7th Parliament · 2nd Session
Mr. Speaker (Hon. W. Elliot Johnson) took the chair at 3 p.m., and read prayers.
Mr.GROOM. - The other day the honorable member for Maranoa (Mr. Page) asked some questions regarding the cost of recruiting in the several States. I promised to get the information, and to make it available as soon as possible, and I now lay on the table a statement showing the details of expenditure on recruiting for the period from the 1st January, 1917, to the 30th June, 1917. The figures relating to the 3rd Military District differ slightly from those given in answer to a question by the honorable member for Kalgoorlie (Mr. Heitmann), but the cost per recruit for each of the States is unaffected.
Paper laid on the table.
– I received this morning the following telegram from the Chairman of the Chamber of Commerce, Hobart : -
Last steamer leaving Hobart for Sydney, Moeraki, 11th August. 150,000 cases apples awaiting shipment, in cool store and growers’ hands; also usual weekly exports, including 20,000 cases preserves. Only’ ten days’ supply of coal on hand for gas. No sugar, other foodstuffs.
Can the Prime Minister Bay whether a steamer will be put on the Hobart to Sydney service shortly to relieve this rather serious situation)
– If the facts are as stated, I shall do that.
– I ask the Honorary Minister if communications from Darwin are being censored, mutilated, and in many cases slopped altogether. The Department for Home and Territories throws all the responsibility in this matter on the Defence Department. For a week 1 have been expecting communications from Darwin, and have received nothing. I ask the Honorary Minister if communications from Darwin to myself have been censored and stopped, or prevented from reaching me in the ordinary course?
– I know nothing about the matter, and can only promise to make inquiries.
– I wish to make a personal explanation. The honorable member for Capricornia (Mr. Higgs) is reportedto have said last Friday, referring to contracts between the Government and certain firms engaged in the manufacture of wool tops -
The Government ought to lay the list of shareholders on the table. Surely thereis nothing to conceal.
– Is the Prime Minister making a personal explanation ! If so, I ask in what way he has been misrepresented ?
– The right honorable gentleman has not proceeded far enough to enable me to answer the question.
– I have frequently explained that the list referred to was handed to the Wool Committee confidentially, and is regarded by the Committee and the Government as in the same category as returns under the Income Tax Act and other statements made under the seal of confidence.
– Mr. Speaker, do you regard this as a personal explanation?
– I understand that the Prime Minister desires to remove a misapprehension regarding a statement that has been made, or to more fully explain some matter upon which information has been sought.
– I rose to make a personal explanation regarding the insinuation of the honorable member for Capricornia that the Government was acting improperly inthis matter. He is reported in Hansard to have interjected, when the Minister for the Navy was speaking -
I do not think that many members of the Government do know anything about it, meaning the transaction to which I have referred. I submit thatI am as much entitled as any other member to make a personal explanation in regard to a matter in which I have been misrepresented during my absence.
I also ask permission to make a personal explanation regarding some observations of the honorable member for Maribyrnong (Mr. Fenton), who, speaking of replies furnished by me earlier in the day, in answer to a. question about food returns, said -
I asked for returns, and there was a general impression that full information would be given; but when a question was asked, it was laughed off with a statement of the number of sheep, tons of sugar, and bushels of wheat in store…… He (the Prime Minister) said that the returns arrived too late. That is a reflection on officers engaged in important duties. .
I have obtained a report from the Department in which it is stated that -
At the beginning of July, 1915, a monthly census was taken of the food supplies in Australia. Stocks in hand of the following commodities were ascertained: - Beef, mutton, lamb, bacon and ham, rabbits, sugar, molasses, cheese, butter, jam, tinned fish, condensed milk, rice.
I did not deal with all the commodities mentioned, but only with bo many as I had at my fingers’ ends at the moment -
These returns came to hand from month to month until January of this year. The information contained in the replies was tabulated, and was generally available about a month, sometimes longer, after the date up to which the return was prepared.
In answering the questions of the honorable member for Maribyrnong, I merely stated the facts, and he should have accepted my statement. He may be of opinion that the practice of making thesereturns should be continued, but that is another matter. I told him that the Government were considering the question. We are doing so.
– I desire to make a personal explanation, since the Prime Minister has endeavoured, perhaps unintentionally, to show that I have done something which is not quite regular. The questions I have asked in regard to the Colonial Wool Combing and Weaving Company and its list of shareholders are the outcome of a report that a member of the Central Wool Committee is largely interested, financially, in the arrangement by which the Government and the Colonial Wool Combing and Weaving Company share certain profits. I have endeavoured to obtain the list of shareholders. When I asked the Prime Minister for it he replied that the information was not available, but that I could obtain it at the Registrar’s Office, Sydney. Search was made at that office, but the share list was not available. I then drew the. attention of the Prime Minister to a clause in the agreement, which provides that the company shall furnish the Government with a list of shareholders and of the shares held by them; but when I asked him for the list he replied, “ It is confidential.” The position is, therefore, that we cannot obtain the share list at the Registrar’s Office, Sydney, and the Government will not supplyus with a copy. If they would do so we should then know to what extent the member of the Central Wool Committee to whom I have referred is interested in the agreement. I desire to ask the Prime Minister whether it is not a fact that a member of the Central Wool Committee is largely interested in the agreement ?
– The honorable member will not be in order in putting a question to the Prime Minister in the course of a personal explanation.
– I also desire to make a personal explanation. The reply which the Prime Minister gave to my question was such as to suggest to me that hewas indulging in one of his well-known efforts to put off, by means of a joke, the answering of my inquiry. I thought he treated me in a rather cavalier fashion.
– I gave the honorable member a very full answer.
– It was,I think, a little overdone. The right honorable gentleman said that one reason why these monthly reports were not now forthcoming was that they were often solate in being furnished as to be of no real value. In referring to that answer on the motion for the adjournment of the House on Friday, I said that it was either a reflection on the officers called upon to make such returns or it proved the inefficiency of the Government. Other returns are provided in a few days, and, that being so, I should like to know why we cannot obtain equally prompt returns in regard to so important a matter as the supply of foodstuffs.
– Order. The honorable member is now going beyond the making of a personal explanation.
North Queensland Railway Strike
– I desire to ask the Prime Minister whether the Premiers of New South Wales and Victoria have exercised upon him any moral suasion to prevent his intervening to bring about a quietening of the industrial unrest which at present exists?
– This seems to me to be a most extraordinary question, and one that should not properly be asked. I shall, however, answer it. My answer is. “No. Most emphatically, No!”
– Will the Prime Minister lay on the table of the House the correspondence that has passed between him and the Premier of Queensland, and any other persons in regard to the industrial dispute on the railways in Northern Queensland?
– There has been no correspondence other than telegrams, all of which have appeared in the press.
Rumoured Action of Naval Board
– I have a question to put to the Minister for the Navy in regard to a fire which occurred on board a ship at Port Adelaide. Rumour has it that when the fire brigade reached the wharf to assist in putting out the flames the Naval Board authorities insisted on the firemen showing their authority before they went on board the vessel. I ask the Minister whether red-tape exists to such an extent in his Department, and, if so, whether he will take action to get rid of it?
– I know nothing about the matter, but shall cause inquiries to be made.
Recent Decorations - Special Leave
– Will the Minister representing the Minister for Defence be good enough to supply the House with the comparative numbers of officers and privates upon whom decorations and distinctions of various kinds have been conferred, as disclosed in the most recent list published; and whether he has any comment to make upon the fact that in the very long list published in this morning’s issue of the Age, extending over two columns, there does not appear the name of one private?
– If the honorable member will furnish me with a copy of his question, I shall have inquiries made with regard to the matter. The honorable member for Corio (Mr. Lister), on 29th instant, put to me a question with regard to week-end leave, and I promised to have inquiries made. I am now in a position to furnish him with the following reply:
The following instructions with regard to special leave for members of the Imperial Forces were recently sent out: - “ (1) Cases have come under notice of men in the Australian Imperial Force Camps, whose homes are in the country districts, and who sometimes find that their business or family affairs necessitate their return for a few days. “ (2) In such cases, applications will be submitted to the Camp Commandants, who may, if the circumstances justify, grant such special leave, without pay. “ (3) Camp Commandantswill personally deal with all such applications, and carefully consider the circumstances of each case. “(4) This leave should preferably be given so as to include a week-end, in order that the soldier is absent from his training for as short a period as possible.”
It was pointed out that it was only intended that additional leave should be granted in cases where it can be shown that business or family affairs necessitate such urgent additional leave, and not to allow men in Camps additional leave in order to visit their homes at week-ends. The training of the troops would seriously suffer if men were allowed such leave indiscriminately.
The following papers were presented : -
Inscribed Stock Act - Dealings and Transactions during year ended 30th June, 1916.
Ordered to be printed.
Defence Act - Regulations Amended - Statutory Rules 1917, Nos. 203, 208, 209, 216.
Inter-State Commission Act- Inter-State Commission - Tariff Investigation - Index to Reports.
Public Service Act - Promotions of -
H. C. Brown, Prime Minister’s Department.
D. Shugg and P. E. Coleman, Department of Defence.
War Precautions Act - Regulations Amended -Statutory Rules 1917, Nos. 197, 217.
Disallowance of Regulation
– Has the Prime Minister’s attention been drawn to notice of motion No. 1, to the effect that the regulation issued under the War Precautions Act, Statutory Rule No. 196 of 1917, and dated 30th August, 1917 - which amends Statutory Rule No. 129a of 1916, Regulation No. 10, previously issued under the Act - be disallowed ? This is an urgent matter, and I desire to know whether the Prime Minister will give an opportunity for it to be brought before the House.
– As this is an urgent matter, or might become so, I shall make inquiries before this man’s rights can become affected in regard to a pending action. I take it that the question is whether I consent to the prosecution of an action ?
– If I find I cannot consent, I shall see whether I can give the honorable member an opportunity to discuss the matter. Of course, if I do consent, the honorable member will not require that opportunity.
– That will do.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Trade and Customs, upon notice-
When does he propose to take further action to protect Australian industries against importations from America, Italy, Japan, and other countries?
– If the honorable member refers to action with regard to the pro- hibition of luxuries, his attention is invited to the statement made in this House by the Prime Minister on the 23rd August last.
asked the Prime Minister, upon notice -
In view of the declared neutral attitude of the Commonwealth Government towards the present industrial trouble, by whose authority and for what purpose has the Censor prohibited the transmission of press messages regarding the position in Victoria?
– Censors have not prohibited the transmission of press messages to and from Victoria to other States regarding the position of the industrial trouble in Victoria or other States.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: -
Mr. PAGE (for Mr. Blakeley) asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
Mr.FENTON askedthe Prime Minister, upon notice -
When does he intend to carry into effect his promise to have members’ questions and the answers thereto printed, so as to save time in reading answers to questions?
Y asked the Prime Min ister, upon notice -
In view of the fact that workers in England are objecting to Australians of military age going to Britain as munition and other workers, while the British Government is still asking for Australians as munition workers, carpenters, artisans, and even as unskilled labourers, will the Prime Minister make inquiries as to whether or not the objection to Australian workers by English workers is serious?
Mr. HUGHES.- Seeing that the
British Government accepted the offer of the Commonwealth Government to send munition workers to Britain, and in view of the fact that our representatives in the United Kingdom who look after matters affecting these workers have not informed us of any objection to them on the grounds stated, the Government do not propose to take any action.
R asked the Prime Min ister, upon notice -
Mr. HUGHES.- The answers to the honorable member’s questions are as follow: -
ey) asked the Prime Minister, upon notice - 1.. Did the Public Trustee compel the German agent, Frank Snow, and the German, Sigfried Hirsch, to dispose of their interests in the electrolytic smelters?
Mr. HUGHES. - The answers to the honorable member’s questions are as follow: - 1-4. The Electrolytic Refining and Smelting Company, in August, 1915, adopted additional
Articles of association giving it power to get rid of alien shareholders, and also preventing aliens from ever again becoming shareholders. Under these articles Hirsch was compulsorily retired from the company, and the shares held by him were transferred to the Mount Morgan Gold Mining Company, on 10th September, 1915. The office of Public Trustee was not established till nearly twelve months later - 1st September, 1916. The moneys received are held by the Comptroller-General of Customs under the Trading with the Enemy Act.
By agreement the shares held by F. H. Snow were sold to the same company on the same date.
N asked the Minister representing the Minister for Defence, upon notice -
Mr. GROOM.- The answers to the honorable member’s questions are as follow: -
ey) asked the Minister representing the Minister for Defence, upon notice -
Mr. GROOM. - The answers to the honorable member’s questions are as follow: -
Y asked the Prime Minister, upon notice -
Whether he will inform the House what was the output in silver, lead, and zinc respectively for the years 1912, 1913, 1914, 1915, 1916, and latest date of 1917 respectively from the following mines: - Amalgamated (De Bavay), British Broken Hill (old), British Broken Hill (new), Broken Hill Proprietary, Broken Hill Block 10, Broken Hill Block 14, Broken Hill Block 14 (preference), Broken Hill Junction (paid), Broken Hill Junction (contributing), North Broken Hill, Sulphide Corporation (preference), Sulphide Corporation (ordinary), Zinc Corporation (preference), Zinc Corporation (ordinary)?
Mr. HUGHES.- This information is not at present available, but further inquiries will be made with a view to obtaining same.
y. - Did not the Honorary Minister promise to recommit clause 31 ‘i
– On clause 31, the honorable member for Wide Ray (Mr. Corser) brought forward the request for extended time for payment of the tax. It was pointed out that it would be a heavy burden if the taxpayer was called upon to pay two assessments at the same time. However, I understand from the Treasurer that it is not proposed to collect the two taxes at the one time. On Friday afternoon we recommitted clause 31, and extended, in effect, the period of payment from thirty days to sixty days. As the Bill now stands, after notice of the assessment/ is given, sixty days, instead of thirty days, are allowed for the payment before the liability to pay 10 per cent, extra is incurred.
M. - I promised to refer the matter to the Treasurer. He is very ill to-day ; but he informs me that the Commonwealth are sellers, not buyers, of bonds. The taxpayer can sell his bonds, and pay the tax.
son). - The honorable member may discuss the proposal to recommit, but not the general principles of the Bill as a whole, or details of the separate clauses proposed to be recommitted.
R.- I hardly think that the moving of this motion can be considered as an opportunity for a secondreading debate; but honorable members are at liberty to give brief reasons for moving for the recommittal of any particular clauses, without debating the clauses themselves.
R.- There will be a further opportunity for discussion at the final report stage. This motion is merely for the recommittal of certain clauses. The Committee has made certain proposals, and it is open to honorable members to deal with them; but a discussion on the Bill generally is not in order at this stage.
R. - That can be done in. Committee.
R. - The honorable member will be in order in doing so.
– I would like the consent of the Government to the recommittal of clause 31. My desire is to have it altered so that people may pay their tax in war bonds. Some big companies have made provision for the payment of this tax by investing their money in war bonds; and if they are compelled to realize on these bonds, they may sustain a loss. In any case, they will be required to pay brokerage and other costs that they should not be called upon to pay. In view’ of the fact that many companies have made provision to pay the tax in war bonds, I move as an amendment -
That “ clause 31 “ be added to the motion.
– This clause was discussed for a long time in Committee.
– The discussion must have taken place in the early hours of the morning, when all respectable people were supposed to be in bed.
S.- The Treasurer should not say that the clause was discussed if nobody suggested that there should be an alteration in it.
S. - In my opinion, the number of members to constitute the Board of Referees should be stated in the Bill. Although the measure is so liberal that it is doubtful if anybody will be so dissatisfied with the ruling of the Commissioner as to desire to appeal to a Board of Referees, still, in order to do things decently we should specify how many members shall constitute the Board. If we are to have such appeals, there should be a tribunal in every capital city. Are people in Perth to be asked to come to Melbourne if they desire to appeal against the decision of the Deputy Commissioner in Western Australia ? If the Board is to consist of only three members, they will, I presume, be resident in Melbourne, and those persons in other States who have reason to find fault with the Deputy Commissioner will be greatly disadvantaged in having to come to Melbourne for the purpose of appealing. I would prefer’ that there should be referees in each capital city, and that each Board should include at least one chartered accountant. Whilst our system of recruiting the Civil Service is very good, the accountancy methods in the Government employ are quite different from those adopted in commercial circles’.
S. - I should like to know how the honorable member, who is a squatter, could expect a Civil Service accountant to be able to audit his accounts, go through the various documents involved in the sale of stock, and to understand the discount that is given in each trade and profession.
son). - The passage in May read by the honorable member deals with the reference of a Bill to a Select Committee. What is now proposed has been frequently done, and is in accordance with the practice of the House. I ask the honorable member for Capricornia to confine himself as closely as possible to his amendment.
– I shall do so, but unless I can induce the House to recommit clause 26 I shall have no opportunity of speaking about the Board of Referees in Committee, and, therefore, I must offer a few arguments now in support of my contention that the number of the members of the Board should ‘be fixed.
– The honorable member will not be in order in making more than a general reference to the matter now.
– The House evidently is not seised of the importance of this matter, and I, therefore, wish to show as briefly as I can that the Board ought to consist of more than three members. Otherwise, it will probably sit in Melbourne, and persons living in Perth, Adelaide, Brisbane, and other distant places, who may have occasion to appeal against the decision of the Commissioner, will have to come to Melbourne to have appeals heard, which would be a hardship. I cannot imagine that there will be such appeals, because the Bill is so liberal, and allows so many exemptions. But I have had complaints from business people who say, without in any way challenging the capacity or ability of the officers of the Taxation Department and the Treasury, that it is not possible, with the training that a man gets who starts in boyhood in the Public Service–
– This is a discussion which properly should take place in Committee. If I were to permit the honorable member to continue it might open up a debate on every important provision of the Bill.
– May I put it to you, sir, that if this clause be not recommitted I shall have no other opportunity of placing my arguments concerning the Board before honorable members?
– I cannot help that. The Bill has been reported from Committee, where an opportunity was afforded for the discussion of every clause of it. The Government now proposes its recommittal for the reconsideration of certain clauses. The honorable member is in order in moving for the reconsideration of other clauses, but he is not in order in debating the clause that he wishes to have reconsidered.
– I bow to your ruling, sir, and hope that the perspicacity of honorable members will prove equal to the occasion.
R.- The honorable member is debating a provision of the Bill. Such debate at this stage is out of order.
– Should I be out of order in giving reasons for fixing the number of the members of the Board ?
– The honorable member may not now discuss the clause which deals with that matter. The principles of the Bill were open for discussion during the second-reading debate and the various clauses in detail when the Bill was in Committee.
m. - The Treasurer does not see his way to agree to the reconsideration of the clause.
R.- The discussion is irregular. No amendment for the reconsideration of clause 10 has been moved. It will simplify procedure to dispose of the two amendments already before the House before dealing with other proposals.
m. - And to recommit clauses in regard to which we promised assistance.
– Yes. That has been done.
.- If the business is to be got through, such understandings must be adhered to. The Government has shown that it is quite willing to take into consideration representations on such matters as that to which the honorable member for Kooyong has referred, and in another place it can propose minor alterations. I do not think that at this stage it should be pressed to recommit more clauses than at the last meeting it promised to recommit.
n. - I rise to a point of order. A little while ago, sir, you ruled that Iwas not in order in giving the reasons why I desired to have a certain clause recommitted. I, therefore, submit that the honorable member is out of order.
– The honorable member will not be in order in discussing the details of the clause. He should not do more than give a few general reasons for his action in moving that it be recommitted.
