9th Parliament · 2nd Session
Mr. Speaker (Rt. Hon. W. A. Watt) took the chair at 3 p.m., and read prayers.
Rescue or White Women
– I ask the Prime Minister whether he has any information to impart to the House with regard to the women -who are supposed to have been captured by natives of the Northern Territory?
– A telegram has been received by the Minister for Home and
Territories from the Administrator of the Northern Territory intimating that the
John Aloe returned to Darwin on Saturday night last. The Minister supplies the fallowing statementinconnexiontherewith: -
The captain of the John Aloe has reported to the Administrator thathe arrived at Eloho Island on the 24th September, where he landed the wireless operator and the stores intended for the expedition, for transhipment to theHuddersfield, at Arnhem Bay, by the auxiliary ketch Pat, which was then due at Eloho Island and has, doubtless, since effected the transhipment.
Whilst at Eloho Island the captain of the Joan Aloe learned that theHuddersfield had sailed for Arnhem Bayon the 1st September, and that mainland natives had reported that she had safely landed the members of the expedition with their horsesand equipment.
He brought no news as to the progress ofthe search on the mainland.
In view of the widespread anxiety respecting the expedition, andthefactthatthe HuddersfieldisanchoredinArnhemBay,which is only one day’s sail fromEloho Island, a telegramhas beendispatched to the Administrator instructing him to obtain and famish a full explanation as to the reasons why the captain of the John Aloe did not transfer the wireless operator and stores totheHuddersfield direct, or get into touch with that ship for the purpose or obtaining news as to the progress of thesearch and ascertaining whether the party required any assistance.
The lighthouse steamer Kyogle is due at Darwin from Western Australia on or about Thursday next, and arrangements have been made for her to proceed as early as possible to the scene of operations, with instructions to ascertain and report what progress hasbeen made by the expedition and whether any assistance is needed.
A vessel of the Kyogle’s speed should make the journey from Darwin to Arnhem Bay in about two days, end as she is equipped with wireless, definite news respecting the search on the mainland may very shortly Be expected,
Sleepers for Second-class Passengers.
– I ask the Minister for Works and Railways if he will take steps to see that at the next conference with state Ministers an item on the agenda paper shall be the consideration of a proposal for providing second-class sleepers on the South Australian and Victorian lines, so that people coming from Western Australia may pass the third night on the train in a sleeper!
– I shall have the matter inquired into, and give the honorable member an answer later.
– Although the Treasurer may not play the Australian game of football, he will agree that a match of some importance was played on the Melbourne Cricket Ground on Saturday last, with a view to raising funds to help disabled soldiers. I should like to know whether his officers in the Taxation Department are charging the entertainments tax onthe proceeds of that match, and if so, will he take steps to remit the tax, and thereby augment the funds collected for so very desirable an object?
– I shall bring the honorable member’s remarks under the notice of the Commissioner for Taxation.
– I ask the Minister for Trade and Customs whether he will favorably consider the remission of the duty on calcium cyanide? I understand that it is not made in Australia, and is used for the destruction of rabbits.
– Several representations to a similar effect have been made to me recently. I am having the matter thoroughly investigated, and I shall inform the honorable member of the result at the close of the investigations.
Issue of Licences
– I ask the PostmasterGeneral whether a broadcasting licence has been issued to any company in the State of South Australia?
– No licence has been issued to any company operating in South Australia.
Action of the Commonwealth Shipping Board.
– Some time ago, in a series of questions, I asked the Prime Minister whether the Commonwealth Line of steamships would carry on the fight against high freights now ruling in the interstate trade. The right honorable gentleman promised to bring the matter before the notice of the Commonwealth Shipping Board. Assuming that he has done so, I should like to know if he has yet received a reply from the board as to what its attitude is likely to be?
– No reply has yet been received from the Commonwealth Shipping Board.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow: -
– On the 30th September, the honorable member for Dalley (Mr. Mahony) referred to the impending discharge of a number of employees at Cockatoo Island. I promised to make inquiries into the matter, and I now desire to inform the honorable member that the Australian Commonwealth Shipping Board advises that in view of the early completion of the s.s. Ferndale it has been reluctantly compelled to dispense with the services of approximately 670 men. The men embrace the following classes of workmen : - Boilermakers, shipwrights, general assistants, plumbers, ironworkers, joiners, painters, fitters, electricians, blacksmiths, coppersmiths, crane-drivers, general labourers, and boys. The remaining staff of approximately 400 men will be more than sufficient for the work at present in hand. It is expected that the repair work in view at the end of October will absorb approximately an additional 200 men for a short period. As I pointed out on the 14th August last, in reply to a similar reference by the honorable member for Barrier (Mr. Blakeley), there must of necessity be fluctuations in the number of men employed in ship construction and repair work where the volume of work is of a varying quantity, and honorable members will agree that it would be impracticable to maintain staffs at the numbers employed at the periods of maximum output. The management is, however, using its utmost endeavours to secure additional constructional and repair work, and in these efforts the Government is co-operating to the fullest extent. As a result of these efforts, it is hoped that it may be possible in the near future to absorb most of the employees who are, of necessity, being now discharged.
– On Friday lastIannounced the names of five of the six members of the Commonwealth Bank Board, and I am now able to state the name of the sixth, who is Mr. R. B. McComas.
The following papers were presented : -
Cotton Industry - Improvement of the Cotton Industry in Australia -
Report of Proceedings of Conference between Representatives of the Commonwealth and State Governments.
Report of Proceedings of Conference between Representatives of the Commonwealth and State Governments and of the Growers, Ginners, and Manufacturers.
Norfolk Island Act- Ordinance of 1924- No. 2 - Melanesian Mission Lands.
Papua Act - Ordinance of 1924 - No. 5 - Customs (Export) Tariff.
Public Service Act - Appointment of E. A. Poole, Department of Health.
Motion (by Mr. Bruce) agreed to: -
That the House, at its rising, adjourn until to-morrow at 3 o’clock p.m.
– I move -
That the hill be now read a second time.
This bill is necessary because the judgment of the High Court in the Cameron case indirectly affects assessments for the war-time profits tax. Live stock was valued on a basis which the court declared to be invalid and unconstitutional. Consequently, it is necessary to amend the law in the same way as it was amended by the Income Tax Assessment Live Stock Bill last week. The arguments used by me on that occasion apply also to this bill. The bill provides that the owner can return his stock at either its market value or the value that has been laid down and accepted. The provision for election is the same as in the Income Tax Assessment Live Stock Bill. There will be no appeals against assessments, so no special provision for that purpose, such as was included in the other bill, is necessary.
.- I assume that the bill means that election made for the purpose of income tax shall apply also to war-time profits tax. Will the Treasurer say whether taxpayers must make the same election for both taxes ? .
– I assume that taxpayers will make the same election, because it will be advantageous to them to do so.
– That is not so. The election that might suit them under one measure might not suit them under the other. Those men who employ accountants to work out their taxes for them may want to make separate elections. An election for income tax for the future might have a quite opposite effect if applied to the war-time profits of the past. Whatever choice taxpayers make under one measure should apply also to the other. Assessments are still being sent out for war-time profits tax for the year 1916. That is a most extraordinary circumstance. I do not object to giving taxpayers a choice, because by the law of averages the tax will work out fairly over a number of years. In war time market values were probably higher than they are now. I hope that the Treasurer will insert a provision in the bill that the election of a taxpayer in respect of assessment for income taxation purposes shall apply also for the purposes of war-time profits taxation.
Question resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 (Acceptance of assessments involving value of live stock).
. -I should like to hear the Treasurer’s intention with respect to my suggestion. Sub-clause 1 of the clause reads -
Where the value of live stock has been taken into account in assessments made under the War-time Profits Tax Assessment Act 1917, or under that Act as subsequently amended, the person whose profits were assessed may, within four months after the commencement of this Act, elect to have the assessments so made altered, so that, in determining the liability of that person to pay tax under that Act, the value of the live stock shall be taken into account at a value selected by the taxpayer within the limits prescribed by regulation 50 contained in Statutory Rules 1923, No. 177, made under the Income Tax Assessment Act 1922-1923 for the purposes of the selection under section 16 of that Act of the value of live stock.
A provision could easily be inserted to provide that the election for income taxation purposes shall apply for war-time profits taxation purposes.
.- I trust that the honorable member will not persist in his proposal, for I think that its adoption might inflict hardship upon pastoralists who were only establishing themselves when the war broke out. I am speaking on their behalf, . and not for well-established pastoralists, who can afford to pay their taxation. For the purpose of war-time profits taxation pastoralists were entitled to select any two of the six preceding years as the basis of assessment. Unfortunately for many -of the smaller men, the years preceding the war were very unprofitable. One man I have in mind, who spent £10,000 on a cattle st at ion bad not even had interest on his capital returned to him prior to the war. In the first year of the war he made a book profit of £1,200, on which he had to pay federal and state income tax. In the next year his book profits were between £4,200 and £4,500, on which he had to pay federal and state income and land taxation in addition to £2,250 war-time profits tax.
– But special provision was made for new businesses. He had an alternative.
- His business could not be classed as new, for it had been established for some time, though there had been no profit in it. Unless we are careful we shall be dealing harshly with taxpayers who were situated like the man I have mentioned. I do not think that the honorable member for Yarra desires that.
.- The report of the Auditor-General, which was tabled last Friday, shows that the following taxes are outstanding: Land. over £2,000,000 ; income, nearly £3,500,000; estate duties, £110,000; and war-time profits, £1,006,000.
– A list of exemptions from war-time profits taxation would be interesting reading.
– The reason that war-time profits taxation assessments are still being made is that the information on which to base them has only recently been obtained by the Commissioner.
– But some of the assessments are in respect of returns that should have been submitted in the first year of the war.
– The war-time profits taxes outstanding for 1923-4 are only about £300,000, so that £700,000 is due in respect of the years 1916-7 to 1922-3. No one wishes to inflict hardship on struggling selectors, but this seems to be an extraordinarily large amount of money to be outstanding. The price of cattle has fallen considerably in the last few years, and I am not at all sure that we are justified in permitting pastoralists to adopt present market values as the basis of their assessments for the years covered by the bill. I admit that the price of sheep is still very high. Probably if the whole business were averaged, the taxation returns would be practically the same whichever of the alternatives were adopted. It. is quite possible, however, that, acting on expert advice, pastoralists may elect to have their ordinary income tax assessed on one basis, and their wartime profits tax assessed on the other. It is well known that not only in regard to grazing, but in respect of all rural pursuits, an army of lawyers, accountants, and taxation experts are at work advising their respective clients as to which is the most satisfactory way for them to submit their taxation returns. I do not know whether that is being done in this instance.
.- I should like the Treasurer (Dr. Earle Page) to explain whether this measure resembles in principle similar bills with which we have recently dealt, andwhether its provisions are likely to be acceptable to the taxpayers concerned. I understand that certain taxpayers who declared the value of their live stock will now have an opportunity to choose the basis of valuation on which taxation shall be paid in the future.
– If they are allowed to elect the basis of valuation of live stock for income tax purposes they should be compelled to elect the same basis for wartime profits taxation.
– I do not think there is anything in the bill which is likely to be injurious to individual taxpayers or to the Crown. Does the measure refer only to war-time profits taxation imposed since 1917?
– That is when the act was. passed.
– This measure will considerably affect those who have paid the tax for several years. It is provided that taxpayers may make a revaluation within a specified time.
– The taxpayers may elect whether stock shall be taxed on values “ as prescribed,” or on their market value.
– The same principle should apply to both war-time profits and ordinary income taxation.
– The basis in this instance was fixed by departmental values “as. prescribed.”
– The provisions of this measure are not so objectionable as those in a retrospective bill which we were discussing last week. I ask the Treasurer to state the exact position.
– In the Income Tax Assessment (Live Stock) Bill discussed last week provision was made for electing the basis for valuing live stock. The question at issue then was legislation in which three alternatives were provided for that purpose, and is quite different from that in this bill, or in the bill submitted in consequence of the judgment given bythe High Court in the case Cameron v. Deputy Commissioner of Taxation for Tasmania. The two latter bills were necessary, as the existing law provided that the values of live stock should be “as prescribed.” The values “as prescribed” were declared by the High Court in the Cameron case to be invalid, and consequently there were no. values upon which live stock could be taxed. The object of the bill to amend the act affected by the High Court judgment in the Cameron case and of this bill is to provide a basis of valuation for the period duringwhich the departmental basiswas invalid. Notwithstanding the judgment of the High Court, we believe the departmental1 valuations are fair. We are therefore giving taxpayers the opportunity to pay on them, or on the market value of the stock.
