Commissioner, and shall set aside such sum out of the assets of the company as appears to the Commissioner to be sufficient to provide for any such wartime profits tax as may become chargeable.
Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That after the word’ “is,” line 18, the word “ being “ be inserted.

The object of the amendment is to enable the Commissioner to collect the tax before a company is wound up.

Amendment agreed to.

Amendments (by Mr. Groom) agreed to -

That after the word “ Commissioner “, line 20, the words “ within fourteen days after the approval of the shareholders to the winding up has been obtained, or the order for the winding up has been made,” be inserted.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That the following new sub-clauses be added : - “ (4) In the case of any business which by reason of its being unable to pay its debenture holders or creditors is being carried on by a liquidator, receiver, or trustee under the Court, no war-time profits tax shall be levied or paid until provision has been made for the payment of the unpaid debenture holders or creditors.

In any case in which a business is transferred to another person after the commencement of this Act the person to whom the business is transferred shall be personally liable to pay any war-time profits tax which may subsequently be assessed as payable by the former owner if he fails to secure the payment of that tax to the Commissioner.”

The amendments in sub-clause (3) of this clause and of the new sub-clause (4) are designed to make clearer the duties of the liquidator of a company being wound up, and sub-clause (4) recognises that we ought not by reason of this tax to deprive creditors of companies in liquidation of an opportunity to get their claims satisfied. The idea of sub-clause (5) is to see that when the transfer of a business takes place the predecessor in the business shall provide forthe payment ofthe tax.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 14 (Computation of profits).

Sir WILLIAM IRVINE:
Flinders

– We are now about to enter upon the consideration of parts 4, 5, and 6 of this Bill, and I think we should be exceedingly ill-advised if we proceeded with them to-night. In these three parts quite a number of questions of vital importance arise, and personally I feel physically unfit to apply my mind to their consideration now. In the circumstances I think that it would be wise to report progress.

Clause postponed.

Clauses 15 and 16 postponed.

Clause 17 consequentially amended, and agreed to.

Clause 18 verbally amended, and agreed to.

Clauses 19 to 23 agreed to.

Clause 24 verbally amended, and agreed to.

Clause . 25 (Notice of assessment).

Amendment (by Mr. Groom) agreed to -

That the following sub-clause be added: - “ (3) Where a taxpayer is liable to pay the war-time profits tax in respect of more than one business, the Commissioner may, in his discretion, issue to that taxpayer one notice of assessment showing the tax payable in respect of each of the businesses in respect of which the taxpayer is liable to pay tax.”

Clause, as amended, agreed to.

Clause 26-

  1. There shall be a Board ofReferees to he appointed by the Governor-General.
  2. The Board of Referees shall consider such cases as are referred to it . by the Commissioner.
  3. The Board of Referees shall have power to allow such modifications of any provisions of Parts IV., V., and VI. of this Act as it thinks necessary:

Provided that where the reason for the modification is that the business has been established since the war, or has only commenced to be remunerative in the accounting period, the modification shall not be greater in extent than is sufficient to insure the financial stability of the business.

Amendment (by Mr. Groom) propose d- -

That the words “ and as are prescribed “ be added to sub-clause 2.

Mr PIGOTT:
Calare

– I think that instead of having a Board of Referees for the Commonwealth there should be one for each State. It should not Be necessary for persons to come from Queensland or Western Australia to state a case before the Board.

Sir William Irvine:

– I presume that the Board will visit the various centres of population.

Mr Groom:

– That is the intention.

Mr PIGOTT:

– The Bill does not say so

Sir William Irvine:

– It is best tohave one Board of Referees for the whole Commonwealth, visiting the State centres, because that secures uniformity.

Mr PIGOTT:

– Have I the assurance of the Minister that the Board of Referees will visit each State?

Mr Groom:

– That is the intention.

Mr Boyd:

– How many persons will be on the Board?

Mr Groom:

– Three.

Mr Richard Foster:

– Will they include the Commissioner ?

Mr Groom:

– No.

Mr PIGOTT:

– As the pasttoralists will pay the bulk of the taxation, they should berepresented on the Board. I ask the Minister to give that matter consideration.

Mr Gregory:

– Have we the distinct promise of the Minister that the Board of Referees will, if necessary; visit the various States?

Mr Groom:

– I am sure that it is the intention of the Treasurer (Sir John Forrest) that they shall do so.

Mr Pigott:

– Will the Minister move to insert words which will make that intention clear.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I prefer not to do that. The amendment that I have moved is to comply with the request that we should give a wider reference to the Commissioner than is already provided for. By regulation other cases may be sent to the Board of Referees.

Mr Finlayson:

– Will the Government, as well as the Commissioner, have power to refer matters to the Board of Referees ?

Mr GROOM:

– No. The Government may prescribe regulations setting out the class of cases which shall be referred.

Mr TUDOR:
Yarra

.- The Board will be an important one, and I presume that its members will receive adequate salaries. I do not say that its status will be as high as that of the InterState Commissioners. The Government should indicate what will be the status of the members of the Board, and what remuneration will be paidto them.

Mr. . JOSEPH COOK (Parramatta-

Board should, I think, have something like the status of the Inter-State Commission, but I cannot say now what its remuneration will be. Its members must be thoroughly competent and able men.

Mr Tudor:

– They may receive more than the Commissioner.

Mr JOSEPH COOK:
NAT

– That should not matter. The appeal will be from the Commissioner to the Board. The land courts of the . States have a higher status than the Secretary from whom appeals come to them. To give confidence the appeal must be to a superior authority.

Mr FINLAYSON:
Brisbane

– Is it intended that the Board of Referees shall be a permanent tribunal ? Does the Minister think that there willbe a sufficient number of appeals to warrant the Board in sitting continuously, or almost continuously?

Mr Groom:

– The Board would be always available. That is desirable, so that there may be a continuous policy. Whether it will be occupied permanently will depend on the work to be done. When the Act expires the Board will cease to exist.

Mr FINLAYSON:

– Will the expenses of the Board be a permanent charge ?

Mr Groom:

– The remuneration of the Board is a matter for the Cabinet to consider.

Mr MATHEWS:
Melbourne Ports

– I do not see why we should be encumbered with an expensive establishment like this in perpetuity. What the Board will have to do will be to give decisions bearing on a number of cases : it will not be called upon to deal with every case of objection. It will not be giving decisions continually. Its decisions will be on broad principles. and one of them will probably settle thousands of cases.

Mr Joseph Cook:

– We cannot at this stage say what the precise establishment will be.

Mr Finlayson:

– It looks as though we may have to pay £10,000 a year for the Board.

Mr Joseph Cook:

– In the nature of things, the Board will exist for only a brief period, but it must be a court which will command the respect of the trading interests of the Commonwealth.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– Would it be possible to utilize the services of the Inter State Commission ?

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– That is a matter which can be considered. The whole of the provisions of the measure will not cease to have effect on the 30th June next after the declaration of peace, because the Bill relates to profits made during the preceding year. The collection is to take place over a long period.

Mr Tudor:

– That is the last time the collection will be made.

Mr GROOM:

– Those are the last profits that will be taxed.

Amendment agreed to.

Amendments (by Mr. Groom) agreed to-

That after the word “ necessary,” sub-clause 3, the words “ and such other powers as are prescribed “ be inserted; that the word “ war “ b e left out with a view to insert in lieu thereof the words “ fourth day of August, One thousand nine hundred and fourteen “; and that the following new sub-clauses be inserted : -

  1. The costs of and incidental to any pro ceedings before the Board of Referees shall be in the discretion of the Board, which may order by whom and to whom they are to be paid and by whom they are to be taxed.
  2. The Board of Referees may make rules for regulating the practice and procedure in relation to proceedings before the Board.
  3. All such rules shall -

    1. be notified in the Gazette; ‘
    2. take effect from the date of noti fication, or from a later date specified in the rules; and
    3. be laid before both Houses of the Parliament within thirty days of the making thereof, or, if the Parliament is not then sitting, within thirty days after the next meeting of the Parliament.
  4. If either House of the Parliament passes a solution, of which notice has been given at any time within fifteen sitting days after the rules have been laid before that House, disallow ing any rule, that rule shall thereupon cease to have effect.”

Clause, as amended, agreed to.

Clause 27-

  1. A taxpayer who is dissatisfied with the decision of the Commissioner may, within thirty days after the service by post of notice of the decision of the Commissioner, ask the Commissioner to treat his objection as an appeal, and forward it either to the High Court, the Supreme Court, or a County or District Court of a State, or such other Court as is specified in that behalf by proclamation, as required by the taxpayer.
Mr BOYD:
Henty

.- Will the Minister tell us why the Board of Referees cannot be substituted for the Courts mentioned in the clause?

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– These Courts are all over Australia, and are immediately available as in the case of the income and land taxes. The Courts will deal with specific cases and objections to particular points, while the Board of Referees will deal with broader questions, such as the pre-war standard, and so forth.

Mr MATHEWS:
Melbourne Ports

– If an objector is dissatisfied with the decision of the Board of Referees will he be at liberty to appeal to a Court?

Mr Groom:

– There will be no appeal from the Board of Referees.

Mr PIGOTT:
Calare

.Would it not be possible to allow matters which involve, perhaps, a sum of only £20 or £30 to come before a Small Debts Court?

Mr Groom:

– It is open to the Government to specify such other Courts as they may deem necessary.

Mr PIGOTT:

– There ought to be some definite provision in the clause.

Clause agreed to.

Clauses 28 to 30 agreed to.

Clause 31 -

  1. War-time profits tax shall be due and payable thirty days after the service by post of a notice of assessment.
Mr CORSER:
Wide Bay

– This is a very important clause, and I think it requires an amendment. Instead of making the tax payable in thirty days, it should be payable in three instalments at two, four, and six months. Although profits may have been made, they may not all be in cash, but are probably distributed amongst customersI hope the Minister will see his way to accept the suggestion.

Mr Groom:

– Any one has the right to apply for an extension of time under clause 32.

Mr CORSER:

– I move-

That after the word “ payable “, line 2, the words “ in three payments at two, four, and six months “ be inserted.

Mr FINLAYSON:
Brisbane

– This clause raises a point that a number of us have been waiting for. I am not so much concerned as to the intervals of payments, but it is obvious that to demand, as the Commissioner could, an immediate payment within thirty days would involve much hardship.

Mr Groom:

– The Commissioner has power to extend the time.

Mr JOSEPH COOK:
ParramattaMinister for the Navy · NAT

– I suggest to the honorable member for Wide Bay that he allow the clause to pass for the time being. I have felt that the time allowed is too rigid and too short.

Sir William Irvine:

– Leave the time to be prescribed by regulation.

Mr JOSEPH COOK:

– I should not object to that at all. However, I wish to consult the Treasurer; and if the clause is allowed to pass, I shall see that it is recommitted.

Mr Mathews:

– Postpone the clause.

Mr JOSEPH COOK:

– If honorable members so desire.

Mr Corser:

– I ask leaveto withdraw the amendment.

Amendment, by leave, withdrawn.

Mr BOYD:
Henty

– Will the Minister also consult the Treasurer as to the desirability of inserting after the word “ assessment,” the words “ and may be paid in Commonwealth war bonds “ ?

Clause postponed.

Clauses 32 to 36 agreed to.

Clause 37 -

  1. Where a taxpayer dies after the conclusion of any accounting period, and before furnishing a return of the profits of his business for that period, his executorB or administrators shall furnish a return of the profits of his business during that period.

Amendments (by Mr. Groom) agreed to -

That the words “ accounting period,” line 2, be left out, with a view to insert in lieu thereof the words “financial year”; that the words “ that period,” line 4, be left out, with a view to insert in lieu thereof the words “ the accounting periods ending and beginning in that financial year”; that the words “that period,’” line 6, be left out, with a view to insert in lieu thereof the words “ those periods.”

Clause, as amended, agreed to.

Clauses 38 to 42 agreed to.

Clause 43-

With respect to every agent, and with respect also to every trustee, the following provisions shall, subject to this Act, apply: -

He shall be answerable as taxpayer for the doing of all such things as are required to be done by virtue of this Act in respect of the profits derived by him in his representative capacity and the payment of tax thereon.

He is hereby made personally liable for the war-time profits tax payable in respect of the profits if, after the Commissioner has required him to make a return, or while the tax remains unpaid, he disposes of or parts with any fund or money which comes to him from or out of which war-time profits tax could legally be paid, but he shall not be otherwise personally liable for the tax.

Amendments (by Mr. Groom) agreed to -

That the word “ derived,” paragrapha, be left out, with a view to insert in . lieu thereof the words “ arising from the business carried on “; and that after the word “ money,” paragraphf, the words “ then in his possession or “ be inserted.

Clause, as amended, agreed to.

Clause 44 consequentially amended and agreed to.

Clauses 45 to 49 agreed to.

Clause 50 (Offences).

