7th Parliament · 2nd Session
Mr. Speaker (the Hon. W. Elliot Johnson) took the chair at 2.30 p.m., and read prayers.
Mr.WATKINS.- Will the Minister for the Navy lay on the table of the Library the papers connected with certain charters referred to yesterday, and the charter parties ?
– I shall give instructions for that to be done.
– Has the Acting Prime Minister seen the following statement : -
Replying to the statement of Mr. McCallum, Perth Trades Hall representative at the GovernorGeneral’s Recruiting Conference, that it was for the Government to make the next move, Mr. Colebatch, Acting Premier, has made the announcement that the embargo on the employment of men who went onstrike at the wheat stacks has been removed, and the Fede- ‘ ral authorities’ have been asked to remit the fines on certain persons incurred under the War Precautions Act.
Is the honorable gentleman ‘ aware that at the wheat stacks at Brooklyn, Spotswood, and Williamstown, the foremen in charge tell men applying for work that they must first join the non-union union -there are other terms applied to this union - and that men who are members of other unions are not employed, although they could give effective service? I should like the honorable gentleman to endeavour to get the Victorian Government to keep the compact that was made regarding . the stoppage of victimization. We were told that there would be no victimization, but what can be done by the Government of Western Australia can be done by the Government of Victoria.
– My attention has not previously been directed to this matter, If the attitude of the foremen is as it has been represented to be, it is not . in the spirit of the compact. I shall make inquiries, and see what can be done to put the matter right. We are endeavouring to put things right everywhere.
– Has the Acting AttorneyGeneral yet prepared a list of those who were fined or sentenced to imprisonment, and whose sentences the Prime Minister, at the recent Conference, promised to remit?
– Yes ; and in pursuance of the promise, fines have been remitted and prisoners released. A full Announcement on the subject will be made later. We are carrying out the agreement.
– Will the Minister for Trade and Customs bring under the notice of the Board of Trade the desirability of ‘encouraging the manufacture of fencing wire and. wire netting, the prices of which, would be prohibitive even were supplies procurable?
– I shall be pleased to comply -with the request.
– Has the Honorary Minister (Mr. Greene) a reply to the question I asked’ yesterday concerning the freights on fruit passing between the ‘ States?
– I have referred the matter to my colleague in charge of it, and hope to reply to the question next week.
– On what infor mation does the Minister for Trade and Customs base the statement . made in reply to an inquiry yesterday . that the motor car body builders of Australia are unable to meet the demand for motor car bodies, and that therefore he is allowing a certain number of motor bodies to be imported? My information rather contradicts his Statement.
– A proclamation was issued in the Gazette of, speaking from memory, the 10th August last, prohibiting the importation of motor cars, which were deemed to be a luxury. But, as I stated at the time, cars which had been ordered from manufacturers in England or America were to be permitted to come in, because financial obligations had been incurred in respect of them. Subsequently, deputations of importers asked that consideration should be given to their business, which they said should not be suddenly dislocated or stopped, and deputations from the motor car body builders of Australia also waited on me. A mutual agreement was arrived at between the importers and the motor body builders that the latter would be satisfied ifit were decided that every car permitted’ to come into Australia should be accompanied by two chassis. The introduction of two chassis with every motor car imported meant that the business of . the local motor body builders would be afforded an opportunity to progress. Motor body builders had not the necessary material to enable them to cope with . the requirements of the Commonwealth, since the proclamation had been suddenly issued, and it was because of this mutual arrangement that I resolved to allow the introduction of one car with every two chassis imported. So far as I know, the motor body builders, having regard to the insufficient supply of material for their work, are not in a position to do more’ than they are doing at present to meet the requirements of the Commonwealth.
– I desire to ask the Minister representing the Minister for Defence whether employees at the Small Arms Factory who havebeen thrown out of employment have received one week’s pay in lieu of a week’s notice, in accordance with the award madeby the Conciliation and Arbitration Court?
– I do not know whether they have or not, but I shall ascertain.
Mr.HIGGS. - Has the Minister for Trade and Customs issued to his officers any memorandum having reference to soldiers’ parcels? If so, will he lay on the table of the House at an early date a copy of the memorandum?
– I have issued instructions to-day, and shall be pleased to place the House in possession of them tomorrow.
– Will the Acting Prime Minister state whether it is a fact, as reported in the press, that Captain Burkett, a military officer, speaking last night at a meeting at St. Kilda, at which the honorable gentleman was present, Btated that the improved position as to enlistment arose from the reason that we were now enlisting “ baby boys.” If that is so, will the Acting Prime Minister reconsider his decision in regard to the enlistment of youths over eighteen without the consent of their parents in view of this implied reproach on the part of the military officers?
– I do not know whether Captain Burkett made the statement referred to. I opened the meeting in question, but had to leave to return to Parliament. I read the report, and that is all the information I. have in regard to the matter.
– Has the Acting Prime
Minister any statement to make regarding the advance due to the farmers from the Wheat Pool?
– Not at present. I admit that honorable members are becoming importunate, but it is an important finance question, and I want to see it settled before . I make any announcement on the subject. I may have an opportunity to make an announcement later in the sitting.
– Has the Acting Prime Minister seen a report in the press to the effect that at the Conference of State Premiers it was , decided, in regard to electoral uniformity, to ask the Federal Minister to supply the States with confidential copies of the proposed Commonwealth Electoral Bill as soon as it was prepared and before its introduction to Parliament? Is the honorable gentleman prepared to hand over the making of Commonwealth electoral laws to the State Parliaments?
– Iwish that all the questions put to me were as simple as this. The answer to it is “ No.”
– In connexion with the promise given by the Prime Minister at the recent Recruiting Conference that there should be no economic conscription, I wish to ask the Acting Prime Minister whether he is aware that an employee of a Commonwealth Department receivednotice of ‘his dismissal three days after the making of that promise?
– For what reason was he dismissed ?
– Simply because he had not enlisted.
– I am not aware of the case.
– I shall supply the honorable gentleman with particulars.
– I shall be glad to have them, since it may lead to the discovery of a real misapprehension in regard to economic conscription.
– In view of the great inconvenience caused to the public by the use of old directories at various post offices, will the Postmaster-General cause up-to-date directories to be issued ?
– I do not know whether the statement made by the honorable member is correct or not. I shall have inquiries made, ‘and acquaint him with the result.
-In view of the potentialities of the existing electoral rolls, will the Postmaster-General give consideration to the matter of issuing a more perfect directory by utilizing the information contained in them?
– I will have the matter looked into, and will furnish the honorable member with a reply at a later date.
– Last year the Prime Minister, in reply to a question, gave me an assurance that representations would be made to the Imperial Government to secure the exchange, or, if possible, the release of Australian prisoners in Germany. Is the Acting Prime Minister in a position to say now what has been done in that direction? If not, will he favour the House later on with a statement on the subject?
– I know that certain steps were taken at the time, but cannot say what was their effect. I shall inquire, and inform the House later.
– Has the attention of the Minister controlling the prices of necessary commodities been called to a letter in the Age of to-day showing that excessive prices are being asked for a variety of foods, and will the honorable gentleman inform the House with whom the writer of that letter should communicate in order that a prosecution may take place without delay?
– My attention has been drawn to the matter, and I have already instructed the Chief Prices Commissioner in Melbourne to inquire into it, and to take whatever action is necessary.
– To whom should the public complain in regard to such
– To the Chief Prices Commissioner.
– I desire to ask the Postmaster-General whether the practice of making up small parcels of mails for transmission from one railway station to another has been abandoned, and whether it has been determined that all mails shall be forwarded by train to some central clearing office where they are to be redistributed over lines along which they have already travelled?
– It is a fact that an effort has been made to get rid of the superfluous exchange of mails. This does not involve any unnecessary inconvenience to the public, since other facilities are provided-
– It means great delay.
– I am answering this question.
– But answering it wrongly.
– It is not the rule, nor is it expected, that mails shall be conveyed from post-office to post-office by a complete system of exchanges. As a matter of fact, that could not be done.
– Has the Honorary Minister in charge of price fixing noticed a statement in the press to the effect that Lord Rhondda has said that he has associated with him seven business men to every Government servant, and will he take into consideration the advisability of associating two or three representative business men with him in the matter of price fixing?
– I shall be very pleased to consider the matter.
– Yesterday the honorable member for Barrier (Mr. Considine) directed my attention to a statement which had been made about the sale of zinc concentrates to the British authorities, and more particularly to a speech delivered by the Hon. W. L. Baillieu. The British Government have expressed a desire that the details of the agreement relating to the sale of zinc concentrates should not be published for the present, and I feel obliged to observe the confidential nature of the information at the express wish of the British Gpvernment, but I shall be glad to inform the honorable member privately in regard to anything he desires to know for his own use.
– When framing his Estimates, will the Treasurer consider the advisability of placing a sum of money at the disposal of the Department of the Postmaster-General for the purpose of providing reasonable postal facilities in country districts?
– Speaking as a former Postmaster-General, I feel that there is a delicacy about the situation which the honorable member for Dampier will doubtless appreciate. Whatever requests are made by the Postmaster-General when framing his Estimates will be duly considered.
– In view of the serious dissatisfaction existing at the Small Aims Factory, Lithgow, for the last ten weeks, will the Minister representing the Minister for Defence consider the advisability of appointing an independent tribunal to investigate matters connected with the working of the factory, and of providing that such tribunal, if appointed, shall not be restricted by the regulations under the War Precautions Act?
– I shall submit the request of the honorable member to the Minister for Defence.
– Is it the intention of the Government to amend the Invalid and Old-age Pensions Act in the near future in order to provide that where a husband and wife endeavour to supplement their pensions in order to maintain their existence there shall be no reduction in the amount of the pension payable to them?
– That matter has not been under consideration, but if the honorable member will give notice of his question I will see that it does receive consideration.
– In accordance with the promise given by me to the honorable member for Darling (Mr. Blakeley), to furnish him with further information in reference to the sale of rabbits to the
British Government, I desire to submit the following report that has been prepared in regard to the matter : -
With reference to the report that the British Government had purchased 600,000 crates of rabbits through the Meat Control Board, Sydney, it will be recollected that a cablegram was despatched to the Secretary of State for the Colonies, pointing out that the contract for the 1917 rabbit-pack was made with the Commonwealth Government, and that the Commonwealth Government had submitted the offer of the 1918 pack; further, that it was’ very desirable, in view of the previous arrangements and organization that the Commonwealth Government should deal with the matter, more especially as a contract with one State would be sectional in character, and cause much dissatisfaction in others.
In a telegram which has just come to hand, the Secretary of State has advised that the Board of Trade have concluded negotiations for 600,000 crates of hooked skinned rabbits direct with the Meat Control Board, Sydney, and that the exporters in New South Wales, Victoria, South Australia, and Tasmania, are to participate in proportion to the respective production for export last season.
The Secretary of State added that he very much regretted that, owing to a misunderstanding, the question of the rabbit purchase has not been handled in a more satisfactory way. As to thu purchase of the 600,000 crates, the Board of Trade were under the impression that, as the offer was made through au official body, the Commonwealth Government were aware of the negotiations.
In conclusion, Mr. Walter Long stated that he presumed the Commonwealth Government’s offer of shipments to the United States still holds good.
A reply has been sent that this presumption is correct.
– Has the attention of the Acting Prime Minister been drawn to the report appearing in this morning’s Age of the evidence given yesterday before the Inter-State Commission, which is inquiring into the cost of clothing? This is one portion of the report - “Amongst the wholesale section of the trade,” witness further remarked, “ a great deal of roguery has been going on. Things are sold and resold, and sold again, between the different warehouses. Many men make a good living as brokers running about from one place to another, making profits. We have known two or three such cases recently.”
Iii view of that statement, will the Government take into consideration the advisability of establishing a central depot, controlled by the Commonwealth Government, for the wholesale distribution of the whole of the output of clothing, both imported and of Australian manufacture ?
– My attention has not been directed to that report, but the problem to which the honorable member has referred is already receiving attention from the Honorary Minister in charge of price fixing (Mr. Greene). However, I do not think that there is any danger of my accepting the honorable member’s advice to solve the difficulty in the way which he has suggested.
-In view of the statement made last night by the Leader of the Opposition (Mr. Tudor) in regard to the enormous profits which, he said, were being made . by the Wallaroo and Moonta Copper Mining Company, upon which it was not paying war-time profits taxation, will the Acting Prime Minister have an inquiry made into the matter, and a public statement made, so that the public mind might be relieved?
– I did not hear the statement referred to, but I shall peruse the Hansard report of the speech to which the honorable member refers, and see whether it demands action on the part of the Government.
– In view of the doubts that are prevalent amongst the public as to the safety of registered letters containing money, will the PostmasterGeneral consider the advisability of charging an extra penny postage, in order to guarantee, the safe delivery of such letters up to the value of £5 ?
– I believe that the matter is governed by international postal law, but I will look into it, and let the honorable member know what can be done.
– (By leave), - I find that I am now in a position to make a statement regarding the wheat payments. Honorable members, will appreciate the cause of the delay, seeing that it is necessary to complete matters with the financial institutions which have undertaken obligations respecting this matter. On the 25th April of this year, the Australian Wheat
Board unanimously decided to recommend that, payments, as soon as found convenient, should be made to the wheat growers of the various States as follows : - 1915- 16 Pool. - 3d. per bushel in New South Wales and Victoria; lid. per bushel in South Australia and Western Australia. 1916- 17 Pool.- 3d. per bushel in all States. 1917- 18 Pool.- 3d. per bushel in all States.
The amount involved in those payments is approximately as follows: -
I “have now been able to arrange with the financial institutions to have the payments made as follows: -
It will be seen that between now and the middle of August there will be paid, as further advances on the three pools, a sum of £4,750,000.
– Is that the final payment for 1915-16?
– It is not quite final; but it is as nearly a clean-up of the’first pool as is possible, in view of the shipping and deterioration difficulties. The Board assures me that, as soon as possible, this pool will be finally cleaned up and extinguished in that way.
– What will that leave outstanding?
– I could not say; it is a matter of value, to a large extent, in regard to the first pool.
– But as to the lot?
– It is impossible to say, because, as honorable members know, the British surveying officer is valuing wheat in the various States, particularly in New South Wales, at the present time, and until that valuation is completed we cannot know what the remaining portion of any given pool is worth.
– That is, his valuation as to losses?
– As to losses, yes, for a take-over date. This pool question seems simple from the outside, but its finance and its figures become very tangled as years go on. I am sure that the Board and the Treasury are -alike desirous of cooperating in the simplification of wheat methods, which can only be achieved by the gradual wiping out of the early pool balances, and possiblybringing them forward into other pools. I am sure that the wheat farming community in the four States will be grateful for this extra payment. We should have been -glad to make it more, if that had been safe as well as possible; it involved, however, financial organization, and the present arrangement is just about as fair a, deal as we could possibly have at the present time, in view of the condition of the finances.
Amount Paidin Estate Duties
asked the Treasurer, upon notice -
What is the value of stock accepted at par and Treasury Bonds at their face value received in payment of estate duties under the law of the Commonwealth?
Appointment of Mb. Latham
asked the Minister representing the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Assistant Minister for Trade and Customs, upon notice -
Will he favorably consider the ‘formation of. bran and pollard pools, so that users of those commodities may obtain regular supplies?
– The answers to the honorable member’s questions are as follow : -
asked the Minister for
Home and Territories, upon notice -
What steps have been taken to carry out the Electoral Commissioner’s recommendation to save expenditure, and aid the public convenience by a joint roll for the Commonwealth and States?
-The matter is receiving the attention of the Commonwealth and States. It is anticipated that when legislation providing for essential uniformity of method, now under consideration, has been passed by the several Parliaments there will be no delay in giving effect to the proposals in question.
asked, the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
Purchase by Allies.
asked the Acting Prime Minister, upon notice -
Whether he can inform the House as to the price paid per ton by Great Britain, Japan, or other purchasers of Australian lead and zinc?
– I do not feel at liberty to give the information asked for.
asked the Acting Prime Minister, upon notice -
Whether he will arrange for the supply of cornsacks and woolpacks to country merchants at the same price and terms as the supplies are made available to- wholesale merchants in the various State capitals?
– The Government is dealing with cornsacks only, and all merchants will be treated on the same terms, whether country or town. The bags will be publicly advertised for sale at ships’ slings, the Government endeavouring to sell whilst in transit.
asked the Acting Prime Minister, upon notice -
– Inquiries are being made with a view to ascertaining whether there is any information relatingto this case in any of the Commonwealth Departments. So far, I have not been able to ascertain.
asked the Acting Prime Minister, upon notice -
– The answers to questions 1 and 2 are as follow: -
Mr. Arthur Nelson Barnett, late Stipendiary Magistrate, of Sydney, has been appointed a Commissioner -to inquire into the origin of birth and parentage of all persons now in ‘the Commonwealth Public Service or employ who are, or may be reported or believed to be, of enemy origin or descent, and in any matters incidental thereto, and to make recommendations as to their continuance or otherwise in the Commonwealth Government Service or employ.
As to the other questions, I have inquired of Mr. Barnett, and have received the following telegram from him: -
No children being examined on oath by me with a view to incriminating their parents. Youngest woman examined so far twenty-four years old. No young girls examined, but in cases where enemy descent is disclosed questions are asked tending to disclose loyalty or disloyalty of forbears. This inquiry is not confined to Australian natives only.
asked the Assistant Minister for Defence, upon notice -
Have any Italian subjects or naturalized Italians been- actually deported beyond Australian waters for compulsory military service overseas ?
– The answer to the honorable member’s question is as follows: -
Italian conscripts and reservists have been, embarked for Italy.
No naturalized British subjects have been compulsorily deported from Australia in this connexion.
asked the Assistant Minister for Defence, upon notice -
Is it a fact that a person of the Italian race, convicted of the most serious capital offence, and serving in consequence a life sentence of imprisonment or other extended term, has been released from civil’ custody and enlisted with Italian conscripts in Australia?
asked the PostmasterGeneral, upon notice -
Mr.WEBSTER. - The answers to the honorable member’s questions are as follow: -
The Acting Prime Minister has already stated that it is not the intention of the Government to give information concerning individual cable messages.
asked the Assistant Minister for Trade and Customs, upon notice-
– The matter is already under consideration.
asked the Acting
Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Assistant Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister representing the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow: -
The whole question is at present being gone into to see whether it is possible to make such arrangements as will obviate further complaints of this nature;
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Acting Prime Minister, upon notice - .