– The bill allows taxpayers to elect the basis they desire: ,
– Yes. The taxpayers can allow the existing assessments made under regulation 177 to stand, but if they prefer they can. pay on the market value of their stock..
– There were not many appeals.
– There were no appeals under the act which this bill is toamend. I am satisfied that we are dealing fairly with taxpayers, and that they will allow the assessments to stand. The number of appeals under the other measure will be negligible. This bill is necessary to enable the department to issue valid assessments to safeguard the owners of live stock, and to protect the revenue. In view of’ these facts, and the cogent reasons advanced by the honorable member for Swan (Mr. Gregory), I suggest that the honorable member for Yarra (Mr. Scullin) should allow the clause to pass in its present form. As no appeal has been made against the assessments, taxpayers must be satisfied with the present position.
.- I do not wish to submit an amendment which) will detrimentally affect any one. If a taxpayer considers that he has been harshly treated he can be dealt with under another clause; I understand the amount of rebates granted under the Wartime Profits Tax Act is considerable, but in consequence of the difficulties mentioned by the honorable member for Swan (Mr. Gregory), taxpayers have been generously dealt with by the Commissioner. In the validation of legislation which has been declared invalid, the owners of stock are to be given a choice; in other words, they may elect to accept the method of valuation which the High Court has declared to be invalid, or value at market rates. The Income Tax Assessment (Live Stock) Bill, passed last week, provides that once a stock-owner has made his choice, he must abide by it, and I contend that he should also be compelled to adhere to it for the valuation of his live stock during the war period. I submit that if he chooses the market value as a fair basis for future years, it should also be accepted by him as a fair basis for the years covered by the wartime profits tax.
– Except that the conditions might have been abnormal in the past.
– If it had not been for the abnormal times of the past there would have been no war-time profits to tax, but now it is proposed to allow the taxpayers a choice that will enable them to get rid of the abnormal values of the past, and thus avoid paying anything in the shape of war-time profits tax. We might just as well wipe out that tax so far as those persons are concerned.
– No; this bill will keep their assessments as they stand.
– If they elect to accept the departmental assessments, well and good. It is said that, if given the choice, some men who have strongly protested against the departmental valuations will value their stock at the departmental estimate. I understand that, in the Cameron case, the claim was not that the departmental valuations were unfair, but that they were invalid.
Mr.Gregory. - The objection taken was that the department differentiated between the states.
– Exactly. If the department had not followed the state boundaries in setting out standards of values there would have been no violation of the Constitution. Live stock varies in value in different states and in different parts of the same state.
I do not think that many stock-owners have claimed that the valuations assessed by the department were unfair. I have no intention of submitting an amendment. I merely suggest to the Treasurer that he should insert a provision that the election by the stock-owner should be on the basis chosen under the Income Tax Assessment (Live Stock) Bill. That is to say, the method of valuation chosen by the taxpayer should be applied to the past, as well as to the future.
.- A peculiar position is likely to arise in the taxation department when an officer examines the returns furnished by an owner of live stock for income tax and war-time profits tax purposes. He may find the stock valued in a certain way in the return furnished for income taxation purposes, and in another way in the return for war-time profits tax purposes. Why should it be possible to have two different valuations of the same stock in the same year? The only object I can see in two sets of valuations under two different acts is the defrauding of the revenue. If the taxpayer makes his choice of valuations it should apply to both the income tax and the war-time profits tax.
– The suggestion put forward by the honorable member for Yarra (Mr. Scullin) is perfectly good in its intention, but if it were given effect it would operate very harshly on the taxpayer, and cause an unnecessary amount of alteration to schedules now in the taxation office. The live stock owners would be limited in regard to the values placed on their stock to whatever method of valuation they elected to have applied to their stock for the future. Every one must recognize that during the war conditions were quite different from what they are today. Many stock-owners may have learned from experience the best method of assessing their stock. The adoption of the honorable member’s suggestion would mean tearing up practically all the assessments now in the taxation office, and it would cost possibly many thousands to work out what each taxpayer should have paid under another method of arriving at the value of live stock.
– Did not the Treasurer suggest a moment or two ago that in the majority of cases the stock-owners would adhere to the departmental valuations?
– Yes ; but this bill is not dealing with the future. It is to amend an act which has already ceased to function, and was in force only for four years.
– I do not think there will be many alterations if this bill is passed.
– I do not think there will be any. There might be some difficulty in regard to assessments under the Income Tax Assessment (Live Stock) Bill, which deals with stock affected by the Cameron judgment, but I do not think there will be any under this bill, which amends the War-Time Profits Tax Assessment Act.
Clause agreed to.
Clause 3 agreed to.
Bill reported without amendment; report adopted.
Bill (by leave) read a third time.
Senate’s amendment agreed to.
Message recommending appropriation reported.
In committee (Consideration of GovernorGeneral’s Deputy’s message) :
– I move -
That it is expedient that an appropriation of revenue be made for the purposes of a bill for an act to grant and apply out of the Consolidated Revenue Fund a sum for invalid and old-age pensions.
It is customary to ask Parliament from time to time to vote lump sums for the payment of the pensions which are granted under the provisions of the Invalid and Old-age Pensions Act. Up to the present time Parliament has voted for this purpose a total sum of £61,250,000. The actual expenditure to the 30th June last was £53,991,661, and this year an appropriation has already been made of £7,000,000, so that the total expenditure to the 30th June nextwill be £60,991,661, leaving an unexpended balance of £258,339. This margin of £258,339 is insufficient to ensure that moneys will be available for paying pensions falling due on the 2nd July next. It has been the practice for some years to pay into the War Pensions and Invalid and Old-age Pensions Trust Accounts the whole or portion of the surplus remaining at the close of the year, so that the moneys will be available for the payment of pensions in the following year. The Government trusts that there will be a surplus at the end of the present financial year, and we also desire to ensure the payment of these pensions at the beginning of the next financial year. Parliament is therefore being asked to grant an appropriation of £10,000,000.
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Dr. Earle Page and Mr. Bruce do prepare and bring in a bill to carry out the foregoing resolution.
Bill presented by Dr. Earle Page, and passed through all its stages without amendment or debate.
In committee (Consideration of Senate’s amendments) :
Senate’s amendments in clauses 4 and 10 agreed to.
Clause 11 - (1.) There shall be an Executive Committee of the board consisting of the chairman of the board and four members of the board to be elected annually by the board.
Senate’s Amendment. - After “board” (line
– I move -
That the amendment be disagreed with.
The purpose of this amendment is to ensure that the executive shall be constituted in more or less the same proportions as the actual board of control itself. But in a measure of this nature, in which we are giving to the industry as a whole the right to control its own affairs, we must assume that the board of control will carry out its duties properly, and not that the whole of the five members on the executive will be representative of co-operative factories only. If that were to happen, it would tend to destroy a measure which those interested in dairying appear to be desirous of seeing placed on the statute-book. For that reason I do not think that the amendment is necessary.
Motion agreed to.
Clause 14 -
For the purpose of enabling the board effectively to control the export and the sale and distribution after export of Australian dairy produce, the Governor-General may by proclamation prohibit the export from the Commonwealth to Europe of any dairy produce except in accordance with a licence issued by the Minister subject to such conditions and restrictions as the Board approves.
Senate’s Amendment. - Leave out “ to Europe “.
– I move -
That the amendment be agreed to.
At the time when the words “to Europe” were inserted, there was considerable doubt in the minds of honorable members, including myself, whether it would not open the gate too wide. Later, it was considered that we might add the words “ and South Africa,” but on examination we concluded that that would hardly meet the case. Our object was to exclude the eastern trade from the control of the board. That is an entirely different trade from our trade with other countries, and is at present carried out on an altogether different basis, the butter and cheese being nearly all exported in tins.
– We are already well established in the East.
– That is so. I believe that Australia has about 95 per cent. of the butter trade of the East. The Government agreed to this amendment originally in the desire to exclude that trade from the board’s control, as it appeared neither necessary nor advisable that the board should control it. The Senate has concluded that the addition of the words “ to Europe “ would not achieve the desired ob ject, and I think the committee should agree that that is so. If the amendment of the Senate is agreed to the Government proposes to meet the position by adding at the end of the clause the following words: -
Nothing in this section shall apply to the export of dairy produce to any port between the ninetieth and one hundred and eightieth degrees of east longitude and north of the thirtieth parallel of south latitude.
That will define the area to which the act will not apply, shipments towhich will not be under the control of the board. If honorable members will examine the map, they will see that the amendment will meet the case, as it will exclude from the area of the board’s control the East as we generally recognize it in ordinary conversation. Java, Borneo, and all the islands north of Australia, including Fiji, will be excluded, but a line north of the 30th parallel of south latitude will leave New Zealand within the area to be controlled by the board. This amendment has been examined very carefully, and the Government believes that it gives effect to the original intention of this committee. Colombo is within the area to be controlled by the board. The board will have control over all ports that can be used for the purpose of avoiding the operation of the act by making dummy sales and shipments to them.
.- The area placed outside the control of the board will include Singapore, which is one of the biggest transhipment ports in the world. The practice adopted by dishonest shippers to evade the operation of the act by ostensibly shipping to South Africa and America will not be discontinued even under this amendment, because they will use Singapore as aport of transhipment, and reship goods from there to Great Britain and Europe via the Suez Canal.
– The extra handling charges involved in transhipment would be a bar to that practice.
– The handling charges at Singapore are low, because stevedores’ wages amount to 10 cents a day, equal to about 2½d. If Singapore is in future used as a transhipment port for the purpose of evading the act, no doubt the Government will take action to tighten up its provisions.
Motion agreed to.
Senate’s Amendment. - Omit “the Board approves “, and insert “ are prescribed, after recommendation to the Minister by the Board”.
– I move-
That the amendment be agreed to.
The wording to be substituted is identical with that inserted in the Dried Fruits Control Bill, and in no way alters, but makes clearer, the intention of the measure, and prevents discrimination. The amendment simply provides for the prescribing of general regulations.
Motion agreed to.
Motion (by Mr. Bruce) agreed to -
That the following words be added to the clause : - (2.) Nothing in this section shall apply to the export of dairy produce to any port between the ninetieth and one hundred and eightieth degrees of east longitude and north of the thirtieth parallel of south latitude.
Senate’s amendments in clauses 20 and 23 agreed to.
Clause 25 -
All moneys received by the Board in respect of the sale of dairy produce or otherwise howsoever (except moneys forming part of the fund) shall be paid by the Board into a separate account at a bank to be approved by the Minister.
Senate’s Amendment. - Omit “ a bank to be approved by the; Minister “, and insert “ the Commonwealth Bank.”
– I move-
That the amendment be agreed to, with the addition of the words, “ or any other prescribed bank.”
Clause 23 provides that moneys may be placed in account with the Commonwealth Bank or with any other prescribed bank. I ask the committee to agree to the amendment with the insertion of the words, “or any other prescribed bank,” so that clauses 23 and 25 may be brought into line.
Motion agreed to.
Resolution reported; report adopted.
The committee appointed to draw up the reason for disagreeing with the Senate’s amendment in clause 11 sub mitted the following, which was agreed to-
That it is desirable that the board should be unfettered in its choice of an executive committee to carry out such of the board’s functions as it desires to entrust to such a committee.
In committee (Consideration of Senate’s amendments) :
Senate’s amendments in clauses 4, 10, and 13 agreed to.
Clause 24 -
All moneys received by the board in respect of thesale of dried fruits or otherwise howsoever (except moneys forming part of the fund) shall be paid by the hoard into a separate account in the Commonwealth Bank.
Senate’s Amendment. - After the word “ Bank” insert the words “or any other prescribed bank.”