Mr PIGOTT:
Calare

Under the State laws the Commissioner generally gives the taxpayer notice, but under this Bill, unless a taxpayer sends in his return, he is liable to be penalized without any notice. Would it not be just as well to adopt the State system? We have so many taxes, Federal and State, at the present time that a person might very easily forget to send in a return; and in view of the fact that only about 13,000 or 14,000 taxpayers will come within the operation of the Bill, the sending out of notices would not involve much cost.

Mr Groom:

– There is the expense of printing and so forth. Further, a proclamation is issued notifying the date for returns, and there is also an announcement in the press. No person is ever prosecuted without notification for failing to send in a return. ,

Mr PIGOTT:

– If they do not send in their returns the Commissioner should notify them before instituting a prosecution.

Mr Groom:

– He does.

Mr PIGOTT:

– Then I am satisfied.

Clause agreed to.

Clauses 51 to 54 agreed to.

Clause 55 -

  1. In any case where it is shown to the satisfaction of the Commissioner that a taxpayer liable to pay war-time profits tax has become bankrupt or insolvent, or has suffered such a loss that the exaction of the full amount of tax will entail serious hardship, a Board, consisting of the Commissioner, the Secretary to the Treasury, and the Comptroller-General of Customs, may release such taxpayer wholly or in part from his liability. . . .
  2. The Minister shall cause to be laid before both Houses of Parliament, as soon as may be after the close of the financial year, a full statement of all cases in which; and the grounds on which, liability has been so released.
Mr SINCLAIR:
Moreton

– I wish to ask the Honorary Minister whether any specific object is to be served by sub-clause 3. It appears to me that it will involve a large expenditure on printing that might very well be avoided, and that we can trust the Commissioner to administer this Act without favour or partiality.

Mr Groom:

– There is a similar provision in other Acts. I will have the matter referred to the Treasurer for his decision. I understand that my right honorable colleague has the question under consideration.

Mr FINLAYSON:
Brisbane

– Does not the Bill already provide that the Commissioner shall furnish annually a report to Parliament? In that event, is there any need for this special provision ? If there is to be a general report it is not fair to single out as special subjects for a report to Parliament unfortunate people who become bankrupt.

Mr GROOM:
Darling DownsHonorary Minister · NAT

– I move -

That sub-clause 3 be left out.

I shall tell the Treasurer what I have done, and if he considers it desirable to reinstate this provision he can move to recommit the clause.

Mr LAMOND:
Illawarra

– If we delete this sub-clause will Parliament have no report from the Commissioner as to what has been done under the clause?

Mr Joseph Cook:

-The Commissioner has to report annually to Parliament.

Mr Groom:

– Yes, but he will not specify the names of the persons who have been relieved wholly or in part of their liability under this sub-clause.

Mr LAMOND:

– That is the only check the Parliament can have on the licence of the Commissioner.

Mr Groom:

– The Treasurer under another part of the Bill has the right to call for a report at any time while an annual report is also required of the Commissioner.

Mr LAMOND:

– If we delete this subclause it will make it easy for people to obtain behind the back of Parliament a release from this taxation.

Mr Groom:

– The matter must be dealt with not by the Commissioner alone but by a Board consisting of the Commissioner, the Secretary to the Treasury, and the Comptroller-General of Customs.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 56 agreed to.

Motion (by Mr. Groom) agreed to -

That the following new clauses be added: - “ 37a. Where a person dies after the conclusion of a financial year, and after furnishing a return of the profits of his business for the accounting periods ending and beginning in that financial year, but a notice of assessment has not Prior to his death been sent to him by the Commissioner, the Commissioner may assess the executors or administrators of that deceased person in respect of those profits, and the executors or administrators shall be chargeable with and pay tax thereon.” “ 37b. Where a person dies during an accounting period, the executors or administrators of that person shall, in making their return of the profits of the business, include in that return the profits of the business arising during that accounting period up to the date of the death of the deceased, and shall be liable for the tax in respect of those profits.” “ 37c. Where a person, after lodging a return of the profits of Mb business, but before the tax thereon is due and payable, takes advantage of any law of a State relating to bankruptcy or insolvency, the tax, which is assessed as due and payable by that person in respect of those profits, shall, notwithstanding anything contained in any law of the State relating to bankruptcy or insolvency, be deemed to be a debt due to the Crown provable in bankruptcy or insolvency.”

Sitting suspended from 6.37 a.m. to 11.80 a.m. Friday.

Ordered -

That postponed clauses 14 to 16 be considered before postponed clauses 3 and 4.

Postponed Clause 14 -

  1. The profits shall be taken to be the actual profits arising in the accounting period from business carried on in Australia.
  2. Deductions for wear and tear or for any expenditure of a capital nature for renewals, or for the development of the business or otherwise in respect of the business, shall not be allowed except such as may be allowed under the Income Tax Assessment Act 1915-1916, and if allowedshall be only of such amount as appears to the Commissioner to be reasonably and properly attributable to the year or accounting period.
  3. Deductionsshall not be allowed on account of the liability to pay, or the payment of, war-time profits tax, but a deduction shall be allowed for any sum. which has been paid in respect of the profits on account of any wartime profits tax or similar tax imposed in any country outside the Commonwealth:

Provided that a deduction shall be allowed from the profits of any accounting period of all rates and taxes, including Commonwealth and State land and income taxes, paid in that accounting period less any refunds of such taxes received in that accounting period.

Where a deduction of war-time profits tax is allowable in any income tax assessment, but has not been made owing to the date at which the war-time profits tax is ascertained, the Commissioner may reduce the war-time profits tax payable, by the amount by which the income tax would have been reduced if the deduction had been made at the time of the making of the income tax assessment.

Where the profits of a business arias wholly or partly from the use of a wasting asset the following provisions shall apply: -

A deduction shall be made in ascertaining the excess profits under this Act, of the sinking fund (calculated according to the prescribed tables, for the number of years estimated to be required to exhaust the asset from the time it was first used by the owner as a wasting asset), which will recoup the amount expended by the owner in the purchase of the asset or (where the asset has been acquired otherwise than by purchase) the value of the asset, at the date when it was first used as a wasting asset for the purpose of the business, as known at that date. The estimated number of years required to exhaust the asset shall be ascertained as at the end of the accounting period upon the profits of which the current assessment under this Act is being made ; and

In the case of a mining business, other than mining for coal, the capital expended by the owner of the business in necessary plant and development of a mining property from which profits have been derived (less the distributed and undistributed profits derived by the owner prior to the year upon the profits of which the current year’s assessment under this Act is based) shall be divided by the estimated number of years during which payable mining operations may be expected to continue under normal conditions, and the quotient thus obtained shall, in addition to any other deductions allowed by this Act, be deducted in ascertaining the excess profits.

In the case of a business which uses leasehold property - “

forwhich a definite sum of money, other than the rent reserved by the lease, has been paid by the lessee either to the lessor, or to purchase the leasehold rights from a precedent lessee; or

upon which the lessee has covenanted with the lessor to expend money on improvements which will revert to the lessor upon the termination of the lease, a deduction shall be allowed of the sinking fund which, according to the prescribed tables, will recoup the amount so . expended to the lessee in possession over the unexpired period commencing from the date of his possession of the lease.

Any deduction allowed for the remuneration of directors, managers, and persons concerned in the management of the business shall not exceed the sums allowed for those purposes in the last pre-war trade year or a proportionate part thereof as the case requires, unless the Commissioner, owing to- any special circumstances or to the fact that the remuneration of any managers or managing directors depends on the profits of the business, otherwise directs :

Provided that in the case of a business which has been established since the commencement of the present state of war -

if the business is owned by a company - the total deduction allowed for the remuneration of directors shall not, unless the Commissioner otherwise directs, exceed the sum of One thousand pounds;

if the business is owned by an indi vidual - a deduction of Three hundred pounds per annum or such greater sum as the Commissioner directs shall be allowed if the owner devotes the whole of his time to the business; and

if the business is owned by a partnership - a deduction of Three hundred pounds per annum or such greater sum as the Commissioner directs shall be allowed in respect of each partner who devotes the whole of his time to the business or a part of that amount proportionate to the time devoted to the business when part only of his time is so devoted.

No deduction shall be allowed in respect of any transaction or operation of any nature, where it appears, or to the extent to which it appears, that the transaction or operation has artificially reduced the amount to be taken as the amount of the profits of the business for the purposes of this Act.

A deduction shall be allowed of all profits which are set aside for the purpose of any profit-sharing scheme between employer and employee, so far as such profits have been distributed among the employees, within six months after the close of the accounting period, or such further time as the Commissioner may allow.

Where a company, either in its own name or in that of a nominee, owns the whole of the ordinary capital of another company carrying on the same business, or so much of that capital as under the general law a single shareholder may legally own, the provisions of this Act as to war-time profits tax and the prewar standard of profits shall apply as if that other company were a branch , of the firstnamed company, and the profits of the two companies shall not be separately assessed.

Where in the case of any business -

the net result of the business since the first of the three selected pre-war trade years and up to the end of the accounting period immediately preceding that upon which the current assessment ‘is being made has shown a loss; and

any part of the profits of the current accounting period has been applied in extinction of that loss; then in estimating the profits a deduction shall be allowed equal to the amount of profits so applied.

In estimating the profits, no account shall be taken of income received from investments, except in the case of businesses where the principal business consists of the making of investments. Where account is taken of any such income -

interest derived from the bonds, debentures, stock, or other securities of the Commonwealth issued for the purposes of Commonwealth War Loans shall not form part of the wartime profits; and

the income has been derived from profits in respect of which any payment or repayment of war-time profits tax has been made under this Act, such deduction or addition shall be made in computing the profits as will make proper allowance for that payment or repayment of tax.

In the case of any contract extending beyond one accounting period from the date of its commencement to the completion thereof, and only partially performed in any accounting period, there shall (unless the Commissioner, owing to any special circumstances, otherwise directs) be attributed to each of the accounting periods in which the contract was partially performed, such proportion of the entire profits or loss or estimated profits or loss in respect of the complete performance of the contract as is properly attributable to such accounting, periods respectively, having regard to the extent to which the contract was performed in such periods.

Amendment (by Mr. Groom) agreed to-

That the words “ Subject to this Act “ be inserted after the numeral “ (1).”

Sir WILLIAM IRVINE:
Flinders

.- Will the Minister explain the position of a business house whose principal domicile is inEngland, with a branch house here, in which it makes the most, or a large proportion, of its profits ? How is it to be safeguarded from paying double tax - war tax in England and war tax here?

Mr GROOM:
Darling Downs · NAT

– The intention is to tax all profits made in Australia, but if a company is also taxed in England, sub-clause 3 provides that “ a deduction shall be allowed for any sum paid in respect of the profits on account of any war-time profits tax, or similar tax, imposed in any country outside the Commonwealth.”

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– That gives England the first claim upon profits made on such businesses in Australia.

Mr GROOM:

– No. We cannot prevent outside countries from taxing what is produced in Australia, but we do not purpose to tax profits earned anywhere else than in Australia and Papua.

Sir William Irvine:

– Does the English Government tax people on all their business, no matter where the profits are derived ?

Mr GROOM:

– I am inclined to think they do, but will have the matter looked up.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Minister may have the best intentions, but he is giving England the first claim upon the profits of an English business carried on in Australia.

Sir John Forrest:

– No.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If a company carrying on business principally in England happens to open a branch here, it will be taxed in England on its profits, and England will get the benefit of the corpus of profit made by the company. An English company may have branches all over the world. They may have a branch in America, Canada, Australia, and New Zealand. The English revenue will get the benefit of the profits made on the whole business of the company. We are simply standing back and saying, “ We will let you off the tax because England has taxed the whole business.” I do not want to say that the profits of the company made in Australia should pay double, but there should be some arrangement by which the tax on the profits made here shall not go into the English revenue.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– A few moments ago the honorable member for Flinders (Sir William Irvine) asked whether the English Act did operate on profits earned by English companies in Australia. I learn from the Commissioner that the British Act operates to the extent of 80 per cent. of the profits. We are allowing a deduction of 80 per cent., and our legislation will apply to only 20 per cent ; otherwise it would be harsh.

Sir ROBERT BEST:
Kooyong

– In the case of a British company carrying on business in Australia by means of branches established here, it is taxed to the extent of 80 per cent. of the profits which it makes and which taxation goes to Great Britain.

Sir William Irvine:

– From any part of the world?

Sir ROBERT BEST:

– Yes. According to this Bill, the profits made by the company in Australia will be directly liable to the Australian tax, and the balance, if remitted to England, will be liable to further taxation. This is a process of double taxation, but not double taxation to the extent which was suggested in the course of the debate here. The profits made in Australia of a British company with a branch here are not liable to British taxation until they are remitted to the Old Country, but when that takes place, then the one incomewill be taxed both in Great Britain and in Australia. First of all, all the company’s profits made in England and entering into England from abroad will be liable to 80 per cent. taxation.

Sir William Irvine:

– What you mean is that 80 . per cent of those profits will be liable to taxation.

