10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 3 p.m., and read prayers.
– I ask the Minister forHealth whether there is any new development in connexion with the tests of the Smalpage treatment for tubercular patients?
– An interim report was received to-day from one of the States, and I hope the remaining reports will be in hand within the next two or three days. I shall then be in a position to give the House some information on this subject.
– Will the Minister for Trade and Customs be good enough to inform me whether the Government is yet in a position to come to a decision with regard to the extension of the wine export bounty? If not, when may it be expected that a decision will be arrived at?
– The Wine Export, Bounty Act expires, I think, in August of next year. Many representations for the extension of its operation have been made to the Government. These are receiving careful consideration.
-Has the attention of the Postmaster-General been drawn to the fact that the administrativestaff of the Engineers’ Branch in Sydney has been seriously depleted owing to the absence of a large number of officers through illness? Is he aware that many of these officers attribute their illness to the dampness of the concrete building which is used for the City South Exchange, Castlereagh-street, and to the absence of heating appliances on some of the floors? Will . the honorable gentleman see that the work of heating the building is proceeded with at once, and that temporary relief is provided immediately byan ample supply of electric radiators?
– I shall obtain the desired information for the honorable member.
– Will the Attorney-
General tell the House the reason for the delay in the proclamation of the Commonwealth Bankruptcy Act, and whether the universities will be justified in. in- cluding the act in next year’scurriculum for the study of law?
– The cause of the delay in the proclamation of the act is that in bringing it into force many arrangements have to be made with the States. It is desired to avoid, if possible, the setting up of an altogether independent system of Commonwealth courts, which would be very much more expensive than a system framed in cooperation with the States, Arrangements are now being made with a view to securing the assistance of the States, in order to utilize the service of State officers, judicial and otherwise. It is not possible at the present time to say exactly when the act will be proclaimed, but I hope it will be in force next year.
– Has the Prime Minister noticed the report which has appeared in the Herald regarding the great inconvenience to which Australian tourists abroad are put on crossing the Spanish border? The latest victim is a representative of the newspaper referred to; but there have been others. It appears that Australian tourists are required to have their passports vised, although in the case of tourists from Great Britain some reciprocal agreement exists which avoids inconvenience. Will the right honorable gentleman have inquiries made, and see if something can be done to prevent the great inconvenience to which Australians travelling abroad are subjected?
– I did not see the ‘press statement to which the honorable number refers. I shall have the inquiry made for which he asks, and shall take any steps possible to relieve Australian tourists abroad of inconveniences to which they may be subjected.
– Has the PostmasterGeneral yet reviewed with his officers the admitted anomalies in the varying gradations which form the basis of charges for telephone services?
– These matters are being looked into at the present time.
Practice of Colonial Sugar Refining Company Limited
– Isthe Minister for Trade and Customs aware that the Colonial Sugar RefiningCompany Limited has refused to accede to the. application of fruitcanners inQueensland for the rebate paid by the Commonwealth Government on sugar required for canning purposes? The rebate is refused in the case of purchases of less than 12 tons of sugar for the season, and thus canners in a small way of business are placed at a disadvantage as compared with those carrying on a. large business.
– I am not aware, of the circumstances referred to in the honorable member’s question. I shall make inquiries regarding the matter, and let the honorable member know the position.
Payment for Work Done in Australia.
– Now that the troubles existing in England, which afforded a possible reason for the delay in replying to a previous cablegram from the Prime Minister concerning payment for work done on certain ex-enemy ships, have, somewhat abated, will the right honorable gentleman send another telegram with a view to having the matter expedited?
– I shall senda reminder on the subject, to the British Government.
Transfer of Head Office to New Zealand
– Seeing that threefourths of the business with the Phosphate Commission is done by the Australian people, will the Prime Minister urge the British Government not to come to a. final decision to remove the head office of the. commission to New Zealand until such time as he has had an opportunity to personally discuss the matter with Ministers there on. his visit to the Old Country?
– Several questions have already been asked regarding the possible removal of the head office of the Phosphate Commission from Australia to New
Zealand. At the present time the Government is in communication with the British and New Zealand Governments about the matter, and I hope that finality will be reached in the very near future.
Trade Relations with the Commonwealth.
– I ask the Minister for Trade and Customs whether his department has received any representations from the Government of the Republic of Brazil for the entering into of closer trade relations between that country and the Commonwealth 1
– . So far as I am aware, no.
– I wish, Mr. Speaker, to address to you a question on a matter of order. Some weeks ago I asked, on notice, a question of the Minister representing the Minister for Home and Territories, and I should like to know whether it was in order for him to reply to it by laying on the table the information asked for, instead of having the answer included in the Hansard report. Inquiries that I have made lead me to think such a course irregular,and I should like your ruling on the point for the guidance of honorable members generally ?
– A Minister of the Crown replies to questions as he sees fit; the Speaker has no power to say in what manner he shall frame his replies. He may give a direct answer, and, when his statement is somewhat lengthy, may ask the permission of the House to have it printed in Hansard without being read. On the other hand, he may give the information asked for in a paper, and lay it on the table of the House or of the Library, which was the course adopted in the case to which the honorable member has directed my attention. That procedure was quite in order.
– I invite the attention of the Prime Minister to a press report of the presidential address delivered in
Sydney by Mr. J. S. Wilson, F.I. A., to the members of the Actuarial Society of Australasia, in which he spoke of the necessity for Federal legislation in regard to insurance. In the course of his remarks, he said that 68 per cent. of the amount collected in premiums was absorbed in overhead expenses, and he urged that both Federal and State Governments should take action in the matter. He further pointed out that there was no Federal legislation in respect of insurance. I should like to know from the Prime Minister when the Government intends to introduce legislation in regard to this matter ?
– When the Government proposes to introduce legislation dealing with insurance or any other matter, the House will be informed. As the honorable member knows, his question refers to Government policy, and to such questions it is not the practice to reply.
asked the Minister representing the Minister for Markets and Migration, upon notice -
– The . Minister for Markets and Migration has furnished the following replies to the honorable member’s questions : -
1925-26 Season. - A freight subsidy will be paid on exports to the United Kingdom, but the amount payable cannot be determined until the export season terminates, about the end of November next.
These advances are repayable to the Commonwealth. (A board is about tobeappointed to advise as to what proportion, if any, of these advances should be remitted, because of the adverse financial position of the growers concerned) .
Supplies of Oil South Australia
– On the 28th May, the honorable member for Angas (Mr. Parsons) asked the following questions : -
I am now in a position to furnish the following replies : -
Statements in Senate.
– Honorable members are probably aware that certain statements were made in another place re garding the British Imperial Oil Company. I have now received a letter from the managing director of that company in which he suggests that it is being misrepresented, and asks that certain information should be made available to honorable members. As I know that honorable members desire that all the facts should be placed before them, I place the letter on thetable for their information.
The following papers were presented : -
Northern Territory - Report of Administrator for the year ended 30th June, 1925.
Ordered to be printed.
Oil Agreement Bill - Letter from the British Imperial Oil Company, Limited, in regard to certain statements concerning the Company made in the Federal Parliament during the debate on the Bill.
Canberra - Report of Operations of Federal Capital Commission for quarter ended 31st March, 1926.
Naval Defence Act - Regulations Amended - Statutory Rules, 1926, No. 63.
Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinances of 1926-
No. 11 - Encouragement of Mining.
No. 12- Real Property.
War Service Homes Act - Arrangement between the War Service Homes Commissioner and the Government of the State of Western Australia.
– (By leave.) - I move -
That the order of reference to the Joint Committee on Electoral Law and Procedure agreed to by the House on the25th February. 1926, he extended to include the following matters: -
Administration of the compulsory sections of the Federal act.
The committee desires that these questions should be investigated, and as the Government think that they are matters requiring investigation, I recommend the motion to the House.
Question resolved in the affirmative.
In committee (Consideration resumed from 28th May, vide page 2461).
Clause 3 -
Section 11 of the principal act is repealed -
Section proposedtobe repealed -
No Crown lands in the Territory shall be sold or disposed of for any estate of freehold, except in pursuance of some contract entered into before the commencement ofthis act.
.- The honorable member for Wannon (Mr. Rodgers), when supporting the freehold system, said that honorable members of the Opposition, who believe in the leasehold principle, are taking the side of the city against the country. That accusation is narrow” and unjust. Every commonsense person knows that the interests of the city and the country are so interwoven that, in the- scheme of national development, both are equally important. Many years ago a. Labour government applied the leasehold system to the Northern Territory, and. because I think it more beneficial to the community than freehold, I am opposed to its withdrawal. The Honorary Minister defended this bill by saying that men in the Territory should have an opportunity to acquire a piece of land on which to build a home. The evil of unearned increment is not. so serious in connexion with building blocks as in connexion with business areas and broad acres. But, in any case, the freehold of building blocks is already obtainable in the Northern Territory : under the system of land tenure established by the South Australian Government. For every block of land bought in Darwin, at an almost nominal price, the purchaser was given 640 acres of land in the country. Those 640-acre blocks can be purchased to-day for £5 each. That apparently is their value under present conditions, and under this bill the fee-simple of large areas will be disposed of by the Commonwealth at equally ridiculous prices. But in time the Northern Territory will develop, and the nation will then be obliged to buy back this land at exorbitant prices for closer settlement. One argument raised during this debate was that a man going upon leasehold land cannot raise money. The Minister said that some of this land is worth 2s. 6d. an acre. If that is so, a man would require about 5,000 acres in order to get a bank overdraft of £100.
– The bank advances, not on the land, but on the improvements.
– If a man has sufficient money with which to carry out improvements he has no need to borrow from the bank. The argument that the freehold is abetter security upon which to borrow does not apply to land in remote and undeveloped areas.
– The honorable member does not understand the difficulties of the man who is trying to develop a holding out-back.
– I do, and I know that those difficulties are increased when the freehold system has inflated the price of land. In the dairying districts of New South Wales laud is so expensive that a man who is able to buy a block has no need to do so, because he is already wealthy enough to retire. Those who do buy find that their produce is not sufficiently valuable to pay a. return on the capital cost of the land. ‘ The freehold system forces the landholder into the clutches of the banks and other money-lenders. Under the leasehold system a man with a small amount of capital can take up land, and commence to make a living almost ‘immediately. Freehold is a good proposition for men who can buy to-day, and wait for the unearned increment that follows development. In illustration of the amounts expended by governments in the repurchase of land unwisely alienated years ago, I draw the attention of honorable members to a statement in theCommonwealth Year-Book, that the value of farms allotted betwen the years 1919 and 1924 inclusivein New South Wales under the closer settlement policy is £54,624,921, and the total ‘cost to date of the area acquired by the Government of Victoria during the same period is £24,590,399. Much of that money was expended by the State Governments in the repurchase of land that was sold years ago at almost nominal prices. I admit that money spent in the repurchaseof estates for closer settlement is not a permanent addition to the. national debt, but is repaid by the settlers. Nevertheless, huge sums of money must be borrowed before land can be made available to the settler, who, in turn, is burdened at the outset by a heavy capital cost. That state of affairs will arise in the Northern Territory if the Government is permitted to part with the fee-simple of the land there.