– When the measure was first introduced, clause 24 provided that the account could be kept at any prescribed bank. But to show that it was the intention, wherever possible, to have the account kept at the Commonwealth Bank, this committee agreed that that bank should be specifically named. The Senate amended the clause by the insertion of the words “ or any other prescribed bank “ in order to bring it into line with clause 22, which provides -
Moneys held in the fund uninvested, by the board may be lodged in an account at call or on fixed deposit, or partly atcall and partly in an account on fixed deposit, with the Commonwealth Bank, or with any other prescribed bank, and while in such bank shall be held to be moneys of the Crown.
I move -
That the amendment be agreed to.
– I cannot see that there will be any connexion between the functions of the board under clauses 22 and 24. I think that the intention of both honorable members and honorable senators is that, wherever possible, the moneys held by the board should be banked with the Commonwealth Bank. The point was taken that, under the provisions of clause 22, moneys may be held at places where there is not a branch of the Commonwealth Bank. That could not apply to moneys held under the provisions of clause 24. I consider that, wherever there is a branch of the Commonwealth Bank, any moneys held ‘by the board should be deposited with that bank.
– In this case, I do not think it would be possible for the board to carry out its functions properly if it were restricted to banking with only one bank.
-Clause 24 relates to moneys held in respect of the sale of dried fruits. Does the Prime Minister contend that such moneys may be held at places where there is not a branch of the Commonwealth Bank? He should make a further explanation.
, - Under the scheme for the anticipated financing of the industry during control by the board, it is contemplated that the> Government will be asked to guarantee, up to 80 per cent, of its value, an immediate payment against the fruit that is placed in the hands of the board. We have haul experience of similar guarantees in regard to wheat. When large sums have been involved it has never been the practice of the Commonwealth Bank to carry the whole of the guaranteed amount. Generally speaking, that practice is not a convenient one. The business is done through the Commonwealth! Bank, which apportions it amongst the associated banks. The honorable member for Hume (Mr. Parker Moloney) can see the embarrassment that will be caused if only the Commonwealth Bank is mentioned in this clause. Unless it is provided that moneys may be paid into any other prescribed bank the guarantee provisions will probably be unworkable. Whatever views the honorable member may hold in regard to the patronage that should be accorded to the Commonwealth Bank, I think that he must agree that in this case it is absolutely imperative to allow some of the business to be done with other banks.
– That relates only to guarantees.
– That is all that the clause covers. Dried fruits will be placed in the hands of the board, and the board wilt obtain an advance against them from a bank; but the Government, will guarantee the bank up to the amountadvanced. It is almost inevitable that a considerable number of transactions will be necessary, because of the financial posi tion of the industry. The business could not possibly be handled by the Commonwealth Bank solely, and I feel sure that that bank would not desire the restriction contained in the clause as it went to the Senate. I therefore suggest that it is imperative to accept the amendment proposed by the Senate.
.- I find myself in somewhat of a difficulty in connexion with this amendment.?’ These words were inserted at the instance of the honorable member for Angas (Mr. Gabb), and the amendment was readily assented to by the Prime Minister when the bill was last before us. In connexion with clause 22, I can realize that in the case of moneys to be paid to fruit-growers in Mildura, where there is no branch of the Commonwealth Bank, the business might be done by arrangement with some other bank, but under clause 24, in the case of moneys received by the control board for the sale of dried fruits, I assume that in Victoria,, for instance, the whole of the business of the board would be carried out in Melbourne, and. there is no reason why its moneys should not be deposited with the Commonwealth Bank. Whether honorable members! favour the Commonwealth Bank or not, it has to be remembered that under legislation recently passed by this .Parliament that bank isi working under a new system. Previous to that legislation, the Commonwealth Bank could devote one-half of its profits to strengthening its reserves, or to the redemption of its debentures, and if there was still a surplus of profit it would go into the Consolidated; Revenue. But we have now provided definitely that onehalf of the profits made by the bank must go into the Consolidated Revenue. If by legislation this Parliament can extend the operations of the bank, the result will be that a greater amount will have to be paid by the bank into the Consolidated Revenue. Some distinction must be drawn between financing the dried fruits industry and financing the export of wheat or butter. I suppose that the value of the butter exported would run into £4,000,000 or £5,000,000, and I can understand that the Commonwealth Bank might desire that responsibility for so large a sum should be shared with other banks. The value of our wheat export would also run into many millions sterling, but the value of the export of dried fruits, or the total output of the industry would be comparatively so small that one bank might readily undertake the business.
– If the Commonwealth Bank desires to do the whole of the business, there is nothing in the bill to prevent it from doing it. The intention, of course, is to give preference to the Commonwealth Bank.
– There would be nothing to prevent the Commonwealth Bank from making use of another bank as an agency.
– We could not provide that the Commonwealth Bank should do all the business of receiving money whilst other banks should do the business of advancing money.
– I have said that the whole of the financial business of the dried fruits industry is comparatively small.
– It may be bigger than the honorable member imagines. I should say that it would run into over £1,000,000 per annum.
– The honorable member must be referring to the value of the whole of the output of the industry, whilst the bill deals only with the export. I remind honorable members again that because of recent legislation, if we deprive the Commonwealth Bank of making greater profits than it would otherwise make, we shall be reducing the amount to be paid into the Consolidated Revenue.
– I am not satisfied with the statement of the Prime Minister (Mr. Bruce). The right honorable gentleman says that what we suggest might embarrass the Commonwealth Bank, which might not desire to do the whole of this business. He has said, also, that the intention is that the money shall be paid into the Commonwealth Bank. I am surprised at the reason he has given for altering the opinion which he must have had when the bill was previously before us, and he agreed to the amendment submitted by the honorable member for Angas (Mr. Gabb)-
– I ought to correct the honorable member. I must admit that on the occasion to which he refers I made a mistake. I desired that the words’, “the Commonwealth Bank” should be inserted, but I also intended that the words, “ or other prescribed bank “ should also be inserted.
– I should think that the Commonwealth Bank would not hesitate to finance the dried fruits industry to the extent of £1,250,000, which, I understand, would be about the amount involved. That should be quite within its capacity.
– It has other business to look after as well.
– In connexion with the export of wheat and wool, the Commonwealth Bank may transact business running into several millions sterling.
– This would be in addition to that.
– In dealing with wheat and wool, the Commonwealth Bank has been associated in its transactions with private banking institutions. I should think that the Commonwealth Bank would be prepared to handle this business to the extent of over £1,000,000, if it received payments made to the control board in connexion with the industry. Nothing has been saidby the Prime Minister to-day to justify his change of opinion from what it was when the bill was previously before us. We are under an obligation to stand by the Commonwealth Bank as “ the people’s bank.” I admit that that name is not now so appropriate to the bank as it was. In every bill recently introduced which deals in any way with banking, there is evidence of a desire to take the business from the Commonwealth Bank and give’ it into the hands of private banks.
– We are robbing the Commonwealth by doing that.
– Of course we are. The honorable member has just reminded us that under recent legislation half the annual profits made by the Commonwealth Bank must be paid into the Consolidated Revenue. The Postmaster-General (Mr. Gibson) and his leader (Dr. Earle Page) stood at the last Federal elections for extending the functions of the Commonwealth Bank in the interests of the people, and particularly of primary producers. I am sorry to say that since the arrangement of the pact the interests of the Commonwealth Bank have been neglected.The way in which amendments are thrown at honorable members is unfair. The Prime
Minister attempted to show that there was a connexion between clauses 22 and 24, and he argued that because it was advisable to insert in one clause the words “ or any other prescribed bank,” it was therefore advisable to insert the same words in clause 24. The two clauses are entirely different. Clause 22 applies to places where there may be no branches of the Commonwealth Bank, but it is beyond doubt that clause 24 refers to business that will be transacted in one of the capital cities. As one who wishes to see the functions of the Commonwealth Bank extended, and who views with alarm the constant clipping of its wings, I record my protest against the Government’s proposal. The Commonwealth Bank would gladly accept the business. If the words proposed to be added are added, the Commonwealth Bank will not get the business. The treatment of the bank recently has been shameful. The State Governments bank money for the payment of public servants in private banks. That is deplorable, but it indicates the trend . of affairs in Australia to-day. If we desire that the business shall be done through the Commonwealth Bank, we should say so in no uncertain words. There is only one bank, and that is the people’s bank, that has a right to do this business. The people of this country are finding the money for the scheme, and their bank should handle the business. The Prime Minister was at his worst when he was explaining his change of front. The matter may seem small to him, but to me every proposal that will give the Commonwealth Bank an advantage over private banks is big. I am unable to understand why the Prime Minister has changed his attitude. I shall call for a division on this motion, so that the people will be able to see which honorable members are friends of the bank.
.- It seems that the Government never tires of according special privileges to private firms, and that there is a deliberate sacrificing of public interests to the special claims made upon the Government by the agencies that no doubt contribute most liberally towards its support. The Government, without realizing it, is setting an example for future governments to follow in serving the interests of the great working class. There is little doubt that when future govern ments apply the policy of this Government to the working class, instead of fo the capitalist class, there will be screams of horror and suggestions of scandal. The Government continues to hand out gifts to these big interests., and makes no attempt to justify its action. The latest effort in that direction is the attempt to deprive the Commonwealth Bank of business that rightly belongs to it. During the last few months private banking institutions have received more consideration than is their due. They are permitted not only to get substantial rakeoffs from the flotation of loan money, but also to manipulate - “manipulate” is a better word than “ control “ in the circumstances - the affairs of the Commonwealth Bank. The policy of the Commonwealth Bank is directed by, and is subject to the influence of, private financial corporations. The policy of the Government is to allow the Commonwealth Bank to function only along those lines that will profit the private banking institutions. The proposal now before the committee represents another attempt to give special consideration to private banking institutions, to whom it is proposed to give .business that should be transacted by the nation’s bank.
– The Commonwealth Bank could not handle all the business; no one bank could do so.
– If there is a bank that should be used in connexion with the legislation now before us, it is the Commonwealth Bank. I do not agree that the Commonwealth Bank could not handle all the business of the Commonwealth. There is no reason why the Commonwealth Bank should not be the chief financial agency iri this matter, and, if necessary, should secure assistance from private institutions. This latest attempt to subordinate the Commonwealth Bank to the private banks is a further indication of the extent to which the Government is prepared to sell the rights of the people and of the public institutions of this country to its private friends in the financial, commercial, or great landed concerns of this country.
.- The honorable member for Hindmarsh (Mr. Makin) has created a storm in a tea-cup, and his last sentence was quite irrelevant. His speech was nonsense. The Commonwealth Bank does not operate except in large centres. The question where the money shall be banked should be determined by the board, and surely it is a detail that can reasonably be left to the board. Parliament- should not dictate every detail to the board. To do so would ‘be disrespectful to the men who will be appointed to watch over the interests of the industry..
– The honorable member has failed to recognize the significance of the words proposed to be inserted.
– I have not failed to recognize the significance of the honorable member’s delusion. The operations on the “river Murray nave been financed by several private banks for the last 20 or 30 years, and it requires only the slightest sense of fairness to realize that some sort of decent consideration should be meted out to them. “We should leave this matter to the board, for it will know its business better than we can know it, and it may be trusted to do the fair thing.
– The honorable member is the disciple of big business.
– The honorable member knows very little about big business. If he would confine his remarks to the business which he does understand, namely, trade unionism, I should not think of disputing his authority and knowledge. I trust that the amendment will be agreed to.
.- I am at a loss to understand the purpose of the Government in proposing the amendment. An amendment to this clause, moved last week by the honorable member for Angas (Mr. Gabb), to provide that all the banking should be done through the Commonwealth Bank, was accepted by the Prime Minister. Now we are told that he then agreed to do something that he did not intend to agree to. The only argument that has been submitted in favour of the amendment is that there may be no branch of the Commonwealth Bank where the business with which the clause deals will need to be done. But there ia a branch of the Commonwealth Bank at every port from which fruit will be exported. The argument might have been valid had the amendment been proposed to clause 22, but it has no force whatever in relation to >clause 24. The honorable member for Wakefield <Mr. Foster) says, “ Trust the board to do the right thing.” I should be quite prepared to do that if past experience justified it. Unfortunately, however, the history of the Commonwealth Bank and its association with public bodies is thoroughly unsatisfactory, for the bank has been continuously boycotted.