– The answers to the honorable member’s questions are as follow : -
asked the Assistant Minister for Defence, upon notice-
Is the regulation enabling minors to be enlisted for active service without’ the parents’ consent interpreted by the Minister to mean that youths of upwards of eighteen years, will be enlisted in spite of the opposition of the parents?
– The regulation means that the Department does not make the consent of the parents a condition of enlistment.
asked the Assistant Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s, questions are as follow : -
Message recommending appropriation reported.
Bill received from the Senate, and (on motion by Mr. Groom) read a first time.
The following papers Were presented : -
Contract Immigrants Act - Return for 1917, respecting contract immigrants admitted or refused admission into the Commonwealth, &c.
Immigration Act - Return for 1917, showing - (a) persons refused admission to the Commonwealth; (b) persons who passed the dictation test; (c) persons admitted without being asked to pass the dictation test; (d) departures of coloured persons from the Commonwealth.
Ordered to be printed.
Arbitration (Public Service) Act - Award (dated 26th April, 1918) of the Commonwealth Court of Conciliation and Arbitration, and other documents, in connexion with a plaint Submitted by the Professional Officers Association, Commonwealth Public Service.
In Committee (Recommittal) (Consideration resumed from 15th May, vide page 4706) :
Clause 14 -
Section 18 of the principal Act is amended -
by omitting from paragraph (l) of subsection (1) thereof the word “ and “ and inserting after paragraph (m) of that sub-section the following paragraph: - “and’ (n) . the annual sum necessary to recoup the expenditure on improvements made undercovenantwith the lessor on land by a lessee who has no tenant rights in the improvements. The deduction under this paragraph shall be ascertained by dividing the amount expended on the improvements by the lessee by the number of years in the unexpired period of the lease at the date the improvements were effected”.
Section proposed to te amended- 18. (1) In calculating the taxable income of a taxpayer the total assessable income derived by the taxpayer from all sources in Australia shall be taken as a basis, and from it there shall be deducted -
sums paid by way of commission for
.- In the absence of the honorable member for Kooyong (Sir Robert Best) and at his request, I move, pro formâ, the following amendment of which he has given notice : -
That after the word “effected” the following paragraph be inserted: - and (o) all interest actually paid by the taxpayer in the year immediately preceding the year of assessment upon money borrowed and actually used or invested in Australia.
The effect of the amendment is that all interest paid on money invested in Australia shall be regarded as an item rightly deductible from income. I regret to say that I cannot give a fuller statement of the reasons actuating the honorable member for Kooyong in the framing of his amendment, but I have done what I undertook to do in moving it, and in giving to ‘ the Committee what inf ormation he waa able to impart to me on passing from the chamber. If the Minister is of opinion that the carrying of the amendment will affect money invested in the war loan, I shall not support it.
– I cannot accept the amendment, though I am sorry that the honorable member for Kooyong (Sir Robert Best) has not been able to move it himself, because there may’ be other reasons which do not occur to the members of the Committee for considering his proposal. My opinion is that the amendment would affect an enormous number of investments, and, if carried, would cause a large loss of revenue. In relation to the war loans, it would mean that a man borrowing to invest in war stock would not only enjoy an exemption of income tax in respect of the interest on the stock he bought, but also an exemption in respect of the interest paid on the money borrowed to buy the stock, which would not be- fair. Take the case of two men, one starting in business, having capital to the amount of, say, £10,000, and the other borrowing for private purposes to that extent. If you gave an exemption from income taxation, in respect to the interest paid on all borrowed money without respect to use, the man with capital could ask for a similar concession.
– The arrangement made with financial institutions for the borrowing of money for investment in war stock is that the rate of interest payable shall foe a little lower than the rate of interest on the war stock.
– I believe that is so. I understand that the money is borrowed at 4 per cent. I do not see why investors in war stock who borrow to buy the stock should have the two exemptions that I have mentioned. When a man with capital commences a business, he surrenders the interest which his capital was former ely earning, and if all who borrowed, “whether for business or not, were given an exemption in respect of interest the capitalist might ask for a similar concession.
– A matter which, I think, may have been in the mind of the framer of the amendment is the fact that occasionally, after serious financial disturbances and consequent bankruptcies, honorable men who have failed have subsequently borrowed to enable them to pay off their liabilities in full, although others, perhaps of greater social distinction, have been content to pay their creditors fd. in the £1. Is it fair for the Commissioner of Taxes to refuse an exemption in respect of the interest paid to enable a citizen to discharge his obligations in full ? Cases of this kind may not be numerous, but I have known men to pay interest for several years on money borrowed to enable them to meet their liabilities in full. I am certain that the Committee would not like such men to be penalized for their integrity.
– I understood the Minister to say that the man who borrows money to invest in a business is not entitled to an exemption from income tax in respect of the interest, paid on that money. If that is the law, it is outrageous. The Minister said that if two men went into business, one possessing capital and the other borrowing to provide himself with capital, the man without capital should not be allowed to deduct from his income the interest paid on the borrowed money.
– A man is allowed to deduct as an outgoing interest on money borrowed, if it is used in connexion with the creation of taxable income.
.- I understood the Minister to say that the man who borrowed money to put into a business would not be allowed to deduct from his income the interest paid on the borrowed money.
– He would be allowed to do so.
– I want that to be made perfectly clear.
.- I emphasize the need for a clearer understanding of the position. It would greatly check enterprise if men could not deduct from their incomes the interest paid on borrowed capital, and it would be very unjust. I understand the Minister to say, however, that this deduction is permitted.
.- I understand the position to be this: If a man borrows, and by doing so is able to add to his income, he can place the interest he pays against his earnings; but the man who borrows to buy, say, shares which do not return a dividend, cannot claim a deduction in respect of the interest he has to pay.
.- The money expended in connexion with the production of taxable income is allowed as a deduction from the amount of income earned; but the amendment covers all borrowings, without regard to their purpose. What I wanted to point out was that the clause would allow a man to deduct interest on money borrowed for any purpose, although a man possessing capital and using it for business is not given any similar concession. I see no justification for the proposal. Under it, men who have borrowed large sums, whether using- the money to earn income or not, could deduct the interest from their return of income.
– The proposed amendment is taken from Victorian legislation.
– I cannot see any good ground for it. Cases have arisen bearing on the point, though I am unable at the moment to cite them.
– If the amendment were carried the Commissioner would not be able to inquire how the money which had been borrowed had been invested ; whether it had been used to earn revenue, to pay debts, or for some other purpose.
– The amendment covers all moneys borrowed and used or invested in Australia, though the drafting may include money borrowed out of Australia and invested in the Commonwealth. It would allow the deduction of interest in respect of all borrowed money. I have been unable to obtain from the Statistical Department an estimate of ‘the effect that the amendment would have upon the revenue, and the Commissioner for Taxes has not the information; but his opinion is that the amendment would cause a large loss.
– If a man bought a farm, the management of which was not exactly a part of his business, and he were losing on the farm, would he be allowed an exemption in respect of the interest?
– If a man borrowed for the purposes of his farm, Le would be borrowing for the. purposes of his business. And, I believe, that at present the amount of interest he paid would be allowed.
– - But suppose the farm was a non-paying one?
– Then it would depend upon the total of his income. I should think, in that case, the amount would be an expenditure in relation to taxable income from property, and, if so, the allowance should be made. I speak, of course, subject to- correction. In general, the principle is that all expenditure on interest in relation to income from business is credited as an outlay in connexion with the making of that income. I think the honorable member will find that, under the law as it stands, where a man, carries on two businesses, a loss in one business is set off against the profits of the other, and that, on the whole, the amendments made already in the principal Act will attain the end desired. In this Bill we have extended the principle. Where a man has, say, a fixed salary, we will allow a loss on any business carried on by him to be taken into account against his income by way of salary.
– If a man borrows money to discharge a debt, is he allowed to deduct the interest which he pays ?
– The honorable member is alluding to the point raised by the honorable member for Hindmarsh (Mr.. Archibald). Where a man this year borrows to pay a past obligation, not connected with current business, I do not see on what principle we could allow the interest on that borrowing as a deduction from his income tax in relation to the present year. The transaction in relation to which the borrowing takes place is a past one, and, unless directly related to present business expenditure, cannot affect the principle of taxation for this particular year. When the Committee takes into account the fact that in connexion with businesses, taxpayers are allowed to deduct from their taxable income the amount expended by way of interest; that the loss on one business can be taken into account in connexion with the profits made on another carried on by the same taxpayer, and that in connexion with the taxation of a man’s salary a loss made by him on his business may be taken into account, I think it will be recognised that we have gone as far as we ought.
– Take the case of a man who, owing to the precarious nature of his business, has incurred heavy losses over a number of years, and has had to obtain an overdraft. Would a man so situated be allowed to deduct the interest payable on that overdraft, which was incurred in a past year, from his income in respect of the present year?
– I do not know on what principle such a deduction could, in all cases, be allowed. The question would depend altogether upon whether or not the borrowing was in relation to the production of income for this particular year. It is all very well to put these hypothetical cases, and to expect an immediate and authoritative decision,- which will bind the administration of the law, but I can only say that, having looked at the principle of the Act, I do not think we would be justified in allowing past obligations, which are paid out of present borrowings, for purposes not related to production of present taxable income, to be taken into account in relation to the income of this particular year.
. This amendment seems to me to be too sweeping, and I cannot support it. Under it a man who was making big profits in, say, an importing business, and who, at the same time acquired a large area of unimproved country, and borrowed money for the purpose of developing it, would largely evade his responsibility as a taxpayer. He would be able to go on building up a valuable asset, upon which he could realize after our war-time taxation had passed away. This amendment would open up ‘an avenue by which wide-awake people, fully alive to the development* possible in a country like ours, might largely evade their legitimate obligations under our income taxation laws. For that reason I shall vote against it.
– The Minister says that assuming that the liability to pay interest was in respect- of an overdraft secured in a previous year, he does not think it would be fair to allow the interest on that overdraft to be deducted from income. I think he is wrong, and I shall give him a concrete case to support the position I take up. It seems to me that the amendment introduces a principle which has been in operation for a long time nnder the Victorian Act.
– I think that Victoria has more use for this particular provision than Australia generally has.
– I do not disagree with the Minister as to that. The case I. have in mind is that of a land broker who was one of three partners: The firm fell upon evil times, and got into financial difficulties. To escape those difficulties two of the partners filed their schedules, and got off scot-free. The third partner borrowed money to pay notonly his own liabilities but those of his partners.
– He was an honest man.
– He was an honest man, and under the Victorian Act he was penalized because of his honesty. It took him years to liquidate the debt; and the point I wish to make is that while that debt existed he was not allowed, under the Victorian Act, to deduct the interest which he paid in respect of it, nor would he be allowed to do so under this clause as it stands.
– But the debt was incurred in respect of past years.
– Quite so, but if it exists to-day, and interest is still . being paid upon it, why should the man not be allowed to deduct such interest from his income? Surely we ought not to penalize a man for honesty of purpose. If, as I suspect, this clause is an exact copy of the Victorian law, it is absolutely unjust and un-British.
– I believe this clause will affect Victoria more than any other State, and probably the honorable member for Wakefield (Mr. Foster) sees the position in the light ‘of some debts that have been incurred here. How ever honorable a man might be in borrowing money in a particular year to pay off past obligations, can it be said that it is the duty of the Income Tax Commissioner to recognise, that honesty in a way that is inconsistent with the Act ? Plainly put, the case stated by the honorable member is that of a man who borrows in a particular year to pay off expenditure incurred in relation to the income of another year which we are not taxing, and which We could not tax even if the borrowing meant’ not a loss but a very great profit.
– If a bank overdraft were involved the interest paid in respect of it should be allowed as a deduction.
– Every bank overdraft is not taken into account in relation to a man’s income. “If it is an overdraft on which interest has to be paid in relation to the production of taxable income, the interest so paid is, of course, taken into account under section 18, sub-section 1, paragraph a of the Act. This amendment is very wide aud indefinite. It is in relation to interest generally.
– I admit that that is its Weakness.
– Of course it is, and I am glad that the honorable member is ready to admit it. I cannot see that in framing our income tax legislation - we are bound to take into account all the conditions of society.
– It seems to me that under this amendment it would not matter where the money was borrowed or where it was used.
.- I can see the force of the objection raised by the Minister, and I ask him to say that if we do not press the amendment he will draft one that will meet such a case as that mentioned by the honorable member for . Wakefield (Mr. Foster). The pastoral and agricultural industries are very precarious, and frequently involve heavy burdens in interest payments on the part of those engaged in them. Will the Minister draft an amendment, and cause it to be inserted in another place, so as to enable those who have been paying interest on borrowed money for ten or eleven years’ - those who have been trying to pay their way instead of becoming insolvent in order to escape the burden of interest- to deduct from their income the interest so paid ?
.- The honorable member for Grampians (Mr. Jowett) is now referring to a debt incurred, in relation to a business, and if that debt exists as a current obligation, it is, as the law stands- at present, deductable from the income of the taxpayer. The principle is to allow a deduction of interest, the obligation in respect of which has been incurred in the production of the income for the year in regard to which the return is made. If, say, a man borrowed money last year or the year before, and was paying interest upon it today, he would be allowed a deduction in respect of that interest as against his income for the present year. This amendment, however, Kas no relation to anything of that sort. It is a general provision in respect of interest paid- in the previous- year of any borrowings. If there is any want of clearness in the legislation in that regard, an amendment will be brought in; but I do not think that it exists.
Clause, as amended, agreed to.
Clause 48 (Applicationof Act).
– This clause deals with the times at which the various provisions come into force. It has been recommitted, on my. motion, at the request of several, honorable members, particularly the honorable member for Dampier (Mr. Gregory). -Sub-clause 1 deals with provisions which are- to be deemed to have come into force at the commencement of the Act on. the 13th September, 1915. The first of these provisions relates to an amendment made by paragraph e’ of- clause- 2, which provides a new definition of income and includes as income in the case of a cooperative company practically all moneys received by it in the- course of its trading. Honorable members will remember what was said about the matter in Committee. It is simply an extension of the word “ commodities “ in order to make it clear that it includes land and sales of goods. The amendment, although it is made retrospective, will not involve a single payment from, any taxpayer.
– Most of them have already paid the tax.
– Yes, but there was some slight doubt as to whether the word “ commodities “ covered the items I have referred to, and in order to remove that doubt we have made the amendment retrospective. The second provision which is made retrospective to the commencement of the Act is an amendment made by paragraph A of clause 2, relating to standard value fon live stock: There is a regulation based on section 14 of the Act giving a definition of “ standard value,” but there was a slight doubt as to whether or not that regulation could be framed under the wording of the section. In order to make the matter certain; the amendment has been made retrospective,- so that the definition of standard value may be, as hitherto, prescribed by regulation. Another provision which is made retrospective to the commencement of the Act is* an amendment made by clause 5, relating, to section 10 of the Act. That section provides -
Subject to the- provisions of this Act, income tax shall be levied and paid in and for each financial year upon - the’ taxable income derived directly on indirectly by every taxpayer from sources within Australia during the period of twelve months ending, on the thirtieth day of June preceding the financial year in and for which the tax is- payable.
The words “ in and for” have been a source of some legal’ objections to assessments and payments that were- not complete within the particular year. It does not really matter whether a- man gets notice of a particular assessment, and- the payment/ happens to fall due on the 2nd July or the 29th June, but the wording of the Act rendered- it doubtful as to whether the Department could really collect where the payment did not fall due within the actual financial year of the assessment. Clause 5 remedies that defect. Another provision which is made similarly retrospective is an amendment made by paragraph, d of clause 8 relating to the decision given by the High Court in the Meares- case, which has already been referred to. In that case, it was declared that income accumulated prior to the 30th June, 1914, was not taxable, but that if the company had carried forward income into a profit and loss account it was taxable . when distributed. In any “event, income is only taxable when it is distributed among the shareholders. The High Court’s decision was that where money had Been paid into an appropriation account, it was really not paid into a profit and loss account, and therefore was not taxable. The Act has been amended to add the words . “ appropriation account, revenue and expenses account, or any other similar account “ to the words “profit and loss account.” We have already discussed this’ matter at length in Committee. If the amendment is not made, a considerable loss of revenue will be involved.
– The Minister was asked whether Meares, who had obtained a verdict in Court, would be compelled to pay by this amendment.
– Any man who has actually obtained a judgment in a Court of justice is never asked to pay.
– ‘But others who have not secured verdicts are affected.
– The amount involved is practically £500,000, the whole of which is practically for refunds, and not for payments that have to be made. There have been a few objections to the assessments made by the Commissioner in this regard, and some who have lodged objections have not followed them up; but in the Meares case the objection was followed up, and - a verdict was secured against the Commissioner. The firm will get the benefit of that verdict. . Another provision made similarly retrospective to the commencement of the Act, is an amendment made by paragraph b of clause 10. The Act, as it stands, requires the Commissioner, where he is not satisfied that a company has distributed a reasonable proportion of its taxable income, to divide that income amongst the shareholders in proportion to their interests in the paid-up capital. The amendment will operate to the benefit of the taxpayers. The drafting of the provision in the Act is somewhat loose. The Commissioner is without limitation in regard to his power to tax as if the income of the company had been distributed. If he exercised his powers to declare that all shareholders would be taxed, and that the company also should be taxed at a flat rate, one man might be compelled to pay two taxes. This was a matter to which I drew the attention of the Treasury before this Bill was drafted. As the section stood, a shareholder in a company might be called upon to pay more than the tax to which he was morally liable. A man holding three-fourths of the shares of any company might be required to pay three-fourths of the flat rate imposed on the company, and also, later on, when he received his dividend, at the rate of hie own income. The section has been made retrospective in order to cover that error. Sub-clause 2 deals with war pensions and ‘agricultural and kindred societies. A promise was given during last year that action would be taken to exempt from taxation war pensions and agricultural and kindred societies. The sub-clause will carry out that promise, and exempt these pensions and these societies from taxation as from the 1st July last. There is also an amendment made by clause 11 which is covered by the same sub-clause. Clause 11 relates to income derived from shares transferred to the Public Trustee from enemy shareholders. The amendment in that regard will also come into force as from the 1st July, 1917.
