10th Parliament · 1st Session
Mr.Speaker (Hon. Sir Littleton Groom) took the chair at 3 p.m., and read prayers.
Use of Arsenic Spray
– Will the Prime Minister say whether full facilities are available for the export of apples sprayed with the usual solution for the prevention ofcodlin moth and. other pests? If objections that may not seem well-founded are taken against apples exported, will the right honorable gentleman bring under the notice of the oversea authorities, and particularly the British authorities, the fact that, whilst it has been the practice in this country for years to spray apples with an arsenic solution, no death has ever been reported as a result of it?
– In 1903 aroyal commission in Great Britain recommended that the consumption of apples imported into that country should be prohibited if they had on them more than 1 -100th of a grain of arsenic per lb. of fruit. A regulation to that effect has been in force since then, and has not caused any difficulty. But recently certain apples from America, which contained a great deal of arsenic, were considered the cause of eases of illness, and the British Government announced its intention to apply the regulation rigidly. The Commonwealth Government has been in communication with the British Government on the sub- ject. In no instance have Australian apples caused harm, and we are confident that there will be no trouble in connexion with their exportation ; but it is necessary in the interests of the producers that steps should be taken to prevent the possibility of trouble. Consequently, a rigid inspection of apples intended for export is being carried out in compliance with the suggestion of the British Board of Health, and when apples bear a trace of arsenic spray, steps will be taken to remove the deleterious matter.
– I ask the Minister for Defence whether, in view of the serious happenings associated with aviation in this country, he will secure the services of Sir Keith Smith to make a full examination of the circumstances and of the methods, organization, and general administration of this branch of the Defence Department, and to report thereon ?
– I answered the honorable member’s question fairly definitely twice last week. I have no intention of recommending the Government to do what he desires.
– In view of the statement made by Archbishop Duhig in Brisbane within the last few days, that Australia is being flooded with atheistic and immoral literature from abroad, I ask the Minister for Trade and Customs to say exactly what power his department has to prevent the introduction of such literature, and what is being done in that direction by the department?
– My attention has been drawn to the remarks to which the honorable member refers. Section 52 of the Customs Act prohibits the importation of blasphemous, obscene, or indecent literature or works. There has been drawn up by the department a fairly long list of prohibited literature, and from time to time recommendations in the direction of prohibition come to the department, and are generally acted upon. The department will welcome any help in connexion with the administration of this very difficult matter, as books and publications to the value of over £1,000,000 arc coming into the Commonwealth every year. If specific publications arc indicated, or other help in this direction is given by outsiders, the department will rigidly administer the law.
– Will the Minister for Health kindly give the House the names of the medical men who have been appointed to select cases for the test of Dr. Smalpage’s treatment? Will he also say whether any medical man may send a case for treatment, and, if so, to whom?
-I shall be very pleased to mention the names personally to the honorable member. I have been asked by the specialists not to publish their names, because to do so would cause them to be inundated with letters. I, myself, receive some hundreds of letters on the subject every week. If the specialists had to deal with a similar correspondence officers would have to be appointed to. assist them to deal with it.
– With respect to the report of a. recent disturbance madeat Hobart by certain sections of the Royal Australian Navy, will the Minister for Defence look into the matter with a view to removing from the Fleet generally the stigma cast upon it?
– Inquiries have been made into the reports of misconduct by certain sailors in Hobart. I cannot at the moment give the honorable member complete and authentic information on the subject, but I shall let him have it as soon as it is available.
Destructionof Telegraph and Telephone Lines
– In view of the destruction of telegraph and telephone lines by bush fires, and the necessity for their early repair, as well as of giving relief work to those much in need of it, will the PostmasterGeneral say what steps are being taken to restore the lines that have been interrupted ?
– Linesmen have been withdrawn from many districts and concentrated in the areas devastated by the bush fires, and the work of the restoration of interrupted lines is well in hand.
– I ask the Minister representing the Minister for Home and Territories whether an opportunity will be afforded to discuss in this House the proposed contracts for the Papua and Pacific Islands shipping services before they are ratified?
– I shall bring the honorable member’s question under the notice of the Minister and let him have a reply to it in the course of a day or two.
asked the Prime Minister, upon notice -
In regard to the 54 vessels taken over by the Commonwealth Shipping Board on the 1st September, 1923, will hestate -
The names of the vessels sold to date, to whom sold, and the price paid for each ?
The names of the remaining vessels in commission, and those not in commission ?
Whether efforts are being made to sell any more; if bo, what are the names of the vessels intended for sale, and the names of the vessels not for sale ?
What profit has been made by the “Bay” liners to date?
– I have communicated the honorable member’s questions to the Australian Commonwealth Shipping Board for advice, and hope to be in a position to give him the desired information at an early date.
On the 18th February, the honorable member for Hume (Mr. Parker Moloney) asked the following questions : -
I now desire to inform the honorable member that the replies to his questions are as follow: -
The following figures are the totals in respect of each class of vessel: -
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Prime Minister, upon notice -
– No recommendation has been made by the Board of Trade to the Government regarding this matter. The question is still under consideration by the board.
The following papers were presented : -
Lands Acquisition Act - Land acquired at Quilpie, Queensland - For postal purposes.
Railways Act - By-law No. 37.
In committee (Consideration resumed from 19th February (vide page 1075) :
Clause 17 (Proposed new sections 30l to 30r).
.-The committee has now reached the machinery provisions of clause 17. but, to my mind, they are really infernal machines, because they give the Attorney-General power to seize people and send them out of the country. Proposed section 30l reads as follows : -
The Attorney-General may by order under his hand direct that any person notborn in
Australia convicted of any offence under section 30c, 30j, or 30q of this act shall he deported from the Commonwealth.
Provided that such order may only be made before, or within three months after, the expiration of any period of imprisonment to which the offender has been sentenced for the offence, or, if the offender was not sentenced to imprisonment, within three months after his conviction for the offence.
The Attorney-General may make an order before the term of a man’s imprisonment has expired or within three months after it has expired, and the man may then be deported.
– Only if he was not born in Australia.
– Yes. But under the latter portion of the proviso, although a man’s offence may not have been thought by the judge sufficiently serious even to warrant imprisonment, if a conviction is recorded against him he may be deported. I bring this fact under the attention of honorable members in order to show how drastic this legislation is, and urge that these machinery clauses which cover the whole of the deportation provisions of the bill be rejected.
– As I have already said, the AttorneyGeneral has thrown into this chamber and the country the apple of discord. Proposed section 30n will impose a penalty of £100 on a ship-owner who refuses to provide a passage for any person who is ordered to be deported. I am sure that the Britishseamen belonging to the union controlled by Mr. Havelock Wilson would refuse to carry away from Australia any person ordered to be deported for having taken part in an. industrial trouble. I believe that even the Lascars engaged on British boats would turn against legislation of this kind.
– The honorable member thinks a lot more of the rebels than he does of the interests of Australia.
– The honorable member need not worry about rebels. This bill adds twenty new offences to the criminal code, and the excuse for this is that it is the duty of the Government to carry out its mandate from the people. I deny that the Government has received a mandate to introduce this class of legislation. I am certain the people would not sanction it.
– This clause deals with three classes of offences only, namely, those under proposed new sections 30c, 30j, and 30q.
– It applies to those connected with industrial trouble. The Attorney-General admits that he is creating in this bill twenty new offences.
– The new offences of which the honorable member speaks include forgery, larceny, false pretences, and all manner of other offences.
– If the Government attempts to deport men for participating in industrial disputes, it will involve itself in trouble with seamen from every part of the world, including coloured seamen. Sailors sometimes convey objectionable cargo and passengers under protest; but if the Attorney -General tries to deport the men whom this bill will make criminals, both foreign and British sailors will refuse to man the ships that it is intended shall carry them. I am not appealing on behalf of men who ought to be deported.
– Does the honorable member think that anybody should be deported ?
– If I had the power of a dictator I would not deport even the Attorney-General. Of course, as he is Australian born I could not do so, but thousands of men who came to this country as babies are to all intents and purposes as much Australian as he is. Yet, for taking some part in industrial trouble-
– What does the honorable member mean by “taking some part in industrial trouble “ ?
– Unfortunately, the Attorney-General has the right of deciding what constitutes a reason for deportation. I wonder what the Commonwealth will do with the seamen who decline to carry some of the passengers whom the Attorney-General will put upon their ships.
– The seamen decline now to carry merchandise away from Australia.
– Australia would be a poor place but for the services rendered to it by the sailors. The great war would not have been won by the Allies without the aid of the mercantile marine, and some of the men who were imprisoned in the recent strike had served on transports that were torpedoed. Even the hon- orable member for Wentworth (Mr. Marks) protested against the harsh treatment of those men.I shall not allow any honorable member to revile the sailors, whether they be Australian or British.
– I am not reviling them. The honorable member is pleading for rebels, and allowing his country to go to the devil.
– The country will not go to the devil unless it is sent there by legislation supported by the honorable member and his kind. The Age newspaper, which was to the fore in helping to win the election for the Nationalists
– And has since turned “ dog “ on every statement it then made.
– It has now become sane, and has told the Attorney-General plainly that the deportation of men for having been connected with industrial trouble is impossible.
– And I have said many times that the bill does not empower us to do that.
– I advise the AttorneyGeneral to consult with the right honorable member for North Sydney (Mr. Hughes),who has first-hand knowledge of industrial affairs and knows something of the psychology of the Australian workmen. I was a young man when the great maritime strike occurred, and I would not have hesitated to do then many of the things for which, under this bill, I could be deported.
– Would the honorable member hinder others who were attempting to load the farmers’ produce?
– I would have hindered, or helped others to hinder, blacklegs who were taking the places of unionists. I would have tipped them into the Yarra, or been tipped in by them. Honorable members do not realize what extensive powers they are giving to the Attorney-General. Prior to the election, the editor of the Age denounced the Labour party, and wrote up the Nationalists for all he was worth, but now, sitting calmly in his editorial sanctum, he is giving sound advice to the AttorneyGeneral. He is pointing out that when industrial trouble occurs and an attempt is made to deport the leaders thousands of men will be involved. All the trade unions will rise to their support, so will the seamen, and the Government will be at war with unionism in the mass. Not enough ships will be leaving Australia to take away all the men whom the Government will have to deport if it attempts to operate this law. I believe that Havelock Wilson,even though he is at loggerheads with Tom Walsh, will protest when this Government attempts to deport one of his countrymen.
– If a man does any of the things specified in the bill as punishable by deportation, should he not be sent out. of the country?
– If the honorable member for Wentworth wishes to defend the measure, and particularly the proposed sections to which I am objecting,, why does he not do so? It would be more fitting to do so than to endeavour to trounce me by interjections. Perhaps the honorable member for Wentworth is merely drawing attention to the fact that he is once more in the House.
– That is not fair.
– What other object can the honorable member have? His interjections have nothing to do with the bill.
– I object to the honorable member’s remarks.
– Then why does the honorable member not do so in the proper way ? I again enter my strong protest against these proposed new sections, which, to me, are quite as objectionable as others which the committee have already passed.
.- The bitterness displayed by the honorable member for Wakefield (Mr. Foster) shows how utterly futile it is to expect calm reasoning and common sense to prevail in the discussion of such an important measure as this. The honorable member for Wakefield and other supporters of the Government are not amenable to reason. It would appear from the interjections of honorable members opposite that we have no right to express the opinions of those responsible for our election. Are the members of the Government and their supporters the only persons who should have a voice in, framing the legislation which has to be obeyed by the whole of the people? The members of the Opposition will exercise their rights on behalf of those responsible for their election to this Parliament The proposed new sections, which subvert the principles of British justice, have a farreaching effect. Neither the honorable member for Wentworth (Mr. Marks) nor any other honorable member opposite will dare to assert that this Parliament has the right to discriminate between British subjects as is proposed in this bill. I am an Australian native, but as I. have the blood of an English mother and an English father coursing through my veins, I realize the perils to which other Britishers are likely to be subjected by a measure such as this. I could not be regarded as a true Australian if I permitted such a discrimination to be made without offering a strong protest. I remind the honorable member for Wentworth that it is almost certain that, although the court may not impose even a fine, the Attorney-General will have the power to deport.
– The Attorney-General will have the power to deport only in the event of imprisonment or the imposition of a fine.
– I accept the correction. Although a fine may be imposed for only a minor offence, the AttorneyGeneral will have the power to deport. No provision has been made for such an extreme penalty in the case of persons guilty of the most serious criminal offences. Persons found guilty of forgery, splitting bank notes, larceny, and even murder cannot be deported; yet those who are in any way associated with industrial unrest, which may have been caused by the unreasonable attitude of employers, may be brought before the court, and, if found guilty, deported.
– That is not provided in the bill.
Mr.MAKIN. - Then the AttorneyGeneral should explain the provisions of the measure more clearly. Certainly, he has not convinced the House that this is not the strict principle underlying this legislation. I am not prepared to give the Government the power to treat industrial offenders in such a drastic way. A person guilty of forgery, murder, or some other serious crime may be fined or imprisoned; but an honest, hardworking man who desires to improve the conditions of his fellowworkmen may be subjected to the pains and penalites of deportation, which is equivalent to civil death. Up to the present, the Attorney-General has not adduced any arguments which will weigh with reasonable men and those who desire that common sense shall prevail. Our laws should be such that they will be respected, and not held up to contempt as a measure such as this is likely to be.
.- The criticism that has been levelled at the whole of this clause has as its basis what I conceive to be a very sound principle; that is, that the administration of the criminal law should not be influenced in any way by party political passion and prejudice. That simple statement of the case cannot be repeated too often, or with too great an emphasis. I can assure honorable members that there will be constant repetition of it, and that it will be emphasizedwith all the force that we on this side have at our command, in order to make it clear that we reprobate that class of legislation. The honorable member for Wentworth (Mr. Marks), in an outburst of enthusiasm that was as entertaining as it was unexpected, sought to justify the provisions that we are now discussing by harking back to the proposed new section 30c, which relates to unlawful associations, and makes an offence certain acts of violence by any citizen, including, it may be, the devotees of a particular political cult. I have previously addressed myself to that proposed new section. Its selection for his apologia by the honorable member for Wentworth is significant. Apparently he believes that the provisions with which we are now dealing can be justified only in relation to the offences that are particularly enumerated in that proposed new section. The Labour party in both industrial and international matters favours reliance upon the force of argument and reason rather than upon physical force and bloodshed. It is open to argument whether persons who have been accepted by this country as citizens, and have for a number of years discharged the duties of citizenship, whether they be British subjects or have undergone the process of naturalization, are not as much our responsibility as those born in Australia. It is monstrous that men who have resided in Australia for many years should be liable to deportation under the operation of the criminal law. If such persons commit offences against the law they certainly should be punished. Under our system of criminal jurisprudence the arm of the law is sufficiently long and strong to deal with them without resorting to the crude and brutal practice of exile, which was associated with the early history of this continent, and besmirched it with a stain of which it has not since been able to completely rid itself. In the majority of instances those who were exiled from. Great. Britain probably did not deserve that punishment. The- better class of Australian citizen desires to forget that men were brought out here under those conditions. We may leave the consideration of the proposed new section 30c, to which the honorable member for Wentworth displayed such, fidelity, and. devote our attention to those provisions that are at present before us, especially proposed new section 30l, which provides that -
The Attorney-General may by order under his hand direct that any person not born in Australia, convicted of any offence under section 30c, 30J, or 30’Q of this act shall be deported from the Commonwealth.
It then sets out the time and the conditions under which such an order may be made. Taking that in conjunction with the proposed new section 30j, it will be seen that a man may be imprisoned for a year, and afterwards deported on the order of an Attorney-General, swayed, as he must necessarily be, by that party prejudice and passion which, we must confess,’ more or less influences every man in the stress and strain of political encounter. Whilst the committee was considering certain phases of this matter last Friday, the honorable member for- Fawkner (Mr. Maxwell) waxed indignant at criticism that I had passed upon him. I merely endeavoured to bring home to him the consequences of his vote upon these provisions. Honorable members opposite argue that if a crime is committed it does not matter whether the offender is an industrialist or any other member of the community. I am prepared to admit that the active trade unionist must obey the laws of this country equally with any other man, and that he is not entitled to protection, privilege, or immunity because of his membership of a trade union. If he does any act to advance the cause of his trade union, he is entitled merely to have that act examined under the searchlight of public policy and in its relation to the law. If he commits an offence he should be called upon to suffer for it. That is a general principle. But what view does the Government hold ? First of al] it says that it reserves to- itself the right to declare that there is in existence a. state of> serious industrial disturbance prejudicing; trade and commerce, &c. That is to be. the first condition in the administration: of this criminal law. The discretion in. regard to the issuing of such a proclamation will rest with the government of the day. If, for political considerations-, agovernment does not desire to apply these* provisions to certain persons who haves been involved in the commission of an? offence, all that Ministers will have to dowill be to “ sit tight “ and say that no proclamation shall be issued. The veryfoundation of this legislation is corrupt.. ‘
– Not corrupt!
– It is corrupt. Whenever the administration of a criminal law rests upon the act of a government that is, or may be presumed- to be’; influenced by political considerations, it” has a corrupt foundation.
– At any rate if is tainted.
