7th Parliament · 2nd Session
Mr. Speaker (Hon. W. Elliot Johnson) tookthe chair at 11 a.m., andread prayers.
– I ask whether the services of members of the censorship staff in any State have been dispensed with, seeing that it is now over a month since the armistice was signed? -
– I shall obtain the information which the honorable member desires.
– I wish to know from the Minister for Price-fixing whether the
Teplies which he gave to some questions I asked yesterday regarding the distribution of methylated spirits were all supplied by Mr. J. L. Lennard, including the Teplies to the questions which did not relate to that gentleman?
– They were furnished to me by the Chief Prices Commissioner.
– Was the Minister aware, when he appointed Mr. J. L. Lennard, that that gentleman was previously associated with the firm of Henry Markwald, whose head was interned in England?
-I am not aware of the circumstances, but inquiries are being made regarding them.
– Supply is the second Order of the Day on the business-paper. I ask the Acting Prime Minister if that means that the Estimates will be brought forward for discussion immediately the War-time Profits Tax Assessment Bill has been dealt with ? Is it the intention of the Government to proceed with the Estimates before we rise next week?
– The business-paper is prepared for the day only, and as it stands it, indicates to honorable members that if the House will dispose of the Wartime Profits Tax Bill sufficiently early to-day, the discussion of the Estimates will be the next business. What the order of business will be for next week will depend on the progress made to-day, but it is the intention of the Government to pass the Estimates before Parliament rises.
-I ask the Minister for Price-fixing if any- definite decision has yet been come to regarding the fixing of prices for small fruits?
– Yes. I have not got with me an exact statement, but it has been arranged that the jam manufacturers shall purchase and pulp, on behalf of the Government, any surplus of small fruits of certain kinds in any part of Australia. This will be done under a definite agreement, which, of course, will operate only in the event of there being a” surplus.
– I ask the Acting Prime Minister if the embargo on the exportation of certain goods from Great Britain has been removed, and whether priority is still given to certain other goods. I desire more particularly to know whether the embargo exists in regard to articles with which Australia cannot supply herself?
– Some embargo is still enforced by British authority, and if my honorable friend will give notice of the question, I shall ascertain the exact circumstances.
asked the Acting Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Acting Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Acting Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow : -
The Government decided -
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and replies will be furnished as early as possible.
asked the Minister for Works and Railways, upon notice -
Will he take steps to define the position of certain members of the Professional Officers Association in his Department under the direction of the Director of Naval Works, so that those officers will come under the award recently gazetted covering officers in the Department of Works and Railways?
– There are other professional officers in the Commonwealth Service besides those in the Naval Works Branch who are concerned in the terms of the recent award of the Arbitration Court being extended to them, so the question is not one for the Works and Railways Department only. The whole matter will be considered.
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 -
– I am not in a position to answer the honorable member’s questions straightway. If the honorable member can give me more specific particulars-as to the branch at Head-quarters to which he refers - it will facilitate the inquiries which I will institute in the matter.
asked the PostmasterGeneral, upon notice -
– Inquiries are being made, and replies will be furnished as early as possible.
asked the Acting Prime Minister, upon notice -
– The information desired by the honorable member will take some considerable time to compile, as much of it will have to be obtained from the States.
asked the acting Minister for the Navy, upon notice -
Will the Minister look into regulation 89 of Navy Orders 1915, in which seniority is granted to men of the Royal Navy joining the Australian Navy over the heads of Australians who have spent years in the R.A.N., with a view of giving Australian-trained men the precedence they should be entitled to if they have the necessary qualifications ?
– I shall be pleased to look into the matter.
– On the 21st November the honorable member for Maranoa (on behalf of the honorable member for Melbourne (Dr. Maloney))’ asked the Acting Prime Minister the following questions : -
I am now able to furnish the honorable member with the following information : -
– On the 27th November the honorable member for . Cook (Mr. J. H. Catts) asked a series of questions about the prosecution of milk companies in New South Wales. The following papers are supplied for the information of the honorable member : -
Chief Commonwealth Prices Commissioner.
Melbourne, 12th December, 1918. (Memorandum. )
The Hon. the Minister.
With reference to the request made by, Mr. J. H. Catts in the House of Representatives on the 27th November, 1918, that he be informed as to how many prosecutions have been recommended from the State of New South Wales since your occupancy of the office of Minister in Charge of Price Fixing, &c, I now forward copy of a statement which I have had prepared, setting out the information desired by Mr. Catts.
I may add that I am not aware of any instance where a case has been withdrawn by you except on my recommendation, other than certain cases In which you directed, on 28th May, 1918, that no action be taken pending the display of lists of fixed prices.
Chief Prices Commissioner.
Commonwealth of Australia.
Commonwealth Prices Commissioner, Victoria. (Minute Paper.)
Subject. - Replies to questions asked by Mr.
Catts re New South Wales prosecutions.
Question. - Why were prosecutions undertaken against the big milk companies in Sydney and withdrawn ?
Answer. - Prosecutions against three milk companies in New South Wales were withdrawn on the recommendation of the Chief Prices Commissioner, of whose minute, dated 3rd September, 1918, the following is a copy: - “ In the matter of the prosecution of the New South Wales Fresh Food and Ice Company, Dairy Farmers Milk Company, Farmers and Dairymen’s Milk Company, representatives of the above have made the following statement of their case: -
The prosecution is in respect of a charge of id. per lb. made to certain vendors. They state this charge was made prior to 1914, and has been made continuously as a trade usage ever since; that it is really a charge for extra work done on behalf of the vendors. They further say that it was sanctioned by Order No. 72, Gazette No. 153, of 25th October, 1916. They admit there is a technical breach of the Order as now made.
It has been the practice of the Department to retain trade usages of that nature, and it is certain that, had it been known here that such was in existence, it would have been sanctioned. The parties concerned say, also, that they understood Mr. Ackerman admitted the charge was a fair and legitimate one.
The statement so far is ex parte, but on the facts as stated the Minister has, upon my recommendation, consented to the withdrawal of the prosecution on the understanding that if, upon subsequent^ investigation, the statement of the case is found to be incorrect, further proceedings will be instituted.
As a technical breach is admitted, in agreeing to the withdrawal, it must be on the undertaking that the expenses of the prosecution to date will be paid by the defendants.”
Question. - How many prosecutions have been recommended from the State of New South Wales since the Minister’s occupancy of the office?
Answer. - One hundred and thirty-nine.
Question. - How many have been instituted?
Answer. - Ninety-two prosecutions were approved of by the Minister and forwarded to the Crown Law Department, with instructions that proceedings be instituted. Of these - 46 cases were heard. Fines were inflicted in 44 cases, and 2 were dismissed. 37 cases were withdrawn after consultation with the Chief Prices Commissioner, pending the exhibition of lists of fixed prices. The Minister’s minutes, dated 20th May, 1918, and 29th May, 1918, are attached. 2 cases were withdrawn on the recommendation of the Chief Prices Commissioner owing to the technical nature of the offences and the discovery that the prices order required amendment. 3 cases against milk companies were withdrawn for the reasons set out in the answer to the first question. 2 cases were not proceeded with by the Crown Law Department, owing to lack or insufficiency of evidence. 2 cases have not yet been heard.
Thirty-nine cases were not recommended by the Chief Prices Commissioner, in view of the decision to withhold prosecutions pending the exhibition of lists of fixed prices.
Eight cases were not proceeded with by direction of the Chief Prices Commissioner, in view of satisfactory explanations having been given and no action deemed necessary.
Question. - In how many cases has the advice of his (the Minister’s) responsible officers been turned down?
Answer. - On no occasion has the Minister “ turned down “ the advice of his responsible officers.
The minute which Mr. Catts desires produced is attached.
Jas. T. Lennon. 13th December, 1918.
Board of Trade. (Memorandum.)
Melbourne, 18th May, 1918.
The Display of Public Notices in Retail Establishments of Fixed Prices.
Since taking control of price-fixing operations, I have been surprised at the very large number of prosecutions which it has been found necessary to institute against storekeepers for breaches of the price-fixing regulations. In most cases the amount actually involved on the individual purchase is of a most trifling character, and frequently amounts to no more than id. on the article, but, of course, representing in the aggregate a very considerable additional profit to the particular storekeeper involved. Steps have been taken in the past to notify the public as to the prices fixed from time to time for various commodities - firstly, by publication in the Gazette; secondly, by advertising in the press; and thirdly, by the issue of pamphlets containing a list of all the prices fixed. It has been found that none of these methods are really satisfactory, and they do not appear to have in any way prevented individual storekeepers overcharging in many items. The advertising in the press we found to be altogether too expensive, and, unless a practically continuous advertisement was arranged for, giving detailed price-lists, very little could be hoped for from this method.
I have given a good deal of thought and consideration to this subject, and it appears to me that there should be no objection to the compulsory display in each establishment selling goods, the prices which have been fixed, of a proclamation setting forth the fixed prices in bold characters. There are, however, difficulties in the way of this being done, the principle of which is that, whilst prices in the city areas are fixed at a certain definite figure for the most part, in the country districts the prices are conditioned by the cost of transportation, and it would be a very heavy task to ask the staff of the Price-Fixing Commission to work out a separate landed cost of goods throughout Australia. The other principal difficulty consists in many of the prices being fixed as a percentage over landed cost, the landed cost being a continually varying quantity. These difficulties, it seems to me, can be surmounted by issuing the notices with three columns. In the first column would be printed the fixed price in the capital city from which the supplies are ordinarily drawn. The other two columns would be printed in blank, and it could be laid down in the regulations making the display of these notices compulsory, that the storekeeper should fill in No. 2 column the cost of transportation, and in No. 3 column the cost of which, based upon the proclaimed price plus the cost of transportation, he would be permitted to sell the article.
In regard to the articles which are fixed on a percentage basis, the percentages could bo enumerated immediately after the name of the article in question, and in the same column. In column No. 1 the storekeeper would be compelled to insert his invoice price plus percentage allowed. This would apply equally to the country and the city. In the second column he would in the country insert his cost of transportation, and in the third column the price at which he would be permitted to sell.
I strongly recommend to the Board the adoption of this procedure, for the following reasons: -
I am practically certain that, at the present time, there is a very widespread evasion of the price-fixing regulations, and without an army of inspectors constantly moving throughout the country, it is practically impossible to enforce them. In the event of a compulsory exhibition of the prices in the shops being adopted, the people themselves would police the operations of the price-fixing regulations, and all that it would be necessary to do would be from time to time to check the placards in each store. I think that this could easily be arranged through the police force, who could take down, on forms supplied, the actual prices displayed, and forward same to the head office in each State to be checked. It seems to me that it would avoid a good deal of expenditure which otherwise it would be necessary to incur if there is to be anything like adequate supervision of the price- fixing operations.
I recommend that the Government bear the cost of these placards, and that the distribution be made to the post-offices, it being made compulsory for. each storekeeper to provide himself with a copy.
I attach hereto specimen notice which it would be necessary for the storekeeper to exhibit.
This notice must be exhibited in a conspicuous place where the goods it related to are ordinarily bought. Any breach of the proclaimed prices should be reported to the Chief Prices Commissioner for the State.
Commonwealth of Australia.
Department of Trade and Customs. (Minute Paper.)
Writer. - Assistant Minister in Charge of Price Fixing.
Subject. - Display by retailers of notices re fixed prices.
The within proposals were approved by the Board of Trade at its meeting on 20th May, 1918, with the proviso that the notice should be exhibited in the front window of the shop against the glass, and that another copy should, be exhibited conspicuously on the purchasing counter.
President Board of Trade. 24th May, 1918.
The Assistant Minister in Charge of Price Fixing, 27th May, 1918.
Cabinet has also approved of these proposals, and I wish this matter to be pushed on with all possible expedition.
Chief Prices Commissioner, 29th May, 1918.
Commonwealth Prices Board.
Constituted under the War Precautions Act 1914-16.
Phillip-street, Sydney, 22nd May, 1918.
Dear Sir, - Inspector Lawler reports that E. E. Gibbs, 32 Neville-street, Marrickville, milk vendor, was selling country milk at 6d. per quart at the time the fixed price was 5½d. per quart.
He also reports that William Duncan Reid, of 58 Adelaide-street, Woollahra, was offering for sale butter at ls. 6id. per lb., the fixed price for that kind of butter being ls. 6d., and 9½d. for a tin of gold medal condensed milk, the fixed price being 9d.
I recommend prosecutions in these cases.
The Hon. Minister in Charge of Price Fixing.
Forwarded for favour of approval, with a view to prosecutions.
Chief Prices Commissioner. 25th May, 1918.
No action to be taken pending display of notices of fixed prices.
28th May, 1918.
In Committee (Consideration resumed from 11th December, vide page 9108) :
Clause 1 agreed to.
Clause 2 -
Section 4 of the principal Act is amended by inserting after the definition of “Co-operative company” the following definitions: - “‘Established business’ means a business other than a new business. “ ‘ New business ‘ means a business which, in the opinion of the Commissioner, was not commenced until on or after the 4th day of August, 1913, and was not reasonably established until on or after the 4th day of August, 1914.”
– I have circulated three amendments dealing with co-operative societies, and this is a convenient occasion for explaining their intention. As I stated in my speech on the second reading, the Government wishes to exempt from taxation the profits made by co-operative companies in trading with their own members. Certain exemptions were given to co-operative companies by the original Act, but they are not deemed wide enough because it has been found by experience that certain supplying organizations, which are not in any sense profiteering concerns, might be levied on. The object of these three amendments - and two of them are very technical - is to exempt the profits of co-operative societies arising out of business done with their own members. We do catch, as the amendments are framed, a certain portion of the profits of these organizations, which are not fully co-operative. Honorable members are aware of quite a number of such organizations in the different States. To the extent that they do ordinary trading business with nonmembers, they will still be liable, under the arrangement suggested, to pay taxation on the excess profit, if an excess profit is visible, in their returns. As the first technical step towards carrying out this object, I move -
That the word “ Co-operative “ be left out.
– I wish to be clear in regard to this matter. Are we to understand that the proposed omission of the word “ co-operative “ is preliminary to a further amendment of theprincipal Act other than is provided for in the Bill itself, or is it merely to make it clearer that the intention of the Government is that all sales by a cooperative society to its members shall be free of this tax?
– That is so.
– While purchases made by non-members will be subject to the tax?
– The amendment makes clearer, on a revision of the draft, our intention, as announced by me, not to tax the profits of these societies arising out of the purchases of members.
– Co-operative dairying companies have ‘ been started in all the States, and originally shares were taken up, not only by suppliers of cream and milk, but in many cases by storekeepers and others who wished these concerns to be successfully established in their midst. Dairymen who subsequently came into these districts were unable to. obtain shares, since they had already been taken up; but as suppliers of milk or’ cream to a co-operative butter factory in which they do not hold shares, they receive encouragement in the shape of a bonus. Are we to understand that those who receive bonuses from a cooperative society in which they are not shareholders will be taxed in respect of those bonuses?