– I do not think so.
– I .shall give the honorable member some instances, beginning with the previous Victorian Government, which has deliberately boycotted the bank. It does im,ot give tha bank the business of even one of its many departments. I suppose that not 1 per cent, of the muni,cipalities in this ‘state have traded with the Commonwealth Bank until they have been forced to do so. I could name a number of municipalities which handle public money that have deliberately given the private banking companies’ their business notwithstanding that better terms have been offered to them by the Commonwealth Bank. The Melbourne and Metropolitan Board of Works, ihe Harbour Trust, and a number of subsidiary public bodies have boycotted the bank. After die painful ‘experiences of the past in trusting to public bodies to do the right thing, I am not prepared to accept the advice of the honorable member for Wakefield to trust this board. I can quite understand the reasons which have actuated the Government in proposing the amendment. It stands for private enterprise as against public enterprise, and for profit-making private concerns as against profit-making public institutions.
– I am quite sure that the honorable member conscientiously believes what he is saying, but I do not agree with him.
– I speak from experience. The Commonwealth Bank has offered better terms than the private banks to quite a number ‘of municipal corporations and other public bodies; but it has not been given their business. The reason is, of course, that the members of so many of these public bodies have substantial interests in private financial institutions. The declared policy of this Government is to support private enterprise as against public enterprise. It is for that reason that it sold the Common- wealth Woollen Mills to a private company at about a third of their value. A statement was made in Great Britain recently by Mr. James Dyer, the principal member of the syndicate which purchased the concern, that the mills were the best in the Southern Hemisphere, and were worth £350,000. The Government disposed of them for £150,000.
– They have paid no dividends yet.
– All their profits are being spent in extending the plant and increasing the number of looms, and the number of employees. The latest statement that we have had from the management of the mills is that the business is booming. The amendment is in direct conflict with the amendment accepted by the Government last week, and I hope that it will be defeated.
.- I support the view expressed by the honorable member for Yarra (Mr. Scullin) in regard to the boycotting of the Commonwealth Bank by public bodies. I regret that the managers of the branches of the Commonwealth Bank are not instructed to push for new business. A former manager of the Melbourne branch of the bank made no effort to secure new clients, but his successor did, and was instrumental in obtaining a large number of very good accounts. If the clause is left in its present form the Commonwealth Bank will not be precluded from operating in conjunction with other banks. In several instances public bodies have been practically forced to do business with the Commonwealth Bank because of the better terms offered by it. Some time ago the Melbourne City Council desired accommodation from the banking firm with which it had been doing business for many years, but the bank would not give what the council regarded as satisfactory terms. The Commonwealth Bank was then approached, and it immediately granted the terms which the council desired, on the condition that the council transferred its account to the bank. The honorable member for Swan (Mr. Gregory) will remember an experience which was brought under the notice of the Public Works Committee some time ago, when inquiries were being made respecting a water supply for the Flinders Naval Base. The officers of the Victorian State
Rivers and Water Supply Commission informed the committee that they did not know where money could be obtained to finance the proposition. A suggestion that the Commonwealth Bank should be approached was acted upon, and the bank without hesitation granted a loan of £160,000 at a satisfactory rate of interest, which made possible a water supply for Flinders Naval Base and Mornington Peninsula. Notwithstanding this, successive Victorian governments have not given any other business to the bank. I stated on the public platform on Saturday night that the people of Australia did not know what they owed to the Commonwealth Bank. That statement is true. I suppose that we have been saved not less than £40,000,000 during the last twelve years by the operations of and the existence of the bank.
– Then why paint the lily?
– Because an effort is being made to spoil it. .
-it is too big to spoil.
– I know that, and am thankful for it. If, in the vicissitudes of politics, a party comes into power which seeks to harm this institution, the people may be trusted to deal suitably and speedily with it. The action in appointing a board tocontrol the Commonwealth Bank does not in any way prevent the Government from seriously interfering with the work of this fine institution. The honorable member for Fawkner (Mr. Maxwell) will agree with me that the Melbourne and Metropolitan Board of Works ihas declined to negotiate loans from the Commonwealth Bank at rates lower than those offered by other financial institutions.
– Certain influences must have been at work to prevent it from accepting money at a lower rate of interest.
– That is corruption.
– The honorable member may call it by what name he likes. I can, if necessary, produce figures to support my statement. I do not suggest that the private banking institutions are controlled in such a way that they would act to the detriment of the fruit-growers; but, as one-half of the profits of the Commonwealth Bank are paid into the Consolidated Revenue, and assist in meeting our interest bill and other expenditure, we should give it whatever business we can. When this clause was before the committee on a previous occasion, the honorable member for East Sydney (Mr. West) was so incensed at not being able to move an amendment that the Prime Minister (Mr. Bruce) consented to the recommittal of the clause.
– We refused to agree to its recommittal.. The honorable member for East Sydney missed his opportunity:
– The Prime Minister was opposed to the amendment, and at the time I was inclined to agree with him up to a certain point, because when financial transactions are being conducted in places where there is not a branch of the Commonwealth Bank it is necessary to negotiate through a. private institution. The Government, in accepting the amendment moved by the honorable member for Angas (Mr. Gabb), has made a distinction between two provisions in the bill. Theclause, in its present form, does riot prevent the Commonwealth Bank sharing its business with any private banking institution.
.- The committee should not be asked to consider this amendment until some honorable members who, through no fault of their own have been prevented from reaching the House, are able to take part in the discussion. We know that the train from Sydney has been delayed through an accident.
– If honorable members opposite merely wish to take a vote on the amendment, I shall move that progress be reported.
– That will, I think,’ meet the wishes of honorable members on this side.
In committee (Consideration resumed from 3rd October, vide page 5141) :
Clause 2 - (1.) A tax, at the rate declared in this act, is hereby imposed on every person who, being a lessee, receives, in the financial year commencing on the first day of July, One thousand nine hundred and twenty-three, or in any subsequent financial year, any payment for, upon or in consideration of, the assignment or transfer of a lease to any other person after deducting therefrom -
. -I move-
That after the word “ lessee” the words “ of other than for a pastoral, grazing or mineral lease granted by the Government of the Commonwealth or of a state” be inserted.
It is my desire to raise the issue whether a lease granted by the Government of the Commonwealth or of a state for a term of years should be regarded as a chattel instrument, the profits from the sale of which should be considered as capital. When Parliament agreed to an amendment of the act, it was understood by many that it was the desire of the government to tax as income the profits received by persons engaged in the business of buying and selling hotel leases and other leases of that description, and not to tax money derived from the sale of pastoral and mineral leases. Under the South Australian acts, pastoral leases have been granted for 42 vears, but the usual term is 21 years, and leases of such land, when it is not required for other purposes, have always been renewed. The ordinary term of a mining lease in Western Australia is 21 years, with the right of an extension for a further fifteen years. Large sums have been spent in developing pastoral and mineral leases, and I do not know of an instance in which a government has resumed the land when the lessees have complied with all the conditions under which it was granted. Are we to understand that persons who purchase large areas of land adjacent to the capital cities, and who make profits of from. £50,000 to £100,000 on the transaction, can regard those profits as an accretion of capital, whilst a person who disposes of a mineral or pastoral lease on which he has expended very large sums for development cannot do so? We should decide whether we are to continue the policy adopted since the amending bill was passed some years ago. I think it was in 1916 that we determined to tax the profits made on the sale of leases. I am desirous of getting a decision as to whether the profit derived from the sale of a pastoral or mineral lease shall be regarded as taxable income. This bill has been brought in owing to the decision given in the Dalrymple case, and, apparently because what was desired could not be done by amending the Income Tax Assessment Act, special legislation is necessary. I do not know how other honorable members view the Government’s proposal, but my opinion is that the bill proposes a tax on capital. That being so, the principle should be applied all round, or not at all.
– It is .only a step from that to a. levy on wealth.
– This bill already imposes a levy on wealth. If a man takes up a pastoral lease and sells it, the income tax office will assess the value of the improvements effected by him1. The man who takes up a pastoral lease in what is thought to be an artesian belt may put down two or three bores before he succeeds in striking an artesian flow. How much of the expenditure thus incurred will be allowed to him as tangible assets belonging to the lessee? Will he be allowed only the amount expended on the bore that actually proved the existence of artesian water ? The whole matter is left to the “ opinion of the Commissioner of Taxation “ and the lessee is given no right of appeal against the Commissioner’s decision. The Commissioner, of course, must depend upon the reports of his inspectors. It is an enormous power to give to these men. I have provided in my amendment for the exemption of pastoral, grazing, and mining leases granted by the Commonwealth and the states. If a man goes into the Northern Territory and spends his lifetime in building up a cattle or sheep station, and ultimately sells his property, he should be treated at least as well as, if not better than, the man who buys property in the city and sells it at a considerable profit. All the expert advice I have been able to obtain assures me that this bill proposes to tax capital and not income. If that is thought just, let us tax capital all round, or let theTreasurer accept my amendment.
– The bill contains a very dangerous principle.
– If it is applied to the sale of leases, it should also be applied to the sale of any class of tenure.
– Does it not apply to every one?
-No. The man who purchases a freehold property and sells it six months afterwards at a profit of £1,000 pays no income tax on that £1,000, because it is regarded as an accretion to this capital.
– He is taxed in Queensland and New South Wales.
– He is not taxed in most of the states, nor under Commonwealth legislation. I . can see no reason why the investor in city property should be given an advantage over the man who invests his money in a pastoral or mining lease. On the contrary, every inducement should be given to people to go into the back country and develop the open spaces of Australia. If we cannot give them an advantage over other classes of land-holders, we should certainly not put them in a disadvantageous position as compared with the others. I trust that honorable members will realize that this bill proposes to tax capital. Honorable members should either agree to my amendment, or make the profits on all land transactions equally liable to the payment of income tax.
– The honorable member for Swan (Mr. Gregory) has overlooked the fact that the sale of a lease must be taxed, because the Income Tax Assessment Act permits the purchaser of a lease to claim a deduction for the amount he has spent in acquiring the lease. It would be impossible to allow a deduction in both cases. Already there is discrimination between freehold and leasehold land, inasmuch as leasehold land is nob taxed for land tax purposes, whereas freehold is. Special provision was ‘ made in the original Income Tax Assessment Act to deal with the sale of leases, and the trouble that has arisen since arose through an attempt to extend the principle to a subsequenttransfer or assignment. If we allow a deduction to the purchaser, we must impose the tax on the vendor. It mustbe paid by some one.
.- By making the profits on the sale of a leasehold taxable, we naturally increase the price paid for the property. When a person buys a lease, he buys it fully realizing his responsibilities. He knows that the lease has only a certain period to run, and ho pays a smaller price than he would pay if the vendor were called upon to pay income tax on the purchase price. Provision i3 made in the Income Tax Assessment Act for the person who puts his capital into a lease to get a deduction each year during the currency of the lease.
– Provision would have to be made to cover that by an amendment to the Income Tax Assessment Act.
– I am dealing now with the question, Are we to tax capital? The man who buys a lease should take his full responsibility. If he cannot make an income out of it within the unexpired period, the responsibility rests upon him. But why should the man who builds up a property be obliged to pay an enormous income tax, and particularly on the basis of one year’s profit, though he may have held the lease for many years, in order to enable the next man to deduct so much each year because of the amount he was obliged to pay for the purchase of the lease?
.- This is a very involved question, and it is very difficult to lay down any principle to guide us. I agree with the honorable member for Swan (Mr. Gregory) that this bill is tantamount to a tax on capital, and that if we are to tax any capital we should tax all capital.
– And if we do not tax all capital we should not tax this particular capital.
– But we are faced with another problem. Purchasers of leaseholds have not regarded the purchase money as capital when they have asked for a rebate in respect of the amounts they havepaid. They have treated the amounts paid, not as capital, but as income.
– Is their demand a fair one?
– I am not saying that it is fair ; I am merely pointing out what has been done without involving that issue. As a matter of fact, this tax was not imposed on leaseholds until the leaseholders themselves asked for a deduction, spread over the periods of the leases, in respect of the purchase-money paid by them. They regarded it as income expenditure, and if the amount paid for a lease is income expenditure at the time of the purchase, it must also be income at the time of the sale. The leaseholders themselves have rendered the position involved.