– At its inception it is tainted sufficiently to raise at least a. strong suspicion. I ask the AttorneyGeneral (Mr. Latham) to remember how; sensitive British courts have always been upon the subject of bias. Even asuspicion of bias is sufficient to arrest theaction of a judge or any other person, administering justice. There is no escape from this simple fact, that any member of any organization may be involved in the particular class of dispute contemtemplated by this proposed new section. A trade unionist, having laid’ down the instruments of his toil after his day’s work, and being present at a meeting of his trade union in the evening, and recording his vote with his fellow members, may, by so declaring that the rewards for the work in which he is engaged, or the conditions under which he is employed, are such that he will decline to accept them any longer, cause a stoppage of work. The acts of trade unions, it must be remembered, are always the acts of unionists acting in combination. There can be no unionism without combination, nor without loyalty on the part of the minority. The minority in trade unions must always act in that spirit of manliness which impels a man to give up his individual views and individual rights to achieve the greatest good for the greatest” number. It does not require any stretch of the imagination to see that a trade unionist, by recording his vote in this orderly and lawful manner - a vote based upon the highest principles of morality, justice, and self-sacrifice - may bring himself within the provisions of this proposed new section.
– The honorable member for Wakefield (Mr. Poster) does not seem to worry about that.
– I have heard it all before.
– No doubt; but it has not yet percolated through the honorable member’s brain. At any rate, it seems to go in one ear and out of the other. I am not at all complimented by the fact that it is necessary to keep hammering away at this one point, that any trade unionist voting in such circumstances, and with such results, may become a felon and liable to imprisonment. In the past our arbitration courts have imposed punishment for certain offences; but, generally speaking, it has been upon organizations and not upon individuals. The penalties have been based upon this fact, that when arbitration for the settlement of a dispute is proceeding, it is unfair for one organization concerned in the matter to withdraw from the proceedings and use another weapon; that cannot be claimed as a true process of arbitration. Under this new proposal, however, the individual trade unionist who took part in a strike under certain circumstances would be liable to imprisonment for twelve months, and at the conclusion of his sentence he might find the AttorneyGeneral waiting at the door of the prison to serve upon him an order for deportation from the country, notwithstanding that he may have acquired more right to citizenship here and have done more for the country than this leisured gentleman, this non-producer, whose signature is sufficient to bring about his deportation. The honorable member for Wakefield (Mr. Foster) seems to regard this as ludicrous.
– I do.
– Only those in his frame of mind could do so. The honorable member is incapable of taking a serious view of a serious subject, so we do not look for anything different from him. He thinks he can support this proposal, because he is one of a large majority; but not even he can afford a cynical smile about it. The honorable member for Wentworth (Mr. Marks) invited a little criticism. I have tendered it.
– I invited criticism of proposed new section 30c.
– The honorable member must admit that a chain is only as strong as its weakest link. Fruit must be judged, not by the parts that are sound, but by those that are decayed. Even if there are some parts of this proposed new section that are fairly defensible, they do not justify the parts that are fundamentally wrong, and, in the opinion of honorable members on this side of the committee, vile. But the Government must take the responsibility for its proposals. Its docile followers are prepared to stand by and see the thing done.
The CHAIRMAN (Mr. Bayley).The honorable member is not in order in using the word “ docile “ in that connexion.
– I am surprised at that, sir; but I shall accept your ruling. Had I searched the whole dictionary, I feel sure that I should have failed to find a softer or gentler word than docile. I amend my remark by saying these obedient, these placid, followers of the Government.
– Order! The honorable member may not impute unworthy motives to other honorable members.
– I withdraw my remark, sir. I shall not suggest that either placidity or docility characterizes those honorable members who support the Government. They may be depended upon, however, to assist the Government to place this iniquitous measure upon the statute-book. We, who speak for the workers and the expert handicraftsmen of this country who keep the wheels of industry going, shall oppose the proposal. It is regrettable that the Prime Minister, who could not have made his triumphal tour through the land without the help of the trade unionists on the trains, trams, motor cars, and every other means of conveyance, has acted so ungenerously as to revile the men who helped him.
– The Prime Minister was not helped on the occasion of the contemplated trip down the bay recently.
– On that memorable occasion, certainly, he considered it discreet to remain in his office, and not risk being left ignominiously on the wharf, though his friends were in very unhappy circumstances.
– But none were so upset as the Labour members, among whom was the honorable member himself.
– We were quite cheerful. Honorable members on this side of the committee are neither docile nor placid; and they will resist this proposal to the uttermost.
Question - That proposed new sections 30l to 30r be agreed to - put. The committee divided.
Majority … … 26
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 18 (Tampering with notes or securities) .
– This clause is designed to protect the Australian Note Issue. An individual who was possessed of the necessary skill and dexterity split an Australian note. He presented the front half -folded up, I suppose - and succeeded in passing it, and he accomplished the same feat with the other half. When. the case was tried, the magistrate decided that he was not guilty of forgery or any other punishable offence. It is desired to prevent that kind of fraud in the future.
Clause agreed to.
Clause 19 agreed to.
Clause 20 (Stealing property of the Commonwealth) ,
– It is desirable that the Commonwealth Parliament should provide in its enactments against stealing the property of the Commonwealth, instead of allowing the offence to be’ dealt with under the varying laws of the six States.
Clause agreed to.
Clause 21 agreed to.
Clause 22 (Official corruption).
– This clause is a simplification of the existing law, which contains a somewhat complicated and involved, and not very successful, definition of bribery.
– Does the clause provide for the deportation of persons found guilty of bribery?
Clause agreed to.
Clauses 23 and 24 agreed to.
Postponed clause 4 (Definitions).
– Earlier in the proceedings of the committee the necessity of continuing to provide that the word” constable “ includes any member of the police force was questioned. Honorable members asked whether there was in existence a police force of the Commonwealth as distinct from the peace officers force. I have made inquiries, and find that in the Northern Territory there is a police force. For that reason alone at present this provision is required.
Clause agreed to.
Postponed clause 10 -
After section twelve of the Principal Act the following section is inserted : - 12a. - (1.) Any offence against this Act, although declared indictable, may, with the consent of the defendant, be heard and determined by a Court of Summary Jurisdiction. (2.)Any proceeding in respect of an offence against this act, although declared to be an indictable offence, may -
if the offence relates to property the value of which does not exceed Fifty pounds ; and
if the prosecutor so requests, be heard and determined before a Court of Summary Jurisdiction.
– The opinion expressed by honorable members on both sides was that it would be better to give the option to the court rather than to the prosecutor. I propose, first, an amendment in the proposed new sub-section 12a (1), namely -
That, after the word “ Any “, the words “ proceeding in respect of an “ be inserted.
The clause would then read -
Any proceeding in respect of an offence against this Act, although declared indictable, may, with the consent of the defendant, be heard and determined by a Court of Summary Jurisdiction.
Amendment agreed to.
– In order to carry out what is evidently the desire of honorable members generally, I move -
That the proposed sub-section (2.) he left out with a view to insert in lieu thereof the following: - “ (2.) A Court of Summary Jurisdiction may, if it thinks fit, upon the request of the prosecutor, hear and determine any proceeding in respect of an offence against this Act, although declared to be indictable, if the offence relates toproperty the value of which does not exceed Fifty pounds.”
That will meet the wish of honorable members.
Amendment agreed to.
Clause, as amended, agreed to.
Title agreed to.
Bill reported with amendments; report, by leave, adopted.
Motion (by Mr. Latham), by leave, proposed -
That the bill be now read a third time.
.- Even if it were possible to depend upon the magnanimity of the Prime Minister not to move the closure, I have no desire to initiate at this stage a further general discussion regarding the merits of this bill. But as its general principles are now, by the forms of the House, open to discussion, I desire to say a word or two about them. It is obvious that if we are not acting within the ambit of our constitutional powers, everything that we have done is futile. Much that we have done is, in any case, mischievous. It has already been sufficiently argued from many points of view that it is objectionable. I do not propose to challenge the constitutional validity of this bill. So far as I am competent or equipped to form an opinion, it appears to me that the Government has, with a somewhat belated carefulness, filled up the various chinks and interstices which were so evident in a measure which was before us in the last Parliament, and which rendered that legislation so utterly abortive. I can only express the hope that if the powers conferred by this bill are to be used to affect vitally the. liberty of the subject, as was the case with the legislation to which I have referred, a little more care will be exercised than was manifested in connexion with that legislation. I must express my profound disappointment that the Attorney-General has thought fit to treat honorable ‘members on this side with so little courtesy as to disregard altogether their arguments on the second reading, andtooffer not a single word in reply. That, in any circumstances, would be somewhat unusual, and would show a want of regard for the best traditions of the House; but it is particularly so in view of the fact that when discussing a parallel bill on the floor of the House previously, I deliberately charged the Attorney-General with having, either with grave carelessness, or wilfully, misled members of this House and the country.
– The honorable member must not accuse another honorable member of having wilfully misled the House.
– One of the alternatives having now been removed, I am driven to say that the Attorney-General, with gross carelessness, misled members of this House and the country - members of this House on the floor of this House, and the country in speeches which he delivered to his constituents. I charged him with having referred in apparently considered terms to what is known as the Irish Envoys case, with having quoted Mr. Justice Isaacs in connexion with that case, and -with having added that four judges concurred in the decision. Was it not a fair criticism to say that the only inference one could draw from the Attorney-General’s remarks was that those four judges had concurred in the statement quoted by him from the judgment of Mr. Justice Isaacs! I pointed out - and I was amazed to make the discovery - that, so far from that being the case, the decision of Mr. Justice Isaacs on that point was a minority one, and was overborne by the majority of the court. That entirely reversed the effect and force of the Minister’s argument, turning it upon himself instead of allowing it to support his quotation. Unless the honorable gentleman treats members of the Opposition with contempt, and wishes it to be understood that the people outside will take it for granted that learned counsel know more than general practitioners and laymen about this matter, one might suppose that the charge was worthy of refutation, if it could be refuted, and necessitated an explanation and an apology if it could not. The Attorney-General, however, preferred to take refuge in silence. Silence is said to be a virtue under certain circumstances; but in the face of a charge of that kind it may easily be understood to be something quite different. The Prime Minister, in speaking at various places, with more enthusiasm than knowledge of this subject, said that, after all, the legal luminaries of the Opposition had not had much to say upon the constitutional aspects of that measure while it was before the House. They were silent, he said, and he paid me the compliment of specially mentioning my name. The AttorneyGeneral knows well, although, perhaps, the Prime Minister does not know it, that as a rule general practitioners defer upon questions of constitutional law to the experts and specialists who are assumed to have a superior knowledge because they are making nice refinements on those matters almost every day of their lives. I confess to have been sufficiently influenced by the traditions of my profession - which I, probably, should not be in politics - to accept as sound the views expressed by the Attorney-General and by the ex-Attorney-General (Sir Littleton
Groom) ; but I regret to have to state with emphasis that the views of hoth those distinguished gentlemen were found to be. radically wrong and misleading. They, were wrong in proportion to the emphasis and unction with which, these honorable gentlemen declared themselves to be certain that they were right. And so I have to confess, in the first place, with due contrition, that to a certain extent I was “ bluffed “ and misled by those learned gentlemen. Tt is a humiliating confession to have to make, but it is true. Still, independent judgment has come into play, because a little later I enjoyed the privilege of speaking on this subject in various places, notably before a large and enthusiastic gathering of university students; Their newspaper, Farrago, of the 11th- September, 1925, contains the following, report- of my speech: -
Mr. Brennan went on to say that he pro* posed to criticize on two grounds the Deporta-tion Act, which the Government had placed on the statute-book. There was the political and’ human objection to the bill, and there was the legal and constitutional position to consider. Taking the latter question first, the point at issue was the legal power of the Commonwealth to permit immigration and to expedite the emigration of undesirables - or, in the language of his own electorate, “ to. let ‘em in “ and to “ chuck ‘em out.” The Government’s power to eject individuals who had been domiciled in Australia was seriously in question, and a more exact definition of its authority in this regard might be reached in the course of the proceedings now under way in Sydney. The speaker referred to the case of the Irish envoys, who were deported for sedition in 192a, as bearing on the cases of Messrs. Walsh and Johnson, inasmuch as the opinions of the learned justices of the High Court on that occasion seemed to indicate that the Commonwealth’s powers of deportation extended only to persons who, in returning to Australia) could not be said to be returning “ home.?’
It will be understood, of course, that this is an abridged report of my- speech. I do not accept it as being absolutely correct, but it is sufficiently accurate for my punpose. The report continues -
The Government, by its new act, had~ abolished the three years’ probationary period, in force prior to this year, thus making its powers more arbitrary, and resorting to force, instead of discussing the legal issue in a reasonable manner. Mr. Justice Starke had’ said’, in 1022. that deportation was an instrument which should be employed only apra hist persona “who did not belong to the people of Australia.” The law aimed at and hit immigrants, and not members of the Australian community.
It will be seen, therefore, that in ray public address to those university students I emphasized the effect of what appeared to be the main feature of the High Court’s decision so far as it had application to the very men whom we knew perfectly well the Government was endeavouring to deport. As a matter of fact, at that very moment the Deportation Board was sitting. I need only add that it is noted with the utmost veracity that at the conclusion of my address I was loudly cheered. That would naturally be expected. About the same time - to be exact, on the 3rd September, 1925 - I was honoured with an interview bv a representative of the Melbourne Herald. I had forgotten that I had been so famous as to be given this space in the Herald; but my attention was directed to the fact after the Prime Minister’s observation. The interview was headed, “ Act valid. Real issue - Who is an immigrant? Mr. Brennan’s view.” That sums up the situation, let me say, in a nutshell. The statement that I then made was published before the High Court gave jits decision, and stated that the real issue was, “Who was an immigrant 1” The report of the interview reads as follows: -
Specifying that he was neither speaking for the Labour party, nor giving a legal opinion, Mr. Brennan, M.fl.R., said to-day that be believed the validity of the Deportation Act was established, so far as immigrants were concerned. “ But the question here,” said Mr. Brennan, “ is whether the persons concerned in the summonses ave immigrants within the meaning of thu act. “ The Commonwealth’s powers in this case seem to rest on the meaning of the word immigration in the Constitution. ‘ The most striking High Court decision on the point was that relating to the two Irish envoys. The point was then discussed as to what constitutes an immigrant, and whether once Jin immigrant, always an immigrant.’ “
Mr. Justice Higgins seemed to express mild surprise at finding himself to be still an immigrant; but, nevertheless, there are dicta (with persuasive power in future cases) in the decision of the Chief Justice which appear to show that the condition of being an immigrant is affected by duration of residence. The Chief Justice applies., as a test, the question, is the person entering the Commonwealth “ returning home”? and later on suggests that the three years’ limit, during which proceedings, at that time, could be instituted, was a probationary period after which the immigrant became, established as a member of the community. Applying these considerations to the. cases now under review, continued Mr.
Brennan, it would seem to strain the powers of the Commonwealth to their utmost to say that a British subject of 35 years’ residence in Australia is still an immigrant within the meaning of the act giving deportation powers. The Commonwealth undoubtedly has very great, if not unlimited, powers regarding who may come and go. And the best Australian view-point is that the” greater the powers of the Nationalist Parliament the better for Australia. Certainly the Labour party does not welcome limitations on Commonwealth powers, imposed by judicial decisions, whether in law, right or wrong.
I may add that that statement represents the view of the Labour party. We were less concerned with the constitutional powers of the Commonwealth under the Immigration Act passed last year than with its political implications and moral aspects. Our particular duty was to examine the act from those view-points rather than from the view-points of the niceties of constitutional argument. Still I hope that I have made it abundantly clear that honorable members on this side have not been silent upon the’ constitutional aspect of the act. Although I have never pretended to set myself up as an exponent of constitutional law, and have never, up to the time that the Prime Minister challenged me in this regard, made any claim whatever to have said, “ I told you so “ or anything of that sort so far as the legal position was concerned, yet, since the challenge was made, I think that I have shown clearly that honorable members on this side were right, while the legal luminaries of the Government were absolutely and fundamentally wrong. For the life of me, I cannot to this day understand how honorable gentlemen opposite, when on the platform during the election campaign, deliberately conveyed to the electors that Parliament had undoubted constitutional power to deport certain persons, knowing, as they must have known, what the position in those cases, and in particular the case to which I have referred, imported. During my second-reading speech I challenged the Attorney-General by asking him had he ever known a case in which, acting outside our constitutional powers, we had seized and imprisoned a man in this country. The Attorney-General preferred to make a* personal quip of the matter, and said that though my voice was loud, he did not hear me. I believe that he heard me, but it suited him not to reply to my question. Any government that proposes to lay hands upon one of the subjects of the King in this country must do it, just as the police force does, at its peril; it must have the lawful right to so act. No man should be thrown into prison in this country by an act of lawlessness, to be excused afterwards by the members of the Cabinet saying, “ We did not know that it was an unlawful act until the High Court decided that we were acting unlawfully.” The ordinary citizen is presumed to know the law. He acts at his peril. He may not say, when charged with having broken the law, “ This is an obscure provision in a statute of which I have previously not heard, and about which I have had no legal advice.” A man acts at his peril.
– It was not an unlawful act until declared to be so by the High Court.