– There are a number of co-operative societies paying bonuses to customers who are not shareholders. Eor instance, the Lithgow Co-operative Society has quite a number of customers who are not shareholders, and during the last four years a bonus of ls. 3d. in the £1 has been paid to these people. If that society, amongst others, is called upon to pay this tax in respect of the bonuses it will be hit for a considerable amount. Further than that, both shareholders and non-shareholders would thus be doubly taxed since they would have to pay this tax as well as the Federal income tax. I should like to know what is the actual position in regard to such a society.
.- Those who appreciate the great work being done by co-operative societies of farmers and dairymen will applaud the Treasurer’s proposal to exempt cooperative companies in which not less than two-thirds of the shares are held by members who are bona fide primary producers or suppliers to the company. That, however, will not meet the case of co-operative societies such as those mentioned by the honorable member for’ Macquarie (Mr. Nicholls ). - societies consisting of a number of people who have banded together for the distribution of groceries and other goods at the lowest possible cost. Such societies, founded upon the example of the Rochdale Stores, in the Old Country, in many cases have been a great success. The co-operative societies in Sydney, Brisbane, and Rockhampton, however, have not been so successful, owing to the high cost of distributing goods amongst shareholders living in the outside suburbs. Where a number of persons band together in this way to distribute goods as cheaply as possible amongst themselves, I suggest that they should be exempt from the operation of the Act.
– The Bill as originally introduced does that, and the amendments we are now proposing will make our intention more specific and definite.
– That is the point that I desired to have cleared up.
Mr. WATT (Balaclava- Acting Prime Minister and Treasurer [11.26]. - I should, perhaps, have given a fuller explanation of these amendments, but I imagined that those honorable members who had special knowledge of the various classes of co-operative societies would be able from the amendments circulated to follow our intention. The position is that at present certain co-operative societies are absolutely exempt. In paragraph b of section 8 of the original Act we exempt -
The business of co-operative companies engaged, for the main part, in the manufacture, preparation or wholesale distribution of foodstuffs, the produce of Australia so far as regards the manufacture, preparation, or wholesale distribution of food-stuffs, the produce of Australia.
On representations being made to me by several honorable members that there were other- forms of co-operation that were likely to be hit by the Act, in producing this Bill, at the end of clause 7, I made a further exemption of certain classes of co-operative societies, and if the amendment be agreed to, the exemption will be so widened as to embrace those societies to which reference has been made by the honorable member for Capricornia (Mr. Higgs), the honorable member for Macquarie (Mr. Nicholls), and, I believe, the honorable member for Maribyrnong (Mr. Fenton). The exemption at the end of clause 7, to which I have just referred, reads -
In calculating the profits of a co-operative company or society there shall be deducted so much of the profits as is distributed or set aside for distribution as bonuses to its members.
That means that societies of the character referred to by the honorable member for Macquarie - supplying societies, and not butter and bacon factories, which are already dealt with in the original Act - will be exempt from the tax so far as the business of legitimate co-operation is concerned.
– The amendment does not affect the position of primary producing co-operative societies under the original Act?
Mr.WATT.- No ; it preserves to them the exemption they enjoy under the original Act.
– In some cases the exemption is widened so far as they are concerned.
– The amendment may help certain classes of these societies to secure a wider benefit than before. Cooperative businesses for the manufacture and distribution of primary products will stand precisely as before, but the exemption will now be so widened as to apply to other forms of co-operative societies. I think, therefore, that the amendment will be regarded as conferring a benefit and protection which these organizations are justly entitled to claim. As to the honorable member for Maribyrnong’s inquiry, I presume the honorable member has in his mind cheese, butter, and bacon factories, and organizations of the kind.
– Under the original Act if two-thirds of the suppliers are shareholders there is complete exemption, and that exemption is not taken away. Organizations which comply with that condition stand exactly under the Bill as under the parent Act.
Amendment agreed to.
– There are a number of amendments of a highly technical character to effect the purpose to which I have referred. I move -
That there be added at the end of the clause the words, “ and by omitting the definition of “ Cooperative Company ‘ “.
The object of the amendment is to move the definition from one part of the Act to another in order to make it clearer.
.- I desire to draw the attention of the Treasurer to the definition of a “ new business,” and it seems to me that it is not quite wide enough. I suggest that he ought to omit the words “ was not commenced until on of after the 4th August, 1913, and,” so as to leave the date of the “ reasonable establishment” of a business the 4th August, 1914. This would meet the case of a company that had not had time in the twelve months to become established.
Twelve months is a very short time to allow.
– This definition of “ new business “ is very embarrassing, drawing an arbitrary line as it does. Possibly some date must be fixed, and more or less arbitrarily; but it is somewhat unfair when speaking of a new business to take twelve months before the commencement of the war. Very frequently a new business requires up to six years before it is put on a payable basis. It would be much fairer to go back three years, seeing that “ pre-war standard,” “pre-war capital,” and so forth, all have reference to a period of three years before the war, and that, in my opinion, is not an unreasonable period to adopt in this connexion with new businesses. I admit the difficulty of the Treasurer, and that some interpretation must be given in order to give new businesses the benefit of the terms of the Act. But while a certain amount of relief is obtained, twelve months before the war is not sufficiently long, and I suggest three years.
– I should like to explain some of the difficulties which are not easily settled in connexion with this matter. A date must be. inserted as the honorable member for Kooyong (Sir Robert Best) suggests, because we are dealing with points of time, with “new” or “established businesses,” the terms used in the Act. The question, therefore, to be determined by the Taxing Office and the Government, in giving relief to new businesses, was how to describe a “new business.” The original desire of myself was to date a new business from the outbreak of the war, seeing that it had no pre-war test at all. At the same time, I was acquainted with businesses, and representations were made to me in respect to a large number of others, which had just been set going before the war; and it, therefore, became necessary to find a date. It is, of course, a matter of opinion whether this arbitrary date is a wise or fair one.
– Your protection is the words “ was not reasonably established until,” and so on.
Mr.WATT- But the honorable member suggested that it takes four years or more to “ reasonably establish a business,” and that is the difficulty. I. must think of the administration of the measure, and place no difficulty in the way of the collecting and assessing authority. It is,- as I say, a matter of opinion whether the provision is unduly liberal or unduly restrictive. I think it would be unwise to make the period three years, but I am prepared to meet honorable members by making the year 1912. To that end I desire, first, to withdraw the amendment I have just moved.
Amendment, by leave, withdrawn.
Amendments (by Mr. Watt) agreed to-
That the word “ thirteen “ be left out with a view to insert in lieu thereof the word “twelve”; and that there be added at the end of the clause the words, “ and by omitting the definition of ‘ Co-operative Company ‘
Clause, as amended, agreed to.
Clause 3 -
Section 8 of the principal Act is amended-
by inserting in sub-section (1) after paragraph (g) the following paragraphs : - “ and (h) shipbuilding so far as’ regards contracts made with the Commonwealth Government since the 4th day of August, 1914, and before the declaration of peace; and “ (i) such mining businesses or such classes of mining businesses (not including any coal mining business) as are specified by proclamation, as from the date, to the extent and on the conditions, set forth in the proclamation; and”; and
by omitting all the words in that subsection after paragraph (g) thereof and inserting in their stead the following new paragraph : - “(j) any agency (not being an agency carried on by any person who carries on any other business) the profits of which arise exclusively . from commissions in respect of purchases or sales made on behalf of any other person, and in which little or no capital expenditure is required, including commercial travellers and agents whose remuneration consists wholly of a fixed and definite sum not dependent on the amount of business done or any other contingency.”
.- I move -
That the following new paragraph be inserted before paragraph (a) : - “(aa) by inserting in paragraph (b) of sub-section 1, after the words poultry raising the following words: - ‘the raising and sale by the breeder of stud stock bred by him
This clause deals with the exemption of certain businesses from the operation of the Act, and amongst these, according to the principal Act, are agriculture, fruitgrowing, the maintenance of dairy herds for the supply of dairy products, and pig and poultry raising. I do ‘not think I need dwell on the reasons for this proposed amendment. Any honorable member with a knowledge of country pursuits must know that the path of a stud breeder of cattle, sheep, and pigs is rather an unequal one. Sometimes, by the exercise of much skill, he gets a good stud ram, and for a time he has a rush and may in one year make a fair sum. The following year, however, somebody may beat him at the show, or some other circumstance may arise which prevents him from making anything at all. I am sure it is the desire of every one in the chamber to foster the breeding of good stock, and, as I have said, under the Act the breeders of stud pigs and dairy cattle are already exempt. There is no reason, therefore, why the raising of stud stock, or beef cattle, or sheep should not also be exempt.
– Except that the pastoralists stud cattle undoubtedly come within the Act, and the animal culture to which the honorable member refers is more frequently associated with agriculture. The amendment will include these agriculturists in a section of pastoralists.
– A stock breeder cannot be called a pastoralist, for he usually starts on two or three acres.
– Some of them do an immense business.
– Perhaps, after being established for a number of years. Sometimes twelve to twenty years pass before they get any recompense for what they have expended and the time they have put into the business. With some stock breeders their business becomes a hobby, and I am sure the Treasurer will acknowledge that it is not to the advantage of Australia to restrict these men in any way.
– What would you do with the man “who sold a £4,000 ram the other day?
– I would give him a gold medal for raising a ram’ of that value. I ask the Treasurer to accept the amendment as a reasonable one from every point of view.
.- I should like to add a word in support of the amendment, which, if accepted, will do much good to producing interests. As already pointed out, the majority of people who cultivate stud stock begin in a very small way. I know one gentleman in Victoria who was occupied for years in getting his cattle of good strain together, and yet he has no pre-war standard of profits, because, up to that time, he had really been working at a loss. There are many others in the same position, and if now, when their ventures have become remunerative, they are called upon to give 75 per cent, of their profits in taxation, they will, of course, stop operations. It is necessary in a country like Australia that the very best stock should be used. Australia is a great country for sheep and cattle, and it is absolutely necessary that the best strains possible should be cultivated, otherwise we shall lose our premier position in this regard. It must be observed that the amendment refers only to cases where the stud stock is sold by the breeder; any dealers who take part in the business will, of course, be liable to the tax. Although there are a great many people affected by the amendment the revenue involved would not benefit the Treasury to any extent; whereas if this class of breeder is not exempt considerable ‘harm may be done to stock.
– It must not be supposed that I am in any way unsympathetic with the men who are raising stud stock. I fully recognise that the breed of stock in this country must be kept up, and that the industry of the stock breeder is of the greatest possible importance as the basic one of the primary industries. But I am assured by the taxation authorities that there will be trouble if an amendment of this kind is accepted by the Committee. First of all, I may say that the small man working up a little stud-stock business will not be touched by the Bill as it stands, because he will not come within the scope of the Act unless he earns over £1,000 per year. The difficulty is that if we were to exempt this branch of the pastoral industry - it is just as much a branch of the pastoral industry as is fattening and selling - some large breeders of stock or holders of studs would benefit whom I do not feel inclined to exempt.
– They would only be exempt to the extent of their stud stock. Most pastoralists make their money out of wool and other things.
– The honorable member for Hume. (Mr. Falkiner), if he were here, could tell, perhaps, better than any one else, what profits are made through breeding stud stock. I think, without doing the honorable member an injustice, I am safe in saying that where one holding is used by his widespread firm purely for pastoral purposes, another of exactly the same class is used exclusively for stud purposes.
– I do not think that he would apply for exemption.
– I do not think that he would, but, still, there are in Australia many big stud-stock breeders carrying on no other branch of the pastoralists business who are making big profits, and I do not think that they should ask for exemption. Another class mixes the business of raising stud stock with that of fattening and selling. The man who is carrying on a mixed business and has a fairly good stud may occasionally put his rams or his ewes into his own flocks. How are we to draw the line between the stud section and the grazing section of such a business ? If a man comes down to the sheep sales with a few first-class rams and sells them for a few hundred pounds each, or for any amount up to £1,000 each, those profits can be traced and possibly exempted, though, it would be difficult to do it with accuracy; but . if, instead of doing this, he sent some of his stud stock into his own flocks it would be an almost impossible task to identify and tax the different classes of receipts. In the circumstances, I ask the honorable member not to press his amendment at this stage, because I want to see whether, on a very careful review of the position, the taxation officers can suggest a remedy which will relieve the men whom we do not desire to tax without opening too widely the door for the exemption of the other class who do not deserve to escape the taxation, because in recent years the profits of graziers generally have been very substantial, and even in some cases ascendingly substantial.
.- I cannot quite agree with the Acting Prime Minister that the acceptance of the Bill will not injure small men. Any one who understands the pastoral business knows that the big men were making large profits before the war, so that their position will not be affected. The very fact that they were making big profits before the war will enable them to escape this taxation.
Mr.Watt. - The price of wool and meat has helped them.
– It is not the wool on the backs of stud sheep that represents the breeders’ profit. One breeder recently sold a ram for £3,000. The wool on its back weighed 30 lbs., and, as ram’s wool is inclined to be a little bit coarse, it was probably not worth more than ls. to ls. 6d. per lb., so that the value of the fleece of this £3,000 ram would not be more than 30s. to 43s. Thus, a 50 per cent, increase in the price of wool would have very little effect upon the profits of a stud stock-raiser. The real value of the efforts of a stud stockraiser come when other pastoralists take advantage of them and purchase stock from him. The stud-breeders have done more to bring about Australia’s prosperity than have any other set of men in the Commonwealth. They are a class who should be encouraged, particularly the small men among them. The big man who has been making profits before the war will not be affected by this tax, but it will hit the small man who happens to make a profit of £1,500 in one of the war years, £500 of which may be excess profit. He has to maintain his position by purchases from other breeders, and if the Taxation Commissioner takes away practically the whole of his money he will be considerably hindered in his operations. I was talking to one gentleman the other day, who informed me that whereas the average return from his father’s flock some years ago was about 5 lbs. of wool per sheep, this had now increased to 10¼ lbs. of wool per sheep. If the stud stock-breeders of . Australia can bring about that result, it means all-round prosperity to the community. Therefore, I hope that the Acting Prime Minister will give sympathetic consideration to the amendment.