Sub-clause 3 relates to a number of amendments which are to come into force on the 1st July, 1918, and to apply to assessments for next year and onwards. The main provisions affected may be summarized thus -
The remaining provisions of the measure will come into operation forthwith. The principal amendments relate to -
This is necessary in order that action can be taken immediately if the circumstances should . arise.
These are practically all the amendments affected by this retrospective clause.
Clause agreed to.
Bill reported with further amend-; ments.
Standing Orders suspended, and reports adopted. .
Motion (by Mr. Glynn) proposed -
That this Bill be now read a third time.
.- When the Bill was in Committee, I consulted with the Treasurer, and also with the Minister in charge, with a view to a recommittal of clause 8; but I think there was some misunderstanding on the point. I am sorry that the Minister did not see his way to permit this clause to be re-submitted, because it is one of the fundamental provisions of the Bill, and well worthy of discussion. I desire to do nothing that might in the slightest degree curtail the power of the Government to collect revenue at such a time as this. We all realize the difficulties of the position, and desire to give, every assistance to those responsible for the finances. However, for many years, in this and all the other Parliaments of Australia, there has been a strong desire expressed for uniformity in taxation administration. At conference after conference, attended by both Commonwealth and State Ministers, the question has been discussed in full realization of the inconvenience experienced by taxpayers in dealing with the many varying taxation forms. Yet in the Bill before us there is proposed an entirely new method, so far as Australia is concerned. My desire now is to urge the adoption of the principle of taxation at the source, so that, instead of individual shareholders, companies shall be subject to an imposition in the nature- of a dividend, tax. There is nothing new in the principle; indeed, it is embodied in the Bill, inasmuch as provision is made for employers to collect the tax from employees. But, in relation to a section of taxpayers of much greater importance, the principle is ignored. The advantages of taxation at the source are obvious, and the first is that it means a large increase in revenue. If these matters are left to the individual, there must be loss. Only recently I heard of a case in which a gentleman, acting on information, bought certain shares on his own behalf and on behalf of two others. Except in the case of one of those concerned, the shares were never transferred; and yet dividends were paid. How is the Crown to trace a transaction of that kind, assuming the taxpayer does not include it in his return?
– The Government get a list of shareholders every year.
– But, in this instance, the person who actually received the dividends was never registered as a shareholder, the shares being in the broker’s name and hands. The Minister ought to remember that, if there are 10,000 companies, there must be hundreds of thousands of shareholders’; and, if the tax is received from the company, the Government are sure of it, while they certainly cannot be sure if all these individuals have to be traced.
– A shareholder always remains liable.
– Does the Minister know the extent of the staff in the Taxation Department?
– That does not affect the question beforeus.
– If the Minister does know, he may realize what staff would be required if these individuals had to be traced.
– That: is another subsidiary question.
– The plan proposed in the Bill will mean certain circumlocution, expense, and loss. When an income tax was first imposed in the Old Country, the individual was taxed, but, after four years’ experience, the Government resorted to taxation at the source, with the result, that the revenue was nearly doubled. The States and the people generally are desirous of uniformity, and to that end there was recently held a conference of Commonwealth and State taxation officers, amongst whom was the Commonwealth Commissioner. Is the Bill before us a measure recommended by the Commissioner, or is it the Treasurer’s Bill ? Either the Treasurer is departing from the expressed opinion of the Commissioner, or the Commissioner was humbugging the Conference.
– I went through the report and the draft Bill of the Conference, and, for the life of- me, I cannot see the relevancy of what the honorable member is saying.
– Probably the Minister is obtuse, or does not wish to see. That Conference unanimously affirmed that the profits of companies should be taxed at the source, and drafted a Bill, which tarried out the principle, while securing the uniformity we so much desire. Those connected with mining associations are in favour of the reform; and it would be very, easy for the Government to frame a clause bringing it into effect. Taxation at the source, is in operation in Western Australia, and ,1 have taken the trouble to gather together some cases which may prove informing, to the Minister in charge of the Bill. Under this suggestion a small taxpayer receiving £2.0 per annum in dividends, included in £30 from property, and £250 from personal exertion, making a total of £280, is liable, at 4d. in the £1, on Eis personal exertion income, for £4 4s. 4d; at 4½d. in the £1 on his property income, lis. 4d.., making a total of £4 15s. 8d. From this is deducted £1 10s., the tax on dividends at ls. 6d. in the £1, leaving the tax payable £3 5s. 8d., plus the 25’ per cent, additional tax. Another person, who receives £800 from personal exertion and £100, including £20 in dividends, from property, is liable for £25 5s. 6d. on the whole; but “the deduction of ls. 6d. in the £1, or £1 10s. on account of the dividends, leaves him liable for only £23 15s., plus the 25 per cent, additional .tax. In the case of a taxpayer with £500 per annum from- personal exertion, and £6,000 per annum from property,, including- £20 from dividends, the same applies. He is liable for- £1,100 5s. 7d, less the tax on the dividends. The whole thing is perfectly simple, and would, as I say, mean less- cost in administration, while giving every security to the Government. Let me put the matter in another way, and contrast two cases. In the first, the taxpayer has an income of £500 a year, half, from dividends and half from personal exertion. In his return he shows that. ls-. 6d. in. the pound has been paid on the £250 received in dividends; therefore, on- his- assessment, this amount will be deducted. The other case is that of a man with. £1”0,000 a year, of which £5,000 is from dividends. This man shows that he has paid the ls. 6d. in the pound on the £5,000; but the Commissioner will tell him’ that, although the ls. 6d. is already paid, he, with his income, is liable to pay 5s. in the pound,’ and must pay the balance of 3s. 6d. I think the Treasurer has been wrong in the course he has pursued, and I hope that an alteration in the Bill will be made in another place. I ask honorable members to remember that when the Treasurer attended the Premiers’ Conference last week, the matter of uniform taxation was brought forward, and it was suggested that the matter should be considered at the next Conference; and that the Income Tax Commissioners should confer again on the matter;
– There are plenty of conferences, but nothing is done.
– Something was done. A Bill to .bring about uniformity in taxation was drafted by a Conference of Taxation Commissioners, but in respect of some of its most important particulars the Treasurer has departed from that scheme. I hope that in another place a demand will be made for the redrafting of the Bill, so that Parliament may not be accused of humbugging. We know how strong has been the demand for uniform taxation, because of the multiplicity, of returns that are required to be mad’e up under the .present system. The difficulties of filling in the schedules are so great that many persons are obliged to pay agents to do the work.
– The Treasurer said that if one uniform schedule were adopted, the saving to the taxpaying community would be £1,500,000.
– Nearly 800,000 returns are made up in the Commonwealth.
– I am fighting for uniformity, because it will mean a big saving to the taxpayer, and because I believe the Government will receive more revenue and expend less money on administration.
– I hope that this Bill will bring us a little nearer to uniformity than we were when the measure was introduced. In hi3 secondreading speech, the Treasurer said that . one of the main principles of the Bill was the adoption- of the recommendations of the Conference of Taxation Commissioners. Whether the saving to be effected by having one uniform schedule would be as great as the Treasurer estimated I cannot say, but it is certain that with a simpler form of schedule many taxpayers would not find it necessary to employ an agent to make up their returns. Every Bill we frame should aim at achieving greater uniformity and simplicity. I have no desire that the Commonwealth shall swallow the States. The honorable member for Herbert’ (Mr. Bamford) is one of those who believe in Unification, and I am of opinion that if ever the people of Australia have an opportunity of expressing their view, they will give it in no uncertain manner. We have made some steps towards uniformity in taxation. In regard to the taxation year there is only one State to come into line, and it will be far easier for that State to range itself alongside the other States than that the other five States should alter their taxation year. Uniformity in regard also to the making up of returns and the allowing of exemptions should be possible.
Yesterday I referred to the fact that the Broken Hill South Company was treating a smaller tonnage than before the war, but owing to the increased price of metals was making a larger profit. There may be good and sufficient reason for that state of affairs. Possibly the company is not able to obtain labour. It stands to reason that when , 300,000 men of all trades and callings have left Australia, there cannot be the number of skilled employees available in any industry that there was ‘before the war. However that may be, it is felt that some mining, companies are deliberately leaving reserves of ore in the ground, and are not working their mines to the fullest possible extent.
– That would be a false policy, because metals will not bring the same price later on.
– Is not the price of some metals fixed for at least ten years ahead t
– A statement to that effect has been published. I have here a return showing the operations of the Broken Hill South Company since 1912:-
In other words, the company produced in 1917 93,000 tons less than in 1914, yet the profit per ton rose from 16s. 4d. to 47s. 2d., and the total profit from £232,731 to £451,000.
– Perhaps the ore is running out.
– That ; may or may not be the reason.
– I think that there is a shortage of labour.
– That may be, but if there is an opportunity of getting nearly three times the profit per ton which they made in 1914, in all probability they will be satisfied to raise less ore, because they will argue, “if we raise more ore and make a greater profit, we do not know how .taxation may hit us.”
– The Commonwealth ought to be getting 75 per cent, of that profit.
– Up to June, 1915, those profits would be absolutely free of the war-time profits tax. For the year ending 30th June, 1916, the Commonwealth is entitled to take 50 per cent, of the excess profits. But certain things are exempted, and it is quite possible that some of these mining companies will get some exemption from the tax.
– That is impossible.
– The companies will look about for all sorts of exemptions.
For the year 1916-17 the companies may be required to pay 75 per cent, of their profits to the Commonwealth. But I understand that not one penny of wartime profits has yet been paid.
– The tax is not due till the 15th June.
– In answer to the remark which I made in the House yesterday, I have received from the secretary of the Wallaroo and Moonta Mining Company a letter stating that the company has not tried to evade the war-time profits tax, and that on its reserves it had paid income tax. I have not said that the company has tried to evade the tax, but I blame the Government for not having collected the war-time profits tax earlier.
– On the contrary, many companies have set money aside for the payment of the war-time profits tax.
– Some of them have done so. The Wallaroo and Moonta Mining Company has paid in the last three years 87½ per cent, in dividends, and has added £252,000 to the reserve fund. I say that that company is making profits out of the miseries of the people, and the Government should step in and take, not 50 or 75 per cent., but 100 per cent, of such war-time profits. I ask the Commissioner of Taxation to deal with the companies which are piling up huge reserves in money or in ores, and are not working their mines to the fullest extent at a time when metal is required for the making of munitions. I was recently through the district of the honorable member for Wakefield (Mr. Richard Foster).
– For years the mine to which the honorable member has referred was not earning anything.
– But it has done well during the last few years.
– Yes. The company paid its men on a sliding scale all the time.
– The figures which I quoted ‘from the Bulletin the other day have, as far as I am aware, never been’ contradicted, and I understand that . it has a huge ore reserve. It is the duty of the Taxation Commissioner to see that companies do not make reserves to escape taxation. In my opinion, persons or companies who think that they are doing a good thing by postponing taxation from this year to some subsequent year are mistaken, because our taxation is likely to increase instead of to decrease. The Treasurer (Mr. Watt) has hinted as much. I hope that under the Bill those who ought to pay will be compelled to pay. 7. regret that parents of families are not to obtain the relief for which some of us asked last night, because of the high cost of living. Every father of a family would say that to grant an exemption of £50 for each child would be to do only an act of justice.
– The proposed exemption would reduce the taxation of some of the richest persons in Australia.
– That could be prevented by providing that no person whose income was over a certain amount should take advantage of the exemption.
– The honorable member himself helped to fix the exemption at £13.
– That was on the introduction of this legislation. The Government of which I was a member was, Ithink, the first to propose such an exemption.
– No. A similar exemption was in force in Western Australia.
– At any rate, I believe that our exemption was the highest that had up to then beenproposed.
– I do not think so.
– Well, if a Ministry makes a mistake, its members should be ready to acknowledge it.
– Yes; when in Opposition !
– I have always declared that the Government of which I was a member made a mistake . in exempting from income tax the interest from war loans, but we had this excuse, that there was not then a progressive Federal income tax. The exemption gives a greater advantage to the rich man, ‘because it reduces the rate at which he is taxed.
– The chairman of the National Bank, Sir John Grice, sounded a serious note in regard to the exemption.
– That was over a month after the honorable member for Grey (Mr. Poynton) had moved to remove the exemption proposed in respect of a new issue of war stock, and I supported him, giving figures which showed that the man whose rate of income taxation was 6s. 3d. in the £1 got an advantage of practically l£ per cent, on his investment in war loans compared with the return to the small investor, and a still further advantage in respect of State income taxation, making his return equal to nearly 7 per cent., although small investors get only 4^ per cent.
– There will he no more issues of war stock exempt from taxation.
– I hope not. I regret that the last issue was exempted, contrary to the wishes of a good number of members on both sides of the chamber. I hope that the Bill will make it possible for the ‘ Commonwealth and States to work harmoniously in the collection of income taxation, and that there may be a uniform system for the preparation of returns which will save time and trouble and be of great convenience to the public generally. .
– I regret that I do not share the optimistic opinion of the Leader of the Opposition (Mr. Tudor), that the measure is bringing us nearer to uniformity in taxation matters. It is doubtful if there will be any saving in the preparation of returns. At the present time, many taxpayers have to employ experts to make up their returns, and I do not know that their position will be any easier under the Bill. The Government have come out of this business very badly. Uniformity in taxation methods has been promised repeatedly. Last week, the Premiers met in conference to talk over the subject, and now the Treasurers are to meet and discuss it; but three sensible business men would settle the whole matter very quickly.
– “Why do you always disparage politicians?
– I judge them by their work. Politicians have done nothing to secure uniformity. We need to allow common sense to operate in connexion with this matter. As the Leader of the Opposition has said, our income taxation is likely to increase. An immense debt has been heaped up because of the expenditure which this awful war has entailed upon us, and we must face it. Nevertheless, a system of duplication prevails which keeps in employment an army of public servants that is constantly increasing. The States have the sublime impudence to say that their Departments could look after taxation matters more cheaply than the Commonwealth Department, but if we were silly enough to hand over to them the collection of taxation, there would be a great collision of regulations and no uniformity. We suffer through having Bills put before the House in a form in which they cannot be understood. Many of the statements made during the Committee consideration of this Bill were a surprise to me. The Minister for Home and Territories (Mr. Glynn) is learned in the law, a great worker, and a man whom we all respect; but I ‘do not think that he thoroughly understands the Bill. He has had to consult “constantly an official placed behind your chair, Mr. Speaker. Why cannot we march with the times and have the necessary officials placed alongside their Ministers at the table, or adopt the American system of referring Bills to Committee for information? No one can say that he is thoroughly au fait with this measure. We must remember that those whom we are taxing have to work very hard for their money. I share the opinion that when we get down to bedrock, it is the workers who pay the taxes.
– Not under existing legislation, by which some persons are required to pay as much as 6s. in the £1.
– It is the workers who have to earn the incomes which the honorable member and myself enjoy. We, the middlemen,- are merely the agents through whom the taxes are paid. I am glad, that the Commissioner is to be given more power. He is one of the ablest public servants that we have, and independent. So, too, are many of his responsible officers. They will do their duty, and they should have power to give consideration where it is needed. There are many hard cases in which a strong man should have the Tight to show consideration. I hope that the Treasurer, when dealing with financial matters, will tell us that the duplication of functions by Commonwealth and State Departments is to be brought to an end. For two or three years past, Lord Forrest, replying to questions asked by me, has said that the duplication connected with electoral rolls and electoral printing generally will be stopped, but, although the Postmaster-General economizes by sending us telegrams on such small scraps of paper without envelopes that it is almost impossible to read them, I and other members get nearly cwt. of useless printed matter every week. Private members can only protest against this extravagance; it is for Ministers to- act. The Government have a strong majority behind them.
– A docile majority.
– That would be the proper word to apply were those on this side as docile as I have known the honorable member to be. Many support this Government because they fear that if it were put out they would get a worse “one in its place. They fear that men like the honorable member for Brisbane would come into office. I have not heard the honorable member raise his voice in support, of the plea for uniformity. Is he afraid that he would offend some of our public servants by doing so? I have not heard him complain about the duplication of public Departments.
– That is owing to the honorable member’s unfortunate absence.
– The honorable member is resorting to a mean and contemptible trick to call attention to my occasional absence from the chamber.
– The honorable member must withdraw that remark.
– I withdraw it. We have in Australia, not only too many’ income tax Departments, but too many Parliaments. I would wipe out many of the Parliaments at present existing in Australia, as well as some of our public Departments that are duplicated and over-manned.
– We do not want Unification.
– And we do not want seven Parliaments with over 600 members.
– Order ! The question before the Chair is the ‘ third reading of this Bill.
– I’ have been led away by the interjections of unruly members. Last year we passed a bachelor tax, but it has not yet been brought into operation. From my point of view, it is well that it has not. I am also opposed to the War-time Profits Act, because I think it is unfair. It would be far better to increase the income tax, and so to deal equitably with every taxpayer.
I do not wish to labour this question, but I warn the Government that unless they wake up something will happen. The people are complaining that We are not legislating as we ought to do. This Bill is supposed to make our income tax law clearer and more explicit, but it seems to me that the only man who understands it is the Commissioner. All taxation measures should be so brought forward that every honorable member oan readily grasp their effect. So far as this Bill is concerned, we do not know what we are doing, and our income tax legislation generally is a perfect maze. I strongly object to this or any ‘other tax being made retrospective. Such a principle is most dangerous. People may be called upon to pay taxation in respect of incomes earned two or .three years ago, and which they have in the meantime expended. The tendency of bath men- and companies, when making good incomes, is to spend those incomes.. Tt is only the fortunate few that can live within their incomes, and I certainly object to any of our legislation being made retrospective. I invite honorable members to take their bearings, so that when the Treasurer comes down with his financial statement we shall know exactly where we are. When things are prosperous, as they are to-day, and have been since the war began, we ought to be paying off more than we are doing, if the people are not to be ground down to the very dust. I have only to say, in conclusion, that the provisions of this Bill should have been more clearly explained to the House. In the old days, Ministers used to be primed up with information in respect of any measure they were introducing, and I hope that in the near future the officer who will have to administer any Bill that’ is before the House, and who, therefore, thoroughly understands it, will be allowed to sit beside the Minister introducing it, ‘ and so enable him to answer any inquiry in regard to it. I have spoken with some warmth, and if I have said anything unkind concerning any honorable member, I regret it. I certainly regret to have to say one harsh word regarding this Bill, since the Minister for Home and Territories (Mr.