– That is the kernel of the whole position.
– Undoubtedly it is. Another strange complication arises from the fact that a rebate is allowed for any covenanted improvements to which the lessee agrees. The freeholder ought to be taxed on them, but he is not.
– Is the honorable member speaking of Crown leases?
– I am speaking of leases of premises such as hotels or shops. When the freeholder gives a lease to another person, and the tenant agrees to expend so much on improvements, the lessee secures a deduction for the amount he spends on those improvements. By the same line of reasoning, the freeholder ought to pay income tax on the amount he has received in this way from the leaseholder. It ought to be added to the rent and spread over the term of the lease, but it is not. Wherever we go, the freeholder has a better deal than the leaseholder. The point raised by the Treasurer (Dr. Earle Page) must be considered. If we are not to tax these leases, we shall be obliged to get a refund on all the rebates that have been given to leaseholders on the prices they have paid for the leases they have taken over. If the principle is made to operate only one way, the revenue will suffer considerably. I have not heard what the Treasurer estimates the loss would be, but I should think that it would be in the neighbourhood of £1,000,000. The amendment proposed by the honorable member for Swan would increase the injustice, because it would result in further discrimination. He wishes to exempt pastoral and mining leases, but what about agricultural leases?
– They are exempt.
– They may be, or they may not.
– They are not absolutely exempt.
– We cannot separate the genuine cases from the others. If a man buys a freehold property and sells it at a profit, his profit is not taxed, but if his business is the buying and selling of property, the profit that he makes is taxed as income. Why, when a man who makes a profit by selling freehold property such as houses is not taxed on the profit he makes, should a man who sells a lease’ be required to pay tax on his profit ? I claim that no distinction should be made between the sellers of freehold and the. sellers of leasehold property.
– A man who makes a business of buying and selling leases relies on that business for his income, but his case is different from that of a man who parts with his capital by selling an income-producing property to somebody else who is desirous of using it for the purpose of earning income.
– The honorable member has repeated my own argument. In dealing with freeholds we clearly distinguish between the man who buys land and sells it at a profit, and the man who buys and sells land as a business, but we do not make that distinction in regard to leasehold property. Yet I confess that I find it very difficult to become dogmatic on the subject, realizing the consequences of the present practice. The whole matter has become involved through the action of leaseholders themselves, and, of course, they cannot have a thing both ways. Is it possible to trace all the money that has been lost in rebates that should not have been made ?
– Take a pastoral lease of 21 years. It is very seldom that the whole of the land is resumed when the lease falls in.
– Take a case where there has been no rebate. In a number of cases there has been no reduction of the tax, but it is no use going back too far. We must remember that whether the rebate was legal or not it was deemed to be legal. If I am correctly informed, no. tax was imposed on profits from the sale of leaseholds until the rebate was claimed.
– That is so.
– There is another consideration. A royal commission threshed this matter out for a considerable time. If my memory serves me aright it came to the conclusion that the price paid for a lease was not an accretion of capital, but pre-paid rent, and there is much to be said in favour of that contention. Here is another complication. If a loss is made on the sale of a lease no allowance is made for that loss by way of deduction from the seller’s income, but it is treated as a loss of capital. Why, I ask, is it not treated as a loss of income ?
– We are prepared, to consider that point.
– I think that the Government should do so.
– The whole issue depends upon whether the buying and selling of leases is a person’s method of earning a livelihood.
– Quite so; but where are we to draw the line?
– It is left to the discretion of the Commissioner.
– It is not fair to leave too much to his discretion. Some men make a living by buying and selling house property. They live in a house for a year or so, and then sell out, thereby escaping the payment of income tax on the profit. Others buy leases of businesses, and after a year or so sell out at a profit. A man may buy the freehold of an hotel, and, after building up the business, sell out for £20,000, obtaining £10,000 for the freehold and another £10,000 for the goodwill. He escapes the payment of income tax. If, on the other hand, the same man had purchased the lease of an hotel, and, after building up the business, had sold the goodwill at a profit of £10,000, he would have to pay income tax on that amount. That is the law which is now to be validated. In the case of the sale of an hotel that is freehold, not only is the increase in the freehold value to be regarded as an accretion of capital, but the goodwill also is to be included. The granting of a rebate of income tax was wrong in the first place, but we cannot remedy the trouble by retrospective legislation. I am satisfied that as much injustice will be done to the hotel lessee as to the pastoralist or mining lessee. Therefore, the amendment of the honorable member for Swan will not meet the position,
.- A few days ago we agreed to exempt from income tax sums paid for medical expenses. Previously, tax has been paid twice on the same money. For instance, if a taxpayer paid £100 to a doctor for medical expenses, the money would be taxed as part of the income of the doctor, and the person who had paid the money would not be allowed to deduct it from the amount of his taxable income, so that the Government collected tax twice on the same money. Whatever the nature of a lease, the Government has the right to, and does, tax the owner if he makes any profit on the sale of it. That profit regulates the price obtained for it, and determines the earning capacity of the property. When the owner parts with his means of earning income, he sells his assets. The person who buys the lease is liable to be taxed on the income derived from it, and it is manifestly unfair for the Government to collect the tax twice. A man’s lease may be his source of income. If we desire that this country shall develop both as regards mining and agriculture, we must act justly towards the people engaged in those pursuits. The case of the estate agent, who makes his living by the exchange of properties, is entirely different. He derives his income from the sale of property, and should be taxed on that income. When a lease is sold by the holder, it means that the seller has sold his means of livelihood to another, who, in turn, becomes taxable on income derived therefrom. The seller, should not be called upon to hand the proceeds of the sale, or any -portion of it, to the Commissioner of Taxes, because probably he will have to invest it in some other direction to continue to make a living. The cruel injustice which has been meted out to ‘ a section of our citizens has been a factor in retarding the mining industry. Honorable members should see the difference between the two classes of persons, and realize that- if the amendment moved by the honorable member for Swan (Mr. Gregory) is not agreed to, we shall be taxing two people on precisely the same money.
.- This amendment deals only with a certain section of leaseholders. There are others similarly situated.- The honorable member for Swan (Mr. Gregory) said that estate agents who sell property as a business should be taxed on the incomes they deriVe from such sales, but there are others who buy and sell property, and make profits by so doing. Honorable members all know that it is not unusual for a man to purchase a property and live in it for a time, during which period he improves it, and then sells it at a profit.
– That man is a land jobber.
– Yes : but he is not taxed on his profits, because he is not registered as an estate agent. A system which taxes the. profits derived from the sale of leasehold properties, and excludes from taxation any profits from the sale of freehold properties, is inequitable. But not only does the law discriminate between leaseholders and persons owning freehold property, but it is now proposed to discriminate between different classes of leaseholders. I recollect a case where a syndicate of three men took over the lease of a Melbourne hotel. Because of the improvements they effected and their manner of conducting the business, custom was attracted, and before long a profitable business developed. When the lease had still seven years of its original ten years to run, they sold out at a profit of £33,000. Do honorable members think that those men should have been exempted from taxation? In that line of business alone there are numbers of people who make considerable profits year after year. They are fair game for taxation. In this matter I shall have to support the Government, as I believe that if some leaseholders are ,to be exempted, all should be exempted.
– A man may die, and his widow be unable to continue the business. If she sells the business, should she be taxed 1
– The “ poor widow “ argument has been used in connexion with nearly all legislation which has been introduced. When first we proposed to introduce legislation controlling shops and factories, we heard of the poor widow whose means of livelihood would be taken from her. No Parliament can satisfactorily, legislate for exceptional cases. The best that can be done- is to deal justly, so far as is possible, with the great majority of the people. Even when we do our best, we find that the legislation doe3 not meet every case, and that some still suffer. The honorable member for Swan may be pleading for a class of leaseholders who are in difficult circumstances, but if I vote for his amendment, and some other honorable member moves a further amendment to include practically every leaseholder, I shall feel compelled to vote for that also. At this stage I do not feel disposed to deprive the country of so much revenue.
.- The desire of the committee appears to be that, in connexion with a most difficult phase of taxation, we should try to do what is a fair thing. The Governmentproposes that the profits on sales of leaseholds shall be regarded as income, and not as accretions of capital. On the other hand, it is intended that we shall allow the amount paid for the lease to be amortized during the currency of the lease. I was very interested in the remarks of the honorable member for Yarra (Mr. Scullin), with which I was, to a great extent, in agreement. He put the case fairly clearly. We are not discussing this subject from a party stand-point, but with the idea of doing a fair thing by the leaseholders, and laying down generally fundamental principles of taxation that will equitably meet a situation which admittedly is extremely difficult to handle. The effect of the amendment moved by the honorable member for Swan would be to discriminate between leaseholders, because it proposes to exempt from the provisions of this bill certain leaseholds, but hot all leaseholds.
– It would exempt leaseholds from the Crown, as tenures in fee simple from the Crown are exempt.
– The amendment, if carried, will further complicate the position, and I cannot see any reason for departing from a fundamental principle by differentiating between the profits from the sale of leases. Under the taxation proposals before the committee, a person who gives £5,000 for a ten years’ lease of land is allowed £500 a year deduction from his income as rent or amortization until the lease expires. Therefore, if he sells the lease during its currency, he should certainly pay income tax upon any profit that he makes from the sale.
– The leaseholder cannot have an advantage both ways.
– That is so. The Treasurer indicated just now that if a leaseholder loses as a result of selling his lease, it would be fair for him to have a deduction made from his income tax to meet that loss.
– Is that provided forin the bill?
– The Treasurer said just now, by interjection, that that matter could be considered.
– It would be a dangerous thing to do.
– I do not think so. I see nothing unfair in allowing a lessee an annual deduction from his income tax for amortization of the cost of his lease during its term, but any profit made from the sale of his lease during its currency should be taxable as income.
– Say a pastoral lease for ten years had expired, and during that period the leaseholder had had the benefit of the whole of the amortization allowance, what would be the position if he received from the department a renewal of his lease for another 21 years?
– He would get the renewal at a certain price, and then the lease would go on as in the past.
– If the price were the same there would be no rebate for the previous period.
– The position is very difficult from whatever aspect it is viewed. If we regard profits from the sale of leases as an accretion of capital, and not of income, surely it is fair for the department to charge the income tax upon the amortization allowed in past years.
Mr.Foster. - A profit from the sale of a lease should be regarded as an accretion of capital.
– I cannot follow the argument of honorable members who would not suspend the law whereby amortization can be annually deducted from incomes, and also contend that when a lease is sold at a profit it shall be regarded as an accretion of capital. It must be one thing or the other. It seems to me that the proposals of the Government are fundamentally fair and present the only practical way out of an exceedingly tangled position in respect of taxation of leaseholds. If deductions over the term of a lease are allowed, surely profits made from the sale of that lease should be taxed, and, alternately, allowance made for any loss incurred by the sale?
.- In this debate the outstanding difficulty is that all leases are spoken of as being of the same kind and quality. There are two reasons why a man leases instead of selling his property. He leases it either because it is too valuable to sell, or because be cannot sell it. The Government leases properties because there is no other way of disposing of them, and also to develop them.
– The Government leases properties in the Federal Territory that could be sold.
– In that case, a different principle altogether is involved. The amendment moved by the honorable member for Swan (Mr. Gregory) deals with the leasing of properties that cannot otherwise be developed. The state does not give tenures in fee simple because people in a great many cases are unable to buy them. The state gives a lease so that land may be developed. The lessees pay for placing improvements on the land, to obtain as a reward, when the lease is sold,an accretion in value
– A mining lease is sold to make profit from gold.
– The majority of the lessees do not want to make a profit out of the sale of their leases. When they purchase the lease they know perfectly well what chance there is of developing the land. It is no use trying to apply the same argument to a class of lease, which is of value only because of the development of the land and the improvements placed upon it, and to another class of lease which is so valuable that the owner does not care to part with it. I support the amendment moved by the honorable member for Swan.