.- I agree with the views expressed by the last speaker. The amount of money which is being spent by the New South Wales Government on the resumption of land is enormous, but the price of the land is so high that those who are being placed upon it will never be able to own it. At a recent sale of leasehold land at Canberra, the difference between the upset price and the price at which the land was sold was as much as 150 per cent, for some of the blocks. I cite the following figures to show the difference between the upset prices and the prices realized: -
Thirty -nine blocks, for which the upset price was £16,099, were sold for £38,100. Such figures, show how the nation benefits by the leasehold system. The lessees will pay 5 per cent, of the capital value of the leases for twenty years, when the value of the leases will be subject to reappraisement. The total value of the leases sold was £46,585, and the rents that will be paid in the course of twenty years will amount to £93,170. If 1 per cent, is then added to the value on reappraisement - the income will probably be more than 1 per cent. - the rents received by the Crown for the second twenty-year period will be £48,909, making a total of £142.079 for 40 years. The anxiety of the Government to abolish the leasehold system has some connexion with the proposal to construct a railway through the Territory. The railway is not the only developmental scheme in the hands of the
Government, for the Public Works Committee is now investigating a proposal to improve the wharfage accommodation at Darwin. If the Government carries out public improvements, the owners of the freeholds will need to do nothing, but pocket the unearned increment. If the land granted to our forefathers in Australia years ago, had been merely leased, the income from it to-day would enable the whole of the population of this country to travel on the railways free of cost, and pay for their construction. Why should there be so much anxiety to abolish the leasehold system ? I am not in the confidence of honorable members opposite, and I do not desire to pry into their business, but I invite them to convince me that there is not an ulterior motive behind the Government’s proposal. There is no doubt that Darwin will become, a large shipping port. The Northern Territory is a rich cattle country, and it has valuable mineral resources. Specimens of ore which I brought from Maranboy, and which are now in the British Museum, contain 87 per cent, of pure tin. Is the Government’s action dictated by the fact that the leasehold system in the Northern Territory was introduced by the Labour party ? Its motives have not been explained : the Minister has done his best, but he knows nothing about the subject. Seeing that so much energy has been expended in establishing the Northern Territory on the leasehold system, I cannot understand why the Government should seek to substitute the freehold system for it. A wonderful vision of the future determined the Labour Government of ten or fifteen years ago to make the leasehold system general in the Territory, and a similar vision is causing honorable members of the Labour party to-day to try to retain it. We shall be unjust to posterity if we agree to this bill. There has not been a philosopher, a social reformer, or a man of note in the political world for many years who has not admitted that the people are robbed under our present land system; and, in saying that, I do not wish it to be inferred that I am a follower of Henry George. I believe there are other avenues of taxation than the land. The value of the Territory land will not be known for tho next 25 years. Whoever guessed, when the leasehold system was adopted for tho Federal Capital Territory, that so- -early
Iri its history 39 business and residential blocks of land there would be sold for £59,000? I should like to get ‘ at the bottom of this matter; for I am sure that some ulterior motive has prompted the Government to introduce the bill. If a few wealthy people ave behind it we shall know what to do with it. But, whatever is the reason for its introduction, I intend to op-pose it. I spoke at great length on the second reading of the measure, and I propose to send copies of my speech all over the Commonwealth. This is legalized robbery. It is a great pity that the Government did not find something else to occupy its attention. In 40 years a total of £142,079 will be received in land rent in the Territory from the last sale, and in the future vast revenue would be received from the same source if we retained the leasehold system. I believe that the revenue would be so large that we should be able to build a marble parliament house at Canberra. If other honorable members believed that the retention of the system would lead to- that result they would not be so> anxious to abolish it. If honorable members had taken sufficient interest in the land question, they would have known that, as far back as 120 years ago, the titled owners of land around Belgrade Square, in London, refused to part with the freehold of it. They leased the land, and every year now fine blocks of valuable building’s that have been erected on it, are falling into the hands of their descendants. They would belong to the Government under the leasehold system. The Duchy of Cornwall, from which the Prince of Wales receives a large income, is maintained on the leasehold system. The adoption of the. freehold system for the Northern Territory will hinder development there. If people with, say, £1,200 to £2,000 capital, can get a lease of land there for £30 a year, it is to their advantage, for they will be able to use the remainder of their capital to build a home on it and stock it. But if they have to spend all their money on ‘ land they will have nothing left for developmental purposes. If a settler has to purchase the freehold of land he must mortgage it to a bank or some other institution to pay for his stock. Then if his cows run dry, or he suffers some other misfortune, he loses both his money and his land. There have been thousands of such cases in Australia. I do not live in a farming community ; but the farmers have my sympathy, and I know what is best in their interests. There are not many farms in my electorate, where the freehold of land is worth between £1,000 and £2,000 a foot. What, a fine thing it would be for Sydney and Melbourne if the freehold of those 11111111cipalities had been retained. The authorities might from the leasing of those lauds have constructed trams and railways on which passengers could be carried free. I am afraid there is not much good in further protesting against this clause. Some move that I do not understand is being made to deprive intending settlers in the Northern Territory of the opportunities which would have been open to them under the leasehold system.
, - I support the amendment, and while I think the Government would be well advised to accept it, I am not so optimistic as to believe that it will do so.
The CHAIRMAN (Mr. Bayley).There is no .amendment before the Chair.
– I understood that an amendment had been moved to the clause.
– I think I have already said all that it is necessary to say on this subject. If the honorable member for East Sydney (Mr. West) had read the bill he would not have talked as he has done. He has accused the Government of desiring to alienate all the lands in the Northern Territory, but it would be impossible to do so under this bill. The honorable member suggests that the Government has ulterior motives in what it proposes to do, but he measures it with his own bushel and attributes to it the action which he would take himself. I said the other day that the leasehold system had in no way hastened the progress of Queensland. I challenged honorable members opposite to produce figures to show that- the system has increased progress in Queensland, but they have not done so. The figures which I submitted are substantiated, not only by the Queensland Statistician, but also by the Commonwealth Statistician, who shows more conclusively than I did that the leasehold system has been a curse to Queensland, and has led to tremendous areas of country going out of cultivation. In 1925 there -were 257,803,489 acres under occupation in Queensland. In 1915, when the Nationalist party in Queensland went out of office there were in occupation in Queensland 360,049,079 acres. After the leasehold policy had been in operation in Queensland for nine years, it is proved by the Statistician’s figures that there has been a decrease in the area under occupation in Queensland of 25,821,740 acres. These figures knock the bottom out of the contention of the Labour party that the leasehold system is the best system for developing the country. The honorable member for East Sydney (Mr. West) said that the Government does not know its job. Whilst we might admit that we do not know as much about it as the honorable member, we are trying to do our best according to our light. We claim that this bill will give the Northern Territory a chance. It is not intended to alienate the lands of the Territory. Areas of not more than 1,280 acres can be alienated under this bill.
– What about the 20,000- acre blocks?
– Those . are tropical lands, but the honorable member for East Sydney referred to agricultural land. The honorable member for the Northern Territory (Mr. Nelson) knows very well that the tropical lauds cannot be subdivided and sold to settlers in small blocks. I have explained that under the ordinance which it is proposed to table a settler must spend 10s. an acre on tropical lands before he can secure the freehold of it. In the case of town lands and garden lands, the occupier must fence and erect a residence, or improve his holding to a certain amount per acre before he can obtain a freehold. In the circumstances, of what use is it for the honorable member for East Sydney to say that it is intended to dispose of these lands to wealthy persons, who will hold them in expectation of securing an enhanced value by “their subsequent sales ? When the bill is passed, the ordinance which has been referred to will be laid on the table, and it will be open to any honorable member to move a. motion dissenting from anything contained in it.
Clause agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Bill, by leave, read a third time.
Message recommending appropriation reported.
Motion (by Mr. Bruce) agreed to-
That it is expedient that an appropriation of revenue be made for the purposes of abill for an act to amend the Audit Act 1901-1924.
Standing Orders suspended, and resolution adopted.
That Mr. Bruce and Dr. Earle Page do prepare and bring in a bill to give effect to the foregoing resolution.
Bill presented by Mr. Bruce, and read a first time.
– I move -
That the bill be now read a second time.
This is a short bill to amend the Audit Act 1901-1924. The reason for urgency in its consideration is the recent death of the late Auditor-General. I am sure that every member of the House deplores the death of Mr. Israel. All who were associated with him recognize that he was of the highest type of public servant, and performed the duties entrusted to him with credit to himself and to Australia. He carried the great responsibilities of his high office in a manner which won the approval of succeeding Parliaments of the Commonwealth, and, had his work been better known to the people generally, would equally have won their approval. It is necessary that this bill should be passed before steps can be taken to appoint his successor. It is contemplated to make considerable change in the conditions under which the office of Auditor-General will be held. There is provision in the existing act for the appointment of an acting AuditorGeneral in the case of the illness, incapacity, suspension, or absence of the Auditor-General; but there is no power under the . act to appoint an acting Auditor-General when there is no AuditorGeneral. At the present time, owing to Mr. Israel’s death, there is no AuditorGeneral, and an acting Auditor-General cannot be appointed. We must appoint a new Auditor-General, and this must be done at once, because a great deal of work has to be done by the AuditorGeneral to enable the financial machinery of the Commonwealth to operate. Consequently, the passing of this measure cannot be delayed, and I have to ask the House to regard it as an urgent measure. By the existing Audit Act it is provided that-
The Auditor-General shall hold his office during good behaviour, ,and shall not be removed therefrom unless an address praying for such removal shall be presented to .the Governor-General by the Senate and House of Representatives respectively in the same session of the Parliament.
There is no other provision for the removal of the Auditor-General, and that provision would be applied only if the conduct of the Auditor-General were such that both Houses of Parliament felt that he should be removed. But honorable members are aware that when a man has given long and valuable Service to the Commonwealth, and his powers are failing, it is difficult to remove him from his office, because to do so would appear to be a reflection upon him. No honorable member would desire to take action to remove from office an honoured and tried public servant because his powers were declining and he himself was not cognizant of that fact. The difficulty for which we must provide regarding the Auditor- General has occurred in other countries where high appointments are held under life tenure. For example, members of a judiciary have remained on the bench beyond the period of their usefulness. To remove the possibility of this in regard to any occupant of the office of Auditor-General, the amending bill provides that he shall cease to hold office on attaining the age of 65 years. This alteration of the act will in no way limit the absolute freedom of the Auditor-General from interference, or place any sort of political control on him. He will still be removable from office only when an address praying for his removal is .presented to the Governor-General by the Senate and House of Representatives in the same session of Parliament. But, instead of having a life tenure of office, he must retire at the age of 65 years. Under the Audit Act there is no provision for a. pension for the AuditorGeneral, and it is not proposed to alter the law in that respect. The Public Service superannuation scheme was brought into operation many years after the Audit Act was passed ; but, in future, those holding the position of AuditorGeneral will be public servants, (subscribing to the Superannuation Fund. Future Auditors- General will be in the same position as other Commonwealth civil servants. The bill provides for an increase of the annual salary of the Auditor-General from £1,500 to £1,750. The original act provides that the Auditor-General shall receive a salary of £1,000 a year. In 1920 a new item appeared in the annual Estimates providing for the amount of £500 to be’ paid to the AuditorGeneral in addition to his statutory salary. In 1924, after the present Government came into office, the Audit Act was amended, increasing the salary of the Auditor-General from £1.000 to £1,500. As I have already explained, the AuditorGeneral should not be subject to Government control, and it is therefore not desirable that this officer should have onethird of his annual remuneration provided for in the Estimates presented to Parliament by the Government. The suggestion was made in 1924, when the amending bill was before the House, that there should be an increase in the remuneration pf the Auditor-General, but it was then felt that as the salary of the gentleman then occupying the office had been increased from £1.000 to £1,500, and as he had a life tenure of the position, there was no immediate need for an alteration. Now that the life tenure of the office is to be abolished, and its occupant is to retire at the age of 65 years, the Government feels that some increase in his remuneration should be made, and it is now contemplated to increase the salary from £1,500 to £1.750 a year. When the salary of £1,000 was fixed, the total expenditure to be audited by the Auditor-General’s Department was something like £11,000,000. The Auditor-General to-day is faced with an expenditure from the Consolidated Revenue of about £70,000,000, a tremendous increase. In addition, the Commonwealth has taken over a great number of activities, such as navigation, lighthouses, quarantine, the Northern Territory, and the administration of the oldage and invalid pensions system, which it did not control when the original act was passed. This, of course, greatly in- creases the responsibility of the AuditorGeneral. The war, also, has left to us many legacies which place a great obligation on him. Those include war service homes administration, repatriation, soldier settlement, war pensions, and the administration of the mandated territories under the Treaty of Versailles. Then there has been an expansion of the Commonwealth railways; the accounts of the Commonwealth Bank are audited by the Auditor-General, and so, too, are those of the Commonwealth Shipping Line and the Cockatoo dockyard. The remuneration of a permanent head of a department can be reviewed any year upon the Estimates, if there has been an expansion of the activities of that department which greatly increases his responsibilities; but the salary of the AuditorGeneral is a statutory appropriation which cannot be varied without an alteration of the law. I apologize to honorable members for having to rush this bill through the House; but if a new Auditor-General were appointed before the bill were passed, he would have the right to hold office for life, and no outside arrangement made with him would be binding upon him or upon the Government.