Glynn), who is in charge of it, is the most generous of men; and the inclination of honorable members generally is to help rather than to hamper him in his work.
– Although this. Bill is designed to’ remove certain blots from the original Act, there are several blots upon it against which I desire to protest. Chief amongst these is the power given to employers in certain circumstances to collect income tax from employees. I indorse the remarks made by the honorable member for Eden-Monaro (Mr. Chapman) as to the necessity for an improvement in the way that Bills are put before us. It often happens that it is- only when a Bill is put , into, the hands of a Minister bo introduce in this House that he starts to study it.
Lord Forrest. - That is. not the case.
– We cannot expect a Minister in charge of a Bill before the House to be a veritable encyclopædia in regard to its contents; and over and- over again, we see Ministers, consulting with their, officers- as. to the provisions of measures of which they are in charge. I take it that the honorable member for Eden-Monaro considers that, in . connexion with all Bills of this kind, we should have a printed memorandum - prepared by the officers to be charged . with their administration - setting, out clearly the object at which they aim. Such explanatory notes would greatly facilitate the work of the Parliament. Finally, I express the hope that the Commonwealth Government will not be too meek and mild- in its dealings with the State Governments in regard to the amalgamation of our Taxation Departments. In the interests of’ the people, the Government should say straight out to. . the States that it is time we had uniformity. I hope that before very long we shall have one supreme authority in Australia, with the States occupying a very minor position, and when that day comes, there will, be no longer any complaint as to want of uniformity in the administration of taxation and other measures..
– I feel it my duty to refer to some of the remarks that have been made during this debate as to the alleged inactivity of the Government so far as the question of uniformity is concerned. The honorable member for
Eden-Monaro (Mr. Austin Chapman), who has a fairly long memory in regard to political matters, will recollect that this question of uniformity was raised as far back, as 1902. Dealing with the Electoral Bill at that time, I said that we: should shake up the States with the object of securing uniformity.
– Sixteen years ago!
– Quite so; and since then the States,, as a whole, have done very little. An effort has been made by the Commonwealth to bring about some degree of uniformity in electoral procedure. I cannot go into that matter now, but. I can assure the House that a Bill has been prepared which will form a basis upon which the States can. adopt uniform methods.
In the report of the Taxation Commissioners, to which the honorable member for Dampier (Mr. Gregory) has referred, reference is made to the necessity for uniform taxation methods. That matter has not been entirely overlooked’. On at least half-a-dozen different occasions, I have drawn attention to it in this House, and have mentioned’ that in America we have had. a splendid example set us. In 1912 or 1913, a conference took place at Buffalo between the representatives of the States and Congress, and the lines upon which uniformity in respect of quite a number of matters could be secured were laid down. ‘ On a previous occasion, I mentioned there were, at least, three different matters in respect, of which it was suggested that uniformity, could be obtained and. a saving effected as between the States and the- Federal Government. The Commonwealth, on the whole, has led the way in regard to uniform methods of taxing. In the election manifesto of the Cook-Deakin Government uniformity was suggested, and, as a matter of fact, the Commonwealth is prepared to go . further in that ‘ direction than the States appear to toe. We desire not only uniformity of returns, but uniformity of administration. We ought not to forget that by failing to have some uniformity in respect of rates of taxation we are marring the economic effect of our progressive rates. A man is taxed under the Commonwealth legislation according to one theory of progression, and under a State law he has to pay according to quite another theory. Although he is paying taxation in respect of the same income, the policy expressed in the State Act may completely neutralize the economic efforts of the Federal Act.
– There is no great difficulty for adjustment.
– There is the difficulty of securing unanimity as between the several Governments, but the larger questions of uniformity have not been overlooked by Federal Governments or by the Ministry at present in office.
This Bill has received the attention of Ministers, although some honorable members may assume that it has not. I went through the original draft with Mr. Ewing, Commissioner of Taxation, many months ago, and it has been drawn as nearly as possible upon lines which will enable the States to adopt uniform methods. Some questions which do not directly touch this point were raised by the honorable member for Dampier (Mr. Gregory). As to the taxation of companies, it Was pointed out at the last Conference of Premiers that uniformity was desirable, but not really necessary. I believe it is now understood by the representatives of the States that they can, if they wish, agree to uniformity on the lines of this Bill, without rendering necessary any alteration of the Commonwealth law in regard to the taxation of companies. The honorable member suggested that we should adopt the State principle of taxing the profits of companies at their source. All the States have adopted that principle, but I do not think a single State allows a rebate to the taxpayer. The majority, at all events, do not. They tax a company, and leave the incidence of the rate to affect differently the various taxpayers, so that the smaller a man’s income may be the greater the inequality of the method adopted by the States would be. We could get over the difficulty by adopting the English principle of taxing dividends at their source. Shareholders in English companies are better off, as a rule, than the average shareholders of an Australian company may be said to be, and the companies are the main source of the wealth or the taxable capacity of the nation at large. The result is that the principle of taxing income at its source can be adopted, because they are dealing with men with larger incomes than are to be found in Australia, and who, therefore, have a greater inclina tion to ask for a rebate. What is the result of the English system? A very large Refund Department has had to be established, really duplicating administration, and instead of simplicity being brought about, more confusion and expense are occasioned than is the case with our system of taxing the shareholders themselves. The honorable member for Dampier (Mr. Gregory) has referred to the fact that possibly leakages would take place, and he quoted an instance of where shares could be actually sold but not transferred. If a man does not see that his shares are transferred he is taxable, being liable as the registered share holder. There is no difficulty in dealing with the taxation of shareholders. Every year a return of dividends paid is prepared by each company and forwarded to the Commissioner of Taxation, and he compares it with the amount of the company’s total income, and after deducting the one from the other assesses the balance as the taxable income of the company at the flat rate. He can also compare the company’s dividend list with the individual returns furnished by the shareholders who have received the dividends, and see if they have included those dividends. I have asked the Commissioner to give his opinion in regard to this method. I believe that our system is as efficacious, as is the English system in the matter of getting all we should get; it is certainly as economical, and it is the fairest method that we could possibly adopt. Therefore, there is no justification for the strong condemnation we have heard in regard to it to-day.
The matter of uniformity was discussed at the last Premiers’ Conference and at the subsequent meeting of taxation officers, and it was seen that it was not . necessary to adopt the principle followed by the States in order to bring about uniformity of assessments. That is one step towards that uniformity which we all desire. I admit that great savings will be effected by having uniformity. The Commissioner has told me that about 800,000 returns would be affected. A good many people have their returns prepared by agents, and if the average agent’s charge for the preparation of an income tax return is put down at 30s. to each taxpayer, it will be seen what a large outlay would be saved if we could only have one return instead of two or three. The Treasurer has already referred to the administrative saving that could be effected. I am pointing out the saving that the taxpayer would effect in the matter of paying agents for preparing returns. There would also he an immense saving of time and worry on the part of the taxpayer.
– Does the Minister regard the income tax as being now a permanent instrument for obtaining Commonwealth revenue?
– No Ministry can declare the permanency of any form of taxation.
– In the Federal Constitution it was provided as an emergency or war-time tax.
– I attended the Convention held in Sydney, and then contended that no power which was vested in the Commonwealth should be regarded merely as an auxiliary or occasional power.
– The general trend of the feeling at the Conventions was that this form of taxation should be regarded only as an auxiliary power for the Commonwealth.
– Whatever may be said about the land tax, we are driven into the position of saying that an income tax as a means of raising revenue for the Commonwealth will have some degree of permanency. Of course, no Parliament can bind any future Parliament in regard to the form of taxation which should be adopted, and it is idle for any one to declare the duration proposed to be assigned to any particular measure; but there is about this income taxation a degree of permanency sufficient to justify the States and the Commonwealth adopting uniform returns. The opportunity to do so is afforded by this Bill. Even Germany set us an example in this respect in about 1911, a uniform system of ‘ direct taxation in connexion with the land tax having been adopted for what we would call the German States and the Central Power.
Honorable members have asked that printed information should be circulated so that some of the provisions of the Bill might be made more lucid to them. It is a technical measure, and its provisions are somewhat difficult to follow. It would be almost impossible for an honorable member to understand the retrospective clause without sitting down and examining each sub-clause one by one. This afternoon, I have endeavoured to explain in detail what this clause does, and if any doubt * arises in the mind of an honorable member, an examination of what was said by me in dealing with that clause should help him to comprehend the purport of the various amendments effected.
– I regret that’ we have not got as near to uniformity as I was hoping we should get. Had I been here yesterday, I would have voted with those who were seeking to obtain greater uniformity. However, it is not yet too late. I am encouraged in saying this by the attitude taken up by the Treasurer at the Premiers’ Conference held in Sydney the other day, particularly when he suggested that the Taxation Commissioners of the various States should meet again and endeavour to suggest some method by which all taxation machinery could be drawn into a closer line of uniformity. I hope that something practicable will come out of his suggestion ; but, judging from what I know of the temper of the different States, I do not think there will be any probability of an agreement being arrived at to allow the Federal authorities to collect the income tax.
– May not the reason bo that we ar,e continually saying that we should abolish State Parliaments?
– I do not know ; but we’ must, as a Parliament, insist on uniformity in every possible direction, and we must avoid unnecessary overlapping of machinery in connexion with every form of government. I have no sympathy with those who would seek to weaken the authority of the States; but I believe the time is coming when necessity, which knows no law, will enforce rigid economies in many directions, in which no attempt is made to economize now. This is a machinery Bill whicli does not impose new taxation, yet I think I am quite within the Standing Orders when I suggest that the time is not very far distant when there will need to be a considerable increase in contributions through the income tax in order to meet the almost daily increasing commitments of this Parliament. Those increased contributions will form an intolerable burden on the people if we do not insist, as we have never attempted to insist, on necessary and reasonable economy. I would start with this Parliament, and go right through it from A to Z, and not only with this Parliament, but with every State Parliament. Casting stones at one another is useless; we have all- been sinners in this regard for a long time, and it is quite time that the Federal Parliament set an example and made a corn.mencement of practising economy. On the civil side, we should not undertake anything except that which is necessary. “We will have untold millions to provide for before very long unless we put an end to a great deal of the excessive expenditure that we encounter in connexion with the construction of public works in. Australia. We have taken in hand works which are not immediately necessary, but we should put an end to that sort of thing. We have been multiplying departments and increasing the number of public servants in every direction; and always the burden is put on the rank and file of the people.
– While we import highly paid experts!
– On that question, I cannot agree with my honorable friend. It is possible, at times, to import highly paid experts with great benefit to the country, and especially with benefit to the rank and file of the workers, if only we can get men of the right type. I desire to emphasize the note of warning given so vigorously by the honorable member for Eden-Monaro (Mr. Austin Chapman). If the Government do not travel energetically in the direction of proper, reasonable, and necessary economy, this side of the House will have to compel them to do so.
Mr. WEST (East Sydney) [5.20J. - It must be admitted that the Bill is a very necessary one, its main object being to provide machinery so that the Commissioner may know really what, and how, to collect, and the public may know exactly what they have to. pay in income tax, and why they have to pay it. The conference of taxation officers was in a rather peculiar position, inasmuch as it had no directions or power to do anything; and, under the circumstances, I think they brought their common sense and business ability to bear with good effect. Practically, we have in this Bill the results’ of that conference ; and this is one of those matters in which. I am content to be guided bv expert officers, by whom I am afforded information unobtainable elsewhere.
The honorable member for Wakefield (Mr. Foster) speaks in a depreciatory tone of the Commonwealth Parliament, and complains, amongst other things, of an increase in Commonwealth officials and in parliamentary expenditure. Personally, as a member of this Parliament fulsome years, I am quite satisfied with the work that has been done here. Whoever may write up the history of this Parliament, especially during the war period, can relate nothing of which honorable members, who are now taking part in the business of the country need feel ashamed. To me it is amazing that we have got so successfully through our difficulties up to the present ; and I am satisfied that much of that success is owing to the useful groundwork provided in the legislation passed by the Labour Governments between 1910 and 1913. There is doubtless a very trying time ahead of Australia, and much of the work we shall have to do will prove displeasing, but it is work that has to be faced, and the Bill may prove of some assistance. At the same time, I must say that the people of Australia take things more easily than the people of almost any other country on earth. “At the present moment there is sitting a Premiers’ Conference, which, even seeks to dictate to the National Parliament; but I fancy that if the people have an opportunity, and if the war did not overshadow all else, short work would be made of the State Parliaments and their sovereign rights. In my opinion it -is only due to the war that they have been permitted to exist so long ; and they present a question that the Commonwealth. Parliament will have to take into serious consideration, no matter how the susceptibilities of the State legislators may be hurt. The Commonwealth Parliament should rise to the -occasion, as I feel sure the people expect us to do, and remove these anomalous fourteen Houses of Parliament with their duplicate powers of taxation. Honorable members like the honorable member for Wakefield (Mr. Foster) may talk somewhat slightingly of the work of the National Parliament, hut, after all, I believe the people are more satisfied with our efforts than with those of any other Parliament in Australia. Until such honorable members show that they desire to do none other than real national work, they should dis continue to asperse those who are endeavouring to raise this Parliament to and maintain it in the position it ought to occupy in the public estimation.
Question resolved in the affirmative.
Bill read a third time.
Debate resumed from 30th May (vide page 4605), on motion by Mr. Watt -
That this Bill be now read a second time.
.- This at any other time would be a very important measure. At present I do not think we can attach the importance to it that its position on the notice-paper would appear to indicate. Some time ago I asked the Prime Minister (Mr. Hughes) whether there was any arrangement between himself and the Government whereby important legislation should not be introduced during his absence, and, judging by the character of the measures brought before us, I believe that there must be some arrangement of the kind. By way of illustration, I may say that a measure having for its object the scientific protection of Australian secondary industries would more fittingly be considered at the present time than can this Bill.
I mentioned, in a recent speech which seemed to cause honorable members some anger because it had reference to the war, that we were incurring very large liabilities, that at no distant date our war loan debt would amount to £300,000,000, and that honorable members were, apparently, not paying sufficient attention to the fact. When it is considered that under this Bill we shall require to put aside out of our revenue at least £1,500,000 every year in connexion with a £300,000,000 loan debt, we are compelled to consider whether this is really a proper time to introduce a Sinking Fund Bill.
In 1916, when I had the honour to be Treasurer of the Commonwealth, I endeavoured to ascertain what amount was set apart by the Imperial Government as a sinking fund to repay war loans. On the 11th April in that year I sent the following cable to the Official Secretary of the Commonwealth: -
Please ascertain what is the amount set apart by the Imperial Government as asinking fund to repay war loans.
On the 14th April I received the following reply from the Official Secretary : -
With reference to your telegram of 11th April, Treasury state details of sinking funds will probably not be settled till after the war. Chancellor of the Exchequer stated in Budget speech that, reckoning interest at 5 per cent., sinking fund 1 per cent, basis, thirty-seven years have to meet new charge at interest and sinking fund amounting to £79,000,000.
The Chancellor of the Exchequer said the question of a sinking fund would probably not be settled until after the war, and the question is, whether we are not . now taking up time which might be better devoted to- other measures, in discussing one which may have to be. amended at a future date. The Government have found it necessary for some reason already to foreshadow the repeal of one measure - I refer to the bachelor tax - and I would much prefer them to bring down the legislation which is extremely necessary at the present time, rather than that we should have discussions which will have to be repeated at a very early date.
– Does that not apply to 90 per cent of the legislation ?
– No, it does not. I admit that we do amend our legislation from time to time; but when the British Government is of opinion that it would be better to wait until after the war to settle the question of how much shall be set apart for sinking fund, we ought, perhaps, to follow their example.
– Where is the comparison ?
– I am not introducing a comparison to the disadvantage of the British Government, but merely endeavouring to show that, if the British Government think such a course advisable, it might be even more advisable in our own case.
– It is impossible for the Imperial Government to deal with the matter now, but it is not impossible for us.
– At a very early date we shall have to find £10,000,000 more of revenue than we require at the present time. We are now raising about ?35,000,000, and we shall require to raise at least ?45,000,000. Are we in a position to-day to say how much of that revenue we are able to put aside as a sinking fund for the redemption of our debts? I do not think we are. However, the Government have introduced this measure, and although I have heard honorable members in the past ridicule a sinking fund, I am of opinion that such a fund, if provided strictly out of revenue, is a good thing, and will impress upon the Treasurer the necessity for economy. It will act as a sort of flood warning, a reminder of the amount of money that will be required to meet our obligations, unless Parliament is prepared to adopt a spendthrift policy, and pass on to future generations the obligations that we ought to meet from time to time, as far as we possibly can. It would be very wrong to continue to borrow money for various purposes, and to put aside no reserves for the paying-off of the public debt. On this subject the report of the Commissioners appointed to inquire into the Public Debts Sinking Funds of Tasmania is illuminating.
The Commissioners took evidence from several financial authorities in Australia, and they reported that the utility of a sinking fund for a borrowing country was useful for the following purposes: -
On page 11 the Commissioners reported -
We consider it well established by the evidence put before us that a sinking fund used to buy up our stocks on the London market is a substantial help to our credit, and would probably improve the price obtained for our stock by as much as i per cent.
Mr. Nash, the financial editor of the Sydney Daily Telegraph, when asked his opinion regarding a sinking fund, said, on page 14 -
The ideal loan and sinking fund would be something in this way:’ You issue a 4 per cent, loan. A 1 per cent, sinking fund will redeem that in forty-one years, and a? per cent, sinking fund in fifty-six years. You issue the loan with that sinking fund, to be repaid in the time mentioned. At the end of forty-one years or fifty-six years, as the case may be, the loan disappears of its own accord. All the Continental loans are issued in that way. They are issued for the time the sinking fund . will operate, and they redeem themselves. Then the loan dies out.