.- The Acting Prime Minister has given a very satisfactory assurance to the mover of the amendment. There are hard cases in connexion with all taxation, and I am afraid that we cannot amend the clause in the direction desired without including the big grazier spoken of by the Acting Prime Minister, who, in addition to having a pastoral holding for trading purposes, also has one for breeding purposes. Such a man should pay the tax if he is making a lot of money. However, the case cited by the honorable member for Wilmot (Mr. Atkinson) is quite a different matter. He speaks of a cattlebreeder who, prior to the war, had made no profits worth speaking of, but had simply been getting his stud in order, and has now arrived at a stage when he can look for some return. As the Acting Prime Minister has said, this man is entitled to an exemption of £1,000, and an income of £1,000 is . a very fair one, but he may have been in financial difficulties in the pre-war years, and he may have had to make arrangements for liquidating his liabilities out of his present profits’. In such a case, some concession might reasonably be made. If we insist on collecting war profits from the poorer class of cattle or sheep breeder, the result may be that he may not sell his stock until after the Act expires, seeing that it has only a few months to run after the war. It is to tie advantage of the country if stock can be successfully raised, and we should assist a man who is a small breeder to put his stock into use. The greater the production of a country the better it must be for the nation. I would not support any proposition to exempt the big man who is making large sums of money by breeding stock, but there* are exceptions; there are many men in a small way of business who have not done too well prior to the enactment of this, taxation, and it would be better to draft an amendment to meet their case. In the meantime, I urge the mover of the amendment to accept the suggestion made by the Acting Prime Minister.
– Would the Acting Prime Minister make a statement with reference to the position of tin producers?
– Yes, at a later stage.
.- I would point out to the honorable member for Hunter (Mr. Charlton) that the tax is retrospective, and that no man would hold his stud sheep in the circumstances he has just suggested.
– It could be done in the case of a man who is this year, for the first time, in a position to make profits.
– That is so. A gentleman who took the prize for English Leicester sheep in Victoria last year lost two of his best animals when he waa bringing them to Melbourne on the occasion of the last show. He suffered a great loss on the year’s operations through that mishap. However, I accept the assurance of the Prime Minister that he will consult with his officers and endeavour to meet the cases I have mentioned, and ask leave to withdraw my amendment.
Amendment, by leave, withdrawn.
– Paragraph (i) introduces a dangerous and vicious principle, inasmuch as it gives the Governor-General in Council or the Minister for the time being power to exempt any company from taxation. That is a power of discrimination beyond the control of Parliament. It may, and undoubtedly would, in the hands of the present Government be honestly and fairly exercised. But there is a danger that undue political influence might be brought to bear. This paragraph opens the door for the introduction of political influence to secure the exemption of some mining concerns from taxation. I urge the Treasurer to either strike out that paragraph or to propose some modifications or safeguards. If it were prescribed that this exemption should only be given by regulation which would have to be laid upon the table of the House, and be more or less subject to parliamentary negotiation, that would be some, although not sufficient, protection. I think this power ought to be surrounded by direct safeguards and that the Parliament should have the right to say whether any proposed exemption was proper.
– The remarks of the honorable member for Kooyong carried my memory back to the days of my legislative childhood, when he was a leading and. influential member of the old State Parliament, and I recollect using, from the Ministerial corner, arguments very similar to those which the honorable gentleman has just addressed to me. I was opposed, at that time, to legislation by the Governor in Council, and I think that I have explained on more than one measure this session that I thoroughly believe in the views expressed’ by the honorable member for Kooyong. If we have a democratic form of government we ought, as far as possible, to give it a democratic spirit. Regarding the application of that spirit to the Bill for the extension of the War Precautions Act, I have had to cross swords with honorable members opposite more often than I liked, because I am of opinion that, abnormal times frequently compel the Government to adopt abnormal measures. But I wish to see the abnormality disappear as fast as possible. <The idea of inserting paragraph (i) in this clause was not to give power of political patronage to the Minister administering “ the Act, although that may be it9 effect. The paragraph was primarily designed to help the tin-mining industry. Representations have come from Tasmania and other States, that the tin industry should be given total exemption.
– Could not that ex*emption be inserted in the Bill?
– If the Committee desires to give total exemption to the tin-mining industry, that can be done explicitly, in the same way as it has been done already in the case of the gold-mining industry, but I do not think that such a provision would be quite fair or elastic enough to meet some of the cases that may arise. When the principal Act was before the House., mining for tungsten metals, at the suggestion of the honorable member for Wentworth (Mr. Kelly) was wholly exempted if the business had been commenced after a certain time, and if the total produce had been sold for munition purposes to the British or Allied authorities. I think we should certainly condition any exemption of metals that are and may be munitions of war, by some such condition. If the Committee prefers that the Bill should specify definitely to what metals and under what conditions’ exemption should be given, 1 shall try to frame a clause to that effect, but I am afraid that it will be a clumsy attempt, and that we may include interests which should be excluded, and vice versa.
I would remind the Committee that political influence can have no real effect in connexion with this taxation. The land tax is administered by the Commissioner, subject to the control of the Minister, but in income tax administration the Minister plays no part. Of course-, before a proclamation can issue a Minister must operate it through the Executive Council, but it cannot be suggested that a Minister would, without having received proper representations from the Taxation Commissioner, submit any Executive minute that would confer exemption. In other words, if the Legislature is prepared to say that it is dangerous to .allow the Governor-General in Council to do so much with taxation as the clause proposes, it must be prepared to place trust in the Commissioner with the independent status which Parliament has conferred upon him. The Commissioner has to report in a regular way what has been done. He has responsibilities which are non-political and nonpersonal, and the Act throughout gives him much discretion, showing that Parliament trusts the Commissioner in the exercise of his powers. However, we have to make a choice of two open roads. I think I can draft an amendment which will hedge and condition this power with some safeguards, but I may make the mistake of leaving the door not sufficiently ajar, and not giving that due exemption to mining interests which it may be desirable to give.
– We could provide that the regulations should be laid on the table within seven days. -
– That could be done, or we could provide that the exemptions should apply to only specified metals. T think that such a limitation would be too rigid. However, I am prepared to meet the wishes of the Committee, provided we are able to give enough elasticity to the clause to permit us to give assistance to the tin-mining industry which especially has felt the strain and duress of war. Although the price of tin has been high, and the industry has been stimulated by that fact, the threat of the tax gatherer lurking round the corner in readiness to take 15s.” of every £1 of profit made after incurring all the risks attendant upon mining, has deterred the opening up of new shows.
– Would the revenue suffer seriously if mining generally wereexempted ?
– I am not prepared to dothat. A general exemption would extend to the Broken Hill and Mr Lyell Companies. We must take care not to conferon wealthy men in the enjoyment of lucrative properties an immunity that is not conferred upon the more struggling classes of the community.
.Paragraph i seems to have been designed for the particular benefit of tin-mining, but I think it would be unwise to leave the clause in such a form that some particular companies might be exempted, whilst others were required to pay the tax.
– That is the object of paragraph i.
– It is a dangerous power to place in the hands of any Government, and it is one that I should not like to be saddled with if X were a Minister. I should not care to be placed in the position of saying that one man should be taxed, and the other man should be exempt.
– What is the proposed basis of immunity for a company ]
– There is no proposed basis. Absolute discretion is left to the man administering the Act, or to the GovernorGeneral in Council. I think this will be placing the Executive in an awkward position in having to determine between various interests. It would be much better, in the interests of the community generally, if the Treasurer would consent to provide that tin-mining, which is the industry he has particularly in mind, shall be wholly exempt. That would make the administration of the law much easier for the Government.
.- The constituency I represent is interested in this matter, and a number of very clear cases have been submitted to me which show the effect which even the proposal to impose taxation has had in preventing the development of tin mines, and investment in new propositions. At this time particularly the country does not desire that taxation should interfere with development. Only by tremendously increased production can the Commonwealth be placed on a sound financial footing. Not only does the taxation prevent investors from putting their money into new propositions, but in some cases it has prevented the carrying on of existing mines. Some small companies and syndicates have worked their properties for a number of years, and received practically no return for their money. After doing a great deal of dead work, and installing expensive plant, they were eventually able to open up payable ore. In spite of the fact that they have put up a plant which would enable them to treat five times as much as they could previously treat, they are not using it fully, because they know that if they did the tax-gatherer would take from them the profits which would be the result of twenty years of outgoings. Naturally they say, “ We shall wait until the war is over, and then we shall be recouped for our losses over the past twenty years.”
I know of another case which is similar. You cannot compel mines to be worked under these circumstances, and it is not fair that their profits should be taxed. The case could be met by exempting tin mining entirely from the operation of the Act.
– If that were done, oldestablished and successful mines like the Mount Bischoff mine would be exempted.
– It would, “of course, be wrong to exempt rich companies. Perhaps, on the whole, it would be best to agree to the Government’s proposal. Some honorable members of late have made a good deal of the regulations under the War Precautions Act, tut usually we hear very little about regulations. Certainly it is very rarely that a regulation is disallowed by Parliament.
– What chance has Parliament to consider them ?
– Not much. I am. prepared to trust a well-proved officer.
– A member can always move the adjournment of the House to call attention to any grievance under a regulation.
– That is a method of drawing attention to and ending grievances. A regulation might meet the circumstances which I have outlined, but, on the whole, I favour the Government’s proposition.
Lt.-Colonel ABBOTT (New England) [12.21]. - I ask the Acting Prime Minister (Mr. Watt) whether it is proposed to exempt all tin propositions?
– I said, in introducing the Bill, that it is proposed to exempt new tin shows.
.- Some of the old tin shows which have been working for a considerable time at a loss and now, by reason of their enterprise and energy and not by reason of the war, after doing a lot of dead work, are making a profit, should also be exempted.
– The war has increased the prices of tin.
– Yes, but the profits made by the companies to which I refer are not profits due to the war. Let me give a concrete case. If the Acting Prime Minister wishes to “know the name of the company to which I am about to allude I will give it to him privately. A tin dredging proposition in my electorate which was employing a considerable number of men when the price of tin was low has struggled on until the present time, and is now making a profit. On the 31st May, 1915, its losses were £467 19d. 6d. ; on the 31st May, 1916, its profits were £1,052 10s. 4d., but in that year it was compelled to make calls to the extent of £2,250, which is £1,200 over and above the profit for the year; and in 1917 its profits were £821 17s. lid. The company has several dredges. During the three years that I have mentioned it was working through dead and practically unpayable ground in the effort to shift its dredges to another paddock, where they knew that payable tin could be obtained. These dredges could not be dismantled. The employees of the company number some hundreds. By working practically at a loss for some time, and contributing freely to calls, the company was enabled this year to show a profit of £9,528 16s. 3d. Should the Bill pass as it stands, the company will be taxed on that profit without . being given a set-off in its losses during the lean years.
– Was the company operating prior to 1915 ?
Lt. -Colonel ABBOTT.- It has been operating in the New England district for twelve or fifteen years. When it has worked out one paddock, it has shifted its dredges to others, and has removed some dredges to places 40 or 50 miles away from where they were first employed, in order to exploit old alluvial tin workings. Should the Bill be passed as it stands, the company will have to pay to the taxing officer practically the whole of the £9,528, which is this year’s profit. If its profits are to be taken from it this year and next, the company will be wiped out, and the men employed by it will have to seek other occupations. Why cannot the profits for the war years be averaged 1
– What is the capital of the company ? Will the 10 per cent, pre-war allowance give it any relief ?
.- The capital of the company is less than £10,000.
– Then there are the wasted assets. They would come into the calculation. I think that the Bill pro vides a sufficiently elastic mode of treatment to enable cases, or classes of cases, like this to be dealt with.
– You said that those provisions applied to new businesses only.
.- The company about which I am speaking is an old business. Although in 1916 it made a profit of £1,062, it also called up £2,250, or £1,200 over and above its profit for the year. At the present time no industry in Australia requires more careful handling than the tin-mining industry. When a man puts his money into a business or a farm, he sees a good chance of making a profit out of his investment, but those who invest money in mining concerns often pay heavily for developmental work, merely with the hope of securing a quite problematic reward. The Government says that it wishes to encourage the production of base metals; but when investors put their hands into their pockets to pay for prospecting and developing, they are told that if their speculation is successful, and if, as the result of spending £5,000 or £10,000 during two or three years, they ultimately make a profit, the taxing master will take a great part of the .profit with the war-time profits tax. The ultimate result in some cases would be that where there are three shifts being worked, only one will be worked in the future, the company preferring to wait for a more favorable opportunity to win the metal. This measure may thus become the means of closing down a number of mines and the sacking of a number of men who have been “ following mining for many years. New businesses are to be exempted from the war-time profits tax, but it will be very hard on old-established concerns that have carried a heavy burden for years, and have kept their employees together when their returns were little or none at all, if the Government takes from them practically the whole of any reward that may ultimately come to them as the result of their courage and energy. I ask the Acting Prime Minister not to leave it to the discretionary power of a taxing officer to provide for exemptions by , pro.clamations. We know all about the circumstances of these companies, and why should we not provide for their straightout exemption ?
– Every argument that the honorable member has used applies to a number of mining concerns that, do not deserve the same consideration.
– I desire to support the protest made by the honorable member for New England (Lt..Colonel Abbott) in regard to, not only tin, but other metals. I have had eight or nine years’ experience as a working miner, and look to new developments of all forms of mining to assist us in getting out of the rut in which we have been placed by the war. I would mention the case of a mine in the Cobar district, which has had a very long and chequered career. Scores of deserving business, professional, and other men had so much faith in the enterprise that they invested almost the whole of their savings in it; but it was not until the war began, and a short line of railway was constructed, that the mine became a payable one. It is now a very profitable enterprise, but the shareholders had already expended over £80,000 in the dead work of development before they secured any return. It seems very hard that these men, who stood by the mine for years, should now be told that ls. 6d. out of every 2s. of profit made by the mine is to be taken over by the Government.
– That is not the position, under the Act, in regard to any proposition. The tax is ls. 6d. out of every 2s. of the excess profit, if any, made.
– “ Excess profit “ means the profit over and above what the company made before the war.
– Or in excess of 10 per cent, on their capital, whichever is the larger.
– That does not protect this company, which has now become a very big producer, and has undoubtedly made very large profits. The shareholders waited a very long time for any return on their capital, and surely we ought to be able to frame an amendment differentiating between companies that have been securing a profitable return for years, and ventures of this kind which are of a pioneering character.
Lt.-Colonel ABBOTT (New England) [12.35]. - I wish to ascertain what will be the exact position in the event of our not urging that the tin-mining industry be wholly exempt from the Act. Are we to understand that cases of the kind quoted by me would receive very favorable consideration at the hands of the Commissioner 1 I do not suggest that the Government are going to specially exempt the particular company to which I referred. There are big companies which the Government think should come under this Act, but there are others which deserve consideration, and which should come under the exemption proclamation.
– Honorable members are now struggling through a phase of thought that occurred to me when first considering this proposition. I tackled the matter just as the honorable member for Kooyong (Sir Robert Best) has done, and tried to evolve some cleancut provision. I found, however, thatsuch a provision would be just in one case and unjust in the other, and that if the Legislature was prepared to trust the Commissioner in the ordinary sense, it would be far better to adopt this elastic form of provision, for the reason that, as the honorable member for Flinders (Mr. Bruce) said last night, the principal Act, like the War Precautions Act, has just about run its course. Whether we like it or not, we are looking back over at least two and a half years. There is not a feature of the Bill as brought down by me, whether it be the gift or the levy feature that is not retrospective. In that regard it is totally different from any other Bill we have introduced.
– We should take, it to the cemetery and bury it.