– I merely desired to show the character of the amendment that should be made, in the event of the clause being recommitted. My object in submitting this amendment is that we may have an opportunity to extend the discretionary power of the Commissioner, provided for in the clause.
R. - I would point out that if I were to permit a general discussion on each of these proposals to recommit a clause, the whole Bill could in that way be debated just by the simple process of going through the form of moving an amendment to recommit each clause an honorable member desired to debate. On the motion for the second reading, honorable members were able to discuss the whole principles of the Bill; and in Committee they were at liberty to discuss in detail the whole of the clauses. It would, therefore, be quite irregular at this stage to permit a debate which would include a discussion covering all these various points. ‘ If the House agrees to recommit the clause, there will be a still further opportunity to discuss it in detail.
– The honorable gentleman might point out that para graph g of clause 10 gives unlimited elasticity to the discretionary power of the Commissioner.
– I was about to do so. I invite honorable members to look at paragraph /. The matter referred to by the honorable member for Kooyong (Sir Robert Best) refers only to sub-clausef, which reads -
The fact that, on account of the recent commencement of the business-
son). - I think a good deal of this discussion would be more appropriate in Committee; and I ask the Minister to reserve his comments till that stage.
– I merely desire to say, in the most general way, that that subclause only refers to a particular case. There is also, in the most general way,, power to make regulations of a most general character, which will cover many of the cases referred to. The GovernorGeneral is given power by regulation to prescribe the class of cases which can be referred to the Commissioner.
M.- That proviso is limited to only one particular class of cases.
– It is the same provision that is contained in the Imperial Act.
– Unfortunately, it is not, because the Imperial Act does not provide for the exemption of the amount paid in income tax, and that it is which creates the trouble in regard to this Bill .
– My purpose is merely to point out the effect- of the Bill. The Prime Minister and. the Treasurer have talked about the pledge given to the country. I am as strongly in favour of keeping political pledges as any honorable member is, but it is necessary to have regard to what was the real substance of the pledge said to have been given to the people. AsIhave said before, in my opinion the real substance ofthe pledge given to the people was that the Government proposed, either through the War-time Profits Tax Bill, which had already been introduced, or by some necessary alteration to that measure, to tax heavily, if it were possible to do so, profits made by large companies and rich people through the war.
– If this Bill were wiped out altogether, we would still derive the same amount of revenue from these companies from the income tax they pay. I do not propose to further reduce their profits. My proposal is totally different ; it is this : If we cannot arrive at what are, in effect, war profits, we should take a percentage of capital, and allow a man 10 per cent. without charging him any tax. If he makes 15 per cent. on his capital we should take, say, 50 per cent. of theprofits above that 10 per cent., and so proceed by a graduated scale. It must not be assumed that I am saying that the Bill should be modified by wiping out the exemptions in regard to payment on account of income tax. What I am endeavouring to say is that the Bill, with that exemption, has not the effect which the country expected that this kind of legislation would have. This Bill will take from the great bulk of the big companies and the rich men who have made war profits nothing whatever more than if it were thrown into the wastepaper basket; but it will take away a considerable portion of the profits of smaller businesses. These latter pay income tax at a very much lower rate, and, therefore, will get a very much lower rate of deduction. The only effect of this Bill will be that while it lets off the wealthy companies and firms, whether their excess of profits is derived from the war or not, from any burden of taxation under it, it will greatly increase the taxation upon the lower incomes, which at present, under the income tax, are not called upon to pay an excessive rate. In other words, the whole burden of this form of taxation ‘ will be thrown, not on the big companies or the persons who hold shares in them, but on those people whose incomes as shareholders in companies or as individuals carrying on businesses do not approach those of the shareholders of the big companies. If there was any pledge to the country, if the late election was really fought on this issue, and there were no other issues before the people, or if this was one of the material issues before the people, the substance of it was that we should so frame our legislation -that we should, as nearly as possible, tax under this form of taxation the profits of those metal companies, those shipping companies, those softgoods companies, those chemical businesses, and others whose gains, whose stocks, whose freights, or whose other sources of revenue had, by reason of the war, enabled them to make larger profits. But the Bill lets them off.
.- The excess profits undoubtedly are heavy in some cases, but because a firm’s stocks have increased by 200 per cent. it must not be concluded that its profits have increased to the same extent.
– It is quite true that some companies whose profits have increased beyond 50 per cent. will be hit by this Bill, but those companies whose excess of profits does not amount to more than 50 per cent, of the pre-war profits will not be hit by it, and the great bulk of those who have made war profits must be included in the latter category, and will not be taxed by the Bill, because the income tax rate is already one-third in the highest grade. The firm whose income was £10,000 before the war, and whose income during the accounting period is £15,000, pays income tax at the rate of 5s. plus 25 per cent., that is, 6s. 3d. in the £1, and’ that will just about wipe out the £5,000 excess profit. On the other hand, the smaller men, where the income tax rate is lower, will bear the whole burden of this war-time profits taxation, and that is not what I consider was the intention of the people when they gave sanction, if they did give sanction, to what was then termed the War Profits Bill before the country. Let me give the history of this legislation. Originally there was no exemption of payments on account of income tax in the Bill introduced by the honorable member for Capricornia (Mr. Higgs), so that this argument would not have applied to that Bill; but the honorable member for Grey (Mr. Poynton), though he did not introduce an amending Bill, made an interim financial statement on the 6th December, 1916, and under the heading of “ What constitutes war profits “ he said -
Allowance should also be made for the deduction of amounts paid in respect of Commonwealth and State income taxes.
That was stated before the election; but can any one say that it is not straining the matter to the utmost to suppose that when the Government said that they intended to proceed with the War-time Profits Tax Bill, and pointed out that certain modifications would have to be made, the people had in their minds, not only the terms of the Bill, which very few knew anything about, but also the statement made by the honorable member for Grey on the 6th December, that certain further alterations should be made ? But, if the people knew that those further alterations, when made, would have the effect of preventing this kind of legislation from touching the large companies and firms which made war profits, would they have sanctioned it?
I have placed my views as strongly as I could upon this point previously. Like other honorable members, I have received numerous letters from all parts of Australia, but I have not paid much attention to cases of individual hardship, because, with all such legislation, there must be such cases. However, I have become more and more impressed with the fact that this taxation, based on a pre-war standard, will not touch the man we seek to touch, for the most part, but will hit with crushing weight many of those smaller growing industries upon which the future of the Commonwealth depends.
– I have already admitted it. In reply to the honorable member for Cook (Mr. Catts), I pointed out that my argument covered only those firms whose profits did not exceed 50 per cent. In chemical businesses, and in others, there will be cases where the actual cost of the article sold has gone up by 100 per cent, yet the profits have not gone up more than 50 per cent.Any excess over 50 per cent. will come under this Bill. So far as companies are concerned, it must be remembered that it is the shareholders who will be affected. If a company pays its profits away in dividends, it doesnot pay income tax on those profits, and therefore would not be entitled to deduct income tax, bub a company is merely an aggregation of shareholders, and all wealthy shareholders whose income exceeds £5,000 are the persons who would get the greatest relief from this tax. If their business does not earn 50 per cent. more than it earned before the war, they would be relieved absolutely. It would be invidious to mention the shipping companies and other large concerns which expected to pay this tax, but which, unless they made more than 50 per cent. excess profit, will not be touched by it.
I wish to say a word or two upon the principle of the pre-war standard. To my mind, it is an essentially unsound principle, and is particularly dangerous at the present juncture in Australia. The 10 per cent. standard which will be adopted in a great many cases ought to be adopted as the standard in every case, but we ought not to require people to pay 75 per cent. of all profits made in excess of that standard. We should have a graduated tax based always on a percentage of capital. It is unfortunate that we should have to debate this extremely important measure without having an opportunity of dealing with the general financial position of the country. We are crippled in respect of that kind of criticism which we, as a Parliament, ought to use in connexion with such a measure. In a very short time, there will be returning to Australia about 300,000 men who must be replaced in industry. Heaven knows that will be a sufficiently heavy burden upon us. But, in addition, we shall have a sudden and great diminution of the amount of borrowed money available for maintaining public works and employment. Those two f acts represent our immediate future ; that is the position we have to face. I said the other day that there never was a time in the history of Australia when so urgent a duty lay upon this Parliament to stimulate and encourage every form of production and enterprise, because there neverwas in the history of Australia such a difficulty as is right on our threshold to-day. The problem which every country engaged in war will have to face we shall have to face. But in some respects we shall have to tackle it with greater difficulties than confront other countries. Yet at this moment, when every encouragement ought to be given to enterprise, to the starting of new businesses, and to the taking of business risks, we are saying to people, “ If you continue developing your business and succeed, if you throw your whole energy into it, and use every gift of knowledge, strength, and enterprise you possess to expand your activities, we shall take 75 per cent. of any profits above the pre-war standard of your business, but if you lose, you yourselves must bear the loss.” Is it conceivable that, under such an embargo, there can be any development in this country ? My criticism of this measure applies with equal force to the Bill introduced by the honorable member for Capricornia (Mr. Higgs). But I realize that only when a measure is threshed out in Parliament, and has the light of criticism thrown on its provisions, do we see the full measure of its strength and its weaknesses, and if we are a rational Parliament at all, while avoiding party issues on all sides, we ought to have regard to the immediate industrial and economic problems that confront us.
– That would minimize the effect of the measure to only a limited extent. That Bill provided, as this one provides, that if a business made more profits than it had been making before the war, 75 per cent. of such profits should go to the Treasury.
.- Members on both sides have been wrong in regard to this class of legislation. We find now that it will not work. At a. time when credit is low and the springs of enterprise are necessarily slackened, when it takes more energy and enterprise to launch out into business and create fresh avenues of employment, to say to people, “ We shall bind you to your pre-war standard, and take 75 per cent. of anything you make in excess,” would be to dry up the wells of enterprise, and to cause economic sterility. Once more I appeal to the Government to reconsider this measure. No question of party or political conflict ought to deter us from preventing such injuries as this measure is likely to do.
.- I am not. It is quite true that if the war ends next year this Bill will only hamper and weaken enterprise for one year. If the war does not end next year, the Bill will have that effect for two years, and so on. But this is not the sort of legislation which we can try, and then repeal if it does not succeed. Its very nature is to place an embargo on industry during the coming year.
.- I do not think the English precedent ought necessarily to bind us in Australia. I pay the greatest respect to legislation relating to legal and commercial matters, bills of exchange, and so forth, which has received the advantage of the great skill and experience which statesmen of the British Parliament can give. Their experience entitles most measures which they pass to the greatest consideration from us, but when we are dealing with a tax which directly touches the present economic position of our country it is our duty to go to the ground level, and study exactly what it means. The suggestion I have made to the Government on previous occasions I venture to make again, and I do not think that the Ministerial party, any more than the party on the other side, will lose any prestige by facing the real question and even jettisoning some of our previously-conceived ideas. I should not have again raised this question unless I felt that we were about to do an irreparable injury.
My original suggestion - and I do not think it is impracticable - was that we should devise some method of scheduling businesses which are supposed to have made war profits, and call upon them to show reason why their excess profits are not derived from the war. I believe the majority of honorable members are opposed to that idea, and therefore I do not press it. But, instead of having a prewar standard, which will operate as an immovable fetter upon the natural growth of industry, we can adopt the alternative 10 per cent. standard, which is in this Bill, and was, I think, in the previous measure introduced by the honorable member for Capricornia.
– I do not care what the percentage is, provided that the burden is graduated. We shall then be taxing war-time profits, not on the false and mischievous theory that we ought to tax a man because he is making more now. than at some other time, but because he is making an abnormal profit on the capital invested in his business. That principle is adopted by the Bill in some cases.Wherever the pre-war standard is less than 10 per cent. on his capital, a man is entitled to take 10 per cent. as his standard. I suggest that we should omit all the provisions relating to the fixing of a pre-war standard, and that we should take a 10 per cent. standard in every case. But we should not commence by taking 50 per cent. and 75 per cent. of all profits above 10 per cent. We should have a graduated scale, the precise range of which will be for tie Committee to determine. I recommend the Canadian principle that if a man is making a 15 per cent. profit he should pay 50 per cent. in taxation, or if he is making 20 per cent. profit he should pay 75 per cent. That would not cripple any man’s industry, because he would know that he could, at any rate, make up to 15 per cent. on his capital before feeling the burden of taxation. Of course, all war taxation must have some crippling effect on industry, but the scheme I suggest would not place an absolute embargo on enterprise.
– I have such cases in mind. The businesses which we intend to reach by this taxation are those which have made large profits which are the direct outcome of the war.
.- No. I do not think it is agency business that the people wish to have heavily taxed. Such businesses are in the same category as professions.
The CHAIRMAN; (Hon. J. M. Chanter). - The honorable member’s time has expired, but he is permitted, under the Standing Orders, to make a second
– I have not very much more to say. The system adopted in Canada has worked very well.
– A great deal more than it is estimated that the tax provided for by the Bill will give, though taxation of this kind does not yield anything like as much as is expected of it. I am informed that the yield from the Canadian tax is between £2,500,000 and £3,000,000 ; the estimated revenue from our proposed tax is £500,000.
– If we adopted the Canadian system, we should still have our income taxation ; every citizen would stillhave to pay income taxation at therates applicable to his income. But where the profits of a business are much in excess of what may be called the normal rate of profits on capital, it is not unjust to impose an additional tax. Such a tax would affect war profits, and would include profits that were not war profits, but were profits due to some cause having no connexion with the war. Some companies have watered their stock, other companies have not done this, but possess very large reserves. Most of the companies whose war profits it is intended to tax have large reserves, in addition to their nominal paid-up capital - reserves sometimes equalling the paid-up capital. The Bill provides, in my opinion very properly, that it is the real capital, not the nominal capital, of a business that is to be taken into consideration. A dividend of 15 per cent. on the nominal capital of a concern may be only 10 per cent: on the real capital. My suggestion is that the percentage principle should be applied to capital. It is applied in many cases, and, I believe, would cover the majority of businesses in which war profits have been made. Although in many cases companies may have declared dividends of more than 10’ per cent, prior to the war, the profits on their- real capital may have been less than 10 per cent.
.- Practically all reserves are business capital. I think that honorable members will agree with me that it is proper to take the assets of a ‘business as the basis of calculation, and to say,” We shall allow you to- make 10 per cent, without taxing your profits, but over amd above that percentage we shall tax on a graduated scale, rising rapidly to large percentages.” I put forward the Canadian method as one the adoption of which would leave a great deal ofthe machinery of the Bill intact, and would make unnecessary a pre-war standard, with all its difficulties and its unjust and mischievous results. The Bill would then have nothing like such ruinous effects upon industry and enterprise. It is with the greatestreluctance that I have again brought forward this matter. I thought when we last discussedthe measure that, with the alterations made in Committee, and the very wide discretion given to the Commissioner, it might be possible to avoid’ the most injurious effects; but the more I have read the representations made to me, and the more I have thought over- the matter, the more convinced have I become that that is not so, and that while the pre-war standard is preserved, nothing will prevent, the measure from having the disastrous consequences to which I have drawn attention.
tts. - Why not, if his suggestions are good?
– In these days of practical politics each party has its secret Caucus, in- which every Bill has to run the gauntlet. I suppose that the honorable member for Flinders put before the Liberal Caucus all the suggestions which he has just stated. If there had been a chance of their adoption, they would have been adopted then..
S- That was because there was no.t time; but had’ we remained in office it would have been submitted to the Caucus, as most other Bills- were. I think that I have said as much before when speaking about the measure. The honorable member for Flinders seems to think it. inequitable that we should tax wartime profits or profits made during war time. It may be that this particular measure is more political than fiscal, that the public had demanded it.
S. - As I am going to help the Government, I hope that I shall not be interfered with in replying to the honorable member for Flinders. The public has seen that many companies are making huge profits, and believes that their profits are due to the high, prices charged for commodities. The honorable and learned member says that we should abandon tha idea of taxing war-time profits, and adopt the Canadian system of allowing a dividend of 10 per cent, to be exempt from taxation, and having no pre-war standard. The equity of a pre-war standard is shown by the reference of the honorable member for Flinders to the watering of stock. According to the share list there are companies which pay as much as 15 per cent, and 20 per cent, on their capital. For a number of years the Bank of Western Australia has paid 20 per cent. Its directors have been perfectly honest with the public, and have shown that percentage on their balance-sheets- year after year. Some companies, however, have done differently.. From time to time these companies increase their capital by issuing fresh shares, upon: which their shareholders have the first option. This is allowed by the law. The new shares, though nominally worth £1, may have a market value of £2, but the shareholders are allowed to take them up at £1, the company thus increasing its capital and appearing to decrease its profits. The proposal of the honorable member for Flinders would penalize the honest company which showed the true profits on its capital, and would allow the company which adopted the more modern method to escape scot free. The Bank of New South Wales has from time to time offered new shares to its shareholders for £20 apiece, although such shares might be worth in the market nearly £40 each. Shares in companies like the West Australian Bank have been turned over and over again, and many present-day holders may not be getting a return of more than 5£ or 6 per cent, upon their capital. The proposal now is to tax such shareholders in such a way that the return on their investments will be reduced to, perhaps, only 4 per cent. That is inequitable.
The honorable member for Flinders (Sir William Irvine) spoke of the serious position that confronts us. He said that perhaps next year we should have to settle 300,000 returned soldiers ; that our public works expenditure would be reduced, and that there would be difficulty in obtaining the capital necessary to carry on industry. If the general public are afforded an opportunity to read the honorable member’s speech in the newspapers to-morrow, I am afraid that it will cause, on their part, something in the nature of a panic. The honorable member spoke in the most serious tones of the difficulties that would confront us if next year we were called upon to provide for the repatriation of 300,000 soldiers. He must know, however, that even if the war were to end next June we should not be called upon to settle anything like that number within the following twelve months. When we had at the Front only 200,000 men it was said that it would take two years to. return them to Australia. It is probable that it will take us nearly three years to bring back- the whole of our troops after the war. They may be brought back at the rate of 2,000 a week, and whilst the process of returning them to Australia is in operation this Government, which apparently will not attempt to raise by taxation the requisite revenue, will doubtless be borrowing money to provide their pay and to defray the cost of their transport and repatriation. For the first two or three years after the close of the war; therefore, there will be, in my opinion, not a period of depression, as suggested by the honorable member, but something nearly approaching a boom. The honorable member said that because of this depression difficulty would be experienced in obtaining the capital necessary for the development of industry. I take the view that if, following the close of the war, we experience a great depression, it will be possible to obtain, with the greatest ease, capital, at a low rate of interest. If, on the other hand, there is something like a boom, difficulty will be experienced in obtaining capital for the purposes of commercial enterprises.
The Government must go on with this measure. I do not think that industry will suffer by reason of it, because every business will be allowed to earn 10 per cent., plus a £200 exemption, before any part of its profits is taken. If, as the Treasurer estimates, the tax will yield only £1,000,000, then the taking of that amount from the incomes of Australia will not seriously affect our commerce and industry. Under instructions from the Government, Mr. Knibbs, who is an impartial statistician, took a census of the wealth and incomes of the people soon after the outbreak of war. We are given to understand by him that the wealth of Australia amounts to something like £1,000,000,000, and the incomes of Australia to about £200,000,000. The taking of £1,000,000, for the purposes of taxation, from incomes amounting to £200,000,000 is not likely to have the serious effect which the honorable member for Flinders has suggested.
s. - Can the honorable member see anything in the Bill that does not select for taxation only one section of the community?