– Does the honorable member really put forward that argument? I invite him to support that principle of law and morality on the platform, in this House, or elsewhere. I say that it was an unlawful act. The High Court does not make laws, but declares what the law is. It decides in cases of doubt affecting persons what the Constitution and what Parliament by its legislation import. The act of this Government in seizing those men under those circumstances was lawless, and, more than that, it was done with a total disregard of the law. It was done either carelessly anc! callously, or else wilfully, because, if the members of the Ministry had opened their eyes to the legal position as already laid down by the courts, they must have known that they were doing something, the legality of which was, at least, doubtful. That was the gravamen of my charge against the Government regarding the Immigration Act passed last year, and it is also related to this measure. Tinder the bill it is proposed to seize a man and to impose heavy penalties upon him, and having done that to impose the further heavy penalty of exile from his own country. I hope that the Government will in future pick its steps with greater care than has characterized it in the past. I regret that this bill is to become part of the law of this country. It will remain so, I suppose, until the Labour party is returned to power. It will then be our proud privilege to strike from the statute-book this odious measure, under which honorable members opposite, and their friends, could be put in the same pillory as they intend to put the workers in ; but we shall not do that. The Labour party, I can safely promise, true to its principles of justice upon which democracy rests, will remove this measure from the statutebook, and return to those elementary conditions of justice under which trade unionism in this country has expanded - trade unionism, which means a fair deal between employer and employee, and which safeguards the right of the individual to work out, as a free man, his own destiny in his own country without acting in peril of being thrown into prison because he records a vote in favour of his wife and family, and fellowmen, assessing the value of his services and stating the price at which he will render those services to the person who wants them.
.- We have discussed this bill, not at considerable length, but fairly fully in this House, and throughout the discussion the Government has stubbornly opposed every suggestion put forward by honorable members on this side in the interests of the people of this country. It has refused to listen to any reason at all, and has tried to bludgeon through a measure which it is determined shall be placed upon the statute-book, I believe, purely and simply for political purposes. The final stage of this bill we shall further resist. The honorable member for Batman (Mr. Brennan) has clearly intimated the view of the Labour party. He has repeated the opinions that he previously expressed on the constitutional aspect of the bill. I do not propose to touch upon that subject, nor to deal in detail with the bill as a whole. I take this final opportunity of registering further objection to a measure which I believe will be regarded as a blot upon the statute-book of this country. I was struck yesterday on taking up a copy of the Ballarat Courier by a report of a recent trial in Sydney, and some comments thereon. The paragraph I refer to reads -
In Sydney last week, a man was sentenced to ten years’ imprisonment for attempted murder, the presiding judge describing him as a brute in human shape and brutally regardless of the life of others. The prisoner was born in Holland, and came to Australia before 1914, in which year he was tried for wilful murder and acquitted. Seven years later he was charged with attempting; to kill, and owing to the nonappearance of Bie principal witness the prosecution collapsed, and he was acquitted.
Now lie has been brought up again, and sentenced to tcn years’ imprisonment. The newspaper from which I quote the paragraph goes on to ask the question whether this individual is liable to be deported or not. That is a very pertinent question. So far as I understand the existing law of this country, and the Crimes Bill now before us, there is no power, and there will be none when this bill is passed, to deport such a man if he is a naturalized British subject. Under this bill, new crimes are to be created, such as the splitting of banknotes for the purpose of fraud; but there is nothing to provide that persons of the type of the man referred to in the paragraph quoted shall be deported, if they are naturalized British subjects, and have been in this country for three years. A line of demarcation is drawn clearly and distinctly by the Government between offences committed by bodies of working men fighting for better conditions, and those criminals who commit the vilest of crimes. Under certain conditions, the former can be deported, and the latter can not. If there is anything which might show the political and industrial bias of the Government responsible for the measure now under consideration, it is such a case as I have quoted. “We have an immigration law, under which men can be deported, whether they are criminals or persons who advocate criminal acts; but men cannot be deported under that law if they have resided in Australia for three years, provided they have become naturalized British subjects. That is the qualification they require to be regarded as citizens of Australia who must be punished in Australia under our laws. No matter what crime has been committed by a murderous, brutal man of the type referred to in the paragraph I have quoted, if he is a naturalized British subject, with three years’ residence, he cannot hp deported under any law we have, or under this bill when it becomes law. I could understand the Government saying that they would introduce a law to enable them to punish such persons by deportation, but they do not. do so; they maintain the distinction drawn in the existing law which says that no matter what crime a man may commit, if he has been three years in the country, and is a British subject, he must be punished in this country. That is what the Government stands for in regard to the punishment of criminals of the worst type; but when it is a question of dealing with men who commit, not crimes as we understand the term, but offences, in connexion with industrial affairs, it takes up a different position. A man may get upon a platform, .and urge a body of mcn to strike for better conditions. The court trying him may decide that his offence was so trivial as to be met wilh a fine of a few pounds; but the AttorneyGeneral may under this diabolical law deport him from this country for the term of his natural life. That is what could happen under this bill. It indicates what we have come to in this country when honorable members opposite sit calmly behind the Government and say that they will stand for that. But, they add, the law will not be put into operation if men do not break it. “You are champions of rebels,” said the honorable member for Wakefield (Mr. Foster) to the honorable member for Maribyrnong (Mr. Fenton). We are not champions of rebels or of criminals. The offence of stopping work committed by men in combination fighting for better conditions of employment is regarded by the Government as the worst crime that can be committed. Honorable members opposite say that men should not go on strike, becaues there are tribunals to deal with their grievances. In many cases we have no tribunal to deal with their grievances. In many cases such tribunals are denied them, not by the Labour party, but by the party opposed to Labour in this country. There are parts of Victoria where industries are being carried on, and where those employed in them have not the protection of a wages board or an arbitration court These means of protection have been deliberately denied to workers in these industries by anti-Labour governments.- Should these workers go out on strike in their fight for better conditions, they will be liable under legislation of this description. The other day the Prime
Minister addressed a number of employers, and he asked them, ““What are you doing to preserve industrial peace?” There was hope in an address of that description to employers that the Prime Minister was capable of considering both sides of the industrial question. I want to address the same question to the Prime Minister and his Government. What are they doing to preserve peace in this country ? They have done many things to disrupt it, aud nothing is more calculated to do so than the bill, the third reading of which we are now considering. Let me draw an illustration from what has occurred under a department of the Federal Government. The point I wish to make might be illustrated by a reference to an incident that occurred here recently, but which I shall not traverse now because it has been settled, and I have no wish to raise the question again. But I may refer to an incident in connexion with a department of the Federal Government that has not been settled, and in connexion with which a strike is impending. If in this particular case a strike occurs, it will be due to the administrative act of an official of the Government; I refer to the complaint of men who are working on the railway between Quorn and Oodnadatta, taken over by the Commonwealth. If those men go on strike, and they talk of doing . so, the Government may put up an industrial political stunt and issue a proclamation under this measure. The men have been working under certain conditions secured by proper constitutional means. The question now is not whether they are getting more or less than they are entitled to, but whether the Prime Minister and the AttorneyGeneral will say that men enjoying certain conditions under a South Australian award, on a railway taken over by the Commonwealth, shall have one of those conditions altered without reference to any industrial tribunal. Will any honorable member opposite say that that should be done? We talk in this chamber about lockouts and strikes. We cannot find a man guilty of :a lockout because employers do not need to lock out their men. They take direct action by altering the conditions under which their men are called upon to work. They force them to work under conditions which are objectionable to them, or to go on strike. Under a State award, the men on the railway from Quorn to Oodnadatta worked under certain conditions on Sunday trains, and without consultation or conference with the men, and without submitting the matter to any tribunal, the Commonwealth Commissioner for Railways by simply issuing a by-law, which he has the power to do, has materially altered the conditions. The Commissioner suggests that the conditions they have been enjoying are ridiculously generous. That is not for him to say, but for some industrial tribunal in this country. If he wants to alter the conditions under which the men have been working, why does he not, as a representative of the Government, adopt the constitutional method of asking the Commonwealth Conciliation and Arbitration Court to vary the conditions? He has not done that, but has taken direct action by the issue of a by-law. His direct action does not lock out the men ; but if the men resist it, and say that they will not work under the conditions he imposes, their action will amount to a strike, for which they may be liable to punishment under a law such -s that we have now under consideration. This is the kind of thing that is occurring inside and outside the Public Service of Australia. What does the Railway Commissioner say in reply to the representations of the union in this case ? He says that if the men are not satisfied, let them file a plaint before the Arbitration Court. Is that not a fine state of affairs ? Here are men who have been working under the conditions of an award” of the State, whose conditions have been altered without any consultation with them. As a matter of fact, a request by the men for a conference was point-blank refused. Their recent representations remained unanswered. The first representation made was answered by the Commissioner saying, “ If you are not satisfied with cbe conditions, file a plaint with the Arbitration Court.” Why should they be forced to file a plaint with the Arbitration Court to get something which they already have under an award of a board, but which it is proposed to take from them ? That is not the procedure in arbitration and industrial matters in this country for which we should stand. The procedure should be that existing conditions should stand, no master by «?hat tribunal they were awarded, ave? : is for those who desire to alter them to apply to an industrial tribunal for their variation. The Commonwealth Commissioner for Railways has reversed that procedure. The result is that a resolution has been passed by the men that the first time a Sunday train is proposed to be run from Quorn to Oodnadatta they will refuse to run it under the altered conditions. That resolution is backed by the Federal Union of Railway Employees of Australia. What is the Government, going to do when that stage is reached ? If the men go out on strike they will be just as guilty of breaking this law as any other men who are likely to be brought under it and deported. They will have committed no offence beyond standing by an award under which they have worked for many years. I cite this as an illustration of the way in which men may be provoked to strike in this country. When conditions under which men have been working are altered to their disadvantage without consultation with them, the only course left when arbitration is denied them, as it is in many cases, is to refuse to work under what they consider objectionable conditions. Any of these- men can walk out and refuse to work, but if in combination they refuse to work, that will be an offence under this measure. In practice, men do not fight singlehanded if they can fight in combination. They do not take the weakest way of resisting things which they regard as an encroachment on their rights, but in combination they are prepared to resist every such encroachment. When, a hundred years ago, the iniquitous combination laws of England were repealed and trade unions were legalized, the right to combine and organize carried with it the right to act in combination in a fight for better conditions. The working men have not parted with the right to strike; they have merely given up the desire to strike. Instead of striking, they are willing to arbitrate, and I venture to say that 98 per cent, of the men in our organizations to-day are willing to abide loyally by the decisions of an arbitration court. But bring those men up against a situation such as that which has just been brought about by the Commonwealth Commissioner of Railways, and they would have no choice but to say, “If, without summoning us to appear before a tribunal sud bringing about a change in our working conditions in a legal way, you. by your direct action, alter the rules, regulations, and conditions under which we work, we also shall take direct action by declaring that we shall not work your trains under the altered conditions.” No Sunday trains have yet been run on the Commonwealth railways under the altered conditions, but immediately it is found necessary to run them the men will refuse to work them, and a strike will be declared. The Government will then be able to deal with the men by issuing a proclamation under this statute. If it chooses it can put them in gaol, and deport those who have not been born in Australia. I have given only one instance among many to show how strikes are provoked by the employing classes themselves. I have never declared that the workers are always right and the employers always wrong, but I have never yet heard the admission from the other side that the employers are ever wrong. I have experience of a quarter of a century in the Labour movement, and I know that, in the overwhelming majority of cases, bodies of working men do not lay down their tools and suffer the consequences of that, action unless they have a real and just grievance. There is need in this country, as well as elsewhere in. this world, for peaceful conditions in industry. No country can prosper unless employers and employees work together in harmony. There is in Australia a growing feeling throughout the trade union movement and among the employing classes that our industrial system should be a little more humane, just, and harmonious; but, as the honorable member for Maribyrnong (Mr. Fenton) has said, the Government has sought to counteract that feeling and bring about discord by the introduction of this bill. I know the psychology of the working man. The men with whom I mix are sound, logical, and reasonable men, who would fight to the death in a class struggle ; but at any moment they are willing to sit at a round-table conference and adjust all questions at issue in a sound, reasonable, and logical way to arrive at a peaceful conclusion. They are more likely to resent this type of legislation than are those whom honorable members are pleased to term extremists. This legislation will postpone for more years than one can contemplate the day when we shall get both sides to come together. It will not accomplish what honorable members desire. It will be futile. If a really big industrial upheaval occurs in Australia, the jails may be filled, but still there will be more to go in; hundreds may be deported, but still there will be others to take their places. While we are striving to secure a bigger share of the fruits of industry for those who produce the wealth of the country, the growing desire in all sections of the community to re-adjust conditions by constitutional and peaceful means will be weakened, and in some minds’ destroyed. By the introduction of this bill, the Government has not rendered a service to the community, and it will accomplish nothing by its enforcement.
– I regret that a measure which is a men ace to the peace, order, and good government of the Commonwealth, and which, industrially, puts back the hands of time at least 25 years, has advanced to its final stages. The Government shows a desire to revert to the old times when acts of intimidation and fear of punishment by despotic employers acted as a restraint upon those who desired to improve their working conditions. Although I may seem young in years, I have had bitter experiences as a unit in industry. I have known the tyranny of the employing class, and although my soul has not been embittered to the extent that I cannot see any redeeming features in the employers, I know how easy it is for managers and masters to impose upon those serving them tyrannical conditions that no person with any manhood or sense of honour would be prepared to tolerate for a moment. On one occasion, after moving a vote of thanks to parliamentary candidates, I was asked by my employer to accept a wage reduction of 3s. a day. Of course, he merely desired me to refuse the reduction, and leave the town. I obtained employment in another town 25 miles away. The same candidates addressed a meeting there, and on this occasion I took the risk of seconding a vote of thanks to them. Immediately I was asked to take indefinite leave, and I have never been asked to return to the job. At times I and my fellows have had to meet in secret to discuss political and industrial matters in. regard to which our ideas were at variance with those of the employers. Only in that way could we avoid victimization. Honorable members will readily understand that employers of a certain class will use all the economic power at their disposal to create circumstances which will make men liable to punishment under this new law. Remember, at all times the employing class is able to impose its will upon the workers. The economic weapons of unemployment and starvation are used to keep the workers humble, and any employee who gives expression to ideas that are calculated to arouse his fellows to seek an improvement in their conditions becomes at once subject to suppression and victimization.
– When I was a candidate I could not get employment.
– Even so skilled a tradesman as the honorable member for Melbourne Ports (Mr. Mathews) has experienced injustice from the employing class, and that is why he has always been such an ardent champion of the rights of the workers. The responsibility for the industrial unrest and dissatisfaction today lies mainly with the employers. As the workers obtain a broader and brighter outlook, they desire to further improve their conditions, so that those dependent upon them may enjoy more of those amenities of life which a young and rich country like Australia should be able to provide for its people. Is such an endeavour to be regarded as a crime? Will the attainment of such an objective interfere with the prosperity and development of this great continent ? I remind honorable members opposite and the great captains of industry that the improvement of the conditions of the working class and the increase of their purchasing power have been attended by at least a corresponding improvement in industry and commerce. In those countries where the workers are still downtrodden, and are obliged to yield the maximum of effort for the minimum of reward, industrial and general advancement is slow; the conservative and inhumane employer, not only keeps his workers in subjection, but retards his own progress and prosperity. I reiterate the warning given by the honorable member for Yarra (Mr. Scullin) regarding the way in which even a government can cause dissatisfaction and precipitate an industrial crisis. The honorable member referred to the employees loaned to the Commonwealth by the South Australian Government for work on the railway between Quorn and Oodnadatta. I know fairly well that country, and the trying conditions under which those men are required to work. Employees in that country are deprived of many of the comforts and amenities of civilization, and are separated from their homes and families. They merely ask of the Commonwealth the same conditions as were awarded by a South Australian tribunal to railway employees doing that class of work. If a cessation of work occurs there, not through any fault of the men, but because of deliberate interference by the Commonwealth with conditions awarded by a properlyconstituted tribunal, the status and accrued rights of these men in the South Australian service will be endangered. The Government should hesitate before committing itself to a reduction of wages which may mean a serious injustice to employees who have been loaned by the State Government. If this were the only instance of the present Government’s lack of consideration for the workers, we might reward it as a mere oversight or error; but only a fortnight ago honorable members of the Opposition had to complain in this House of a reduction of the wages of men employed by the Department of Defence, through the issue of a departmental regulation which was in conflict with an award of the Arbitration Court. Only after considerable trouble, and several conferences, were the employees able to secure justice. I often wonder whether these disputes are caused by men who are trying to curry favour with their superiors. I understand that the employment of “industrial officers “ is extending from the realms of private enterprise to Commonwealth Government undertakings. I suppose that the industrial officer, in trying to justify his position, consciously or unconsciously invades the rights of other people. Ministers should accept a more direct responsibility in connexion with these matters; they should make themselves personally conversant with the conditions under which their employees work. Do we not remember that two years ago certain Commonwealth public servants took their grievances before an arbitrator appointed by the present Government. The very circumstances of his appointment and his dependence upon the Government of the day for an extension of his term of office must have made him unconsciously partisan ; yet even he awarded the public servants certain improvements of wages and conditions. Immediately the Public Service Board reclassified the whole of the duties covered by the arbitrator’s award. The Government confirmed the act of the Public Service Board in depriving its own employees of the increased emoluments and improved conditions awarded by the Public Service Arbitrator. Notwithstanding this, and other similar acts, the Government wonders why there should be industrial unrest and dissatisfaction, and why it should lose the services of some of its best officers; but there need be no expressions of surprise, because the Government does not appreciate its responsibility towards its employees. Under regulations issued, men are to be deprived of additional emoluments for the performance of Sunday work, and if they are compelled to take the extreme step of going on strike in endeavouring to maintain the present standard, I shall support them. I shall fight for them, both on the floor of this House> and before the people. There are not only the men to whom I have referred, but there are others in the Commonwealth Service who are being most unjustly treated, and whose means of redress are being restricted in every possible way. In any industrial unrest which threatens the peace, order, and good government of the Commonwealth, the interests of the employees are always disregarded, and those of the kings of commerce, who, in the opinion of the Government, are paramount to the king of the realm, are most closely conserved. My indignation at legislation of this description cannot be adequately expressed in the language at my command. I have endeavoured to meet the situation in a calm and temperate manner, but, as a representative of the people, I cannot allow such unfair, unjust, and un-British legislation as the present bill to pass without expressing my strongest disapproval, and I shall always protest strongly when I consider that the rights and privileges of the people are seriously menaced.