– It will be buried, and I hope the honorable member will be in office in due time to conduct the obsequies. He will then have a little more sympathy for the men who are at present enjoying the responsibility about which he is complaining.
– I have every sympathy with them.
– I can only say that the honorable member has a curious way of showing it.
There are in the Act to-day three kinds of special provisions with regard to mining companies, two of them being special, while the other is general. Under the general provision they have, together with all other enterprises, the pre-war test, or the 10 per cent, rate, whichever they elect to take. Then we have two special provisions for mining companies. We have the developmental provision under which a mining Board or management, if it makes a profit of £10,000, can set aside £5,000 for developmental work, and that amount is at once deducted in the assessment of the tax for the year. The Commissioner traces that £5,000 into the accounting period for the next year to see that it is used. If it is used, it disappears altogether, and is not taxed. If it is not used, it becomes taxable in that accounting period unless by the same process it is carried into the third year. We give, as far a3 it is possible to do so, an allowance for a wasting asset. The management is called upon to judge, if it can, the life of a given undertaking, and if a thing has a five years’ life, the amortization allowance, as in the Act, allows for it in that way.
The more honorable members study this question, unless they set out on a road different from that which the Government had to take in their investigation, the more convinced they will be that it is wise to allow this elastic provision to remain, even at the risk of having it regarded as too great a trust to place in the Commissioner or the Executive. Under such a provision the Commissioner is able to take into consideration not a given company proposition, but a given class of cases in any of the mining industries, and where he deems it desirable he can recommend the issue of a proclamation setting out the conditions that he regards as equitable for the assessment of enterprises such as the honorable member for New England has referred to.
– Were any of the Chambers of Mines consulted as to the method of giving this assistance?
– Speaking from memory I do not think they were consulted in a formal way, but I have had so many conversations with representative citizens who know the interests affected by this provision, that I think I can say that a large number of mining men have considered it.
– If the honorable member does give consideration to the suggestion made by the honorable member for New England, will he also consider the position of those working in the industry ?
– This measure does not tax wages. If it did, I should answer the honorable member’s inquiry in the affirmative. This is supposed to be a tax on capital, and occupations are specially exempted from the operation of the Act. The question which honorable members have to ask themselves is, whether they are prepared to take the road which gives us elasticity and the power to provide against hard cases, or the rigid road which the Legislature must adopt when it wishes to bind the Executive. This provision, I think, will meet the circumstances better than any other.
.- T. think we shall all agree that elasticity in a provision of this kind is to be desired. I desire to ask the Acting Prime Minister whether new mining enterprises, such as molybdenite mines, will be exempt under the regulations?
– No; molybdenite mines are exempt under the original Act.
– I am glad to have that assurance, since some companies are not working to their full extent because of the fear that they would be taxed to the extent of 75 per cent, of their excess profits.
– If they were established after 4th August, 1914, and their produce has been commandeered for the use of the Imperial Government - and molybdenite has been so commandeered - then they are all exempt.
– -The mine to which I refer has only been established within the last eighteen months, and I do not know that its product has been commandeered.
– All molybdenite has been commandeered.
.- In connexion with this clause it has been suggested that all base metals should be exempt. Such an exemption would mean an enormous loss to the Treasury. Big corporations, like the Broken Hill Proprietary and the Sulphide Corporation, would be exempt from the taxation of excess profits. The further suggestion was made that tin mining should be exempted. There is no difference between tin mining and lead or copper mining. All these metals are being produced in the several States by people who are experiencing the same sort of difficulties. If, however, some assistance is not given, many small mines which have not a fair pre-war standard of profits will have to close down, and many men will thus be thrown out of employment. We realize how unfair the present Act is. The Broken Hill Proprietary Company and other big organizations, for instance, had an enormous pre-war standard of profits, and if they keep their profits down to the pre-war standard they have not to pay even 6d. under this tax. On the other hand, mines that might have had a very small pre-war standard will be compelled to hand over to the Government 50 per cent, or 75 per cent, of their excess profits I think the Treasurer has endeavoured to realize the difficulties we are up against at the present time. When I was in Western Australia recently I was shown a wonderfully rich lead deposit about 80 miles north of Geraldton; and I honestly believe that if it were possible to attract capital to its development it would be the means of affording immediate employment to 400 or 500 men. We all know how different from all other businesses mining is, in that it is almost wholly speculative; so much so, that 95 per cent, or 97 per cent, of the companies formed turn out failures. There are very few prizes, hut so speculative is the business that people can always be found to put a few pounds into a mining venture. We desire to help, not only mines which were unprofitable prior to the war, but also new fields that are discovered. In the Geraldton case, if investors were satisfied they would get a fair deal from the Government, money would be forthcoming. We all know how copper, lead, tin, and other metals have increased in value; and no doubt money would be available for such a speculation. But it is realized that, there being no pre-war standard available to them, the only profit obtainable would be 10 per cent, on the capital, which, in mining, is insufficient to induce capital, owing to it being a wasting asset. I can only say that I should not like to be the Minister who has to administer this Bill, for, of course, it cannot be left to the Commissioner.
– The Commissioner may recommend, but the Minister alone can proclaim through the agency of the GovernorGeneral in Council.
– I do not suppose that the Treasurer would consider it advisable to issue a proclamation in reference to any particular mining venture?
– For some years I controlled what is known as the State battery system in Western Australia, and the difficulty was to give assistance to ventures that were not ordinarily profitable. The suggestion was often made that we should give special treatment to low-grade propositions ; but a. big low-grade proposition, with fair values, may be much more valuable than a small one of rich ore. The latter requires much more labour to extract the ore, while the larger one, as I say, may prove to be the more valuable mining venture. I can foresee a great number of difficulties in connexion with a clause like this, and the heart burnings and adverse comment that may result.
The Treasurer may remember that last year the tin miners of Tasmania put a proposition to him. They asked that, under the Act, the Government should declare the pre-war standard of value for tin, say, £200 peT ton, and give a special allowance on account of the increased cost of production caused by the war, and then fix the present standard of value, and they were prepared to pay war-time profits tax on the ^ difference between the pre-war value, plus the increased cost of production, and the present value. That struck me as a very fair proposition, only I think if the Government could accept the suggestion to fix the pre-war and present-war values, and then have power by proclamation or otherwise to permit the people who speculate in mining, if they have not paid back a certain proportion-
– That is to say, a certain proportion of the capital?
– Yes ; I do not say that they should pay the whole.
– That is the basic idea of the wasting asset provision.
– I think this clause requires further consideration, and would be glad if the Treasurer would postpone it until Monday.
– I was going to ask the House to give me the whole Bill before we rise to-day.
– If the Treasurer will not agree to considerable alterations I am prepared to accept the clause as a step in the right direction; and, as I have said, I should not like to have the duty of administering it.
. - By interjection, I asked the Acting Prime Minister (Mr. Watt) what was the special object of the proposal to exclude coal mining from other branches of mining. Is there any reason? There is a principle, or want of principle, underlying this Bill ; in my opinion, it is crude in the extreme, and it is very satisfactory to hear from the honorable gentleman that it is not intended to keep it in force for any length of time: A company - it may be one of the wealthiest in Australia - which has been paying enormous dividends for a great number of years; may just now embark in some other branch of an ultimately lucrative character. In such a case, the excess profits will be practically nil, and under the Bill such a company will escape taxation. If, however, we take the case of a company which has been delving along for many years, and simply keeping itself alive with heavy calls, we find that if, from any cause Whatever, it is now1 able to make profits, practically all the profits are taken by the Government. By no stretch of the imagination can this be called fair or scientific taxation.
– I have been looking for a scientific tax for years.
– Then_ I think that the honorable gentleman, in despair of finding a scientific tax, took the first ohe that came along. If the honorable gentleman will allow me to say so, he has my sympathy in having to “father” a great many proposals. The object of this Bill, when it was introduced, by the honorable member for Capricornia (Mr. Higgs), in his capacity as Treasurer, was to secure the public from undue profiteering during the war. That, I venture to say, was a legitimate and laudable object ; but the Bill, during its progress, or want of progress, through the House, was converted into a War-time Profits Bill, at the instance of the late lamented Lord ‘ Forrest, when he was Treasurer. Immediately, however, that gentleman, and, I believe, every honorable member, found that the grafting of one principle on to the_ other had resulted most unsatisfactorily and disastrously. The Act does not protect the public of Australia from the making of undue profits by traders as the actual result of the war; and it inflicts a serious injustice when it results in such instances as I have just presented.
– The Treasurer is meeting that difficulty with this amendment.
– That is true, but only to an extent. Can the Treasurer give any reason why coal mining should be exempt? We know that there aTe many owners of mines who have made large fortunes, while there are others that have been struggling along in this and other States.
– Is coal mining exempt ?
– Coal mining is liable under the original Act.
– The words in the Bill aTe - such mining businesses or such classes of mining businesses (not including any coal mining business) as are specified by proclamation…..
– Coal mining is taxable under the parent Act, and will still be taxable under the Bill.
– But the coal mining business is specially precluded from the exemption which is given to all the other mining companies.
– Not all the other mining companies. There are copper, silver ore, zinc, lead - it is safe to say the bulk of metal mining is liable to taxation. Gold mining is exempt. The honorable member will have to get the principal Act to see the meaning of what he has quoted. The position is that all mining is liable to taxation, except that for gold and certain other ores used in munitions.
– The fact is you have exempted coal from the exemption.
– That is so - to keep it within the taxable area.
– The Treasurer must realize the unfairness that may arise under this measure. The Broken Hill Proprietary Company is, I suppose, one of the biggest paying companies in Australia, and it has just started an important branch of iron manufacture. This, of course, every one welcomes; but. because the company expends its profits in establishing this new branch of business - a branch which, after the operation of this Bill expires, will be extremely remunerative - it is exempt.
– Is it? Look at the Newcastle balance-sheet of last year.
– But. the money they are putting into the new branch of their business will reduce to a very considerable extent the gross profits they are now making because of the war; and, to that extent, the company will be exempt from the operation of this Bill.
– If I were an irreligious man I would bet against that proposition.
– On the other hand, in the case of a company which has been struggling for years, and is only now beginning to be remunerative, the Government take 50 per cent, to 75 per cent._ of their, profit. It seems to me almost like confiscation.
– That is the usual argument against every tax.
– Those who are interested know that the operation, or threatened operation, of this Bill has prevented a great many businesses being established in Australia.
Sitting suspended from 1 to 2.30 p.m.
Amendment (by Mr. Watt) agreed to-
That at the end of the proposed new paragraphi, the word “ and “ be left out.
.- In framing regulations, will the Treasurer allow mining companies to set off a certain portion of the money actually expended on their properties before being called upon to pay war-time profits taxation?
– The matter is full of difficulties, and I do not wish to finalize it by giving an answer now, but I shall consider the point raised by the honorable member.
– I move-
That the words “ (not being an agency carried, on by any person who carries on any other business) “ be left out of the proposed new paragraphj.
If this amendment is carried, all agents will be exempted, not only those who carry on an agency work solely, but also those who carry on businesses in addition to their agency work. Of two firms, one earning £5,000 a year from agency work solely, and another earning £5,000 from agency work, and an additiontal £1,000 a year from some other business, the former will be totally exempted from war-time profits taxation, while the latter will be called upon to pay to the Treasury three-fourths of its income above an allowance for its pre-war standard. My contention is that if it be a wise principle to exempt agents, any firm that can reasonably show that portion of its income is derived solely from agency work in which it has no capital invested, should be exempted to the extent of that portion of its income. If the principle of exempting agents holds good in one case, it ought to hold good all through. If the one class of trader is not to be exempted, then the other class, doing exactly the same business, should, not be exempted. We should not create anomalies and unfairness between firms whose source of income is exactly the same. I ask the Treasurer to give the matter serious consideration, and apply a general exemption to all agents who can satisfy the Taxation Commissioner that portion of their income is earned from agency work in which they have no capital invested.
– Some stock and station agents whose businesses are amongst the largest in Australia derive a very large proportion of their earnings from commission work, and, as the stock they handle has doubled in value during these past few years, they have had a very big turnover during the period of the war. Will the clause exempt these big firms 1
.- I am under the impression that this clause will exempt jobbers, a type of people who are living on the necessities of the community. They find where there is a scarcity of any particular commodity, and as they are in a .position to get inside information they can use it to their own special advantage. Recently, I am informed, a commission firm, hearing that there was a possibility of permission being given to export honey, bought up large quantities of it in New South Wales at a low figure, and shipped it away. As a result, they made a large profit. I understand that many of these jobbers in Melbourne and Sydney have made large sums of money during the period of the war. If that is correct, I cannot understand what is actuating the Treasurer in asking that they should be exempted.
– The object of the clause is to eliminate from taxation agency businesses that are mainly “the result of personal exertion. The wartime profits tax is an impost on the proceeds of capital in excess of pre-war standards, but there is a class of agent who employs little or no capital in his business. His peculiar skill or knowledge of selling on commission enables him to earn a good income. It was represented to the Taxation Department that it was quite unfair to assume that a man who does not handle his own goods, but merely has an office and a very small staff, and practically no capital, should be put on the same basis as the man who buys and sells goods, particularly while we propose to exclude from the operation of the Act men who make incomes by personal exertion in any occupation or employment.
– Will not the big motor people come under that heading?
– I should say that they have a lot of capital invested in their businesses. This clause applies to the agent who has little or no capital invested in his business. The honorable member for Henty (Mr. Boyd) has said that the words included in brackets in the clause give inequitable treatment to the agent who carries on some other kind of business. There might be a good case put up for the honorable member’s amendment if we had no knowledge of the nature of the various businesses which are carried on. The very words to which the honorable member objects, and which he seeks to have omitted, were included for the purpose of catching the class of persons upon whom the honorable member for Wakefield (Mr. Richard Poster) placed his finger. In the stock and station life of Australia there are different classes of agents; there are some men in large centres of population who are doing very large businesses and controlling a vast amount of capital.
– They are having a pretty bad time at present.
– Some of them have had a very good time. But I do not wish to dwell on that matter. It is one which assessment alone can determine. I know one man who discounts all his own paper. He has one of the largest businesses in Victoria. He has a huge capital in it,’ and it is the capital as well as the experience and connexions of this person that has earned for him a very large income. Of course, it would be absurd to put him on the personal exertion basis and give him the advantage of the exemption from war-time profits taxation. The bulk of his earnings are the reward of capital. There are other cases. I would like to be able to mention the name of this firm, because it would draw honorable members’ attention to the class of cases I have in mind; but it would not be fair to do so. However, I may say that it is a highly reputable Melbourne firm with vast connexions and a huge business. It is called an indenting and importing firm, but it is one of the biggest merchant houses in Australia. A portion of thebusiness is agency work solely, but a tremendous lot of it is buying and selling aa wholesale merchants do. I do not want these people to escape this taxation.