– By reason of the pre-war standard, the Bill deliberately excludes from taxation all those large enterprises which have long been returning by way of income perhaps 10 per cent., 20 per cent., or even 100 per cent. All such enterprises are excluded. Instead of going to the sources of income on which taxation might fairly be levied, and levied with good results, the Government pick out small industries, recent enterprises, which are now struggling and endeavouring to grow and develop.Why should this be done?
.- Twelve months ago, I strongly pointed out all the objections that have been urged to-day, and I repeated those objections on the motion for the second reading of this Bill. I deeply regret that the Bill has been persisted in, because I think it is grossly unfair that one section should be penalized in this way. It is true that it is to be only a temporary measure, but, while it is in operation, it will inflict on one section of the community injustices from which they are not likely to recover for many a year.
.- Quite so. One obvious reason why the pre-war standard should not be persisted in is that this is a War-time Profits Bill. If it were possible to bring about the high taxation of all war profits, I should be found cooperating with the Government in such an effort. The fundamental principle of this measure, however, is that it shall be a War-time Profits Bill. That presupposes that all persons who, during the war, have made profits over and above a certain standard should be taxed. The pre-war standard, however, destroys what is fundamentally intended to be the principle of the Bill. It is not too late to withdraw this particular feature of the measure, and so enable the Government to obtain more revenue, while, at the same time, avoiding the taxation of one particular section of industry.
.- If we were to take away the pre-war standard, we should have to provide for taxation according to the scale of profits made. Under the Canadian Act, as has been mentioned, a man who was making any profit beyond. 15 per cent, would be liable to taxation.
.- As I have said, if we abolished the pre-war standard, the tax would have to be imposed according to a scale of profits.
.- This Bill does not provide for the taxation of profits arising out of the war. It is a war-time profits tax, and, therefore, should deal with the profits made during the period of the war.
.- I contend that we already have machinery which would do greater justice and produce greater results.
– Infinitely ; but we have to deal with the Bill before us, and it is a Bill that creates the differential treatment to which I have referred. This measure, I regret to say, will result in serious discouragement of investment in war loans.
.- It has not; but I remind the honorable member of clause 11, which deals with the decrease of capital, and also clause 16 and other clauses, which deal with the investment of capital. The position is that where capital is withdrawn from a business, there is a presupposition that it will earn the same amount of profit that, it did in the business, whereas, if it is withdrawn, as thousands have been withdrawn, forinvestment in war loans, there is an infinitely less return than previously. However, I am glad to hear emphasized objections which I emphasized . a little while ago.
n. - It does, by the exemptions.
– If it were possible to get at war profits I would go so far as to make an attempt in that direction, although I admit the difficulty. We are, however, fixing a period during which we shall tax war-time profits; and that should be done in a fairer way than the terms of the Bill permit.
.- Personally, I am pledged against the Bill.
r. - The Prime Minister told nas that “ wealth has its ‘obligations.” Is this the way to fulfil the party pledges ?
Sit ROBERT BEST. - What I urge is the recasting of the measure in the direction indicated, maintaining it as far as it can otherwise be maintained.
– It is a very limited power.
– The power is limited only as regards one paragraphof clause 10. Paragraphf of that clause is as follows : -
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 4th day of August, 1914.
There is a number of other cases, but the limitation applies only to paragraph /. In paragraph g of clause 10 provision is made for special circumstances, as specified in the regulations ; and that bears out what I say, namely, that a wide power is given to the Commissioner to meet certain cases of hardship.
M. - Paragraph / of clause 10 is so governed. Honorable members will see that the promise given by the Prime Minister on the public platform is being carried out, though, of course, individual members may have pledged themselves as they chose.
M.- At present I am dealing with this Bill and the promise given by the Government to introduce such a measure. This Bill proposes, admittedly, taxation on war-time profits, and the whole of the arguments we have Beard are in favour of the substitution of some other proposal. Of course, we would all like to tax war profits only if war profits could be segregated from other profits. This cannot be done, because the ramifications ‘of the war run through all our industries, primary and secondary. It is impossible to allocate a portion of profits, and say that it is particularly due to the war, while another portion of the profits is not. A suggestion has been made th’at we should schedule businesses, and distinguish those which have made war profits as distinguished from war-‘ time profits. Can we say that pastoralists have made war profits, and war profits only?
M.- Could we say that all the boot manufacturers of Australia have made war profits only?
– And some have not.
– Could we say that all the shipping companies have made war profits only? It is utterly impossible to say which profits are war profits and war profits only.. If we were to split up, the balance-sheets, and,, after analyzing each individual case, call upon those concerned to show cause why they should not be taxed, the Department would have to hold an inquisitorial examination into the conduct of almost every business in Australia. The worst feature is that Parliament would not lay down the principle of taxation, but simply delegate its taxing power to the Commissioner to be exercised at his discretion. That, of course, is contrary to the elementary principle of taxation measures, which, as a rule, ought to be as certain and .specific as they can be made. Another suggestion is that we should adopt the Canadian measure; but if we did that we would have to drop the whole principle of war-time profits taxation. It might be a good additional form of’ taxation, but because it could probably be made to apply, that is no reason for abandoning the Bill before us. We have also to remember that, at the time the Bill was introduced in Canada, there was’ no income tax in that Dominion. As a matter of fact, each- country, in framing its taxation measures, must have regard for its own conditions. We must take into consideration our existing legislation, our own industries, and the circumstances in which, we live; and we must seek to apply the proposed taxation equitably to all sections of the community. The large companies will not escape this taxation.
M. - It is the big companies who are mostly engaged in the larger industries of Australia.
M. - If these companies -are making huge profits, they would be hit by this Bill. Does any one suggest that we should also hit them with the income tax? It would mean double taxation. We cannot take the tax from .them twice. If the income tax does take from them the whole of the excess profits, we cannot take it again, by an excess profits tax. The House has adopted the principle of the Bill by its decision on the second reading, and if it is sought to depart from the vital points, of the measure, it will simply mean asking the Government to withdraw the Bill’.. The Government intend to proceed with, the Bill in the form in which it nc-w stands.
s. - We will not get it under this Bill.
– We will be getting very little, yet some honorable members want the Government to drop the measure. If the Government introduced another measure, we should have similar objections offered. When I introduced the Income Tax Bill last year, similar objections were raised. Because it was proposed to take £16 from a man earning £600 a year, honorable members complained that the proposal was iniquitous. When the Amusements Tax was introduced, honorable members said, “Do not tax women and children who are going to entertainments”; and so they mutilated the Bill. They mutilated the Income Tax Bill, more or less, and they seek to mutilate this measure. I urge the Government, to stick to their Bill. If there are any iniquities in it, there will be an opportunity of reconsidering the measure when we meet again; but as the party on this side is pledged to the imposition of a war-time profits tax, and the people outside have a strong feeling in regard to this form of taxation, we cannot throw the Bill on one side.
t. - Let us tax the lawyers.
– I have helped honorable members a little in regard to this Bill, but I did not appreciate what their real trouble was. I find now that the real burden of their woe is that they made certain pledges prior to the last elections which they have, technically at least, to carry out. Therefore, they have come down with this Bill, which is nominally a War-time Profits Tax Bill, because they have said, “ We are pledged to the electors to introduce a War-time Profits Tax Bill.”
d. - Pledged to smash the British Government !
– I never get up to speak but this ancient mariner begins to bait me.
N. - This ancient mariner, who should be trying in the brief respite he has received to make his peace with the electors who have given him a brief sojourn here by a curious accident - this Labour anomaly, this fungus growth that has been cub off from the tree of labour-
The TEMPORARY CHAIRMAN. - Order !
– I sympathize with honorable members in their difficulties. They desire, nominally, to fulfil their election pledges; and when some of them say, “ But you are going to tax the small businesses and let the huge incomes escape,” the reply from Ministers is, “ But we must fulfil our election pledges. What matters it if the large businesses do escape, and the small men who are striving to get their heads above water are hit by the Bill; what matters it if these small men have to bear the burden of this taxation so long as we fulfil technically our election pledges, and square t(he ledger to all appearances, even though morally and really we have grossly failed to discharge those pledges 1 ‘ ‘ Before getting down to the merits of this question, I find it necessary to remind my friends of where they are in regard to it. These gentlemen of “unlimited sacrifices”; these gentlemen who have advocated again and again the whole sacrifice of the worker’s life, wages, income, capital, interest, and principal; in fact, the worker’s everything, come down here, and say that it is unjust to place discriminating taxation upon the man whose income from his business is only £1,000 per year. Of course, it is unjust by comparison, but how badly the argument comes from those whose policy is what we know it to be !
I come now to point out why I consistently with my general attitude oppose this Bill - lock, stock, and barrel. We are merely juggling with terms when we say that this is . a War-time Profits Tax Bill, and again, in some respects, say that iti is a War Profits Tax Bill. If an honorable member rises, and addresses himself to the war profits aspect of the measure, and says, “ Let us get at the war profits,” the reply is, “ We cannot; we cannot find them; we do not know where they are and what they are; therefore we” cannot tax them, and, - besides, this is a War-time Profits Tax Bill.” Very well; we call it a War-time Profits Tax Bill, and we say, “ Let us apply it justly to those profits which are made during a time of war” ; but Ministers say, “ No, you quite forget the war aspect of this Bill,” and they hark back to the war profits aspect of the measure. It is a mere juggling with words. If this is a War Profits Tax Bill, let us select war profits, and tax them. If we cannot select the war profits, let us adopt a principle of taxation which will apply justly to the whole community.
N. -Yes, tax the lawyers, tax the doctors, tax the whole population that is capable of bearing taxation.
N. - The honorable member does not seem to have taken the trouble to ascertain the basis of our objection to this Bill. Of course, I objected to the taxation of junior lawyers and small businesses. I would be very recreant to my trust if, having secured that small measure of justice to one class of persons. I sat mute while it was proposed to do an injustice to other sections of the community, as the Bill proposes to do. Of course I did my best to have exempted those junior professional men who by personal exertion, and not because of the war, but in spite of the war, happen to be making increased incomes at this time, while those with very large incomes escape altogether. Consistently with that’ attitude I now say that the Bill should be withdrawn, because the more that I have listened to arguments such as I have heard this afternoon and previously, the more I have become convinced that it will do nothing less than gross injustice. The honorable member for Cook (Mr. J. H. Catts), who has returned to the chamber after a few days’ absence, naturally asked whether the Government had made any attempts to answer the outstanding objections against the injustice that will be done by the Bill, and I interjected that they have succumbed to our arguments in respect to a few special cases. But, as the honorable member for Kooyong said - and I agree with almost every one of his remarks - they leave an i.inlimited list of injustices still unremedied.
N.- The fatuity of this parrot-like repetition of what was in the previous Bill ! I never pledged myself to support any such Bill.
Mr. Pigott. You pledged yourself in Caucus.
- (Hon. J. M. Chanter). - Order! I ask the honorable member for Melbourne Ports to withdraw that remark, and apologize.
.- The honorable member must withdraw unconditionally.
N.-“ Wealth must bear its part,” was the watchword of the Prime Minister in regard to this tax. Only once have we seen him in the House while this measure has been under consideration, and then he sat in the shadow of the Treasurer - the right honorable gentleman whom he referred to as a troglodyte who had never conceived a new idea.
– Order ! The honorable member must confine himself to the question before the Chair.
– When I spoke in support of the honorable member for Henty in the early hours of Friday morning, I said I was against the Bill, and would do anything to limit the scope of its mischief. I voted accordingly then, and accordingly I will vote now. I do not know whether it is by the grace of the Chairman or the Standing Orders that we are discussing this Bill at such length at this stage. I think that the liberty of discussion arises rather from the growing sense on the part of Ministerial members of the futility and even wickedness of passing a measure of this kind in its present form. I hope that when the Bill is in transit to another place it will be happily lost or forgotten, and that the Government will come before the House with a measure - I do not care what they call it, a war profits tax or a war-time profits tax - but a measure consistent with their own pledges to tax those people- who are able to bear taxation. If our condition in regard to this war is anything like what it is said, to be, if it is in the remotest degree approaching what the Prime Minister, on the platform and in the House, has said it is, we should have a measure,, not lightly and unjustly touching a small section of the communitv. but, if necessary, cutting to the bone the whole community in proportion to their ability to pay. Let us have such a mea’sure, and let us h.ave this iniquitous proposal forgotten, if possible, after it passes from this Chamber, because I am certain, after what the Honorary Minister has said, that the Government are determined to pass it here, being ashamed, no doubt, to submit further amendments.
– Order ! I ask the honorable member to withdraw his last remark.
– P certainly withdraw it.
The CHAIRMAN (Hon. J. M. Chanter). - The Chairman is placed here for a specific purpose, namely, to interpret the rules of debate as liberally as possible. I have done that, and I believe that the temporary Chairman (Mr. Atkinson) has acted in the same way. I recognise that this claus* embodies practically all the- principles in the Bill, but I ask honorable members to restrict their remarks to those principles, and not to get outside the scope of the clause. Such discursions only lead to disorder and interjections, and cause unnecessary trouble.
n. - Do you mean that we ould not impose a super-income tax?
– We could still do that.
Y. - That is the point. That was the year when the distribution of money throughout Australia began to get back into trading bands, and to yield large .profits. It was because of that fact that .notice of this tax .was given. At that time I heard no objection from honorable members opposite. The tax was hailed as a Heaven-sent .proposition which .only the genius of the Labour painty could have evolved. Now the ‘honorable member for
Maribyrnong suggests a super-income tax, not in respect of the year of plenty thai is passing, but in respect of the years of decreasing income that are before us. I should not have bothered to speak this afternoon but for the claptrap which has been uttered about the large interests escaping. That is the argument advanced by the other interests which wish to escape. We must tax the profits of the year 1915-16 in order to keep the National party’s pledges, and there is no way of taxing that year other than by some such measure as is now before the Committee, because the public was given notice of this measure, and in passing it there is no retrospection.
Y.- If I tell somebody that I intend to tax him, and that he must make ^provision for that tax, he makes that provision. J£ he does not, the fault is his own. About fifteen months’ notice of this tax was given by Parliament, and every Government succeeding has reiterated the warning. If people have not taken the warning they have only themselves to blame. If we abolish the pre-war standard, we shall act unfairly, and even foolishly, and cause immense dislocation of share values throughout Australia, and infinite inconvenience to the Treasury. Further, you cannot tax the profits of the year 1915-16, the year of great profits, unless you pass this Rill. It is often urged against those arguing -against a taxation measure that, while burning with a righteous zeal to be taxed, they bitterly- resent being brought within its application.. If you withdrew the Bill, and proposed a super-income tax, we should have the same gentlemen saying, “ In the name of common sense, why heap this intolerable burden on the taxpayers?” Whatever form the proposal may ,take, it will .create trouble, but I think .that under the Bill there will be less trouble than under any other proposal. Let us see how the measure works. ‘Should it work inequitably we may trust the Government to reconsider the position.
Dr. MALONEY (Melbourne) [6.211.- I agree with a great deal .that was said bv the honorable member for Grey (Mr. Poynton), and had there been a division would have voted ica the second reading of the B2U, not that I think .that the measure goes far enough, but because I am bound to support one having for its object the taxing of war profits in war time. The honorable member for Batman (Mr. Brennan) has justly characterized as. a quibble the contention that we should pass, not a war-time profits tax, but a war profits tax. To do that would be to create more technicalities. I disagree with what was said by the honorable member for Grey regarding the entertainments tax. It was stated that that tax would fall unjustly upon the purveyors of amusement who were already subject to the ordinary income taxation. Certain firms in this city, however - Hoyt’s and two or three others - were willing to pay the tax, and leave their prices of. admission untouched. But the combine immediately insisted that they should make the people pay the tax. In my opinion, the Government should not permit any combine or Trust to interfere between a firm and the public when the firm wishes to pay a tax itself, and does not wish to pass it on to the public.
One must agree with some of the remarks of the honorable member for Flinders (Sir William Irvine), but I think that he was wrong in saying that those who earn the largest incomes would escape the proposed tax. If that were so, the Government should alter tlie Bill in order to compel these large profit makers to contribute to the general taxation. In my opinion, the honorable member did not prove his statement. When I asked him to say what was the yield of the Canadian tax, he said, “ only £2,500,000.” That seems a very small sum to be contributed by a population of 8,000,000 persons, forming a community that is wealthier than Australia. In my opinion, a super-tax on the ordinary income tax would have been better than the proposal now under consideration. But it must be admitted that the Government was pledged to the introduction of the proposed tax, and Ministers, according to their lights, are honorably fulfilling that pledge, though their lights do not burn as brightly as I could wish. If I understand the measure rightly, everything over the pre-war standard of profit, making allowance for the £1,000 exemption, will pay taxation at the rate of 50 per cent. That is a fair commencement, but I hope that we are not going to stop at that. The honorable member for Capricornia (Mr. Higgs) spoke of the Western Australian Bank, the history of which is unique. The honorable member for Flinders spoke about capital being held in reserves. The Western Australian Bank has what, I think, no other bank in the world possesses - a reserve fund equal to nearly 300 per cent, of its paid-up capitaL
Sitting suspended from 6.28 to 7.^5 p.m.
– The capital of the Western Australian Bank consists of 25,000 £10 shares fully paid up which represents £250,000. Its reserve of undivided profits, however, amounts to £713,370, or nearly 300 per cent, on its paid-up capital. Thus, if the suggestion made by the. honorable member for Flinders were adopted, the percentage allowance would be upon practically £1,000,000 instead of the £250,000 actually paid up. Instead of an exemption of 20 per cent, on the actual paid-up capital of .the company, the bank would thus ‘receive an exemption of 80 per cent. That would be an absolute infamy.
The Government are offering me, and those who think with me, only a commencement in this form of taxation. If I cannot obtain the full loaf, I am prepared to take a portion of it; but I shall not cease to ask for more.- The Bank of New Zealand has a reserve fund of £2,246,595. That reserve fund really represents profits, but under the honorable member for Flinders’ proposal the shareholders would be allowed the percentage deduction in respect of the full amount instead of upon the amount subscribed by the original shareholders. On one occasion Mr. Clapp, then secretary of the Melbourne Tramway and Omnibus Company Limited, was under cross-examination for three successive afternoons in regard to the way in which the capital of the old company had been watered; but it was impossible to clearly ascertain to what extent the watering-down process had been carried on. It was estimated that a dividend of 5 per cent, was really equal to a dividend of 45 per cent., or even 50 per cent., upon the original capital subscribed before the watering of the stock took place. I hope that the proposal made by the honorable member for Flinders will be rejected.- The return prepared for the information of Sir Alexander Peacock in regard to the profits made by firms and individuals, as disclosed by the State income tax returns shows that only thirtythree out of 265 suffered a reduction of income in the year of war, 1916, as compared with the returns for 1914. Of the thirty-three, five in the following year made sufficient to more than “balance the deficit of the previous year. Honorable members opposite talk of an exemption of £1,000, but what is to be said of the position of thousands of working men in Australia to-day who earn only £2, £3, or £4 per week, or that of girls in factories who, if they are lucky, average from 30s. to 40s. per week 1 A man who in pre-war times was earning £1,000 a year will be allowed an exemption of that amount if his profits exceed that amount in later years. There will also be an additional exemption of £1,000.
Y.- I am speaking, not of partners in a business, but of individuals. I am strongly opposed to any exemptions. As the honorable member for Henty (Mr. Boyd) has said, the fairest course to pursue would be to remove all exemptions from this Bill. It would be well if we were to require those who have raised the price of foodstuffs to pay into the Consolidated Revenue every penny made by them in excess of their average returns prior to the war.