.- The Attorney-General (Mr. Latham) must be surprised at the somewhat unusual course adopted in further discussing the bill at this stage. The provisions of the measure, however, demand the fullest possible consideration. It is quite likely that when the Attorney-General replies he will refer to the statements made by the honorable member for Batman (Mr. Brennan) concerning the attitude the Minister assumed on another measure which was so ignominiously pitchforked out by the High Court when it considered its constitutional aspect, and the manner in which it was administered.
– I propose to say something about that.
– We are told that a measure such as this is necessary in order to remedy some of the ills from which the community is suffering to-day, and that under the present Constitution we have the power to legislate in this way. If we have the power, why is profiteering and the exploitation of the public going on just as it has been for many years? I believe that on a previous occasion when I made a similar statement I was challenged by the Prime Minister, who said that if the Commonwealth Parliament did legislate on certain specific matters, the legislation would probably be held to be unconstitutional. I well remember the late Mr. Thomas Ryan - a legal authority of no mean repute, who successfully upheld legislation before the High Court and the Privy Council - informing the Prime Minister of the day that he could draft a measure for dealing with such offences which he knew would be held by the High Court to be constitutional. The Attorney-General cannot recall the maritime strike, but as a youngster I can remember that great industrial upheaval, which affected not only the capital cities of the Commonwealth, but also the main provincial centres, and notwithstanding the unsettled industrial conditions which then existed, there was no mention of deportation. To use a mild expression, the workers at that time were in a state of seething insubordination, and, as a result of that great industrial upheaval, which was undoubtedly caused by the action of employers, the political labour movement was established. The site upon which the Melbourne Trades Hall is situated was practically given to the trade unionist movement by the Victorian Government. Since then many measures affecting industrialists have been passed by the Commonwealth and State Parliaments, and there are only a few which can be regarded as dark blots on the statute-book. There is, for instance, what is known as the Irvine Coercion Act, which was, as I predicted, repealed by a succeeding Government. Similar legislative action was taken in New South Wales, where the result was the same as in Victoria. Instead of encouraging trade unionism and allowing it to develop to its fullest extent, this Government is doing everything to retard it. The honorable member for Batman (Mr. Brennan), and the honorable member for Yarra (Mr. Scullin) referred to this measure as futile, and I believe it will be, because it will be found inoperative when an attempt is made to enforce it. Does the AttorneyGeneral think that ‘ the trade unionists of Australia are likely to abandon their old system of organized effort? Trade unionists will always have their leaders. Reference has been made to the holding of secret ballots. As a member of a union for many years, I. know that certain matters are decided by a secret ballot of the members of the organization. Sometimes a ballot is preceded by a meeting of unionists, and, if the meeting decides in favour of a secret ballot, such a ballot is held. The last secret ballot with which I was associated was on the question whether our union should vote a sum of money to help the Labour party at the recent elections. There is no need to ask how I voted on such a question.
– During the campaign a Labour candidate said that the industrialists had not anything to do with the political wing.
– Men may belong toa union but not to the same political camp.
– Such a man would have a bad time.
– Some of these are paid by the other side.
– Oh no.
– Does the Minister dispute that?
– Where is the proof?
– I shall give a concrete case. A unionist, who was once my secretary during an election campaign, and was secretary to a Labour League, left the Labour party, and for the past six or seven years has been engaged by the Nationalist organization at a very good salary.
– He saw the light.
– That may be so, but the Minister pooh-poohed the idea of a member of a union being paid by an organization supporting the Government. When a man joins a union, he is not compelled to hold a particular political opinion.
– Is that individual still a member of the union?
– So far as I know, he is.
– If the result of a secret ballot is that a contribution must be made to the political funds of the party, is every member of the union bound to contribute.
– Every member must abide by the result of the ballot. In what other way could any matter be decided? I assume that in the legal profession every member has the right to move for the amendment or the repeal of any rule of the organization. The AttorneyGeneral (Mr. Latham) may desire to have one of the rules amended. If he did, he would give notice of his intention to move that amendment. When it came forward, he would urge it with all the forensic ability that he possesses. But a majority of his brother legal men might not agree with him. If they defeated his proposed amendment, he would have to abide by that decision.
– The organization cannot compel any member of it to make a political subscription.
– I do not know of a better way than the ballot for ascertaining the will of the majority.
– Does the AttorneyGeneral propose to bring down legislation to prevent unionists from subscribing to political funds?
– I do not know whether the thoughts of the leaders of the National party are similar to those of some members of the Conservative party in Great Britain. So far, the Prime Minister of Great Britain (Mr. Baldwin) has resisted the pressure which has been exerted to induce him to legislate in a way that will prevent trade unionists from contributing to the funds of the Labour party. At a conference of the Conservative party that was held recently in Great Britain, one of its foremost members announced that, if the Prime Minister would not introduce such a bill, he, as a private member, would do so. The leaders of the National party in Australia closely watch the various moves that are made in Great Britain, and in recent years they have adopted similar methods to attain their ends. I am a thorough believer in the organization of both employers and employees. A wellorganized community is easily governed. I need mention only two great organizations to demonstrate that point; they are the trade unions and the friendly societies. Since I was married, I have had to start life afresh on about four occasions. I lost a government position because, as a member of the board of management of my union, and a member of the Trades Hall Council, I took a prominent part in fighting the men’s battles. The reason given for my dismissal, and that of other men, was “ the imperative necessity that existed for retrenchment.” A week later I was re-employed as a casual hand. In that capacity, I lost the privileges that attached to my permanent employment. The honorable member for Yarra (Mr. Scullin) has endeavoured to run a newspaper. We both can testify regarding the systematic boycott that is exercised against those who, in a newspaper, give expression to certain opinions. On one occasion, I stood for a metropolitan seat in the State Parliament. The manager of the firm by whom I was employed said to me, “As a matter of course, you can put in your resignation, and I will hold it. When the election is over, if you are not successful, you can come back to your old position.” I did not win the seat. When I applied for my position, the manager said to me, “ I am very sorry, Fenton, but the directors do not care for your political opinions, and therefore your position is filled.” Banking institutions exercise an influence upon their clients, many of whom have suffered pecuniarily because of the opinions that they hold.
– The employers are not singular in exercising such an influence.
– But the difference is that if an employee exercises it, he is liable to be punished under the Crimes Act.
– Employers can give numerous reasons for dispensing with the services of their employees. An employee may be promoted this month and be earmarked for dismissal the next.
– There are hundreds of similar cases among the employees.
– Cases ofthat kind among employees are few compared with those among employers. There are in our community persons who exercise an influence upon some honorable members in this House, and who would hark back to the conditions that prevailed in the days before unionism was established in Australia. They would be delighted to have the opportunity to deal with every man individually. It is interesting, at times, to quote the opinions of spiritual leaders. At an Anglican congress that was held some years ago Dr. Gore, then Bishop of Oxford, counselled churchmen to support trade unions, and to encourage agricultural labourers to obtain improved conditions. The Archbishop of York, Dr. Cosmo Gordon Lang, at the same congress, attributed much of the industrial unrest to “ the idle rich, whose selfishness and luxury are more responsible for the bitterness and discontent than are the agitators at whom they sneer.” Those are true words. I remember reading a paper, portion of which was published in the daily press, that was read by Mrs. Carrington at an Anglican congress held in Melbourne eighteen months ago. Speaking of Australia, she said -
The arrogant methods of the rich did more to create bolsheviks in this country than any other influence she knew.
That bore out what had been said by Dr. Cosmo Gordon Lang. The Attorney-General makes the pretence that employers will be dealt with under this legislation because the word “ lockout “ occurs in it. That suggestion has been ridiculed out of court. Can he name an employer who has been brought before any tribunal in Australia to answer the charge of having locked out his workmen ? Is it likely that any employer will be charged under this act? The honorable member for Boothby (Mr. Duncan-Hughes), with his legal knowledge, will unhesitatingly answer “ No.” If that honorable member forsook his present political faith and, as the leader of a union, advised men to go out on strike as the only means of redressing their wrongs, he would stand a good chance of being put in jail. Much has been said regarding the mandate that the Government was given by the people of Australia. What story do the cold figures tell ? Candidates supporting the composite Government polled approximately 1,422,000 votes. The Labour party, despite the opposition with which it was assailed, polled 1,192,000 votes. What is a majority of 230,000 in a poll of 3,000,000.
– A very decent one.
– A turnover of slightly over 100,000 votes would reverse the position. That is an easy matter.
– The honorable member will find that it is not an easy matter.
– It was done in 1910, when I was first elected to this House. The Labour party then won sixteen seats. Mandates are obtained in most peculiar circumstances, and the assistance which is given in certain directions to enable them to be obtained is even more peculiar. I have here an article headed -
THE MONEY MASTERS.
National Union Meets.
Passing Bound the Hat.
– From what authority is the honorable member quoting?
– The Melbourne Age, of Friday, the 27th October, 1922. The report reads -
The union is the influential body which collects and administers the funds used by the Nationalist party in fighting election campaigns.
It is a significant fact that the opulent National Union consists “wholly of representatives of the wealthy interests. It is the head and front of money power - in large capitals. It receives almost fabulouscheques from shipping, pastoral, commercial, importing, mining, and financial concerns, and in dark secrecy it allocates the money to various branches of the Nationalist party for expenditure along definite lines, carefully laid down by the union itself. The main avenues of expenditure may be set out as follows: -
Publicity in support of the Nationalist party.
Advances to cover the election expenses of candidates.
Provision for conveyances for speakers and organizers before election day, and for voters going to the polls on election day.
Payment of the salaries and expenses of huge organizing and publicity staffs, who spend money like water at election time.
Provision of consolation prizes for men who consent to run in the Nationalist interest in electorates where there is no possibility of success. This is a device to keep opposing candidates busy in their own electorates, and prevent them from assisting others who need their help.
– The honorable member is not discussing the mandate now. I must ask him to confine himself to the question before the Chair.
– Only recently within the precincts of this House the Prime Minister (Mr. Bruce) was called upon by one of the persons associated with the National Union, who asked why Walsh and Johannson have not been deported.If it had not been for certain wealthy interests behind the National Federation quite a number of smug and smiling honorable members opposite would not be members of this Parliament. The report proceeds -
If a candidate displease the plutocrats who sit behind the closed doors at National Union meetings - well, he may look forward to the withdrawal of the funds necessary for the conduct of his election campaign.In a few words - the union “ out-caucuses the caucus,” for which it affects a withering contempt.
A little later on the report refers to the nature of the meeting. It says-
The gathering was kept as select as possible. There were present representatives of the following interests: -
The shipping companies, who are grateful to the Government for maintaining high freights;
The beef barons, who are receiving a lordly subsidy from the public Exchequer;
The wool kings, who are still being petted and coddled by the Government;
Flinders-lane, which feels that as long as Mr. Hughes is in power there will be no interference with the sacred rights of the profiteer ;
Other financial magnates, who hope to be able to continue to extort high rates of interest for a long time to come.
Does the average citizen consider his affairs safe in such hands?
– I must remind the honorable member again that the question before the Chair is -
That the bill be now read a third time.
He is entitled to discuss the general principles of the bill, of the policy of the measure, and to give reasons why it should or should not be read a third time. He has gone beyond even the wide limits’ that I was prepared to allow him in discussing whether or not the Government had received a mandate from the people to introduce the bill. I must ask him to confine his remarks more closely to the measure.
– If the report that I am reading truly described the position in 1922, I will go so far as to say that the position now is a thousand times worse than it was then. The report goes on to say that the Commonwealth Treasurer of the day, Mr. Bruce, was present at the meeting, and said a few things to frighten the wealthy people who were in attendance. Evidently he had done some good work earlier, for when the hat was passed round a rich harvest was reaped. As the bill is directed against organizations, I contend that the National Union comes within its purview. We have been discussing only industrial organizations ; but in the view of the report I have read, can any honorable member do other than agree that the methods of the National Union should be investigated judicially ? The public should be informed of the manner in which it incurs such high expenditure during election time. The honorable member for Perth (Mr. Mann) a little while ago said that trade unions did not use gentle means to persuade their members to do as the majority desired. Perhaps the AttorneyGeneral will be surprised to hear that at the meeting to which I have referred there were some employers who had no desire to contribute to the funds, but strong steps were taken to force them to do so. The report proceeds -
Secret organizations like the National Union exercise the most pernicious influence in public life, and the community will be the richer when the power of the Government is taken from their hands, and passed over to men whose principles and actions are dictated solely by considerations of the public interest.
I have an extract of a different kind to read. The Age newspaper has been giving the Government some good advice during the last few weeks. In a leading article published on Monday last it made proposals with the object of rescuing the Government from its unhappy predicament. The honorable member for Wakefield (Mr. Foster) was vociferous in his interjections this afternoon. I ask him to read the article, which was probably written in a less heated atmosphere than this one. Speaking of newspaper articles reminds me that the National Federation spent a great deal of money during the election campaign in getting numerous articles written and published in the provincial press. The big metropolitan daily newspapers have their permanent staffs, and are not dependent upon casual contributions; but it was quite easy during the election campaign to recognize the writings of the few wellknown journalists in various country newspapers. This is additional evidence that the affairs of the National Union in 1925 were in a worse state than in 1922.
– If the honorable member desired any alterations in the hill, why did he not propose them in committee ?
– For the simple reason that no amendments from this side of the House would have been accepted.
– There is no justification for that statement. Quite a number of amendments were accepted.
– A few commas and a full stop or two were put in, but no material amendments were accepted.
– That is so. The leadingarticle of the Age that I have mentioned reads -
Inadequate and retrograde legislation should not be sanctioned by Parliament simply because a mandate is insistently and arrogantly postulated by the Government. . . . The strike is a negative form of force, and the Government will not, by the positive form of force proposed in the Crimes Bill, prevent it That is one of quite a number of reasons why Parliament should not pass it unamended. ….. With pathetic earnestness the Ministry declares that under the Crimes Bill all genuine trade unionists and decent citizens will bo perfectly safe; the Government’s real purpose is to grapple with a few persons who shall be nameless. But no single man, no handful of men, is responsible for Australia’s industrial troubles. In times of such trouble deportation would need to be on mass scale in order to be successful. But deportation on a mass scale would be impossible. The thing that is impossible should not be made legal.
That is common sense. I have a few more quotations to make. I dare say that when honorable members go back to their constituencies shortly - for it appears that we shall soon be in recess - they will tell their constituents that, notwithstanding the opposition of the Labour party to the Crimes Bill, there was no general opposition to it by trade unionists; but the fact is that trade unionists throughout Australia have, through their official press organs, strongly opposed the bill. Trades Hall Councils in every city of Australia, and Labour leaders in the provinces, as well as in the metropolitan areas, have voiced their condemnation of this iniquitous measure. I could spend a complete 65 minutes - the full time allowed me in addressing myself to this motion - in simply quoting extracts from adverse motions that have been adopted. We are surrounded by a great cloud of witnesses who have testified to their opposition to the measure. When the Government says that it has the interests of the trade union movement at heart in seeking to place this measure on the statute-book, I reply that it is talking with its tongue in its cheek, for it is squarely opposed to trade unionism. The Railways Union Gazette, which circulates among tens of thousands of railway workers, published an article which is headed, “ Bruce’s Coercion Act and Deportation ; What Mandate has been given?” There are a few people who would summarily wipe out. trade unionism. But the Australian people as a whole do not approve of bringing trade unionism under the provisions of this bill. British subjects are exempt from such legislation in Great Britain, and in every other British dominion deportation is a punishment that is applied only to foreigners. The Canadian, New Zealand, and South African acts specially exclude British subjects.
– South Africa has deported British subjects.
– That is why General Smuts and his party were defeated at the last election in South Africa.
– And there has been no alteration in the act since.
– The alteration will come in time. The menin power in South Africa to-day would never put such an act into operation. If not in South Africa, then at least in Canada and New Zealand, British subjects are exempt from deportation. The Railways UnionGazette. of the 10th February, 1926. printed the following reference to the Crimes Bill : -
We had some insight during the war years into the high-handed dictatorship that manifested itself in prohibiting books, censoring newspapers, suppressing organisations, deporting pacifists, penalizing printers and publishers - aye, terrifying them with armed guards - and generally hunting down fighters for freedom, and the rights of democracy.
We are to have it all over again, only more bo.
We are to have a system of deportation in peace time more tyrannic than that of war time, and with far less justification.
Hie new deportation is to become part of the “ established Government,” and the very act of calling for its removal is to render the act punishable by deportation or jail.