– Did Mr. Nash recommend a sinking fund?
– He spoke distinctly in favour of it. Mr. H. Y. Braddon, superintendent of Dalgety and Co. Ltd., Sydney, said -
Any business man, if he were asked baldly whether a sinking fund as against permanent debt is a good thing or a bad thing to have, would say, “Yes, it is a good thing, on the whole.”
I should add that some of the witnesses said there were Governments which managed their sinking funds in such a way that the funds became a farce. On page 22 Mr. French, the Manager of the Bank of New South Wales, said -
A sinking fund, if it is properly applied, must make provision for the redemption of the loan. If it fails to do that, then it is not a true sinking fund.
Mr. J. W. Holliman, UnderSecretary for Trade and Finance in New South Wales, was asked whether his experience was sufficient to enable him to say that the existence of a sinking fund was helpful to the State’s “credit, and he replied -
When I was in London with the Treasurer, some four years ago, I instituted inquiries on that particular point amongst some of the leading financial people with whom we had dealings, and I was assured that the existence of a sinking fund was an attraction to investors and of some assistance in floating a loan.
Clause 6 of the Loans Sinking Fund Bill empowers the Treasurer to invest any moneys standing at the credit of the Loans Sinking Fund in the purchase of any securities of or guaranteed by the Government of the United Kingdom, the Commonwealth, or any State, and to sell such securities at any time. That provision seems to be inconsistent with clause 5, which says that no repurchased or redeemed securities shall be re-issued. I ask the Acting Attorney-General to give attention to that point.
The Treasurer is to have control of and to operate the sinking fund, and on this point as this is a non-party measure, I have no hesitation in offering a suggestion of my own. There ought to be in connexion with the Commonwealth Bank a board of directors.
– There is in England a body called the National Debt Commissioners.
– We might give to the body I am proposing a similar name, but I would give it something more to do than the management of the public debt. I should like the Board to be associated with the Commonwealth Bank. The present Governor of the Bank, Mr. Denison Miller, is an extremely able man, and has done extraordinarily good work for the Commonwealth in the establishment of an institution which already has ramifications throughout the world; but it is possible that some future occupant of that position may not be as capable. I suggest that we should have two- or three men, not to control the Governor, but to act as his advisers - he having the casting vote - and also to manage the sinking fund in conjunction with the Treasurer.
Make the test of efficiency for such advisers as high as you choose, but also make the salaries commensurately high. If such a body ‘were created, I would propose that the moneys to the credit of the Loan Sinking Fund might be invested in other ways than in the repurchase of Government securities. On this point, I believe I am treading new ground, and likely to find myself in opposition to a great many honorable members, who will doubt the wisdom of investing Government moneys in the way I propose. Political economists are groping about from time to time for some method of removing the grave discrepancies in society. There is an enormous gulf between the rich’ and the poor, and to bridge it men advocate the nationalization of monopolies, because those monopolies make huge profits, and it is hoped that by nationalization they will prevent the public being exploited, and secure a better distribution of wealth. We hear of other schemes, such as profit-sharing, the payment of bonuses to workmen, and so forth. It would to some extent relieve the tension if we could get men able, careful, and honest enough to do the work that I think should be undertaken. I believe that they, are to be got ; I should be sorry to think they could not be got.
I suggest that, instead of investing in our own securities, we should invest in bank shares, for example. The Bank of Australasia has a paid-up capital of £2,000,000, and its reserves and undivided profits amount to £2,997,868. Its shares, which are paid up to £40, are quoted at £114 10s. buyers, and £116 sellers, and sales give a return of £5 17s. 6d. per annum.
– They carry a second liability.
– That is true. The bank has been so long established, and the people have such confidence in it, that they are willing to buy its shares at a price which gives them a smaller return than they could get from other investments. In my opinion, it would be safe to invest the Government money in such an institution.
Then there is the Bank of New South Wales, with a capital of £3,904,860, and reserves and undivided profits amounting to £2,994,187. Its shares have the nominal value of £20, and at present prices are £36 buyers, and £36 2s. 6d. sellers, the return to investors being £5 7s. 6d. per cent. It must not be. forgotten that the investors in this bank from time to time get the right to buy new shares at their nominal value. A shareholder may thus acquire for £20 a new share which on the market is worth from £35 to £36, getting a substantial bonus, and in this way increasing his rate of interest. I dare say that some of the investors in the bank get a return of 10 per cent, on their money.
Another bank that I might name is the Union Bank, with a paid-up capital of £2,000,000, and reserves amounting to £2,073,503. Its shares have a nominal value of £25, and are quoted at buyers £55 12s., sellers £56, the return to the investor being £6 5s. per centum.
There are several sound shipping companies whose shares return £5 7s. 6d. and £5 12s. per centum, and two or three sound gas companies giving a return of over 5 per cent. Then some industrial companies give as much as £6 12s. 6d. and £7 per cent, to investors in their shares.
I suggest the appointment of a board of directors to assist the Governor of the Commonwealth Bank, and to manage our sinking fund, and it should be empowered to invest in concerns such as I have mentioned. This would be more profitable to the taxpayers than the investment in Government securities, and would enable us to keep down our taxa-. tion.
– We have been asking the people to take money out of other concerns to put into war loans.
– I am speaking of what should be done after the war. In my opinion, this Bill has been brought in too soon. Our taxation is going to be very heavy. Those who to-day are paying £20 in income tax may next year have to pay £40, and the following year £60. What I suggest might relieve our taxpayers to some extent. I do not agree withKarl Marx that all the various industries will organize themselves into huge monopolies which will then be taken over by the State. I am inclined to think that that will not happen. The State, however, could invest its money as I have suggested, and, if necessary, take over any particular concern. A remark was made by an honorable member about the watering of stocks. The Commissioners would be men who would know the history of every company, would have its balance-sheets, and would know what its shares’ were worth.
Mr.Fenton. - If the State purchased a preponderating influence in a company, it would have it under its control.
– That is so.
– The Government is to become a shareholder in a private concern.
– I would not term the Bank of New South Wales a private concern.. It is a big public company that has come to stay, unless its business is taken over, as it may be some day, by the Commonwealth. There may be a time when we shall be able to take over the whole of the banking business of the community, and run it as the Commonwealth Bank is run, though I do not wish to say more on so important a subject now. Although I should have preferred a different measure, I am prepared to vote for the Bill.
.- The state of the House makes it plain that honorable members pay little heed to questions of finance. Unfortunately, the public life of Australia has never attracted men who have devoted themselves chiefly to financial matters. Proper finance is the foundation upon which our prosperity rests; no nation can make progress unless its finances are on a proper footing. The last speaker drew attention to the fact that the British Government have not thought it necessary to introduce legislation of the kind under consideration. The reason for that is plain; the nation is still borrowing. It might well be asked, what is the use of setting aside money for the redemption of loans while we are adding to our debt. The various States have done this without any good result. In New South Wales they established a sinking fund of per cent., and then, within five years, borrowed £30,000,000. They would have been better off had they had no sinking fund, but had borrowed less money. Probably, before the war is over we shall owe £300,000,000, and it would be better to reduce our borrowings by £1,500,000 than to put that amount into a sinking fund. The question of banking will be one of the most important after the war. We may despise the Germans, and feel enmity against them, but we cannot ignore the fact that their system of banking, by assisting industrial and manufacturing life, is the quintessence of prudence, and that Australia would benefit largely by imitating it. The powers of the Commonwealth Bank are not large enough, but the private ‘banks are not prevented from doing what the German banks have done. In Germany, if a manufacturer finds that he cannot dispose of hi3 goods without giving his customers three months’ credit, a bank will advance him ‘ sufficient to meet the obligations which his- credit entails, and thus enable him to continue manufacturing. I feel sure we shall not be slow to adopt that system after the war.If I understand the Acting Prime Minister’s proposals aright, it will be one of the means proposed to continue and expand our industrial power. I regret that so few honorable members are prepared to give any attention to the important question of finance.” If supporters of the Government are not ready to take an active interest in the finances of Australia, the Opposition, at least, will do so, and will endeavour to educate the people up to the view that Australia must avail herself of every opportunity for advancement after the war. I believe that at the close of the war we shall have a flood of immigration. Many people on the other side write to me of their interest in Australia, and of their desire to come here. The author of a book that has recently been published points out that the fact that this is a country in which a Labour Government has ruled, and will rule again, will act as an incentive to many of th& people of Canada and the United States to come here. A friend of mine writes me that it is difficult to forecast what will become of the women of England after, this world war is over. Some 2,000,000 or 3,000,000 of them, in following wartime occupations, have ‘so developed themselves mentally and physically, that if they are called upon later on to return to their former employments, they will be greatly discontented. Many of them no doubt will come here.
This Bill will not have any effect until the war is over, since, as long as the war lasts, we shall go on borrowing. It seems to ‘be an absurd system of finance that permits of our placing £1,500,000 to the credit of a sinking fund, while at the same time we . borrow a further £.10,000,000 or more. All the States have sinking funds, and for every 5s. they put into them they borrow £500. That sort of finance might he all very well in the backwoods of America, but, it is not worthy of an intelligent Democracy such as we have in Australia.
– If it does no good, it cannot do much harm.
– Quite so. This is not the first occasion on which the National Parliament has indorsed this principle; but I do not think that any great benefit will be derived from it. This Bill, no doubt, will be passed, and the Government and its supporters will point to it as part of the splendid work done by the National party. They “will not point to the other side of the picture, but when the elections come round I shall not hesitate to do so. I want the public to understand what the Bill means, and I shall take care that they are not deceived as to what its provisions actually are.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 agreed to.
Debate resumed from 10th May (vide page 4607), on motion by Mr. Watt -
That this Bill hu now read a second time.
.- I do not think any exception will be taken to this measure. I see no objection to the proposal to allow the banks - and this is one of the features of the Bill - to secure a lien over inscribed stock or war . bonds, which have been purchased as the. result of advances made ‘by them to their clients to “the extent of 90 per cent, of the value of such stocks. The honorable member for East Sydney (Mr. West) thinks the provision should be extended to firms who have advanced money to their employees for the purchase of war bonds ; ‘but with that “point I am not much concerned. I notice that the Treasurer (Mr. Watt), in connexion with this Bill, has not followed the very admira’ble practice of setting out in . block type the alterations that it proposes to make in the principal Act.
– We wished to avoid the cost of reprinting a long Act.
– The Bill provides for two very important alterations in the Inscribed Stock Act.In the first place, section 52a of the principal Act provides -
Stock certificates, stock certificates to bearer, scrip certificatesto bearer, Treasury bonds and coupons, and transfers to stockor Treasury bonds shall not be liable to stamp duty or other tax under any law of the Commonwealth or a State.
It is proposed to amend that provision by adding the words - unless they are declared to be so liable by the prospectus relating to the loan in respect of which they are issued.
Then, again, section 52b of the Act reads -
The interest derived from stock or Treasury bonds shall not be liable to income tax under any law of the Commonwealth or of a- State.
And it is proposed under this Bill to add the words - unless the interest is declared to be so liable by the prospectus relating to the loan on which the interest is payable.
I agree that it was a mistake to exempt from income tax interest received in respect of war loans. No doubt it was a wise precaution to take at the time of our first war loan issue, since there was considerable uncertainty as to whether the people of Australia would subscribe locally tq such loans. But we have seen since that it is a great mistake, inasmuch as it removes from the area of taxation an enormous amount of capital.
– It favours the big companies.
– It favours the rich as against the poor. In connexion with the last war loan, the public were given the option of receiving 4½ per cent interest, free of taxation, or 5 per cent, interest, liable to taxation, and I dare say that, of the £42,000,000 raised, about £35,000,000 were subscribed at4½ per cent. That is’ an illustration of the fact that this system of exempting interest on war loans from taxation is a splendid thing for the rich man. As the Leader of the Opposition (Mr. Tudor) pointed out to-day, a man with an income of £7,000 per annum who invested in the war loan would get as much as 6 per cent, for his money.
When I was assisting the honorable member for Grey (Mr. Poynton) some time ago in his admirable amendment to make interest on war loans liable to taxation, the “gag” was applied to me by honorable members opposite. I would point out the unwisdom as well as the unfairness of “gagging” any honorable member who is endeavouring to persuade the House to keep on the right track. The “ gag “ was applied to me at the instance of Lord. Forrest. He moved, “ That the question’ be now put.” At the time, I was showing honorable members what an advantage a rich man would have by investing in our war loans at 4½ per cent, interest free of taxation.
– But the honorable member did not propose any alteration when he was Treasurer.
– No; I give the honorable member all the advantage he can get out of that statement.
– I am not seeking any advantage out of it. I. am merely putting on’ record the bare historical fact.
– I have no desire to go into that phase of the matter. I admit that, when I was in the position of Treasurer, I did not propose to alter the principle adopted with regard to war loans, but I am very glad to see that under this Bill the Government propose a provision by which they may make interest earned on war loans liable to taxation. However, I think that they might do it in a more diplomatic way than the method which they propose to adopt. Why is it proposed to add to each prospectus the words, “ The loan is liable to income tax on the interest earned”!
– Heretofore, people, have been lending their money on the other principle. It is, advisable to draw their attention specifically to the alteration.
– Would it npt be sufficient to put a provision in this Bill that such interest is liable to taxation after the passing of the Act? To put on each prospectus for the new loan a notice that the interest’ earned under it is liable to income, tax is very much on a par with the action of a man selling house property, who would say, “ This house is for sale, but I remind you that, in estimating the value of your proposed investment, you ought to make allowance for depreciation, repairs, and taxation.” If a man wishes to sell a house, he does not do that. He talks of the number of rooms in the house, and says how well it is built, and he speaks of the advantage of its beautiful eastern aspect, but he does not tell the prospective buyer that he should allow so much each year for depreciation, and that he must expect to pay taxes. If he should do so, the possibility would be that the would-be buyer would still continue to pay rent. But that seems to me to be on a par with the unbusinesslike methods of the Government. I have already drawn attention to the fact that honorable gentlemen opposite have all the brains and education of university men, especially those who have obtained the degrees of the profession to which the Minister in charge of the Bill belongs.
– What is the honorable member expecting ? .
– I am expecting from them’ a little more perspicacity, but we find that they have not what in my early days was known among the lads as “ horse-sense “ when they (propose to add to every prospectus the words, ‘ ‘ We warn you that if you invest in this war loan you will have to pay income tax on any interest you may receive.” However, I shall vote for the second reading of the Bill.
Question resolved in the affirmative.
Bill read a second time and committed pro formâ.
Sitting suspended from 6.26 to 7.45 p.m.
Debate resumed from 10th May (vide page 4608), on motion by Mr. Watt -
That this Bill he now read a second time.
Mr. HIGGS (Capricornia; [7.46].- This Bill, having for its object the repurchase of war loan securities, is not, to my mind, the embodiment of financial wisdom. It proposes that the Treasurer may create a trust fund by taking a sum equal to one-eighth of 1 per cent. of so much of the public debt of the Commonwealth as represents moneys received in respect of war loans from lenders other than the Government of the United Kingdom. That, of course, refers to money raised in Australia. This fund is to amount to £1,000,000, and so long as it does not go below £900,000 the Treasurer need not make those payments, but if it does go below £900,000, then he is to continue to take the one-eighth of 1 per cent, and replenish it. It will be seen that this trust fund has really no limit, because as soon as it gets below the sum stated the Treasurer may replenish it.
The Treasurer, when introducing the Bill, said that it was to provide the Treasurer with means, not out of revenue, but out of war loans, for operating on the market -for the repurchase of war loan stock, to keep the market healthy - to take up, I think he said, “ the slack of the market.” Honorable members will observe from the Stock Exchange lists that our war loan securities in the case of inscribed stock fluctuate when sold, sometimes, as during April, bringing par value, and at other times £9 9 . Messrs. Good-all and Company, in their Stock Exchange circular, issued on the 4th May, covering a month, said that Commonwealth Bonds 1925 were - buyers, £4 10s. 6d., and sellers, £411s. 9d., and sales, £99 7s. 6d. Throughout the whole period since the issue of our war loans there has been fluctuation, but the only serious discount was when the Government announced that they proposed to make a levy on wealth. The stock then fell considerably, but, after the Government let it be known that “such was not their intention, the price went up, until now, as a rule, a man may obtain for inscribed stock or bonds, about £99 12s. 6d. Now a Bill is introduced whereby the Treasurer may go on the market and purchase stock up to par value.
– So I believe; and it would appear to be the practice of the Commonwealth Government, whenever a Bill is introduced in the British House of Commons, to get a copy of that Bill and submit it to this House.
I do not approve of the Bill before us, because I deem it unnecessary; indeed, I think it may turn out an incentive to people to sell their war loan stock. There is already a provision that persons in trouble with regard to war loan money, especially those who have taken up bonds on the time-payment system, may go to the Commonwealth Bank, have the bonds taken off their hands, and be repaidthe amount already contributed. As I say, I am afraid this Bill will encourage trafficking in war loans. If a man desires to sell his war loan inscribed stock or bonds, why should he not lose the discount? He ought to ibe prepared to lose; and, certainly, if, at the present time, a person wishes to sell a house or any other property, he does not, in most cases, expect to get the same value as before the war. Why should we create a fund which will have the effect of inducing people who have taken up war loan stock to put it on the market, sell it, and invest the proceeds in the new loans we raise from time to time? The effect of this Bill will be to bring the stock up to par; but war loan stock carries 4½ per cent., and is not subject to income taxation; and I ask whether that does not represent a good enough investment without our raising loan moneys for the purpose of repurchasing and keeping the stock up to par value. The financial members of the House who deal in war-loan stock, and the financial public generally, know very well how much they earn by investing in new war loans. Some time ago, when I was Treasurer, and there was some question as to the soundness of -our war-loan stock, with a depreciation in value on the market, a friend - a high authority - writing to me on the. subject, said -
With reference to- your letter of the 3rd inst., there is a point in connexion with the issue of the war stock that is sometimes overlooked. I refer to the fact that the subscriptions to the loan are made in instalments, the last of which (30 per cent.) is payable on 15th November, while a full half-year’s interest is payable on 15th December. The outcome of this is that an investment in the new loan may, from one point of view, be considered as bearing interest at a rate of 11 per cent, per annum . (11.08 per cent.) for the period up to the 15th December, 1916, and of 4½ per cent, thereafter until redemption. - On the other hand, a purchaser at par on the Stock Exchange of stock or debentures on which the initial half-yearly interest payment has already been made, will be obtaining an investment at a rate of 4½ per cent, only throughout. The slight discount at which the War Loan is quoted on the Stock Exchange is, consequently, not an indication of depreciation in the value of the Commonwealth securities, but a result which naturally follows from the initial accrued interest bonus having ceased to operate in stock on which the first interest payment has been made. On account of this fact, a subscription to the new issue at par is a better investment over all than the purchase of existing stock would be at a discount of even 25s. The interest that would be actually earned by 15th December on the instalments paid in up to and including that paid on 15th November is 18s. 3d. if interest is reckoned at 4½ per cent, per annum. The investor in the new issue consequently gets interest at 4½ per cent, over the whole term of his loan, and, in addition, a bonus of £1 6s. 9d. per cent., payable on 15th December, 1916. In other words, tha War Loan issue is practically equivalent to an iss ue at £98 13s. 3d., without any accrued interest bonus.