I invite honorable members to consider for a moment the profits made on whisky. The output of Australian whisky runs into some thousands of gallons, but who knows where and how that- output is sold? It is reported that Australian whisky is blended with other whiskies, and sold in bottles purporting to contain imported whisky. We cannot put a stop to the crime of burglary, but we can make it awkward for the burglar whom we catch. Why do we not make it awkward for the manufacturer or merchant who sells Australian whisky in bottles purporting to contain the imported article ? Two gentlemen in the trade told me this afternoon that prior to the war a good Scotch whisky, having the requisite certificate of two years’ maturity, could be bought here in bond for 2s. 6d. per gallon. At that time the duty was 14s. per gallon; it has -since been increased to 17s. We may make an allowance of 2s. 6d. per gallon for the increase in freight charges, but that will not account for the fact that to-day such whisky cannot be purchased for less than 17s. 6d. per gallon, an increase of 600 per cent.
Y.- Of course, the honorable member for Yarra, as an exMinister for Customs, knows much more about this matter than does my informant, and I gladly accept his statement. Coming to Australian whisky, which is manufactured in thousands of gallons, I would point out that very few hotels sell it as Australian whisky. To my mind, that is an infamy. I desire to see our Australian products built up as American products have been built up. Shortly before the outbreak of war Australian whisky cost 4s. 6d. per gallon. It is now being sold at 15s. per gallon: The Treasurer will agree with me that there is a large source of profit hidden there.- I object to firms which are making large profits being permitted to escape taxation. Before the war , the Excise duty upon Australian whisky, distilled wholly from barley malt by a potstill or similar process, at a strength not exceeding 45 per cent, over proof, was 13s. per gallon, whereas upon blended whisky, distilled partly from barley malt and partly from other grain, containing not less than 25 per cent, of . pure barley malt spirit, which had been separately distilled by a pot-still or similar process at a strength not exceeding 45 per cent, over proof, it was 15s. per gallon. If I had my choice I would prefer a super income tax to a war-time profits tax, because I candidly confess that I do not fully grasp the Canadian system of war profits taxation. Canada has been credited with many good things, but I would have to understand its system more thoroughly before I could accept it. For advanced legislation Australia can more than hold her own with Canada, just as she can more than hold her own from the stand-point of her treatment of the Mother Land. Canada imposes upon Great Britain the cost of every man - as soon as the Canadian lands in England - that she places in the field. We have not done that. To my mind, there should be no exemptions under this Bill. I am satisfied that if the question were put to the people, “ Do you approve of persons making huge profits in war time?” they would by an overwhelming majority answer “ No.” I know of one man, or firm, who in 1916 made a profit of £100,000 in excess of his profit in 1914.
Suppose that he made that profit by raising the prices of foodstuffs. If he knew that every penny -of the excess would be confiscated, would not that knowledge tend to prevent the raising of prices? 1 have shown that there has been an increase of 600 per cent, in the price of Australian whisky. But that is nothing compared with the increased prices charged for other commodities. There are in this city two firms which have increased the prices of food to such an extent that under the old code Napoleon they would- not only have been fined . heavily, but would also have been imprisoned.
Y. - I hope so sincerely. I trust that the Government will not yield to the suggestion of the honorable member for Flinders. But the Bill will not produce the revenue that it ought to yield. I maintain that anycompany which at a time like the present can make pre-war profits ought to be very well content. We are 12,000 miles distant from the danger zone, and consequently are most fortunate. When we reflect upon the countries which have been devastated - countries like Belgium, Servia, Montenegro, Albania, Roumania, and a portion of Russia, including Riga–
Y . - Yes. I ask the Minister for the Navy, who has been very good lately, whether . the merchants and othersof the before-mentioned countries, and of Petrograd, would not be exceedingly grateful if . they could carry on their businesses under existing conditions, and make pre-war profits? In these devastated countries what has become of the individuals who were wealthy? They have been swept like chaff before the wind. I regret that the Government have slavishly followed the Bill which was introduced by a former Administration.They ought to recognise that the conditions which then obtained are very different from those which prevail . now. Times have . changed, and whereas we might then have been content with 50 per cent, of the excess war-time profits, we should now stretch out our . hand and take the whole of them. In Victoria alone profits amounting to just upon , £2,000,000 have been made since the war began, in excess of profits amounting to £3,900,000 which were made in peace time. If we include the rest of Australia, it is manifest that £8,000,000 of excess profits . have been made in war time. Yet it is proposed to take only one-half of these profits.
Y. - I think the honorable member will find that profits were higher in 1913 than isa 1914.
Y . - That bears out what I am going to say. The year 19.13 was . a year of peace, whereas the declaration of war was made in August, 1914; and every one will admit, that trade suffered, and credit was shaken for a few weeks, that) is, until we pulled ourselves together. The result was that profits during the last quarter of the year were not equal to those of the three preceding quarters.
Y.- I think it will be found that there was a decrease in 1914. However, that is a matter for inquiry. I should have liked to see the computation of profits made absolutely on the incometax returns, which are on formal declarations, and any one making a false declaration is liable to a heavy penalty. It is the height of absurdity tohave seven different income taxes imposed in Australia; and, in my opinion, there ought to be one income tax and one landtax for the whole of the . country. The . State could be paid a proportion . of the revenue raised by the Commonwealth; and if a scheme to that end were carried out it would prove a means of economy, and more just . than the differential system of bookkeeping.
Y.- The honorable member will agree that . some day we hope to have . only one representative of Australia in the Old Land, . and other economies . of the . kind; and there is no harm in throwing out seeds that may bear fruit. There ought not to be one penny of exemption, in regardto profits which . are more than those made in peace time; and I venture to prophesy that if the present Government do not take some steps in this connexion within a year, public opinion will force legislation with that object upon us.
m. - That matter can be discussed more appropriately on clause 16, which deals solely with capital.
– Very well. In the case of a small business, if a man is the owner and does not devote the whole of his time to it,, he is allowed nothing for the time he gives; but if he is one of two partners, and gives part of his time to the business, that is allowed for. I think the individual man should have a proportionate allowance.
m. - I have given notice of amendments in clause 14,. and these will give the honorable member an opportunity to deal with that matter.
ter). - I remind the honorable member that clause 14, which has still to bo considered, deals with’ the question he is debating.
– No ; I am dealing with the pre-war standard question raised by the honorable member for Flinders.
– I remind the honorable member that a clause has been recommitted which deals specially with the subject to which be is referring, and he might defer his remarks until that clause is under consideration.
– If the Minister in charge of the Bill will say that, when we come to that clause, some means will be devised to overcome the difficulty to which I am referring, I shall be content.
Y. - I am pointing out a. difficulty that will arise under, the Bill as it stands, because I realize, as did the Honorable member for Flinders (Sir William Irvine) that every effort should be made to induce people to bring forward new propositions to develop the resources of the country, so that when our men come back from the war there will be avenues of employment open to them in new industries. We should not now do anything that would block the establishment of new industries.
Y.- I am pointing out that a company now making profits equal only to its pre-war standard of profits will not have to pay a sixpence of this tax, whilst a new company, with the same capital, and making the same profits of £12,000 a year, will take 10 per cent, of its capital, get an exemption of £1,000, and under the clause providing for wasting assets with ten years’ life a further exemption of £1,000, and an exemption of one-fourth of the balance of £10,000 of its profits; but it will have to pay £7,500 in the shape of war-time profits tax, whereas the older company, making the same profit, will not pay a single sixpence. That is the anomaly to which I am directing attention, and I should like some means to be devised to deal with it.
– We could overcome it by abolishing the pre-war standard.
– I think that the difficulty might be met to some extent by assessing the war-time profits tax on the excess value arising from war conditions of the metals in which the company does its business. The company should be able to declare to the Commissioner of Taxes that, .for instance, the pre-war standard of the value of tin was so much per ton, and that the present price is so much in excess of that, and the company could be called upon to pay the tax on the difference between the value of the tin or of other metals prior to the war, and during the accounting period under this Bill. If that arrangement were made, I believe it would satisfy those, engaged in such businesses as I have referred to, whilst it would not block the formation of mining companies, which I am sure the Government intensely desire to promote. If the Bill is passed as it stands, I am fearful that its effect will be to put an immediate stop to the formation of- these new companies, and so will be very injurious to the Commonwealth. Honorable members are aware that mining is a very speculative business. Those investing in such a business anticipate larger profits than may be expected from any other venture, because mining is the most speculative of all industries. Although I recognise these difficulties, I am prepared to support the Government in connexion with this part of the Bill in the hope that at a later stage of the measure some effort will be made by the adoption of an amendment on the lines I have suggested to lessen the injury which otherwise will be done to new companies.
– We do not propose to abolish the pre-war standard.
– I am pleased to hear the Treasurer say so. On this matter I am a solid supporter of his. The Bill is such an intricate problem, that there are very few people who understand it, and, therefore, I make the suggestion that after it passes through the Committee stage it should be reprinted with all the amendments incorporated in it before it is submitted to honorable members for the third reading. It is very necessary, on such an intricate measure, that honorable members should clearly see what they have done. I do not think there is one honorable member except the Treasurer and the Honorary Minister (Mr. Groom), who has been helping him so assiduously, who understands thoroughly its many ramifications. If the Government would consent to have a clean print of the measure made before the third reading comes on, it would facilitate the passage of the Bill.
m. - The underlying principle is the same.
– -The first Bill contained no £1,000 exemption, nor did the Bill drafted by the honorable member for Grey (Mr. Poynton).
R. - Yes ; but they were to be left to a Board of Referees.
R.- I said the other night that it was too high, and I say it again.
R. - I am not here to frame the Government’s financial policy. I am the last man that the Government would consult in the framing of that policy. They must accept the responsibility. They cannot shelter themselves behind the fact that this Bill was introduced by the honorable member for Capricornia (Mr. Higgs).
R. - Several honorable members opposite have done so, and particularly the honorable member for Calare (Mr. Pigott). He said across the chamber, “It is your Bill,” meaning the Bill introduced by the honorable member for Capricornia, but no one would recognise this Bill as that which was introduced by that honorable member. It contained no exemption of businesses with a profit of £1,000. There are other exemptions in this Bill which were not in the measure introduced by the honorable member for Capricornia. His Bill allowed a pre-war standard of 6 and 7 per cent. only. We do not know what rates the Government will propose in their taxing measure. According to the Treasurer’s admission in his Budget speech, at least £2,000,000 has been taken from the people in the shape of excess profits, which, to my mind, should not have been taken, because he admits that by this process of taxation he is going to raise £1,000,000 or thereabouts. I think that the suggestion is that only 50 per cent, of the profits shall he taxed. The action of the Government reminds me of the case of a man who, when he was robbed of a shilling, said to the thief, “ Give me back (>d. and I will let you off.” The Government practically say to the persons who will be affected by this taxation, “ We will allow you to keep the first £1,000 for yourselves.” As the honorable member for Henty (Mr.. Boyd) has said, very few honorable members understand the Bill. It is doubtful whether the £1,000 exemption is not in addition to the 10 per cent, profit which can be allowed. It is also very doubtful whether persons will not be allowed a prewar standard in addition. The Bill has been mangled. I sympathize with the Treasurer in his indisposition. He is troubled with the sort of throat which most of us have after an election campaign and I trust that he will be better soon. The only vigorous speech he has made on this measure was the one in which he fought for the exemption which the honorable member for Henty had’ moved to be struck out. Let honorable members look through the Hansard record for last ‘week, and they will see that there was not one speech made by a member of the Government in defence of the principles of the Bill. The honorable member for Hindmarsh said at half-past 5 o’clock the other morning, and the honorable member for Grey said this afternoon, “ When it was a question of the conscription of life you said that the men had to go, but when it is a question concerning taxation you say, ‘ We will treat these people very gingerly. We will put the hand in a velvet glove. We will let them go. We will allow every one to escape whom ?it is possible to exempt. ‘ ‘ ‘ There is no honorable member on the other side, whether he understands the Bill or not, there is not even a Minister who can state what amount is likely to be received. There has never been a taxation, measure submitted to any Parliament which has been so mangled as has this one. It has been subjected to ‘very severe criticism even from the supporters of the Government. After it ran the gauntlet of their Caucus meeting upstairs last Thursday; after the definite principles were decided upon, honorable members on the other side came here and twitted us with having supported Bills-
– I hope that the honorable member will not pursue that line of argument.
– If honorable members state that a Bill has gone before our Caucus that is all right.
– Order !.
– Not with the present Chairman.
– There have been one or two remarks made which I could not help- overhearing: I appealed to honorable members, and’ pointed out they are not being deprived of. their privileges by being’ required to speak relevantly to the clauses, nor did I intend to deprive them of any. All these matters have been discussed, and could well foe discussed upon the clauses which the House has referred to the Committee.
– The honorable member will please be silent. I assure honorable members that -their- privileges are not interfered with when the Chair asks them to confine themselves to the question immediately before the Committee. Clause 3 practically deals with “ Parts,” and by, perhaps, the unwisdom i of the Chair too much latitude has been- allowed, and the discussion has de*veloped into a second-reading debate. On clause 4 the definitions will be considered by the Committee. On clause 7 the war-time profits tax will be considered. On clause 8 the businesses to which the tax. applies will be considered. On clause II the pre-war standard will be considered. On clause 14 the computation of profits will be considered. On clause 15 the prewar years will be considered. On clause 16 the definition of capital will be considered. On clause 31 the date for the payment of the tax will be considered, and then the insertion of a new clause is to be proposed. I ask -honorable members to assist . the Chair to get on with the business.
. - We shall only have a repetition of speeches ‘if this latitude of debate is allowed to continue. Therefore, I intervened to ask honorable members to address themselves to the clause immediately before the Committee.
– On clause 3 the honorable member for Flinders (Sir William Irvine) and other honorable members have had an opportunity to traverse the whole Bill, but I did not do that.
– Order !
– I would have finished my speech by this time if I had not been interrupted. I have no desire to prolong the proceedings.
.- I call upon the honorable member for Maranoa to withdraw that reflection upon, the Chair.
– Order !
.- I again call upon the honorable member . to withdraw that reflection upon the Chair, and to apologize.
.- Then I name the honorable member.
.- I call upon the Minister to take the usual course.
.- Order !
.- Willthe honorable member cease? I have namedthe honorable member for Maranoafordisobeying theChair, . and I call upon the Minister to act.
.- The honorable member for Bourke will resume his seat, and withdraw that statement.
. - Will you withdraw the reflection that I did not call the honorable member for Angas to order ?
– I ask the honorable member to withdraw the reflection.
. - Order !
. -The reflection that I did not call the honorable member for Henty to order.
.- Will the honorable member withdraw the reflection unconditionally ?
n. - It is a new one.
– No; I do not know that there is anything new . about it. I want the honorable member for Maranoa to relieve me of the unpleasantness of the task which devolves upon me. He will recollect that all this has arisen from undue latitude having been given to other . honorable members.
.- Order !
y. - Are you, sir, not going to call the Minister to order ?
Mr. JOSEPHCOOK.- That is precisely what the Chairman ‘himself . said,
y. - That is outof order.
– The honorable member willbesilent.
.- Will the honorable member be silent?
.- Then I name the honorable member for defying the Chair.
.- Order !
.- Order ! Serjeant, remove the honorable member for Bourke.
Mr. Anstey (to the Serjeant-at-Arms). - You need not lay your hand upon me, I will walk out.
– I now desire to report the honorable member for Bourke for having disobeyed the Chair.
Mr. Anstey (to the Serjeant-at-Arms). - Keep your hand off me, and I will walk out.
.- Order !
.- Not at this stage. During the absence of the Prime Minister the honorable member for Maranoa made a reflection upon the Chair. I called upon the honorable member to withdraw. That he declined to do. Twice I repeated the request for a withdrawal, and still the honorable member declined. . I have now reported the honorable member to the Committee, and I call upon the Prime Minister to move that the matter be reported to the House, and a resolution be made that the honorable member for Maranoa be suspended from the service of the House for the remainder of the sitting.
s. - On a point of order, I should like you, Mr. Chairman, to be good enough to inform the Committee by what authority you instructed the Serjeant-at-Arms to remove the honorable member for Bourke.
– I acted in the interests of good order, as I am charged to do.
– The honorable member for Batman is disorderly in interjecting when the Chairman is addressing the Committee. If the honorable member for Capricornia takes exception to my ruling-
– The honorable member, must state his dissent in writing in the usual way, and it can then be dealt with by the Committee.
.- I asked the honorable member for Capricornia to hand me a written notice pf his dissent in accordance with the rules. What the honorable member has handed to me is a personal objection, which reads -
I hereby take exception to the action of the Chairman of Committees in instructing the Serjeant-at-Arms to remove from the Committee the honorable member for Bourke (Mr. Anstey ) .
The honorable member knows that his proper course is to move dissent from my ruling. Before he writes out his dissent, I take this opportunity of saying that under the Standing Orders, and in accordance with all the rules and prac’tice of the British House of Commons, the Chairman is charged with the responsibility of preserving order in the Committee, just as the Speaker has that responsibility in the House.
.- The honorable member for Melbourne will please be silent. I declined to allow the honorable member for Bourke to continually defy an order from the Chair. I commanded him to be silent, and he would not obey. I did not order the Serjeant-at-Arms to suspend the honorable member. I instructed the Serjeant-at-Arms to remove the honorable member from the chamber, with the intention of immediately reporting the matter to the Committee, in order » that it might be dealt with in the House.
.- Will the honorable member be silent? I put that position to the Committee now as I put it to the Committee at the time. I know that the Chairman of Committees has no power to ask for the suspension of an honorable member except through the House, but the Chairman has power to prevent disorder in Committee. The scene in which the honorable member for Bourke figured was decidedly disorderly, and wa« likely to lead to greater disturbance, and I took upon myself the responsibility of having the honorable member removed from his seat, so that disorder might cease.
.- If the honorable member will alter his motion to read that I ruled that I have power to order the removal by the Serjeant-at-Arms of any honorable member for the purpose of preserving order I will accept it.
.- Is it the pleasure of the Committee that the matter be taken forthwith ?
– Those in favour of the’ motion say “ Aye.”
.- Order !
– Order ! There can be no debate. I asked the Committee distinctly and clearly if it was their pleasure that the motion be taken forthwith. I got an assenting voice, and I then put the question “ That the motion be agreed to.”
.- That is entirely within the discretion of the Committeer Standing order 228, “ Objection to ruling of Chairman of Committees,” provides -
If any objection is taken to a ruling or decision of the Chairman of Committees, such objection shall be stated at once in writing, and may forthwith be decided by the Committee; and the proceedings shall then be resumed where they were interrupted.
I call the Committee’s attention to the words “ and may forthwith be decided by the Committee.” I asked the Committee immediately if they were content to decide the matter forthwith, and the Committee assented to that course.
.- Then, will the honorable member please take the proper course - that is, will he put his dissent in writing ?
– Does the honorable member rise to order ? If the honorable member wishes to dissent from my ruling he must put his dissent in writing in the proper form.
– . Order ! I call the honorable member’s attention to the fact that nothing can intervene until this matter is settled.
.- That is not the Chairman’s ruling.
.- I gaveno such ruling. The standing order I have just read is not mandatory, but permissive. It became mandatory when I sought and obtained from the Committee their acquiescence in the question being put forthwith. I deliberately and’ clearly put it to the- Committee whether they would have the motion taken forthwith. The Committee agreed absolutely.
– Honorable members may offer their objections in the proper form.
Mr. West interjecting;
– Order ! I have called upon the honorable member for East Sydney (Mr. West) several times not to interject, and I ask him now to assist and not defy the Chair.