We have little hesitation in asserting that the acceptance of the principle of deportation, as an instrument of strike-breaking, is in itself a “ crime “ upon the country and the Labour movement, and upon tradition and posterity both.
Let the workers be sure of this, that when they cannot strike as a last resource - when they cannot stop work, however grievous their burden - they have indeed sold themselves into slavery.
I agree with that view. Our protests are unavailing, but it is necessary to place them on record to show that an attempt has been made to prevent this bill from being forced through the House by a brutal majority. I agree with what previous speakers have said about the difficulty of dealing with men in the mass, and during industrial troubles they must, of course, be dealt with in the mass, if an attempt were made to apply the provisions of this bill during industrial trouble it would be found that the ships available would not contain all the people that the Government would want to deport, and that the jails would not hold those that the Government would want to imprison. If men are compelled to wait a long time for the redress of grievances, they may be driven to take direct action. Such extreme measures, however, can be avoided if the conditions of the workers are ameliorated with reasonable expedition. Pin-pricking practices by employers are frequently the causes of industrial trouble. It has been proved in America, and I believe it is so here, that industrial troubles are most frequently caused by the managers and owners of businesses. I have tried to the best of my humble ability to carry out my duty as a member of this Parliament. We have heard something about mandates, and I had a mandate, given to me by the electors, to oppose legislation of this character.
– The honorable member for Wakefield (Mr. Foster) said you championed the rebels.
– He said that only in an angry moment. All the responsibility for this bill rests on the Government and its supporters. It is becoming more and more apparent that not more than two members on the other side understand the industrial position in this country. If they did understand it, legislation of this character would not be passed. Honorable members on this side do not endorse law-breaking, or support law breakers. If I broke the laws of this country I should expect to be subjected, to the penalties provided for lawbreakers. Is this Parliament content to display its incompetence by not punishing offenders in the ordinary way ? When honorable members come to consider the bill in their calmer moments, they will realize that the electors never sanctioned it. The Australians of to-day are the offspring of Britishers, and it is because the blood of our ancestors flows in our veins that we are the better Australians. A person might have been born on the other side of the world and brought to Australia in his infancy. In spirit, in education, and in everything but birth, he might be a true Australian, and perhaps a better Australian than some who are born here. Such a person could be deported under this bill, but Australians by birth must be tried and adjudged guilty or not guilty by the courts of this country. Who can contend that it is right to make such a distinction between British subjects? The right honorable member for Balaclava (Mr. Watt) can recall the time when a Victorian Parliament did a similar thing, but a later Parliament wiped out the act as a blot on the fair escutcheon of thisState. This bill will remain a blot on the fair escutcheon of Australia until a future Parliament wipes it out.
– I shall first say a few words about the speech of the honorable member for Batman (Mr. Brennan). He was unable to resist the temptation of saying, in accents more or less subdued, when referring to the Immigration Act passed last session, “ I told you so !” He criticized some of the remarks made by me during the debate on the Peace Officers Bill, and stated that on the election platform I had said that that act was valid. I am not aware that the honorable member honoured me by attending any of my election meetings. At those meetings I was studiously careful, having regard to the fact that proceedings were being taken before the Deportation Board, to refrain from saying anything about the legal aspect of the act upon which the proceedings depended. I was on several occasions asked what I thought of that act, and my reply, in effect, was - “ Proceedings are now pending. The matter is sub judice, and it may be taken to the High Court. You are not asked to vote upon the validity of the act, and, if you were to vote upon it, your vote would have no effect. Accordingly, I shall not presume to discuss the constitutional aspect of the act.” I proceeded to deal with the merits of the legislation, and it was upon the merits of it that the people gave their vote.
-. - How could the AttorneyGeneral make a speech on the merits of a measure that had none?
– If the honorable member had been present at my meetings he would have received an answer to that question. The honorable member for Batman’s second-reading speech appeared to have been prepared for delivery during the debate on the Address-in-Reply, for it had very little relevance to the provisions of the bill; but I suppose he thought it would be a pity to waste it. He referred to something I said last year during the discussion of the Peace Officers Bill, but he did not read the following statement made by me on that occasion: -
I have had too much experience to guarantee the validity of any act until the High Court lias positively pronounced to that effect. Sometimes unexpected results accrue from legislation, and a provision which has long stood unchallenged is declared to be unconstitutional. I have had personal experience of judicial decisions which, to say ths least, were unexpected.
I then proceeded to say that there was a certain amount of guidance available, and I referred to the decision of the High Court in the Irish Envoys case. I read the actual words used by His Honour Mr. Justice Isaacs, who, I said, was very clear and definite. After quoting the words of one judge, I stated, as was the fact, that four judges, including Mr. Justice Isaacs, concurred in the judgment of the court.
– Did not that mean that the four judges concurred in the statement made by Mr. justice Isaacs?
– I did not say that four judges concurred in that statement. Each judge used language of his own. I made the statement, which should be quite plain to any one who reads the report of my speech, that His Honour Mr. Justice Isaacs dealt with this point, and that the other judges concurred in the decision of the court.
– I read the honorable gentleman’s remarks very carefully, and I interpreted them as meaning that the four judges concurred in what Mr. Justice Isaacs said.
– If they did not mean that, they had no point.
– The honorable member for Batman actually said this afternoon that the judgment of Mr. Justice Isaacs was a dissenting judgment.
– I did not use that term. I said that I disagreed with the interpretation given by the AttorneyGeneral.
– The honorable member said that the judgment of his Honour Mr. Justice Isaacs was a dissenting judgment, whereas it appears that he only intended to say that the other judges disagreed with what Mr. Justice Isaacs said. Reference to the report of the case - it may be found in the Commonwealth Law Reports, page 518 - will reveal that that case is regarded as laying down a number of principles which are severally set out in the head note. The only judge who is there described as dissenting upon any question is Mr. Justice Higgins, who did dissent from the judgment of the court.
– That is a different thing.
– Let us consider the reasons given by the judges to which, doubtless, the honorable member referred. I have read every word that the four judges used, as given in the report of the case. Excluding Mr. Justice Higgins, who dissented from the whole judgment of the court, none of the other judges expressed any dissent from what Mr. Justice Isaacs said. What he said was a very clear and deliberate pronouncement. That none of the other judges dissented from his opinion honorable members may confirm for themselves.
– They will find it hard work.
– It is difficult for me to abstain from remarking upon the position taken up by the honorable member for Batman (Mr. Brennan) in relation to certain legislation last year, concerning which he has now adopted the attitude of “ I told you so. I knew it at the time.”
– I expressly repudiated such an attitude.
– In his second-reading speech, the honorable member did so ; but this afternoon he referred to a statement which he made in September of last year, when he said, “ I told you so.” I refer to what the honorable member said, not at a meeting which was reported to have been highly, successful - I do not doubt that it was interesting: - but to what he said in this House in July and August of last year. If the honorable member then knew that there was something wrong with the legislation before the House, it was obviously his duty to say so. I have read everything that the honorable member is reported to have said in the debate on the Immigration Bill, and on the Peace Officers’ Bill. It is rather remarkable that, when discussing the Immigration Bill, no honorable member in this House, so far as I have been able to discover from the reports of their speeches, raised the question of the unconstitutionality of that legislation. The only opinion on that matter which was offered came from the honorable member for Batman, but even he did not suggest that there was anything wrong with the measure from the constitutional point of view. After having referred (o something which he alleged that I said, but which I did not, in fact, say, the honorable member said that it was well established that we not only had power to control the incoming and outgoing of aliens, but that we also had practically unlimited power to control the incoming and outgoing of British subjects. That is the only positive opinion, from a legal point of view, regarding the existence of the power to deport that I have been able to discover in the records of the debate.
– So far that opinion seems to be sound.
– The honorable member then proceeded to show that he was not complaining of the general provisions for preventing the influx of large numbers of aliens, but that, in his view, the power was unjustly exercised in the case of British subjects. Doubtless, he referred to the Irish envoys case. The only positive opinion given in the course of that debate was expressed by the honorable member for Batman, who said that we already had practically unlimited power.
– I did not mean that that power was unjustly exercised in the Irish envoys case. I did not complain of the decision in that case. I was referring to other cases.
– The honorable member for Batman made a contribution to the debate on the Peace Officers Bill, du ring which he confined himself largely to a consideration of the Immigration Bill. In August last .legal light on the Immigration Bill had not dawned upon the mind of the honorable member. He did not then suggest that there was anything wrong with that legislation from the legal point of view or regarding its constitutionality or applicability. On the other hand, his whole argument was that the Government already had sufficient power to deport persons from Australia, but that it ought not to do so. After lengthy proceedings before a board, and further lengthy proceedings before the High Court, for divers reasons it was held by certain of the judges that the Immigration Act passed last year did not apply to the individuals against whom proceedings had been taken. It is interesting to remember that at the commencement of the proceedings before the Deportation Board an adjournment was asked for in order that the legal advisers of the individuals concerned should be able to make up their minds whether they should attack the validity of the legislation or not. They decided that they would not attack it. The case continued for some weeks, occupying the whole of September and October, and a portion of November. The hearing in the High Court lasted for over a week. Now the honorable member for Batman comes along and says that he knew all the time that the legislation was unconstitutional. At least he says that he knew it in September, although possibly he had not seen the light in July or August.
– I commenced. my original research in September.
– Much of the criticism directed against this bill has been entirely misconceived. It is due to a misunderstanding of its terms and objects. It has been said in a superior manner that this legislation is not a panacea for industrial troubles. The Government does not suggest that it is. It is not a bill which is directed to removing industrial troubles or to legislating in respect to trade unions. Its object is to protect organized government and to provide against any serious interruption of vital services. The first portion of the bill relates to unlawful associations. Here the Government has presented so overwhelming a case that the Opposition has not even fought it. Yet during the election campaign the main contention of Opposition members was that no man should be deported from Australia for any reason.
– That is absolute, misrepresentation.
– The main objection of the Labour party was to deportation.
– Not at all.
– We have repeatedly heard from honorable members opposite, including their leader, that the issue before the electors was not law and order, but deportation.
– The Leader of the Opposition did not say that. He referred to the deportation of Australian citizens. The honorable member is misrepresenting the Leader of the Opposition, and he knows it.
– Let us take it at that. If I have misunderstood honorable members opposite, and they now avow themselves to be in favour of deportation as a principle to be applied in some cases, I am perfectly agreeable to accept that position.
– We have never disputed that.
– Then let us take it that Opposition members during the election campaign vigorously opposed the deportation of Australian citizens. I take it that an Australian citizen is a person who, whether born in Australia or not. has settled here and become a member of the community. That being so, it passes my comprehension that the Opposition should have supported the first portion of this bill dealing with unlawful associations, and providing that proven enemies of the community may be sent out of the country whether they had made their home here or not.
– We never supported that.
– Regarding that portion of the bill, the Opposition has not been able to put up a fight. It has not even attempted to do so, hut has let it go by default. But upon the provisions in the bill which deal with industrial disturbances a great deal of attention has been concentrated. It is important to observe carefully the moderate character of those provisions. They can only come into operation after the Government has accepted the responsibility of recommending to His Excellency the Governor-General that it is desirable to issue a proclamation of the character described in the act. The disturbances referred to are strikes and lock-outs affecting transport, whether interstate or foreign, and interference with public services. It does not rest with the Attorney-General to determine whether there is a strike or not. That power rests with the court. A strike can only be deemed to have taken place when the facts comply with the definition given in the act. The word “ unreasonable “ has been inserted in the definition in several places.
– What about the proclamation?
– The proclamation would have nothing to do with the question whether a particular individual had been taking part in a strike after the proclamation was made. The AttorneyGeneral does not determine that; it is a matter for the court to decide. No action can be taken against any person unless he has first been convicted under that clause, which will only be brought into operation in cases of emergency. Let us consider the case of a violent individual who is the enemy of all forms of government, and who was not born in Australia. It is useless to imprison him for life. Should he be convicted of an offence, it is far better to put him out of the country. In the same way, the man who bona fide believes that industrial disputes should be used for political purposes, and for disturbing the community, is much more humanely dealt with, after conviction, by being deported than by being imprisoned. This is sane and moderate legislation which the people of Australia well understood that the Government, if returned to power, would introduce. By the emphatic decision of the electors the Government has been returned to power with a large majority. It is hoped that the passing of this legislation will in itself act as a deterrent, that it will not be necessary for the Government to avail itself of the powers which the measure confers. The Government has no hesitation in commending the bill to this House and to the people of Australia.
Question - That the bill be now read a third time - put. The Committee divided.
Majority . . . . 26
Question so resolved in the affirmative.
Bill read a third time.
Sitting suspended from 6.37 to 8 p.m.
Debate resumed from 3rd February (vide page 607), on motion by Dr. Earle Page-
That the bill be now read a second time.
.- This measure was one of the slaughtered innocents of last session. It proposes to validate certain refunds of income tax, and also to validate the non-collection of certain amounts of income tax. In the first place, I should like the Treasurer to state the total sum involved by the bill. I have no doubt that it is a very considerable amount. The Minister admitted in his speech that it was substantial, but when asked by the Leader of the Opposition (Mr. Charlton) to mention the amount, he said that it was impossible to give it. Although I admit that it is impossible to give the total accurately, the major portion of the amount could be stated absolutely. I hope, therefore, that before the debate closes, and even if the committee stage has been reached, the Treasurer will let honorable members know what sum is involved. First of all, I desire to know the actual amount that was refunded. Surely the Treasurer will not say that it is impossible to supply that information. The amount collected and subsequently refunded must be known to the Taxation Department. The amount of tax assessed and not collected must also be known. Then there is a third amount that was not assessed, and, of course, not collected. One could not expect that sum to be stated accurately; but it could be given approximately. I maintain that the refunds of tax were neither legal nor equitable. They are proved by a recent judgment of the High Court to have been illegal, and I propose to show that they were not equitable. The only claim, therefore, that the bill has to the consideration of the House rests on the ground of expediency.
– The amount involved is not significant, and the continuance of a palpable injustice is unwarranted.
– That is not my argument. It is not a matter of what ought to be done now, but what has been done. When something illegal and inequitable has been done, and the amount is large, it makes the offence worse. That is what I propose to prove. It was a case of the remission of taxation on bonus shares issued against accumulated profits ordinarily known amongst companies as reserves. In moving the second reading of the bill, the Treasurer said that it was a measure to give statutory effect to what was regarded as the will of Parliament.
I propose to inquire to what extent the measure can be regarded in that light. In 1922 Parliament agreed to exempt from taxation all bonus shares distributed from accumulated profits, ‘ and it also acquiesced in a statement by the then Treasurer (Mr. Bruce)1 that such tax as had been collected should be refunded. That is the basis of the statement by the present Treasurer that this bill gives statutory effect to what was regarded as the will of Parliament, as expressed by the fact that it had exempted bonus shares from taxation in 1922, and by the fact that the then Treasurer made an announcement that from the date of the commencement of the act until that time all money collected as tax on bonus shares issued against accumulated profits would be refunded. Since Parliament took no exception to that announcement, it was interpreted as being the will of Parliament. There is slight ground for the assertion that effect is sought to be given to the will of Parliament; but I shall show that the ground is very slight indeed, when one examines all the circumstances that led up to that action, and what has been done since. Why was there such an agreement by Parliament? Do honorable members think1 that any Parliament, or any government, has the right to refund taxes over a period of six or seven years, if such refund is illegal ? I am sure that no honorable member would agree to that. Then the reason why Parliament did accept the position was because it believed that the tax collected had been illegally taken, and that the sums refunded should not have been collected by the Government. Subsequent events have proved that Parliament was misled into the belief that the money was illegally collected, and that it was bound to order a refund. From a perusal of the debates in the House I can discover only one honorable member who did not believe that. That was the right honorable member for Balaclava (Mr. Watt). The Treasurer of the day (Mr. Bruce), speaking in the House on the 2nd October, 1922, is reported in Ilansard, at page 2966, to have said -
The alteration is more apparent than real, because what we are actually proposing to do ds to make .clear, beyond doubt, what apparently is the law to-day.
He referred to the decision of the High Court in the Webb case, and interpreted it. as meaning that all bonus shares dis tributed from accumulated profits should be exempt from taxation under the act. He made this very definite statement -
In view of the judgment in Webb’s case, the Government have come to the conclusion that, although the point has not been absolutely settled by that case, they would be unable, by taking further action in the courts, to establish that bonus shares issued against accumulated profits are liable to tax. . . .
During the debate the then honorable member for Kooyong (Sir Robert Best), who is a lawyer, supported the view of the Government that the decision in the Webb case exempted such shares from tax. The honorable member for Balaclava (Mr. Watt), however, made this statement, which is reported in Hansardof the 6th October, 1922, at page 3328 -
On the subject of bonus shares, I do not agree - although I speak as a layman, and, therefore, with some deference - with the lionorable member for Kooyong (Sir Robert Best), who said that the exemption of these shares has been settled by a recent decision of the court. I do not think the Treasurer agrees with him. That decision, as I read it, made certain features plain. It laid down certain principles that appeared to be correct, but I think the Treasurer realizes that some phases of the matter are not covered by the Webb decision, and, therefore, he proposes to boldly face and deal with the situation.