Sir ROBERT BEST:

– Yes. As regards the profits made in Australia, those profits, forming portion of the one income, will be first liable to our tax, and the balance remitted to England from Australia will be liable to a further 80 per cent. taxation, making in all probably, according to a calculation which has been made, taxation to the extent of 95 per cent.

Sir William Irvine:

– How does the deduction meet that case ?

Sir ROBERT BEST:

– The deduction is put in rather an unfair form. I want honorable members to realize that it is not a deduction from the amount of the tax actually paid, but a deduction only from the profits. Suppose that a sum of £100 is paid in Australia for war-time profits taxation. In the English Act there is a corresponding provision which will permit the deduction of that £100 in the balancesheet from the profits. This clause is a copy of the British section, which seeks to do the same thing, but it only makes an allowance where there is a direct payment. It does not make an allowance where there is a liability to pay. On a construction of this Bill, the position would probably be that as the company had not made a payment abroad, it could get no deduction here, and afterwards, having been taxed here, it would have no chance of getting a refund. This proposal should provide as to the company’s liability to pay abroad rather than as to the actual payment made abroad.

Sir William Irvine:

– Subject to that alteration, this provision would meet the injustice which you speak of ?

Sir ROBERT BEST:

– Personally I am opposed to the provision altogether.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– You would protect the result of the Australian trade, whether the money went to America, Japan, or any other part of the world.

Sir ROBERT BEST:

– I am only concerned about the Mother Country.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The Bill does not discriminate.

Sir ROBERT BEST:

– No, but I should like the Bill to discriminate in favour of the Mother Country, because I feel that our obligations to her are so great that weought not to be too nice, particularly in view of the fact that we have made an effort at all times to get rid of this process of double taxation. By sub-clause 3 of this clause we reintroduce the principle of taxing the same income twice. If the taxpayer here were permitted to deduct from his tax the actual payment made abroad, it would mean the loss ‘of a certain amount of income to Australia, but I contend that we should not be too exacting with the Mother Country in a matter of this kind and should be prepared to make a little sacrifice.

Mr Page:

– Oh, the dear old Mother Country.

Sir William Irvine:

– “ The dear old Mother Country “ has been supporting us during this war.

Mr Page:

– That is all right.

Sir William Irvine:

– Where would you be without her aid ?

Mr Page:

– I admit that.

The CHAIRMAN (Hon J M Chanter:

– Order !

Sir ROBERT BEST:

-I would be very pleased if that concession were made to the Mother Country at this time. It would mean the loss of certain revenue to us, but it would be a just concession, and have the effect of encouraging the development of British manufactures in Australia rather than putting them at a grave and serious disadvantage, as they will be put by reason of the competition here. They will be put to a disadvantage to the extent of the payment which they will have to make on the same income when it reaches the Mother Country. Furthermore, the Mother Country has to some extent endeavoured to improve the position of Australia in this regard as to income tax, because her Finance Act provides that if payments have to be made in any of the Dominions then the maximum tax which will be levied by the Mother Country will be only 3s. 6d. in the £1, although in other circumstances it might run to 6s. or 7s. in the £1. They are giving credit for any actual payments made in the Dominions over and above the 3s. 6d. in the £1. That is a very substantial concession to us by the Mother Country. We should endeavour to meet her in the same way by granting, if not a complete concession, at least a concession to the extent which, she has been prepared to make to the Dominions.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– How would you meet the case of liability to pay?

Sir ROBERT BEST:

– If the taxpayer were able to prove here his liability topay abroad then he should not be charged for the present, but he should be under a guarantee to produce the receipt for the payment when it is actually made.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– You were not up all night.

Sir ROBERT BEST:

– My speech is completely apropos to the subject before the Chair.

Sir William Irvine:

– The honorable member for Kooyong is the only member who understands this particular part of the Bill,and I think that we ought to hear him.

Sir ROBERT BEST:

– Part II. of the Imperial Finance Act (No. 2) - 6 and 7, George V. - provides for relief in respect to colonial income tax. Section 43 reads : -

If any person who has paid, by deduction or otherwise, the United Kingdom income tax for the current income tax year on any part of his income at a rate exceeding 3s. 6d. proves to the satisfaction of the Special Commissioners that he has also paid any colonial income tax in ‘respect of the same part of his income, he shall be entitled to repayment of a part of the United Kingdom income tax paid by him equal to the difference between the amount so paid and the amount he would have paid if the tax hud been charged at the rate of 3s. 6d. or, if that difference exceeds the amount of tax . on that part of his income at the ‘ rate of the colonial income tax, equal to that amount.

Mr Groom:

– It is dealing with the income tax.

Sir ROBERT BEST:

– Exactly. That is the concession which is made by the Mother Country to the Dominions.

Mr Groom:

– The English War Profits Tax -Act is exactly the same as our own measure.

Sir ROBERT BEST:

– No. I believe that there is also a section in the War Profits Tax Act carrying out the . same principle. But it is the principle which I am contending for. It shows that the Mother Country has endeavoured . to meet us, and our reply to that endeavour is that we will not meet her, but will tax the same income twice in the manner set out in this provision.

Sir William Irvine:

– Would you mind suggesting the particular amendments which you have in your mind ?

Sir ROBERT BEST:

– It is very difficult to formulate amendments, but what I would suggest is that, by the insertion of a few simple words, we should insure to the taxpayer here, who represents a branch establishment, the liberty to deduct the actual payment made by him from his tax here.

Mr Groom:

– You mean to nave the deduction taken from the tax ?

Sir ROBERT BEST:

– Instead of from the profits.

Mr Groom:

– That would wipe out the tax altogether.

Mr Page:

– That is what he wants.

Sir ROBERT BEST:

– So far as the Mother Country is concerned it would undoubtedly.

Mr Sampson:

– Would you limit that concession to the Empire?

Sir ROBERT BEST:

– I would limit it to within the Empire, so far as the Mother Country or a sister Dominion is concerned. In Canada a deduction of the actual amount paid is allowed to be made by the taxpayer. I have a copy of the Canadian Act. First it imposes a tax, and then it goes on to say -

Provided, however, that the amount of any tax paid by a person under the provisions of the Finance Act (No. 2) 1915, passed by the Parliament of the United Kingdom of Great Britain and Ireland, or under any legislation for raising revenue for the present war in force in India, or any colony or dependency of His Majesty, or in France, Bussia, Italy, Belgium, Japan, Serbia, Montenegro, Portugal, and any other country that may hereafter become an Ally of His Majesty in the present war, or the colonies or dependencies of any of these countries, in respect of any business liable to taxation hereunder shall be deducted from the amount of the tax that would otherwise be payable by such person under this Act.

In Australia, the taxpayer should be allowed to deduct any tax actually paid in the Mother Country from the tax which he is liable to pay here. The effect of such a provision would be to avoid double taxation.

Sir John Forrest:

– Would you take in Montenegro, too?

Sir ROBERT BEST:

– I did not say so. I confined myself to the British Empire. It is only in respect to the British Empire that I am seeking the concession.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– If the honorable member will compare the British legislation with this Bill he will see that our provision is actually reciprocal with that in the United Kingdom. This is the provision in the British Act : -

Deductions shall not be allowed on account of the liability to pay, or the payment of, income tax or excess profits duty, hut a deduction shall be allowed (if not otherwise allowed by means of the adoption of the principle of the Income Tax Acts) for any sum which has been paid in respect of the profits on account of any excess profits duty, or similar duty imposed in any country outside the United Kingdom.

We have practically copied that paragraph, but as the United Kingdom are ahead of us in their financial year, in every case payment of the taxation is made there before it is made in Australia. The . United Kingdom gets in first, so that there is no need for us to repeat the words “ liability to pay.” If the contention of the honorable member, that we should allow the deduction to be made off the amount of tax payable on account of war profits, were to be carried into effect, the Commonwealth Treasury would collect nothing from the British investor earning profits in Australia. If the excess profit is £100, and the United Kingdom collects £80, it leaves only £20 for us to tax. The utmost we could get of that £20 would be 75 per cent., which would amount to £15; but inasmuch as £80 has already been paid to the British Treasury, if we permit that payment to be deducted from the amount due to the Commonwealth Treasury, we will collect nothing out of the £100.

Mr Boyd:

– What about the poor fellow who pays? He will die of financial paralysis.

Mr GROOM:

– We are very sorry for him, but we apply to him only the principle that we apply to every one else. We simply tax the proportion of the profits available here, and the Act in the United Kingdom works out exactly in the same way as our measure will. We do not propose to treat British companies worse than the United Kingdom treats Australian companies. The two measures are quite reciprocal in this regard.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Does the British legislation discriminate between foreign companies and British companies ?

Mr GROOM:

– It allows the deduction in Tespect of any country outside the United Kingdom, and we allow it in respect to any country outside the Commonwealth. The two provisions are identical.

Mr Sampson:

– The Canadian system seems to be the better one.

Mr GROOM:

– That is a matter of opinion. The honorable member for Kooyong (Sir Robert Best) has charged us with treating the United Kingdom unfairly. I maintain that the Imperial Parliament has treated us in exactly the same way as we propose to treat the United Kingdom.

Mr PAGE:
Maranoa

.- In the person of the honorable member for Kooyong I have listened this morning to one of the best advocates of “ boodle “ that I have heard for many a year. When the Income Tax Assessment Bill was under consideration in this Parliament I remember the honorable member shedding crocodile tears about the poor widow and the poor orphans who would be made to suffer under the income tax. The honorable member jsaid that the heavens would fall and that before six months passed the Government would be only too pleased to bring in an amending Bill to alter that “iniquitous” tax. We have heard him say exactly the same thing today in his pleading for “ boodle.” He has told us what he would do for the “Dear Old Mother Country.” He is not doing anything for the “Dear Old Mother Country,” but he is doing something for the “ boodleier “ in the “ Dear Old Mother Country.” No person will invest . his money in Australia because of any philanthropic feeling towards Australia, and if money is earned in Australia the person who earns it, though he may not live here, is just as much entitled to pay taxation upon it as I am to pay taxation on what I earn.

Mr Sampson:

– The honorable member does not forget that we have a great deal of country in the north that we are anxious to have developed?We want to encourage British capital to come out here and develop that country.

Mr PAGE:

– If British capitalists can see that they will benefit by investing their money in Australia they will do it. Is it contended that all outside capital should be freed from taxation and that all Australian capital should pay taxation?

Sir Robert Best:

– The honorable member’s contention is too stupid altogether.

Mr PAGE:

– The Honorary Minister has put the position very plainly. If we accept the proposition of the honorable member for Kooyong. there will be no tax to be collected. We hear from the Honorary Minister that our provision is exactly the same as that contained in the British Act. What more does the honorable member want ? Surely he is not crying “ stinking fish “ about his own country,, and seeking to make Australian capital pay taxation while allowing imported capital to go free.

Mr WEST:
East Sydney

.- For a long time I have watched the attitude of the British Government towards the taxation of profits earned in Australia, but after hearing the ‘ honorable member for Kooyong, if I were asked by a friend in England to recommend some person to hold his power of attorney in Australia, I should at once name a member of Parliament.. It is evident to me that the honorable member is tiring of representing Australia’s interest, and prefers to take charge of the interests of those for whom he holds a power of attorney Several firms in Sydney have endeavoured to escape this double taxation. One firm has decided to remove its registered office from London to Australia, and where firms which are doing a large business in Australia find the double taxation a strain, it is no great hardship on them to follow the example, of this firm. It is a sorry spectacle to see citizens of Australia who have- ‘gained enormous wealth, possibly by fortunate circumstances, or, perhaps, by their own exertions, leave Australia to reside in Great Britain. They are entitled to the wealth they have earned or gained, but, seeing that they do not consider their fellow Australians fit company to live with, I do not think that they should receive any sympathy from us when it is sought to exempt them from taxation upon their wealth. The point brought forward by the honorable member for Kooyong is one that is difficult to understand. It comes before this Parliament at such long intervals that honorable members lose their grasp of the. details of it. My view is that we should put a heavy tax on those people who do not consider that the people of Australia are fit company for them.

Mr Sampson:

– What about moving an amendment to that effect?

Mr WEST:

– If members of the Government side have not sufficient influence with the Ministry to induce them to alter the Bill, it is not my business to do it. I leave it to the Government to attend tc the matter.

Sir John Forrest:

– We will attend to that.

Mr WEST:

– I believe the Treasurer will, because he is Australian in sentiment. I hope this is the last occasion on which we shall hear honorable members pleading the case of those who, while drawing their incomes from Australia, live abroad, because they consider that Australian society is not fit for them. We should discourage people living abroad and spending in foreign countries money made in Australia.

Sir WILLIAM IRVINE:
FLINDERS, VICTORIA · ANTI-SOC; LP from 1910; NAT from 1917

. -New Zealand ‘has made a reciprocal agreement with the Imperial authorities to the effect that where a . tax is levied in both countries on the same profit the greater rate only shall be collected, and the amount collected shall be divided between the two Governments. That is a . reasonable and practicable method, and I should like an intimation from the Honorary Minister that the Government will, at all events, consider this provision.