.- I agree with the right honorable “the Prime Minister that this is an urgent measure. We all regret the circumstance that has made it so, because the late Auditor-General (Mr. Israel) was a good and faithful servant of the country. He carried out his work fearlessly and without favour, and his reports have, on various occasions, been of considerable help to honorable members. This bill provides for an increase of the salary of the AuditorGeneral, and for his retirement at the age of 65 years. The Prime Minister has given very good reasons for increasing the salary of the office. He pointed out that, hitherto, the Auditor-General has enjoyed a life tenure of office, and could be removed only for misbehaviour after both houses of Parliament had passed addresses praying the GovernorGeneral to remove him. Although I generally deprecate increasing the salaries of high officials, it seems to me that in this case it is justified. The person appointed to this office may not have many years to hold it before reaching the age of 65 years, and we should make the salary commensurate with the work performed. Very few officers in the Public Service have greater responsibilities than the Auditor-General. The concerns of the Commonwealth Government have grown enormously since the war, and of necessity the . responsibility of the AuditorGeneral has been increased. The Government’s decision to provide for the retirement of the Auditor-General at the age of 65 years is wise. It is a great mistake to permit men to remain in office when they are no longer capable of performing their duties. I am entirely in agreement with the bill.
Question resolved in the affirmative.
Bill read a second time, and passed through its remaining stages without amendment or delay.
Debate resumed from 21st May (vide page 2249), upon motion by Dr. Earle Page-
That the bill he now read a second time.
.- This Bill is an amendment of the Wartime Profits Tax Assessment Act of 1917, which was introduced, in response to the agitation against profiteers. Those provisions of the act which relate to mercantile businesses were lifted almost in their entirety from the imperial act, but the sections dealing with primary industries had to be evolved to meet the peculiar conditions prevailing in Australia. After our experience during the last, few years, especially since 1919, I am confident that if those who were responsible for the original legislation had anticipated the trouble it would cause, they would have preferred to increase the rate of income tax, rather than meddle with this very complicated form of taxation. I do not think there is any other act on the statutebook so complicated in its various forms as the War-time Profits Tax Assessment Act of 1917, particularly the sections relating to the primary industries. However applicable such legislation may be to manufacturing and other settled industries in the cities, which are not subject to extreme variations of trade, it has been found almost impracticable to apply it to the pastoral industry, for the reason that very few pastoralists, other than incorporated companies, kept books prior to the passing of the Federal Income Tax Act in 1915. The War-time Profits Tax Assessment Act made it necessary, in some instances, to get particulars of income as far back as 190S, but. of the prewar years there was practically no record. Other factors that hinder the application of this form of taxation to the pastoral industry are the occurrence of droughts, and the fluctuations of business. In the cattle industry it is not unusual to sell only in every second year, with the result that in one year the income is small, and in the next year big. In all rural industries, long periods of depression are sometimes followed by a rise in prices for two or three years. Many hardships have been created by this taxation. A large number of primary producers made a great deal of money during the war, but they were mainly those, who sold out and retired. Few who are engaged in a paying industry feel disposed to sell out : the more the money they are making the longer they hang on. Those men who did sell out escaped with their profits, but the men who bought in at high prices have been sorry ever since, and have suffered, most severely from the slump in the markets for primary products. Of course, when they bought, they expected to make big profits, but the high prices which prevailed during war-time were not maintained, and all the profits made during the few prosperous years disappeared in the years following the war. As a result of the High Court judgment in the Cameron case, the standard values of stock fixed by the Commissioner for the different States were declared illegal, and every assessment in respect of income and war-time profits tax became null and void. The quandary in which the Commissioner found himself was accentuated by the complexities of the War-time Profits Tax Assessment Act, which was so little understood in or out of the department, that during the year in which it was first imposed very little could be done to put it into operation. I speak from practical experience. Perhaps I may claim to have as good a head as the average man in my profession, and I admit that I never properly understood the act: very few men did. Indeed’, it was not comprehended by the taxation officers in the capital cities, and those who had to do business with the department could never get down to bedrock. In the circumstances those like myself who were engaged in making lip assessments, did the best they could in the interests of their clients, and simply told them that the best thing they could do was to pay. And most persons did pay. The judgments given by the High Court in the various appeal cases exposed the act in a new light. Taxpayers and departmental officials began to> get a better idea of the meaning of its complicated provisions. One effect of the judgments was to disclose that some people had been assessed wrongly, that some should not have paid any tax, and that others were liable for less than the amount they had been required to pay. This necessitated those considerable rehinds to which the honorable member for Yarra (Mr. Scullin) referred. The classification of the act happened only after all the assessments had been . issued and most of the taxes had been paid ; consequently, the refunds had to be made in subsequent years when very little money was being collected! That explains the apparent anomaly mentioned by the honorable member for Yarra that more money was refunded in one year than was collected. The act of 1924 enabled many people to’ have their assessments reopened. Had the time allowed for objections not expired, many people would have protested against their assessments and obtained refunds in the ordinary course. But the amending act, by giving them an opportunity to make a new valuation of their stock, enabled them also to take advantage of the legal benefits which the High Court judgment had conferred. As the old standard values had been declared illegal, the 1924 act gave taxpayers the right to have their assessments altered by electing to have their stock taken into account at a valuation to be elected by them within certain limits. If they did not so elect, the valuations were to be taken at the old assessments. The limits were those imposed in the Income Tax Assessment Act in respect of bred stock, but were extended to apply to all stock, whether bred or bought. There was an implied option of the existing value or valuation within certain limits. Taxpayers were allowed only four months after the passing of that act in which tomake an election as to the method of valuation they would accept. This bill allows all those who made no such election to do so. The commission is continually sending out assessments to newly-found taxpayers who had not previously been assessed. Proposed subsection 1b provides that in respect of such new assessments, the commissioner may call upon the taxpayer to elect to have his stock valued within certain limits. If a person entitled to elect under subsection 1a does not make an election, he shall be deemed to have accepted the existing assessments, and under proposed section 3a, if a person entitled to elect under sub-section 1b fails to make an election, the stock shall be assessed at the market selling value. I shall now reply to some of the arguments advanced by the honorable member for Yarra (Mr Scullin) last Friday week. I compliment him on the studious way in which he examines all taxation bills, but I think he made a few mistakes in his criticism. He said that the bill dors not extend the provisions of the 1924 act. The 1924 act gave all taxpayers, up to the date of that act, the right to assess their stock at elected values. The bill gives the right to all who, b lapse of time, may have missed the benefits of the 1924 act. to have their stock taken at elected values. Taxpayers assessed after the passing of the 1924 act, and before the passing of the bill, will have the same right of election, as those assessed under the 1924 act. In the matter of election, therefore, the provisions of the 1924 act are the same as those of the bill, but there is one seeming difference. If no election was made under the 1924 act, taxpayers were declined to accept the existing values j but in ihe bill it is deemed that those who have been assessed accept the existing values, while those who have not been assessed cannot be deemed to have accepted the existing values, because they cannot be deemed to have accepted an illegal value. In such cases the commissioner will assess their stock at market value. The so-called “ market value “ is not an option, unless it may be termed an implied option. Seeing that the com.m,ss: c ner cannot impose values that are. illegal, although they may be fair, we may assume that in fixing so-called market values for new assessments he will generally fix values which have passed muster hitherto. If a taxpayer objects he will have to prove that what the commissioner says is the market value is. not the market value. The honorable member for Yarra also said that certain clauses of the bill are contradictory. I do not agree that that is so. He referred to certain differences between the minimum and maximum values under the act and in the bill. He should not have used the words “minimum” and “ maximum,” but rather “ highest in one State “ and “ lowest in another State.”
– The words suggested by the honorable member have the same meaning as those used by me.
– They have not the same meaning, because to those unfamiliar with the act it would appear from the honorable member’s words that something unfair was intended. The honorable member for Reid (Mr. Coleman) did, in fact, make an interjection that showed that he thought something unfair had been done by the introduction of fresh socalled minimum and maximum values. The varying values taken by the commissioner really made no difference. If we apply these so-called minimum and maximum values to any one State, we see that there is not much disparity. In Queensland, for instance, the old minimum for sheep was 9s., and the new minimum is 2s. 6d. ; the old maximum was 9s., the same as the minimum, and the new maximum is 10s. For cattle, the old minimum was £3, the new minimum 10s.; the old maximum £3, and the new maximum £5. For horses the old minimum was £4, the new minimum 15s. ; the old maximum £4, and the new maximum £3. For pigs, the old minimum was 15s., the new minimum 5s. ; the old maximum 15s., and the new maximum 20s. There is a greater disparity under the bill between the minimum and maximum values than there was previously, because previously the maximum and minimum values were alike - 9s. for sheep, £3 for cattle, and £4 for horses. The value of sheep under the bill may vary from 2s. 6d. to 10s. The bill gives a much wider range of values. Stations which can sell their stock young are on a different basis of values from others which sell fat stock.
Some, stations far away in the north-west of Queensland must sell their stock as stores, because the beasts have to be driven from 100 to 1,000 miles. Values there are very different from values in Victoria, and station-owners there ought to have the right to elect values. It really does not matter what value is chosen, as it applies to the war and prewar years, and therein lies the difference between the income tax valuations and the war-time profits tax valuations. Whatever values are taken, if they are spread over a long period, the resulting profit works out the same. As the same values for the war-time profits tax have to be taken for the pre-war as for the war years, the comparison, as between those two periods, is fair.
– What about new businesses!
– It is- conceivable that some of the new businesses may benefit. They may, for instance, have bought stock at 35s., and have them valued at the end of the period at 10s. ; but during the war very few stock-owners who thought their prospects were good sold out. The period of slump came after the war-time profits tax period had elapsed. It is more than probable that no new pastoral or farming business would come within the category of businesses liable for war-time profits tax. The large war-time profits were made by men who had owned and bred stock for many years at a low valuation, and sold out at a high valuation during the war. Prices gradually rose from the first 3rear of the- war until, at the emd of the war, they were very high. A person buying a business in the last year of the war-time profits tax could not do so on favorable terms; but would have to pay a high price. There is no pre-war scale by which such a business can be judged ; but if the owner made more than a certain percentage of profit he would be taxed upon that. Under the conditions of purchase, however, very little margin for profitmaking was left. I have watched the stock markets week by week, and I know that towards the end of the period of the tax values were fairly stable. It was not. then possible to buy cattle at £5, and, within twelve months, to> sell them at £11 or £12; although previously, in some cases, prices had doubled in three or four months. But there are other ways of looking at the matter. If a man bought stock at 30s., and at the end of the period it was assessed at 10s., we might say that he had escaped taxation; but, in the light of the awful slump in the pastoral industry, we can see that very few men benefited by the reduction in values. If a man bought sheep at 35s., and they were assessed for taxation purposes at 10s., it is quite possible that 10s. might represent their true value, when really sold after the year; and had they been assessed at their market value, the owner might have been called upon to pay taxation on an assumed profit he had not made. There has been, and there is to-day, a drought in the north-west of Queensland. I know a pastoralist beyond Winton and Hughenden who would give away 20,000 sheep for nothing.