.- The honorable member will have to help it. The Committee decided on the point I submitted to them, and once the Committee have decided on a question it would be improper on the part of the Chairman to attempt to go behind their decision. The Committee decided to have the question put forthwith, and I then put the question forthwith. The- dissent of the honorable member for Capricornia (Mr. Higgs) therefore does not apply.
.- That is quite another matter. If the Committee, as a whole, were under any misapprehension, I have no desire to take advantage of it. Is it the pleasure of the Committee that the matter be re-opened in order to have the question resubmitted ?
– - Notice of dissent has been, given from the ruling of the Chair. Standing order 228 provides that that question may be taken forthwith without debate..
– “Forthwith” means without debate. There is no other meaning. The question is. whether this, motion shall be submitted to the Committee-
. - Yes . without debate.
– That is my interpretation of the standing order. The honorable member can dissent from that ruling again if he wishes. I ask the Committee again, so that there may be no misapprehension, do they desire to take this matter forthwith, which means without debate, under standing order 228 ?
Honorable members having given their voices,
– I think the “ Ayes “ have it.
Honorable Members’ in Opposition. - The “ Noes “ have it.
– The Committee will divide.
ter). - Certainly. I did not order the honorable member’s removal from the precincts.
anter). - Order ! I am loath to intervene, but I point out tothe honorable member that the Committee has already decided that this question cannot be re-opened.
– The Committee decided that.
– Order ! The honorable member is again reflecting on what the Committee hag , already done.
.- Order ! The honorable member has already dissented from that, and the Committee has decided that my ruling be agreed to.
.- Order ! Is it the pleasure of the Committee that the Prime Minister have leave to make a statement?
e. - , If we- are going to be “ gagged,” the Prime Minister will be “ gagged,” too.
– Clause 3 is before the Committee.
.- Order ! I again intimate to the honorable member, and the Committee as a whole, that I distinctly called the attention of the Committee to standing order 228, and asked the Committee to decide, for itself, whether it would takethe vote forthwith, without debate. That is how it was submitted to the Committee.
– That is how it was submitted, and the Committee decided to take the vote without further debate. The business now before the Committee is that clause 3 be agreed to.
.- That is not a point of order, but a question; and being put in a proper way, I shall answer it. The Chairman of Committees is the guardian of the rights of all honorable members. Whenever any disorder occurs, it is the Chairman’s duty to intervene immediately to see that order is restored. I did that, as the honorable member knows; and in his own case he made a graceful withdrawal from the position he took up. I endeavoured to do the same with the honorable member for Bourke (Mr. Anstey), but that honorable member would not comply with my ruling. Now I trust, in the interests of good order, that the matter be dropped’ forthwith, and the business of the Committee proceeded with.
.- That is quite right. The House may censure; but in this case there was no report to the House, and the Committee did that. The Chairman is charged with the preservation of good order. In other States, particularly the State to which I belong, there is a clear and distinct ruling to this effect. In dealing with this matter, I was particularly careful in regard to the honorable member for Bourke (Mr. Anstey), because, personally, I have always been on the best of terms with him, and I know that he has no desire to defy the Chair; but the Committee will see at once that if serious disorder arises, and if the Chairman were not authorized to preserve order in the intervening time, there could be no report from the Committee to the House except after a lengthened period. This would lead to a very grave position, such as has happened in some of the
State Houses. Our Standing Orders are perfectly clear. I call the attention of the Committee to standing order 227.- This is one of our own standing orders, and if honorable members do not approve of it, then, by resolution of the House, it may be referred to the Standing Orders Committee for revision. It provides -
The same rules for regulating the conduct of business shall be observed in Committee as in the House itself, the Chairman of Committees being invested with the same authority as the Speaker for the preservation of order-
That .appears to be perfectly clear. I have not exceeded, the authority conferred on me under that standing order, nor do I desire to do so.
.- It provides further - but disorder in a Committee can only he censured by the House on receiving a report.
I did not censure the honorable member, nor did I ask that the House censure him. The position is so clear that it would be in the interests of all to drop this matter, and to allow the debate to proceed.
d. - What has that tfe* do with clause 3 of the Bill?
– I shall not permit any further discussion on this matter unless the Committee specially desires it.
.- Is it applicable to clause 3 of the Bill ?
.- I cannot allow it.
.- Order! Will the honorable member resume his seat? I have no desire to exercise my privileges or rights in ja. partial way. If honorable members persist, I shall have to use the forms of the House in the way in which the House has determined they shall be used.
tts. - You have made an explanation, why should others not be heard ?
– Will the honorable member be silent?
.- Order ! I call on. the honorable member for Yarra.
.- Is the point of order applicable to the clause before the Chair?
.- I call on the honorable member to resume his seat. The honorable member for Yarra.
.-Is it applicable to the clause before the Chair?
s. - The Chairman will not allow you to do that.
– The Committee has already decided that question.
.- The honorable member for Cook will cease his interjections , and his reflections on the Chair.
’.-Will the honorable member be silent?
.- Will the honorable member cease ?
.- I name the honorable member for Cook for disorderly conduct in refusing to obey the Chair.
k. - I am sure that the honorable member will recognise that it is his duty to obey the ruling of the Chair.
k. - It is quite clear that the honorable member has made up his mind that he is “going out.” I move -
That the honorable member for Cook (Mr. J. H. Catts) be suspended from the service of the Committee.
r. - I rise to a point of order. The matter has to be reported to the House.
– Order ! Honorable members, on referring to the Standing Orders, will see that this motion must first be submitted to the Committee, and, if approved, must then be reported to the House, so that the House may deal with it.
.- I now suspend the proceedings of the Committee to’ report the circumstance to the House.
In the House:
The Chairman of Committees (Hon. J. M. Chanter). - Mr. Speaker, during the progress of the debate in Committee the honorable member for Cook (Mr. J. H. Catts) was, in the opinion of the Chairman, creating disorder.
son ) . - Order !
Mr. J.- H. Catts. - I ask leave to make a statement.
Mr. SPEAKER.- Order ! The honorable member cannot do that at this moment.
The Chairman of Committees. - I called upon the honorable member several times to desist, but he refused to do so. Consequently I named him for wilfully disobeying the order of the Chair. The Committee then had submitted to it the motion “ That the honorable member for Cook be suspended from the service of the House.” That motion was carried, and I now report the occurrence to the House. Mr. SPEAKER.- The. question is-
That the honorable member for Cook be suspended from the service of the House.
R. - Order ! Under the Standing Orders, the Chairman is entitled to report to the Speaker, but no debate is allowed.
Mr. J. H.- Catts. - Who is moving the motion ?
e. - Punish a man first, and hear him afterwards.
– Order ! I have three times repeated the call for order, and I shall name the next honorable member who interjects. I call the attention of the House to standing order 59, which reads -
Whenever any member shall have been named by the Speaker or by the Chairman of Committees immediately after the commission of the offence of disregarding the authority of the Chair, or of abusing the rules of the House, by persistently and wilfully obstructing the business of the House, or of disorderly conduct, or otherwise disregarding the authority of the Chair, then, if the offence has been committed by such member in the House, the Speaker shall forthwith put the question, on the motion being made, no amendment, adjournment, or debate being allowed, “ That such member be suspended from theservice of the House “ ; and, if the offence has been committed in a Committee of the whole House, the Chairman shall, on a motion being made, put the same question in a similar way; and, if the motion be carried, shall forthwith suspend the proceedings of the Committee, and report the circumstances to the House; and the Speaker shall thereupon put the same question, without amendment, adjournment, or debate, as if the offence had been committed in the House itself.
I, therefore, put the question to the House in accordance with our Standing Orders -
That the honorable member for Cook be suspended from the service of the House.
son). - There is no question before the House, and, therefore, no point of order can. be raised. The Committee will resume at the point at which, its deliberative proceedings were interrupted.
t. - We wish to make this a War-time Profits Bill.
– Your only anxiety is to exempt as many people as possible, and. to make a mere pretence of the Bill.
R. - I do not care what support . the Government have; the fact remains that the majority of honorable members opposite will have to shoulder the responsibility for this Bill, which is absolutely a farce and a fraud on the public - a mere pretence at being a war-time profits measure. The Treasurer (Sir John Forrest) has admitted that he does not know how much revenue it will bring in, considering the exemptions that have been made. He first of all brought one section of the community within the operation of the Bill, and then exempted that section.
This is fooling the people. During the elections, we told the people that, the measure was intended to fool them, but they did not believe us. Now, however, they will see what this measure is that is put forth as the finished product of this ‘ Win-the-war ‘ ‘ Government..
Mr.WEST (East Sydney) [9.52].-I had not intended to speak on the Bill as presented to usto-day, but I cannot keep silent when I observe the attitude of honorable members opposite, who are supposed to represent the views of’ the Government, and who, in the short interval since the election, cannot have forgotten the pledges they gave on the hustings. If it be. permissible,. I shall say that those honorable gentlemen behind the Government are simply a body of tax dodgers. Hardly one of them who has spoken has not shown that there is some section of the community whom he wishes to exempt. Is there one of them, however, who did not tell the people during the elections that, if returned, he would be prepared to tax those who had made profits during the war - who did not impress on the public that while a duty devolved on all young men to goto the Front, there was a needful duty on those who were left behind to support our fighting Forces?
The CHAIRMAN (Hon. J. M. Chanter). - I asked the Leader of the Opposition not to pursue that line of argument.
.- I am sure we do not desire any more disorder. I have twice called the attention of the Committee to the fact that the clause before the Committee merely sets out the parts- of the Bill. The Leader of the Opposition (Mr. Tudor), when speaking, proceeded to deal with pre-election events, but desisted when I asked him to do so. I now ask the honorable member for East Sydney (Mr. West) to follow the example of his leader and assistthe Chair to confine the discussion to the question before the Committee.
Mr. WEST. - I have been as regular in my attendance in the chamber as has any other member of the Committee. Ihave listened to the debate which has taken place on this clause, and have noted that honorable members have been allowed a certain latitude. If I have transgressed it is owing to the latitude which has been allowed to other honorable members.
– Order! I have indicated to the Committee that I did, perhaps, improperly allow more latitude than I should have done. I have called the attention of honorable members on both sides to the clauses of the Bill- that have been recommitted for consideration, and to the fact that if they restrained themselves in debating this clause they would not be deprived of their privilege of discussing the clauses towhich they wished to refer when they came on for consideration. The honorable member for East Sydney is discussing a matter quite outside the clause, and, as he is an old and experienced Parliamentarian, I ask him to assist me in the performance of my duties in the chair.
Mr. WEST. - My transgression may be due to the influence of the company I have kept. I have no desire to fall out with theChair, but I could not help expressing myself as I have done, because it has at all times’ been my desire to see the will of the people given effect. I believe that in this Bill the Government are not carrying out the will of the people. This is a serious moment in our history, and if I have transgressed the rules of debate, it must be due to my earnest determination to carry out the people’s will, and see that legislation is passed in accordance with the views they have expressed. I believe that if we all went home, and asked the Government to reconsider their position, it would be a good thing to do. During this debate one honorable member has told us that he does not understand clause 3.
– Order ! For the information of honorable members I shall quote clause 3, which is before the Committee. It provides that -
This Act shall be divided into parts as follows: -
T. - I do not think, sir, that there is anything contained in the Bill that you have left out. I am entirely opposed to exemptions. I noticed a paragraph only, in to-day’s newspapers to the effect that a son of the late Right Honorable John Bright, speaking of a measure similar to this passed by the British Parliament, stated that, owing to the exemptions provided for under it, the people of the United Kingdom were robbed of £200,000,000, which, but for those exemptions, would have been contributed in taxation by certain sections of the community. Honorable members opposite are proposing, in the same way, the exemption of certain sections from the payment of the war-time profits tax under this Bill. It is of no use for honorable members to blind themselves to the fact that we need revenue. We require £9,000,000 to pay interest, and yet honorable members are taking advantage of every opportunity to exempt from taxation under this measure persons who should be taxed. The Chairman of Committees (Hon. J. M. Chanter) has been for many years a politician, and I ask him whether he ever saw such a spectacle as we have seen today, when honorable members opposite have been trying to prevent the payment of taxation by those who are receiving profits upon which taxation should be levied. I hope that honorable members will not treat the principles of this Bill too lightly. They, no doubt, have friends whom they would like to relieve from taxation, but they should put the interests of the country before those of their personal friends. That is what I am doing. Amongst my personal friends there are some who are perfectly willing to pay this taxation in order to assist the Commonwealth in carrying on the war. This is a quite exceptional time in our history, when . every one of us should be prepared to make sacrifices. The Treasurer (Sir John Forrest) tells us that he requires money, and we are here to provide him with the means of obtaining it. The professional man, the man on the land, and the manufacturer should alike be prepared to assist the Government in this matter. We must submit to taxation in these times, and I ask honorable members opposite, even at this late hour, to assist in obtaining revenue by the imposition of taxation which the Parliament would not ask the people to bear at any other time. If I have done nothing else than impress upon honorable members the seriousness of the position, I Have done good service for Australia.
Clause agreed to.
– It would be impossible to define the businesses.
– The particular business which it is wanted to establish is, say, the manufacture of motor bodies. That is an industry which is carried on in Australia to-day. Every one knows that motor bodies are being made here. Since the prohibition of the importation of motor bodies new firms are taking up the busi ness. It is the prohibition of a luxury, not under the will of Parliament, but under the will of the Executive. If the amendment is to be applied to any one industry it would be right and proper to apply it to all industries.
M.- No. Moreover, the amendment, if accepted, would in some respect alter the purpose of the Bill.
e. - There will be nothing left in the Bill presently.
– Yes, there will.
M. - No. It only covers co-operative companies. Electric light is not a foodstuff. The amendment is limited to foodstuffs.
M.- Incidentally the cooperative companies may handle other things, but their main business must be the manufacture of foodstuffs.
e. - Do you want revenue, or do you want the Bill ?
– We want both. We desire a Bill which will do justice.
Amendment agreed to.
– It is provided for already.
– The object of every Government should be, as far as possible, to help and encourage men to settle in the back-blocks. These men are the outposts of Australia. No matter where we sit in the chamber, we all believe in the principle of closer settlement. So’ far as wasting assets are concerned, the people who reside in the central districts of Australia get no consideration whatever. But the men who take up leases of land not very far from a centre of civilization are given big exemptions.
– Land used for pastoral purposes is not a wasting asset. “
– It is, because the holder gets no tenant right from the Crown, and every year the lease has a diminishing value.
Clause, as amended, agreed to.
e. - Does the amendment mean that there will be an exemption of £200 every time a business changes hands?
Mr. GROOM. - If it changes hands a number of times there will be a- proportionate allowance each time.
Amendment agreed to.
Clause, as amended, agreed to.
m. - I understand that the Income Tax Assessment Act provides for what the honorable member has suggested.
– The income tax is not calculated on the excess profits.
– No; but the excess profits are part of the whole year’s earnings for the purpose of ascertaining the rate of income tax, and the income tax is levied on such excess profits as a part of the entire income for the year.
r. - You are taking the income tax from him first instead of afterwards.
– On a graduation basis the income tax may be something less than 6s. 3d. in the £1; but when the’ 25 per cent, additional income tax is taken into account it will not be found to be very far wrong on the maximum income. In the second accounting period there is again a balance of 13s. 9d., of which the Crown takes three-fourths, or 10s. 3d.. leaving to the person who is taxed only 3s. 51/4d. for every £1 of the excess profits that he has earned.
S.- That is practically what we are doing in taking from a taxpayer 16s. 63/4d. of every £1 of excess profits earned by him.
S. - The excess profits only commence beyond thatpoint. I am sure that no one thought that two and perhaps three different taxes would be levied on excess profits.
S.- My suggestion is that all other taxes should ceaseto operate in respect of excess profits. I do not think that the patriotic fervour is so great that people will be prepared to carry on business to earn excess profits of which they retain only 3s. 51/4d. in the £1.
S.- I suggest that income tax should be levied as at present on the normal profits, and that the Government should be content with 50 per cent, of the excess profits. Take a pre-war income of £10,000, with excess profits of £5,000 in the first accounting period. My proposal is that the income tax should operate on the normal income, and that in respect of the £5,000 excess profits it should not operate, but that 50 per cent, of those excess profits should be taken as a war-time profits tax.
r. - Under what section is that done?
– Under the Income Tax Act.
m. - For income tax purposes.
– I do not see any provision of that kind here.
.- With regard to the case quoted by the honorable member for Wannon (Mr. Rodgers) it seems to me that he misapplied the provisions of this Bill. His instance was that of a man whose pre-war standard was £10,000, and whose taxing standard was £15,000. In that case he said he would first of all deduct income tax, which would be 6s. 3d. in the £1, leaving then 13s. 9d. to be divided between the State and the individual. The complete answer to that is that from the £15,000 you take 6s. 3d. to start with, which is £4,800, and you bring down his surplus revenue to £200; then you bake away from that amount the whole of the State income and land tax, and wipe it out absolutely, there then being no excess profits to pay taxation upon.
.- I think it would be more. It would probably be about 4s., plus 25 per cent., or about 5s. altogether. If you take away that, and the whole of the State income and land tax, you find that the whole excess profit is gone.
m. - In a particular case metals might be higher in price, and yet, owing to the output of the mine, a company might really make less profit.
– Under the proposed paragraph, it would be left to the option of the company whether they would take advantage of the other ..provision in the Bill, or fix their profit at. the increased prices given to metals by the war. I should like to submit my proposition as an amendment if the Minister could see his way to accept it.
y. - The proposition was sent to me, and the Minister’s promise will satisfy me.
– I merely promise that the Treasurer will consider it. If he approves of it he will have it inserted in another place. I move -
That the proviso to paragraph 6, sub-clause 5, be left out with a view to insert in lieu thereof the following proviso: - “ Provided that so much of the profits so appropriated as would, if they had not been appropriated, have been war-time profits, and which have not been expended for the purpose for which they were appropriated by. the end of the accounting period next succeeding that in which the profits were derived, shall be liable to tax in the financial year in which the end of the latter accounting, period falls, at the rate which was applicable at the time of appropriation.”
The reason for this amendment is that it is open to question whether the sub-clause as it stands would not tax money that has been set aside for developmental purposes, whether it represents excess profits or not. Our object is to make it clear that only war-time excess profits shall be liable.
Amendment agreed to.
Amendment (by Mr. Groom) agreed to-
That after the word “ his,” sub-clause 6, the words “ entry into “ be inserted.
r. - Why allow in the case of a partner £300 for the time that he gives to his business, while an individual carrying on a business is not given any such allowance?
– It must not be forgotten that we are dealing here only with small businesses. The owner of a small business in which the pre-war standard of profits does not exceed £500 is likely to personally discharge the duties of management.
Amendment agreed to.
Amendment (by Mr. Groom) agreed to-
That after the word “ directs,” first occurring in paragraph a, sub-clause 7, the words “ in the case of a business in which the pre-war standard of profits does not exceed Five hundred pounds” be inserted.
Amendments (by Mr. Groom) agreed to -
That in sub-clause (7), second and third provisos, the words “ per annum “, wherever occurring, be omitted; that paragraph (b) be left out, and the following new paragraph inserted in lieu thereof : - “(b) If the business is owned by a partnership - in the case of a business in which the pre-war standard of profits does not exceed £1,000, a deduction of £300, 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; but the total sum to he deducted shall in no case be less than the sum which represents the difference between £1,000 and the pre-war standard of profits.”