Mr Groom:

– The Treasurer will give it sympathetic consideration.

Mr HIGGS:
Capricornia

.- The point of view of the taxpayer is that he ought not to be called upon to pay this tax, which is a Defence tax, in more than one part of the Empire, and it was the intention of the Government of which I was Treasurer to endeavour to arrange that he should not be required to do that. The question was raised in the House of Commons when the Excess Profits Bill was being discussed in Committee, and Mr Montague, representing the Chancellor, said, in reply to Mr. Smith -

Supposing the case does arise, then I can assure the honorable and learned member that if a company carrying on business in a Dominion or in India is. subject to an excess profits tax there, which may or may not be the same excess profits tax as the tax in force here, the tax so paid in the colony or in India will be deducted from the profits before they are assessed here, as an expense of the business, so that they will not have to pay twice over on the same sum. I will give an example: - Let me take a company with a pre-war standard of profit of £1,000, and let us suppose that the profit this year is £2,000. The excess profit, is therefore £1,000. Under the Bill as it stands the company will pay £400 tax - SO per cent, of the excess profits, minus £200. If there is a colonial tax of 25 per cent.,’ £250 will be charged there, and the profit for the purpose of our duty will be taken, not at £2,000, but at £1,750, and the excess will be £750, so that the excess profits tax to be paid in this country, instead of being £400, will be £275. So far as that is concerned, I think the Bill goes far enough to meet a hypothetical case.

A point has been raised that a company liable to be taxed would not get the exemption unless the tax had been paid, but I think the Government could meet that case by undertaking that where a company was not allowed exemption for the tax to which, it was liable, but had not paid, if the company produced evidence later that it had paid this tax, it should be granted a refund ; but there is no doubt that a reciprocal arrangement, such as that between the United Kingdom and New Zealand, to share the excess profits, would be a good one.

Amendments (by Mr. Groom) agreed to-

That in sub-clause 1 the words “business carried on in “ be left out, and the words “ sources within “ be inserted in lieu thereof.

That the following proviso be added to subclause ls - “ Provided that the profits accruing to a person not resident in Australia from the sale by an agent in Australia of the goods of that person shall not be deemed to be profits for the purposes of this Act, unless the principal has a branch and carries stock in’ Australia or- consigns his goods to an agent for sale in Australia.”

That in sub-clause 2 the words “ under the Income Tax Assessment Act 1915-16 “ be left out, and the following words inserted in lieu thereof : - “ for the purposes of the Commonwealth Income Tax.”

Mr PIGOTT:
Calare

.- I moye -

That after sub-clause 2 the following words be inserted: - “ 2a. Deductions for all money expended in the destruction of scrub, suckers, seedlings, and . rabbits shall be allowed to such extent .as is necessary for the maintenance of an estate.”

Graziers are only allowed for maintenance the same expenditure as is specified in the Income Tax Assessment Act, which makes no allowance for such very important maintenance work as the destruction of scrub and the cutting of suckers. Throughout Australia, and particularly on the western leases of New South Wales, there are millions of acres of land where the - yearly destruction of scrub is absolutely necessary to maintain the productivity of the land. By this work the income of the pastoralist is very much enhanced, and the Income Tax Commissioner receives a larger amount of taxation. A man who paints his house every two or three years is allowed that expenditure as part of his cost of maintenance, and it is just as important that allowance should be made for expenditure incurred in order to maintain the full carrying capacity of a property. In the Bogan district I met a pastoralist who had been cutting the’ scrub on his property for the last thirty years, and if he did not attend to that work regularly the land, instead of carrying a sheep to 2 or 3- acres, would carry, perhaps, not more than a sheep to 10 acres. The destruction of rabbits is another important work, and if it is riot attended to the pastoralist is penalized. Since the war a. number of graziers have spent as much as 30s. per acre on rabbit destruction. In my own district, a man who has 13,000 acres, has spent £7,000 on this work, as a result of which the carrying capacity of the country is increased by 50 per cent., and the quality of the stock > has been improved by 25 per cent. Those improvements mean increased profit and, incidentally, increased revenue to the Commonwealth through the income tax. Only a month ago I visited a friend who had been scrubbing his land’ for some years, and he was surprised to find last’ year that, owing to the excessively wet weather, big forests of suckers had sprung up, and he will have to do the whole of the work over again. I hope the Treasurer will give this amendment his sympathetic consideration.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

.- In this Bill we have accepted, generally speaking, the principles governing assessment of the Income Tax Act, and under that Act allowance is made for annual recurring expenditure for the maintenance of property. This will cover, to a very great extent, the maintenance expenses to which the honorable member has referred.

Mr Pigott:

– I can assure the honorable gentleman that the Commissioner of Taxes does not allow those expenses.

Mr GROOM:

– I am informed by the Commissioner that such expenses are allowed as deductions.

Mr Boyd:

– If that be so, there should be no objection to the amendment.

Mr GROOM:

– There is an objection to accepting the amendment when what the honorable member contends for is already provided for.

Mr Pigott:

– I referred to, amongst other things, the destruction of rabbits.

Mr GROOM:

– The destruction cf rabbits is allowed for. Deductions are allowed under the Income Tax Act for annual and recurring outgoing for the maintenance of property. It would only complicate matters to accept the amendment. I think the honorable member for Calare (Mr. Pigott.) must be mistaken when he says they are not allowed for under the Income Tax Act: Perhaps he could give a concrete case.

Mr Pigott:

– I could mention the case of Mr. Reginald Fagin, who was not allowed to deduct these expenses.

Mr GROOM:

– I shall ask the Commissioner of Taxes to look into that t>articular case. Where expenditure of the kind is of annual recurrence for the upkeep of a property, it will be allowed for, and I therefore ask the honorable member not to press his amendment.

Mr BOYD:
Henty

.- This is an attempt by an old Minister to impose on a new member.

The CHAIRMAN CHon J, M Chanter:
RIVERINA, NEW SOUTH WALES

– I think that is not in order. I ask the honorable member to withdraw it,

Mr BOYD:

– I certainly will withdraw the statement. I did not mean it in any offensive way.’ The Honorary Minister says that these expenses are already allowed for under the Income Tax Act, and will be allowed for under this Bill. If that be so, there should be no objection to accept the amendment. It is not a good reason for objecting to it to say that it would complicate this measure. The proposal is to make deductions in respect of legitimate expenditure for the upkeep of the property returning the taxable profits, and those are deductions which ought to be made.

Sir John Forrest:

– Honorable members will not accept the assurance of the Government that they are already provided for.

Mr BOYD:

– The honorable member for Calare (Mr. Pigott’) says that they are not, and lias mentioned a specific case.

Sir John Forrest:

– Surely the Commissioner of Taxes knows his own business.

Mr BOYD:

– I am not saying that the Commissioner of Taxes is wrong, but the honorable member for Calare has mentioned a particular case in which he says these expenses were not allowed.

Mr Manifold:

– The cost of the destruction of rabbits , is allowed for every year.

Mr BOYD:

– If it is not, it ought to be.

Sir John Forrest:

– So is every recurring expenditure of the kind, but not capital expenditure for the improvement of an estate.

Mr BOYD:

– We should not leave the matter in doubt, and there is some doubt as to whether these expenses are allowed for.

Mr Groom:

– There is no doubt. The honorable member would suggest that we should run to Parliament to meet every case in dispute between a taxpayer and the Commissioner of Taxes.

Mr BOYD:

– No, but we are dealing with a new Bill, and a different principle, and any doubt upon the matter should be removed.

Mr LAMOND:
Illawarra

– The’ principle involved in this case is a very simple one. Any expenditure that is capital expenditure is not entitled to be allowed for, but the Commissioner of Taxes makes allowance for maintenance expenditure. To include in this Bill a direction ‘that expenses should be allowed, even if they represent purely capital expenditure, would be to alter the law with regard to income taxation in an unjustifiable way.

Amendment negatived.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move - .

That after sub-clause 2 the following new sub-clause be inserted: - “ (2a) Deductions shall be allowed for -

  1. all losses by fire, accident, robbery, or embezzlement which are proved to the satisfaction of the Commissioner to have occurred and to be irrecoverable either directly or by way of insurance;
  2. alterations (but not additions) to plant, machinery and premises for purposes of the business which have been charged to revenue account; and
  3. all bad debts proved to the satisfac tion of the Commissioner to have been written off in the accounting period.”

These deductions are not allowed under the Income Tax Act, but it is considered that they are properly allowable under this Bill.

Amendment agreed to.

Amendment (by Mr. Groom) agreed to-

That in sub-clause 3, in the proviso, after the word “ paid “ the words “ in Australia, in respect of the profits “ be inserted.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That paragraph 6, of sub-clause 5, be left out, with a view to insert in lieu thereof - “ (b) In the case of a mining business, other than mining for coal, there shall be deducted, in addition to any other deductions allowed by this Act, so much of the profits of the accounting period as is appropriated for development or new plant:

Provided that any of the money so appropriated, which has not been expended for that purpose at the end of the accounting period for which it was appropriated, shall be liable to tax in the financial year following that accounting period at the rate which was applicable at the time of appropriation.”

The object of this amendment is to allow in mining, other than mining for coal, deductions in respect of money spent for developmental purposes. The intention is to stimulate the development of the mining industry and to encourage existing mining ventures to open up their mines more extensively. If the part of the profits set aside for future development is not expended in the year of its appropriation for that purpose, the part not so expended will be taxed in the following year. The reason for confining the amendment to mining propositions is that they are wasting assets, and are therefore essentially different from ordinary business concerns. The amendment’ now proposed will be more advantageous to mining propositions than the sub-clause which it will replace.

Amendment agreed to.

Amendment (by Mr. Groom) agreed to-

That in sub-clause 6, paragraph a, after the word “ paid,” the words “ or a consideration in the form of material assets has been given “ be inserted.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I move -

That in sub-clause 6, all the words from “ sinking fund “ to the end of the sub-clause inclusive be left out, and the following words inserted in lieu thereof : - “ amount obtained by dividing the sum so paid, or to be expended, or the value of the consideration so given by the number of years of the unexpired (period of the lease at the date the amount was so paid, or the consideration so given, or, in the case of money to be expended within the meaning of paragraph . (&) of this sub-section, at the date of his possession of the lease.”

This is intended to simplify the annual deduction on account of the final premium paid on a lease, or money expended on a lease. It is proposed by a subsequent Bill to amend the Income Tax Assessment Act in this respect, and it is necessary to have the provision identical in this measure also.

Amendment agreed to.

Mr GROOM:
Darling DownsHonorary Minister · NAT

– The Treasurer yesterdayafternoon announced that he would make amendments to give effect to the exemptions of £500 in small businesses - £300 for management and£200 for ordinary exemption, or a total exemption of £1,000. In pursuance ofthat intention, I move -

That the proviso to sub-clause 7 be left out, and the following inserted in lieu thereof : - “ Provided that, in the case of a business owned by a company in which, owing to its recent commencement, there has not been one pre-war trade year, the total deduction allowed for the remuneration of directors, for their services in every capacity, shall not, unless the Commissioner otherwise directs, exceed the sum of £1,000 per annum:

Provided, further, that in the case of a business (other than a business in which the pre-war standard of profits has been computed under paragraph (b) of sub-section (5) of sec- tion 15 of this Act) in which the pre-war standard of profits does not exceed £500 -

  1. if the business is owned by an individual, a deduction of £300 per annum, or such greater sum as the Commissioner directs, or, in the case of a business in which the pre-war standard of profits exceeds £500, but is less than £1,000, such sum as represents the difference between £1,000 and the pre-war standard of profits, shall be allowed, if the owner devotes the whole of his time to the business;
  2. if the business is owned by a partnership, a deduction of £300 per annum, or such greater sum as the Commissioner directs, shall be allowed in respect of each partner who devotes the whole of his time to the business, or a part of that amount proportionate to the time devoted to the business where part only of his time is so devoted.

Provided also that in the case of a business in which the pre-war standard of profits has been computed under paragraph (6) of subsection (5) of section 15 of this Act -

  1. if the business is owned by an individual, a deduction of £300 per annum, or such greater sum as the Commissioner directs, shall be allowed, if the owner devotes the whole of his time to the business;
  2. if the business is owned by a partnership, a deduction of £300 per annum, or such greater sum as the Commissioner directs, shall be allowed in respect of each partner who devotes the whole of his time to the business, or a part of that amount proportionate to the time devoted to the business where part onlyof his time is so devoted..
Sir Robert Best:

– The first proviso refers to a business commenced within four years. Do all those which follow refer only to businesses of’ that kind, or to all businesses?

Mr GROOM:

– The intention is to apply it to all businesses.

Mr Sinclair:

– Is a partner entitled to director’s fees in addition?

Mr GROOM:

– A partner could not draw a director’s fee, but we are allowing each partner an exemption of £300, at least, for the cost of his management.

Mr Boyd:

– How will the phrase “whole time” be interpreted? For instance, will I be regarded as giving my whole time to my business when attending to my political work ?