– Does the honorable member contend that stock should not be taken at their real value because there may be a slump in the future?
– That is not. my contention; but for the present I am dealing with the case cited by the honorable member. While I admit that some taxpayers may benefit from the system adopted; I contend that the number will be very few. The market, of course, might have continued to rise; but we know that, as a matter of fact, it fell.
– And although a man’s stock was bought for 30s., he could take them in at 10s.
– Quite true. But whatever figure he takes he must stick to. There can be no fluctuation. If he elects to take sheep at 10s., he must take them through every year at that figure. A man who bought stock in the last year might seem to escape the tax, but really he does not do so. There can be no escape from it. You can practically set one year off against another. It is not like the old system, under which you took sheep and cattle in at cost, and allowed for the increase at a certain figure. The system of taking fixed value at the beginning and the end is perfectly just. This case actually occurred : A friend of mine sold out a sheep property for £60,000. Cattle were all the rage at the period, and he thought he would make a pot of money by going in for cattle; so he bought a cattle property for £100,000, with £40,000 on overdraft. If cattle had remained at the same high figure, and he had been able to sell them, hewould havecome out all right, and the overdraft would not have worried him. He had started from scratch, and had gone up and down several times, and he thought he would be all right on this occasion. Unfortunately for him, immediately after he had bought his property a drought and the slump came, and he found himself with a £40,000 overdraft, and a property valued at £20,000. That illustration shows the injustice of the whole proposition as applied to the pastoral industry. It is a pity that in considering a matter like this we so often have in mind the so-called “ big man.” The great majority of country people do not make £1,000 a year net. I think I may say that the great majority do not make £500 a year net. I speak from practical experience. I suppose that 900 taxation returns go through my office eachyear, and I am able to judge the position fairly accurately. If a man makes £1,000, £2,000, or £3,000 a year in the country, he is looked upon as a “ big man “ ; but in the city a business man may make £2,000, £5,000, or £10,000 a year in his business, and no one thinks of applying that term to him. The honorable member for Yarra (Mr. Scullin) said that as market value could be taken for income-tax purposes, it should also be possible to take it for war-time profits taxpurposes. But in practice market values are not applicable in war-time profits tax administration in the country. The basis may be all right for the city, where businesses go on year after year without a great deal of variation ; but in the country the market value may be at one figure to-day and at quite a different figure in a week’s time. The Income Tax Assessment Act gives the taxpayer the option of taking market values; but the real value may be taken plus an allowance for the increase at a certain value. The reason why the market value proposition cannot be adopted for war-time profits tax purposes, as it can for income-tax purposes, is that the income-tax period only goes back to 1915, whereas the war-time profit tax period covers, for the purposes of comparison, the period of three years before the war. It would be absolutely impossible to find out the market value of stock over those three years. If taxpayers were given an option in the matter, as suggested by the honorable member for Yarra (Mr. Scullin), not many would take advantage of it. To show how impossible it would be to fix a satisfactory market value for stock in that period, honorable members need only consider for a. moment the relative value of stock in the far north-west of Queensland and in the more favoured parts in the south-east where I live.
– But is not the onus on the owner to put a market value on his own stock?
– Whatever he elects to do he has to stick to, and he has to prove that the value he has set down as the market value is the market value, which it is almost impossible for him to do. Differences in districts is not the only difficulty. There are differences in the class of stock. It may suit one man to say, “ My stock are worth £2 a, head,” whereas the next man may say. “ My stock are worth only £1 a head.” Differences in age have also to be taken into consideration. People will pay more for stock at some ages than at others. Then, again, sheep which are worth 35s.a head in full wool are not worth so much just after they have been shorn. During the war period the wool on a sheep was worth 20s. If the carcass were worth15s., it would not be so very wrong to take 10s. as the value just after shearing. So many different considerations enter into the matter that it is almost impossible to fix the market value. At present people who have sheep in the north-west of Queensland would probably give them away to any one who would undertake to do anything for them. But, notwithstanding all the difficulties in fixing market values, I think the Treasurer might stretch a point and allow the option, so that the conditions could be uniform with the Income Tax Act.No difficulty would be caused by allowing the option. I am sure that no one would accept the market values basis, forthe simple reason that, before the war, there was a long period of depression when values were very low; and, if the taxpayers elected to lake the war-time value, they would also have to take the pre-war value, and, in consequence, pay a considerably larger tax. It is a moral certainty that no taxpayer would choose to take market values as the basis. It might appear to persons who are not familiar with the subject that the contention of the honorable member for Yarra that the conditions applicable to income tax assessment should bo applicable also to war-time profits tax assessment, but you cannot have uniform conditions, for you cannot get the same basis of comparison. At least, there is only one way by which you can get it, and that is by arbitrarily fixing the value of the stock. Seeing that the great majority of persons assessed for income tax. and also the great majority assessed for war-time profits tax, have already paid their tax and the matter is closed, it would be a hardship on them, as well as on the Taxation Department, if every case were re-opened now. The honorable member for Yarra (Mr. Scullin) has contended that, because one value of the stock has been retained for income tax purposes, it could easily be stated for war-time profit tax purposes. He may argue that the Commissioner of Taxes could say to a taxpayer, “ This is the value of your stock as shown in your income tax return; so we will adopt it as the basis for your war-time profits tax assessment.” But many considerations have to be borne in mind. For instance, the amount of capital invested may have varied before and after the war, and so may the amount of borrowed money. The matter is so complicated that it is almost impossible for one who is not well informed about it to understand it. The real reason why a uniform basis of comparison is not possible is that the basis of the war-time profit tax lies in the pre-war years, while the income tax did not come into operation until 1015. The only way for, a taxpayer to get at the position properlywould be to go back to the time when he started with stock, say in1908. He knew what he paid for them, and allowing for the increase, he can show the value of them at the end of the year. He will thus work up from year to year, right to the time when the tax was first levied .
– Is not all that information shown in the income tax returns for those years ?
– No ; because the income tax did not come into operation’ until 1915. I will undertake that, on the basis set out for estimating war-time profits tax, and that laid down for income tax purposes, you would get an entirely different value for your stock at any given period. I suppose that in not one case in a thousand was the assessment on the same value for income tax as for wartime profits tax.
– And you say that if a man valued his stock, say, at the . beginning of 1915, at 20s. for income tax purposes, he would not value it at the same figure for the war-time profits tax ?
-For the first two years in which the income tax was imposed, the department took whatever value the taxpayer cared to return, but, later on, specified amounts were set out. For war-time profits tax purposes) the taxpayer was required to submit a list showing his purchases and his breedings for three years before the war. In that way we got a fresh set of figures and values.
– But if the returns were correct that should have made no difference.
– The returns could not be the same on account of the working up I have explained. When we get into committee we can go into the matter in greater detail on the different clauses ; but I want now to say something concerning the illegality of the collection to which the honorable member for Yarra referred. We need not worry very much, about that, because most of that taxation has been paid. If it is illegal and is not refunded, those who dispute it can go to the High Court and appeal against it. If they do that, the commissioner knows enough to combat any such endeavour. If they dispute the figures there is left to the commissioner the right to say, “ If you dispute these assessments, you must take market values.” By taking market values, the taxpayers would find themselves worse off than they are at present.
– That applies to new assessments, but what about the old assessments ?
– The old assessments have been paid. If they are illegal, there is nothing to prevent the taxpayers asking for refunds. Not one of them has attempted to do so, and it is morally certain that not one will do so, because those who did would find themselves worse off than if they let things slide. It is as well that taxpayers should understand the present position. People will pay the assessments if they are satisfied and they are given an option if they are not satisfied.
– They are not given the option of market values under the old assessments.
– I recommend to the Treasurer that they should he given that option.
– If the taxpayers are willing to take market values, I am quite willing to give them the option to do so.
– In the case of the old assessments ?
– I am very glad to hear that.
– I believe that those who would exercise the option would find themselves 50 per cent, worse off than they are by paying on the so-called illegal assessments. I hope that when we get into committee the honorable member for Yarra will point out how the clauses are contradictory, so that we may deal with them.
– My point is that in. the case of old assessments the bill lays down a different basis for election to that laid down for new assessments.
– I have already referred to that. In the case of the old assessments the taxpayers were offered impliedly what they have already taken. They were told that they would be assessed on the figures that they had given, or might take new figures, within certain limits. In the bill now before us, they are given exactly the same option.
– Yes. Where they failed to elect on the assessments issued, they took what was said to be the illegal figures. If in their case fresh assessments were issued, it would be impossible for the commissioner to say, “ You may elect to take the illegal figures.” All that he says is, “ Will you elect ; if you do not, I shall assess you on market values?” Judging by the number who have agreed to accept market values in the case of income tax, it is clear that most of the taxpayers will prefer the old values.
– Under the act of 1924, where the taxpayer fails to elect, there is imposed upon him the old illegal assessment. Under the bill if a taxpayer fails to elect there will be imposed upon him market values.
– Under this bill two classes of people are dealt with, those who have been assessed, and those who have not yet been assessed. Those who have already been assessed have exactly the same privilege as taxpayers had under the 1924 act to accept values within certain limits. When we come to deal with new assessments the commissioner cannot give taxpayers the option of taking the old illegal figures, and so he will say, “ Elect; if you do not elect, I shall impose upon you market value.” I recommend the Treasurer to give taxpayers under the old assessments the option of taking market values. Judging from the reports I have read, I believe that taxpayers generally will prefer to elect rather than leave it to the Commissioner of Taxation to impose market values upon them.
– Why not give the commissioner the right to impose market values on the old assessments as well as on the new assessments?
– I have already recommended the Treasurer to give taxpayers under the old assessment the option to accept market values.
– I have said that I am willing to do that, and I shall .submit an amendment in that direction.
Realizing the intricacy of the taxation legislation, I approach the consideration of the bill with some trepidation. After making a careful study of the subject, I am convinced nhat no one <can claim complete mastery of the difficulties involved. I listened with great interest to the speech of the Treasurer (Dr. Earle Page), some time ago, in moving the second reading of the bill, and also to that of the honorable member for Yarra (Mr. Scullin). I have received from South Australia letters of commendation and appreciation of the services rendered not only to this House, but to Australia, by the honorable member’s careful explanation of this legislation. I have listened this afternoon with great care to what has been said by the honorable member for Maranoa (Mr. Hunter), and I trust I shall be able to give some little assistance in connexion with this involved question. Before proceeding to discuss the bill, may I be permitted to say that I view with some concern (She number of measures which the House is required to pass to validate previous taxation legislation. The bill now before us is not an isolated instance of this; and the fact is disquieting to me as a public man. 1 do not know whether the fault lies with the chief advisers of the Government on taxation matters, or with the Crown law authority.
– Even the High Court judges disagreed at times about it, so the honorable member will realize the difficulty of the subject.