.- I must compliment the honorable member for Yarra for clearly outlining all the difficulties confronting this class of taxation. I cannot support the argument that the profit from the sale of a lease is an accretion of capital. If a man takes up a lease for 21 years, where does he stand at the end of that period ? He has nothing more than his right to the improvements on the property. When a man takes a lease from the Crown, he pays nothing except his annual rent. At the expiration of his lease, he has no accretion of capital at all. Even if he sells his lease half way through its term, it is not right to class any profit hemakes from the sale as an accretion of capital. The amount that he receives from the sale, after deducting the value of the improvements, represents the increased earn ing value of the property just the same as if he had sold portion of the stock on the property. In addition to his lease he must have stock with which to earn his living. If any profits from the sale of his lease half way through its term are not to be taxed, then it is just as right to say that any stock he sells half way through the term of his lease should also not be taxed. The lease implies the right to use the property during its currency. The lessee pays for that right. When a lessee sells his lease to another person at a profit, the value of the property is evidently greater than it was when the rental was originally fixed by the Crown, and, as a natural corollary, one would expect the rent to be greater.
– That land could be of additional value only because of its development.
– Because of development and improvement. Many people think that a person taking up leasehold is in exactly the same position as one taking up freehold, but it is not so. Two people may take up land from the Crown, one freehold and the other leasehold. The man who takes up leasehold pays out nothing, but the man who takes up freehold pays a fairly large sum representing the value of the land. During the time he occupies it, he pays land tax, which increases as the land appreciates in value. The Taxation Department steps in and raises the unimproved value of the land, and the freeholder pays increased land tax, whether he makes a profit or not. On the other hand, a leaseholder pays nothing at all until he sells his lease. He is not taxed upon the total amount he gets for the sale; simply upon the profit. If he makes a loss on the sale he is not taxed at all. I have already spoken to the Treasurer, and I am hopeful that he will be able to devise some means whereby a lessee shall be free from income taxation in proportion to the loss on the sale of his lease.
Sitting suspended from 6.30 to8 p.m.
– During the adjournment I have had an opportunity to fully consider the amendment moved by the honorable member for Swan (Mr. Gregory). In view of a ruling that was given by the Chairman of Committees on the 26th ultimo, when he declared an amendment to be out of order “ on the parliamentary principle that a committee on a bill cannot alter a matter agreed to by a previous committee, and adopted as a resolution by the House “, and having regard, also, to a ruling given on the same day by Mr. Speaker, that if a resolution of the Committee of Ways and Means, originating a bill, is reported to and adopted by the House, a bill founded upon it may not be amended in a manner contrary to the resolution, I must rule this amendment out of order.
.- Then, I move -
That the following proviso be added, after paragraph (b), sub-clause 1 : -
Provided that, in assessing the value of tangible assets belonging to the lessee, as set forth in paragraph (a), due consideration shall be given to all developmental expenditure by the lessee, and the lessee shall have the right to appeal conferred under the Income Tax Assessment Act 1922 and any amendment thereof.
– Order ! In view of the rulings I have just quoted, I have to rule that no amendment can be moved upon this bill.
– Do you rule, sir, that no clause of the bill can be amended?
The TEMPORARY CHAIRMAN:No amendment can be moved to any clause of the bill. In the Votes and Proceedings of the House for the 1st inst., the resolution upon which this bill is founded is clearly set out. It was moved by the Treasurer (Dr. Earle Page), in, and agreed to by, the Committee of Ways and Means, and reported to and adopted by the House.
– On a point of order, I wish to ask whether your ruling precludes any amendment whatever from being moved ? Will it, for instance, preclude me from moving, if the necessity should arise, to add to the exemptions provided for by clause 8 ?
The TEMPORARY CHAIRMAN.Certainly.
– Then, sir, I propose to move -
That the ruling of the Chairman be disagreed with.
To all intents and purposes this bill is eimilar to the Income Tax Assessment Bill, which was before us only a few nights ago. To that bill amendment after amendment was moved in Committee of the Whole. The bill provides for assessing taxation on leaseholds. The bill with which we dealt the other night was for the purpose of assessing the taxation on incomes.
The TEMPORARY CHAIRMAN.The bill to which the honorable member refers is entirely different from that now before us. If the honorable member will peruse the Votes and Proceedings of the House of Representatives for the 1st October, he will see that the resolution upon which this bill is founded was passed in Committee of Ways and Means, and was reported to and adopted by the House. Therefore, no amendment of the bill can now be made.
– Could the Government itself amend the measure?
– The Government itself cannot amend the measure in this committee but it may refer the bill back to the Committee of Ways and Means.
– The committee has got into a very difficult position, but I suggest to the honorable member for Swan (Mr. Gregory) that there is no ground for disagreement with the ruling of the Chair. This bill is founded upon a resolution passed in Committee of Ways and Means reported to the House, and adopted by it. To amend the bill now therefore would be to vary a resolution passed by the Committee of Ways and Means and adopted by the House. That is not permissible. It is obvious, however, that the committee would not wish to have a measure so important as this brought before it without having an opportunity to discuss it or to submit amendments of its provisions. I, therefore, suggest that the measure be again referred to the Committee of Ways and Means. It would then be open to the honorable member for Swan, or to any other honorable member, to move in that committee that it be an instruction to this committee on the bill to amend it in the direction desired by him. The delay would not be lengthy, and a difficult discussion upon a technical and abstruse question of parliamentary procedure would be avoided. I want to make it quite clear to the committee that the Government has no desire to take advantage of any technical point that has arisen.
Mr.Fenton. - The Government would violate our Standing Orders if it did.
– I think that the course I have suggested is theonly one open to us under our Standing Orders. If the matter is dealt with in the Committee of Ways and Means there should be no necessity for any discussion in the Committee of the Whole on the bill.
– Because of the importance of the principle involved, and in order that this Parliament shall not sacrifice any of its rights, I think that this matter should at once be decided. It would be an absolute farce if, after a bill had been read a second time, and the House had gone into committee to consider it in detail, honorable members had not the right to move any amendment of it. The principle is so important that the House ought to decide whether such a thing should be tolerated for an instant.
– This can happen only when a bill has been founded upon a resolution of the Committee of Ways and Means in which every item has been open to discussion.
– It is not my duty to say whether the rules governing our procedure are absurd or ridiculous, as the honorable member for Swan suggests. They are the rules adopted by the House, and must be obeyed. The only way out of the difficulty is that suggested by the Prime Minister, that I do now report progress and that the House again go into Committee of Ways and Means to consider a resolution dealing with the details of the measure.
– I rise to a point of order. Will you, sir, inform the committee whether the resolution carried in the Committee of Ways and Means was in the express terms inwhich this bill appears before us, or was it merely a resolution in general terms.
– The resolution carried in the Committee of Ways and Means was in the terms of the whole bill. If the honorable member will refer to the Votes and Proceedings of the House for the 1st instant he will find confirmation of that statement.
Motion (by Mr. Bruce) proposed -
That the Chairman do now report progress and ask leave to sit again.
– On a point of order-
– I shall take no further point of order.
-On the motion moved by the Prime Minister to report progress, is it not competent for any honorable member to say a word ?
– No, it is not. No discussion of the motion is allowable.
-For the information and giiidance of honorable members, I should like to know from you, Mr. Speaker, the position in which honorable members are placed when the Government introduces a bill founded upon a resolution of the Committee of Ways and Means. Would it not be possible for the Government to introduce such a measure in the ordinary way by notice of motion, so that it might be discussed on the second reading, and, during the committee stage, might be open to amendment? I ask for guidance in the matter, so that we may know whether if in future other bills are introduced founded upon resolutions of the Committee of Ways and Means we shall be precluded in Committee of the Whole from moving any amendment of them.
– I presume that the honorable member is referring to the Lessee Tax Bill, upon which the Committee of the Whole has just reported progress.
– It would not be possible to originate a bill of that kind except by message from the Crown, or resolution of the Committee of Ways and Means. Other bills which do not impose charges or levies or rates upon the people may be originated by ordinary forms of notice, but such a Bill as this must be originated by a message from the Crown or upon a resolution of the Committee of Ways and Means. I take it that honorable members desire some further information as to the powers of the Committee of Ways and Means when the original resolution upon which a bill is to be subsequently founded is being considered.
Honorable Members. - Hear, hear!
-It is perfectly plain that certain things are permitted at certain stages of a bill, whether it originates in a message or in a resolution of the Committee of Ways and Means. But if the Committee of Ways and Means reports a resolution to the House and the House adopts it, the resolution then becomes the resolution of the House upon which the bill is founded. When subsequently such a bill after the second-reading stage goes into Committee of the Whole as distinguished from the Committee of Ways and Means, certain strict limitations are placed’ on _the powers of the Committee of the Whole. I could not, at a moment’s notice, undertake to strictly define those limitations, but it is obvious that they are of this character : that no amendment which in any substantial way varies the terms of the resolution upon which the bill was founded can be accepted, and particularly if it varies the terms of the resolution by altering the area of taxation, when taxation is involved, or by increasing the charges or levies upon the people. In such circumstances, such amendments are, distinctly forbidden by parliamentary practice. So strong has been the feeling in connexion with these measures, that for upwards of a century the House of Commons had only two standing orders, and these standing orders governed the House in its ‘ consideration of such measures. They prevented the Commons from augmenting the Supply when Supply was being granted and limited the power of the Commons, either in House or Committee to increase the levies which the Crown demanded. If there is any other matter upon which I can assist honorable members I shall be happy to do so.
– I take it, sir, from your statement, that it is quite permissible in committee to move any amendment upon such a bill as has been referred to, provided that it does not increase the area of taxation or increase the charges on the people ?
-In which committee ?
– In the Committee of the Whole.
– I am afraid that I have nob made myself understood. Once a resolution of the Committee of Ways and Means has been reported to and adopted by the House, no variation of that resolution can be made in Committee of the Whole on the bill founded upon it. The Committee of the Whole cannot alter the character or width of the resolution.
– Are we to understand, sir, that when a taxation bill has been founded on a resolution of the Committee of Ways and Means, no amendment affecting the scope of the taxation proposed can be made in Committee of the Whole House. The House, having adopted a resolution of the Committee ot Ways and Means, it would appear that the only opportunity afforded honorable members to amend the bill founded on the resolution, and subsequently presented, is at a stage before they have seen it. The resolution of the Committee of Ways and Means, of course, precedes the first reading of the bill. The bill cannot be circulated until it has been read a first time. Then it is read a second time, and is then taken into Committee of the Whole. At this last stage, which is the only stage at which honorable members, having seen the bill, have an opportunity to discuss its details, it is too late to make any . amendment in it. Is that the position?
– Precisely the same question arose less than a fortnight ago on a point of order raised by the honorable member for Angas (Mr. Gabb). I then gave a ruling, and endeavoured to make clear to honorable members generally, that the stage at which to challengeexplanations, or even to alter a measure of taxation originating in a resolution of the Committee of Ways and Means, was in the Committee of Ways and Means itself. There is . one further point which I perhaps did nob make quite plain on that occasion, when I was called upon for a ruling without notice, and that is that if, when a resolution of the Committee of Ways and Means is presented to the House for consideration and adoption, the House desires to alter it, it may do so.
– Before it has seen the bill.
– Yes; bub the Committee of the Whole cannot alter a resolution from the Committee of Ways and Means which has been adopted by the House.
– Your explanation, sir, of the point raised by the honorable member for Angas was clear, and I think was thoroughly understood. It is, I think, known to us that no amendment which would alter the area of taxation or increase the charges proposed would be permissible. I understand you to say now that the Committee of the Whole cannot alter the character or scope of the resolution of the Committee of Ways and Means, but that amendments within a strictly limited area are permissible by the Committee of the Whole. I should like to direct your attention to the fact that the Temporary Chairman of Committees (Sir Neville Howse) has ruled that no amendment of any kind is permissible in the bill which has been under consideration in the Committee of the Whole.
– I wish also, on the point of order, to explain that I moved in Committee of the Whole an amendment which, if adopted, would have altered tie scope of the bill, as under it a certain industry would he exempt from the taxation proposed. The Temporary Chairman of Committees ruled that that amendment could not be accepted, because it would alter the scope of the bill. I accepted his ruling as correct, but I later desired to move a further amendment, which, if adopted, would not have altered the scope of the bill. The Temporary Chairman then ruled that it was impossible in Committee of the Whole for an amendment to be moved which would alter the bill in any way whatever. I should like to know whether that ruling is correct.