Mr GROOM:

– I think the honorable member would be regarded as giving the whole of his time to his business. If an individual has only one business, and that is his means of earning, the mere fact that, in a spirit of patriotism and selfsacrifice, he gives his valuable services to his country, can hardly be taken to debar him from the exemption.

Sitting suspended from 12.55 to 2.15p.m. (Friday) .

Mr GROOM:

– During the adjournment for lunch the amendment has been printed and circulated. If honorable members will be good enough to look at the sheet they will see that it carries out the intention of the Treasurer as announced.

Amendment agreed to.

Mr TUDOR:
Yarra

.- While we are waiting for the Honorary Minister to submit the next amendment I think that I might make a few general remarks for the consideration of the Treasurer (Sir John Forrest). Never in the life of this Parliament have I seen a finance Bill handled in the way in which this measure has been.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– We never had a Wartime Profits Bill before.

Mr TUDOR:

– I know that, but I venture to repeat that no member of this House has ever seen a finance Bill handled as this measure has been. No honorable member who has followed its course closely can state what provisions have been left out, what provisions have been put in, and what clauses have been postponed.

Mr Groom:

– The honorable member knows that that statement is not correct.

Sir John Forrest:

-We are doing the best we can.

Mr TUDOR:

– I rose in all friendliness to make a suggestion to the Treasurer. We are all anxious that a measure of this sort should be passed. That it will fall short of what we hope is now well known to many honorable members. I understand the Senate cannot initiate financial legislation. If it should bring other persons within the scope of this tax I wish to know how the measure will stand. While in the case of ordinary legislation the Senate can insert new clauses and alter legislation generally it cannot deal in that way with a financial measure.

Sir Robert Best:

– Yes; it can make requests.

Mr TUDOR:

– I think that the honorable member, who has followed the progress of this Bill very closely, will realize that it is our duty to see that anything we leave undone here shall be done in the Senate, because our desire is to make the Bill as good as possible, no matter how we may disagree on the general principle. The Honorary Minister will remember that when the present Prime Minister and myself were on the Ministerial side, and the. present Minister for Home and Territories and himself were on this side dealing with the Navigation Bill, we were in a similar position. We were running through the clauses practically a dozen at a time, when Ministers were so pushed that they were not quite sure as to how they were legislating. That is why I urge the Minister to exercise greater care than usual before this measure is allowed to leave another place so that we may not be called upon to amend its provisions before it is brought into operation.

Mr LECKIE:
Indi

– I wish to understand the position, as I entered the Chamber a little late. I desire to know, sir, whether you put the amendment of the Honorary Minister to omit the proviso to sub-clause 7, and to insert new provisos, as one question?

The CHAIRMAN:

– The question was put in the usual way.

Mr LECKIE:

– Should you not have put the amendment in two questions, sir?

The CHAIRMAN:

– Yes ; the amendment was so put.

Mr LECKIE:

– I am sorry that I missed the opportunity to speak to the new provisos which’ have been inserted.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– If the honorable member for Indi wishes to make any remarks on the new provisos the clause, as amended, has yet to be put, and on that question he can raise any point he likes, and, if necessary, he can at a later stage move that the clause be recommitted. I move now-

That sub-clause 9 be amended by the addition of the following words: - ‘‘Provided that for the purposes of this sub-section a director shall Dot be deemed to be an employee.”

The amendment deals with the distribution of profits so as not to allow a managing director to be considered an employee for the purposes of the section.

Amendment agreed to.

Amendment (by Mr. Groom) agreed to-

That after the word “ same “ in sub-clause 10, the words “ class of “ be inserted.

Mr SAMPSON:
Wimmera

.- I wish to move an amendment to alter the calculation in reference to pastoral industries. So far as I understand this provision, any loss which is incurred during the year between the pre-war standard period and the accounting period can only be calculated in connexion with the pre-war trade period. I think that if there is any net loss it might be carried over in order to reduce the profit in the accounting period. I wish to provide that the loss of the year 1914-15 in connexion with the pastoral business shall be carried forward and placed against the profit earned during the next two years, that is, during the accounting period. That alteration would enable the pastoral industry to start at the beginning of the drought period from scratch, and permit losses incurred during 1914-15 to be recovered during the accounting period of 1915-16 and 1916-17. That is, I think, a very fair proposal. We know that during 1914-15 stock in Australia was saved only because the pastoralists “were assisted by financial institutions. That was in the national interests as well as in the interests of the pastoralists themselves.

Mr Groom:

– What do you call the drought year ?

Mr SAMPSON:

– From the 30th June, 1914.

Mr Groom:

– You would enable the losses made between 1914 and 1915 to be set against the profits made in the two subsequent years, covering the accounting period ?

Mr SAMPSON:

– My proposal is that any loss sustained because of the drought may be carried forward and set. off against the profits of the accounting period. The terribly destructive effects of the drought of 1914 are well known. Australia’s flocks of sheep were depleted by 20,000,000 head, and several million head of cattle were lost. But the actual loss of stock did not represent the total loss sustained. Millions of pounds had to be spent by pastoralists in the purchase of fodder at high prices in order to keep their stock alive. One pastoralist spent over £50,000 in this way, and then lost half his sheep. It is only fair that these great losses sustained during the drought period should be taken as a set-off against the profits made during the two subsequent years, and I think that, if we amend the clause in the way I suggest, it will meet the case. I move as an amendment -

That after “ business “ in line 1 of sub-clause 11, the words “ except a pastoral business,” bc inserted, and that the following sub-clause be added: - “ Where in the case of any pastoral business, (a) a loss has been made during the period between the last pre-war year and the first accounting period, and (6) any part of the profits of the current accounting period has been applied in extinction of that loss, then in estimating the profits a deduction shall be allowed equal to the amount of profits bo applied.”

The effect of the amendment would be that, instead of setting the loss on the drought year back against the pre-war profits, in order to discover whether there is a deficiency to carry forward, the loss in the drought year will be applied against the profits earned during the following two years.

Sir John Forrest:

– Would not that argument apply to all businesses?

Mr SAMPSON:

– I think not.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If it is limited to pastoral businesses, it will hit the very people who financed the pastoralists during the drought.

Mr SAMPSON:

– I merely apply it to the pastoral industry because it is a primary industry. I commend the amendment to the favorable consideration of the Treasurer, in order that fair relief may be given to this industry.

Sir JOHN FORREST:
Treasurer · Swan · NAT

– This is a very important matter, but it is very inconvenient that it should be brought forward “ at this late stage. The honorable member should have given notice of his amendment. . I can promise, however, that if he will let the matter stand over until the Bill is recommitted, the Treasury and Taxation officials will consider his proposal and see whether anything can be done in the matter.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– It is very necessary that something should be done in regard to it.

Sir JOHN FORREST:

– If it is so very necessary, how is. it that it has not been put forward earlier?

Mr HIGGS:
Capricornia

.- The Bill is already sufficiently liberal. In this direction it provides that any person, firm, or company can go back for six years to make up losses before being called upon to pay taxation on profits.

The object, of the amendment seems to be to allow a person to make up any losses suffered* during the war in any accounting period even right to the end of the war.

Mr Sampson:

– That is not the meaning of the amendment.

Mr HIGGS:

– I consider that the provision is already sufficiently liberal, because it .provides that in estimating the profits a deduction shall be allowed equal to the amount of profits applied in extinction of any loss sustained prior to the accounting period.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

.- I am glad that the point has been raised by the amendment suggested by the honorable member for Wimmera (Mr. Sampson). I point out to the Treasurer that it is very difficult for the average member of Parliament to ascertain exactly what the Bill means.

Mr Manifold:

– Or what the Government mean. ‘

Sir John Forrest:

– The honorable member ought to know what he wants.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– I thought that the clause made full provision for what I required. I did not recognise that there was an interval between the pre-war period and the accounting period. J can give a concrete ‘case. A. man who invested £90,000 in a station and borrowed £40,000 some years ago did not draw sixpence out of his venture prior to the drought of 1914, and at the ending of the drought his overdraft was £90,000 instead of £40,000, but he saved his stock by means of that huge overdraft. If the Government do not permit that period in which the loss was sustained to be taken into consideration he will not be allowed to set off his huge loss against his present profits.

Mr Kelly:

– Would the honorable member suggest that the increased value of the stock at the end of the period of trouble, due to the expenditure of capital, should be taken into account as a set-off?

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Undoubtedly. In his returns the man would have to put in the increased value of his stock. At the same time that increased value would not cover his immense losses.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– As a matter of fact, it would increase his difficulties under the Bill.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Yes, because it would increase his capital. Something should be done to cover the interval between the pre-war period and the accounting period.

Mr POYNTON:
Grey

.- I was also under the impression that sufficient provision had been made in the ‘Bill to meet the case to which honorable members have drawn attention. A pastoralists stock is included as his capital. If a man had a pre-war standard of £20,000 made up of stock and the value of his property, his capital may have shrunk by one-half in the first accounting period following the year of the drought. -Whilst <the Bill does not penalize him to the extent of debiting him with the capital withdrawn he is penalized in other directions. Ten per cent, on his £20,000 capital would give £2,000 as the pre-war standard of earnings. But, assuming he lost half his stock, and his returns in the accounting period, when his capital was only £10,000, again amounted to £2,000, that would -show 20 per cent, for the accounting period as against 10 per cent, in the prewar period, and he would be required to pay £500 in taxation.

Mr Kelly:

– Could not the same argument be applied to other industries t

Mr POYNTON:

– Yes. Losses by fire are covered, but not losses by flood or drought. The big floods in Queensland destroyed a considerable amount of capital. That capital existed in the pre-war period, but in the accounting period portion of it had disappeared. Yet the taxpayer has to pay on his reduced capital, and his percentage of profit is perhaps double what it was in the previous period. We could meet that situation by providing that if, in the opinion of the Commissioner, the shortage of capital in the accounting period, as compared with the pre-war period, is the result of drought, fire, or flood, the pre-war standard of capital shall be deemed to be the capital in the accounting period.

Sir John Forrest:

– We will consider that on recommittal.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- The Treasurer asked why losses by drought were not mentioned earlier. I remind the honorable gentleman that on the second reading I specifically referred to losses, by drought, and he asked me whether 10 per cent,- would not cover such losses. I said they would not. The honorable member for Capricornia (Mr. Higgs) says that the pastoralist is allowed the profit’s of six years to set off against the drought losses. I would point out to the honorable member that in the drought the accumulated profit of the six prior years disappeared by exhaustion. The provision in the Bill might recoup the pastoralist on paper, but not in fact and in substance. It was in the period when he was emerging from ‘the drought, that, by reason of the enhanced prices consequent on the drought and the war conditions, he enjoyed the most prosperous years he had ever had. Unless we allow him to set off his drought losses against his actual earnings we give him no benefit. This clause gives him nothing more than the satisfaction of reading that he can set off the losses of the drought against the already exhausted profits of the previous years. His only chance of being recouped is by setting off the drought losses against the profits of the subsequent years. The Bill does not give him actual relief.

Sir John Forrest:

– We cannot give relief to everybody.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Any relief that he might get would be by reason of the allowance of 10 per cent, on the capital. It is perhaps unreasonable to ask the Treasurer to frame at a moment’s notice a clause that will deal with losses by drought, fire, and flood, and I understand that the honorable member for Wimmera (Mr. Sampson) is likely to. -accept the assurance of the Treasurer that this clause will be recommitted?

Sir John Forrest:

– I have asked the honorable member to move an amendment on recommittal.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I think that is a fair proposal. Unless we do something to substantially remove the effect of the drought we shall be taking from men by taxation a profit which they nominally earned, but which in reality went to the men who financed them during the drought period. Prior to the drought, many of the pastoral and auctioneering firms were owed money by their clientele for stock. In some cases they had to pay 10s. and 12s. per head for the agistment of that stock during the drought, and finally the stock died. Therefore those firms would have lost both the money paid for agistment and the stock if they had not financed the pastoralists further by paying interest on their mortgages and guaranteeing their store account. The profits which the pastoralists made subsequently have been paid to the institutions or- firms which financed them, and now they are to be asked to pay 50 per cent. of those profits to the Treasurer.

Mr RICHARD FOSTER:
Wakefield

– The honorable member for Wimmera would be well advised if he accepted the promise of the Treasurer that the Government will give this matter consideration, and deal with it at a later period. The honorable member referred to the drought of 1914-15. When an honorable member speaks of a drought of one year, he is referring generally to ‘a pretty good area of country that has had a misfortune. But the way-back stations had a drought in the years. 1911, 1912, 1913, and it culminated in 1914. Some stations in 1911 shore 100,000 sheep, and in 1915 only 18,000 sheep, and then the shearers had to go all over the run to pick up the sheep, because their condition was so poor that they could not be brought into the shearing sheds. I ask the Treasurer to allow the Commissioner to deal specially with such cases, with a right of appeal to the Board. In two or three good years the stations have built up their flocks, and the income tax has been hitting them up each year because they had to return the sheep and. cattle at a certain value, and pay interest on them. It was hard, under such conditions, that men should pay taxation on profits which were only bookkeeping profits. In some cases - particularly of cattle stations- before the stock was matured and placed on the market, another drought occurred, and they also were lost. I am perfectly satisfied to leave this matter in the hands of the Government, because I believe the pastoralist will receive sympathetic . consideration at the hands of the Treasurer.