– The honorable member for Yarra has pointed out that we have passed taxation measures ultra vires of the Constitution, and because of errors in judgment, or counsel on the part of the officers of the Taxation Department or of the Crown law office, it has been found necessary from time to time to introduce legislation validating previous legislation. This bill is divided into two parts - one dealing with pastoralists and the other with returned soldiers. Pastoralists as a class are usually well able to bear war profits tax, and I hold no special brief for them under such circumstances; but this legislation inflicts injustice, especially on the small man and those undertaking new business, including returned soldiers. Our attempts to remedy injustice inflicted upon taxpayers owing to the interpretation of the law have led to no end of anomalies. The honorable member for Maranoa has stated that the act of 1918 proved to be a most intricate piece of legislation. In continuing, he stated that it was so intricate that taxation experts, advising people required to pay taxation, did not thoroughly understand it, and said the only course left for the taxpayer was to pay up. The legislation of succeeding years has not prevented anomalies, or made the interpretation of the law more easy. In fact, the intricacy of the original act is only accentuated by the act of 1924 and the bill now before us. We are making confusion worse confounded. There are certain provisions in the bill to which no reasonable man can take exception. It proposes an extension of the time given to a taxpayer to make his election from four months - under the act of 1924 - to seven months, and the Commissioner of Taxation is given power under the proposed new sub-section 1a of section 2 to allow a further three months from the commencement of this act, within which taxpayers may make election.
No one can take exception to these provisions, but I take strong exception to the basis on which the Treasurer and his advisers on taxation matters arrive at the war-time profits tax. It absolutely subverts and contradicts the canons of accountancy. To the Government this is not a question of equity, but of expediency. To make our legislation equitable and uniform, we cannot lend ourselves to expediency when by so doing we inflict a wrong upon the taxpaying community. The Cameron judgment of 1923 rendered all pastoral assessments invalid, and the attempt to rectify the position has caused numerous anomalies. In arriving at live-stock values, there are four things to be calculated - pre-war profits, war-time profits, pre-war capital, and war-time capital. Section 16 of tha 1918 act provides that pre-war profits and war-time profits shall be calculated on the same basis. But this principle has not been applied by the Commissioner of Taxation. Section 17 provides that the. capital of the taxpayer shall, even although he may have paid £1 a head for his sheep, be computed on the elected value as between 2s. 6d. and 10s. a head, and shall be applied to reduce his capital accordingly. That seems to me to be a grave injustice. In addition,, a taxpayer is permitted to recoup his losses by calculating his capital on a market value basis. At the end of the accounting period, in order to determine profits, the department calculates, on a different basis altogether. The losses incurred and the allowances made respecting a business are based upon market values, but in determining the stock in hand or the capital in hand, a fictitious basis is taken. As has been suggested by the honorable member for Yarra (Mr. Scullin), a taxpayer may have paid 30s. a head for his sheep and yet under the basis of elected values 10s. is the maximum amount that he can elect as the value a head. This means that the taxpayer concerned is deprived in the calculation of capital of £1 a head on those sheep. The calculation of profit arrives, not at a real profit, but a very much inflated profit that certainly should not be accepted by the Taxation Commissioner as correct.
– In the year during which a taxpayer loses on his business he assesses his stock in hand at market prices; but for the year in which he makes a profit he assesses it at elected or fictitious values.
– This method of assessment, especially when it involves a departure from the accepted principles of true accountancy, exposes the Commonwealth Parliament and its taxing agencies to ridicule arid contempt.
– Does the honorable member suggest that sheep-breeders should know the principles of true accountancy 1
– Unfortunately, only the expert . accountants who advise them seem to have anything approaching an adequate or desirable knowledge of this question, and even that in many respects seems limited.
– Then the sheep-breeder must pay for advice.
– That is so, I regret to say. This class of legislation helps independent taxation agents to become rich at the expense of the taxpayers. Our laws should certainly be intelligible to those to whom they apply. , Unfortunately this is not so at present, and taxpayers are forced to seek the advice of taxation experts. The basis upon which the war-time profits tax is arrived at is irregular and inequitable. We should have a uniform system, based either on market values or on elected values. The Treasurer has led this House to believe that it well nigh impossible to levy taxation on the basis of market values alone, or to review over a period of years past valuations of stock. It seems strange that the Treasurer is able to ascertain over a period of years the market value of stock in respect of losses but not in respect of capital and profits.. Prior to the Cameron, judgment, profits, losses, and capital were computed on a system under which certain stock-owners were certified to as being immune from taxation. It is contended by those persons in a position to advise that the basis was truly equitable. Under this bill the Taxation Commissioner will have power to review valuations over the last ten years, and it is quite possible that those persons who had previously been certified to as being immune from the provisions of the act will be required to pay the war-time profits tax to which on an honest and just calculation they would not be liable. If the new system would apply a real value, and do no injustice to the tax payers, I should certainly not object to it, but in making assessments on two different values, it is quite apparent even to the most ill-informed mind- that we shall certainly do a grave injustice to the taxpayers. The Treasurer, when introducing in this House a bill relating to the taxation of profits, transferred to bonus shares, said that it was necessary to amend that act in consequence of a certain judgment of the High Court. He also said that it was unfair to levy on people, a tax from which they really felt they should be immune.
– The honorable member does not suggest that this bill will levy an unfair tax ?
– I am trying to prove that it will.
– In what way?
– Under the system of calculating the war-time profits tax, prior to the Cameron judgment, the basis upon which losses, capital, and profits were assessed was the same, and a great number of persons were certified to as being immune from taxation.
– They can still elect the same values.
– The Government is prepared to permit invalid assessments to be made.
– Nobody disputes that they are fair assessments, but they may ‘ certainly be invalid.
– A uniform basis of determining profits and losses would give some measure of equity. Under this bill, will the Taxation Commissioner review the assessments over the last ten years, and relieve taxpayers who are suffering hardship?
– This bill proposes a measure of relief.
– I should like to believe so.
– I can assure the honorable member that the only reason for bringing the bill down is to rectify certain anomalies which are said to press hardly on taxpayers.
– I would like the Treasurer when replying to this debate to explain why the department will not place those three systems of calculating liability to war-time profits tax upon a uniform basis.
– Does the honorable member refer to the computation of the value of live stock ?
– Yes. I desire to draw attention to the unfair position in which new businesses are placed by this legislation. All businesses have the right to take the pre-war standard for their capl. tal, but new businesses that have not a pre-war standing are at a distinct disadvantage; they are not even permitted to return the value they have had to pay for their stocks; they have to select a valuation between certain prescribed limits. That seems to be unjust. It places a new business in a very false position, for it has had to pay an enhanced value for its stock, and yet has to accept a reduced figure under the scheme of valuation which the department allows. The honorable member for Yarra (Mr. Scullin) referred to the wide discrepancy between the values that the Treasurer set down as fair; I do not think those values were over-generous, but we find there has been a substantial reduction of them in the limits within which taxpayers may elect. I ask the Treasurer to extend these limits to cover the prices actually paid by taxpayers for ‘ their stock. The honorable member for Yarra made out a very clear case when he compared the standard values with those from which the taxpayer is to be required to make his election. Returned soldiers who are partners in a business are still suffering certain injustices under this legislation. Prewar and war-time profits are to be calculated alike, but from each must be deducted the amount of income tax that would be ‘paid on the particular income, according to whether it was jointly or severally earned. Section 15, sub-sections 4 and 5, govern this. During the war period a man could be exempted from income tax, but had to pay war-time profits tax. The commissioner has ruled that if a man paid no income tax, there is to be no deduction under section 15, subsections 4 and 5 from his war-time profits tax. In partnerships this has the effect of making the aggregate wartime profits tax more than it would have been if an individual partner had never enlisted. Under section 8, sub-section 3, the particular partner obtained a refund of his portion, but the other partners paid more than they would have paid had the first partner not enlisted. This bill gives relief in those cases in which the partnership did not receive a refund under section 8. The Taxation Commissioner says that the act does not permit him to rectify the anomaly, and if this bill is passed in its present form, one particular partnership, whose circumstances have been brought to my notice, will pay £100 more in taxation by reason of the fact that one of the partners went on active service. The details of this case are -
– If the circumstances you mention are due to the fact that State income tax could not be deducted, that difficulty will be overcome by an amendment I am proposing.
– I am glad to hear that that relief is promised.
– Was that partnership in existence before the partner enlisted ?
– Yes. It will be seen that if one of the partners had not gone on active service, this partnership would have been entitled to further deductions amounting to approximately £224, which, at the rate of 75 per cent., means a tax of £168. This merely places the partners on the same footing as those who did not enlist, and I submit that they should receive this allowance in addition to the refund under section 8. If the amendment which the Treasurer has indicated will not adequately meet the circumstances of this partnership, I suggest that this and similar cases can be dealt with by regulation.
– Possibly, but if the honorable member will let me have the particulars, I shall have this case investigated before the bill leaves the Senate.
– I shall send the palticulars to the Treasurer. The bill gives this partnership a concession for the year 1916-17 only, that being the only year in which the firm did not receive a refund under section 8, but it still leaves it. over £100 worse off than if the partner had not enlisted. That is only one of many cases Another difficulty arises in determining who shall receive the advantages of deductions in respect of active service. I understand that the present legislation makes it possible for only those engaged in the management of a partnership to get the advantage of the reduction or exemption. I submit that a returned soldier who is directly interested in a business, although not actually engaged in its management, should receive the same advantages as are extended to a partner who does participate in the management.
– Would the honorable member apply that to all company shareholders ?
– A certain amount of common sense must be exercised in applying these principles. There are many returned soldiers who have invested money in businesses, and have felt that they could not accept the responsibility of management.
– No distinction is made between returned soldiers and others under the Income Tax Assessment Act.
– It is singular that there should be such a discrimination in the bill. Much confusion has arisen because principles have not been applied uniformly. As the honorable member for Yarra pointed out, the war-time profits tax is really a super-income tax, and, that being so. I cannot understand why this departure should be made, unless the object is to confuse the minds of. taxpayers. I listened to the attempt of the honorable member for Maranoa (Mr. Hunter) to explain why the war-time profits tax should not be calculated on the same basis as the income tax. I may be doing him an injustice; but his argument did not appear to me to be convincing. He failed to establish his case.
– If the honorable member had a personal knowledge of the pastoral business, he would realize that the honorable member for Maranoa stated the case correctly.
– The personal knowledge which the honorable member says should be applied in considering this bill is so abstruse and remote that one can hardly say that a person with the personal knowledge of the business is justified in claiming the right to determine the question unless he makes himself intelligible.
– If the honorable member had the necessary personal knowledge he would be able to prove that he should return his sheep at a value of 10s. for income tax purposes, and of 2s. 6d. for war-time profits tax purposes.
– I agree with the honorable member for Yarra that values are values.
– In the one case an artificial standard of values is arrived at by a certain process, and in the other case market values are taken.
– Why in the first place should an artificial standard have been taken?
– I do not say it should have been taken, but it was taken.
– Does the honorable member say that it was an equitable procedure 1
– I do not say so.
– The true values, as nearly as we can arrive at them, should be taken. None of the arguments advanced will induce me to agree to differ- ent methods in two acts that have such an intimate relation. I hope that, even at this belated hour, the Government will agree to rectify the errors of the past, and will not continue to calculate fictitious profits on fictitious values that are not equitable. Great as have been the difficulties in administering the War-Time Profits Tax Assessment Act, no right of appeal against the interpretations of the Taxation Commissioner has been allowed. There is a right of appeal to a board against interpretations by the Commissioner under the Income Tax Assessment Act; but if a taxpayer feels that an interpretation of the WarTime Profits Tax Assessment Act operates harshly towards him and in a way not intended by the Parliament, there is no authority to which he can appeal. The Commissioner is a power unto himself; his word is final. Although many taxpayers feel that they have serious grievances, they have no remedy. Provision should be made for a right of appeal against interpretations of the Commissioner. I suggest that the board that hears income tax appeals should hear war-time profits tax appeals. If that provision was made, many taxpayers who feel that they are being harshly treated would have less cause for grievance. It is very difficult for a layman to grasp the legal technicalities of legislation of this kind. The bill should impress honorable members with the need for simpler legislation. We cannot expect people to obey the law if it is impossible for them to understand what the law means. Our method of framing legislation may be of advantage to eminent lawyers, but it causes great loss to the taxpayer, who has to test the validity of an act of Parliament by the expensive process of an appeal to the courts. It frequently happens that , a taxpayer who succeeds in such an appeal has to pay more in costs than the amount of the judgment.