It is clear that the honorable member for Balaclava had in mind an alteration of the law ; but when the honorable member for Kooyong was speaking on the same day, at page 3319, he said -
Thus we may take it that the law is thai bonus shares of this class, which have been a source of great anxiety to the members of the commercial and trading community, are exempt from income taxation.
– No; only the shares affected by that particular judgment.
– Not at all; that was a strong case. . . .
– If that is so, the provisions of this bill referring to them are not necessary.
– Some fine distinctions may be drawn, but in the case I . have mentioned bonus shares, representing the accumulations of profit which had been capitalized, which were openly issued as bonus shares, were declared free of income taxation.
When he said that they were declared free of income tax, he was referring to the decision of the High Court in the Webb case. The only honorable member in the House, therefore, who really understood the decision in the Webb case was the honorable member for Balaclava. The then Treasurer stated that in view of that judgment, the Government had come to the conclusion that it would be unable to collect this money, and therefore had decided not to proceed with any further assessments, but to refund all the tax collected from the date of the commencement of the act in 1915 to 1822.
– It might not have suited those honorable gentlemen to understand the judgment in the Webb case.
– It was clear that the judgment in the Webb case left some doubt, and that the act of 1922 sought to remove it.
– It more than removed the doubt; it definitely exempted bonus shares issued against’ accumulated profits. But 1 submit, with the humility with which a layman should approach a subject of this nature, that the Webb decision by no means disturbed the position as it then existed.
– The then Treasurer made it clear that in view of the Webb judgment, the Government considered that it would be impossible by taking further action in the courts to establish that these bonus shares were liable to tax.
– The Treasurer must know that, if bonus shares were not exempt, a mere declaration inthis House could not make them so, and the fact that the former Treasurer introduced an amendment of the law showed that he. had a doubt on the matter. I propose to show honorable members that there was room for much doubt, and that the Government of the day, before exempting these shares from taxation for a period of six years, should have had no doubt at all on the matter. The Treasurer, in introducing the present bill, endeavoured to bring the whole House behind him by saying that the Leader of the Opposition (Mr. Charlton) acquiesced in the bill introduced in 1922. He remarked that, although the Leader of the Opposition objected to it in the first instance, he agreed to it when the matter was fully explained to him. He further stated that I interjected freely when the honorable member for Balaclava was speaking, but did not think it worth while making a lengthy speech on the subject. I shall now frankly tell the House what happened in 1922 regarding myself. I made several interjections during the speech of the honorable member for Balaclava (Mr. Watt), andIpay him this compliment that he took my interjections in good part and treated them with more courtesy than perhaps they deserved. But at the same time I obtained a considerable amount of information from the honorable member. My interjections at that time show definitely that I was opposed for reasons that I shall give later to the exemption ofbonus shares from taxation. I was convinced, however, after reading in Hansard the speech of the Treasurer of the day (Mr. Bruce) that the High Court decision in the Webb case rendered it impossible to collect taxation on bonus shares distributed from accumulated profits. From his interpretation of the Webb case, I then understood that the reason the High Court had ruled as it did was because bonus shares distributed from accumulated profits were capital and not income, and knowing that the Constitution did not permit of income taxation on capita], and believing that the High Court’s decision was against this House, I refrained from speaking in opposition to the measure. I was, like the honorable member for Batman (Mr. Brennan) regarding another measure, bluffed by the then Treasurer’s interpretation. I became wise after the event. I frankly admit that I have examined the facts of the Webb case only since the hearing of the James case.
– Did not the honorable member definitely agree with the interpretation’ given by the then Treasurer ?
– I had no knowledge of the Webb case, and I accepted the interpretation given by the Treasurer. If honorable members cannot accept the interpretation of a High Court decision by the Government and its legal advisers it is a bad state of affairs for this Parliament. In the light of recent events, it is evident that we must refrain from accepting the Government’s interpretation of the law. At that time I accepted the interpretation of the Treasurer, which, as he said, was backed up by his legal advisers.
– The honorable memberis not suggesting that I was trying to mislead the House at that time ? I gave the interpretation that was put on. the judgment.
– No. I am trying to show that the then Treasurer did not take the necessary steps to put that question beyond all reasonable doubt before making a declaration in this House that large collections of tax, retrospective for six years, had to be refunded. There are four kinds of bonus shares - first, those issued from capital assets written up ; and, secondly, from profits on sale of capital assets. I understand that these being accretions of capital have always been considered to be exempt from taxation. Thirdly, bonus shares are issued from accumulated profits placed in reserve; and, fourthly, against current profits. Under the 1922 act the third form of bonus shares issued from accumulated profits was exempt from taxation, and the fact that the Government of the day deemed it necessary, as the honorable member for Balaclava pointed out at the time, to amend the law to exempt those shares from taxation, showed that before refunding large sums of money something more was needed than merely a declaration in this House by the Treasurer of the day. The Government relied upon the Webb case in exempting such shares from taxation. Let us briefly look at that case. The Broken Hill South Silver Mining Company, with a capital of £200,000, had accumulated profits to the extent of £600,000, so that its assets were worth £800,000. It is true that on these profits the company rate of income tax had been paid, but if they had been distributed as dividends and profits to the shareholders - some of whom were wealthy men - a heavy tax of 5s., 6s., or 7s. in the £1 would have been levied. The company, therefore, decided to have a reconstruction. A new company was formed, and the shareholders of the old company received 800,000 £1 shares in exchange for 200.000 £1 shares, which represented the assets of the old company. Those extra shares were then assessed by the Taxation Department as being taxable, and the case was tested by a man named John Webb, who had held 500 shares in the old company, and had received 2,000 shares in the new company. The assessment was for the year 1919-20. The case eventually went to the High Court, which held that such shares were not “ profits or bonuses credited or paid to a shareholder,” and, therefore, were not taxable under section 14b of the Income Tax Assessment Act 1915-21. Mr. Latham appeared for the Commissioner of Taxation, and he argued that there was no difference between distribution in money or distribution in kind, which, I think, was a sound argument. The Chief Justice, Mr. Justice Duffy, and Mr. Justice Starke said, in reply, that the crux of the question was, whether the shares were severed from the capital funds and liberated as profits or income. They held that there was no detachment, no liberation in money or moneys’ worth, and that the scheme was reconstruction, not distribution. That was clear and definitelanguage. Mr. Justice Isaacs said that the shares received were capital, not profits, and that in a winding-up surplus assets were not profits. Mr. Justice Higgins emphasized that point by saying, “ The price received for a house or land is not income …. this was a sale …. a winding-up . a reconstruction, not a distribution.” Mr. Justice Isaacs, as reported at page 483 of the Commonwealth Law Reports, vol. 30, summed up the situation as follows : -
The fact that a going company distributes anything among its shareholders is treated as showing that it is a distribution out of the company’s income; for the company cannot distribute any of its capital to the shareholders.
In the Webb case it is obvious to the lay mind that there was a distribution of capital, because it was a winding-up and a sale. If the company were a going concern there could not be a distribution of capital to shareholders. There was a clear line of demarcation. To my mind, the High Court made it clear that there was a distinction between distributing either dividends or bonus shares from a going concern and a distribution of assets by a reconstructed company. The company was not a going concern in this case. It was a reconstruction, a winding-up of the old company, and the formation of a new company. It might have been done to avoid taxation, but that did not affect the decision of the court. It simply considered the facts and decided that there was a reconstruction and not a distribution. Yet on that case all bonus shares from accumulated profits issued by going companies were exempted by the government of the day from past, present, and future taxtion
– The accumulated profits had already been heavily taxed.
– That affects the question of equity only, and not that of legality. On the question of equity, the Government will simply amend the law retrospectively, but on a legal interpretation all bonus shares issued from accumulated profits were exempt from taxation. The Treasurer (Dr. Earle Page), after quoting Mr. Bruce’s announcement in the House in 1922 concerning the refund of this money, said - “ That statement was explicit and expressed the interpretation of the law as then accepted by the Taxation Department.” He also said that independent counsel supported that interpretation. I contend that the Taxation Department did not accept that interpretation which the Treasurer of the day (Mr. Bruce) put upon the law.
– Did it not accept the decision in the Webb case?
– Not as covering every case.
– Not as covering ali those cases in which moneys were refunded.
– Why did the Department accept the decision of the Webb case respecting the Broken Hill South Company ?
– Because that was a reconstruction case. The interpretation given to that was that all bonus shares distributed from accumulated profits were exempt from taxation, but the judgment actually exempted from taxation, as the honorable member for Balaclava said, only those particular shares that were issued by the new company to the old company. I return now to the statement of the Treasurer (Dr. Earle Page), that the interpretation given by the Treasurer of the day (Mr. Bruce) expressed the interpretation of the law as then accepted by the Taxation Department. That is assumed to be a statement of fact that is not disputed, but I dispute it on the authority of the Eighth Report of the Commissioner of Taxation, Mr. Ewing, dated the 28th August, 1924. At page 24 of this report this is what he said, speaking of the decision in the Webb case -
This decision did not deal with bonus shares distributed by a continuing company out of past profits upon which the company had paid income tax.
That meets the point submitted by the honorable member for Balaclava; the fact that they had paid tax did not affect the legality of the matter. I ask honorable members to contrast the statement of the then Treasurer, Mr. Bruce, that the interpretation put upon the decision in the Webb case by the government of the day was the interpretation of the law as then accepted by the Taxation Department, with the statement of the Commissioner of Taxation in his Eighth Report, which was published, I think, before the last decision of the High Court in the James case. There is a direct conflict between the then Treasurer’s interpretation of the decision in the Webb case and that of the Taxation Department.
– If the honorable member has quoted the words of the Taxation Commissioner before the decision in the James case, the Government does not appear to be left with much excuse.
– I am not very sure at the moment whether the Taxation Commissioner’s interpretation was stated before or after the decision in the James case, because I cannot just now remember the date of the James case. However, that does not alter the fact that the interpretation of the Commissioner of Taxation in his Eighth Report of the decision in the Webb case was that it did not deal with bonus shares distributed by a continuing company out of past profits upon which the company had paid income tax.
– I think I made it clear in my second-reading speech on this bill that independent counsel’ had given the opinion that the effect of the judgment in the Webb case would be as interpreted by the then Treasurer.
– I thank the Treasurer for reminding me of that. The government of the day did obtain the opinion of an independent counsel, and one would have thought that it would have placed that opinion on the table of this House. I ask the Government to do so now.
– That is not done.
– Everything depends on the statement submitted to counsel.
– Perhaps if we had the independent counsel’s name it would help us.
– The independent counsel whose opinion was obtained was Mr. Latham. He was counsel for the Crown in the Webb case. According to the Ninth Report of the Taxation Com- missioner it was the opinion of counsel for the Crown that was taken on the question. In his Eighth Report the Commissioner of Taxation went on to say-
The point at issue was whether tax was payable on shares received from a new company.
Thus again stressing the point that it was not the shares of a continuing company that were referred to, but shares received from a new company. Further on in the Eighth Report of the Commissioner of Taxation he says -
The law on this question has not yet been settled by the courts.
If that were so the Government could not have been satisfied that the decision in the Webb case referred to other shares than those issued by a new company, and that the law on the subject had not been settled. If the interpretation of the Government was the same as that of the Taxation Department, then the Government must have knowingly refunded money illegally. It cannot have it both ways. ‘We are now asked to validate that illegal action, and to make legal the illegal refund of large sums of money collected in taxation. That is the object of this bill. When we consider the facts it is clear that the Government of the day was slovenly in its action, and did not take the requisite steps to prove beyond the shadow of a doubt that what it proposed to do was legal. What it proposed was most drastic, because it was undoing the work of six years, and was opposed to the legislation intended by Parliament. When this Parliament passed the Income Tax Assessment Act in 1915, it clearly intended to tax these bonus shares. The Government, after the tax had been collected, refunded it back to the beginning of the operations of the act, and did so upon a most flimsy foundation.
– If the Government obtained independent legal advice, what more could it do?
– I suggest that it could have submitted a test case to the High Court on the general question. A decision in such a test case would alone justify it in refunding public moneys collected over so many years. The Government had a decision of the High Court in a specific case of the reconstruction of a company, but not on the general question of whether taxation could be imposed on bonus shares distributed from accumulated profits. In his Eighth Report, the Commissioner of Taxation continues -
The position has been considerably clarified, though not entirely settled from the technical point of view, by an announcement in Parliament by the Treasurer, the Hon. S. M. Bruce, that the Government would refund the taxation paid in respect of the bonus shares.
The statement of the Commissioner of Taxation was that the Government would refund this money. One was under the impression that the Commissioner of Taxation collected and refunded taxation. But the Commissioner would not accept the responsibility, and he made it clear in his report that the announcement of the Treasurer was that the Government would refund the money, and the Government, and not the Commissioner, did refund the money.
– The Government announced in this Chamber that it would refund the money.
– I said so at the beginning of my remarks. I have no wish to say one word that might be misleading.
– The only way in which the Government could refund the money was by putting the amount on the Estimates, and, if it did not do that, the Commissioner must have refunded the money.
– The amount appeared on the Estimates in the vote for refunds of revenue.
– Then the Government did refund the money.
– The reference is to the last Government?
– Yes ; according to the Treasurer’s statement the money was refunded by the last Government. In his Ninth Report the Commissioner of Taxation again refers to the decision in the Webb case, and he says -
The High Court ruled that the tax was not payable on shares in a new company issued in substitution for shares in an old company reconstructed. The Government, after consideration of the views of the Solicitor-General, the Crown Solicitor, and Crown Counsel in the Webb appeal, decided to announce in Parliament that this money would be refunded.
Again it will be seen that he stresses the fact that the decision in the Webb case applied to shares in a new company upon reconstruction.
– There is no real difference in practice between a new company and an old company in the matter of taxation in such circumstances.
– There may not be, but there is a vast difference in the interpretation by the High Court of what is a new company. There is a vast difference, I suggest, in taxation laws, between bonus shares distributed from a windingup, and shares distributed from accumulated profits.
– The Broken Hill South Company did not wind up. It kept going all the time.
– It did not wind up actually, but it did technically, and thus it evaded taxation.
– It did what it did openly. It enlarged its capital.
– That may be so, but it dodged taxation by what it did. The Treasurer has reminded me that the opinion of an independent counsel was sought as to the meaning of the decision of the High Court in the Webb case. There is a marked conflict between that counsel’s opinion of what the decision in the Webb case meant and that of another counsel on a later occasion. When the James case came on for consideration before the High Court, and before the court had heard it at all, counsel for the Commissioner of Taxation, who I think was Mr. Owen Dixon, contended that the shares that had been declared to be exempt from taxation by the Government of the day were taxable. Let us see what the James case was. James was a shareholder in the Australian Portland Cement Company. He received an assessment from the Commissioner of Taxation for 1920-21, which included tax on bonus shares issued from current profits. James held that such bonus shares were not taxable, and he appealed against the assessment. The counsel engaged to> appear for the Commissioner of Taxation advised the Commissioner to include all his bonus shares in the assessment, not only those from current profits, but also bonus shares which James had received from accumulated profits of the company. That is to say, counsel for the Commissioner at that stage gave a very different interpretation of the decision of the High
Court in the Webb case from that previously acted upon, and held that shares distributed from accumulated profits before 1922 were taxable in the same way as those issued from current profits.
– What time intervened between the two cases ?
– Some three years elapsed between the two cases, but so far as I know there was no judgment bearing on the subject from the court in the meantime to guide counsel in the James case. At the time judgment was given in the James case I learned from a letter which appeared in the press from J. S. Eastwood, that it was by arrangement with the taxpayer, James, that the Taxation Commissioner included those shares in the claim that went before the court on a promise that whatever the decision of the court might be, no claim would be based upon bonus shares from accumulated profits. The assessment included shares from current profits and also shares from accumulated profits, and the High Court held that they were all taxable. Thus we arrive at the position that the Commonwealth had illegally refunded money that it had previously collected.
– James must have been sorry that he spoke.
– In view of the introduction of this bill he has not very much to be sorry about.
– It shows how important it is that a decision of this Parliament should be made clear beyond mistake even to the High Court.
– That might easily have been done in 1922.
– That is so, but it was not done.
– If the Government desired to exempt these shares from taxation back to 1915 it could have submitted a retrospective measure to Parliament. I do not believe that Parliament would pass a retrospective law for the refund of taxation collected over six years. If it would, a dreadful state of affairs would be brought about, because one Parliament might impose a tax and another Parliament six years later might repeal the tax, and pro-, pose the refund of what had been collected. I venture to think that this Parliament would never have acquiesced in the announcement made by the Treasurer of the day if honorable members had not been convinced that their acquiescence was forced upon them by a decision of the High Court.
– I do not think it was the intention of Parliament even under the act of 1915 to tax bonus shares out of accumulated profits.
– I think it was.
– Parliament made it clear in 1922 that it did not intend to do so in the future.
– Yes, because honorable members generally, like myself, were led to think that the proposed amendment of the law was necessary in ‘ view of the decision of the High Court that such bonus shares were to be regarded as capital. As the honorable member for Balaclava (Mr. Watt) will well remember, I told the House plainly on that occasion that I considered that bonus shares from accumulated profits should be taxed. I shall discuss that matter in a moment. On the interpretation of the Webb decision, the two counsel’s advice differed diametrically. That was before the High Court had given its decision in the James case that the tax which was not collected should have been collected according to the law, and that any tax collected should not have been refunded.
– It smells like the taxation of Crown leaseholds.