Mr SAMPSON:
Wimmera

.- I realize that an important amendment of this kind, affecting a large industry, requires a little more consideration than can be given to it at this juncture. I am glad to have the assurance of the Treasurer that he will give consideration to the matter, and on recommittal of the Bill I shall move the amendment again. I hope that, in the meantime, the Treasurer will endeavour to evolve some provision that will do justice to this big in-, dustry. I ask leave to withdraw the amendment, with the intention of moving it on recommittal.

Amendment, by leave, withdrawn.

Amendment (by Mr. Groom) agreed to -

That insub-clause 11, after the word “ years,” the following words be inserted: - “ (in the case of a person adopting a profits standard), or since the first one of the last three pre-war trade years (in the case of a person adopting the percentage standard).”

Amendment (by Mr. Groom) proposed -

That the following new sub-clause be inserted: - “ 11a. Where, in the case of a business in which the pre-war standard of profits is a percentage standard, it is shown to the satisfaction of the Commissioner that borrowed money has been used for the creation or acquisition of any of the assets employed for the purpose of gaining profits which are liable to tax under this Act, a deduction shall be allowed from the profits of the difference between the interest paid on borrowed money, which has not been repaid, and the statutory percentage thereon.”

Sir ROBERT BEST:
Kooyong

– I ask the right honorable gentleman in charge of the Bill to take into consideration certain facts and circumstances connected with the custom and practice of trade, and affecting the question of the capital to’ be recognised in a business. The new sub-clause now under consideration is one of some amendments which have been submitted in response to complaints concerning former provisions of the measure dealing with capital. It is now proposed that the capital of a business shall be cut down in a hard-and-fast way to that which is immediately employed in Australia. This completely ignores usage and practice commonly adopted in the carrying on of a business. I take the case of a British manufacturer having a branch establishment here. The local establishment carries high stocks and is conducted by means of a current account which varies from time to time. The amount of that current account is not the only capital employed in the business, because credit and assistance is given from the head-quarters of the business in London. To allow 10 per cent.on the current account only, or in cases where only a small amount of capital is used, ignores the ability, skill, and enterprise thrown into the business. The Government proposes that only 10 per cent. should be allowed on the borrowed money.

Mr Higgs:

– Is the honorable gentleman not losing sight of the fact that there is a clause under which, upon a case of hardship being referred to the Commissioner of Taxes, he may grant relief ?

Sir ROBERT BEST:

– That does not affect this matter. I am referring to the case of a branch establishment in Australia carried on by a mere current account. The Bill ignores all shipments on the water and raw material to be worked up for export. This kind of business is not carried on merely on the current account, but by a process of credit and of assistance from the head-quarters of the business in London.

Mr Groom:

– It is a case of credit and debit between afirm and its branches in Australia.

Sir ROBERT BEST:

– Yes; but the amendment merely takes into account, as capital, the current account or amount overdrawn.

Mr Higgs:

– The honorable gentleman wants allowance to be made for the capital invested in the business in both countries.

Sir ROBERT BEST:

– No; but I think that there should be recognition of the floating capital on hand from time to time and represented by goods on the water, for instance, and the assistance given to the branch in Australia by the head-quarters of the firm in England.

Sir John Forrest:

– Has the honorable gentleman given notice of an amendment ? If he had given notice a week ago we might have been able to consider it.

Sir ROBERT BEST:

– I have already made representations concerning this matter, and I am prepared to move an amendment if that is desired. I ask the right honorable gentleman to take these matters into consideration.

Mr Groom:

– The honorable gentleman contends that 10 per cent. onthe capital is not sufficient in the cases to which he refers.

Sir ROBERT BEST:

– Yes; all that the proposed new sub-clause 11a provides for is the borrowed money. I shall quote the Canadian sections dealing with the subject, and it will be seen that they are much more liberal than is this Bill. I take another class of business, conducted by agents, or by men who act in the joint capacity of agents and merchants. In the Indian trade particularly, there is a process of what is called “Eastern credits.” Under this practice, goods are ordered from India, and arrive here. The papers connected with them are sent to London, and the London house is drawn upon three months after the arrival of the papers in London. The goods sent to Australia are in the meantime sold here, and the proceeds of the sale are employed in Australia at times from fifty to sixty days before they are remitted to London. The agent or merchant has thus the benefit of. the proceeds of those goods as capital in Australia for that period. That is quite a common practice. There is another practice followed by merchants, particularly in connexion with American firms. Goods are sent against an order or consignment; they arrive in Australia, and are paid for only by quarterly accounts, and the merchantin Australia has thus the benefit in the meantime of the capital derived from the realization of the goods. These are definite usages of trade which provide merchants here, for a time, with the capital of other persons; but there is no credit whatever given for that capital under the provisions of this Bill.

Mr Groom:

– The honorable gentleman’s contention is that there should be recognition of this stock-in-trade.

Sir ROBERT BEST:

– The goods arrive here, and are sold here, and the money is, of course, ultimately remitted to the American firms concerned.

Mr Groom:

– The honorable member’s contention is that, while the goods are here, they should be treated as capital.

Sir ROBERT BEST:

– Precisely ; because the money realized by their sale is used as capital employed in the business.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There is a provision covering capital employed for part of a year.

Sir ROBERT BEST:

– I have seen no provision in the Bill that covers cases of the kind to which I refer. There are other cases in which goods are sent from Great Britain to Australia, and four months’ credit given. The goods are sold here in the meantime, and the merchant here has the benefit, while it remains in Australia, of the capital realized by their sale. There is no provision in the Bill to cover a case of that kind. On the contrary, the measure seems to completely ignore these recognised practices of merchants.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– How does the honorable gentleman suggest that they should be dealt with ?

Sir ROBERT BEST:

– I think that credit might be given, perhaps, for the average amount of capital utilized in that way over a year.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There is a provision making allowance for capital used for part of a year.

Sir ROBERT BEST:

– The honorable member is referring to a different matter. He refers to a provision under which, where capital is increased, the pre-war percentage standard is allowed. There is also a provision dealing with cases where capital is decreased. The provision of the Canadian Act with regard to capital is as follows : -

  1. For the purposes of this Act, the capital employed in the business of any person other than an incorporated company shall be taken to be the fair value of all assets, real and personal, movable and immovable, used in connexion with such business in the accounting period.
  2. The accumulated profits employed in the business shall also be deemed capital.
  3. Any money or debts borrowed or incurred in connexion with the business shall be deduced in computing the amount of capital for the purposes of this section.

That provides for a balance-sheet, and gives relief to some extent, but not to the extent required in the cases I have stated. All that I ask the Government to do is to bear in mind the actual usage and practice of merchants, and to give men in business some credit for the capital which they are enabled to utilize as the result of the common usages followed in the transaction of their businesses.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.- I wish the Treasurer to interpret one part of. the proposed new sub-clause 11a. and I shall be satisfied if his interpretation of it is all right. I wish to know whether the term “borrowed money” will be applied to unpaid balances of purchase money?

Sir Robert Best:

– There is a subclause dealing with that.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If the Treasurer will state definitely that unpaid balances of purchase money will be covered by this proposed new sub-clause, I shall be satisfied.

Sir John Forrest:

– Unpaid purchase money will, of course, be borrowed money.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Another important point arises in the case of a business where there is a tenant. In the case of a landed proposition, where the money is wholly or partially subscribed by the owner of the business, he is allowed credit to the extent of 10 per cent. on the capital employed. Will the Treasurer see that the full allowance of 10 per cent. is made to a. tenant carrying on business on land, whether he is an ordinary or a life tenant under a will? The only deduction that will be allowed to a tenant, under the Bill as it stands, is the rent that may be payable. The object of the Bill is to impose a tax on businesses, and the whole capital of businesses such as I am thinking of consists of land, stock, management, and energy. One man provides the land, and the other provides the stock, management, and energy. Will the Treasurer so interpret the term “ borrowed money “ as to include the capital value of the land, &c, subscribed for the benefit of the lessee?

Sir JOHN FORREST:
Treasurer · SWAN, WESTERN AUSTRALIA · PROT; WAP from 1906; LP from 1910; NAT from 1917

– The land is not put into the business. It is only the rental value of the land.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The land is part of the capital employed in the business. What is the difference between this case and the case of a man who provides part of the money to carry on his business and obtains the rest on mortgage?

Mr Sampson:

– You mean that the lessee should take the place of the owner in the computation of his property? There is no other way of doing it.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Exactly. How can the Treasurer discriminate between a lessee of land and a mortgagor?

Mr Poynton:

– If the lessee did not find the capital to purchase the land, why should he get consideration?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– What does it matter to the Treasurer who subscribes the money in a business so long as he taxes, the result of the business ? The Treasurer is really putting a heavier impost on the man with little or no capital and exempting the man with capital.

Mr Kelly:

– The honorable member’s trouble seems to be that the actual occupation value of the land for a year is more than the rent paid for the land for a year.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Of course. Exactly the same principle is involved in the difference between the interest you pay on money and the amount the Treasurer tells you money is worth in this country for the purpose of carrying on a business, namely, 10 per cent. The Treasurer recognises that 7 per cent. is a fair thing for money at present, and allows another 3 per cent, for the risk you take, for the carrying on of the business, and for the knowledge you put into it.

Mr Brennan:

– “What is the lessee’s capital ?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The money he has in his stock and plant and his knowledge of the business. He induces some one else to subscribe the capital value of the land for the purpose of the business. The Treasurer will not be doing justice to the men on the land unless he enables them all to get the benefit of the 10 per cent, exemption on their businesses, whether they own the whole of the capital invested, or have borrowed some of it, or have been able to induce somebody to lend them capital to carry on the business, which capital is land.

Mr POYNTON:
Grey

.- I understand the honorable member for Wannon (Mr. Rodgers) to refer to cases where one man gives the use of land and another occupies the land and finds the stock and plant. The latter has the land free of rent, but the honorable member wants .to treat him as if the land was capitalized, or as if he had borrowed money equivalent to the purchase value of the land. That would do a monstrous injustice, because it would give him an undue advantage over a man who has to pay the capitalized value for the land he uses. If a man is renting land, the rent is credited to him.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Only the customary rate of 5 per cent.

Mr POYNTON:

– What more does he want?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I want the allowance in respect of the capital employed at the rate of the 10 per cent, the honorable member fixed in the Bill

Mr POYNTON:

– If he is paying 6 per cent., the honorable member wants the Treasurer to concede the difference between 6 per cent, and 10 per cent.?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Exactly; I want the’ other 4 per cent.

Mr POYNTON:

– If that is so, there is something in the point.

Mr LECKIE:
Indi

.- I move -

That in proposed new sub-clause IIA the words “in the case of a business in which the pre-war standard of. profits is a percentage standard” be left out.

The position at present is that, if the percentage standard is adopted, and a man has a capital of £10,000 in a business, he will first be allowed 10 per cent., which is £1,000. If he has borrowed another sum of £10,000, as he may have done, he will get the difference between 6 and 10 per cent., or he will have an exemption of £1,400. But if he has a pre-war standard i of £1,000, and has borrowed money to / the same extent, he will not be allowed a penny on that. The particular case I wish ,to deal with is that of a small proprietary firm. Where. the profits of a partnership are left in the business, it becomes capital, and so you get the ordinary increased percentage. But in the case of a small proprietary company, where the partners have drawn dividends and then, for some reason or other, have lent the money to the company because it was needed owing to the increased price of stock, then, although that is capital employed in the business, the partners are not to be allowed any percentage on it. I do not see why the Treasurer should make any difference. Surely he must see the absolute inequality of the position which he takes’ up. I, therefore, propose to move the omission of all the words after the word “ business.”

Sir John Forrest:

– If the honorable member will move to strike out the words “in which the pre-war standard of profits is a percentage standard,” I shall accept the amendment.

Mr LECKIE:

– I have already moved that amendment.

Sir WILLIAM IRVINE:
Flinders

– –It becomes unnecessary to say much about the amendment, because the Government have agreed to accept it. But I desire to mention one case which is of very considerable importance. Take the case of a man who has a pre-war standard and does not come under the percentage standard. Provided that the borrowed money was in his capital, or in his assets, at the pre-war standard, and also at the accounting period, it will not matter, because the same reduction will be made in both cases. But suppose that he had the borrowed money in his business in the pre-war period, and that between the two periods he borrowed more, money; if he is one of the class of men who have a prewar standard, he will not come under the provision. However, it is unnecessary to offer any argument, as I understand that there is no opposition tothe amendment.

Amendment (Mr. Leckie’s) agreed to.