The interest earned during the first six months on our war loans is about 11 per cent., but if we take the interest for a year - and I now. speak of the loan position at the time I was in office - the five instalments of subscriptions of £100 and under from the 1st August, 1916, meant that the investor earned £6 8s. 3d. per cent, per annum. We extended the loan for a month, and the interest earned on the five instalments from the 1st September, 1916, was £7 5s. 7d. ; on the ten instalments from the 1st August, 1916, £9 2s.; and on the ten instalments from the 1st September, 1916, £10 18s.10d. per cent. In the case of subscriptions over £100, the five instalments from 1st August, 1916, earned £6 8s. 3d. per cent., with no deduction; the five instalments from 1st September, 1916, £6 13s. 5d. per cent., with 7s. 6d. deducted; the ten instalments from 1st August, 1916, £7 4s. 3d. per cent., with 18s. Sd. deducted. ; and on the ten instalments from 1st September, 1916, £7 15s. 3d. per cent., with. £1 6s. 2d. deducted.
My point is that when the investor pays in his deposits from, say, the 1st August, and so on to the December, he spreads his payment of £100 throughout a period of only about a third of twelve months, he earns no less a sum than £6 8s. 3d. per cent, for the first year. It will pay any investor to take up war loan stock, hold it for six months in order to receive the interest at 4½ per cent. - which will mean, in some cases, 9 per cent., 10 per cent., and 11 per cent. - and then sell. The Commonwealth Government, through the Trust Fund, will be a buyer in the open market.
– At what price?
– At par, perhaps.
– No; at such price as the Treasurer determines.
– The Treasurer is empowered to buy the stock at a price not exceeding par. Honorable members opposite seem to regard as ridiculous the idea that the Treasurer may buy at par.
– What would be the object of his buying at par?
– What is the object of the Bill ? The Treasurer has stated that the idea is to keep the market healthy, to keep the loan stock at par, and if he will not buy at par, how will he keep the stock at that value? At least one bank has taken up war loan stock and unloaded it on the market. This Bill will create a fund of at least £1,000,000, which is to be used to (preserve the value of our loan stock, so that any bank can take up war loan scrip, get the benefit df 10 per cent, or 11 per cent, interest for six months, and then sell it to the Commonwealth Government at’ par.
– This Bill is to enable the Treasurer to buy when stock is below par.
– I believe that this Bill will offer an opportunity for people to traffic in war- loan stock. Honorable members may laugh, but they cannot escape from the meaning of clause 3, which provides that “ the Treasurer shall not in any case pay more than par in respect of such principal moneys.” Honorable members say that the Treasurer will buy at a discount. How much do they think he will pay?
– He will huy at £98.
– The honorable member’ does not read the Stock Exchange quotations. War loan stock is quoted to-day at £99 12s. 6d.
– The honorable member overlooks the fact that we are nearing an interest payment.
– It will be found that even immediately after the, six months’ interest has been paid the stock will not recede to £98. If the stock ever fell as low as £98, it was when the Government forecast a levy on wealth.An honorable member interjects that to-day’s prices will not be maintained for ever. In my opinion, shortly after the war is ended, this stock will be at a premium, because of the freedom from tax conditions attached to it. For a period after the war there will be a boom, but in the course of a year or two a depression will set in, and people will find that they cannot get the same return on industrial investments as they are getting to-day. The moment money becomes cheap war loan stock will be at a premium.
– When will money he cheap?
– As soon as the depression comes.
– I think money will be dear for years.
– If so, there will be no depression for years.
– Money can be cheap only when it is plentiful.
– It will be cheap only when there is a depression.
– The honorable member is right.
– If money is dear people must be able to earn a high rate of interest by investing it in industrial enterprises. As to when money will become cheap will depend on when the depression sets in, and when the Government cease borrowing money and causing a fictitious prosperity. As showing the value of this 4½ per cent, war loan stock, free of income taxation, honorable members will find that, of the £42,000,000 borrowed recently, only about £7,000,000 was taken up at 5 per cent., the balance of £35,000,000 being taken up at 4½ per cent, free of income taxation. I think that this Bill will provide an incentive to people to sell their war loan stock.
– If the honorable member thinks that this stock is a good thing, why should people sell it?
– They will sell it and take up new war loan stock when they can get 9 per cent, to 11 per cent, for the half-year.
– Is that the honorable member’s idea of finance?
– Suppose the Treasurer is buying stock at £99 12s. 6d., it will pay a man who has bought up war loan stock and kept it for six months in order to get the half-year’s interest, to sell it to the Government, and take up fresh stock, because the Government are floating a loan every six months.
– It would not pay him; he would have to give½ per cent, to the broker.
– Even so, he would lose only 12s. 6d.
– He would only sell after receiving his first half-year’s interest, and the moment that interest had been paid the price on the exchange would fall by almost the equivalent of the interest paid.
– That may be the case now; but when this Bill is passed, and the Treasurer has a fund of £1,000,000 for investment, and he is resolved to - keep the war loan stock at par, there willbe an inducement to investors to sell their stock. Why should a man sell his war loan stock?
– He may meed the money.
– If a man has invested £100 in the war loan, should he not be prepared to pay any discount he may have to suffer if he sells? I say he should. If he desires to sell, he ought to think himself lucky if he gets £99. A person who sells a house or other property that was worth £1,000 before the war does not expect to get that price for it now. He is lucky if he receives £900.
– All property values are up.
– A man who is prepared to bide his time may probably get the full value of a house, but if he is in the same position as a man who is compelled to sell his war loan, stock, he must accept a great deal less. We ought not to offer inducements to anybody to sell war-loan stock. Let me quote the opinion of the Governor of the Commonwealth Bank, who, in his review of the last war loan, had something to say about the priceless lesson of thrift. I should like to add my word of warning to the general public, that in these times of fictitious prosperity, brought about by the expenditure of war loan* moneys of great magnitude, everybody who can save money ought to do so. At the present time a great deal of money is being spent foolishly. The other day a witness, giving evidence before a Commission, said that in his opinion the ladies had money to burn, and he was going to help them. He told the Commission that there were some who, if offered boots at 25s.- per pair, would decline them, and that the retailers, if they wanted to sell such boots, would have to charge £2 10s. a pair for them. But we must make allowance for this foolishness. There are in Australia a number of poor women who never before the war were able to spend a pound recklessly, and now, having money to spend, they do not see why they should not spend it.
– The ladies are always careful of their money.
– The honorable gentleman comes of a race which is noted for its economy. He probably knows a song, the burden of which is “ the best friend in the world is the shilling or twa.” He will agree with me that much money is now being spent foolishly, and that the more the saving on clothes and amusements the less the misery that will fall on the community when the war is over and the depression comes. Mr. Miller, after speaking of this “ priceless lesson of thrift,” said -
Another point I desire to stress is that a in an is not a patriot who buys bonds and then sells them as soon as he can. The actual purchase of a bond means nothing. It is keeping it that helps. People must not only save, in order to be patriotic, but they must invest. People who buy bonds must realize that Australia can benefit only if they hold them as long as they possibly can. The man who buys a bond, and holds it in spite of temptation to sell, and has to practise rigorous economy and self-denial to retain it, is as truly a soldier to-day as if he wore the King’s uniform.
The Bill offers an incentive to the selling of bonds. At the present time any one wishing to sell bonds can get only £99 12s. 6d. for them, and has to pay a brokerage of 10s., and lose a certain amount of accrued interest. But the Treasurer wishes to be able to assure the public par value for their bonds. I object to that. If the Treasurer wishes to maintain the credit of the Commonwealth, he should refrain from making remarks such as that to which he gave expression the other day in regard to a lecture by Professor Meredith Atkinson on the note issue. The professor said that in His opinion we are approaching the danger zone in connexion with the note issue, to which the Treasurer replied that -
The Government had expressed its disapprobation of such views and methods. If this expression were not sufficient, the Government would have to take what measures it thought prudent and necessary to protect Australia’s interests, in order to relieve the mind of the public creditor and assure the stability of our currency.
– Who is Professor Meredith Atkinson ?
– He is a man of good standing.
– I have not met the professor, but I bear that he is of repute as an economist. Was he not entitled to state his opinion regarding the note issue, and to say that he considered that, having issued £56,000,000 worth of notes against a gold reserve of about £33,000,000, we are approaching the danger zone?
– His point was that there is too great an inflation of internal credit.
– It was a very sensible remark to make.
– Evidently the honorable member for Hindmarsh would support the Treasurer in the suppression of criticism of this kind.
– The times are too serious for us to be worried by a lot of academic persons. ‘They do not give such men much chance in England, and we should not do so.
– The fact that opinions have been uttered by a university professor is not a reason why they should be disregarded, rather is it a reason why we should pay attention to them. I admit that university men are often impracticable ; their books get them down, so to speak. In ordinary life a university man may not be so efficient as many a man who has had no scholastic training, and has had to battle for himself in the industrial and commercial world. In my opinion, it is more likely to do harm to the credit of the Commonwealth and the stability of the note issue to suppress the criticism of a professor who has made a study of political economy, than to allow the freest expression of opinion. If criticism is suppressed, the public will be likely to think there is something wrong with the finances, and there may be danger of panic. I do not think that there is such danger, though some persons fear it.
– The honorable member is going beyond the scope of the Bill.
– The Bill has been introduced, the Treasurer tells us, to maintain public confidence in our war loan stock, and to keep it at par value.
– It has no bearing on the note issue.
– I repeat that we ought not to offer an inducement for the selling of stock. Some hold that we ought to try to keep our stock up to par value, so that people may be encouraged to invest in it. That, no doubt, is the opinion of honorable members opposite. They argue that if the stock is saleable on the market at £99 12s. 6d., the public will not subscribe to new issues. In my opinion, the Government should not go to the public cap in hand ; they ought to tell the public who have money to invest that it is their business to take up the Commonwealth war loans.
– We may have to do so yet.
– We may have to do what New Zealand has done.
– Then where is the need for the Bill ? The Government ought not to offer this inducement to invest.Some time ago, when it was desired to get recruits, certain questions were put to the young men of the country. They were asked -
– No doubt the information that the honorable member wishes to give the House is of interest in itself, but I fail to see that it has anything to do with the Bill. If the honorable member will connect his remarks with the provisions of the Bill I shall be pleased for him to do so.
– I hope to do so, though I may not succeed completely.
– Then the honorable member “would be wise to confine himself strictly to the Bill.
– What I wish to point out is that the Bill has been introduced to induce the public to subscribe to war loans. The Treasurer has said that if war-loan stock “ sags “ in the market, if it is only saleable at a discount, the public may not readily subscribe to new loan issues. My reply is that, inasmuch as we have put certain question’s to eligible young men regarding their willingness to recruit, we should, instead of making inducements for subscribing to war loans, put similar questions to the moneyed men of the community. We should say to them -
Have you lent any money to the Commonwealth to carry on the war?
If not, why not?
What is the amount of your total assets in excess of your liabilities?
How much money have you invested in the Australian war loans? “
I think that those questions should be put to every person iolding a certain amount of property, say, to every one possessing more than £1,000.
– In many cases people have all their money invested.
– Is there anything wrong in protecting the public credit?
– This Bill will afford those who wish to traffic in the war loans an opportunity to make money. The honorable member for Wide Bay (Mr. Corser) asked just now, “ Supposing a man had already invested his money, what would be the position ?” If a man had invested his money in any industrial enterprise, or in the purchase of a house, and desired to help in the war loan, I imagine that he would go at once to his bankers with his scrip or his deeds, and say, “ Here is a security worth £200, on which I ask you to advance me £100 to invest in the war loan.”
– That has already been done.
– Undoubtedly. The honorable member for Wide Bay knows very well that a man could readily obtain an advance on. the security of his scrip, or deeds of his property. I sincerely oppose this Bill ; I think it is a mistake, and that it is unnecessary, and even dangerous.
.- The honorable member for Capricornia (Mr. Higgs) has done a service, not only to the House, but to the people of Australia, by directing attention to a most important issue whichis involved in this Bill. That issue is as to whether it is worth while for us in this great war to take any steps to maintain the credit of the country. My honorable friend has held office as Treasurer, and he must feel satisfied that no Treasurer would exercise the powers conferred on him under this Bill unless he felt that in doing so he would have the whole community behind him. If the Treasurer, acting on advice, should consider it necessary, in order to maintain the credit of’ Australia, to purcha’se a limited amount of war loan stock at a price not . exceeding par, he will have power, under this Bill, to do so. My honorable friend has put with great force the point that, while these loans, allowing for accumulated interest and terms, are floated practically below par, the Treasurer will have the right to redeem them at not exceeding par. In speaking of “par” as he frequently did, he ap-. parently had in mind “ nominal par.”
– What is the difference between . par and nominal par?
– No one knows better than does my honorable friend that, for all practical purposes, when one goes on the Stock Exchange to buy inscribed stock, there is no such thing as par except immediately after the interest on that stock has been paid. We must have regard to the question of accumulated interest. Therefore, while the term “ par “ may be used, we must always bear in mind the distinction between par - the giving of £100 for a stock on which no interest is due at all, and the giving of £100 for a stock with, perhaps, halfayear’s accumulated interest. The point which the honorable member for Capricornia seemed to press home was that, while these loans had been floated at less than par, the Treasurer might be disposed to buy them back at par or almost par. In other words, the inference which I drew from his remarks was that he thought the Treasurer of the day, without any sufficient reason, might purchase from those who subscribed to the loan of a’ few weeks ago stock at such a price as would enable them to make a profit out of the transaction. I am perfectly satisfied that there is no such intention on the part of. the Government.
– The very object of the Bill is absolutely opposed to anything of the kind.
– Undoubtedly. I am confident that any Treasurer who purchased these stocks at a price which would give a profit to the man who had taken them up would become involved in such a scandal that the Government of which he was a member would not remain in power for twenty-four hours. Such an -action could not be contemplated for one moment by any Treasurer. I would remind the honorable member for Capricornia of a period in the history of Great Britain which was perhaps almost as critical as the present. I refer to that day in 1797 when, during the great war between England and Prance, the mutiny of the Nore broke out, and Consols fell to £48. Supposing the Government of England of that day had found it necessary to float another loan - as we may. have to do a few months hence in order that we may continue to play our part in this great war - a few weeks after that mutiny, when Consols had fallen to £48, what prospect of success would it have had ? Mr. Pitt was then in power, and I can well imagine that he would, have been glad to avail himself of such a measure as this in order that he might go into the market before Consols fell to £48, and so maintain the financial credit of the country. That is the sole object of this Bill, and there is not the slightest doubt that no Treasurer “would remain in office fortyeight hours after he had attempted to use, or had even thought of using, this Bill in the way which it seemed to me my honorable friend, Mr. Higgs, implied a Treasurer might do.
.- It is a healthy sign when measures of this kind are criticised in Parliament,, since it is only by a discussion of them that we can arrive at their true object, and elicit the intentions of the Government in regard to them. I have never . been a pessimist in respect of the finances of this country. On the contrary, I have always endeavoured to encourage optimism, believing it to be essential to ‘ the maintenance of our financial equilibrium. My honorable friend, Mr. Higgs, and I do not agree as to the probable effect of this Bill. I regard it as a measure to maintain the buoyancy of the national debt. It is essential that the public mind should be satisfied as to the stability of the national debt. And, by the way, a national debt is no disgrace to any country. England has always had one, and her statesmen have never thought it of sufficient importance to try to abolish it. I viewed with favour the first proposal to float a war loan in Australia. When we have to float loans, I believe it is a good thing that they should, if possible, be raised within Australia. I did not anticipate that our first local war loan would prove the success that it was. I was very friendly with Mr. Fisher, who was Treasurer at the time, and I know that his mind was greatly agitated as to what would be the effect of the experiment. He feared that we should not be able to raise in Australia the. £20,000,000 for which he asked, and no man was more pleased than he was at the success of that loan. I may be wrong, but I understand the meaning of the Bill to be this: that war loan scrip shall not be disposed of other than at what might be put down as its face value. War bonds are held by the people of Australia, by friendly societies, and persons like myself, who have put as much into the loans as they can afford, because they regard it as their duty to do so. Once Australia’s national debt has a severe slump, it will have a material effect, on the progress and prosperity of the country. Because we have such a measure as this in the statutebook, the Treasurer will not go down Pittstreet, Sydney, or Bourke-street, Melbourne, waving a flag and asking people to bring along their war bonds because he will buy them. The object of the Bill is to provide that, if some unfortunate citizen who holds bonds is compelled, through force of circumstances, to dispose of them, he will not suffer by reason of the fact that,, in the hour of the country’s need, he was prepared to put his money into war bonds. I did not follow too closely all that was said by the honorable member for Capricornia (Mr. Higgs). With a great amount of ability, he endeavoured to convince the House that some persons were going to make 11.. per cent, if this Bill was passed. I could not see’ eye to eye with him. I think that he allowed his imagination to run riot. His motive may have been a good one. He may have been endeavouring to ascertain whether honorable members had the ability to rise and refute his statements. Occasionally, it is necessary to follow that line of action. The honorable member suggests that after a first instalment is paid on a bond, the holder may propose to sell it to the Treasurer ; but the Bill will make no provision for the repurchase of bonds until persons offering them have the bonds to deal with ; therefore, the allusion of the honorable member to 11 per cent, vanishes entirely. The Treasurer will only be called upon to act under the authority given by this Bill in extreme cases, and in cases of forced sales.