Therefore, having been driven by the selective process to eliminate, as far as one could, the inequalities and unfairness of some of the original provisions of the Act, I have selected for exemption the man who is. simply an agent, and has no money in any other business. A man should be exempt if he has little or no capital in his business..In other words, his operations are an occupation, and occupations and employment are not taxed under the original Act or under this Bill. Of course, with any system of direct taxation it is impossible to be microscopically fair. This war-time profits taxation is’ the hardest in Australia to adjust; I have not hidden that fact from myself or from the public. However, it has almost run its course, and what we are doing now is to arrange that during the liquidation process it shall sit as equitably as our experience can devise. That is the task I am engaged in at the present time, and being forced to a decision to relieve some people who are already unfairly taxed, without opening too wide the door for that larger class of agents who have a large amount of capital under their control,I have selected this comparatively narrow sphere of relief by exempting the agent who employs little or no capital. I think this provision will afford relief to a large number of people.
The honorable member for Dampier (Mr. Gregory) referred to the jobber. I do not know whether he means by a jobber a man who buys and sells; if so, this clause will not exempt him. A jobber is a man who buys and sells with his own money. I think the honorable member really refers to brokers who operate on commission, and if they have little or no capital in their business and do nothing else but commission work, either as brokers or definite agents, they will be exempt. But a man who buys and sells in stocks, or commodities that are threatened with a shortage owing to lack of tonnage or supplies from overseas, will be treated as an ordinary merchant, and will be charged taxation if he shows an excess of profits.
– In the country districts are many small auctioneers, who operate a small furniture business as a side line. Before the war such a mau may have had a commission business worth £800 per annum net. Owing to the deaths of a number of people and the disposal of several large estates his income may have increased by £1,000 per annum during the war period. Will the fact that he conducts a small furniture business debar him from getting an exemption which is given to the other auctioneer who has no small auxiliary business?
– This clause gives exemption only to the man whose earnings are from commission alone. If portion of an auctioneer’s earnings result from trading he will not get exemption.
– That is most unfair. In Sydney and country centres there are scores of auctioneers who augment their income to the extent of £100 or £200 per year by buying and selling furniture. Why should they be debarred from receiving the same consideration as is given to other auctioneers ?
– If they earn anything at all from trade they will lose their exemption.
– I hope the Treasurer will explain the necessity for what seems to be an iniquity.
.- Has the Treasurer considered the possibility of an agency being created by some oversea manufacturer, and, through an indent agency which employs no capital in this country, entering into a very happy competition with local manufacturers.
– That is being done in the motor-car trade.
– An English or American motor-car manufacturer might employ anindentor to approach various firms for orders. That indentor would be an agent for the manufacturer, who would pay no war-time profits tax, although he was making an enormous profit. If the same manufacturer were to open an office in Sydney or Melbourne he would be required to pay this taxation on the profits of his business. But a man who was merely an indentor ostensibly operating on his own account would pay no taxation, and the man who employed him would be so much better off.
– An indentor would pay the tax.
– He would not necessarily call himself an indentor. He would call himself an agent working on commission.
Mr.Watt. - If the honorable member will consult the principal Act he will see that a manufacturer’s agent in his representative capacity becomes liable for the
– I approve of the exemption of agents who earn their income by personal exertion, particularly if they use only a very small amount of capital, but it does seem anomalous that the exemption is limited to “ an agency not being an agency carried on by any person who carried on any other business.” I have in mind large agents in Melbourne, nine-tenths of whose income is derived from agency work, the balance resulting from an indenting business. According to the terms of this Bill they would not be able to get the benefit of any exemption. It is not right that merely because an agent has a side line, which is incidental to the major portion of his business, he should be deprived of the benefit of this exemption.
Mr.Watt. - The present law taxes the agent who is working on commission.
– That is so, and the Treasurer very rightly proposes to exempt him. I suggest that the unfairness which is contained in this clause may be overcome by giving an exemption to all agents ‘to the extent of the amount of their agency business.
.- I agree with the honorable member for Kooyong (Sir Robert Best) that only the actual amount earned by commission should be exempted. The honorable member for Dampier (Mr. Gregory) spoke of honey jobbers. In the country districts there are hundreds of stock jobbers. There are stock and station agents who do not engage in legitimate business. They not only operate on commission, but they also buy stock on their own account and re-sell it. Those men should be classed as deal ing pastoralists, and should pay the tax. There are also solicitors who are not only agents for life and fire insurance companies, but are actually selling properties on commission. They should be taxed. On the other hand, a man who is engaged solely as an agent on 2½ per cent, commission, should receive exemption. The Leader of the Opposition (Mr. Tudor) left upon the minds of the Committee a very erroneous impression regarding the stock and station agents. He said that in his electorate beef and mutton are being sold at 10¾d. per lb., although in the Newmarket Yards it can be purchased at 3d. per lb., and he suggested that the agent was getting the difference of 7-d. A more ridiculous statement was never made in this chamber. If stock were sold at 3d. per lb., the agent received only 2½ per cent, of 3d., or decimal 3 of one farthing.
.- I wish to ask the Treasurer’s consideration of a certain class of agency business. A man goes to a firm which has a certain line to sell, and offers to find a customer for a quantity of goods. For any sale which he effects ho will get a commission. He may employ no clerks; he may not even have an office. But by these operations he makes several thousands of pounds during the course of twelve months. During the war the prices of various goods have increased considerably, and in selling a line of war-time goods on high values his percentage earnings would be bigger than on low values. Do I understand that the income of such a man would be exempt?
– Because he is an agent with little or no capital in his business, we put him in the same position as the man who is in an employment.
– In the larger centres of population, there are many of these agents, some of whom have made fortunes out of the war.
– A man who is carrying large stocks now may have to lose on them.
– The agents of whom I speak do not carry stocks; they merely go to merchants and others, and tell them that they can place certain lines, and they get commissipna for doing so.
They have nothing to pay out, and may not even rent an office. During the war many goods have been at such high prices that the agents dealing in them may have made thousands of pounds per annum, yet these agents are exempt from wartime profits tax. For my own part, I would sooner tax such men than I would tax the men who have fixed responsibilities, and have to stand all the risks of trade.
– I have not been impressed with the arguments in favour of the exemption, which gets its main support from the fact that originally we were foolish enough to exempt from this taxation lawyers and doctors, some of whom have made large war-time profits. Now we are being asked to exempt another class of men who have made more than £1,000 per year during the war by personal exertion. To my mind, an agent who, without possessing capital, but by his own exertions, has made more- than £1,000 a year in war-time should be called upon to contribute towards the expenses of the war just as merchants and others are called upon to do so. But evidently the Committee favours this exemption, and therefore I draw attention to the gross unfairness of dividing agents into two classes, exempting those who devote all their time to agency business, and taxing those who devote part of their time to other business. That is an anomaly worse than the one which it is proposed to remove. All agents should be on the same footing. Tn country towns there are many small business men who have agencies as side-lines - I think that their agency business should be treated in the same way as the business which is wholly an agency business.
.- It is my desire, when I have severely criticised a member, or an ex-member, of the House, to state, as a set-off to that criticism, anything good of him which may come to my knowledge. It is my pleasure now to have to announce that a gentleman with whom I have many times differed politically, has done what is, in my opinion, a glorious action. Mr. Robert Harper, a former member of this House, has settled £1,000 upon Mrs. Ronald, the wife of the Rev. J. B. Ronald, who was also at one time a member. He has done that in recognition of that splendid woman’s courage in giving four sons to the war, one of whom has paid the supreme sacrifice, while another has won the distinguished conduct medal. I am very pleased to be able to mention an action like this, and by way of connecting my remarks with the Bill, I add that I hope other wealthy men will do likewise.
.- I protest against the wrong which I think is being done to those persons who have businesses in addition to their agency businesses. “I am amongst the most uncompromising opponents of the commissionmonger; but I recognise that under our very imperfect system of production and distribution the agent fulfils at times a useful function. Commission agents, especially in the country, where it is necessary to keep horses and traps or motor cars for driving customers about, should receive consideration, because their business is subject to more variation than any other. Notwithstanding my natural objection to the middleman where he can be dispensed with, I was pleased to see that an effort is being made by the Government to do some measure of justice to agents. In many country towns, when people wish to move, they would find no buyers for their furniture were it not for the agents who purchase it at a fair valuation, in the hope of disposing of it later. These agents perform a very useful function. In my opinion, the case would be met if exemption were given in respect of that part of a man’s earnings which was derived from commissions.
– In explaining the object of this provision I had in mind chiefly the big businesses to which I then referred. “ There would be a great loss of revenue if every firm which had an element of agency in its business were exempted from this taxation. It is plain, however, that there are in the country districts men such as have been referred to, who take advantage of opportunities to increase their earnings, or to fill up their time, by acting as agents. I do not wish to hurt such men, and I have conferred with the Commissioner to see whether a reasonable arrangement can be made regarding them. I cannot have the necessary amendment drafted now, but 1 think I can arrange to have the Bill amended in another place, so that, where it is shown to the satisfaction of the Commissioner - we must guard the revenue by that limitation - that there is an identification of the agency results, we can remit, in mixed businesses and undertakings in which only small capital is employed, those agency results. Such an amendment would meet the cases to which reference has been made, and will, T think, do no injustice.
:- On the second-reading debate I stated that I could not understand the Treasurer (Mr. Watt) giving up £20,000 or £25,000 of revenue by increasing the exemptions from the war-time profits tax. All persons whose incomes have been increased by the war should be taxed on that increase.
– Does the honorable member think that lawyers should be exempt?
– I objected to the exemption of lawyers when it was proposed. If a division is taken, I shall vote against the exemption of other persons who are well able to pay this tax.
Amendment, by leave, withdrawn.
– I move -
That the words “ or sales “ in paragraph j be omitted, with a view to inserting in lieu thereof the words “ sales, leases, loans, insurances or collections of money.”
As the clause stands, it exempts only the profits made by a house and land agent in selling property; it does not exempt the commissions made on the leasing of properties.
Amendment agreed to.
Amendment (by Mr. Watt) agreed to-
That the following sub-clause bo added: - “ (c) by inserting after sub-section (1) the following sub-section : - (1a) For the purposes of this section “ Co-operative Company “ means a company in which not less than two-thirds of the shares are held by members who are bona fide primary producers or suppliers to the company.’ “
.- I move -
That the following paragraphs be added to the clause: - ” (d) by inserting in sub-section (3) thereof after the words ‘ business to which this Act applies ‘ the words ‘ or is a shareholder of a company the number of shareholders of which does not exceed twenty, and which carries on a business to which this Act applies.’ ; (e) by inserting in that sub-section after the words ‘ management of the business ‘ the words ‘ or, in the case of a company as aforesaid, was wholly employed in the service of the company,’ ; and (/) by adding at the end of that sub-section the following paragraph: - and (c) when a shareholder in a company as aforesaid be entitled to a refund of the part of the tax payable by the company which bears the same proportion to the tax payable by the company as the dividends received by him bear to the total dividends distributed by the company.’ “
My proposal is that a member of a .company, consisting of not more than twenty shareholders, who has been on active service with either the Naval or Military Forces shall be entitled to a refund of his proportion of the war-time profits tax if, before he enlisted, he was wholly employed in the service of that company. Under the Act as it stands, members of certain companies who are or have been on active service are exempt from its provisions. That exemption, however, does not apply to the class covered by my amendment. Where a man, and, say, his six sons are engaged in a. business which they float into a limited liability company, so that it may be carried on in the event of the death of the senior member of the firm, no exemption -is allowed in respect of the proportion of the tax payable by any of the sons who enlist for active service. I know of several such companies, young men holding shares in which gaveup lucrative positions to enlist as privates. They had to insure their own lives, paying an extra war premium, and neither they nor any member of their family had any prospect of receiving money from the Commonwealth because of the:r enlistment. They knew that if they lost their lives, no member of their family would receive, by way of pension or otherwise, any consideration at the hands of the Government. These young men naturally feel that, in view of the many sacrifices they have made in fighting for King and country, and the free Democracy of the Commonwealth, their interests in these businesses should he exempt from taxation. While away on active service they have lost opportunities for promotion as well as the increased salaries to which they would have been entitled had they continued to be actively engaged in their business. I understand from the Commissioner that it is not permissible to deduct out of the excess profits of such, companies any sum to reimburse these young men in respect of loss of promotion or to grant them any bonus in recognition of their services to their country. No compensation can be given to them by the other members of the firm out of the profits of the business over and above the normal pre-war standard. I trust that in these circumstancesthe Treasurer will see fit to accept my amendment in the interests of young men who have fought bravely for their country. They have made many sacrifices without any hope or desire of receiving the slightest consideration or remuneration from the Government.
– I have not a copy of the amendment just moved . the honorable member for Wide Bay (Mr. Corser), and, therefore, find it somewhat difficult to follow; but, so far as 1 can gather, it would seem to be on the lines of a suggestion that I proposed to make with regard to the exemption of the interests of soldiers or sailors who have been on active service. The point I had in mind related more particularly to subsection 3 of section 8.
– It is proposed that this amendment should be attached to that section.
– Dealing, first of all, with the point raised by the honorable member for Wide Bay, it would seem that bes proposal is that where a business is carried on by a small company, an exemption should be given in respect of the distribution of the profits amongst those of the shareholders who are or have been on active service. The danger of such a proposal seems to me to lie in the fact that it is almost impossible to draw a line between returns from personal exertion and capital. Under the Act a shareholder is entitled only to exemption in respect of the results of personal exertion.
– That is so.
– If a shareholder has been actively working in the business he is entitled to an exemption in respect of his earnings therein. Even in the smallest private company shareholders who are actively engaged in the business are nearly always paid a salary. It rarely occurs that the whole of a man’s interest in a company of this kind flows from his shareholding and not also from salary, and it seems to me that it would be dangerous to introduce this new principle without hedging it about with stringent safeguards. Many members of such companies who have been on active service would derive no benefit whatever from the proposed amendment; they would not be allowed any exemption, since the interest they derive from the business would not flow solely from personal exertion. Where a father and six brothers form a company, and put the whole of their capital into it, the profits of the company are returns on their capital, and not from their personal exertion.
– But in the cases I have in mind they are all working in the firm or company; they are devoting the whole of their time to it.
– That is quite possible. Take the case of a family who have their money scattered over various investments, but who suddenly decide to found a business, draw their money into it, and develop a very profitable trade. The return they get from that business is not in respect of personal exertion alone; it flows also from the capital which they have put into it, so that it would be necessary to give a soldier member of the firm an exemption in respect of his capital assets, and not only in respect of returns derived from his personal exertion in the business. I am not opposed to the amendment; I have not had time to study it, but without stringent safeguards I think it might be found to work inequitably.