Mr SAMPSON:
Wimmera

.- I think that we should have a statement in reply to the contention put forward by the honorable member for Wannon (Mr. Rodgers), in respect to leasehold properties. He contended, and contended rightly, I think, that lessees, especially the lessees of farms, should stand in exactly the same relation to the taxation proposals as the owners of the properties. A man who is leasing a farm and working it is employing all the capital and all the equipment which the owner of the land would have employed in order to earn a certain revenue from the farm. As the whole of the capital is employed in earning the revenue, any taxation on the profits should be calculated on the basis of the total amount of capital employed in the business. The mere fact that the owner has leased the land does not affect the position in relation to the profits earned. It may be that the lessee is paying 5 per cent. on the total value of the land to the owner as rent, but that does not affect the position. That is only a contract between the lessee and the. owner; but, for the purpose of taxation, I cannot see how we can justly calculate the tax on any other basis than the total amount of the capital employed in earning the revenue. The lessee should stand in the same relation to the Commissioner as would the owner if he were working the land in the same way. I hope that we shall have from the Minister a statement that will clear up this matter, and in a way which will be just to a large number of lessees who are producers equally with the owners.

Mr MANIFOLD:
Corangamite

– I cannot understand the Minister taking up the position that where a man owns the land, and works it himself, he should be allowed to earn 10 per cent. on the money which is in the land; but that when he leases his land to somebody else, that person is not to be allowed to earn any interest on the money in the land itself, because he is allowed to deduct the rental value which he is paying. Is there any man who rents a property in order to earn 10 per cent. on the amount of money which he invests in stock, and stock only? If there is such a man, the sooner he goes up to Yarra Bend the better for everybody. When a man puts the whole of his enterprise and energy into a proposition, he is entitled to something better than 10 per cent. If he is not to get a larger return on the money invested, he had better get off the property. It does not matter very much what the rental of the land is fixed at. We know perfectly well that there are a great many properties which are leased, and leased at what may be called a reasonable rental, though in one year a property may be worth several pounds per acre and in another year possibly only £1 per acre. If a lessee is only to be allowed to earn the interest on the money which he has invested himself, the sooner he gets off the property the better. I could cite many estates, but I will cite the case of an estate worth £60,000. The lessees have £10,000 invested in the stock. They started in 1914 - that is, the drought year- and, therefore, they have no pre-war standard. Had they started some years previously, they would have had a pre-war standard. I believe that what they made in 1914 was barely the rental. Things have improved since then. The seasons have got better; the place is able to carry what it should carry in a normal time, and in all probability their income now is about five times as much as it was then. Under the proposal of the Government, these lessees will be allowed to earn 10 per cent. on the £10,000 which they have invested in the stock on the property, and as regards everything over and above that for the year 1915-16, the Government will take 50 per cent. , and for the next year 75 per cent. These people are going to be penalized to that extent. There are thousands of such cases throughout the Commonwealth. I want to know why the people who are leasing land should not be entitled to 10 per cent. on the capital invested in the land. I think it is a fair proposition.

Sir John Forrest:

– Ten per cent. on what they invest in the land ?

Mr manifold:

– Ten per cent. on the money invested in the land.

Sir John Forrest:

– On the capital which other people have put into the land?

Mr Manifold:

– Yes. We allow the owner 10 per cent. on his land, but we penalize leaseholders, and take away practically the whole of their income because they are leaseholders.

Mr KELLY:
Wentworth

.- One excellent principle in the Bill is that there should be not more than one exemption in respect to any one particular thing. If the owner of land is allowed an exemption in respect to the whole of the area he owns, not only that portion which he may be working himself, but also that portion which he may be indirectly working on thehalves principle, will exemption be doubly claimed in the first place by the owner and in the second place by the lessee who is using the land in conjunction with the owner?

Mr Manifold:

– I was not talking of the share system.

Mr KELLY:

– I am anxious to see that the Treasurer is careful to avoid giving two exemptions in respect to the same parcel of land. If that is done I have no objection to the proposition, but I am rather suspicious that it will be one of the results if we agreed to the claim of those who are anxious to have “ all in, except the agricultural and pastoral interests.”

Sir JOHN FORREST:
Treasurer · Swan · NAT

– I am sorry that I cannot agree with the honorable member for Wannon (Mr. Rodgers). Upon capital put into a business by a man himself the percentage will apply, but a man does not put capital into a leasehold property. He pays rent for it, and so secures possession of the property, and he will be able to charge it as one of the assets on which he gets his percentage. I have given the matter consideration, and I regret that I cannot agree to accept it.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

.– The Treasurer has taken a. reasonable view of all the proposals put forward, but I am sorry he has not done so in this case. He is confusing “ capital “ with “ business.”

Sir John Forrest:

– Of what use is it to pursue the matter, seeing that the honorable member cannot succeed in getting his suggestion agreed to?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I have no desire to pursue the matter too far, but it will be found that one-fifth, if not one-fourth, of the grazing properties in Australia are conducted on rented property, and the Bill will create a discrimination between the man who carries on his business with borrowed land and the man who carries on his business with borrowed money.

Sir John Forrest:

– What about the Crown lessees?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I would make an exception in regard to them, but apart from that aspect of the question there has grown up a custom of leasing land. There is no difference between capital in the shape of land and capital in the shape of ready money. If I own working stock and experience, and another person owns some land, and he puts in the land and I pay him a certain rental, and put in my experience and my stock, we practically agree to carry on a business. What is the difference between the borrower of land and the borrower of money? The Bill creates a gross distinction by saying that if I borrow land I am not entitled to the full 10 per cent. allowed, but if I borrow money I am entitled to it, and that when capital takes the form of land it is not to get the benefit of the 10 per cent.

Mr Tudor:

– If we agree to what the honorable member suggests picture-show proprietors and factory owners, who build on leased land, will be in exactly the same position.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Of course, all capital used in carrying on a business comes under the same category, though when the capital is owned by the Crown as in the case of leased land it should stand in a different relationship.

Mr Tudor:

– I do not think that the Government will agree to the honorable member’s proposal.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I would not persevere if I thought I was asking too much. Take the case of a beneficiary under a will who has the use of land for twenty years free of rent, and sets up a business upon it. His deduction will be on his stock-in-trade only. However, seeing that the Government are immovable on the matter, I will not press it further, but the Bill will be doing an injustice to about one-fourth of the graziers of this community.

Amendment, as amended, agreed to.

Mr LECKIE:
Indi

.- Under sub-clause 7 as it now stands, inthe case of new business, the individual business man can make a profit of £1,000 before he is taxed. In the case of a partnership of two persons, each individual is allowed to earn £650 before the tax becomes payable. In the case of a partnership of three persons, each individual is allowed to earn £533 before the tax becomes payable. In the case of a partnershipof four persons each individual becomes tax- able as soon as he has earned £475. But in the case of a small company, comprising four persons, each individual becomes taxable when he earns £425. Surely this is inequitable. All men in business should be put on an equal footing. The Government promised to give this matter consideration. Apparently they have not done so. I have lost my chance of moving an amendment, but I again ask Ministers to consider the point!, and make an alteration, either on recommittal or when the Bill is before another place.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

.- The Treasurer has the matter still under consideration. I remind the honorable member that this is a tax upon businesses, not upon individuals.

Mr Leckie:

– It is a tax upon war profits.

Mr GROOM:

– The basis of the tax is the war profits earned by a business, whether owned by an individual, partnership, or a company. We have agreed that, in all cases of individual ownership, profits shall be exempted up to £1,000, whilst, in the case of a partnership, there is an extra allowance of £300 for each partner. The honorable member is dealing with new businesses started since the commencement of the war. As those businesses had no pre-war standard, the Bill allowed them two alternatives. They could take as their pre-war standard the profits of the business in which they had been previously engaged Or the salary the owner of the business had earned, plus an allowance for management, with a £200 general exemption, orthe profits could be fixed at 10 per cent. on the capital invested. Now, to meet the case of a small business, and to allow room for expansion, we are allowing a third alternative in the form of a total exemption of profits up to £1,000 before the tax operates.

Mr Leckie:

– Would not a small company or partnership expand in the same way ?

Mr GROOM:

– That is understood.

Mr Leckie:

– Does the Government say that a partnership or small private company should not exist in Australia?

Mr GROOM:

– We say nothing of the kind. We have to tax excess profits, and we allow three alternatives for arriving at the profits of new businesses. I can only promise the honorable member that I shall ask the Treasurer to look into the matter he has raised, in order to see if there is any injustice such as he has mentioned.

Mr TUDOR:
Yarra

– I understand that the last sub-clause is intended to deal with companies such as those which sell land on extended terms. A company may have sold £10,000 worth of land in one year, and have received only £2,000 as a deposit or part payment. The balance-sheet may show that they had received the whole of the £10,000. How will such companies stand in relation to this fact?

Mr Groom:

– I shall look into that point.

Mr TUDOR:

– I should like to know if it is the intention of the Government to further proceed with the Bill this afternoon?

Mr Groom:

– We are just considering that question now.

Mr TUDOR:

– I am quite willing to continue the consideration of the measure, but I know that there is no more trying position than that in which the Honorary Minister has been during the last twenty-four hours, in having to listen to the suggestions and arguments of honorable members from all sides, and to consult the technical officers of the Government. In the interests of the Minister himself, as well as in the interests of the legislation, I think it would be better for us to report progress, and to approach the Bill afresh on Wednesday. That would enable the Government to see- the extent to which the Bill has been amended, and the far-reaching effect of some of the alterations. We know that sometimes this class of legislation is found to need amendment before it can be put into operation, and if we can avoid doing that, it is our duty to do so.

Clause, as amended, agreed to.

Mr JOSEPH COOK:
Minister for the Navy · Parramatta · NAT

(By leave.) - It is clear that the consideration of the Bill in Committee will take some time to complete. These clauses are very important; indeed, they are fundamental and vital. The Government did expect to complete the consideration of the measure to-day, but I am not here to complain that it has not been completed. On the contrary, I am ready to testify that the Committee worked willingly all through the night. On the whole, honorable members did an admirable night’s work in the interests of the country.

Mr.finlayson. - The Honorary Minister is to be thanked for that.

Mr JOSEPH COOK:

– The trouble is that time is pressing with regard to this legislation, and I wish to make a suggestion to honorable members. Both the Treasurer and the Honorary Minister have given a good deal of consideration to the Bill and its amendments, and if I specially mention the Honorary Minister, who worked like a Trojan throughout the night, I am sure the Committee will agree that he is entitled to all the credit we can give him for his work. He has all his amendments ready, and I believe they are good amendments. I suggest that the Committee permit him to formally incorporate them in the Bill, so that we may get a clean copy of the measure by Wednesday. In the meantime, honorable members will be able to study them in relation to the whole Bill, and will be in a much better position to shape their attitude towards them than if they had not been moved. At all events, they will have before them a complete presentation of what is proposed by the Government with regard to the amendment of the Bill. Then, on Wednesday, the measure can be recommitted to the extent of the clauses to which the amendments relate. The Committee will then be in precisely the same position as it is in now, with the added advantage of bringing a fresh mind to bear on the amendments as actually presented in the Bill itself. In adopting that course, the Government will expect the completion of the Bill by Wednesday night. If that can be done, I think, in all the circumstances, the Committee will have done a fair thing. I wish to say how much we are obliged to honorable members for their labours of last night and to-day, and for the spirit shown throughout the consideration of this very difficult measure. I have never known an all-night sitting to be conducted in a better spirit.

Mr TUDOR:
Yarra

.- I cannot see that any injury can be done by adopting the course suggested by the Minister for the Navy, so longas this is not regarded as a precedent to be followed on some future occasion. I do not wish the Government to infer from our consent, to this course to-day, that on another occasion they may formally pass a lot of amendments and clauses on a promise of recommittal. In connexion with some legislation, that would not be a wise procedure, because we know that once a measure has passed through Committee, there is not the same keen interest taken in it on recommittal. I offer no objection to the adoption of that course to-day.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I have here all the amendments it is proposed to submit, and if they are allowed to pass, the Bill can be presented in a complete form. Clauses 3, 4, and 31 have been postponed, and they will require to be considered. I suggest that honorable members should allow all the amendments to be proposed to go into the Bill. We will recommit the measure this afternoon to put in the further amendments which have been referred to. It will be necessary to reconsider clauses 3, 4, 15, 16, and 31, and we can recommit any other clauses that require consideration.

Mr Tudor:

– The Government pledge themselves to recommit the clauses mentioned ?

Mr GROOM:

– Yes. I have the amendmentsready now to be dealt with on the recommittal. If these are agreed to, the Bill will be complete, and then on Wednesday afternoonwe can finish with the two clauses that have not yet been fully discussed, and the postponed clauses.

Mr.Fenton. - When shallwe get a clean copy of the Bill, as amended?

Mr GROOM:

– It will be circulated to honorable members at the latest on Wednesday morning, but at the earliest time possible.