It seems to me that war bonds and scrip will become negotiable paper. I do not see why I should not be able to utilize my bonds in securing a loan, or in making a purchase of property. It is quite within the realm of reason that personswho have property or shares in companies for sale will accept war bonds or Commonwealth scrip in lieu of cash. At any rate, there should be nothing to prevent its being done. There is no possibility of these bonds being wiped out within the life-time of any living person. I have been nominated as executor in many wills. Many other honorable members are in the same position. What is to prevent an executor of an estate recommending the purchase of war bonds as a good investment? There is no safer security under the sun. Just as is the case with our note issue, the nation is behind the bonds, and we are exemplifying the soundness of their security in a most substantial manner by saying that they shall not go below their face value. We are now a nation, and one of the benefits of a nation is that it may have a national debt.
– Does that benefit apply privately as. well?
– If the honorable member is running a large business and he can improve it by securing a loan of £10,000, he would have sufficient brains to do so.
– Now I feel flattered.
– I admit that it does not take too much to flatter a Scotchman. In reference to the sale of bonds, the honorable member for Capricornia has spoken about quotations of £99 2s. 6d., and £99 7a. 6d., but in the month of December I have seen these bonds for sale at £100 10s. Every business man knows that in that month the half-year’s interest is due. In January, when the holder of the bonds must wait nearly six months for £2 5s. on a £100-bond, he may be offered something under £100 for his bonds. It does not necessarily mean that he sells them. Many people make offers to buy sheep, but an offer to buy does not complete a transaction. The holder of the sheep does not sell unless he gets what he wants for them. In January and in July there will always be some of those gentlemen who deal in this class of business, and make a living put of it, who will be ready to buy bonds at a figure lower than the face value. If circumstances should arise by which there may be a serious financial position of a momentary character, then, if Parliament cannot rise to the occasion, it is not fit to be intrusted with the administration of the affairs of the country. The honorable member for Capricornia has made some reference to the fact that people are spending too much money in luxuries. Nobody regrets it more than I do. If we could only get people to realize the seriousness of the position, and if they would only cast their eyes on the future a little, they would be a little wiser, and would put a- stop to a good deal of -the unnecessary expenditure that is going on at the present .time. But in Australia we do not seem to be able to realize the exact position. Nature has been bounteous to us so far as climate is concerned. We live an outdoor life, and the seriousness of things cannot be grafted into the people too easily. Perhaps it is a good thing that it is so, because our manner of living has kept money in circulation. No doubt, there are many people in this country who are making untold wealth. There is not a company that is not piling up reserves, and we can only guess that their profit and loss accounts are genuine. It is not only in Australia that this is going on. In the newspapers this week I read of a Japanese shipping company, with a capital in 1916 of £36,000,000, to which they have since added £40,000,000, while their profit on the half year’s transactions is £336,945.
– Is not that yen t That is not much profit on £40,000,000.
– No, I was very careful on that point. I differ from the honorable member for Capricornia (Mr. Higgs), inasmuch as T do not see in the Bill the danger he anticipates. In this legislation we have been set a good example by the Old Country, which has had years more experience than we have in financial matters of the kind, and -has always jealously guarded the national savings as represented by the British consols. No matter on which side of the House I sit, I always have, and always shall, support any proposal which” I deem to be for the public good ; and this Bill shall certainly have my vote.
.- Every credit is due to the honorable member for Capricornia (Mr. Higgs) for the time and study he has devoted to this measure from his point of view. Honorable members on both sides agree that at the present time it is. absolutely necessary to establish the public credit as firmly as possible; and with that end in view I intend to support the Bill. In my opinion this measure will contribute greatly to strengthen the public credit, for it will enable the Government to assure all investors, especially those for small amounts, that there is no chance of their suffering any loss. I cannot think that the banks, insurance companies, and ‘ other great financial institutions, whose loans reach hundreds of thousands, and in some cases millions, would be so mean and contemptible as to unload extensively on the market six months after their subscription.
– That is quite true in regard to the great majority of companies.
– The honorable member was quite right in saying that there is ‘a larger amount of interest paid in the first six months than would appear from the face value of the bonds; and doubtless that is done to promote investment. Those who invest from patriotic motives need no encouragement of the kind, but it is necessary, I suppose, to also attract those who have an eye for a little extra interest. The -value of securities is bound to rise and fall. On the issue it will be near to par, though, fi: the course of time, it may go down very low, as was shown by the honorable member for Grampians (Mr. Jowett) to have been the case during the continental crisis at the end of the 18th century. As such loans become due, there i9 always a rise, through during the long curve, the same interest has been paid by the Government. According to the monthly share list, Commonwealth bonds are sold at 99, and twelve months ago they were quoted at 99$, or £99 17s. 6d., just as the honorable member for Capricornia told- us. Some of the New South Wales 3 per cent, stock has come down as low as 59J, but when the due date approaches, it will rise until it reaches par. That is the rule of all finance in regard to bonds. In Victoria stock has gone even lower, but 59½ is the lowest shown in the share list I have in my possession. In to-night’s Herald it is stated that Victorian stock, due 1930, is bringing only £74 10s. in odd lots, and that the 3 per cent, inscribed stock, which I take to be continuous, has gone down as low as £64 5s., buyers offering £63. People who invest at these low rates frequently get 5 per cent., as in the case of the New South Wales 3 per cent, stock.
I take it that the Treasurer of the day will not seek unwisely to purchase continually at par, but that if stock is being sold, say, at 98, he will purchase, and thus make a clear profit of £2, less some trifling expense for transfer. To that extent, the Treasurer will tend to carry out an idea of Mr. King O’Malley, once a Minister of the Crown for the Commonwealth. Mr. O’Malley was one of the keenest financiers that ever came into this Chamber; without his assistance we should not have had now the Commonwealth Bank with all its public advantages. That gentleman suggested that a fund should be placed at the disposal of the Government of the day in order to do exactly what this Bill proposes, namely, to enable the repurchase of bonds which may for some reason fall, and thus make a large profit for the public revenue. The honorable member for East Sydney (Mr. West) is quite right when he says that, during this war-time, profits are being made on far too large a scale. The Sydney Bulletin publishes the balance-sheets of all various companies, and I personally take every opportunity to thank that journal for giving us these lessons in finance. I suppose my friend the honorable member for Grampians (Mr. Jowett) will agree that the Bulletin is one of the best business and financial newspapers in Australia to-day.
-From the Bulletin I learn that the Australian Mutual Provident Society, in 1913, added £1,476,000 to its fund; and, in 1916, a further sum of £1,366,000; though I regret to say that in 1917 this reserve fell to £954,000. This is one of the few instances of less profit being made than in the pre-war period.
– There are big outgoings in the shape of death claims, and so on.
– That is so ; and, in 1917, those claims amounted to £3,436,000, as against £2,179,000 in 1913.
– And the company has invested heavily in war loans.
– Yes; and we have reason to be thankful to them. Messrs. Burns, Philp, and Company, an important shipping company, had, in 1913, a reserve of £206,000, reduced by a cash bonus of £40,000 to £166,000; and, in 1918, that reserve has risen to £498,000. We know that the financial conditions in France, when the German indemnity was being wrung from it in 1870, were better than even in Prussia; but still we must look forward to the debacle which follows war; and Sir John Grice, Chairman of Directors of the National Bank, has shown us the danger of borrowing large sums of money with relief from income tax. This, Sir John Grice has done as a warning, and not with a view to provide a peg for men of Labour opinions to hang arguments on; and certainly we must all realize the difficulties that face us in the future. I hate the word “repudiation,” but I will never, by vote or voice, put the crushing ‘curse of interest on the untold millions of people who are to follow us. We have, to save our face and keep our pledge, but, if necessary, we shall have to make still further use of our note issue. By this means we shall be able to say to those who have advanced large sums to the community that, on the 1st January, 1919, all to whom the country is indebted for over £100,000 will be paid in notes with interest to date. They will- place the notes in the banks, and’ that will enable those institutions to. advance money again for all ventures that offer good security, such as the starting of new manufacturing industries. All honorable members will agree that it is necessary that we should make Australia self-contained in every respect. By the means I have suggested, all current capital would be paid into the banks, which would lend out the money again. Honorable members must be aware of how the banks to-day are seeking to limit their advances; they are obliged to do that for their own safety. This Bill has potentialities of great good, primarily in establishing and keeping firm the Commonwealth credit. At the present time we are living en- tirely on credit. All the metal currency in the world would not pay for one month’s transactions in connexion With this horrible war. The Germans, with a keen power of organization which amounts almost to genius, are by means of their banking system carrying on a wonderful financial fight. They are lending to themselves over and over again, and so longas the people have a full belief in their own credit, they will be able to finance the war. We have seen what we in Australia have been able to do in that way. I agree with what the honorable member for Grampians (Mr. Jowett) said in regard to any Treasurer who, knowing that an insurance company or bank had advanced large sums of money for the purchase of war bonds, would demean his Government by going into the market after the first payment of interest and repurchasing the stock. Such an action would really amount to worse than bribery and corruption, and if the guilty Treasurer were put against a wall and shot he would be getting only “his deserts. I think he would get very short shrift in this House. This Bill is carrying out a suggestion which was first made in this House by Mr. King O’Malley, and I shall have pleasure in voting for it. At the same time, I thank .the honorable member for Capricornia (Mr. Higgs) for the study he has given ‘to the subject. We all hold different views. There are monometalists and bimetalists, and I hope that some day even wheat will have a currency value. Only once in the history of Australia has gold been imported to balance exchange. We pay with gold, wool, and other jaw material, and I hope that, some day, financial credit will not have to depend almost solely on gold, and, to a lesser extent, on silver. When that day arrives, the world will be happier, because credit will be better established everywhere.
– I congratulate the Government on the introduction of this measure. In fact, I think that if Parliament had adjourned even for a short time without having passed a measure of this character, we should have been neglectful of our duty. I am surprised that the honorable member for Capricornia (Mr. Higgs), who is an ex-Treasurer, does not realize that a measure of this character is of vital importance to the Commonwealth at the present time. At a period when our borrowings for war purposes are extensive, we should not be above taking lessons from older countries, and the principle embodied in this Bill has been operated by the British Government for a great number of years. In fact, apart altogether from war loan stocks, when we are borrowing to any extent, it is absolutely essential that we should have a policy such as this Bill will establish. The National Debt Commissioners of Great Britain operate without the knowledge of the Chancellor of the Exchequer, or the Governor of the Bank of England. It can be readily understood that if it were known that they were operating on the market to steady British Consols, their work could not be so effectively done. The Government should seek, in this Bill, power to create a similar authority in the Commonwealth. It is not necessary that the Commissioners should be appointed entirely for the operation of this fund, for I do not think there would be sufficient work to occupy the whole of their time. But somebody of standing and probity in the community should be placed in charge of this work, because it is not desirable that the Treasurer should have much to do with it. It is not that I fear that we shall ever have a Treasurer who is lacking in public spirit or corruptible, but this work will necessitate a vigilant watching of the. market, and if it were left in the- hands of the Treasurer and his officials they might be so deeply engaged in ordinary official duties as to miss the right opportunity for operating on the market.
The idea that the Treasurer will try to keep the stock at par seems’ ridiculous. My impression is that the authorities will’ not operate, for the purpose of steadying the market until stock falls to about £98. Nobody can- tell what will happen after the war. War loan stocks may remain at their present price or they may fall, but I do not think they will fall more than a couple of points. At the present time all mining flotations, except in respect of concerns which are already in operation, .are practically prohibited, because the authorities will not allow the money market to be depleted by large speculations in mining ventures. It is not impossible that later mining may take an upward move, and, naturally, there will be extensive operations by speculators. If the mining prospects were good some people would sell their bonds. Of course, everybody should patriotically hold his war bonds; but as men of common sense, we must realize that a good number of people will sell if they think they can get “a bigger return by reinvesting the money. If such a position as that Were created, there would be a necessity for operations by the Government in order to steady the market. At the time when Mr. Gladstone was reducing the national debt of Great Britain by leaps and bounds, the operations of the National Debt Commissioners, although known only to themselves and to the Chancellor of the Exchequer from time to time, were very essential to steady the market, and they certainly did take advantage of any opportune time for buying up Government Stock. When the redemption of our war loans is due, such an authority would be of very great help to the Commonwealth.
In following the example of the British authorities in this matter, we are proceeding on safe lines. I hold that in matters of finance we should follow the beaten track, especially in war time. We cannot afford to play any tricks in finance matters at this period ; it is essential that we should proceed on safe and sound lines, and defer some of the proposed wonderful reforms and innovations until we return to the piping times of peace.
A reference has been made to the remarks made by Professor Meredith Atkinson regarding the Commonwealth Note Issue. I think the Treasurer was justified in giving that gentleman a friendly warning that he should weigh well his statements on this matter. Professors, with their large academic training and lack of business knowledge, are unqualified to discuss many of these questions, and their remarks would have very little value were it not for the positions they occupy in connexion with universities. I except such a man as the late Thorold
Rogers, Professor of .Political Economy at Oxford, who based his theories on facts, and not on things of which he had dreamed. Will any man say the note issues of Great Britain and France, the two most stable Governments in Europe, are covered with gold to the same extent” as they -were in pre-war times ? Of course they are not, and no banker or commercial man, or even an intelligent working man, would think for a moment that a note issue in time of war can be supported by the same gold reserve as in time of peace. Yet to-day we were warned that the Commonwealth is not altogether on safe ground in regard to its note issue. I say that we are absolutely on safe ground. During these times the soundness of the note issue-
– I ask the honorable member not to discuss the note issue.
– Then I shall merely say that there is no reason for public alarm about the present financial position. Statements have been made about the necessity for economy, in which, no doubt, there is considerable force. The secret of economy is to abstain from buying those things which you can do without. Reference has been made to the prices that are being paid for boots.
– That matter does not come within the scope of the Bill.
– I merely wish to state my opinions regarding the solid position of our finances. If I am confined strictly to the subject-matter of the Bill, there is nothing to be said except that the measure is on sane lines, and has the approval of all with any authority to speak on financial matters, and, before many years are passed, will prove to be of great value.
– I regret that the Treasurer has not given us more information concerning this measure, and that he has not heard the present discussion, particularly the speech of the honorable member for Capricornia (Mr. Higgs). No doubt his absence is caused by his having to perform public duties elsewhere.
– Did the honorable member hear his second-reading speech?
– -Unfortunately I was not able to hear the speech, and the Hansard report of it has not yet been issued.
I understand that one object of the Bill is to keep the Commonwealth stock in a healthy condition.
– “ To take in the slack “ was the Treasurer’s expression.
– I do not know that I agree with everything that . was said by the honorable member for Capricornia, though he is to be commended for having brought about a healthy discussion of the measure. The Bill evidently contemplates redemption operations, because clause 4 says that securities purchased under it shall be immediately cancelled. I take it that if the Government were to purchase £100,000 worth of stock in the market, the scrip would not be re-issued, and no further interest would be payable on it. When a big investor in war-loan stock “ shuffles off this mortal coil,” if, under his will, his assets have to be immediately realized, the placing of a large lump of stock on the market suddenly may cause such a depression as to alarm timorus holders. It will then be for the Government to step in and buy some of the stock, not at an exceptionally low, but at a modest, figure, and redeem it. The Canadian Government adopts this method of redemption. Instead of creating sinking funds, it goes upon the market at favorable opportunities, and repurchases its stock, thus partially redeeming loans during their currency. We shall do well to follow their example. Some nine months ago the Sydney Morning Herald, which certainly does not expound Labour views - referred in a sub-leader to the extent to which rich men were purchasing war loan stock, which, it said, was not wholly desirable, because, if these operations were continued for any length of time at the then rate, quite a big parcel of scrip would get into the hands of some of the richest persons in Australia, who would be free of taxation on the interest.
– The intention of the Government which the honorable member supported was that the interest on warloan stock should be free from taxation. -
– That is so; but it is not too late to mend. I am referring to the manipulation of this stock by rich men. I do not know whether the Bill has been introduced partly to prevent this undesirable accumulation of stock in the hands of the very rich. That might lead to between £7,000,000 and £10,000,000 of income escaping taxation every year. Although I cannot see much reason for redeeming loans while borrowing continues, the method of redemption provided for recommends itself to me, and I shall vote for the second reading of the Bill, believing the measure to be one tending to the public advantage.
Question resolved in the affirmative.
Bill read a second time, and reported without amendment; report adopted.
Standing Orders suspended, and Bill read a third time.
In Committee (Consideration resumed from page 4787) :
Clause 4 agreed’ to.
Clause 5 (Application of loan sinking fund).
.- Sub-clause 2 of clause 5 says that no repurchased or redeemed security shall be re-issued, but sub-clause 1 of clause 6 allows the Treasurer at any time to sell securities. It seems to me that those provisions are inconsistent. If the Treasurer may not re-issue securities, how can he sell them? What is the difference between a re-issue and a sale?
– Clauses 5 and 6 are the same as sections 46 and 47 of the Commonwealth Inscribed Stock Act of 1911.
– Is there still not an inconsistency ?
– The Bill expresses what is the accepted practice of the Treasury. The two provisions deal with different matters. The one refers to the application of the loan sinking fund and the other deals with investments.
Clause agreed to.
Clauses 6 and 7, and title, agreed to.-
Bill reported without amendment; report adopted.
Standing Orders suspended, and Bill read a third time.
Bill reported from Committee without amendment; report adopted.
Standing Orders suspended, and Bill read a third time.
.- I move -
That this Bill be now read a second time.