I wish to raise a point in regard to the position of soldiers who left for the Front just at a time when, but for the war, they would have been entering into certain business enterprises. The question turns on the words in the section “ who have been actively engaged.” There are cases where a youth has an interest in a pastoral or other business, and upon completing his education would have become actively engaged in it. Just as he had completed his education, however, the war broke out, and he enlisted for service, with the result that it cannot be said that he was “ actively engaged “ in the business before he went away, although it is obvious that he intended to engage in it. In such circumstances, he is not allowed any exemption. I know of two cousins who were inheriting the same interests in two pastoral businesses here. One was two years older than the other, and, having been in business for two years after the completion of his education, and before his enlistment, he secured an exemption under the Act. The other, however, enlisted in the first week of the war, and went straight from Cambridge or Oxford to the Front. He had just completed his education, but, at the very time that he would have been starting in business here he went to the Front, and for that reason - since it cannot be said that he was actively engaged in this business before he want to the Front - he is not exempt from the provisions of this Act. I recognise that it is difficult to deal with such cases, since any attempt to do so might open the door to the transferring of properties; but while I do not wish to press an amendment, I suggest to the Treasurer that some consideration should be given to such cases.
– I rise, not with the object of arguing this matter, but by quoting from the principal Act to show a little more clearly what the honorable member for Wide Bay (Mr. Corser) desires to accomplish. The clause he proposes to amend deals with exemptions. Sub-section 3 of section 8 of the principal Act provides for the exemption of-
Any resident of Australia, who is on active service outside Australia with the Naval or Military Forces of any of the Allied Powers in connexion with the present war - who - is the owner of. or is a partner in a business to which this Act applies, and who before he went on active service devoted the whole or the greater part of his time in connexion with the management of the business. ….
It is a firing-line case, or something equivalent to it, and the person covered by this provision must have been an owner or partner in the business, and must have been devoting the whole or the major portion of his time to it. Such a person is exempt under the original Act. The honorable member now says that there are cases of family companies, or what are known in Victoria as proprietary companies, members of which, who devoted the whole of their time to the business of such companies, have gone on active service. To meet such cases, he proposes that the section in the original Act should be so amended as to read as follows: -
When any resident of Australia, who is on active service outside Australia with the Naval or Military Forces of any of the Allied Powers, in connexion with the present war, is the owner of, or is partner in, a business to which this Act applies,
Then the honorable member proposes to insert - or is a shareholder of a company, the number of shareholders of which does not exceed twenty, and which carries on business,
The original section goes on - and who, before he went on active service, devoted the whole or the greater part of his time in connexion with the management of the busi-ness,
The honorable member proposes to add these words - or, in the case of a company as aforesaid, was fully employed in the service of the company.
These are two amendments the honorable member proposes, and the effect of their acceptance would be to give the same exemption to the man who goes away as a partner or owner as to the man who is a shareholder. Having conversed with the Commissioner and the Treasury authorities, I see no reason to resist the honorable member’s amendment, so far as these two first parts are concerned. They place on scratch the man in the partnership along with the man who is in a nominal company and on active service, and I am prepared to accept them; but I am not prepared to accept the amendment as to a refund in regard to the 1915-16 assessment. I do not know what it means, and as I am one who believes that it is hard to get butter out of a dog’s mouth, I do not, at the present time, want any in mine. If we once start refunds, we do not know where they” will end.
– It is a difficult thing to do.
– It is a difficult thing to do, and a difficult thing to refuse. The honorable member for Wide Bay (Mr. Corser) will, perhaps, be content with the acceptance of the first two proposals?
.- If the clause applies in the way the Minister describes, and there will be an exemption of these boys in the companies to which I refer, I am quite prepared to withdraw the other proposal. I should like to suggest that when the honorable gentleman is giving relief to our soldiers and sailors in this connexion, he should give similar relief so far as the income tax is concerned.
– ‘After further conferences with the Commissioner, I am able to say that he does not see all the danger I see in regard to a refund, and, therefore, I am prepared at this stage to accept that amendment of the honorable member, subject, probably, to amendment later on.
.- It seems to me that the Treasurer (Mr. Watt) is leaving out the much more pressing case indicated by the honorable member for Flinders (Mr. Bruce). That is the case of a young man who was a partner in a business when the war broke out, but not so in the terms of the principal Act, inasmuch as he did not devote the whole or the greater part of his time to the management.
– Because he was not old enough ; he was completing his education.
– I know many cases of young men, partners in business, who, because they answered their country’s call, are absolutely precluded from the benefits of this clause, since they were not actively engaged in the particular business. Perhaps that may not have much to do with the amendment .before us.
– Yes, it has; and I shall have a look into the matter, and see how far it is possible to meet the honorable member’s suggestion. .
– I see that the clause is limited to a company the shareholders of which do not exceed twenty. In Victoria, however, I think that, under the Companies Act, there may be forty shareholders, and an amendment may be necessary in order to give fair effect to the provision.
– The trouble is that there is no uniformity in this regard amongst the States.
– I have in my mind a large manufacturing business which was turned into a proprietary company a few years ago. The father and the mother of the family concerned are shareholders, but I am not sure whether the eldest son, who, as lieutenant, was killed at the Front, had any shares, though it is quite possible that when he was twenty-one he was taken into the business. This step in regard to businesses in order to give them stability is an excellent idea, the adoption of which I have advised on many occasions. . I do not ask the Treasurer to amend the clause as to the number of shareholders just now, but to look into the matter. If we inflict hardship in a few cases we ought to see how far that hardship can be removed. I am given to understand that the number of shareholders varies throughout the States from seven to forty.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 4 (Modifications).
– I move -
That the following proviso be added : - “ Provided that in calculating the income tax under this’ sub-section no deduction shall be made from the profits on account of the wartime profits tax payable in respect of those profits.”
I think I explained to honorable members that this is purely a drafting amendment to make clear the undertaking I gave that, on the one hand, the war-time profits tax will be allowed as a deduction when assessing the income tax, End. , on the ether hand, that the income tax will be allowed as a deduction in assessing the war-time profits tax. The amendment is to give that undertaking final legal form.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 5 (Special provisions as to prewar standard).
– I am going to make a proposal to honorable members who are interested in this clause. It is the most debatable clause in the Bill from the points of view of many whose opinions have reached me from various parts of Australia. Under the circumstances, I would prefer “to postpone it at this stage, and see what progress we can make with the other clauses.
Clause 6 (Reference to Commissioner of questions as to increase of percentages).
.- I move -
That at the end of the clause there be added the words : - ‘ “ and by inserting after sub-section 1 the following sub-section: - 1a. Where an application is made to the Commissioner under this section for ari increase of the statutory percentage as respects a pastoral business carried on in a district which is proved to the Commissioner to be liable to severe drought, and in which the capital of the business is liable to be seriously decreased or wholly lost through drought, the Commissioner shall consider such application and may increase the statutory percentage in respect of such business to any percentage not exceeding 20 per centum.’ “
I have no desire to labour this amendment, because I spoke fully on the point during the second-reading debate. I regard the amendment as affording only fair and equitable treatment to those concerned. There is no desire to escape taxation,- but these men require something to “ come and go on “ in view of severe drought conditions. I have here several letters from constituents of mine Urging me to ask the Treasurer to agree to the amendment, and from what I have heard and seen, I can assure the honorable gentleman that it is quite necessary. I recognise that many pastoralists, owing to the war, have been making big profits, but this amendment will only affect those who are the victims of misfortune. I ask the Treasurer’ to receive the amendment in the spirit in which it is moved.
.- I do not know whether the honorable member for” Maranoa (Mr. Page J has studied the amendment in my name, which follows his own, and has considered which of the two propositions would best serve the interests of those of whom he is now speaking. I would like an expression of opinion from the Treasurer as to how he proposes to treat pastoralists who had not earned sixpence until after the commencement of the war, but, on the other hand, had always shown losses, and aTe now to be mulcted in very heavy taxation. Here is a letter from one of these pastoralists -
With reference to our conversation re the taxation, I will give you a few of the facts as it affects us. We started in 1007 with 3,000 sheep, and by hard toil and economy; in 1.911 we had fenced and put well down and done other improvements and built our flocks up to 17,000 sheep, all out of what we got from the station. In 1011 we had 4.500 lambs, and by March, 1012, all had perished, and from then on till November 14th it was nothing but losses, and on that date when we got our first rains after the drought, we only had 4,500 sheep.
To give you an idea of what we went through, we opened our fences in 1012, and let 14,000 sheep go and take care of themselves. The nearest fence to pull them up is somewhere in Queensland, and as we are the very outside fence sheep-run in the Gascoyne district, so you can see wc had not much chance of making any income. From 1915 till the last shearing 1918, we increased our sheep to 19,000, during which time we sold 5,000.
So now that wo have a chance to make a little profit after twelve years’ hard work, we are asked to hand over the bulk of it to prewar tax. And yet other station-owners who had thousands a year income previous to the war, and suffered no losses in the drought, get off practically free.
This last year, 1918, we had 6,000 lambs, and they are taken as income, and we are taxed on them, and yet if we have another bad season this year, all- may perish, and we have to pay taxes on what we have lost.
We do not complain about being taxed as we are quite aware that money has to be found, and quite willing to pay our share, but to let the mcn oil free who are making large incomes and ask us to pay more than half what we made, and through no fault of ours, is unjust.
In another case a loss of £500 was shown in 1912, the year in which operations were commenced on the holding.
The capital invested was £7,000, but they were not allowed to charge interest on it. In 1913-14 they showed a loss of £950. The total capital expended on the whole property by that time was £8,000; yet they were not allowed to charge interest on that amount. In 1914-15 they showed a profit of approximately £500 without any allowance for interest on capital. In 1915-16, the first year to which the wartime profits tax applied, they showed a profit of £1,500 exclusive of interest on capital; yet the Department refuses to allow them to deduct losses from profits during the pro-war period, and has called them to pay war-time profits taxation on £500. In another case the owner commenced with a capital of £7,000, and gradually worked up to an expenditure of £20,000 in the five or six years during which he was working the holding. He showed a loss each year prior to the war, but during the first year of the war he made a profit of £1,200 without allowing for interest on capital, and* in the next year, the first taxing year, £4,800. He has been called on to pay £2,050 as war-time profits taxation, yet his neighbour, with a pre-war standard of £10,000 or £15,000, will not be called on to pay sixpence unless his profits have exceeded his pre-war standard. The trouble with the men for whom I am speaking is that they have no pre-war standard, and their profit may be represented by the increase of stock and not by cash, yet they are called upon to pay to the Department 50 per cent, or 75 per cent., as the case may be, of the profits which appear on their balance-sheets. My proposal is -that they should be allowed to set off 10 per cent, of their capital during the pre-war years against the war-time profits taxation assessment, and I hope the Treasurer will give consideration to it.
.- I do not think that the public fully appreciate the position of the pastoralists in the drought-stricken districts of Australia. The limitation of 10 per cent, for new capital put ‘into old businesses will be absolutely inadequate as applied to pastoralists who are engaged in the most hazardous occupation of endeavouring to settle the dry districts of Australia with stock. I purchased and took up a large tract of country which six months previously was so dry that for seventy miles a man riding through it could not get a drink for his horse. Sixteen years afterwards it was highly improved at a cost of £80,000, mostly borrowed money. It was divided into thirty paddocks, and each paddock had plenty of water conserved in it. The property covered 400,000 acres, and carried 80,000 sheep, but a drought came along, and’ it was not capable of carrying more than 1,000 head of sheep. I had to ride through the Gulf territory and in the direction of Port Darwin in search of . country before I could succeed in getting a spot to which I could remove those sheep. It was in the days before motor cars came into use, and where I went it was useless attempting to travel with a buggy and pair, because there was not always sufficient grass available for more than one horse. It is preposterous to talk about a rate of 10 per cent, on capital which is invested in such a hazardous industry. I urge the Committee to do something to encourage those who may be expected to invest their money in it, and, at the same time, relieve the position of those who have invested their money in it in the past. I believe the whole matter is covered by an amendment which will be submitted later by the honorable member for Wannon (Mr. Rodgers), and at this stage I will not say more than that the pastoral industry is of the utmost possible value to Australia, and is deserving of as much consideration as is given to any other industry that can be named.
.- Those who were making big profits in the pastoral industry before the war were the earlier settlers who took up land in the best districts, where there is a good rainfall, but as they all had big pre-war standards, they escape this taxation. The men whose position we have to consider mostly are those who have gone out into the back-blocks and fought against the vagaries of seasons. Apart from droughts, they have had all sorts of insect plagues and parasites to combat. I have in mind one property in New
South Wales which was taken up by two gentlemen six years ago. They have been improving the property to a high standard, and during the six years have not made sufficient profit out of it to pay interest on the expenditure. Since the war, owing to the high price of wool, they have made a profit of £3,000. About six months ago, the rabbit plague attacked them, and they have had to expend the whole of their profits in netting the property and digging out the rabbits. Now, a drought has occurred, and they have been obliged to shift their sheep to another district 200 or 300 miles away. They have had to borrow from the bank so heavily that they do not know how they will be able to carry on. Yet they will be called upon to pay this taxation. I suggest that the Treasurer should get into communication with the pastoral boards with a view to creating drought-stricken zones, and giving exemption to the pastoralists affected. Otherwise, we shall be legislating by this Bill for the’ downfall of the people in drought-stricken districts.
.– Notice has been given of three amendments by different honorable members, all aiming at the same object as the honorable member for Maranoa seeks to secure. Of the three, I rather prefer the amendment that is to be submitted by the honorable member for Wannon (Mr. Rodgers); but I hope that the Government, in dealing with this matter, will consider the pastoral interests as being different from ordinary businesses operating under this Act. A three years’ prewar standard might be a quite legitimate and accurate gauge by which to calculate the normal profits of an ordinary business, but such a standard is quite useless in endeavouring to arrive at the average profits of a pastoral concern. Honorable members who are well acquainted with the grazing and pastoral industries know that one would never think of calculating the capital value of a property, based on the productive value, by taking the returns for any series of three years. In order to get at a reliable standard, it would be necessary to take the average profits over a period of twenty or thirty years. The pastoral industry is dependent entirely on the vagaries of the season. There are cycles of dry years and cycles of good years, and pastoralists have found it necessary in the good years to build up reserves which will tide them over theyears of drought. Therefore, it is unreasonable to adopt a four-year period in calculating the pre-war standard of profits, if no regard is paid to what the future may bring forth, or to what the losses had been prior to the accounting period. Any system of taxation based on the average profits of a limited number of years must necessarily do a grave injustice to the pastoral industry. Because: of the war, and of a series of good seasons, the pastoralists have had good yields, and reasonably high prices; but those good seasons supervened on a cycle of dry seasons, and probably the recent prosperous period will be followed by another period of losses or small profits. This tax takes from the grazier the reserves he has built up out of the profits in the good seasons to tide him over the bad seasons which he knows are sure to follow. It would have been fair if the original -Act had given total exemption to the pastoral industry, as well as to the dairying and agricultural industries, but that was found impossible, owing to the fact that it was known that big profits had been made out of wool in recent years. However, if the Treasurer is able to accept one of the amendments which have been circulated, that will afford relief to .those graziers who have been overtaken by calamities due to circumstances over which they had no control. The pastoral industry certainly has been enjoying some good seasons following on a period of drought; but we know from experience that in Queensland, New South Wales, and other parts of the Commonwealth, we are about to experience, if not drought, at least lean seasons’.