– Somewhat. My contention is that the Government accepted the decision in the Webb case lightly, and I shall endeavour to prove that it took a most serious step without sufficient warrant. I have already quoted a few opinions in the Webb case; I shall now quote one or two in the James case referring to the Webb case. After quoting section 14b defining “ income “ as “ dividends, interest, profits, or bonus credited or paid to any member, shareholder,” &c, Mr. Justice Isaacs remarked that, in the Webb case, he had said -
The employment of all these terms marks the anxiety of the Legislature that in whatever form profits of a company are “ credited or paid “ to the members, &c., shall be regarded as the recipient’s income for the purpose of taxation.
It was Mr. Justice Isaacs’s opinion that it was the intention of Parliament to tax these shares, and that the use of all the terms in the provision of the act - dividends, interest, profits, or bonus credited or paid to the shareholders - was for the purpose of ensuring that whatever might be the form in which, profits of a company were paid or credited to a shareholder, they should he taxed in the hands of the recipient as income. Mr. Justice Starke also referred to the Webb case, and said -
In Webb’s case the court was of opinion that there was no dividend or bonus credited or paid to the shareholders.
A case more relied on than any other before and since the Webb case was the decision of the House of Lords in the Blott case. It influenced the majority of the Royal Commission on Taxation in making their recommendation for the exemption of bonus shares. In the James decision, Mr. Justice Isaacs said -
So far from Blott’s case supporting the appellant’s contention, here it is . . . quite opposed to that contention.
He said also -
The appellant contends that the case is governed by the decision of the House of Lords in Blott’s case. I am very clear that it is not.
I leave the legal aspect now in order to deal with the equity of this proposal. The legal aspect is the gravamen of my charge against the Government of the day for having failed in its duty to be thoroughly satisfied that it was acting perfectly legally in what it did. I make no charge against the present Treasurer (Dr. Earle Page). At that time, he wa3, like myself, a critic of the Government.
– Did he not call on the
Government to “ drop the loot “ ?
– When the honorable member was Leader of the Country party, he spoke of the Government getting away with the loot, but I do not think that he was referring to this particular matter. Not only has this remission of taxation on bonus shares been proved to he illegal by the recent decision of the High Court; it is also most inequitable, and it is on that aspect I now desire to dwell. 1 agree that the Treasurer is in a most difficult position. I do not know that this money can be re-collected reasonably. The Treasurer has given a number of instances to show the enormous difficulties of getting the money back into the hands of the Commissioner of Taxation. Therefore, although the Government has done something illegal which we are now asked to validate because we cannot undo it, I am not prepared to say that it ought to advertise, asking those shareholders to whom a refund was made years ago to come along again, after a lapse of three years, and pay again what bad previously been handed back to them. The position is difficult. A demand for repayment might inflict hardship on a considerable number of people. After all, whoever was at fault, Parliament acquiesced in the announcement made to those shareholders; but I repeat what I said at the outset of my remarks, that almost every honorable member outside the Ministry accepted the statement of the Treasurer of the day that the Bill then before the House was based on a sound interpretation of the High Court decision in the Webb case. Otherwise, I do not believe any Parliament would have accepted a declaration of that kind. But Parliament, without inflicting any injustice or hardship, can remedy some of the wrongs of the past. It altered the law in 1922, because it was misled as to the legality of the position. It can now. alter the law, and in future compel shareholders to pay the taxation they were originally intended to pay. In other words, we could include these bonus shares in an amending bill and make them taxable as previously.
– If that were done, the people who have already escaped taxation would not be touched.
– That is so, but our taxation would be more equitable than it is to-day. The exemption of bonus shares from the payment of income tax is most inequitable.
– Not if they are paid out of accumulated profits.
– Yes it is, and, moreover, the exemption of them is more inequitable to-day than it was when the act was amended, because at that time the taxation payable on them was up to 2s. 5d. in the £1.
– It was 2s. 8d. in the £1.
– At the time the law was altered the rate was 2s. 5d. Prior 10 that it was 2s.8d., and still earlier it was1s. 6d. It is now1s. ; consequently, big shareholders who ought to be paying a rate of 5s. on their income are getting off with a rate of1s. in the £1 on a third of their incomes.
– The remedy for that is to put up the flat rate again !
– One remedy would be to impose a flat rate on undistributed profits, and let the others go.
– What about the law of average ?
– The law of average does not come in. That is where this House was again deceived.
– The honorable member should not say that the House was deceived.
– I did not say that it was deliberately deceived, but it was misled by the figures presented. It was advised that a rate of1s. in the £1 on all the profits of a company would be practically the same as a rate of 2s. 5d. in the £1 on the undistributed portion. It was one of those half truths that mislead people. As some one has said, “ Half bricks thrown at you are worse than whole ones.” The exemption of bonus shares is inequitable. When the honorablemember for Balaclava (Mr. Watt) spoke on this question in 1922 he pointed out very forcibly that the undistributed profits out of which bonus shares were paid had already been taxed, in some cases, at the rate of 2s. 5d. in the £1, and in others at the rate of 2s.8d. in the £1. The income tax law before 1922 was that the profits of a company which were distributed were not taxed until they got into the hands of the shareholders, but that the undistributed profits - that is to say, those that went into reserve - were taxed at the company flat rate of 2s. 5d. in the £1. The right honorable gentleman argued that, because these undistributed profits had’ already paid tax at the rate of 2s. 5d. in the £1, they should not pay any further tax when the shareholders received them in the form of bonus shares. If that argument is a sound one, I ask” why dividends distributed from accumulated funds should be taxed in the hands of the recipients, because they have also already paid the company tax at exactly the same rate as bonus shares.
– But dividends have a cash value, whereas bonus shares have not.
– I wish to deal with one argument at a time. It is contended that bonus shares out of accumulated profits should not be taxed because they have already paid income tax. I meet that argument by saying that if the reserves of a company are distributed as cash dividends, instead of bonus shares, they will still have paid the same amount of tax, and yet they are again taxed in the hands of the shareholders. Why should not bonus shares be placed on the same footing as dividends?
– Dividends must come out of current profits.
– Many dividends are paid out of reserve profits.
– Carrying to reserve is merely the postponement of distribution.
– The honorable member is absolutely right. If in one year a company makes a profit of £100,000, and places £30,000 into a reserve fund, it pays taxation on that amount. If next year it distributes that £30,000 to its shareholders in the form of a dividend, that money is followed into the hands of the shareholders and is again taxed according to the current rate of the tax. But if that £30,000 is distributed in the form of bonus shares, and not in cash, it is exempt from further taxation. If the fact that it has already paid income tax entitles the bonus shares to exemption, that exemption should also apply to the cash dividend.
– Hear, hear ! That is an argument for doing it.
– That it should not be done I propose to show. Let me take the case of two brothers. One is a professional man. who earns an income of £10,000 a year, and pays income tax at the rate of 5s. in the £1. The other is interested in companies that earn for him profits at the rate of £10,000 a year, but place a third of their profits into reserve one year, and distribute it the following year. Why should the one pay income tax at the rate of1s. in the £1 on a third of his income while his brother is compelled to pay 5s. in the £1 on the whole of his income, which is exactly the same amount? Why should there be special treatment of the man whose income is derived from the profits of a company, as compared with one whose income is derived from a private business or profession?
– The honorable member’s proposal would bring about a similar inequity. To tax a man’s reserve profits and then his bonus shares would be doing the same kind of thing in another way.
– Not if he is given a rebate, but I would “give the rebate to the company, and not to the individual. The honorable member has raised an argument that it is very tempting to follow, but I do not propose to do so. I do not suggest that a man who receives £10,000 a year in dividends - it is immaterial whether they are in the form of shares or cash - should pay the full income tax rate in addition to the taxation the company has already paid on those profits.
– That is my point.
– That would be doing again the wrong we are trying to remedy, and it has never been done under any Commonwealth income tax law to my knowledge. The amount the company had paid was always rebated.
– I am not sure that the Commissioner did not try to collect both in one case.
– I have no knowledge of that, but the law clearly was that the dividend from reserves was followed into the hands of the shareholder, and if he paid a rate of tax higher than the company rate, he received a rebate of the amount paid by the company in respect of his dividend, but if his rate of tax was lower than the company rate he received no such rebate. That was inequitable, and that is why I say that any rebate in respect of the tax paid by the company should go to the company and not to the individual shareholder. The honorable member for Wide Bay (Mr. Corser) interjected that bonus shares are not cash, and, therefore, should not be subjected to income taxation.
– And are not always worth their face value.
– They represent ascertained earnings.
– But are not always realizable.
– They are nearly always realizable.
– I could quote very many instances in which they were not.
– So far as my knowledge of bonus shares goes, they are usually worth at least their face value. A company accumulates profits and decides to distribute them in cash or in kind. Those profits should contribute to the revenue because they represent income to a certain number of persons. If the company distributes its accumulated profits in cash instead of bonus shares, the individual shareholders will pay tax in respect of them. But the company may at the same time issue new stock and invite the shareholders to purchase it with their dividends. If they do that they are in the same position as the man who receives bonus shares and has previously paid taxation on a cash dividend. The receiver of bonus shares can convert them into cash. The bonus share is scrip worth at least its face value.
– Capital is left in a business for the purpose of earning more revenue.
– Quite so, and the shareholders will derive more profit from the additional revenue.
– But not if the profits are distributed in cash.
– I do not urge that they should be distributed in cash, but I do say that when profits are distributed the recipients should pay income tax in respect of them. A well-to-do shareholder with income from other sources may decide not to accept any dividend in cash, but to wait until he can receive his share of profits in the form of bonus shares. By so doing he will be increasing his interest in the company, and will not pay any taxation in respect of those shares beyond the company rate of ls. in the £1. _ (Extension of time granted.) We are told that bonus shares are not cash, and are not always realizable. I suggest to the honorable member for Balaclava (Mr. Watt), who has more experience of companies than I have, that bonus shares distributed from accumulated profits are usually worth more than bonus shares distributed from current profits. Yet although the latter are not cash, and are not always as realizable as the shares distributed from accumulated profits, they are taxed.
– Because taxation has not previously been paid in respect of them.
– The only tax upon company profits under the present law is ls. in the £1, and that is rebated when the dividend in cash or in kind is taxed in the hands of the recipient. The right honorable member must not endeavour to make the House believe that these profits are doubly taxed.
– I wish to avoid duplication.
– It is avoided when the company tax is rebated. Bonus shares distributed from current profits since 1923 have previously paid the same tax as those distributed from reserves. The point which the right honorable member is urging is: that bonus shares distributed from reserves have already been taxed in the hands of the company, and should not be again taxed in the hands of the shareholders. Bonus shares distributed from current profits upon which the company tax had not been paid were taxed in the hands of the recipient. Under the law of today all company profits are subject to a tax of ls. in the £1, but under this measure bonus shares distributed from current profits will be taxed, but those distributed from last year’s profits which have been carried to reserves will not be taxed.
– The honorable member said that the High Court’s judgment in the James case lumped them together and made them all taxable.
– No; the judgment in the James case related only to the law as it existed prior to the amending act of 1922.
– I am not too sure of that.
– Both the James case and the Webb case arose out of assessments for the year 1920-21. The law was amended in 1922, and no judgment in respect of this question has been given since.
– The reason why these two classes of shares were put together in this bill is that the judgments related to the old law.
– I see that now.
– The bill deals with the period from “1915 to 1922. If that were not so, this bill would have to validate the collection of taxation since 1922, but the present law quite clearly exempts bonus shares distributed from accumulated profits, which, according to the decision of the High Court, were taxable under the old law.
– Is the honorable member opposed to this bill on its merits apart from the past history of this taxation ?
– I am pointing out that the bill has bad antecedents, and that the House was led by a wrong interpretation of the High Court judgment in the Webb case to acquiesce in the revision of this taxation both by refunds and by an amendment of the act in 1922. I have already said that I cannot shoulder the .responsibility of declaring that this bill should not be passed. The Government’s responsibility is to convince the House that this legislation is necessary and just, and the only ground upon which it can be justi- fied is that of expediency. It certainly cannot be justified by considerations of law or equity. Money was refunded illegally ; otherwise this validating bill would not be necessary. The House was misled into sanctioning the refund, and also to amend the act in relation to future assessments. Whilst I do not say that the Government should require the shareholders to pay again taxation previously collected and refunded, it is the duty of the Government to give Parliament at least another chance to declare whether bonus shares shall be taxed in future.
– Have these refunds been made ever since 1922?
– I understand that the department has refunded all moneys claimed by men who had paid taxation in respect of bonus shares from 1915 to 1922.
– Why did not the Government deal with this indemnity long ago?
– The decision in the James case was given only last year. This bill was introduced last session, but was amongst the slaughtered innocents when the session was hurriedly terminated prior to the general election. Two members of the royal commission on taxation reported in favour of continuing to tax bonus shares issued from accumulated profits, but the majority recommended that they be exempt and that recommendation was acted upon by the then Treasurer (Mr. Bruce). A careful reading of the report discloses, however, that the majority’s view was influenced very largely by the decision of the House of Lords in the Blott case, which, Mr. Justice Isaacs has declared, had no bearing upon Commonwealth legislation. The House of Lords gave its interpretation of the wording of a section of the English act, whereas the Australian act clearly stated that income in the form of bonus shares was taxable. Let me deal seriatim with t he three reasons stated in the commission’s majority report for the exemption of these shares - (1) Bonus shares are capital, and therefore should not be taxed; (2) the receipt of bonus shares does not increase the proportionate interest of the shareholder in the company; (3) the receipt of bonus shares does not increase the shareholder’s taxable capacity. In regard to the first reason, I submit that bonus shares are first profits, which then become income, because, mark you, the law refers only to bonus shares issued out of accumulated profits, and not to such shares issued from capital by a writing up of assets.
– If profits are stored up, they become capital.
– Yes, but they were income first.
– Why not tax handsomely the profits of a company and be done with it?
– We used to do that up to 2s.8d. in the £1.
– Only on undistributed profits, and then we gave a rebate to the shareholder when those profits reached him in the form of dividends.
– That was because we taxed at the destination, and not at the source.
– I do not think we should tax at the source. We should tax at the destination, and each individual should pay in proportion to his income. The English act taxes at the source, applying the maximum rate to all profits of a company, and rebating the whole amount when the profits reach the shareholder as dividends. Every shareholder in England who receives a dividend warrant gets also a notification that a certain amount of taxation has been paid in respect of it, and, upon presentation of that certificate at the Treasury, the amount stated thereon is refunded to him. That is certainly the most equitable way ; whether it is simple or not is another question. Bonus shares, we are told, are capital. The honorable member for Balaclava (Mr. Watt) says that they are profits which become capitalized, and flow back into the capital of the company. If the honorable member invested one-half of his salary in a company the day after he received it, it would be capitalized the moment he invested it, but he would have to pay income tax on the amount so invested. He could not go to the taxation department, and say that he had received so much in income last year, but had invested one-half of the amount on which he required an exemption. He would be laughed at if he made such a suggestion. Such a concession, however, is made to a shareholder in a company with respect to some of his profits which, I submit, is not an equitable proposition. If we are to make reductions in income taxation rates because it is considered that they are too high, we should make reductions all round, and not give special treatment to those drawing incomes from shares in companies. Why should the shareholders in companies receive special favours ? The second argument of a majority of the Taxation Commission is that the proportionate interest of the shareholder in a company is not increased by the receipt of bonus shares. With due respect to the members of the commission, I think that that is a stupid argument.
– Hear, hear !
– I am glad to have the honorable member’s approval. If it is to be argued that by the receipt of bonus shares the proportionate interest of a shareholder in a company is not increased, and therefore, he should not be taxed, it could also be argued that by the receipt of a cash dividend his interestis reduced, and he should receive a bonus. The proportionate interest is reduced when a cash dividend is paid.
– The sum of his interest is reduced but the proportion is the same.
– If that is the interpretation to be placed upon it, it makes the recommendation of the commission more ridiculous. The third reason submitted by the commission is that the receipt of the bonus shares does not increase the taxable capacity of the shareholder. That is a point to which I referred in reply to the honorable member for Wide Bay (Mr. Corser). It gives as much taxable capacity as is given to a man who receives his dividend in cash, and who at once invests it. As far as taxable capacity is concerned, he is in exactly the same position as a man who puts his cash dividend into other shares, or some investment that returns income. If he does not wish to retain it as capital, he can dispose of it, and his taxable capacity is the same.
– If the honorable member were to put 100,000 shares in a company on the market, he would see what would happen.
– That amount of tax is not the full face value of the shares. The maximum would be 25 per cent.
– The Commonwealth Taxation Commissioner will not accept shares in payment of income tax.
– He is very wise in declining to do so. When the amendment of the 1922 act was passed, bonus shares were exempted from income taxation. In 1923 an amendment of the company rate was also passed, which can be regarded as one of the worst things done in regard to company taxation. The company rate was reduced to ls. in the £1, while the rate to be paid by individuals run up to 5s. or more in the £1. It is unfair and unjust. Under this law one-third of the profits go into reserves, and as the result of this only the company rate is paid. The next year the bonus shares issued are not taxed beyond the ls. in the £1 already paid, and later they can be redeemed by the company distributing cash, although they have not been taxed beyond the ls. in the £1.
– Does not the honorable member think it right to encourage public companies ?