Amendments (by Mr. Groom) proposed -
That after the word “business,” at the end ,of paragraph a, second occurring in sub-clause >7, the words “together with, in the case of a business in which the pre-war standard of profits exceeds £500, but is less than £700, an additional deduction, equal to the difference between £700 and the pre-war standard of profits” be inserted; that the words “ so applied “, paragraph b of sub-clause 10, he left out, and the words “ applied in extinction of that loss, and any other loss which the Commissioner is of opinion has been recouped out of the profits of the current accounting period,” inserted in lieu thereof.
m. - Where stock has been kept, an allowance will be made.
– I have already told the honorable member that I cannot do what he desires.
Amendment (by Mr. Groom) agreed to-
That after the word “paid”, sub-clause 11a, the words “ in the accounting period “ be insorted. ^
Clause, as amended, agreed to.
m. - That is to meet abnormal cases of loss.
– In the year 1914 there was a serious drought throughout Australia - a year of depression that no one would be able to choose as an accounting period.
r. - That would cut out borrowed money, which has already been provided for.
– I am afraid I cannot help that. I think that the test should be the actual present value of land.
– (Mr Atkinson). - I cannot refuse to accept the amendment on those grounds.
m. - There is an allowance made for capital expended on land.
– Are we to understand that improvements made upon land by an original selector will be regarded in the same way as accumulated profits in the case of a business ?
m. - The ‘honorable member proposes that if ?1,000 spent upon improvements has added ?2,000 to the value of land, we should allow for the ?2,000, and not for the cost of the improvements which have been responsible for the added value. The Government could not accept “that.
– Then I must move an amendment on the lines I have suggested.
m. - There must be some misunderstanding. The Commissioner assured me that the position is as I have stated it.
– When it is sought to get the value of the land stated for land taxation purposes the Government assess it, not at the ?1 per acre ,paid for the land, but at its present value. Apparently the Government wish to make the valuation of the land suit whatever form of ‘taxation is imposed.
Amendment, by leave, withdrawn.
m. - The Treasurer has promised to consider the point raised by honorable members.
– I cannot accept anything.
– I trust that the Treasurer when he hears my proposal will see how reasonable it is. My first suggestion was that firms who had provided for the payment of this tax by depositing their surplus revenue in war bonds should be entitled to pay the tax with those war bonds. My proposition now is that for the retrospective year of the tax, namely, for the year 1915-16, these bonds may be accepted in payment of the tax. It has been said dozens of times that business people had full notice of the imposition of this tax. But notice was not given until the 18th May, 1916, fully eleven months after the accounting period . began. Many firms, believing that the Bill would be dealt with at once, put their surplus profits into war bonds.
D.- If the Treasurer is not prepared to allow them to pay their taxation for the current year in war bonds, he should at least accept those bonds in payment of the tax for 1915-16”. That is a fair compromise.
D. - If that is so, -the amendment will be harmless, because they can sell their bonds and pay the taxation in cash.
D. - I am suggesting a very fair compromise.
D.- That is.no good to me. I move -
That the following words be added to the clause : - “ A taxpayer may pay his . tax for the year1915-16 in Government war bonds if be so desires.”
Clause agreed to.
n. - Will the Minister be good enough to explain what provision as to time for paying the tax has been made?
– I will state the effect of clauses 31 and 33. Under the Bill a man was called upon to pay his tax thirty days after he received the notice of assessment. We were told that that period was too short, and so we agreed to amend clause 33 so as to allow thirty days grace without a 10 per cent, penalty, giving the taxpayer, in effect, sixty days for payment. We are not going to collect the two years’ tax at once. Time will be allowed between the making of the two payments. Any person can also apply to the Commissioner for an extension beyond the period of sixty days, and the Commissioner oan delegate the power to grant an extension to his deputy.
Proposed new clause agreed to.
Bill reported with further amendments.
Standing Orders suspended.
Motion (by Mr. Groom) proposed -
That the reports be now adopted.
– Hear, hear! Some of them.
– The Bill has been of a highly technical nature, and touching industries at all points, it naturally invited a great deal of criticism, and a very full discussion. The Government thank honorable members for devoting them- selves closely to the Bill, and enabling them to get itput through its final stages.
e.- What business do the Government intend to- proceed with tomorrow ?
– It will be remembered that last week we passed several clauses containing amendments submitted by the Government, the object being that honorable members might, on recommittal, have an opportunity to reconsider those clauses as amended.I move -
That the Bill be now recommitted to a Committee of the whole House for the reconsideration of clauses 3, 4, 7, 8, 11, 14, 15, and 16, and for the consideration of a new clause.
I move this motion in accordance with pledges that I gave to honorable members when the Bill was in Committee. As a matter of fact, clauses 3, 4, 15, and 16 have not yet been considered by honorable members. The new clause proposed to be added will give effect to a promise made that the principle of the arrangement between New Zealand and the Imperial Government should be adopted in this Bill if it were found possible to do so. The question was raised by the honorable members for Flinders (Sir William Irvine) and Kooyong (Sir Robert Best). Other clauses are toeing recommitted for technical alterations, while others are to be reconsidered in accordance with promises made to honorable members.
– The promise was made that the question of payment of the tax in war bonds would be reconsidered.
– I do not know how far it is open to discuss the principles of the Bill as it now stands upon this motion. There are certain matters in relation to the Bill as it ‘ now stands which I would like to bring forward if it is open to discuss them - at this stage. The Bill lias been reported from Committee, and the Honorary Minister has moved to recommit it. I wish to know whether it is open to me, on this motion, to discuss the measure in the condition in which it has been reported to you.
– Does that mean that any honorable member can make a secondreading speech on the Bill as it now stands ?
– I do not wish the House to be under any misapprehen- sion. My proposal was nob to suggest new clauses. It was to discuss the principles of the Bill as it now stands. I recognise that, whatever liberty is granted to me must be accorded to every honorable member; and I wish to know whether, on this motion, I can discuss the principles of the Bill as it now stands, or whether I shall have to wait until the Committee stage is reached.
– Is it permissible, at this stage, to suggest - an amendment to a clause ?
.- Will I be in order in moving that clause 31 be recommitted ?
.- -I regret that the Government found it necessary to proceed with this Bill during an all-night sitting. Full and ample opportunity to discuss the measure should have been afforded honorable members. If I had had opportunity in reasonable hours, I should have suggested to the Government that clause 26, dealing with the Board of Referees, should be recommitted. No mention is made in the clause of the number of persons who shall constitute the Board. The Treasurer said that in his view the Board should comprise three members. I should like some information from the right honorable gentleman on that’ point. In the meantime I move as an amendment -
That “ clause 26 “ be added to the motion.
– The point is that nobody asked at that stage that the clause should be recommitted.
– The honorable member for Calare (Mr. Pigott) discussed the clause.
– What is the difference ?
– I rise to a point of order. I submit that the honorable member for Capricornia is entirely out of order in discussing the merits of clause 26 on a motion to recommit that clause. I submit further that no amendment is allowable on a motion such as that which is now before the House. On page 468 of May, tenth edition, this passage occurs : -
It may be necessary to recommit a Bill to a Committee of the whole House, and occasionally to a Select Committee, before it is read a third time; and debate on this motion must be restricted to the purpose and extent of the proposed recommitment of the Bill.
The purpose and extent of the recommittal are expressed in the motion of the Honorary Minister, and I submit that no debate is permissible on any other question.
.- I think it is a pity that the number of the members of the Board of Referees has not been fixed in the Bill. I am the person who introduced this machinery, and it was in my mind that the Board should consist of three members.
.- I ask if the Government will consent to the re consideration of clause 10. Yesterday I introduced to the Treasurer a gentleman interested in an Australian industry which may be injuriously affected by that clause, if it be not amended. That industry is typical of a number of new businesses. It must be the desire of the Government that Australian industries shallbe established before the end of the war to enable Australian manufacturers to compete successfully then with their rivals abroad. An embargo has been placed upon the importation of motor-car bodies, arid a gentleman in Australia has arranged to manufacture 5,000 of these bodies yearly. To do this he has been compelled to ask his bank for an advance of £20,000 to cover the cost of putting down the necessary plant. The bank, however, asks, with some justification, will the security be sufficient if half the profits of the enterprise over and above a certain amount are taken under the war-time profits tax? The American motor manufacturers will not allow their agent’s here to make a contract for a longer term than a year, so that immediately after the war they may be manufacturing their own motor bodies here. It is entirely with a view to assisting Australian manufacturers that I desire to amend clause 10, to give the Commissioner power, where he thinks that the tax would shut up a factory by preventing a manufacturer from successfully competing with outsiders, to make a concession.
. -I support the request for the reconsideration of clause 10, which is probably one of the most important provisions of the Bill. It purports, under certain limited circumstances, to give a certain discretion and power to the Commissioner, and I ask that this power be extended. The discretion of the Commissioner is limited rigidly by the consideration that no modification shall be made unless the financial stability of a business is affected. What the financial stability of a taxpayer means I do not pretend to say.
– I understand the desire for the reconsideration of certain clauses, but I remind honorable members that there was something in the nature of. an agreement arrived at on the last occasion that we sat. The Government agreed to allow the debate to go over, promising to recommit certain clauses and certain batches of clauses.
– Not in my case.
Question - That clause 26 be added to the motion (Mr. Higgs’ amendment) - put. The House divided.
Majority . . . . 20
Question so resolved in the negative.
– There appears to be some misapprehension on the part of honorable members as to the promise I made with respect to clause 31. As a matter of fact, I fulfilled my promise by recommitting the Bill and inserting in clause 33 a certain amendment. Several honorable members, however, do not seem to think that that amendment covers all that I promised to do, and, rather than that there should be any misunderstanding, I am prepared to accept the amendment.
Amendment (Mr. Boyd’s), to add clause 31 to the motion, agreed to.
– I move - That clause 10 be added to the motion.
This is one of the most important clauses in the Bill. It purports to give the Commissioner a certain discretion, if the circumstances referred to in the clause are complied with, but that discretion is very rigidly limited, inasmuch as it is declared that any modification allowed must be to insure the financial stability of the business.
– I second the amendment. It is of vital importance that the Government should agree to the recommittal of this clause. The policy of the Commonwealth is to discourage the importation of certain articles, and to encourage their local manufacture. There is a possibility of this Bill doing material injury to those who may enter upon the manufacture of certain goods. Our only desire is that theCommissioner shouldbe granted wide discretionary powers, so that no business may be ruined before it has had a chance of, so to speak, getting on its feet.
.- I should like to ask you, Mr. Speaker, whether it would not be possible for the House to be placed in possession of the reasons that actuate this amendment. I am anxious to cast an intelligent vote, but I find the utmost difficulty in coming to an intelligent decision when thereasons can be touched upon only with hesitancy and some fear of transgressing the Standing Orders. The House is put in a false position. I do not desire to traverse your ruling, but I suggest to you that it is hardly fair to ask honorable members to vote upon any issue which is clouded byreason of an interpretation placed upon the ‘Standing Orders.
– My right honorable colleague, the Treasurer, cannot see his way to accept the amendment for the recommittal of clause 10. The . clause itself was very fully considered during the early part of Thursday afternoon last, and, later on, was recommitted.
– I rise to a point of order. Quite recently, Mr. Speaker, you ruled that an honorable member proposing a clause for recommittal could give only the most general reasons for advancing his proposition. Is the Minister in order in actually quoting a clause of the Bill in order to give reasons why this mysterious something should be rejected ?
– The honorable member for Kooyong pointed out that the discretion- is limited by the proviso.
Question - That clause 10 be added to the motion - put. The House divided.
Majority . . . . 12
Question so resolved in the negative.
Question, as amended, resolved in the affirmative.
In Committee (Second Recommittal):
Clause 3 (Parts).
– I desire to further appeal to the Governmentto consider the whole question of the pre-war standard. The more I look into this measure the more I am convinced of two things, the first of which is that it will not at all affect the majority of those whom it is intended to affect; that many companies, individuals, and firms who have, during the years of the war made considerable profits in excess of those made before the war, will be called upon to pay nothing under this Bill. I shall show in a moment thatthe measure will not reach the great companies which have made war’ profits - that it will not touch the shipping companies, which the community desire to tax, nor the big metal companies, nor those companies with huge stocks that have increased in value, and given rise to great profits, but that the people who will really be affected are those in smaller classes of business, whose excess profits have not been made out of the war. Let me point out why this Bill will not tax the excess profits of, let us say, shipping companies or softgoods warehousemen, whose stocks have increased in value, provided they are large companies or firms, or individuals whose profits as shareholders in companies have increased by large sums. The reason is that they are en titled to deduct from their excess profits the whole of the income tax which they pay. Let me give a simple example. A firm which made a net income of £10,000 a year before the war - that is its normal pre-war income - makes a 50 per cent. increase during the taxing year.
That is a large increase, the sort of increase which it is intended to tax. It’s income during the taxing period is thus £15,000, and every penny of it may be derived directly from the war through the increase in the value of stocks or base metals, or through the increase in shipping freights. Yet, the firm which makes that increase will not pay one penny in taxation under this Bill. It will be in exactly the same position as if the Bill did not exist, because the amount it has to pay under the Federal income tax will be just about £5,000, and that £5,000 represents the excess income over the prewar standard. Thus the man who mad £10,000 before; the war, and is now making £.15,000, will have nothing to pay under this Bill, but the smaller man who has been engaged in developing his business, and made perhaps £1,000 the year before the war, and though he may not be in a business in which the value of his stock has increased owing to the war, has developed from that £1,000 a year to £1,500 a year, will be in quite a different position. He will be entitled to deduct the amount of his income tax, but only at a very much lower rate, and though he has made £500 a year in excess of his prewar standard, he will deduct only £125 for what he is called upon to pay in income tax. He pays income tax at the rate of l0d. in the £1. The man who has increased his profits from £10,000 to £15,000 pays income tax at the rate of 5s. in the £1. The small man, who earns an excess profit of only £500,. will be called upon to pay war-time profits tax on £375. Is there any sense in this proposal ?
– Does the honorable member wish to tax these people doubly?
– If we have already taxed away their profits under the Income Tax Act, why further reduce them now below what they were before the war?
– One chemical company in Sydney is said to have made excess profits to the extent of £250,000,
– This Bill will reach that company in Sydney.
– The honorable member must admit that if a company makes an excess profit of over 50 per cent. above the pre-war standard, it must pay taxation under thisBill.
– The Bill I introduced contained a clause balancing profits and losses.
– But section 10 of the English Act has been left out of this Bill.
– Are you losing sight of the temporary nature of the measure ?
– They are doing it in England.
– In the Bill introduced by the honorable member for Capricornia the standards were 6 per cent. and 7 per cent. on capital.
– What about businesses, such as agencies, which have a small capital but a large income?
– That is not the class of business to which the honorable member for Flinders was referring.
– How much revenue has resulted from it?
– : But in Canada there is no income taxation.
-. - That is, adding their reserves to their paid-up capital?
-. -Reserves are generally invested in the business of the- company;
.- The honorable- member for Flinders (Sir William Irvine) has made what may be considered a very important speech; he certainly appears to think it important; but I cannot, help thinking that such a speech is of verv little use at this stage. At this stage the honorable member cannot ask the Government to withdraw the Bill, nor can he expect it to alter its machinery in the way in which he suggests.
– We are told that the- honorable member’s Bill did not run the gauntlet of the Caucus.
– Are we back at the second-reading stage?
– I am largely in agreement with the honorable member for Flinders (Sir William Irvine) in warning the Committee of the disastrous effects that will follow the passing of the Bill in its present form. Twelve months ago I emphasized very strongly the serious effect it would have on the industries of Australia at a time when we were all most anxious that our industries should be encouraged and that our production should expand. The whole trouble arises from the fact that the Government are endeavouring to graft on to Australia a form of legislation that is applicable only to the condi- tions which exist in the country where it was originally introduced. There is a fundamental difference between the conditions prevailing here and in the Old Country, and consequently the Bill, in its present form, is calculated to do gross and serious injustice. The New Zealand Act was withdrawn after it had been in operation for only twelve months, because it was found to operate most unjustly, and to be unfair in its treatment of the general community. A still further objection was the cost of collecting the tax. The injustices which must follow the coming into operation of this measure are largely, if not wholely, due to the pre-war standard for which it provides. The effect of that pre-war standard is to select one particular section of the community for taxation, and to relentlessly penalize it. It is not the wealthy section of the community, but the young and struggling manufacturing industries, that are to be so penalized. They are specially picked out for taxation.
– Why did not the Ministerial party settle all this in their Caucus before the Bill was introduced?
– Some of the patients will have become corpses in the interim.
– If we took away the prewar standard, then the taxation would be imposed on men who are making less profits now than they were before the war.
– Even if, before the war, he had been making 20 per cent. ?
– If we abolished the prewar standard, this would not be a wartime profits tax.
– It would be a general tax, without reference to the war.
– Would you add a wartime profits tax to the present income tax ?
– Would it not be more equitable to impose a super-income tax ?
– That has nothing to do with the pre-war standard.
– How could you get at war profits under a super-income tax proposal?
SirROBERT BEST. - The Bill does not attempt to do that.
– That is true; but it has nothing to do with the pledges made to the country.
– I am speaking of the party generally.
– It was understood that the Bill was recommitted to enable us to pass it to-night and send it on to the Senate. This afternoon, however, . we have had nothing but a repetition of the criticisms that have been directed against the Bill all through. We are now really asked to withdraw the measure altogether; because if we omit the pre-war standard, we omit the basis, and the whole of the Bill must go. The honorable member for Flinders (Sir William Irvine) andthe honorable member for Kooyong (Sir Robert Best) have referred to the election pledges. The Prime Minister said at Bendigo -
The Government intend to proceed with the War-time Profits Bill. Every consideration will be given to new businesses, to exceptional industries, and to individual cases where Hardships would arise ; but the principle that no man is entitled to make undue profit in war time is sound and equitivble, and will be applied’.
The Government were pledged to . proceed with a War-time Profits Bill, and the Bill before us is a War-time Profits Bill. It was contended on all sides that if a man engaged in business before the war earned a certain income, and if, during the war period, when our men are falling in the trenches and on the battlefield, his profits increased, it was a fair thing to subject those profits to taxation. That was clearly stated as the principle which ought to be the basis of’ this taxation; and the Bill carries it out, inasmuch as it taxes excess profits which are made in business during war time. Special amendments have been introduced to deal with small businesses, and an exemption is given to the extent of £1,000. Practically the Bill gives a pre-war standard of £1,000. In addition, it is provided that exceptional cases may be dealt with by the Commissioner on their merits, and power is given to make modifications in the pre-war standard itself, in the computation of profits, and in the fixation of what should be a faircapital.
– Do you, say that clause 10 is not governed by financial stability t
– Are you sure of that?
– Some have made huge profits.
– Some of them have.
– According to the honorable member for Flinders, large companies will escape taxation under this Bill.
– There are hosts of firms engaged in large industries.
.- When we compare the enthusiasm over this taxation proposal with the enthusiasm manifested a few months ago in regard to sending the “ last man,” we cannot help noticing the lack of enthusiasm there is on the part of some honorable members in regard to taking a modicum of the “last shilling.” We have had from them almost continuous “ stonewalling “ tactics towards a measure which is estimated to produce a few hundred thousand pounds in revenue. The measure amply protects the small man. It has been amended to doi so. In fact, it is a very moderate proposal. I feel ashamed at the attitude of some honorable members. We, on this side of the chamber, take up the attitude, in regard to sending men to the Front, that a man must go willy-nilly, and the man who goes to the Front makes the greatest sacrifice of all - he risks his life; but when it is proposed to take a matter of £800,000 from those who remain behind, we have speeches such as we have heard during the progress of this Bill through the House. They do not redound to’ the credit of the Win-the-war party or the people outside the chamber. We told the electors that the money must be found.