– Answering . first of all the inquiry of the honorable member for Swan, it must be within the knowledge of the honorable member that it is not the practice of the Speaker to comment upon rulings of the Chairman of Committees. The position of the Chairman of Committees would be impossible if he were to be overruled, not by the committee of which he was chairman, but by Mr. Speaker from another chair. On the question raised by the honorable member for Bourke, I thought I had made it quite plain that there are two occasions on which, should honorable members so desire, they may vary proposals before the Committee of Ways and Means. First of all, they may do so when the resolution is presented to the Committee of Ways and Means. They may do so at the second stage, when the resolution of the Committee of Ways and Means is submitted to the House for adoption. If no alterations are made at either of these stages, it is quite incompetent for a Committee of the Whole House to make any variation in a resolution reported from the Committee of Ways and Means, and subsequently adopted by the House.
– I should like to have some information as to the procedure which should be followed if it is desired to vary the terms of a resolution of the Committee of Ways and Means which has been adopted by the House. Must the resolution be again submitted to the Committee of Ways and Means before it can be altered ? I understand that it is proposed that the House should again go into Committee of Ways and Means for the purpose of varying a resolution of that committee, which has already been adopted by the House. I should like to know whether it will not, first of all, be necessary for the House to alter or vary its decision in adopting the resolution before it can be again considered in the Committee of Ways and Means.
– There is a perfectly clear alternative course laid down by May to overcome difficulties of this kind. For the information of the House, I shall quote from May on the subject. At page 592 of the tenth edition there is a passage, the beginning of which is not strictly relevant to the matter before us, but should be quoted by way of introduction -
No further proceeding is founded on the reports of the Supply grants : but when the resolutions of the Committee of Ways and Means are agreed to, bills may be ordered thereon to carry the resolutions into effect. When such a hill has been ordered, hut not presented, the members appointed to prepare the bill may be instructed to make provision therein, pursuant to such further resolutions of the committee as have been agreed to since the bill was ordered -
And here is the vital passage - or an instruction is given to the committee on the bill-
That is to say, the Committee of the Whole- to make such provision therein, if the bill has been read a second time.
If a bill has been read a second time, an instruction may be given by the House to the Committee of the Whole to make certain alterations in it. The second procedure laid down by May is that most commonly used in the House of Commons -
When a bill brought in on Ways and Means resolutions or on the resolutions of any other Committee of the Whole House be withdrawn, and it is expedient to bring in another bill of a similar nature, the usage is to read again the resolutions on which the bill was founded, and to order another bill, either on all, or on some of those resolutions.
I do not know whether the point raised by the honorable member for Hindmarsh was pertinent to the procedure proposed to be adopted in this case, because I have no knowledge of what has been proposed, but the House alone can order any variation of the present position in relation to the bill to which reference has been directly made - either for its withdrawal or for fresh instructions to be issued to the Committee of Ways and Means or the Committee of the Whole House.
– In this case it so happens that the whole of the bill we have been considering in Committee of the Whole is contained in the resolution of the Committee of Ways and Means upon which it is founded.
– Is that not always so?
– No, it is not always so, but it is so in this case. The fact that the resolution of the Committee of Ways and Means adopted by the House, and upon which the bill is founded, is, word for word, the same as the bill precludes the Committee of the Whole from altering any part of it. It seems . to me that it is unusual to frame a bill exactly in the terms of the resolution of the Committee of Ways and Means upon which it is founded. If the bill were not exactly in the form of the resolution of the Committee of Ways and Means, subsequently adopted by the House, I presume that the Committee of the Whole would have the right to amend it within certain limits. If the resolution of the Committee of Ways and Means did not specify the details of the bill, would the House be permitted to amend the bill?
– That is a somewhat hypothetical case upon which it is difficult to rule. With the exception of the long title, the preamble, and the short title, the bill, as far as I can judge from a hurried perusal of it, follows the exact wording of the resolution of the Committee of Ways and Means upon which it is founded. There would scarcely be a general resolution for a tax of this kind ; but the effect of a resolution of the Committee of Ways and Means reported to and adopted by the House cannot subsequently be varied by a Committee of the Whole. Beyond that, I think, I should not be asked to comment at this stage. Some of the points raised have been suddenly sprung upon me, and they are so important that I may reasonably ask for time for further consideration before finally confirming the views I have expressed.
In committee (Consideration of Senate’s amendments resumed, vide page 5158) :
Clause 24 -
All moneys received by the board in respect of the sale of dried fruits or otherwise howsoever (except moneys forming part of the fund) shall be paidby theboard into a separate account in the Commonwealth Bank.
Senate’s Amendment. - After the word “ Bank “ insert” or any other prescribed bank.”
Question - That the Senate’s amendment be agreed to - put. The committee divided.
Majority . . . . 14
Question so resolved in the affirmative.
Amendment agreed to.
Senate’s amendments in clause 28 agreed to.
Resolutions reported and adopted.
Debate resumed from 26th August (vide page 3548), on motion by Mr. Bruce. -
That the bill be now read a second time.
.- The object of the bill is to give the Public Service Board a legal standing in reclassifying the Public Service, so that any action of the board will not be ultra vires if it should conflict with the decisions of the Public Service Arbitrator. The reclassification of the Service, of which the first part is published in the Commonwealth Gazette No. 38, of 18th June last, is a schemeof wage reduction. It is an endeavour to relieve the Public Service Board of the necessity for obeying the awards of the Public Service Arbitrator. As it thus strikes vitally at the interests of public servants, and as this House has on previous occasions recognized the importance of observing a standard of wages and conditions which will lead to contentment and efficiency in the Service, we should give particularly careful consideration to this bill. Many features of it are distinctly undesirable, and during its passage through the House and the committee it will not be difficult to make honorable members realize that fact. The effect of the reclassification so far has been to lower the status of our public servants. The Public Service organizations have for a considerable time been endeavouring to improve the conditions of those employed in the Service, who have borne themselves with great patience, hoping that redress would be afforded by the awards, of the Public Service Arbitrator. After a delay of many months, for even the most simplified form of arbitration means delay, the Arbitrator delivered his awards, and the officers of the Service naturally felt that they would be able to enjoy the benefit of them. The hope was vain, for the reclassification has to a large extent nullified the awards. I may be told that the provisions of this bill protect the officers of the Service from salary reductions through the reclassification. My reply is that they are only protected while they continue to hold their present positions. They will feel the serious effects of the reclassification when they are transferredor promoted. A man may be occupying a position to-day the minimum salary ofj which is £250 per annum, and although the minimum salary for the next higher grade is £300 per annum according to the arbitration award, he may find when he is promoted that the reclassification has had the effect of reducing the salary to £260 per annum. It must be apparent to all honorable members who have given any thought to the subject that the sole effects of the reclassification must be to create dissatisfaction and discord in the Service, for it will deprive the officers of the emoluments they reckoned would be theirs on promotion. It has reduced status as well as salaries. The adoption by the Government of the policy ofappointing outsiders to the best positions in the Service is also having a deplorable effect. Many brilliant public servants have been overlooked when important appointments have been made in the last two years. They have been shockingly treated. The failure of the Government to recognize the faithful and loyal service of our senior officers is having a disastrous effect upon the morale of the Service generally, and must tend to inefficiency and indifference. If we desire a contented and satisfied Service, we must deal fairly by our officers, and make the Service as attractive as possible. The pernicious system of filling the most lucrative and important public positions by the appointment of persons outside the Service deserves complete condemnation, and in adopting it the Government has been guilty of. a serious departure from what has always been regarded as the settled policy of the country. Among the important offices which have been filled by outside appointments more or less recently are the following: - Director of Navigation, salary £1,500; Director of Immigration, salary £2,0.00 per annum : Commonwealth Superintendent of Immigration, an office which has now been abolished, salary £1,500 per annum ; Assistant Director of Immigration, salary £900 per annum: Official Secretary to the Commissioner for Australia in the United States of America, salary £950 per annum: Commissioner to represent Australia on the Nauru ‘Commission, salary £2,000 per annum; and Trade Commissioner in the East, salary £2,000 per annum.1 In addition, the Government has recently appointed Dr. Henderson and Mr. D. Casey, at a salary of £900 each, to important positions in the Department of Home and Territories, and Mr. Sheaf has succeeded Dr. Little as Trade Commissioner in the East, at a salary of £2,250 per annum. We have smart and efficient . officers in the Service, who were capable of filling ‘ all these offices with distinction to themselves and to Australia. I am not criticizing the abilities of the gentlemen who have been appointed. I say nothing about that aspect of the matter. My complaint is that the offices should have been filled by members of the Commonwealth Public Service, and that the continual disregard of the claims of senior officers to the most lucrative positions at the disposal of the Government is having a deplorable effect upon the Service generally.
– Does the honorable member condemn the appointments that have been made in the cases he has. mentioned ?
– I do not question the abilities of the gentlemen selected, but I protest against their preferment to competent officers of our own Service. Many men in our various departments are thoroughly capable of discharging the duties associated with the offices that I have mentioned.
– That is just the point.
– Surely the. honorable member for Lilley will not justify the adoption of this policy. If he does so, he is perhaps unconsciously, but none the less effectively, making a grave charge against the capacity, ability, and efficiency of the senior officers of the
Service. I trust that the Government will discontinue the policy, and will give adequate consideration to the claims of members of the Commonwealth Public Service when it is making important appointments. If it be contended that the officers of our Service have not had sufficiently wide and varied experience to discharge the duties associated with some of our public departments, I should favour sending tha most brilliant and promising of them abroad for additional experience rather than the appointment of men from outside.
– Experience has proved that public officers who are sent abroad for experience invariably leave the Service soon after their return to ‘Australia.
– And why is that?
– Because more lucrative positions are offered them.
– That supports . the point that I am making. Our efforts should be bent towards making tha Service attractive. We are losing a number of our most enterprising and capable officers because the Service is not as attractive as it should be. On the other hand, many of our officers are sacrificing their prospects in the public interests by remaining in the employment of the Crown when they could better their positions by going outside. It is not only a poor appreciation of them to give the best paid positions in the Service to outsiders, but it is also inimical to the public interests. Nothing has clone more to defeat efficiency and interfere with satisfactory work in the Service than the factor which I have mentioned: and upon which I have enlarged in replying to the interjection by the honorable member for Corio (Mr. Lister). In view of what is happening, I trust that Commonwealth public servants will receive, greater recognition from those responsible for promotions and transfers than they are receiving to-day. In view of the classification of the Service now proceeding, on which this bill ‘has a direct bearing, as it validates the action of the board, it is necessary to ascertain the intention of. Parliament in regard to the status of officers and the Service conditions generally. In examining the first section o.f the classification scheme appearing in Commonwealth Gazette No. 38 of 18th June, it will be seen that a distinct departure -has been made from a very important principle adopted by Parliament.
This bill seeks to legalize the action of the board, as in sub-clause 1 of clause 97 it is given power to make regulations for the specific purpose of arranging the second and third divisions into classes, under which the worth and merit of officers is not to be considered. Consequently, a serious position confronts many of our public servants. They are to be deprived of their status, as the new schedule abolishes all t’he classes and deprives the officers of the status and classification which they hold. This departure, which involves an important principle, is seriously perturbing the Service. On the 4th July of this year, I asked the Prime Minister the following question: -
Is it the desire of the Government, having due regard to the relative purchasing power of money, that the Public Service Board, in the classification now proceeding, should lower the standard of the Public Service below that prescribed by Parliament in a schedule to the Public Service Act of 1902, and relatively confirmed by Parliament in the Public Service Act of 1911 f
The Prime Minister replied -
It is not clear what is meant by the honorable member’s question; but he can rest assured that the Government have no desire to lower the standard of the Public Service.