.- It is strange to me that so many years after the expiration of this tax amending legislation of this character, applicable to pastoralists, should be necessary. I should like an assurance that the bill will not be retrospective in its application to the genera] body of pastoralists. If it deals only with cases that have not been completed by the department, I am content; but if it allows the Commissioner to re-open assessments submitted five or more years ago, there is room for pro- test. The war-time profits tax fell heavily on the small pastoralists who started operations only a few years before the passing of the original act. Those who were making large profits before the war were able to take two years out of the six years preceding the war to represent a pre-war standard. Thus, men who were making £10,000 a year were not seriously affected, for they paid the tax only on the excess profits over pre-war profits; but the small pastoralists, who made little or no profits in the years preceding the war, were taxed very heavily. My reading of the proposed new subsection In of section 2 is that the Commissioner will be able to re-open old cases. I hope that is not the intention. I am glad to see that in an amendment to be moved by the Treasurer, further concessions will be made to returned soldiers. Still greater concessions should be made to them. I find that a number of honorable members extend very little sympathy to the pastoralist who has to pay taxation, not on his average profits, but on his profits each year. After paying taxation on £1,000 one year, he may make a loss of an equal amount the next year. The Treasurer may remember that the Taxation Commission reported that one of our big pastoral organizations actually paid more income tax to the Commonwealth over a period of seven years than the whole of its profits in the same period. The pastoralists are certainly a section of the community which should be given consideration. In connexion with my appeal that further consideration should be given to the returned soldier, let me refer to the exemptions that have been granted. The original War-time Profits Tax Assessment Act provided that - the business of any person taking commissions in respect of any transactions or services rendered, should be taxed. The meaning of that provision waa that any ordinary agent who made a big profit had to pay war-time profits taxation according as his profit was above the prewar standard. The following year the act was amended, and the then Treasurer, the right honorable member for Balaclava (Mr. Watt) was responsible for having all the words that I read struck out and a new exemption included as follows : - ‘
In other words, an agent whose business did not require the investment of a large amount of capital to enable it to be carried on could make £5,000, £10,000, or even £100,000 profit annually without being obliged to pay war-time profits tax; but the soldier was obliged to pay wartime profits tax on any big profits made in his business even while he was at the front. I suggest that he should receive exemption for the period he was absent at the war. If possible, even more consideration should be given to the exsoldier. During the war enormous commission was made on goods sold in Melbourne and sent to Sydney, and then sent back from Sydney to Melbourne, and no war-time profits tax was claimed on it. In these circumstances, surely the pastoralists and the ex-soldiers should be given the consideration that they deserve. We should go as far as we possibly can in granting exemptions to ex-soldiers. We should not be doing too much if we gave them complete exemption from taxation while they were actually at the front.
– If honorable members had remembered the reason for the introduction of both this and the parent measure, they would not have been so severe in their criticism. Both measures were designed to relieve certain persons of hardship, and not to increase the incidence of the war-time profits tax. In consequence of the Cameron judgment, war-time profitsand income taxpayers were forced “from the invalid departmental assessments which had been made in their cases, to the basis of market value, which was declared to be the only valid basis on which assessments could be levied. The 1924 bill was brought down to enable them to choose either selected or market values as the basis of their assessments. It has been suggested that the present bill would be more acceptable if the market values option were included. “ The Government has no hesitation in accepting that suggestion, and I have circulated an amendment which will give effect to it. But the fact is that the amendment will be of no value, for it will not be used to any extent. When I spoke on the second reading of the 1924 bill I said that probably no one would avail themselves of the opportunity of accepting the market value basis. I find that since then there have been twenty cases in which persons have selected it. This bill was brought down because many people had failed to learn that they had the opportunity to choose the selected value basis which is incorporated in the previous act. Some of them live hundreds of miles away from civilization in the back-blocks of northwest Australia, others live in Queensland, and others in the Northern Territory. They represented that the four months granted by the 1924 act to enable them to exercise the option that was allowed, was altogether too short. Others said that although they were aware that they might exercise the option, the time allowed was not sufficient for them to consider whether it would be more profitable for them to elect selected values than to remain under the old assessment. In consequence of these representations this bill was introduced. Its object is to remove any injustice or hardship that certain taxpayers may have suffered through their inability to exercise the option which was given them in the act If this had been realized by honorable members, they would not have addressed themselves to the measure as they have done. Everybody must agree that the War-time Profits Tax Assessment Act is most difficult to interpret, and that it has caused serious hardship to some taxpayers. I can assure honorable members that, as Treasurer, I had no desire to introduce another amending bill. I should have been glad to let the matter rest, but I introduced this measure purely for the purpose of allowing more even-handed justice to be dealt out to taxpayers who felt that they were suffering under an intolerable hardship.
– We certainly hope that there will be no more measures of the kind.
– My experience with this bill has daunted my enthusiasm in introducing remedial legislation like it.
– I hope that there will be no more war to render such measures necessary.
– -If honorable members would realize that the object of the bill is to avoid any unfair distinction between taxpayers already assessed under the 1924 act. and those to be assessed, they would willingly pass it. The desire of both the Government and the Commissioner of Taxation is to treat taxpayers equitably. The reason why no provision was made for allowing a market value option to the taxpayers concerned was that it was considered impossible, because of the inherent difficulty of determining market values. I have been reading the debate on the 1924 bill, and I can see now from the exchanges between myself and the honorable member for Yarra (Mr. Scullin) that we were at cross purposes. I was drawing a distinction between the ordinary Income Tax Assessment Act and the two remedial measures - the Income Tax Assessment Live Stock Bill, which was designed, to remedy disabilities revealed by the Cameron judgment, and the War-time Profits Tax Assessment Bill. In the Income Tax Assessment Act there were three alternatives. I was not worrying about the distinction between the Income Tax Live Stock Act and the War-time Profits Tax Assessment Act. The distinction is that in the case of the former market values were allowed as an alternative, and in the other they were not. The market values alternative is not allowed in the War-time Profits Tax Assessment Act because of the extreme difficulty there would be in determining market values as far back as 1908. It must be remembered that pastoral properties change hands a good deal, and many pastoralists do not keep proper, books. 1 have no doubt that the amendment which will be made by the insertion of the new clause 3 a, in order to give the market values alternative, will be of very little use. The only possible way that market values could be determined would be by agreement between the taxpayer and the Commissioner or by referring the matter to the law courts. Reference to specific transactions is the only effective way of determining the matter. The honorable member for Yarra said that there was an unfair distinction made between those who would be dealt with under one sub-clause of this measure and the people who were dealt with under the existing act. But that is not so. I should like to say that the difference between the standard values of the past and the regulation values of the present is very small. There may have been some difference between the maxima and minima it is true, but it is in the middle values that the choice will probably be made, and in that case there will not be very much in it. That really disposes of that aspect of the argument of the honorable member for Yarra. As the honorable member for Maranoa (Mr. Hunter), dealt at considerable length with stock rates - a subject with which he is very familiar from practical experience - there is no necessity for me to deal with it. I pass now to the position of the ex-soldier. Here again we are taking advantage of the opportunity to rectify some injustices that have become apparent. Some of the anomalies that we are dealing with could not be ascertained except through working out figures in specific cases. Those that had been revealed when the previous amending bill was before Parliament were rectified. The amendments at that time covered cases such as that mentioned by the honorable member for Hindmarsh (Mr. Makin). He referred fca a man who was in a partnership but went to the front, and so did npt pay income taxation, but actually had to pay more taxation through the war-time profits tax than his partner paid who did not go to the war, and paid income taxation in the ordinary way, but no war-time profits taxation. It has since been found that certain soldiers in Victoria and South Australia who were exempt from State income tax were put in an unfavorable position under the war-time profits tax provisions. The amendment that has been introduced now is designed to meet those cases. The position of ex-soldiers who became partners in undertakings’ after they went away is more difficult. Now that the war is over, and we are looking retrospectively on the position, the difficulty is to find a form of words to express what is’ intended without including some who are not entitled to the relief proposed, and excluding others who are just as much entitled to it as are those mentioned. Any one who studies the existing act will admit that it is sufficiently complicated. This very point has been discussed with taxation officials, and they cannot suggest any simple form of words that will express what is intended. Any one who reads the list of amendments proposed will admit that simplicity is not a distinguishing .characteristic of the act. The honorable member for Yarra on a previous occasion quoted a section of it, but, apparently did not grasp the whole of its meaning. He ‘ accused me subsequently of trying to deceive the House, because I assumed that his reading of the section made it clear to honorable members what the act really meant. The anomaly arising from a man being levied on for war-time profits tax for the last year of the war is one which I am afraid must continue to exist. The other points raised during the debate can be dealt with in committee. It is the intention of the Government to try to give every one an absolutely fair deal.. That is the reason why these measures are submitted. The House can rest assured that it is not the intention of the Government to rip open all the old assessments for the purpose of an inquisition into old transactions, as suggested by the honorable member for Swan (Mr. Gregory). What the Government is trying to do is to conclude this long-drawn out business. It is suggested that a tremendous amount of taxation has been refunded, and honorable members asked what the amount is. It is not possible to give the actual amount of war-time profits tax that has been refunded, for the reason that it has not been kept separate, and has frequently been used in part payment of other taxation. The net tax for the whole Commonwealth, assessed, collected, and outstanding, aggregated for the financial years 1917-18 to 30th April, 1926, both inclusive, was £8,401,296. This represents the gross debits reduced by all credits whether involving refunds or not. The net collections have amounted to £7,993,488. This represents the gross receipts less all refunds, whether paid or outstanding, or used to pay other taxes. These figures show that the total tax outstanding amounts to £407,808.
Question resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Sitting suspended from 6.30 to 8 p.m.
Debate resumed from 20th May (vide page 2170), on motion by Mr. Bruce -
That thebill be now read a second time.
.- The hill provides for an amendment of the Constitution, and it will be generally admitted by honorable members that there is urgent necessity to amend the Constitution in very many respects. The framers of that instrument had to be guided by circumstances, and those then obtaining made it difficult to obtain the sanction of the people for any provisions except such as protected the rights of the States. In consequence, the Constitution has many limitations. Efforts have been made from time to time to amend it, but so far without success. This has been largely due to the difference of opinion prevailing in the various States, and the fear that some injustice might be done to them. Although the Constitution provides means whereby it can be amended, it is most difficult to alter it, because it is necessary to obtain the consent of the majority of the people as well as of the majority of the States. But it should be possible to so amend it as to clothe this Parliament with sufficient powers to enable it to develop this country along proper lines, and in the best interests of the people.
– That is why they have turned down referendums.
– That is a matter of opinion. I know that the honorable member is strongly against granting additional powers to the Commonwealth; but it does not follow that the majority of the people are against that proposal. We have made attempts on four occasions to amend the Constitution. The Labour party were returned to power in 1910, and the right honorable gentleman now representing North Sydney ‘ (Mr. Hughes) was a Minister at that time. In 1911, realizing that it was impossible under the Constitution for us to give effect to our principles as endorsed by the people at the election, we asked them for an amendment of it. Our request was refused. Nothing daunted, in 1913, at the expiration of the term of that Parliament, we again took a referendum of the people, and both the proposal and the Labour party were defeated.
– By one vote.
– That is so. The Labour party realized the necessity for additional powers under the Constitution being transferred to the Commonwealth to enable it to give expression to the will of the people, and we were prepared to take risks, to obtain their approval of a proposed amendment. Fifteen months later we were again returned to office, and in 1915, during the war, it was decided to again submit a proposal for the amendment of the Constitution to the people. A conference was- held between Commonwealth and State representatives.