.- Of course, I have been greatly impressed by the magniloquence of the honorable member who has just spoken so freely about the sacrifice made by those who have gone to the Front, and I have wondered whether he proposed by means of this Bill to make that measure of sacrifice which their sacrifice calls from us. Does the honorable member suppose that by selecting a very few persons to be lightly and delicately touched by legislation of this kind, we shall be discharging our full measure of obligation to our soldiers, at the Front ?
– The honorable member, also, was pledged to it.
– Not rebel trash like you.
– Let us tax the lawyers.
– The other night the honorable member was opposed to the taxation of lawyers.
– All of which were in the Labour party’s Bill.
– You are a liar!
– I must withdraw and apologize, but he told a deliberate lie.
– I withdraw unconditionally, and apologize.
.- I do not propose to follow the honorable member for Batman in the electioneering speech he has delivered to the Committee. I would find it difficult to follow the same circle as the honorable member described, for whilst he started with a denunciation of the measure as a ludicrous futility, his mind was suddenly cast back to a very grave crisis only a few days ago, when he spoke with equal fervour and far deeper earnestness in advocating the exclusion of new industries sought to be brought within the comprehension of this measure - unjustly, as I thought - to one of which industries the honorable and learned member belongs.
I am not concerned with, catch phrases such as ‘’ not because of *he war, but in spite of the war.” These’ phrases have been coined by interested persons to enable them to escape the compass of this proposal. I take it that most businesses in Australia have prospered .because of the enormous sums of money brought into circulation by this war, and placed in the hands of new classes, and because of the fact that those new classes were spending that) war money, yet the businesses which reap the benefit of this wide money circulation say, “ We have prospered, not because of the war, but in spit© of the war.” Almost every business throughout Australia has prospered because of the vast war expenditure. The money paid to the people has filtered back to trade,, yet trade would have the impudence to tell us that it has not benefited because of , the war.
However, I have risen to deal with one aspect of the debate on the clause rather than’ to deal generally with the measure. I refer to the somewhat alarming revolutionary doctrine preached this afternoon by the honorable member for Kooyong (Sir Robert Best), and naturally voiced afterwards by the honorable member for Batman (Mr. Brennan), and others’. If the honorable member for Kooyong was pledged to anything, it was that there should be no tax upon wealth. His cry was that a wealth tax was an absurd and antiquated impost, and that the right levy was by means of an income tax. Yet this afternoon we heard him advocating a tax upon wealth by advocating the abolition of the pre-war standard. Take the case of the majority of the large companies which have made most of the big profits in rewent years. The vast majority of lie shareholders bought into those companies a year or two before the war started, on a market value given to them by the interest return shown by the dividends, ‘ and to ay that those companies sh’all not continue to make profits representing that rate of interest is to confiscate the capital value of those shares, and to take the wealth of those “who invested in them. The abolition of the pre-war standard would be a direct tax upon wealth, and I submit that it is grossly unjust to tax that section >of .wealth in this country, unless we .are going to tax -all wealth throughout the community in the same way. We have heard a lot of nonsense talked about the exemption of large interests. The large interests -are not exempted by -this measure, for everybody “who comes within its compass is taxed according to the same principle, that they shall not gain appreciably more from their businesses in time of “war than they gained in time of peace. All big industries stand on the same plane ; the exemptions have been made for the small industries. The only way to make the big businesses pay more taxation is by confiscating the wealth of the shareholders invested in those industries.-
– And let the year 1915-16 escape taxation.
– Rubbish! How can you tax past years without retrospection?
– Not in the case of a partnership.
– I do not think that the freight and insurance would represent more than ls. per gallon.
– Will not this Bill prevent that sort of thing ?
– Is the honorable member discussing war-time profits ?
– What were the increased profits between 1913 and 1914?
– But 1914 was a very poor year - a . drought year..
– There was an increase in profits every year before the war, as well as after the outbreak of the war.
– That is true; but how could we make the States agree to the Commonwealth collecting the whole of this revenue ? The consent of the States would have to be obtained first.
– I should like to draw the attention of the Committee to the definition of “ capital,” which, according to. clause 16, is -
In- regard to land, no provision whatever is made for the earned increment, or, as it is called in connexion with the Federal land tax, the added value of the improvements. Ring-barking, for instance, costs2s, 6d. or 3s. per acre ; while burningoff from time to time may bring up the cost to 12s. 6d. or 15s. an acre. This, however, by no means accounts for the cost of the improvements, because a man has to wait fifteen or twenty years before the benefits of the improvements mature. Under this Bill, a man who has paid £1 per acre to the Crown for land, and ringbarks and clears it, is allowed to make 10 per cent, practically on half the value of his holding; and surely the Treasurer will
Hot say that that is fair ? In business, a man is allowed the full 10 per cent., or pre-war standard, on his capital; but in the case of pastoral land, the owner will suffer great hardship.
– He will, as the honorable member will see from subsequent clauses.
.- While appreciating the difficulty that confronts the Treasurer in his endeavour to meet the wishes of the Committee, I cannot help feeling, with the honorable member for Flinders (Sir William Irvine), that we have started on a bad foundation. I find it extremely difficult to bring myself to support the Bill in its entirety. I feel thatImust support the measure; but I wish the Treasurer, and the Minister who is assisting him, would see whether they cannot do something to get over the difficulties that are felt by myself and others. I speak more particularly in relation to certain companies. At the present time, the best of our base metals- are finder the control of the Government, who supervise the sale and purchase of molybdenite, wolfram., and so forth. The Government have fixed prices which, to those who produce these articles, are considerably less than the standard value;, but I have no objection to that, because the prices are fairly good. If these people went into the open market, they could get 100 per cent, more for wolfram and scheelite than they are getting from the Government. They could get for molybdenite 80 per cent, more in the world’s market than they are geting from the Government for this metal. “ This should be remembered when we are dealing with this taxation. I am satisfied that honorable members generally desire to be fair in dealing with this question, and I should like some attempt to be made to overcome the difficulty which arises out of the consideration of the pre-war standard to which the honorable member for Flinders (Sir William Irvine) has directed special attention. Let us assume that there are two companies with a capital of £10,000 each carrying on business to-day. Suppose one was carrying on its business prior to the declaration of war, and onehas been established since the declaration of war. I assume that the older business, prior to the war, made a profit of £12,000 a year, and is still making a similar profit. That company would not pay a single sixpence of taxation under this Bill,’ because its profit during the accounting period would not be greater than its pre-war standard of profits. The new company, with the same capital, having a good business proposition in selling metals to the Government, is also making a profit of £12,000 a year. It would be entitled under the Bill to take 10 per cent, of its capital of £10,000, and this would give it an exemption of £1,000. Under the provisions dealing with businesses with a wasting asset it would get another exemption of £1,000.
– The honorable member is practically suggesting that there shall be no pre-war standard.
– The honorable member is suggesting that we should abolish the pre-war standard.
– We cannot overcome that difficulty if we are to have a war-time profits tax.
.- If the suggestions of the honorable member for Flinders (Sir William Irvine) and the honorable member for Dampier (Mr. Gregory) are to be given effect, we might as well throw this Bill over-board altogether. The honorable members referred to are proposing to remove the very basis of this Bill, which is intended to impose a war-time profits tax. Both political parties, when appealing to the electors, said that they were going to get at the exploiters and profiteers, meaning the men who have been making more money since the declaration of war than they were making before the war. If ‘we abolish the pre-war standard, only those firms who were making profits equal to more than 10 per cent, of their capital before the war will be brought under this taxation. They may be mulct in very heavy sums indeed. That was never contemplated in any of the Bills introduced by either political party. In a’ll these Bills the pre-war standard of profit has been the basis beyond which the tax proposed was to operate. Any company earning so much before the war could earn that amount after the war commenced without being subjected to this taxation. No such company could be said to be profiteering or getting at the public, and neither party pledged itself to tax such people. The pre-war standard of profits ‘was the basis on which both parties appealed to the country. I hope that the Government will not listen to the suggestion to abolish that standard, because it is the basis of the Bill, and if it were, abolished the Bill might just as well be withdrawn, and the suggestion made from half-a-dozen sources - to establish a super-income tax - adopted.
.- We have been told that this Bill is ito give effect to a pledge that was made by the Prime Minister at Bendigo. The right honorable gentleman, when speaking at Bendigo, said -
Wealth has its duties and its responsibilities in this great struggle as well as manhood. No one should make a profit at his country’s expense. The Government intends to proceed with the War-time Profits Tax Bill.
But, apparently, the Government do not care how many amendments are made in it, or how many exemptions are placed in it, or what minimum is provided before any one shall pay the tax. Can the Honorary Minister say honestly that this Bill is anything like the form in which it was 1 introduced ?
– In his Bendigo speech* the Prime Minister promised to deal with new businesses.
– Does the honorable ‘ member object to the exemption provided?
– What does the honorable member consider a fair thing?
– We are not doing so.
– You have been a long while thinking about it.
– Hear, hear! A regular
– It does not matter what they say on the other side., bub directly you get up to say anything you are pulled up.
– I will do nothing of the sort, because you are doing what I said.
– You have been doing it all day.
– I will not do it.
– You can do what you like.
– We have had enough of this. TheLeader of the Opposition, as well as the Minister, has privileges.
– The honorable member for Flinders was “yapping” there for an hour and a half, but when the Leader of the Opposition gets up tospeak, you pull him up in five minutes.
– It is a pity you did not calltoorderthe honorable member for Henty (Mr. Boyd)..
– I am getting to my seat as quickly as I can.
– I said the honorable member for Henty.
– It is . quite true.
– What, have I to withdraw ?
– I did not reflect on you, sir, but on’ the ‘honorable member for Henty.
– I withdraw it unconditionally.
The -CHAIRMAN . - I now call on the Leader of the House to move in . order that a report may be made to the House that the honorable member for Maranoa has distinctly refused to obey the Chair.
– This is a somewhat unusual proceeding to take in Committee.
– That is another reflection on the ‘Chair,
– Itis a very serious reflection, too.
– That is out of order.
– Order !
– No. Will you allow that to be said ?
– You allow yourself to.be insulted.
– You allow yourself to be insulted time after time.
– I rise to order.
– May I not rise to a point of order?
– I withdraw the statement to which exception has been taken.
– That is not enough.
– I do.
– I cannot find anything in the Standing Orders to that effect.
– You did not say that; you may have meant it.
– My point of order is that you, sir, had no authority to order the Serjeant-at-Arms to remove the honorable member for Bourke from the chamber. The Standing Orders provide for every contingency in the way of disorder on the part of any honorable member. May I say that, in my opinion, your duty was to do as you did in the case of the honorable member for Maranoa, wherein you named the honorable member, reported him to the Committee, and then called upon the Prime Minister to take the usual steps. I move -
That the ruling by the Chairman of Committees that he has the power to order the removal by the Serjeant-at-Arms of any member of the House of Representatives be disagreed to.
– I accept your suggestion, sir, and now move -
That the ruling by the Chairman of Committees that he has the power to order the removal by the Serjeant-at-Arms of any member of the House for the purpose of preserving order, be disagreed to.
Honorable Members. - Aye.
– Mr. Chairman-
– I want to submit another point of order.
– On a point of order, I myself called “ Aye,” but I understood that taking the motion forthwith meant debating the motion forthwith, and not necessarily dividing on it without debate.
– On a point of order, I understood you to rule that the motion cannot be debated. I draw your attention to standing order B, under the heading of “ The closure “-
Motions not open for debate. - The following motions are not open to debate, shall be moved without argument or opinion offered, and shall be forthwith put fromthe Chair , without amendment, and the vote taken:
A motion for the first reading of a Bill;
A motion, That this debate be now adjourned ;
A motion in Committee, That the Chairman report progress … ;
A motion in Committee, That the Chairman leave the chair;
A motion to reinstate on the noticepaper any business which has lapsed because of a count-out.
All the motions, both in the House and in Committee, which must be put without debate, are embodied in that list. You now want to deprive me of the right to speak on this motion, although I was on my feet. You are taking a most unusual course, which I venture to say has never been taken in any House in the world.
- Mr. Chanter-
– In the meantime, may I ask your ruling on a point?
– I put my dissent in the following form: -
I beg to dissent from the Chairman’s ruling that there can be no. debate on the motion to disagree with the Chairman’s ruling.
– I submit that you declined to allow any debate on the motion.
– They did not.
– -I cannot help it.
– I submit to you, sir, in the best of good faith, that where there is a doubt in a case of that kind it is always within the competency of the Chairman to put the question again. When you asked, “Is it the pleasure of the Committee to take the matter forthwith?” I understood that that meant, “ Are you prepared to deal with, and, if necessary, to debate, the matter forthwith?” and not by any means that it was to be put without debate. If I am wrong in that view, I ask you, on the other hand, to say that you have the power where there has been a clear mistake on the part of the Committee to put the question again.
Honorable Members. - Aye.
– It does not say “without debate.”
– Forthwith ?
– I submit, with great respect, that you cannot do that.
Question - That the motion of dissent be dealt with forthwith - put. The Committee divided.
Majority . . . . 10
– Can the honorable member who has been removed have his vote recorded?
Question resolved in the affirmative.
Question - That the ruling of the Chairman be disagreed to - put. The Committee divided.
Majority . . . . 17
Question so resolved in the negative.
– I rise to a point of order. I do not wish to say anything which will disturb the calm of. this Chamber; but may I say that your action in ordering the Sergeant-at-Arms to remove the honorable member for Bourke was an extreme one? In my judgment, Mr. Chairman, your action was unnecessary. Any one who reads-
– I wish to insure the good and orderly conduct of business; and I am trying to ascertain really where we are, because, when I moved that your ruling be disagreed with, you would not allow me to debate it.
– Our Standing Orders are so framed as to protect . the rights of the minority.
– I understood you to rule that there could be no debate on a question whether’ the vote should be takenin Committee forthwith, and-
– I was absent at the beginning of this unfortunate business which is now under review, and-
– I object.
– May I ask what is before the Chair ?
– I desire, Mr. Chairman, to move a motion disagreeing with your ruling relative to a matter associated with what has just transpired, and I do not want to be deprived of my right by the intervention of any other honorable member. My motion is in these terms -
That the Chairman’s -ruling that “ forthwith “ means “without debate”, be dissented from.
– It is not.
– On a point of order, I ask if the Opposition, being in a minority, have any rights or privileges in (his House at all, and who is the guardian of their rights and privileges ?
– I rise to a point of order, and direct your attention to standing order 277, which says -
Order shall be maintained in the House by the Speaker, and in a Committee by the Chairman of Committees; but disorder in a Committee can only be censured by the House on receiving a report.
– Will you, sir, continue the reading of the standing order?
– I ask you, Mr. Chairm,an, to give your ruling on standing order 55.
– May I ask you a question, Mr. Chairman?
– No. But it has to do with your ruling.
– Why should we be denied-
– How is it that you have the right to talk for ten minutes at a time, while we have no right at all to speak ?
– Will the honorable member resume. his seat?
– You have not the sole right to be heard. Why should I not be allowed to explain?
– On a point of order.
– I wish to know, sir, under what standing order you have the right to subject an honorable member to an assault at the hands of the Serjeant-
– I rise to a point of order.
– Yes, and to every other clause. I wish to deal with it quite dispassionately. It refers generally to every question debated in this House. It has arisen during the debate this evening, and I bring it forward at the earliest possible moment. I wish to move that your ruling on a certain matter be disagreed with.
– The Chairman has explained at length, but no one else may do so.
– Why should you be allowed to explain-
– Will you allow-
– Why do the Government put a man in the Chair to bully members? Why should the Chairman shout at me as he does ? Who is this man that he should bully others ? He has devoted , a quarter of an hour to an explanation, but will not allow any one else to explain.
– You have the War Precautions Act applying in the House now.
– Under what rule can that motion be submitted ?
Question put. The Committee divided.
Majority . . . . 22
– All this trouble has arisen through the Chairman of Committees taking upon himself the responsibility of ordering the Serjeant-at-Arms to remove the honorable member for Bourke (Mr. Anstey) without any reference whatever to our Standing Orders.
Question so resolved in the affirmative.
– Has the Chairman of Committees the right to make a speech about the matter ? Why cannot he merely report the motion which was carried ?
– I understand that, as the Chairman has been permitted to make a speech in reporting this matter to you, sir, I have a similar right.
– Wait until the question has been stated.
Question put. The House divided.
Majority . . . . 23
Question so resolved in the . affirmative.
The honorable member was, therefore, under standing order No. 59, suspended for the remainder of the day’s sitting.
– Mr. Speaker, may I ask you a question as to a point of order ?
.. - I do not know whether the time, occupied in these divisions and points of order is counted in my allotted time, but I know that when I started about 8.32, I had not spoken for more than five or six. minutes when I was charged with doing what other honorable members had done, namely, indulging in a general debate. At that . time, I was pointing out that the Bill before us,so far from fulfilling the Government’s pledge, is a fraud and a sham; and I say that deliberately. The measure does not fulfil one single word of . the pledge of the Government; and I pointed out that, during the afternoon, the honorable member for Grey (Mr. Poynton), the honorable member for Hindmarsh (Mr. Archibald), and others behind the Government, had said the same thing. The whole anxiety of honorable members opposite does not seem to be to secure a perfect taxation measure, but to see how many people they can exempt from taxation.
– We have the support of the honorable member, for Batman (Mr. Brennan) in making exemptions.
– The honorable member for East Sydney (Mr. West) is not the Leader of the Opposition.
Part I. - Introductory.
Part II. - Administration.
Part III.- War-time Profits Tax.
Part IV. - Computation of Profits.
Part V. - Pre-war Standard.
Part VI.- Capital.
Part VII. - Returns and Assessments.
Part VIII. - Objections and Appeals.
Part IX. - Collection and Recovery of Tax.
Part X. - Miscellaneous.
Clause 4 (Definitions).
In this Act, unless the contrary intention appears - “ Business “ includes any. profession or trade and any transaction not in the course of a person’s business for the sale and purchase of any commodity. “Wasting asset” means mines (other than coal mines), quarries, timber rights, and any similar, asset which, through gradual removal of the substance of the asset, becomes exhausted.
.- It is my intention, when we reach it, to move an amendment to clause 14, dealing with the computation of profits, sub-clause 2 of which provides -
Deductions for wear or 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 as may be allowed for the purposes of the Commonwealth income tax.
My amendment will be to insert the words “other than for new business” after “ allowed.” I have already put forward the claim that manufacturing businesses need protection; and this amendment, if it is carried, will give manufacturers a certain amount of protection. However, as it will be necessary to provide a definition of “ New business,” I now move, as an amendment -
That the following definition be inserted after the definition of “ Business “ : - “ ‘ A new business ‘ shall mean an industry to establish the manufacture in Australia of goods now generally imported.”
– Honorable members will see the width of the expression “ goods now generally imported.” It is impossible to accept the amendment.
– The Government is not going to accept the amendment ?
– During the debate on the provisions of the Bill the attention of the Treasurer (Sir John Forrest) was drawn to the position of cooperative companies, and he promised to give full consideration to the representations which were made to him. He has done so, and some amendments have been circulated. In the first place, I move -
That after the definition of “ Company “ the following definition be inserted: - “ ‘ Co-operative company ‘ means a company in which not less than two-thirds of the shares are held by members who arebona fide primary producers or suppliers to the company of foodstuffs the produce of Australia for the purposes of manufacture or sale.”
Our intention will be further effectuated by inserting after the word “products,” in clause 8, the following words : -
Pig and poultry raising, and the business of co-operative companies engaged for the main part in the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia.