– I have been able to give some consideration to the three amendments which have been circulated by the honorable member for Maranoa (Mr. Page), Dampier (Mr. Gregory) and Wannon (Mr. Rodgers) respectively, and which more or less attempt to deal with the same matter. I have no personal knowledge of the difficulties against which the pastoralist has to contend, but any one who knows anything of the vicissitudes of the seasons generally in Australia is able to understand that a long course of years is the only fair measure of the pastoralist’ s risks and returns. In expressing sympathy with the pastoralist, who, during the war, has done mighty well, in my judgment, I do not wish to let loose the flood-gates of sympathy on either side of the House. I listened to the honorable member for Maranoa a few nights, ago, and thought that he- was the devil’s advocate. He was a generous-hearted Labour member espousing the cause of the poor pastoralist 1 I approach the question without prejudice one way or the other, but with a desire to recognise one difficulty. I am not concerned with the pastoral industry generally, but with the industry as it is carried on in some of the most difficult portions of the Commonwealth. A man who exiles himself away beyond the margin of cultivation, and even of civilization sometimes, and who, in addition, is subject outside the Goyder- line of rainfall to regular and almost habitually recurring visitations of drought, is entitled to the sympathy of every man, provided that it is not dealt out to him so generously that other pastoralists will feel aggrieved. The Commissioner is of the opinion that of the three proposals, the fairest and most reasonable, and the most easily worked, is that of the honorable member for Wannon (Mr. Rodgers). There are objections that might be offered to that of the honorable member for Dam,pier (Mr. Gregory), and an objection to that of the honorable member for Maranoa (Mr. Page), and these I need not set out now. If the honorable member for Maranoa will withdraw his amendment, and will allow me to carefully review the wording of the new clause suggested by the honorable member for Wannon, I promise to accept the spirit of that clause, and to get the draftsman to give effect to it.
Amendment, by leave, withdrawn.
Clause agreed to.
Clause 7 (Computation of Profits) -
Section 15 of the principal Act is amended-
Provided that where the distribution has not been made on or before the end of the accounting period next following that upon which the assessment is. based, the amount then undistributed shall be excluded from the deduction.”.
– I had intended to . propose an amendment on this clause, but as I do not wish to unduly embarrass the Treasurer, I shall, on Monday, move the insertion of a new clause which will provide what I wish to be provided, and give effect to the spirit of clause 10 of the Bill which was introduced by the honorable member for Capricornia (Mr. Higgs). The clause which I will propose will have for its object the averaging of profits during the whole period of the war. It is legitimate to ask a man to contribute to the revenue upon any excess profits over the average profits made by him according to the . prewar standard. I had intended to propose the omission from clause 15, sub-clause (1), of the words, “ actual profits arising in the accounting period,” with the object of substituting for them the words, “ average annual profits arising since the 1st day of July, 1914, and extending over the period of the war.” That amendment, however, would have required the alteration of several other clauses, and, therefore, after consultation with the Treasurer and the Commissioner, I shall move a new clause which will achieve the same result, but will do so more effectively from the draftsman’s point of view.
Amendments (by Mr. Watt) agreed to-
That paragraphs e and / be omitted with a view to inserting in lieu thereof - “ (e) by adding at the end of sub-section
Provided that in calculating the income tax under this sub-section no deduction shall be made from the profits on account of the war-time profits tax payable in respect of those profits.”
That in paragraph (y) all words from and including the words “ is distributed “ to the words “ from the deduction “ be omitted with a view. to inserting in lien thereof the words, “ arises from business carried on with members of the company or society.”
– I move -
That after paragraph g the following para graph be inserted : - “ (.’/.</) by inserting after sub-section (13) the following sub-section : “ Notwithstanding anything contained in the last preceding sub-section, where in the case of a pastoralist business war-time profits tax has been paid, and in any subsequent accounting period during the continuance of this Act the net result of the business shows a loss, the owner of the business shall be entitled to a refund of the amount of the loss :
Provided that the amount to be refunded to any person in pursuance 6T thissubsection shall not exceed the amount of wartime profits tax paid by him.”
The amendment of which 1 gave notice applied to other businesses beside that of the pastoralist, but the honorable member for Flinders (Mr. Bruce) showed yesterday that a great many business men would have an opportunity to show a loss by unloading, and would thus escape the operation of this Act. The pastoralists, however, cannot deal in that way with their profits. Under the present law, if a pastoralist made a profit during the first year of the war and in the next three years made losses, he could not get any refund in ‘respect of those losses, but if he made a profit in the first year, a loss in the second, a profit in the third, and a .’loss in the fourth, the losses would be. taken into account. I have received several letters from pastoralists who have be*n hit hard by the operation of the tax. This is one of thom. - I can give the Treasurer the name of the writer privately -
Dear Pigott, - There is an aspect of the wartime profits tax that I would like to see you stress, as an instance I will give my own case.
My profits for last year and the year before were very big on paper - from memory about £1,500 each year. These profits we’re left in stock. This year, as you know, we have a drought, and the profit s are now all dead, and the losses for the third year will be very much heavier than all the profits.
– That applies to an amendment by the honorable member for Maranoa (Mr. Page), which the Govern -j ment have al read v conceded. I
– That is not so. The letter continues -
If, then, the Department comes along and demands all the previous two years’ profits, it means ruination to the stock-owner.
This, old man, is a true case, and you can see the predicament of myself and many others - nothing but ruination.
– The Treasurer has conceded that point.
– It is no business of the honorable member’s. I intend to put this case on record -
Possibly you can see a way to get justice done.
Every war loan up to the present I have subscribed to. This time I can’t do anything, and I dread the new legislation now foreshadowed. I am going to write to the Prime Minister on the same subject.
I cited a case where a person made a profit of. £3,000, and had no possible chance of making a further profit during this war. He is down and out. Every penny he has made has been irrevocably lost, and there is no possibility of his getting on his feet again in the next four or r five years. The Act allows him to deduct his losses from his future profits, but if ie has no chance of making future profits, the amount he has paid in tax under this legislation should be refunded to him. If ever there was a time when these men wanted sympathy from the Government, it is now. They are beaten and out. The banks have shut down against them. I speak feelingly in this matter, because I come in contact with these gentlemen. They are constituents of mine, and many of them life-long, friends. They have been fighting in the back-blocks for years against all kinds of disabilities. The Government should lend them a helping hand by accepting my proposal. I am merely asking for British fair play and British law. On a previous occasion the Acting Prime Minister (Mr. Watt) said that our Act was not nearly as drastic as the British Act. This is a part of our legislation which is more drastic, because the British Act gives these people some help and support. The British Finance (No. 2) Act of 1915, part 3, section 38, clause 3, provides -
Where a person proves that in any accounting period which ended after the 4th August, 1914, his profits have not reached the point which involves liability to excess profits duty, or that he sustained a loss in his trade or business, he shall be entitled to repayment of such amount paid by him as excess profits duty in respect of any previous accounting period, or to set off against any excess profits duty payable by him in respect of any succeeding accounting period, such an amount as will make the total amount of excess profits duty paid by him during the whole period accord with his profits or losses during that period.
– I have circulated that very section as an amendment.
– I understood that the honorable member for Kooyong (Sir Robert Best) referred in his amendment to averages. The difficulty about averaging is that a person such as I have just described will receive the refund in three or four years’ time, whereas he needs the money at once and urgently. It is a life and death matter to him, and all others in the same position.
– It is very difficult to refuse anything to the honorable member for Calare (Mr. Pigott). His unexampled modesty and unfailing urbanity win the hearts of honorable members on both sides of the Committee, and one almost forgets when listening to the honorable member’s eloquence that one is Treasurer, and has a duty to perform in guarding the Treasury against brigands in disguise like the honorable member. This question has many phases. There is the general idea, to which the honorable member has referred, conveyed in the original British Act, and adopted almost word for word in the Bill as first submitted by the honorable member for Capricornia (Mr. Higgs).
– That sounds very well so far in respect of that provision.
– That is the broadest phase of it - the phase of equalization, as it was known when the matter was discussed in the British House of Commons - but it was deliberately omitted from the War-time Profits Bill when introduced and carried in 1917 in this country. I have on several occasions conferred with the taxation officers, and chiefly the Commissioner of Taxation, on the wider phase of the question. They say that the loss of revenue which would result from the adoption of the British section, or the original Higgs clause, would be so substantial that the Treasury could not afford to lose the money. That is the general view of the British section, if it is attempted to introduce it into this Bill, as the honorable member for Calare evidently desires.
– If ‘you are going to discuss that matter, I desire to be heard.
– I am discussing an amendment submitted by the honorable member for Calare. It affects a matter to which the honorable member for Kooyong (Sir Robert Best) has already referred, and on which he has announced his intention to move a general amendment in the shape of a new clause. The honorable member, however, has been anticipated by the proposal of the honorable member for Calare to make an addition to this clause. I think the honorable member would do well to submit his amendment in the shape of a new clause, so that it might be discussed as a principle. We have, for instance, dealt with three matters in the one undertaking, which covers the proposals made by the honorable member for Dampier (Mr. Gregory), the honorable member for Wannon (Mr. Rodgers), and the honorable member for Maranoa (Mr. Page).
– It does not cover mine.
– It does not cover it entirely; but it deals with it, and when the honorable member submits his amendment, I shall give the specific objection that we have to it. As a matter pf procedure, it would be better to submit these proposals in the shape of new clauses, since that would enable us to at once discuss the principle involved.
– I am prepared to do that.
– If the honorable member will circulate his proposal in the form of a new clause, I shall be glad to discuss it when we’ are dealing with new clauses next week.
Amendment, by leave, withdrawn.
,- I have a great deal of sympathy with the object which the honorable member for Wannon has in view, but, in the amendment of which I have given notice, I” desire something entirely different. Under sub-section 13 of section 15 of the principal Act, it is provided that -
Where in the case of a pastoral business -
any part of the profits arising during the last three pre-war trade years has been invested in the business, and have, in subsequent years, been wholly or partly lost owing to drought, adverse . seasons, or other adverse conditions; and
any part of the profits” of the current accounting period has been applied in extinction of that loss - then in estimating the profits a deduction shall be allowed equal to the amount of profits applied in extinction of that loss and any other loss which the Commissioner is of opinion has been recouped out of the profits of the current accounting period.
I am not at all concerned as to the position of those who have been making big profits in the pastoral industry. I am fighting for those who, for seven or eight years before the war, were showing a loss, and are able only now to show a fair profit, with the result that the Commissioner is assessing them to the extent of 50 per cent, and 75 per cent, of their profits. Here is the case of a man who showed a loss of £500 in the first of the three years preceding the war, a loss of £950 in the second year, and a profit of £500 in the third year; or, in other words, a loss of £950 in respect of the three pre-war years. In the next year, he showed a profit of £1,500, and he asked that his loss in the three pre-war years should be . allowed as a set-off against his profit in the first accounting period. He wrote to the Department on the subject, but was told that this could not be allowed as a. deduction.
– I could understand the honorable member urging that war-time profits and losses should be equalized, but I cannot understand why a demand should be made to deduct pre-war losses from war-time profits.
– I ask the Treasurer to take into account the position of these people. In one case the capital involved was £10,000, and on that capital they obtained no interest whatever.
– The honorable member realizes that we have made anarrangement as to certain pre–war years. Does not his proposed amendment cover the whole of the pre-warperiod?
– Only the three years immediately preceding the war. My suggested amendment reads -
That after paragraph (g) the following new paragraph be inserted: - (gg) by omitting sub-section (13) thereof and inserting in its stead the following sub-section: - “ (13). Where in the case of a pas toral business any loss has been made during the pre-war years, or if the profit in those years has not been sufficient to pay 10 per centum on the capital employed in the business during those years, such loss or deficiency shall be deductible from the profits of the accounting period. In computing such loss an allowance shall be made on the capital employed in each year, and shall take effect ‘as from the beginning of the Act.”
– If this were allowed in respect of all forms of business subject to the tax, we might as well abolish the tax altogether. We should not collect a penny under it.
– Some time ago I submitted to the Treasurer a long financial statement of the operations of a man who had invested £20,000 in the pastoral industry. He went into the bush, and battled and struggled for seven or eight years, and during the whole of that time was unable to show a profit. Now that he is able to show a book profit, the Commissioner under the Act is compelled to tax him to the extent of 50 per cent, or 75 per cent, of his profit. He has no pre-war standard. If the Government are not prepared to accept my amendment, they must not think that the proposal made by the honorable member for Wannon (Mr. Rodgers) will cover it. I have in mind a case where, in six years, a pastoralist’s outlay on his industry rose from £7,000 to £20,000. During the whole of that period he showed a loss, although he did not allow anything for interest on his capital. In the first year of the war he showed a profit of £1,200, and in the first year of the accounting period he showed a profit of £4,800.. That was his first profit, and on it he was assessed for £2,050. A closely adjoining neighbour made a profit of over £15,000, but as he was able to show a very high pre-war standard, he escaped the tax altogether. This Act is wretchedly inequitable, and I hope something will “be done to protect the class of people for whom I am fighting. I would prefer a super-income tax rather than this wretched tax, which it is impossible to make just or equitable. It is one of the most preposterous taxes ever put on the statute-book. It is exceedingly difficult for the Commissioner to administer, and he must recognise how unjust many of the assessments are. I should like a promise that the Treasurer will endeavour to do something to protect these people. I am urging this because those . who go into the Never-Never are doing what the pioneers of Australia did in Port Phillip in the early days. They are the pioneers of back settlement, and others are to be found going beyond them. It is very hard just now, when they can show one year of profit, to find the greater part of it taken by the Government. As a matter of fact, they will in all probability have to borrow from the Government the money to pay the tax, because it is not a cash profit, that is shown, but an arbitrary profit on the stock, the value of which is fixed by the Taxation Department. I have letters which show that if people try to dispose of their stock at the present time they cannot realize within 50 per cent, of the amount on which they are assessed for income tax and war-time profits tax - It is on book profits that they have to pay ; and I plead, not for men who are doing well, but for men who are in danger of being legally robbed by the carelessness of this Parliament.
.- The plea is put forward by the Treasurer that the request of the honorable member for Dampier (Mr. Gregory) would, if granted, mean serious loss to the Treasury, so serious that it would not be worth while going on with the measure.
– That was not in reference to my proposal, but to that of the honorable member for Calare (Mr. Pigott).