– And the Commonwealth representatives were taken down.
– They were. The State representatives agreed that. if the proposal, were not submitted at that time because of the war, they would be prepared to concede certain powers to this Parliament. In view of that promise, a referendum was not taken. But the promise was dishonoured by all the States with the exception of New South Wales. In 1919 the right honorable member now representing North Sydney brought down to this House further proposals for the amendment of the Constitution. Notwithstanding that they were very limited in character, they obtained the general support of honorable members. It was proposed that if a convention, were not convened before December, 1926, the proposed amendments should lapse,and that if a convention were convened they should lapse at the expiration of three years. There was a good deal of objection to the proposals, because of that limitation. A referendum was taken,and the proposals were defeated. The present proposals came as a surprise, not only to me, but also to the community generally, because no one anticipated that the Government would ask for an amendment of the Constitution at this stage. When the House adjourned for the recent Easter recess, nothing was said regarding an amendment of the Constitution, but, just on the eve of the reassembling of Parliament, we were told that the Government intended to ask for certain amendments of the Constitution. The Prime Minister (Mr. Bruce) has stated repeatedly that the Government intends to hold a constitutional session at Canberra next year, and I contend that this referendum should be deferred until we have dealt fully with the whole question, of amending the Constitution. Why make two bites at a cherry? Why put the taxpayers of this country tothe expense of two referendums, costing from £80,000 . to £100,000, when one would suffice?
– What about the Treasurer’s referendum on new States?
– That would, I suppose, be included among the subjects to be discussed at the constitutional session to be held at Canberra. The Government’s proposals should have remained in abeyance until the people could be asked to clothe this Parliament with proper powers. It is absolutely necessary that the States- should be consulted before any referendum to amend the Constitution is submitted to the people. Unless there is such a consultation, we are riding for a fall, and our efforts are doomed to failure. After all, the State parliamentary representatives are elected by the people who elect us. Are we not one people with one destiny ? How ran we expect the States to view kindly a proposal to amend the Constitution when they have not been consulted in the matter ?
– The Fisher Government did not consult the States in 1911 and 1913.
– The States were consulted in 1915 by the then Labour Government, and, as I have already stated, a certain promise was given which was not carried out. There is always the possibility of obtaining from the States concessions that will obviate the necessity of submitting a referendum to the people. In any case, it is an act of courtesy to approach the State Governments when an amendment of the Constitution is mooted. In January, 1912, a conference was held.
– Was that before or after the referendum?
– It was before the 1913 referendum was taken. We were preparing for the taking of the referendum in 1913 at the expiration of Parliament. The right honorable member now representing North Sydney in 1912 convened a conference, at which five States were represented. Two of them favoured Commonwealth control of industrial disputes, the regulation of the prices of protected goods, and the regulation and nationalization of interstate monopolies. These proposals were modified to permit the Commonwealth to control disputes of an interstate character, with power to provide for the common rule. The State of South Australia was not represented at the conference, and she repudiated this arrangement. If, in 1912, five of the States were prepared to give certain concessions to the Commonwealth, why should they not, if they were now approached, come to some arrangement with the Commonwealth, in view of the fact that the whole question of amending the Constitution is to be considered in twelve months’ time?
– Our experience of 1919 surely does not make the honorable member optimistic.
– The Treasurer should not refer to past happenings. Shall we say to the States “ We- shall have nothing more to do with you, nor shall we consult you”? Are the people of the States different from the people of the Commonwealth? They are not, and this Parliament cannot domineer over them. There should be, therefore, consultation between Commonweal A and State authorities.
– The consultation of the past fortnight was not very fruitful.
– Much depends on what, proposals the Commonwealth puts before State Ministers, and the manner in which it submits them. I know of very few State representatives who will deny the necessity for conferring additional powers on the Commonwealth Parliament. It is obvious that those powers are necessary. Without them this Parliament can do nothing to control trade and commerce. If it obtains additional power in respect of industry and commerce it will not necessarily interfere with every little industry or business in -a State. But this Parliament must be authorized to deal with big national problems in the interests of all Australia. Without extended powers we cannot legislate against trusts and combines, corporations and monopolies. The Government is seeking authority to legislate in regard to trade unions, but it does not concern itself about corporations, which do’ more harm than any other body in the community in regard to the holding up of goods and the fixation of prices. Those corporations can work securely and uninterrupted within a State. The need for power to legislate in regard to them is of vital importance, and should have been considered in conjunction with the proposals now before the House. The segregation of the particular amendments mentioned in clause 2, creates a suspicion that there is some ulterior motive for proposing them. If that idea is abroad in the community it will not help to commend these proposals to the people. Is there one honorable member who does not desire to see greater power conferred upon this Parliament ? This is not a party question. The amendment of the Constitution, which is the instrument that empowers whatever party may be in office to legislate for what it conceives to be the best interests of the people, is a national question. That being so, I do not know what reason prompted the Government to rush forward this bill for the separate reference of these proposals to the people. I cannot see that any advantage will be gained by submitting them to a referen dum in August, because even if the additional power that is sought is conceded by the people, this Parliament will not be able to translate it into legislation before August of next year. But the greatest difficulty will be to get the consent of the people to the proposed alterations, unless they are convinced that the amendments are justified and urgent, and that the Government is not, for. political reasons, picking out one constitutional flaw while others, equally worthy of attention, are left unnoticed. We have not to reckon only with the State authorities. I believe that the majority of the people who support the Government -are not prepared to give this Parliament greater powers. That has been their attitude in the past. The Government has to win to its side the majority of the people in the majority of the States.
– ‘Are not all parties in this House agreed that the powers sought are necessary 1
– What more is needed?
– It is difficult to understand why the Government is so urgently asking for a portion of the additional powers this Parliament needs, when we are told that within twelve mouths a special session will be held to consider amendments of the Constitution generally. Why cannot these particular amendments be deferred until the whole Constitution is tinder review? Surely the job can be done better as a whole than piecemeal. There is not one honorable member who does not favour the first of the proposed amendments, namely, the omission from paragraph xxxv. of the words “extending beyond the limits of any one State.” If that amendment is made this Parliament will have power to deal with an industrial dispute which has not extended beyond the boundaries of the State in which it originated. Because of the restriction of Commonwealth powers in respect of conciliation and arbitration, there is a multiplicity of awards by Federal and State tribunals, and an overlapping of awards. Some manufacturing industries find it difficult to decide what wages should be paid to certain of their workers because of the conflict of awards. In order to get. a plaint heard by the Federal Arbitration Court, unions have had to make their disputes interstate. Arbitration should be facilitated in every possible way. Unions desiring to approach the Arbitration Court should not be prohibited from doing so unless they will magnify their grievance into an interstate dispute. Yet every previous attempt to get for the Commonwealth Parliament the additional power that is now sought has failed. Uniformity throughout Australia of working conditions and wages is an absolute necessity. This country cannot progress if different sets of conditions obtain in the various States. The continuance of such a state of affairs will be a menace to the workers. Competition plays a most important part in the determination of working conditions, and if in one State the workers’ have been able to obtain shorter hours and better wages than rule in the same industry in a neighbouring State, the manufacturers in the former State will be at a disadvantage; they will represent their disabilities to the Arbitration Court, and the tendency will be towards a levelling down rather than a levelling up of conditions. It is not contended for a moment that if this Parliament is granted the power it seeks it will interfere with every phase of industry in a State. Our desire is to apply the Commonwealth power to national or interstate problems only, leaving the others still within the jurisdiction of the States. This does not involve any step towards unification. We are not asking that the Federal Parliament shall monopolize all powers, or even take complete control of industrial matters. All that is sought is power to legislate where Federal intervention is necessary in the interests of the whole Commonwealth. Therefore, I do not expect that any persons will be found opposing the first amendment. The second amendment is the insertion after paragraph xxxix. of the following provision : -
Establishing authorities with such powers as the Parliament confers on them with respect to the regulation and determination of terms and conditions of industrial employment, and of rights and duties of employers and employees with respect to industrial matters and things.
It seems strange that the Government should take action at this stage to establish such authorities. I do not agree with those who say that the establishment of industrial authorities will mean the surrender of any of the powers of this Parliament. This amendment will merely enable this Parliament to submit any question, whether it relates . to working hours, the basic wage, motherhood endowment, or any such subject, to the Commonwealth authority., The Government is proposing to give the judges of the Arbitration Court life tenure, and tho only reason urged is that, unless they have such tenure, all appeals must be to the High Court. The Prime Minister said that the terms and conditions of industrial employment, and the rights and duties of employers and employees are economic and industrial questions. That is true, and the proposed authority will be required to decide what is an adequate working week and a sufficient basic wage. The decision of the authority will then become a general rule. If the general rule sets up a working week of 44 hours, that limit will be the maximum, not the minimum. The tribunal may still award shorter hours in any industry, if it thinks the circumstances warrant it. Sewer miners, men working in the tropical parta of Queensland, and others, might be awarded a week of 40 hours. I differ from the Prime Minister’s statement that the jurisdiction in this matter is being placed beyond the reach of Parliament, and that there is nothing political in this proposal. It presents the policy of the Government in regard to the management of industrial matters; but any other party that may be returned to power in the future will be able, under this provision, to give effect to its policy, whatever that policy may be. This is a provision, not for appointing judges with a life tenure, but for establishing authorities, and any party can establish authorities to investigate and give effect to its policy. Would it not be proper for any party in power to do so 1
– The appointment of the authority is only a buffer to save the Government from the criticism of its friends.
– That may be so, but no one can mistake the language of the bill. Power is proposed to be given, as it should be, to this Parliament to appoint any tribunal it likes to investigate any big national industrial question and make a general rule. I know that I will be met with the statement that that cannot be, done by ‘the passing of legislation. That may be so, for the Constitution has been interpreted on many occasions; but that does not alter the fact that once an authority has been established, and has brought in a finding, this Parliament will have to see that the finding is observed
– Does the honorable member contend that an authority appointed under this hill can, over-ride the Arbitration Court?
– I contend that any party in power can appoint any authority it likes.
– It may appoint authorities and destroy them at any moment,
– Yes; the Parliament will be able to do anything with them. Every honorablemember appears to agree that the interpretation I place upon the clause is correct. That being so, this Parliament will be clothed with full authority in industrial matters. That is a power we have been lacking for a long time, and although it may be stated in the bill in different language from that which we on this side would employ, it is there nevertheless. If the people agree to this proposal, they will confer upon this Parliament a power that is badly needed.
– Does not the honorable member believe that the words of subclause b “ short-circuit “ this Parliament, and are intended to do so - to give power to a tribunal.
– That may be so, but the right honorable member for Balaclava (Mr. Watt), by reason of his parliamentary experience, knows that this Parliament will be the authority that will appoint the subsidiary authorities, and that whatever the subsidiary authorities find will be given effect by it.
– If the honorable member’s view is right, it ought to be stated’ more plainly in the bill.
– The honorable member’s interjection shows that there are doubts in the minds of ministerialists on this question. Although I am not a lawyer, I think the view I am presenting will stand investigation. The. next provision in the bill invests State authorities - with any powers which the Parliament, by virtue of paragraph (xxxv.) or paragraph (x1.) of this section, has vested or has power to vest in any authority establishedby the Commonwealth.