This is a short Bill to make three or four amendments in the Defence Act 1903-17. It is practically a machinery measure, covering three or four matters that might have been dealt with when the last amending Bill was before the House, but which were then overlooked. When we sent the first division to the Front we had no idea as to what would be the duration or the magnitude of the war. Believing that we would be sending away only 20,000 men, and that there would be plenty of transports available, we provided for the enlistment of the men for the period of the war and four months afterwards. Having regard to the many thousands who have since been sent to the Front, and to the great shortage of transports, however, it is anticipated that far more than four months will elapse after the close of the war before all our troops can be brought back. I remember that the. honorable member for Capricornia (Mr. Higgs), when Treasurer, said it was estimated that two years would elapse after the close of the war before all our men could be returned. If the Act, as it stands, were not amended, therefore, the term of service of these men would expire in many cases while they were in Britain, and they would be discharged many months before we could get them back.
– But surely no Government would propose anything of that kind?
– The point is that we could not keep them in the Forces if they thought fit to leave four months after the war terminated. . It is now proposed to amend the principal Act by . inserting in section 31 a new sub-clause providing that-
If the Governor-General, by proclamation, declares that, by reason of the recent existence of a time of war, it is necessary in the public interest that the Permanent Military Forces should be maintained after the cessation of the time of war, Permanent Forces raised in time of war for purposes other than those specified in sub-section (2) of this section may be maintained after the’ time of war and so long as that proclamation remains in force.
That will enable us to cover the whole period during which the men are away and pending their return to Australia. A further provision was inserted in the Bill in another place to the effect that any soldier who makes application in writing for his discharge will be discharged within two months of his return to Australia. It is also provided in the Bill that a soldier on becoming entitled to his discharge shall receive it with all convenient speed, but that until his discharge he shall remain a member of the Defence Forces. Andther amendment which this Bill makes in the principal Act relates to a question of administration. The principal Act provides that “ Minister “ means “ the Minister of State for Defence or other Minister of State “ administering the Act. At present there are honorary members of the Executive Council without portfolio who are not Ministers of State, and in order that they, in the absence of the Minister for Defence, may exercise the powers conferred by the Act, it is proposed to amend the definition of the word “ Minister “ by omitting the words “ of State for Defence or other Minister of State,” so that the meaning of “ Minister “ will be “ Minister for the time being administering the Act.” That definition will include members of the Executive Council who are members of the Ministry. The matter is to be further dealt with by an amendment of the Acts Interpretation Act, which is already on the notice-paper.
Another provision which was wholly overlooked when the amending Bill of 1917 was before Parliament deals with Senior Cadets. The law provides that if a Senior Cadet becomes a cadet officer he may, with the consent of the Defence authorities, on attaining the age of eighteen years, remain with the Senior Cadets as a Senior Cadet Officer, and if physically unfit at that age for the Citizen Forces, he may remain another year with the Senior Cadets. Further in order te secure the requisite number of officers, it has been found necessary to appoint volunteers. We have provided that certain drills which members of the Cadet Forces are required to undergo shall be carried out in their employers’ time, and that an employer shall not make any deduction from the pay of his employee in respect of time lost when attending such drills. There is no provision in that respect, however, with regard to cadet officers, so that as the law stands at present, while a cadet officer has to attend these drills, his employer may make a deduction from his salary in respect of time so lost.
– That is in the case of members of the Cadet Forces who are over eighteen years of age.
– Yes. It is intended by this Bill to put such officers of the Senior Cadet Forces on the same footing as ordinary members of the Senior Cadet Forces. .
The last amendment proposed to be made in the principal Act relates to officers. ‘ Section 148 .of the Defence Act provides that no person who is not a graduate of the Royal Military College shall be appointed an officer of the Permanent Forces. In time «f war the Australian Imperial Force is part of the Permanent Forces of the Commonwealth, and men who are not graduates of the Royal Military College have been granted commissions in the Australian Imperial Force. This Bill will enable us to continue such appointments and to validate those already made.
Debate (on motion by Mr. Tudor) adjourned.
Censorship - Deportation op Italians: Seizure of Petition - Sale of Zinc and Lead Concentrates.
Motion (by Mr. Watt) proposed -
That the House do now adjourn.
.- During the discussion of grievances on Thursday last I raised the question of the censorship. The Acting Prime Minister (Mr. Watt) will remember that on that occasion I mentioned that certain matter had been censored from the Labour Gall, and that on the following day I supplied him with a copy of the matter to Which the. censor had objected. In the course of my remarks I indulged in some criticism of the censorship, but no one could say that my criticism was extreme ot severe. I quoted an extract from Liberty and Progress, which the censor had not allowed to appear in the Labour Call. I also quoted from a speech made by the Prime Minister at the recent Recruiting Conference, in which the right honorable gentleman said that he would not stand . there as the protagonist of the censor, and that if he had been in my place he would have said far more than I had in regard to the treatment to which I and our party, had been subjected. I went on to urge that no one could defend a censorship of the kind that was being indulged in. I now find that the Labour Gall sent a copy of my speech to the censor, with an intimation that it proposed to publish it, and that the censor cut out of it everything that I had had to say in regard to the censorship. I hand the Acting Prime Minister a copy of the speech, with the deletions made by the censor, and bearing his initials. If we axe to have set up in Australia a Department which considers itself above all criticism, then the sooner we know it the better. In this speech I made no statement that could be of any military importance to the enemy. The Acting Prime Minister was ^.present, and took no exception to what I said. I merely criticised the Department as such, but this Department apparently thinks that it should be above the criticism of Parliament. I quite believe that if any newspaper submitted to the censor tonight a report of the speech I am now de- livering, it would not be allowed to publish it. This sort of censorship must stop right here and now. I am not here to dictate to the Government, but Ministers must recognise that if such a thing were allowed to continue, it would be absolutely fatal to the good government of Australia. At the present time no newspaper is allowed to publish any criticism that we may indulge in concerning that Department. What I said last week can be read in Hansard, although it was not allowed to appear in the Labour Gall. I ask the Acting’ Prime Minister to deal with the matter himself. I feel confident that the Minister . for Defence cannot know what is going on, but, if he does, and if we are not allowed to say a word of criticism of the censor, we should know it. Recently I asked a question of the Minister representing the Minister for Defence with regard to reprints of members’ speeches, and I was informed that they must be submitted to the censor. On one occasion I asked Mr. Speaker how many copies of .Hansard were circulated each week, and was informed that the number was 7,500. Each honorable member is allowed thirty-five copies, and public libraries and newspapers are supplied with free copies, a certain number of which are also circulated by the High Commissioner in the United Kingdom. What I say in this chamber in regard to the censor may go out into free’ circulation in Hansard, but directly any newspaper seeks to republish my remarks, down comes the censor and prevents it from doing so. In the case to which I have drawn attention, the military ‘ people apparently wish to save some of their own officers. That was why the report was censored in the first place. I did not quote one word of the article in the Labour Call which was censored. I merely mentioned one or two facts in connexion with the matter, but everything had to be struck out. We were told that’ there would be no censorship of anything which took place at the GovernorGeneral’s Conference. If the Labour Call wished to cut out 3 or 4 inches of the report of the proceedings at the GovernorGeneral’s Conference, they would be allowed to publish it, but because I mentioned the same matter in connexion with my criticism of the action of the censor, the whole thing was struck out. I would like to keep the proof which I have submitted to the Acting Prime Minister as a memento of the idiotic way in which the Censor’s Department is being run. If all this is being done with the connivance or by the orders of the Minister for Defence, we have a right to know it. No one could defend such conduct. The conference of editors denounced it. Mr. Holman denounced the action of the censor in preventing the publication of Senator Millen’s speech upon repatriation in the Senate. I thought that, as the “result of the Conference at Government House and of the conference of editors in regard to the censorship, we would have saner administration of the regulations dealing with the matter. I ask the Acting Prime Minister to let us know exactly where we stand in regard’ to speeches which are delivered in this House.
– I desire to draw attention to another method adopted by the Minister for Dofence, or some of his emissaries, in suppressing a matter of public importance and of great personal importance to a large number of people in Australia, namely, the conscription of Italians for service overseas. This morning, I received the following letter, written from 110 Queensberry-street, Carlton, apparently the premises occupied by the Italian Club: -
The military authorities yesterday (Tuesday, the 14th inst.) visited the above premises and seized all the printed petition forms and a number of other papers. We Italians now feel that we are helpless to express our protestation against the introduction of conscription for Italians if our right of petition is to be taken from us. We appeal to you to assist us to- retain this right, which we believe is recognised as an institution in the Commonwealth of Australia.
It appears that these Italians have had a petition printed for the purpose of obtaining signatures of the citizens of Australia to a protest against the treatment which is being meted out to them, their ultimate object being to present the petition to this House. I have seen a copy of it, and there is absolutely nothing in it which would justify the high-handed procedure on the part of the military authorities of visiting the premises of the Italian Club and seizing the printed petition forms, as well as other documents, the nature of which is not stated in this letter. What is the object of preventing these people from petitioning this House if they feel that they are aggrieved ?
– Is the honorable member alluding to citizens of Australia?
– These Italian citizens are citizens of Australia.
– I do not know that unnaturalized foreigners have the right of petition, but citizens of Australia certainly have.
– These people are naturalized citizens who have supplied me with the information. They are interested in the fate of their fellow countrymen. They believe that the Italian Government is not aware of the circumstances existing in Australia.’ Many of them are firmly of the belief that the Italian Consul, for reasons of his own, is concealing from the Italian Government the condition’ of affairs existing here. He may be acting from the highest of motives, but the Italian citizens, feeling that the Italian Government ought to be made aware of the hardships that they are suffering because of the way in which they are being treated, have attempted to communicate with it. In pursuance of that policy, Mr. Pellegrini spent £16 in sending two cables to the Italian Minister for War, asking him whether the Italian Government was fully aware of the conditions existing in Australia, or whether they endorsed the action which was being taken at the initiative of the Italian Consul here. The money spent on these cablegrams has not been returned, and no information has been made available as to whether the cablegrams were delivered or not. On top of this, the petitions which they were attempting to circulate among their fellow citizens have been seized by the military authorities. Ministers could very well give a little consideration to the feelings of these Italian citizens. At any rate, the relatives of those who are now being forcibly deported are deserving of some consideration. The procedure which has been, adopted is not calculated to inspire them with any great feeling of love for the Commonwealth Government.
I understood from the reply furnished to me this afternoon by the Acting Prime Minister that the Government had received instructions from the Imperial authorities that the details of the arrangement entered into by Australia for the sale of lead and zinc concentrates to the British Board of Trade were not to be made public.
– It was not an instruction ; it was a request.
– It amounts to the same thing in the end. They have requested the Government not to divulge the information. I understand that I can obtain the information privately, but that I am not at liberty to make use of it.
– The honorable member will not be at liberty to publish it or give it any public circulation.
– Then the information would be of no use to me in. my capacity as representative of the district which is mainly concerned in the production of lead and zinc concentrates. The price received by the companies, and the details of the arrangement may vitally affect the people I represent, and although it may be personally gratifying to me to obtain the information, which the Acting Prime Minister offers to supply to me privately, if I cannot make use of it on the public platform or through the press, it will be of no value to me. I cannot see what object the British Government have in making the request that the matter should be kept free from public discussion. When I was in Sydney on behalf of the men who were in dispute with their employers at Broken Hill, certain of the mining companies published a statement that they were being prevented from marketing their concentrates by reason of a combine which was said to be in existence. They said that if the Federal authorities would enable them to secure a market, they would be prepared, in the interests of the Empire, to let the Imperial authorities have the concentrates at pre-war costs. Consequently the Acting Prime Minister will understand why I am interested in learning the details of the contract, and in view of certain comments in the Sydney press to which I have drawn his attention, I hope that he will reconsider the matter of not making the details public if there is really no vital reason why they should not be so treated. It. has been inferred in the Sydney press that the withholding of this ‘particular information will have the tendency to boom already boomed shares. The interests of those who own shares are not served if shares are boomed beyond their real value ; and from the stand-point of. my constituents, the workers of Broken Hill, and of other workers engaged in handling zinc and lead products, the Acting Prime Minister should reconsider the matter.
.- I desire to draw the attention of the Acting Prime Minister to what is, at least, very high-handed conduct on the part of some public officials. .1 refer to’ the censorship of honorable members’ speeches. Some time ago, in. answer to a question by the honorable member for Yarra (Mr. Tudor), the Assistant Minister for Defence said that it was necessary for members to submit their speeches to the censor when they were reprinted for circulation, so that he might delete what he thought should not go out to the public. Will the Acting Prime Minister take steps to see that these reprints of honorable members’ speeches enjoy the same privilege as is given to the circulation of the ordinary Hansard numbers? Members are allowed thirty-five proof copies of their speeches, over which they have full control, and may send to whom they choose; but if those speeches are issued in pamphlet form they have to be submitted to the censor. One of the results is that matter which is allowed to go out in the Hansard number is not allowed to go out in the reprints.
Mr.Watt. - That might be an argument for the- censoring of Hansard.
– It appears to me that the Government make all kinds of promises, but are not prepared to carry them out.
Mr.Watt. - That is not correct.
– Two of my speeches have been censored, and most ridiculous deletions made. In one speech I said that men have been put in gaol for efforts on behalf of their own class, and that was scored out. If the Acting Prime Minister intends to honour the promises which were given on behalf of the Government by the Prime Minister, he will at least see that there is extended to these reprints the same privilege that is given to Hansard.
– I have nothing to do with it.
– You have all to do with it. In -answer to a question, I think by the honorable member for Batman (Mr. Brennan), the Acting Prime Minis-‘ ter said that, so far as he was aware, the censor had no right to seize petitions. Does the Acting Prime Minister intend to let the matter go at that ?
– I did not say that to the honorable member for Batman.
-That is how the Acting Prime Minister will find himself reported in Hansard.
– I do not recollect that form of answer. What I said was that the censor had no right to interfere with the immemorial right of citizens to petition to Parliament.
– That is not how the answer was printed. If members’ privileges are to be taken away- if the censor is to be used in connexion with their speeches - why not bring the censor into the chamber, and, once’ and for all, decide the question? If certain things did not please the censor he should stop an honorable member from speaking ; and it seems to me we are fast approaching’ that stage.
– I have a proposition that I can make to honorable members opposite and the House generally.
– Then I am quite prepared to listen.
– My irritation at the protracted nature of the adjournment debates is due to the fact that honorable members who leave when the motion is moved are not fairly treated if, in a small. House, we indefinitely discuss questions of public prominence. I entirely agree with the Leader of the Opposition (Mr. Tudor) in regard to his treatment by the censor. I speak as a layman, with no knowledge of why or how the censor does his work, and I promise to look into the matter myself, incon- j unction with the Minister for Defence, t seems to me that the bulk of the stuff censored is quite innocuous so far- as publication is concerned. There is one part, however, which the censor, in the exercise of his judgment, properly omitted. I am speaking of the embarkation of Italians. Honorable members opposite have had explained to them three times why the censor is excising such matter. There is another portion - which, it seems to me, most unfair to have excised. That is a compliment, and a Tare one, too, that the Leader of the Opposition paid to myself; and the fact that it has been excised excites my utmost indignation. We get bo few compliments from honorable members opposite that I shall make it my business to ascertain why this passage was excised.
As to the seizure of petitions respecting the Italian movements, referred to by the honorable member for Barrier (Mr. Considine), I have not consulted Hansard as to what I said, but I gave a view which I do not retract. The censor has no right to limit the right of Australian citizens to petition Parliament. Nothing that I am aware of, in peace or war, ought to interfere with that right. As to why the petitions were seized, I do not know; indeed, I did not even know that they had beenseized, and I shall inquire as to the reason.
The honorable member for the Barrier also referred to the publication of information regarding the. sale, and so forth, ofzinc concentrates. All I can say is that the British Government has requested us not to make public these details. There is a tendency amongst honorable members opposite to exercise too freely the privilege of asking questions respecting goods that are contraband of war. The honorable member for Capricornia (Mr. Higgs) has frequently requested information about wool, although it is perfectly clear that it would be unwise on the part of the Government to give, or chance the giving of, information to the enemy respecting’ the price of wool in Australia. It would be unwise to run that risk in regard to those to whom such commodities are sold, or to let the enemy, or even neutrals who may be in touch with the enemy, know where our trade is going, how goods are carried, or the twice at which they are sold. If that applies to so important -a part of military equipment as wool, it applies with double force to material for munitions, suchas zinc, lead, and other concentrates. I have offered to give the honorable member what information the Government has for his private use, and I cannot promise anything further without consulting the cables of request from the British Government.
As to the censorship generally, if the Leader of the Opposition, after consulting with his party, will set out distinctly the grievances they feel about the treatment of their speeches in reprints of Hansard for circulation, I shall consult the Minister for Defence and the Chief Censor and see what Temedy can be applied.
– Criticism of. the censorship should be allowed. ‘
– In the honorable member’s absence from the chamber I admitted, as a layman, that the excision referred to was without warrant or necessity. To prevent this constant and recriminating discussion, if the Opposition, or honorable members generally, will set down what they complain about I will see how far, in fairness it is possible to find a remedy. Beyond that I cannot go. I hope the honorable member for Darling will not accuse the Government, in the absence of the Prime Minister, of withdrawing one word of any promise or undertaking.I have said on half-a-dozen occasions, here and elsewhere, that the Government intend to keep, not only theletter, butthe spirit, of every promise.’
– Two weeks after the promise was made, honorable members’ speeches were deliberately mutilated be the censor.
– Will the honorable member recollect that that is the exercisein the censorship, and not the result of an instruction by’ the’ Government.
– But at least the Government have power over the censor?
– The Government take the responsibility for what the censor does, but we cannot know his every particular act. For instance, I heard for the first time to-night of the illustration supplied by the Leader of the Opposition, and I have undertaken to make inquiries.
– I only heard of it to-day.
– Neither the Government nor the particular Minister in charge can know all the sins of the censor, whether of omission or commission, and we stand to all the undertakings given at the GovernorGeneral’s Conference, not only in the letter, but, as I say, in the spirit.
Question resolved in the affirmative.
House adjourned at 10.30 p.m
Cite as: Australia, House of Representatives, Debates, 16 May 1918, viewed 22 October 2017, <http://historichansard.net/hofreps/1918/19180516_reps_7_84/>.