– No matter to which request or suggestion the plea applied, it shows most emphatically the iniquity of the whole measure. That people who are entitled to a much fairer deal than is proposed should be refused because the Treasury will suffer is one of the most cynical suggestions I have heard in this
Chamber for many a day. What is asked for affects most materially the existence of a struggling phase of production in Australia which is entitled to more consideration than the Treasurer seems inclined to give. When, on the other hand, we find pastoralists who live in parts of Australia where they are practically . assured of success and prosperity, not taxed at all, the’ position is one that this Parliament should not accept for a moment. The honorable member for Dampier (Mr. Gregory) points’ out to me that the concession he asks for in the case of these outside pastoralists is to a large extent in spirit and in practice given in other businesses. If there- is any portion of the community entitled to special consideration at the present time it is those struggling pastoralists who are trying to keep things going on the outside limits of settlement. They are not asking anything special, but merely something to which they are entitled, in common fairness. I trust, therefore, that the Government, if they desire this unfortunate method of taxation to be tolerated, will realize thai it must be made as equitable as possible under the circumstances.
.- I have much pleasure in supporting the amendment. As already pointed out, a man who has put £8,000 into a pastoral business, and after working at it for five or six years, finds himself only paying expenses, would have been much better off had he invested on mortgage at 5 per cent, or 6 -per cent. In other businesses such cases are provided for to the’ extent of 10 per cent., and the- same should apply in the pastoral industry. As to the plea put forward by the Treasurer, and the suggestion that if the amendment was. accepted the Bill might as well be withdrawn, that only means that we have a. choice between continuing this tax and the destruction of the pastoral industry in the back-blocks. There are two classes of people on the land, the descendants of those who came in the early days- and selected the best spots fifty or sixty years ago, and those for whom we are now pleading - those who are now going 300 or 400 miles away from civilization to country with sparse rainfall. I call to mind a property, 400 miles from Sydney, where the average rainfall is 20 inches, and, so far this year, there has been only 6 inches. Many of the people there, who have made good profits during the last year or two with a rainfall of from 22 inches to 23 inches, will be called upon to face the Taxation Commissioner this year with a rainfall of 6 inches. The late Mr. Manifold, whose death we deplore, told me of a cattle stationin the Northern Territory, a long way from the seaboard, where they brand something like 10,000 calves a year. The value of these calves has been placed by the Commissioner at £3 per head, but they have to be kept until they grow to maturity, because they are no earthly good until, say, this year. Suppose 10,000 calves reach the fattening age during the current twelve months, they may be wiped out by drought; but, all the same, the owners of the station will be called upon to pay on an assessed revenue of £30,000.
They have yielded no profit at all, and yet the Commissioner of Taxation has been consistently taxing these people year in and year out on the value of these calves. There is every reason why we should be sympathetic towards the backblocks graziers, who have done so much for Australia in filling up the waste spaces of this continent.
Clause, as amended, agreed to
Clauses 8 and 9 agreed to.
– In order to remove any misapprehension, I may be allowed to say that the honorable member for Dampier (Mr. Gregory) was of the opinion that his amendment was carried, but I understand that clause 7 alone was Carried.
– That is so; the honorable member for Dampier did not move any amendment.
– My amendment has been carried.
The TEMPORARY CHAIRMAN.I never put the amendment. It was not moved.
– Of course it was.
The TEMPORARY CHAIRMAN.No; I have no knowledge of it.
– We shall come back to the subject when we are considering the proposal of the honorable member for Wannon (Mr. Rodgers). As honorable members have left for the country, and by the Inter-State expresses, thinking that the new clauses would not come on, since I gave an undertaking to that’ effect, believing that we would not make as much progress as we have made, I shall not proceed with them at this stage. Postponed clause 5 will involve, I think, considerable discussion, and I require some further opportunity to reconsider it. I propose. now to report progress, and the postponed clauses will be, first taken when the consideration of the Bill in Committee is resumed.
The following papers were presented : -
Northern Territory - Ordinances of 1918 -
No. 14. - Crown Lands:
No. 15. - Closing of Roads.
Removal of the Hon. J. A. Jensen from the Ministry - Prohibition of “Stead’s War Facts.” - Influenza on Troopship “Sardinia” - Supply of Potash - Censorship of “ Hansard.”
– I move -
That the House do now adjourn.
In submitting this motion I wish to make a brief statement. I desire to announce to the House that to-day the Hon. J. A. Jensen was removed from the office of Minister of State for Trade and Customs. It was with great regret that it was found necessary to have recourse to this procedure. Until a further announcement is made, the Department will continue to be administered in the manner- previously stated by me to the House.
.- I wish briefly to refer to the replies given to me to-day by the Acting Prime Minister on the subject of the prohibition of the book known as Stead’s War Facts. I asked -
The Acting Prime Minister, in reply, answered “ No “ to both those questions. I propose to read what Mr. Stead himself has to say on the matter, when I shall ask the favorable consideration of his repre- ,sentations by the Acting Prime Minister. In his letter to me of the 10th December, after referring to the fact that I had brought the matter of the prohibition of his book under the notice of the House, Mr. Stead writes -
I learn from the American papers that it must have been the American Government which requested the Australian authorities to place my book on the list. They assumed that roy book was identical with one which had been issued in New York, and to which strong exception was taken by many people.
The position is, that in response to a cabled request by the editor of the Review of Reviews in America, asking if I would allow him to use the material in my book for a publication he wished to bring out, I sent over advance proofs. These were used by him, but, in addition, he added a whole lot of more or less contentious matter, which I would never have dreamt of issuing here. This dealt with freedom of the seas, compared the methods Great Britain had employed to get her Colonies with those Germany was now using, touched on the troubles which had arisen between the United States of America and Great Britain concerning the blockade, and generally expressed views to which I do not wonder exception was taken.
When challenged in the matter, the editor, Dr. Shaw, calmly sheltered himself behind me, saying that, as the proofs had been obtained from a son of W. T. Stead, he had not troubled to examine them closely. He further promised to eliminate all objectionable matter, and since then the book has, I And, been re- issued.
His method of excusing himself naturally gave the impression that his book was practically a replica of mine. It is true that he used my material, but to the inoffensive information I pave connected with the war he added a whole lot of questions and answers which dealt with controversial matters. For this, his book is suppressed, and, because of his explanation, my book is also banned. I have laid the facts before the Defence Department, but have received no reply.
In a later letter of the same date Mr. Stead writes -
Since writing you this morning I have found further reference in the American papers to the suppression of the book Two Thousand Questions and Answers about the War. It appears that the portions objected to were at the beginning of the book, almost all of which had been added by the American editors. Yet, when I asked to be allowed to omit any objectionable portion of the work, I was informed that exception was taken to the whole of it, and not to any one specific part.
I have a copy of a” letter which Mr. Stead sent to the Defence Department on this matter. It throws a rather interesting sidelight on the methods of the Defence Department in the exercise of the censorship. In his letter to the Defence Department, dated 10th December, Mr. Stead says -
The book quoted, Two Thousand Questions and Answers about the War, which was objected to by the American Government, has now been allowed to appear with the portions objected to omitted.
I find that the section which omitted to conform with the wishes of the American authorities is the first portion of the book, to which, as I pointed out in my letter of 4th December, I myself would have taken exception. In this section, which deals with “Main Springs of the War,” “ The Balkan Powder Magazine,” “Austria and the Slavs.” “The Tragic Wound,” “Alsace-Lorraine,” “Tie Place in the Sun,” “How We got into It,” and “The Freedom of the Seas,” there is very little of the material I supplied to the American publisher. In fact, the only questions and answers in this section which I supplied deal with nothing but statistical matter - for ‘ instance : “How many People live in Roumania?” “What are the Religions of the Entente’s Allies ?” “What is a Czech!” “How long did the Franco-Prussian War last?” “What is the Area of Egypt?” and the like.
When I suggested that it might be possible for me to omit the particular passages objected to in Stead’s War Facts, you informed me that this could not be done, as objection was taken to the whole tone of the publication. This objection was presumably taken by the American authorities. Yet this American book, Two Thousand Questions and Answers about the War, is allowed to be r«* issued after certain sections were omitted. These sections contained admittedly contentious matter, but, as I have pointed out, there was in them very little of what I sent.
The position seems to me to be as follows :_
The American Government, assuming that
Stead’s War Facts and Two Thousand Questions and Answers about the War are practically the same book, requests the suppression of Stead’s War Facts. It. then permits the republication of Two Thousand Questions and Answers about the War after material which did not appear in Stead’s- War Facts at all has been omitted. Yet, when I request that I may be allowed to omit anything deemed objectionable from Stead’s War Facts, I am informed that it is the whole tone of the publication which is objected to.
It is quite clear to me that in suppressing Stead’s War Facts “ the authorities here were acting under an entire misapprehension, an error which has been a serious matter to me. Not only has it meant considerable monetary loss, but the action taken has caused people to imagine that I was responsible for a publication the tone of which was objectionable.
Mr. Stead supplied his facts to the American editor, and the latter added certain material. It was’ because of that added material that the book was suppressed. It was at the request of the American Government that Stead’s War Facts was suppressed. The Acting Prime Minister (Mr. Watt) knows now that on the elimination of the facts added by the American editor the American Government have allowed the re-issue of the book, which contains the matter supplied by Mr. Stead, yet the Commonwealth Government refuse to follow the example of the American Government and allow the circulation of the book in Australia. The whole trouble is obviously due to misapprehension. I ask the Acting Prime Minister to look into the matter, because the suppression of the publication of the book is involving the editor in monetary loss, depriving the public of a very useful compendium of facts concerning the war, and at the same time i? accomplishing no good purpose as far as the Government are concerned.
.- I have been informed that the transport Sardinia is approaching Fremantle with ninety cases of Spanish influenza on board. If it is true that Spanish influenza has broken out on board the vessel I would like the Acting Prime Minister to publish a list of those who have been stricken down. It will be a guide to relatives, who are anxious to go to the nearest port of disembarkation to welcome the returning men.
Mr. ATKINSON (Wilmot) 15.5].- Some time ago I put a question on the notice-paper, in which I suggested that the Acting Prime Minister should bring under the notice of the authorities who will be representing Australia at the Peace Conference the necessity for getting some control over Germany’s vast deposits of potash, which is such a necessary commodity for our producers, and without supplies of which they will be in very serious trouble. Subsequently, in order to ascertain what steps had been taken in the matter, I submitted another question, and the Acting Prime Minister’s reply was that the Government would endeavour to secure potash for the producers of Australia, but that he did not see how it would be possible to do what I asked in connexion with the peace conditions. I thought that he would have cabled to the Prime Minister (Mr. Hughes), requesting him to bring the matter under the notice of those who will represent Australia at the Peace Conference; in fact, I thought that this was the course he intended to adopt some time ago; and when I asked my second question I was hoping that I would learn what progress had been made in regard to the matter. I suggest now that representations should be made to the Prime Minister or some other authority in Great Britain, who will bring under the notice of those who represent us at the Peace Conference the necessity for doing the very best they can for us in regard to these potash deposits of Germany.
.- In the Buladelah district, in the Hunter electorate, there is a mountain, called Alum Mount, from which the Germans prior to the war were drawing supplies of potash, and I believe that a great quantity has already been broken and stored awaiting for export. I hope that if any inquiry is being made in regard to this matter the Government will see whether the deposit at Alum Mount may be utilized.
– I listened with a great deal of interest and a certain regret to the brief but most important statement made by the Acting
Prime Minister concerning the honorable member for Baas (Mr. Jensen), and I only desire to say, at this stage, that, in my opinion, any one who read the report of the Navy and Defence Royal Commission in regard to the purchase of the Shaw Wireless Works and certain vessels for the Navy Department must have come to the conclusion that, as the Minister whose actions have been reflected upon declined to resign, there was no other course opento self-respecting Ministers of the Crown than to remove him from office.
– My attention has been drawn by the Crown Law authorities to certain references made in the course of proceedings in Committee yesterday by an honorable member of this House, and, after consultation with that honorable member, I directed the elimination of certain words from, the Mansard proof of his speech referring to one of Great Britain’s Allies.
– With reference to the statement you have made to the House, Mr. Speaker, I should like to inquire whether the remarks eliminated from the speeches will be kept, so that they may be available to honorable members after the period has expired when their publication is und e s sirable
– All the galley proofs are kept for a certain length of time, - and will be available.
, - May I, in closing the debate, say I note with interest the comment which the Deputy Leader of the Opposition (Mr. Higgs) has seen fit to offer concerning the announcement I made to the House some few minutes ago. I do not desire to add to the pain of the occasion, or to stretch wider the wound which has certainly been made; but I think it only fair to say that Mr. Jensen communicated to me his intention to address the House, probably next week, in connexion with the matter. I think it only right to say this, because he is absent from the chamber.
The honorable member for Brisbane (Mr. Finlayson) has asked nae to make an investigation into Stead’s Catechism or War Facts book. T read the cate chism, if not the whole of it, then -most of it, as it was going through in seria form, and I do not feel qualified at this stage to say whether a mistake has been made, or whether the censorship branch of the Defence Department acted with wisdom or otherwise. I know Mr. Stead personally, very well. I have never doubted his loyalty, never for a minute.. And I will take the very next occasion that offers of having a look at the book to see whether it oan be released or not.
I would ask the honorable member for Calare (Mr. Pigott) not to believe everything that he is hearing about the transports. I am informed by my colleague (Mr. Greene), who is in charge of the Quarantine Department, that he has no information whatever of Spanish influenza having made its appearance on the transport referred to. Another member of the House, alarmed at the rumour, communicated this afternoon with the Base Records Office, and has been advised that it is merely a rumour. I asked, a little while ago, that honorable members and the public generally, should at this, time behave with restraint with regard to rumours of this kind. The circulation of, or the credence given to, them, may cause distress and alarm to a considerable section of this community. We are the most fortunate people in the world with regard to this influenza scourge, largely because of the decision to at once put it in the very best quarantine position, that is to say, higher up in point of gravity and urgency than cholera. The branch of .the Customs Department, in charge of quarantine matters might, so far, very well be congratulated by a grateful people, and we may express the hope that the outbreak will eventually be eliminated without extending beyond the quarantine areas.
I shall bear in mind what the honorable member for Hunter (Mr. Charlton) said in indorsement of the remarks by the honorable member for Wilmot (Mr. Atkinson). What appeared to be an evasive answer given by me to my honorable friend, the member for Wilmot, the other day was due. to the form in. which his question was couched. It rendered it. impossible for me to sire anything but a’ strategic answer. J ,»o not doubt that honorable members of the
Opposition would call this side-stepping, but it was not. It was an attempt at wisdom - a maiden effort, possibly, but successful in a minor degree. I cannot pronounce on what the Peace Conference may decide with regard to deposits within the territory of the former German Empire, and I was anxious not to complicate the matter. My honorable friend may rest assured, however, that the Government knows the wants of Australia with regard to the potash supplies, and will endeavour to safeguard the interests of our primary producers.
Question resolved in the affirmative.
House adjourned at 5.15 p.m.
Cite as: Australia, House of Representatives, Debates, 13 December 1918, viewed 22 October 2017, <http://historichansard.net/hofreps/1918/19181213_reps_7_87/>.