– The amendment covers electric light.
– The rest of the business is exempted, too.
.- I move - ,
That after the word ‘* rights “ in the definition of “ Wasting asset,” the following words be inserted : - “ crown leases used for pastoral purposes not carrying tenant rights in improvements.”
I appeal for consideration for the man who goes out into the back-blocks blazing the track of civilization, and finds each year that his lease is coming to an end. He gets no tenant right in improvements from the Crown. Honorable members should, as far as possible, encourage the settlement of these men in the back-blocks.
– What you are asking for is provided for in sub-clause 6 of clause 14.
Clause 7 -
1 ) There shall be levied and paid on all wartime profits from any business …. a tax ….
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.
Amendment (.by Mr. Groom) proposed -
That after the word “ year “. in sub-clause 5, the following words be inserted: - “or a business has changed ownership in a financial year.”
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 -
agriculture, fruit-growing, the maintenance of dairy herds for the supply of dairy products; and
Amendment (by Mr. Groom) agreed to-
That in paragraph (b), after the word “products,” the following words be inserted: - “pig and poultry raising, and the business of co-operative companies engaged for- the main part in the manufacture, preparation, or wholesale distribution of foodstuffs, the produce of Australia.”
Clause, as amended, agreed to.
Where during the accounting period increased capital has been employed in a business, a deduction shall be made from the profits of the accounting period of the greater of the following sums: -
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.
Where during the accounting period de-, creased capital has been employed in a business owing to withdrawal of capital, an addition shall be made to the profits of the accounting period of the greater of the following sums : -
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:
Amendments (by Mr. Groom) agreed to-
That in sub-clause 1, paragraph b, line ‘4, the word “ of “ be omitted and the words “ and borrowed money (if any) . used in” be inserted in lieu thereof.
That in sub-clause 3, paragraph b, line 4, the word “ of “ be omitted, and the words “ and borrowed money (if any) used in” be inserted in lieu thereof.
Clause, as amended, agreed to.
Clause 14 -
Deductions shall 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 Australia, in respect of the profits in that accounting period less any refunds of such taxes received in that accounting period.
Where the profits of a business arise wholly or partly from the use of a wasting asset the following provisions shall apply -
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.
In the case of a business which uses leasehold property - a deduction’ shall be allowed of the 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 portion 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 (b) of this sub-section, at the date of his possession of the lease.
Provided further that in the case of a business (other than a business in which the prewar standard of profits has been computed under paragraph (b) of sub-section (5) of section fifteen of this Act) in which the pre-war standard of profits does not exceed Five hundred pounds -
if the business is ownedby an indi vidual - a deduction of Three hundred pounds 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 Five hundred pounds hut is less than One thousand pounds, such sum as represents the difference between One thousand pounds and the pre-war standard of profits, shall be allowed, if the owner devotes the whole of his time to the business;
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 inrespect 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 (b) of sub- ‘ section (5) of section fifteen of this Act -
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;
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 where part only of his time is so devoted.
– I move-
That the proviso in sub-clause 3 be omitted, and the following inserted in lieu thereof: - “ Provided that a deduction shall be allowed from the profits of an accounting period of -
Commonwealth and State land taxes paid in that accounting period, less any refunds of . those taxes received in that accounting period; and
Commonwealth and State income taxes paid in respect of the profits, less any refunds of Commonwealth and State income taxes received in the accounting period; and
all rates and other taxes ‘paid in Australia in the . accounting period,”
This is not an alteration in substance, but only in the drafting of the clause.
.- Should not this war-time profits tax be deducted before assessing the income tax? A man with a large income pays a graduated income tax. If 75 per cent, of his profits are taken ‘by the Treasurer under this measure, he may have little or no income left.
– A taxpayer is not allowed to deduct Federal income tax when making up his income-tax return.
.- The point raised by the honorable member for Hume (Mr. Falkiner) is that, although the intention of the Bill is to segregate war-time profits from the ordinary profits of a business, and to make a definite percentage of those war-time profits, or excess profits, pass to the Crown as a war-time profits tax, that intention is not achieved. As I read this clause, before the war-time profits tax begins to operate at all, the Income Tax Act will have operated, taking the maximum income as an example, to the extent of 6s. 3d. in the £1 - that is, 5s. maximum rate, and ls. 3d. for the 25, per cent, additional income tax. Leaving out the State income tax altogether, and taking a maximum income for the first accounting period, the first levy on the excess profit, but amounts to 6s. 3d. in the £1 under the Income Tax Act, leaving a balance of 13s. 9d. in the £1, of which,’ under this Bill, the taxpayer gets 6s. 101/2d., and the Crown gets 6s. 101/2d. The Government are really allowing the Income Tax Commissioner to enter this new sphere of taxation, which this Bill purports to deliver over specially to the Taxing Master to be dealt with under the powers it confers. The country thought that the Government were going to earmark 50 per cent, of the excess profits for the first year, and 75 per cent, for the second accounting period, whereas they are not doing so at all.
– I cannot understand you. What is the difference between that tax and the municipal tax, or the land tax!
– We-ought to take the lot.
– Over and above 10 , per cent.
– What amendment does the honorable member propose?
– Does the honorable member suggest that the income tax should not be levied on this amount ?
.- The income tax has already been assessed on the profits to which the war-time profits tax will apply, but when the war-time profits tax has been levied the amount of the tax will be deducted from the taxable income, and the income tax will be reduced accordingly. Let me give some figures in illustration of the position. Suppose a prewar income to be £1,000 and the excess profits to be £600, making the war-time income £1,600. Suppose, for the sake of argument, that the income tax levied on that £1,600 was £200. In dealing with the income for the purposes of the wartime profits tax, you deduct the £200 paid as income tax, thus reducing the income to £1,400, and from that the pre-war income, namely, £1,000, making the excess profit £400. Of that £400 the Government take 50 per cent., or £200. The taxpayer, however, has already paid income tax on £1,600, and an adjustment is made by ascertaining the income tax leviable on £1,400 and deducting that from the income tax actually paid, refunding the difference.
.- This appears to be the most sweeping exemption in the whole Bill, and one which will allow the larger taxpayers to escape. I quite agree with the honorable member for Wannon (Mr. Rodgers) that relief should only be afforded the taxpayer in cases where, and to the extent, that the income tax would operate on excess profits. It is not fair that the incometax should operate on excess profits to the extent: of 6s. 3d., and war-time profits to 50 per cent, or 75 per cent., as the case may be. Where a taxpayer’s income tax is increased, he should be allowed to set it off against his war-time profits tax, but if he is allowed to recoup himself for the whole of his excess tax the Bill will yield very little revenue. I should like to see the proviso wiped out altogether, or amended in such a manner as to assure . to the Treasury the receipt of some revenue under this Bill. The clause is a very awkward one, and requires a good deal of consideration.
– In his explanation, the Minister quoted the case of a man making £1,600 in the taxing year, and with a pre-war standard of £1,000, he intimated that the income tax paid on the £1,600 would first of all be deducted, bringing the amount available for taxation under this Bill to £1,400.
– That is adjusted in the Income Tax Act.
– The Federal income tax is graduated, and would be about 4s. on an income like that.
– The point I raised is dealt with in clause 4, and if what tihe honorable member for Flinders has said is correct, it ought to be deleted.
Amendment, agreed to.
.- Earlier in the evening, I spoke of the difficulties which would be encountered under this Bill by mining companies starting prior to the war, or of those companies starting since the war, and with no pre-war standard. I pointed out that a company making, say, £10,000 profit prior to the war, and having that as a pre-war standard, would pay no. taxation under this measure, whereas a new company would have to pay 50 per cent, or 75 per cent., as may be demanded. I do not want to do anything except that which is reasonable and fair, and I would like honorable members to realize that, if we pass this clause, irreparable injury will be . done to new companies. It will be absolutely impossible to get capital -for such ventures. We ought to encourage them as much as possible, and I ask the Minister, therefore, to permit the following paragraph to be added to sub-section 5-
That would insure the Crown 50 or 75 per cent., as the case may be, of the actual increased value given by the war to metals.
– I am afraid that the proposal made by the honorable member would mean the introduction of a new and very uncertain basis for the pre-war standard. I shall ask the Treasurer (Sir John Forrest) to look into it, and to refer it to the Commissioner. If, upon consideration, my right honorable colleague sees fit to accept it he will take steps to have the amendment made in the Senate.
– I move -
That the words “ in which the pre-war standard of profits does not exceed’ Five hundred pounds” line 6, sub-clause 7, be left out.
This amendment, and the series to follow, deal with the position of small businesses. We wish to make it beyond all doubt that there shall be an exemption up to £1,000 in the case of small businesses. It will be remembered that we fixed a minimum of £500 in regard to excess profits, and then allowed £300 for management and an absolute exemption of £200 without any deduction.
.- 1 would like the Minister ‘to say whether provision has been made for taxing profits which take the form of an increment in stock ? During the drought period ‘many men on the land had to sacrifice their male stock to save their breeding stock. During the recovery period they did not go into the market to replace the stock which they had lost, but bred up gradually. I should like to know whether this provision will apply to such cases.
– Where a less income has been made by an individual, but the loss sustained has been compensated for by an increment in stock, will such loss be allowed?
Amendments agreed to.
.- In connexion with sub-clause 10, I wish to know if it is possible to make provision that during the operation of the tax, losses extending over’ one year shall be compensated for, and a refund made in a subsequent accounting period ? The position is that men who have made excess profits during this year may, during the next -financial year, sustain big financial losses. In the Bill introduced by the honorable member for Capricornia (Mr. Higgs) which was copied from the Imperial Act, and from the New Zealand Act, provision was made to cover such losses. Are the Government prepared to favorably consider a proposal of that kind? ‘
– That matter has been brought under the notice of the Treasurer (Sir John Forrest) on several occasions. The provision referred to by the honorable member has not been made either in the Canadian or the New Zealand Acts. Neither is it contained in any of our Income Tax Acts. The Treasurer, it must be remembered, has to assess his revenue beforehand; and if these deductions are allowed, he will never know where he stands.
.- I should like to move that after the words “ borrowed money,” in sub-clause 11a, the words “ or capital “ be inserted, with the intention of afterwards moving in clause 16’ a similar amendment. My object is to include rented land as capital. The Bill set out to give to all capital an exemption of 10 per cent. ; and I cordially agree with the amendment to give the same exemption to capital borrowed for the purpose of creating a business. I cannot distinguish between a man who borrows money at 5 per cent, or 6 per cent, to create a business, and a man who borrows land at 5 per cent, or 6 per cent, in order to create a business which will yield him a profit. It would be a pity, when we have laid down a fine fundamental principle, to depart from that principle on the last occasion presented to us.
Clause 15 -
Where the accounting period for which the war-time profits tax is to be assessed is less than a year, the amount of the pre-war standard of profits shall be proportionately reduced.
The pre-war standard of profits shall, subject to the provisions of this Act, he 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 profits standard”), but shall not in any case he less’ than the sum of £500.
Provided that where there have been less than three pre-war trade years, the profits standard shall be - (‘a) 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.
Amendment (by Mr. Groom) agreed to-
That the words “ accounting period for which the war-time profits tax is to be assessed is,” sub-clause 2, be left out, and the words “ profits on which the war-time profits tax is to be assessed are for a period” inserted in lieu thereof.
Amendment (by Mr. Groom) proposed -
That after the word “ reduced “, sub-clause 2, the words “but shall not be reduced, ‘below the sum of ?500 “ be inserted.
.- I should like the Minister to explain subclause 3, which deals with the three-year period. I understood from the Minister the other night that the taxpayer had the option of a six-year period, whereas this sub-clause appears to tie him down to three years.
– Sub-clause 4 provides that where the last three pre-war trade years have been years of abnormal . depression any two of the three preceding pre-war trade years may be substituted.
Amendment agreed to.
Amendment (by Mr. Groom) agreed to-
That the word “average”, sub-clause 3, be left out, and the words “greater of the” inserted in lieu thereof.
Clause, as amended, agreed to.
Clause 16 -
.- I move -
That after the word “ kind,” line’ 3, the words “ or both, or at the option of the taxpayer, the amount by which the value of the assets of the business exceeds the amount of the liabilities thereof “ be inserted.
Unless some such amendment is agreed to the operation of this clause will be manifestly unfair. I take the case of an original elector of a piece of land, taking it up forty years ago at ?1 per acre, and that of a man holding the adjoining property, for which he has had to pay ?8 per acre, In these circumstances the original pioneer will be taxed, under this clause, eight times as heavily as his neighbour. A man in Victoria may be induced to go to New South Wales, and there purchase a piece of property at ?4 per acre, whilst the original selector of the adjoining land in New South Wales may have acquired it at ?1 per acre. He will have to value his land at ?1 per acre, whilst the other man will be able to value the adjoining property at ?4 per acre. If we leave the question of the value of land, and take the case qf the value of shares, one investor in bank shares may have paid ?40 for bank shares, the market value of which to-day is ?118 10s. The test should be the present value of the assets, the difference between assets and liabilities.
– I rise to a point of order. The amendment proposed by the honorable member for Calare (Mr. Pigott) is directly in conflict with clause 11a, which has already been agreed to by the Committee, and which makes provision for borrowed money. The amendment would nullify the effect ‘of clause 11a.
.- It is desirable to avoid any conflict between the amendment and clause 11a. In the case of a business accumulated reserves are to be regarded as capital, but in the case of land an original selector, who paid ?1 per acre for his land, will not be allowed to estimate his capital at more than the ?1 per acre.
– The amount expended Upon improvements will be regarded as capital for the purpose of assessing the 10 per cent, standard.
.- I do not consider the statement of the Honorary Minister (Mr. Groom) at all satisfactory. The cost of improvements being allowed by no means compensates the owner of the land for the value added to the land by them. In the case of the ringbarking and clearing of timbered land, more than half the added value is due, not to the cost of the improvements, which’ maj be a mere bagatelle, but to the time during which the improvement has matured. It is the added value of improvements which is allowed for under the Federal land tax. I suggest that the Treasurer (Sir John Forrest) should agree to the insertion after the word “ kind “ of the words “ and the added value of his improvements.”
– I promise to give the matter consideration. ,
.- In view of the promise of the Treasurer (Sir John Forrest), I am willing to withdraw the amendment, but the statement now made by the Honorary Minister (Mr. Groom) conflicts with a statement made to me by Mr. Collins in the presence of the Treasurer, that the land purchased at ?1 per acre would be valued at that figure.
– I do not intend to proceed with my amendment.
.- The point raised is a very important one. Though it is very difficult to appraise the value of land, we should not penalize the pioneer station-owners by contrast with others who have come in and purchased adjoining land within the last year or two. It is quite possible that this clause will tax very heavily the man who has accumulated large holdings, possibly by buying out other selectors, or by various members of the family taking up originally different blocks in years gone by. If such a person was fortunate enough to dispose of his pro- perty twelve months ago and then repurchase it, he would escape this taxation. A greater value attaches to land than is represented by the amount paid to the Crown, or the actual cost of improvements effected. These have been contributed to largely by members of the family at) no cost in the shape of actual cash paid out. Yet there will be no allowance for the value of those improvements so effected. Perhaps it would be going too far to provide that the total improved value of the property shall be regarded as the value of the capital invested in it, yet some amendment should be made to give a fuller measure of justice to the holders of these properties. Otherwise their only protection will be to get in debt as much as possible. This clause will create a monstrous injustice which should not be permitted.
– Particularly when the value of a man’s asset can be ascertained at the Land Taxation Office.
Amendment (by Mr. Groom) agreed to - c
That the word “ trading “ be inserted after the word “ accumulated “ in line 4.
Clause, as amended, agreed to.
Clause 31 (Date of payment of tax).
.- It is my intention to move an amendment to this clause. I spoke to the Treasurer (Sir John Forrest) about the matter, but he could not see his way to accept it. I now wish to amend my proposition so that he may accept it as amended.
– And they have done very well out of them.
– They are not anxious to get rid of their war bonds. They are worth more than they paid for them.
– We would have to float the bonds again.
– The Treasurer says that he will consider it.
– I now ask the Committee to insert the new clause which I promised to bring down to enable the Government to make an arrangement with the Imperial Government, as the New Zealand Government have done, to prevent excessive taxation. I move -
That the following new clause be inserted: - “ 8a. In any case where war-time profits are chargeable with war-time profits tax under this Act, and are also chargeable in Great Britain with excess-profits duty, under any Act of the Imperial Parliament imposing an excess-profits duty, the Treasurer may agree with the Chancellor of the Imperial Exchequer, or other authorized person, for the apportionment between the Imperial and the Commonwealth
Governments towards the supplies necessary -for the services of His Majesty of the war-time profits tax derived pursuant to this Act or the excess-profits duty derived pursuant to the Imperial Act (whichever provides the greater amount), and may further agree that in any such case the tax or duty (as the case may be) chargeable pursuant to the other of these Acts shall not be collected.”
.- I wish to get from the Minister an assurance that he will consider one point which I spoke to him about, and that is the. faet that the accounting period is to end previous to the 4th August. In the case of a business which balances on the 31st August, the period of eleven months previous to the date of the outbreak of the war will not come into the accounting period. To a new business that will be a great hardship. I should like the Minister to give me a promise that he will go carefully into Irhis matter again, and that if convinced that my contention is fair he will have a small amendment made in the Senate. Otherwise a grave injustice will be done to a rising business.If the Treasurer (Sir John Forrest) will give rae the promise for which T ask T will resume my seat at once.
– The Treasurer will give an assurance to the honorable member that he will look into this matter closely and hear any representations thehonorable member can add to those which he has already so forcibly put.
Question resolved in the affirmative.
Bill read a third time.
Bill returned from the Senate, without amendment.
Bill returned from the Senate, without amendment.
Bill returned from the Senate, without amendment. .
Bill returned from the Senate, without amendment.
Conduct of Business : Supply of Food.
– I move -
That the House do now adjourn.
On behalf of the Treasurer. (Sir John Forrest) I have to thank honorable members for the way in whichthey have assisted the Government to get the Wartime Profits Tax Assessment Bill put through to-night.
.I desire to call the attention of the Government to the condition of affairs now obtaining in Brisbane as the result of the withdrawal of certain coastal and oversea boats from the southern ports and Brisbane. I received the following telegram to-day : -
Wholesale stocksof tea quite exhausted. Can nothing he done to resume Inter-State sea trade? Large transhipments from oversea accumulating in Sydney. Could oversea steamer
Port Sydney be sent on to Brisbane direct from Melbourne? Farmers suffering through crops of pineapples rotting, cannot send to Melbourne or Sydney markets..
In view of the serious fact, thatfruit-growers in and around Brisbane and the North Coast, and also around Cleveland and Redland Bay, are unable to send their fruit to the southern markets, thereby entailing great losses upon them, and also inconvenience to residents of Queensland owing to their inability to secure, certain articles of food at this time, I trust that the Government will take steps to see that either coastal or oversea boats or both resume running as far as possible.
– The two Loan Bills, and then the Repatriation Bill.
– In reply to the honorable member for Oxley (Mr. Bayley), I desire to say that the Government fully recognise the seriousness ofthe position that has arisen in Queensland. It is occupying the attention of the Prime Minister (Mr. Hughes) very closely, -and he hopes to.be able to give some relief in the direction suggested.
Question resolved in the affirmative.
House adjourned at 12.6 a.m. (Thursday;.
Cite as: Australia, House of Representatives, Debates, 5 September 1917, viewed 22 October 2017, <http://historichansard.net/hofreps/1917/19170905_reps_7_83/>.