There is no obscurity in the Prime Minister’s answer, although he declared that there should not be a lowering of the status of public servants, we find that the Government intend to reduce the status and salary of all the officers in the Commonwealth Public Service, with perhaps the exception of those in the first division. The public servants in the lower grades are to be seriously affected, and it seems that the lower the grade in which an officer is employed the greater will be the sacrifice which he will have to make. The Prime Minister suggested that my question was not clear; but there should be no obscurity in this matter. The question distinctly refers to the standard prescribed in the schedule of the Public Service Act of 1902, and which was confirmed in 1911. That schedule specifies five different classes of officers, and gives the salaries to be paid to public servants in each subdivision of each class. A very definite salary standard is also embodied in the schedule of the Public Service Act , of 1911, for which the Fisher Labour Government was responsible. That Government also increased the standard and improved the conditions of the Public
Service as embodied in the 1902 act. The standard established in 1911, to which I referred to in my question, was adopted after considering the relative purchasing power of money. The classification now proposed will materially reduce the status of Commonwealth officers in all grades, and in consequence they are seriously perturbed. The first Parliament, which, of course, consisted of men holding widely divergent views, agreed that the standard should be sufficiently !high to attract the best men to ‘conduct the business of the nation. They considered that the officers should have a personal value as distinct from the value of their work, and -enacted that they, as well as the offices they occupied, should be classified. It is proposed under this measure to dispense with the personal classification that is so important if merit and ability are not to be overlooked. The board now proposes to make it difficult for organizations within a division to so classify their members as to enable them to file a plaint with the Public Service Arbitrator. It is practically impossible for one plaint to cover the officers engaged in any one of the divisions in consequence of the abolition of classes or grades. Classification and future awards may cover a particular division, but it will make confusion worse confounded, as under awards given by the Public Service Arbitrator no public officer will know exactly what is the standard and status of the duties he has to perform. I trust honorable members will realize the difficulty confronting public servants, and the hopeless confusion that will be brought about when they present their claims to the Public Service Arbitrator or any other tribunal. In 1911 a different Parliament confirmed the standard originally fixed, and in doing so had regard to the reduced purchasing power of money. This standard is prescribed in the schedule to the 1911 act, and Parliament has never directed that it should be lowered. No mandate has ever been given to any one to reduce it. Those responsible for lowering the standard are breaking an implied contract with those who, after lue consideration, have adopted the Public Service for their life’s work. I now propose to give sufficient data to enable’ honorable members to judge for themselves whether the new classification re- duces the standard. In order to make the position clear I shall give an illustration which can be readily followed, and, if necessary, checked from the records in the Library. I shall deal with the fifth, or the lowest grade of the Commonwealth Public Service. In checking these standards it is, of course, necessary to employ an official formula in respect of the fluctuating purchasing power of money, or cost of living, and in order that there may be no room for disagreement upon this highly important factor, I shall employ the formula adopted in the new classification for automatically adjusting salaries, namely, the Statistician’s index figure for the cost of food, clothing, and housing in the six capital cities of the Commonwealth. Using as a basis the index figure of 880 for the year 1901, the index figure for the first quarter of 1924 is 1,695, or, in round numbers, 1,700. In the 1901 act the maximum prescribed for the lowest class in the Public Service was £160. Dividing £160 by 880, the index figure in 1901, and multiplying the result by 1,700, the index figure for 1924, the present maximum salary for the lowest class should be £309 a year. The reclassification sets it down at £276. The schedule provided in the act of 1901 continued in force until 1911, by which time the index figure had risen to 1,000. Dividing £160 by 880 and multiplying the result by 1,000, the index figure for 1911, the maximum of 1901, namely, £160, had risen in ten years to £181. In 1911, Parliament amended the schedule to the act, and raised the maximum of the lowest grade to £180. In paying due regard to the relative purchasing power of the sovereign, Parliament apparently adopted the formula upon which I am now working, and upon which the Public Service Commissioners have adjusted salaries in their new classification. But in 1911 Parliament, in addition to increasing the maximum to £180, inserted a special sub-section providing that officers on the maximum of the fifth class should be advanced by two annual increments of £10 to a maximum of £200. That is to say, it went beyond the basis set by the 1901 calculation. At any rate, the standard of 1901 was not only maintained to 1911, but also exceeded. That standard continued in force until the war, but the recent reclassification provides for a reduction of what was establishedin 1901, and confirmed in 1911. It is well for us to com pare the salaries paid to the Commonwealth Public Service with those paid to employees outside the Service. In 1914 the average weekly wage paid to adult male workers throughout the Commonwealth was £2 15s. 7d. In the same year the Arbitration Court delivered an award fixing the salaries of postmen at £3 2s. 4d. a week. In 1923 the average weekly wage of adult workers throughout the Commonwealth was £4 14s. 4d. Under the classification of the Public Service Board, the maximum weekly wage is £4 10s., whereas if the wages of postmen had been increased in proportion to the increases secured by adult workers outside the Service, the maximum would be £5 6s. 2d.
– I think that experience would show that £5 6s. 2d. is not an extravagant wage.
– I say that the reclassification is a deliberate repudiation of the standard set up by the Arbitration Court. While Commonwealth and State Governments are administering arbitration laws, which persons engaged in private industry are compelled to obey, they are not themselves prepared to pay the rates of wages that private employers are expected to pay. The Commonwealth Public Service Board should set an example to outsiders.
– They should be model employers.
– They should be. The new classification loses sight of the great principles followed by the first Commonwealth Parliament in giving the public servants personal status and value and a high-salary standard, although it was not as high as it should have been. The officers of our Service were even worthy of a higher standard than was given to them in 1901 or 1911, but nevertheless the salaries paid attracted many brilliant men and women to the Commonwealth Service.
– It was looked upon as the blue riband of the Public Service of Australia.
– It was looked upon as a service that would provide any young man with a suitable career at a salary which was worthy of the position; but the officers are now finding that they are being deprived of those emoluments which induced them to join the Service. Upon the gazetting of the reclassification and its approval by the Governor-General, all allowances and increments that automatically become due to the members of the Commonwealth Public Service are absolutely discontinued. The salaries fixed by the Public Service Arbitrator are to be observed while officers continue to hold their present positions, but immediately an officer is transferred or promoted he draws the classified salary of the new position, and all the allowances and increments due to the office he leaves are to be discontinued. Can Ave imagine anything more calculated to create dissatisfaction and discontent in the Public Service than this, which the Government intend to make valid through the bill they are now asking Parliament to pass? So far, the principle of equal pay for equal service has been recognized, but under the reclassification of the Public Service Board it is to be seriously departed from, and many female officers with from 10 to 25 years’ service are to have their salaries reduced by amounts ranging from £9 to £45 a year. It is a poor reward for those who have given a life service to the Commonwealth to find that, perhaps, when they are approaching their period for retirement they are not to be given the full salaries attaching to the positions they hold and given to males employed in the performance of similar, duties. The principle of equal pay for equal work was recognized by the Public Service Commissioner prior to 1914. and was confirmed by the Arbitration Court in 1915. Mr. Justice Powers, in 1920, granted equal rates for salaries for males and females in the Australian Letter-carriers’ Association, and during all those years the Public Service Commissioner raised no objection to the female members of that association receiving the pay drawn by the male members of the association. ‘ In 1920, Mr. Justice Starke inserted a clause in the award in the case of the Australian Letter-carriers’ Association that the salary received at that time by any member of the association, male or female, should not be reduced. In the same year also the Commonwealth Government granted an allowance of £12 a year to cover the increased cost of living, and no distinction was made between males and females in its allocation. It was left to the present Government to prompt, or, if not to prompt, to sanction and endorse a departure from the principle of equal pay for equal service. Under this amending legislation it will be possible for the permanent head of a department to make promotions and transfers within his department. If that is done, many officers who have served in other departments for long periods and who have undoubted ability will be overlooked. The permanent head of. the Home and Territories Department, for instance, has no knowledge of the attainments of the most capable officers in, say, the Postmaster-General’s or Customs departments, but it will be competent for him to recommend for transfer or promotion an officer in his own department, without regard for the claims of those employed in other branches of the Service. That is a serious objection. Another feature to which I take exception is that the suspension of an officer of the second division can be effected by the permanent- head of the department. I claim that that power should be exercised only by the Minister. An officer of the first division should not be empowered to suspend an officer of the second division who is next to him in seniority. What manager in a private establishment would empower his foreman to suspend a sub-foreman or leading hand ? The manager retains that right to himself, knowing well . that it is possible for friction to arise between the officers immediately under him. When an officer is transferred from the fourth to the third class on probation, he is to receive the salary for the lower position, although he dischargee the duties appertaining to the higher office. The department has withheld promotion for periods up to two years from men who have filled a ‘higher office than that for which they have been paid. A year ago I raised in this House the case of Mr. J. Mortby, who is a member of the Federal Taxation office in Adelaide. He was a fourth, class officer doing third class work on probation. From time to time he had applied for promotion, but it was withheld. I have repeatedly asked that a decision be given in his case, and I have not yet received satisfaction. If that officer is still in the Service, I have no doubt that he is still receiving the same treatment. It is a scandalous way to deal with members of the Service. Had he been in private employment, his employer would have been brought before the court.
– That is the action of a so-called business Government.
– Yes, a Government that claims to be solicitous for the welfare of public servants.
– It assumes the right to break its own laws.
– Yes, and repudiate its own promises. But the time will come when justice will be done, lt remains for the Labour party to redeem the Government’s broken promises, and I have no doubt that its action in lowering the standard of payment in the Fublio Service will receive the strongest condemnation. Honorable members should prevent the awards of the Public Service Arbitrator from being overridden or repudiated. Either the Public Service Board or the Arbitrator should be supreme. The members of the Service should not be under two masters. The speech by the Prime Minister on the second reading of the bill was marked by its brevity, no doubt because the measure has few redeeming features. I challenge any honorable member to justify its provisions. If honorable members desire to uphold the status of the Public Service and give it the recognition it deserves, they will rejeot the bill.
Debate (on motion by Mr. Coleman) adjourned.
– I move -
That the bill be now reada second time. The measure in no way infringes the principle underlying the Government’s immigration policy, but provides for a number of improvements which have been suggested by the officers of the department who have been administering the principal act for some years. The bill, among other things, proposes to assist the administration in carrying out the law by providing the officers with greater facilities for applying the dictation test in a foreign language where necessary. At present that test can only be applied by an officer who is defined as such under the act. It is now proposed to insert certain words in the act which will not only allow an “ officer “ to apply the test, but will also enable him to authorize in writing other persons to do so. In distant parts of Australia it is sometimes difficult to find an “ officer “ under the act who can apply the necessary test in a foreign language. The bill also empowers the authorities to reject persons who, while not suffering from the diseases or disabilities referred to in the principal act, may, for other reasons, such as having insufficient means of support, be considered likely to become a charge on the community If admitted.
– Does that apply to all immigrants, whether assisted or otherwise?
– Yes. If it is thought that they are likely to become a charge on the public, the power to prevent their entrance to the Commonwealth will be exercised. The bill will also deal with passports. At present nearly all foreign passports have British vises, but it is now proposed that they must all have them, unless there is some reciprocal agreement between the Commonwealth and the other country concerned to dispense with that provision. The present law exempts members of ships’ crews from the operations of the act while their vessels are in port in Australia, but that provision will cease to apply to them if they desert or absent themselves without leave during that period. Further, the billproposes to provide a more effective way than at present exists of dealing with persons who gain illicit entry into Australia, or who, having been admitted temporarily under certain conditions, fail to observe such conditions. The bill also makes less cumbersome the procedure in respect of the deportation of persons who, within three years of their arrival in Australia, have been convicted of criminal offences, punishable by imprisonment for one year, or longer, or who become inmates of asylums.
– Is that a new provision?
– It is a provision extending the. old legislation in a way which the experience ofthe department has shown to be necessary. Where immigrants have been convicted and imprisoned pending ‘deportation, they may, under the existing law, automatically obtain release on finding two sureties of £50each for their leaving the Commonwealth within one month. It is now proposed to make that release discretionary. It is also intended to remedy a weakness in the law respecting the prosecution of the owners or agents of a ship from which a prohibited immigrant has entered the Commonwealth in places where no representative of the firm is resident, and also to make provision for forms to be filled in by persons seeking to land in Australia. There is nothing else of moment in the bill.
Question resolved in the affimative.
Bill read a second time.
Clause 1 agreed to.
House adjourned at 9.55 p.m.
Cite as: Australia, House of Representatives, Debates, 6 October 1924, viewed 22 October 2017, <http://historichansard.net/hofreps/1924/19241006_reps_9_109/>.