– Yes, and to encourage good business men and others; but the department should adequately tax the men who are forming companies to avoid the higher rates. The Government is encouraging a lot of persons to convert their businesses into companies, and thus evade the income tax law.
– We should amend the law to include them.
– The Government tried last year to include holding companies which are robbing the department of revenue, but I doubt very much whether it has succeeded.
– There is no reason why we should discourage the legitimate joint stock companies which are necessary to encourage development.
– I do not wish to discourage the formation of legitimate joint stock companies, but whilst we allow a company rate of ls. in the £1, and leave the individual rate at 5s. in the £1, we are inducing a number of persons to turn their businesses into companies, and thus derive greater benefit. The farmers represented by the Treasurer (Dr. Earle Page) and other honorable members are too busily engaged in tilling the soil to have an opportunity to obtain legal advice as to the advantages to be derived from converting their farming businesses into companies, and thus avoiding taxation. The Treasurer cannot be unaware of the extent to which companies have increased, but I shall give some figures later to show that this low company rate is an incentive to persons to act in the way I have mentioned. The Treasurer said that the law should be amended, and last year introduced a bill to overcome the difficulty, but it is very questionable whether it has had the results desired. When companies pay a rate of1s. in the £1 while individuals have to pay 5s. in the £1, it is merely placing a big temptation in the way of certain persons. In the report of the commission dealing with the amendment of the act, it was stated that a company rate of 1s. in the £1 on all the profits of a company would lead to a simplification of the work. That fact was stressed in the House at the time. In Mr. Ewing’s last report which was tabled a few days ago, he said, “ It has considerably increased the work of assessing the shareholders.”Mr. Ewing points out that whilst it has simplified the assessing of companies to a small degree, it has considerably increased the difficulties of assessing individual shareholders. From the point of view of the Federal Taxation Department the present system is much less satisfactory and less economical than the former practice of taxing companies only on the undistributed income. That is the considered opinion of the Taxation Department after its experience since 1923. In section 21 of the act provision was made to deal with holding companies. Concerning this the Taxation Commissioner says, “It is not yet possible to state whether it has proved satisfactory.” Honorable members will remember that the Treasurer introduced a measure last year to prevent the department from being cheated by the formation of holding companies. The procedure followed is very simple. An investing or holding company, which does not do any business is formed to hold the shares of the trading company. The bulk of the shares of many trading companies are held by holding companies. The representative of a trading company informs the Commissioner that two-thirds of its profits have been distributed. The Commissioner follows the dividends and finds that they have been paid to holding companies which pay a rate of only1s. in the £1. That was sought to be avoided by an amendment of the act last year. I. pointed out that by the transfer to a number of holding companies the profits of a trading company that would be taxable were diminished. The Prime Minister said at the time that that could not be avoided, and it cannot be while the law remains as it is. The position could be. met by reverting to the old law. because even under it a fiat rate of 2s. 5d. in the £1 was imposed, although in some cases it was less.
– There has been a reduction of 25 per cent, in the general rate since then.
– But even that would not bring it down to1s. in the £1.
– To about1s. 9d. in the £1.
– Honorable members should consider the abnormal increase in the number of companies since the act was passed under which a company rate of1s. in the £1 was imposed. For the years 1920-1 to 1922-3 the number of companies returning income tax returns was reduced by 219. Between 1922-3 and 1924-5, when the1s. in the £1 rate was introduced, the number of taxable companies increased by 1,469. I submit that that is an abnormal growth, and shows how revenue is being lost by theconversion of private trading concerns into companies. It is an easy matter to form a company in which 95 per cent, of the shares are held by one person and the other 5 per cent, by the members of his family, and thus the payment of the individual rate is avoided. With this increase in the number of companies, there has been a marked reduction in the number of individual taxpayers. I am not unmindful of the fact that the increase in the exemption is an important factor. A glance at the statistics will show that the number of individual taxpayers has been considerably reduced, whilst the number of taxable companies has considerably increased. This shows that individual taxpayers are forming themselves into companies in order to evade their share of taxation.
This action of the Government has been solely in the interests of rich shareholders, because no refunds have been made to persons with small incomes.
The lowest man was on an eighteenpenny rate. The bulk of this money was refunded to men whose incomes were not less than £4,000 a year. Those persons have been given hundreds of thousands of pounds, and it has now been proved that that money was illegally refunded. A great deal of the profits that were distributed in the shape of bonus shares was made from war profiteering. The stock was watered, and the capital increased out of the accumulated profits. When the shares were issued the individuals who received them should have paid income tax at the rate provided for individuals. Acting upon a most doubtful decision the Government made refunds. A list of the persons who received those refunds would make interesting reading, but I do not suppose that we can hope to get it. We should, however, be informed of the aggregate amount that was refunded, the amount that was assessed but not collected, and an approximation of the amount that was not assessed. The Government surely has not been given a mandate to validate this act of lawlessness !
– The validating bill was before the people prior to the election.
– If that is so, the Government will be claiming to have received a mandate with respect to quite a number of other matters. In this instance the Government has brought down a bill to legalize an unlawful act, not to penalize any one because of it, as in the case of the Crimes Bill. I admit that difficulties would confront the Treasurer if this money had to be re-collected. There would be hardships, but they could be mitigated under certain sections of our law. I want an assurance from the Treasurer (Dr. Earle Page) that after much more careful consideration than was given to the Webb case, the Government is satisfied that it cannot collect the money which it illegally refunded. If it is impossible to re-collect it, the folly of having refunded it without proper warrant is emphasized. The Treasurer, when introducing the bill, said that Parliament had approved of its provisions. That approval was given only because of the interpretation of the Webb case which Parliament at the time had before it. Doubtless the Government, and certainly this Parliament, were misled. A huge blunderwas made because of the bad legal advice that the Government received, and public revenues have suffered in consequence.
– In what way does the honorable member suggest that it could have been obviated ? Neither the Government nor the Commissioner of Taxation has any other means of obtaining an interpretation than that which is afforded by an appeal on the part of a taxpayer.
– Before the Government jumps to any conclusion as to what the High Court means, it should submit a test case to that court.
– The Government cannot get to the High Court unless a taxpayer lodges an appeal.
– The decision of the High Court in the James case was consistent with that which it gave in the Webb case. It is useless for any honorable member to try to” put it on “ the judges.
– Some learned counsel thought that they were quite inconsistent.
– They were not so learned as they thought they were. The Treasurer has not convinced this House that itis necessary to legalize this illegality. If we can be satisfied that it is impossible to re-collect this money without confusion and hardship, we shall have to accept the position. But surely the onus is on the Government to prove that that is so ! The Treasurer has not so far done that. The honorable member for Balaclava (Mr. Watt) has the advantage of having been a Treasurer of the Commonwealth, and he is thus in a better position than most of us to judge of the difficulties that confront the Treasurer in this matter. The little knowledge that I possess in regard to taxation compels me to admit frankly that there are difficulties; but I am unable to say whether they are insurmountable. Honorable members should listen very carefully to the debate. I shall certainly do so. The wrong interpretation which was placed upon the Webb case not only led this House into acquiescing in the remission of money that had been collected, but also into sanctioning exemption from such taxation. In the light of the latest decision of the court, the Government should come down with a bill which will give this House an opportunity to decide whether those taxpayers should, in future, be exempt. The present position is that an illegality has been committed, andwe are now asked to legalize it.
– I have no desire to accompany the honorable member for Yarra (Mr. Scullin) upon his very interesting excursion into the question whether bonus shares should or should not be taxed. I think that there is a more fitting opportunity for the discussion of that matter than is offered upon the consideration of this bill.
Mr.Watt. - It has to be argued.
– But not at this particular time. The question now is. not whether it is possible to re-collect this money, but whether it is right and equitable that it should be re-collected in view of the circumstances that existed when the refund was made. Four years ago this House unanimously agreed to make a refund to those from whom this taxation had been collected, and not to collect from those who might have been assessed. That decision has been allowed to stand for four years. The money involved has been used in absolute good faith by those who might have been called upon to pay the taxation, and it would, therefore, be a distinct breach of faith to now seek to collect it. Four years ago the whole of the facts which the honorable member for Yarra brought forward to-night could have been placed before this House by him, but rhey were not. The James case certainly altered the position to some extent. It was the duty of the honorable member for Yarra to examine the whole of the facts when the question of making a. refund was under consideration. If he were then content to allow the matter to pass unchallenged, it is too late now for him to say that something different ought to have been done.
– If that is what the Government is standing behind, it is the lamest excuse that I have ever heard.
– The Government is not standing behind anything.
– The honorable gentleman claims to have “got away with it.” and argues that we ought not now to rake it up.
– I said nothing of the kind. If the honorable member will read the debate that took place at the time, he will find that the Leader of the Opposition (Mr. Charlton) raised certain points touching the taxation of bonus shares, and declared himself satisfied with the reply that was given by the present. Prime Minister (Mr. Bruce).
– He was misled.
– He was not; he was told definitely the taxation was paid by the . companies, and he declared himself satisfied. The then honorable member for Kooyong (Sir Robert Best) pointed out. as was done by the honorable member for Yarra to-night, that the Webb judgment dealt with the reconstruction of a company, but did not actually cover the question of shares that were paid for out of accumulated profits.
– The honorable member for Balaclava contradicted the honorable member for Kooyong. He was the only honorable member who expressed a doubt regarding the Government’s interpretation of the Webb case.
– Referring to the Webb case during that debate Sir Robert Best said -
That was a case in which a company, whose capital consisted of 200,000 shares at £1 each, and whose assets, by reason of the accumulation of profits extending over a considerable number of years, amounted to something like £800,000, determined to reconstruct. A new company was formed to purchase the whole of the assets of the old company, each shareholder of the old company being allotted four shares in the new company. The court held that, as the profits had been capitalized, and practically formed part of the capital of the new company, they were not liable to income taxation unless severed from the capital of the company. Thus we may take it that the law is that bonus shares of this class, which have been a source of great anxietyto the members of the commercial and trading community, are exempt from income taxation.
– No; only the shares affectedby that particular judgment.
– Not at all.
He went on to say, in effect, that the interpretation of that judgment would be to exempt other classes of bonus shares.
– He said that all bonus shares would be exempt.
– The honorable member surely knows that “reconstruction” is a euphonious term for expansion of capital. There is no virtue about a reconstruction; it is merely a retention of profits and the issue of scrip.
– Ultimately it has the same effect. The Commissioner of Taxation inquired of counsel whom he had employed as to the meaning of the judgment in the Webb case and the effect it would have upon his interpretation of the law. The opinion of counsel was that if a case were stated the High Court judges would decide that these shares were free from taxation. That was the definite opinion upon which the Commissioner of Taxation acted. The Government and the Commissioner of Taxation have no means, other than through an appeal by a taxpayer, to have any question of interpretation of the act brought before the court. The honorable member for Yarra said that it was the duty of the Government to have had the matter tested immediately in the High Court; but how could that have been done?
– By proceeding to collect the unpaid amounts.
– How could the Government do that when it was advised that the amounts could not be collected?
– The Government could have proceeded to collect them in order to have a test case stated.
– Against the advice of its counsel ?
– That would have been a most immoral action. The Government could not have decently or properly acted in conflict with the advice that it had, not only from its own law officers, but from outside counsel. It wouldhave been an unjustifiable use of its great legal resources.
– Will the Treasurer say that counsel definitely advised that, in view of the decision in the Webb case, the unpaid tax could not be collected?
– Counsel stated that he was quite certain that if the point with regard to such shares was submitted to the High Court it would, in view of its finding in the Webb case, undoubtedly decide that the amounts could not be collected. That was, he declared, the irresistible inference.
– That opinion conflicts with the opinion of the Commissioner of Taxation in his eighth report.
– That was the advice that was tendered by outside counsel, and, in view of it having been supported by the Crown Solicitor, the Government could not have proceeded to collect the money. When the Treasurer of the day, Mr. Bruce, submitted the matter to the House four years ago, he put the position very clearly, and if there was any objection to the course he outlined, it should have been stated then. There has been nothing of a hole-and-corner nature about this business. Everything has been done openly. The measure submitted to Parliament then was unanimously adopted. In introducing it, Mr. Bruce set out exactly what would be done in the future in similar cases. He said that the Government was of opinion that shares in the hands of private shareholders, on which tax had been paid by companies, should be exempt from taxation, but that if there was any loophole’ by which shares issued out of current profits might escape taxation the Government would take steps to close it. He added that, if necessary, the Government would bring down an amending bill to insure that all shares were taxed once. Nothing could be plainer or fairer than that attitude. Everybody knew what the Government intended to do, and everybody was prepared for it.
– The Treasurer is arguing a case that has not been submitted.
– I am stating the facts. The first duty of a government is to keep faith with the citizens it controls, and to ensure the continuous confidence of the commercial life of the country.
– Surely it is the duty of a government to give effect to the law until it has been proved to be wrong..
– From the judgment of the High Court the Government had an indication of what the law was; and, in addition, it had definite advice from its own law officers and other counsel.
– Supposing the James case had never occurred, and no decision had been registered on the point, would the Government have brought in this bill ?
– In that circumstance the question would never have arisen.
– If the James case had not occurred until twenty years hence, the Government would have had to act.
– That is so.
– It is happenings of this kind that keep the lawyer and the politician busy.
– If the James case had not occurred until twenty years hence,surely the honorable member would not suggest that it would be possible in twenty years’ time to effectively go over the ground again.
– Which shows the flimsy grounds on which the Government has acted.
– The Government has acted on substantial grounds. On the advice tendered, it was perfectly justified in its action which now leads to the introduction of this bill, and, in the circumstances, honorable members cannot justly do other than pass the measure. That is the only equitable course. It is practically impossible to state the amount involved for the reason that refunds of revenue under this head are not separately recorded from general refunds. Many weeks of record searching would be needed to ascertain the exact figures.
– Do not the bookkeeping methods of the department give separate records of taxation refunds ?
– Refunds are made to taxpayers only, and the records are not kept separately. The honorable member for Yarra suggested that for the future bonus shares distributed out of profits, which have already been taxed in the hands of the company, should be taxed in the hands of the shareholders to recoup the revenue for these refunds. Whatever may be said for that as applied to the future, it can hardly be argued that it would be a cure for the past. It would be unjust to tax future recipients of bonus shares to make up revenue refunds from which they have not benefited.
– I did not suggest that that would be a remedy for the past.
– The honorable member will have an opportunity of discussing this matter when the Income Tax Assessment Bill is submitted for the next financial year. It would be impossible to give any consideration to the proposal for this financial year, for the assessments have all been made.
– Will the Treasurer frame the next Income Tax Assessment Bill in such a way that we shall have an opportunity to test the opinion of the House on this point?
– The honorable member will have an oportunity of doing so, for the Income Tax Assessment Bill is introduced by. motion in committee. This occasion is inopportune for dealing with the future policy in regard to bonus shares, for this is merely a validating bill. No refunds will be made under its provisions. The refunds have all been made. The practice in the future can be dealt with later.
Question resolved in the affirmative.
Bill read a second time.
In committee :
Clause. 1 agreed to.
Motion (by Mr. Bruce) proposed -
That the House do now adjourn.
.- Can the Prime Minister (Mr. Bruce), or the Minister for Trade and Customs (Mr. Pratten) give me a reply to the question asked in the following letter, dated the 19th February, which I have received from Walter Reid and Company Limited, general merchants, of Rockhampton -
I attach to this letter a cutting from the
Sydney Morning Herald, dated 15th February, and we are writing to ask if you can give us any information as to when finality will be reached with the new tariff. At present, as the cutting from the newspaper discloses, we are being hit up both ways; where the tariff has been increased we are called upon to pay the higher tariff, but where it has been decreased, as in the case of clocks, combs, rifles, spices, turpentine, vacuum cleaners, watches, &c, the Customs are still collecting the higher rales, with no prospect of ever getting any refund, and it makes it almost impossible to indent goods with such an uncertainty as regards the finality of the tariff. Can you tell us whether the tariff will be discussed and finally settled this session, or are we to go on working under the present uncertain conditions?
The newspaper extract enclosed in the letter read -
When the new Customs tariff was brought out many items were heightened and some few were lowered, and when the Minister for Customs proposed this tariff he was reported as having said that some of the burden would be lightened. However, the poor general public is being got at always, because the Customs authorities arc collecting higher duties where the duty has been raised, and the old rate of duties where the same have been lowered.
This is a most unfair method, as I understand that, even though the importer pays the higher rate of duty now on an article which has been listed as having a reduction, he will be unable to get the return of the money which ho is now paying into a so-called trust account.
Is it not time somebody in authority moved in the matter
It has always been the practice to collect proposed new duties on presentation to Parliament if those duties are higher than the old duties, but to continue at the old rate if the new duties are lower than the old duties. There is reason in the former practice, but there is no reason in the latter practice, as it is not likely that the proposal of a Government to reduce a duty would be negatived.
I hope that the Prime Minister or the Minister for Trade and Customs will be able to state when the tariff will be discussed and finality reached in this matter, so that I may be able to supply the information sought by this firm of general merchants and importers in central Queensland.
– I regret that I cannot at this stage indicate when the new tariff schedule will be dealt with, except to say that it will be at the earliest possible moment.
Question resolved in the affirmative.
House adjourned at 10.2 p.m.
Cite as: Australia, House of Representatives, Debates, 24 February 1926, viewed 22 October 2017, <http://historichansard.net/hofreps/1926/19260224_reps_10_112/>.