Postponed clause 15 -

  1. The pre-war standard of profits shall, subject to the provisions of this Act, be taken to be the amount of the profits arising from the business on the average of any two of the last three pre-war trade years, to be selected by the taxpayer (in this Act referred to as “the profitsstandard”).
  2. Where, owing to the recent commencement of a business there has not been one prewar trade year, the pre-war standard of profits shall be taken to be the statutory percentage on the average amount of capital employed in the business during the accounting period, or, at the option of the taxpayer, an amount proportionate for the period of twelve months to the actual profits during the pre-war period during which the business was carried on:

Provided that where thebusiness is an agency or business of a nature involving capital ofa comparatively small amount -

  1. the pre-war standard of profits shall be computed by reference to the profits arising from any trade, business, office, employment, or profession of any sort, whether liable to war-time profits tax or not, carried on by the taxpayer before his new business commenced, as if it was the same business; but only to the extent to which the income from the former trade, business, office, employment, or profession has been diminished; and
  2. when the diminution in the income from the former trade, business, office, employment, or profession is less than the statutory percentage on the average amount of capital employed in the new business during the accounting period the statutory percentage shall be taken to be the pre-war standard of profits.

    1. Notwithstanding anything contained in this section, if it is shown to the satisfaction of the Commissioner that the amount of profits during the pre-war trade year selected by the taxpayer under this section was less than the percentage standard as hereinafter defined, the percentage standard shall be taken to be the pre-war standard of profits.
    2. “The last pre-war trade year” means the year ending at the end of the last accounting period before the fifth day of August, 1914, and “the last three or six pre-war trade years “ means the three or six years ending at the three or six corresponding times.
    3. Where any business is confined to the management of any particular assets, but power exists to substitute other assets for them or any of them, such a substitution shall not be deemed, for the purposes of this Act, to constitute a change of ownership of the business; but, where any such substitution has been carried out by the sale of assets and the purchase of other assets, the capital of the business shall be taken to be increased or decreased, as the case may be, only by the amount of difference between the price of the assets purchased and the price obtained for the assets sold; and the capital representing the assets purchased shall be estimated on the same basis for all the purposes of this Act.

Amendments (by Mr. Groom) agreed to-

That after the word “ standard,” line 7, the words “ but shall not in any case be less than the sum of £500 “ be inserted.

That the following proviso be inserted at the end of sub-clause 3 : - “ Provided that where there have been less than three pre-war trade years the profits standard shall be -

  1. where there have been two pre-war trade years - the average profits of those two years, or, if there has been a loss in one year and a profit in the other, the profits of the year in which a profit was made; and
  2. where there has been only one pre-war trade year - the profits of that year.”

That sub-clause 5 be left out, with a view to insert in lieu thereof - “ (5) Where, owing to the recent commencement of a business, there has not been one pre-war trade year, the pre-war standard of profits shall be taken to be the statutory percentage on the average amount of capital employed in the business during the accounting period, or at the option of the taxpayer the greater of the following amounts: -

  1. an amount proportionate for the period of twelve months to the actual profits during the pre-war period during which the business was carried on ; or

    1. a profits standard computed by reference to the income arising from any trade, business, office, employment, or profession of any sort, whether liable to war-time profits tax or not, carried on by the taxpayer before his new business commenced as if it were the same business, but only to the extent to which the income from the former trade, business, office, employment, or profession has been diminished. (5a) The provisions of the last preceding sub-section shall apply to any company which has been formed by any person or persons who had formerly been in receipt of an income from any of the sources mentioned in paragraph (b) of the last preceding sub-section, and whoprove to the satisfaction of the Commissioner that they relinquished that former income on the establishment of the company, and that they own individually or between them the majority of the shares of the company, and that they are devoting the whole of their time to the business of the company.

That in sub-clause 6 the words “amount of profits during the pre-war trade year selected by the taxpayer under this section was “ be left out, with a view to insert in lieu thereof the words “ profits standard is.”

That in sub-clause 10 the words “ or six “ be left out wherever appearing.

That in sub-clause 13 the words “but where any such substitution has been carried out by the sale of assets and the purchase of other assets, the capital of the business shall be taken to be increased or decreased, as the case may be, only by the amount of difference between the price of the assets purchased and the price obtained for the assets sold, and the capital representing the assets purchased shall be estimated on the same basis for all the purposes of this Act” be left out.

Clause, as amended, agreed to.

Postponed clause 16 -

  1. Where any asset has been paid for otherwise than in cash or created or acquired without purchase, its cost price shall be taken to be the value of the consideration at the time the asset was created or acquired, but where a business has been converted into a company or transferred to a company, and the shares in the company are wholly or mainly held by the person who was owner of the business, no. value shall be attached to those shares, so far as they are represented by goodwill or otherwise than by material assets of the company, unless the Commissioner, in special circumstances, otherwise directs. Patents and secret processes shall be deemed to be material assets.

Amendments (by Mr. Groom) agreed to-

That the words “ cost price shall be taken to be the value of the consideration “ be left out, with a view to insert in lieu thereof the words “ value for the purpose of this section shall be taken to be its value.”

That the following new sub-clause be added to the clause: - “ (4) Where a company is reconstructed, and the capital is increased, so much of the additional capital as has not been paid up in money, or is not represented by new material assets, shall not be deemed to be capital for the purposes of this Act.”

Clause, as amended, agreed to.

Postponed clause 3 agreed to.

Postponed clause 4 - “ Business “ includes any profession or trade. “ The Commissioner “ means the Commissioner administering this Act.

Amendments (by Mr. Groom) agreed to-

That after the word “ trade “ the words “ and any transaction not in the course of a person’s business for the sale and purchase of any commodity “ be inserted.

That after the definition of “ business “ the following new definition be inserted : - “ Capital “ means the capital of a business employed in Australia.

Clause, as amended, agreed to.

Postponed clause 31 (Date of payment of tax).

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I may mention that this is the clause which requires thirty days’ notice to be given. It is proposed, in a subsequent clause, clause 33, to provide an amendment allowing for sixty days’ grace to be given.

Clause agreed to.

Title agreed to.

Bill reported, with amendments.

Motion (by Mr. Groom) agreed to -

That the Bill be recommitted for the purpose of considering clauses 8, 10, 14,15, 26, and 33.

In Committee (Recommittal) :

Clause 8 -

The businesses to which this Act applies are all businesses (whether continuously carried on or not) of any description deriving profits from sources within Australia, excepting -

businesses carried on by a municipal corporation or other local governing body or by a public authority; or by a society registered under a Friendly Societies Act of the Commonwealth or a State or Territory, and not carried on for pecuniary profit; or by or for the exclusive benefit of a religious, charitable, or public educational institution; or any company carrying on the business of life insurance so far as regards its life insurance business; and

With respect to a business which, under this section, is exempt fom the provisions of this Act, the exemption shall be limited to that business and shall not extend to any business which supplies to or purchases from that business any commodities.

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– I promised to introduce in this clause a provision dealing with life businesses on the mutual principle. I move -

That after the word “business,” at the end of paragrapha, the words “ but not excluding so much of the profits of that business as is available for distribution to the shareholders “ be inserted.

The effect of that amendment will be that the profits which are distributed to shareholders will not be exempt from this taxation.

Mr WEST:
East Sydney

.- Will there be any distinction made between a proprietary company owned by six or seven persons and one having a number of shareholders?

Mr Groom:

– The honorable member for Parkes (Mr. Bruce Smith) directed attention to that matter, and we promised to inquire into it.

Mr WEST:

– I direct attention also to the case of English life insurance companies that are proprietary concerns. Are they dealt with in the Bill?

Mr.Groom.That matter will alsobe looked into.

Amendment agreed to.

Mr. Groom. (Darling Downs- Honorary Minister) [4.27]. - I promised that a tentative provision would be submitted to provide, in certain circumstances,for the exemption of soldiers at the Front. I submit the provision, though it is not a final draft. I move -

That the following new sub-clause be inserted: -

When any resident of Australia who is on active service outside Australia with the Naval or Military Forces of any of the Allied Powers in connexion with the present war is the owner of or isa partner in a business to which this Act applies, and who before he went on active service, devoted the whole, or the greater part, of his time in connexion with the management of the business, and whose military or naval duties require him to be in any part of the field of operations in connexion with the war where there is danger to lifeas a result of the operations of enemy forces, such person shall -

when the sole owner of a business, be exempt from’ liability to pay the war-time profits tax;

when a partner in the business, be entitled to a refund from the Commissioner of the part of the tax payable by the partnership which bears the same proportion to the tax payable by the partnership as his interest in the profits of the partnership bears to the total profits.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 10 -

  1. Where it appears to the Commissioner, on the application of a taxpayer….. that any provisions …. should be modified in his case, owing to .

    1. the establishment of the business since the fourth day of August, 1914, or the fact that owing to the recent commencement of the business there has not been one pre-war trade year the Commissioner shall have power .

Provided that where the reason for the modification is that the business has been established since the war. or has only commenced to be remunerative in the accounting period, the modification shall not be greater in extent than is sufficient to insure the financial stability of the business……

Amendments (by Mr. Groom) agreed to-

That paragraphf be left out, and the following inserted in its stead: - “ (f) the fact that on account of the recent commencement of the business there has not been one pre-war trade year, or the fact that the business has only commenced to be remunerative since the fourth day of August, 1914; or “

That in sub-clause 1 the proviso be left out, and the following inserted in its stead: - “ Provided that where the reason for the modification is the fact that on account of the recent commencement of the business there has not been one pre-war trade year, or the fact that the business has only commenced to be remunerative since the fourth day of August, 1914, the modification shall not be greater in extent than is sufficient to insure the financial stability of the business.”

Clause, as amended, agreed to.

Clause 14 (Computation of profits).

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– Honorable members who are not now present were concerned about pastoral businesses, and the Treasurer promised to put in an amendment to meet the case. I therefore move -

That after sub-clause 10, the following subclause be inserted : - “ 10a. Where in the case of a pastoral business -

it is shown to the satisfaction of the Commissioner that any part of the profits arising during the last three pre-war trade years have been invested in the business, and have, in subsequent years, been wholly or partly lost owing to drought, adverse seasons, or other adverse conditions; and

any part of the profits of the current accounting period has been applied in extinction of that loss, then in estimating the profits a deduction shall be allowed equal to the amount of profits so applied.”

Amendment agreed to.

Consequential amendment in sub-clause 11, to insert after “ business “ the words “ except a pastoral business,” agreed to.

Clause, as amended, agreed to.

Clause 15 (Pre-war years).

Amendment (by Mr. Groom) agreed to -

That after sub-clause 4 the following subclause be inserted: - “ 4a. Where in the case of any business the pre-war standard of profits, calculated otherwise than under this sub-section, does not exceed £500, the taxpayer may adopt as the pTewar standard of profits of that business a profits standard computed under paragraph b of sub-section 5 of this section.”

Clause, as amended, agreed to.

Clause 26 -

  1. There shall be a Board of Referees, to be appointed by the Governor-General.
  2. The Board ofReferees shall have power to allow such modifications of Parts IV., V., and VI., of this Act as it thinks necessary, and such other powers as are prescribed.

Provided that where the reason for the modification is that the business has been established since the fourth day of August, 1914, or has only commenced to be remunerative in the accounting period, the modification shall not be greater in extent than is sufficient to insure the . financial stability of the business…..

Amendment (by Mr. Groom) agreed to-

That the proviso be left out, and the following proviso inserted in its stead: - “ Provided that where the reason for the modification is the fact that, on account of the recent commencement of the business, there has not been one pre-war trade year, or the fact that the business has only commenced to be remunerative since the fourth day of August, 1914, the modificationshall not be greater in extent than is sufficient to insure the financial stability of the business.”

Clause, as amended, agreed to.

Clause.33 -

If the war-time profits tax, or additional war-time profits tax, payable on an amended assessment, is not paid before the expiration of the time specified in section 31 of this Act, or such further time as may be allowed by the Commissioner under section 32 of this Act, additional tax amounting to 10 per centum of the tax unpaid shall be payable in addition by way of penalty:

Mr GROOM:
Honorary Minister · Darling Downs · NAT

– The honorable member for Wide Bay submitted that the time allowed for payment was too short. It is intended to allow sixty days instead of thirty. This will give double the time allowed by the Income Tax Act. I move-

That after the word “of,” where first occurring in line 4, the words “ thirty days after “ be inserted.

Amendment agreed to.

Clause,as amended, agreed to.

Bill reported with further amendments.

page 1628

PAPERS

The following papers were presented : -

Defence Act. - Regulations amended - Statutory Rules 1917, Nos. 186-9, 201, 202, 204-6.

Invalid and Old-age Pensions Act. - Statement for 1916-17.

War Precautions Act. - Regulations amended -Statutory Rules 1917, No. 200.

House adjourned at 4.43 p.m. (Friday).

Cite as: Australia, House of Representatives, Debates, 30 August 1917, viewed 22 October 2017, <http://historichansard.net/hofreps/1917/19170830_reps_7_82/>.