That provision is contingent on the other two being carried. No one would take exception to this Parliament being able to vest State authorities with power to deal with industrial disputes. The day has arrived when we should have conciliation, committees in the different States to intervene in industrial disputes. We ought not to wait until a dispute has occurred before taking action; but when there are symptoms of a dispute, an authority appointed for the purpose should intervene and adjust matters. It may be necessary, as the Prime Minister has said, to appoint courts in other States, to expedite the hearing of industrial . cases. Nothing is more necessary in the industrial life of this country than expedition in handling industrial disputes. Every honorable member knows of the delays that have occurred in the hearing of applications before the Arbitration Court. The wonder is that the men have been patient enough to submit to the system. They have had to wait for two years for the hearing of some of their plaints. Honorable members should welcome the provision to permit of disputes being investigated in a reasonable time in the States in which they arise, instead of making the. parties travel to Melbourne or Canberra. The Prime Minister said that a court might be established in Western Australia; but he will probably find that courts will be needed in the other States, too. I do not wish it to be understood that. I am speaking about disputes within the States. The State parliaments can handle many disputes without our interference; but we ought to have power to settle the big questions that affect the relations of employers and employees. The next provision relates to-
Trusts and combinations in restraint of trade, trade unions, and associations of employers or of employees for industrial purposes, including the formation, dissolution, regulation and control thereof.
It is necessary that we should have power over trusts and combinations in restraint of trade ; but the proposal does not go far enough, nor even so far as the previous proposals. Previously, we endeavoured to amend the trade and commerce section of the Constitution, and we included trusts, corporations, combinations and monopolies. To control corporations, it is necessary to amend the tradeand commerce section. It is very difficult to prove that a combination is operating in restraint of trade. I am not arguing at the moment that all trusts and combinations are bad. If it can be shown that the bringing about of a close combination has reduced the cost of living, and has been in the interests of the people, it is in a different category from a combination which exists for the purpose of increasing prices and accumulating wealth at the expense of the public. I do not think this provision is wide enough to enable us to legislate for undesirable combinations. A corporation is generally a large company established within a State, and as such we have no power to control it. The result is that corporations can carry on their business to the detriment of the public without let or hindrance from this Parliament. Is that in the best interests of the community % I was surprised that the Prime Minister devoted only a few sentences of his speech to this phase of the subject; but he had much to say about the control of trade unions. The time has arrived when this Parliament is as urgently in need of powers over big corporations and monopolies as it is in need of powers to make industrial legislation. Why is the Government so vigorous in pushing the industrial side of this question, although it does not go so far as it should on the other side?
– It appears to me that we are going the “ whole hog “.
– What does the honorable member suggest?
– 1 suggest an amendment of the trade and commerce section of the Constitution so as to give this Parliament power over trade and commerce not only between the States, but also in the States. We ought to have the right to follow trade and commerce wherever necessary. Unless we have power over trade and commerce, we cannot control corporations.
– Why should the Commonwealth invade the States to control corporations, but not to deal with other matters ?
– Because big corporations ‘get within a State in order to protect themselves from the Commonwealth .
– And they go from State to State.
– That ha* been proved both here and in the United States of America. If it is necessary ‘fox this Parliament to have full power over industrial matters, it is equally necessary that it should have power to control combines, monopolies and corporations. The Government would be wise to defer the taking of this referendum; but if a referendum is to be taken, it should go beyond the fringe of the question. Why not obtain from the people full power to control combines, monopolies and corporations ? Why go only half way, and baulk at the rest? There appears to be no genuine reason why we should not go the whole wa)T. Surely no honorable member will say that we should not have the power to regulate corporations, combines and monopolies that may raise their heads to the detriment of the people. If they are operating iu a way that is hindering the progress of Australia, we should have power to deal with them. Yet we are not asking the people for it. Why is that? It is all very Well to say that this is not a party question ; but honorable members opposite have dealt with it in their party meeting. They may talk about the Labour party caucus, but they also have a party meeting. Everybody knows that there is a great difference of opinion among honorable members opposite on this matter.
– In both branches of the family.
– That is so. Years ago, when a Labour Government submitted to the people a number of constitutional questions covering the matters referred to in the bill, their most bitter opponents were honorable members who are to-day supporting the Government. One can easily visualize what happened upstairs in the party room. There was, no doubt, a difference of opinion, anil a decision had to be made as to how far the Government could go and yet retain the unanimous support of its followers. A halt had to be made somewhere, and it was made at a point which ensured that the Government supporters would be unanimous. Corporations were excluded from the proposals. What happened to the anti-trust legislation that we passed in 1912 ? It was intended to regulate trusts and combines. Yet in the Moorehouse v. Parker case, and in cases which involved the Shipping Combine and the Coal Vend, the High Court declared that the legislation was ultra vires. In spite of that, it is proposed to go to the people now, and ask them to clothe us with only limited power. The whole trouble has been that the power of this Parliament has been too limited. If we were to go to the peopleand ask them straight out for all the power that is necessary to enable the Parliament to function properly, there would be a better chance of our getting it than there is of our getting it piece-meal.
– The Government can only see one spot at a time.
– And it is a bad spot this time.
– The honorable member for Swan (Mr. Gregory) is against these proposals. He is consistent in his attitude. We . always know where he is.
– Yes; he is always sitting in the breeching.
– That is so. The Government proposes to ask for power to deal with persous and associations of employers and employees and industrial matters generally. This Parliament should have such power. The State Parliaments have it. But why was the speech of the Prime Minister (Mr.Bruce) almost altogether directed to the question of the control of trade unions? We heard hardly a word about controlling big companies or employers. Nothing was said about the need for obtaining power to compel them to expose their profits, or the ramifications of their business, or the aggregation of their capital. Power to deal with all these things should be sought. The Government should make it quite clear to the public that it intends to deal with big combines and corporations if they do conduct their business in a way that interferes with the rights of the public. Theseconcerns should be given to understand that they will not be permitted to act detrimentally to public interests. But the only thing that the Prime Minister dealt with was the regulation of trade unions. The trade unions are controlled by the State Governments. Every State Parliament has passed legislation dealing with them.
– Not every State Parliament.
– Every State Government has the power to deal with them.
– That is so, There has been no trouble between the State
Governments and the trade unions, and I think that there is not likely to be any; but we should have power to deal with all associations, that may act against the public interest.
– What are your friends in Queensland doing with the beef trust that we have heard so much about?
– The Queensland Government, like the Commonwealth Government, is hamstrung; but it should be clothed with power to deal with large corporations.
– That is no answer to my question.
– The honorable member for Wannon (Mr. Rodgers) knows very well that dealing with trusts and combines is a national matter, for these trade organizations affect every State.
– They have headquarters in every State.
– The Queensland Government could close the doors of the beef trust, put it under licence, or do what it pleases with it.
– The Government should have the same power to deal with employers that it desires to deal with employees. It is unfortunate that, we heard so much in the Prime Minister’s speech about trade unions. The impression has been created that this proposal has been designed to deal with trade unions.
– And that has caused a good deal of suspicion.
– Undoubtedly. There are two sides to this question. Industrial strife is not always caused by the employees. The employers are responsible for it at least as often.
– I am afraid that those ideas are founded rather on suspicion than on actual facts.
– Any person who read the Prime Minister’s speech would gather that he was chiefly concerned about the trade unions. I should like to say that no Parliament should have the right to interfere with trade unions so long as they conduct their business on proper lines.
– Hear, hear!
– We can well leave to the unions the management of their own concerns. In the great ma- jority of instances, trade union business is conducted in the best interests of Australia. The affairs of trade unions are probably conducted better than those of a good many combines or corporations.
– The combines would probably say the same thing of their business.
Mr.CHARLTON.- I have no doubt about that. If the Government is prepared to amend these proposals and ask for the increased powers that I have suggested, it may rely on the wholehearted support of every honorable member on this side of the chamber. We believe that any proposals of this character should be comprehensive. There would be more prospect of gaining adequate power than of gaining limited power: and it would be advisable for us to go unitedly to the country. If we are to go down, letus go down together.
– That is what has happened in the past.
– I wish it to be understood distinctly that, in my opinion, the questions should be submitted to the people separately. The Government proposals are grouped, and that is unwise. Some people may be willing to vote “yes” to some of the questions, but would vote “ no “ to the others ; and because the whole of them are grouped they may be inclined to vote “ no “ to the whole lot. On the last occasion that constitutional questions were put to the people they were put separately.
– And the people were so confused that they voted “ no “ to the lot,
– I do not think that the people would become confused if they were asked to vote a straight-out “ yes “ or “ no.” That would be much simpler for them than voting in a Senate election is. There is much more confusion over a Senate election than there would be over voting on these proposals. I move the following amendment: -
That all the words after the word “That” be omitted with a view to inserting in lieu thereof the words - “ the bill be withdrawn with a view to eliminating clause 2 and substituting therefor the following - “2. Section 51 of the Constitution is altered -
by omitting from paragraph (i) the words “with other countries, and among the States.’”’
by omitting from paragraph (xxxv.) the words “ conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State”, and inserting in their stead the words - “ Labor, and employment, and unemployment, including -
the terms and conditions of labour and employment in any trade, industry, occupation, or calling;
the rights and obligations of employers and ememployees ;
the maintenance of industrial peace; and
the settlement of industrial disputes “.
by adding at the end thereof the following paragraph: -
Trusts, corporations, combinations, monopolies and arrangements in relation to -
the production, manufacture, or supply of goods, or the supply of services; or
the ownership of the means of production, manufacture or supply of goods, or supply of services.
– Those proposals have already been rejected by the people.
– The questions that were submitted before were stated in different language.
– Different language!
– The meaning is the same. If we go to the people unitedly on this matter we may hope for success. Nobody wants to put the country to the expense of a referendum if it is likely that the proposals will be rejected. I believe that these powers are essential. I should be agreeable to deferring consideration of the whole subject until the proposed constitutional session is held, but if the matter is to be pushed on with at present I trust that we shall be united on any appeal to the country.
– Would the honorable member deal with all those amendments in the one bill?
– No; I thought I made that clear. Although the questions are grouped in my amendment, if the Government agrees to them each will have to be put separately to the- people if they are to answer “ Yes “ or “ No “ to them.
– With the honorable gentleman’s amendment would one or two bills be required?
– There would be three bills at least required. There would have to be a bill for each question if the people are to answer “ Yes “ or “ No “ to it.
– How would we get the bills before the House?
– If the Government is prepared to accept the questions
I have proposed, what is there to prevent it from withdrawing this measure and introducing others to give effect to my amendment? It does not follow that this should be hurriedly done. After all, it is proposed when we go to Canberra to consider constitutional amendments, and this matter might- well be deferred until then. There is no immediate need to rush these questions to the people. No particular benefit would be derived from the carrying of the proposals at the present juncture. No legislation arising from the result of the referendum, if the bill were proceeded with immediately, could be undertaken for another twelve months. It is well known that the Prime Minister must go abroad in August, and if he is to spend any time in the Old Country he will not have returned to Australia until January or February of next year, and so the Parliament will not be in a position to deal with any measures arising out of the referendum until after that time. We might as well now go on with other business and leave this matter for general discussion by all parties. I do not want to make this a party question. I believe that the Constitution should be above party. Let us put our heads together and see if we cannot devise something upon which we can be united in recommending the people to accept. We might have consultation in the meantime with the States, and see what part they are prepared to play in the matter. It would be far better to lay down a general scheme in that way than to rush, possibly to disaster, by immediately submitting the Government’s proposals to a referendum. Every one knows that something like unanimity is required to carry a referendum on any of these questions. The last time similar proposals were discussed in this House honorable members were very much divided. Unless we can secure some kind of co-operation with the States, and some unanimity here about the presentation of the views of this Parliament to the country, we shall have little hope of getting any amendment of the Constitution. I put this view because I desire to see the Constitution amended. It is absolutely deplorable that the Federal Parliament should be deprived of the powers necessary to govern the people it represents. How long are we to wait before we try to come to a common understanding on which we can go to the people? No one in Australia regards the Constitution as a party matter. It is the instrument by which we are governed, and it is the power which it confers that enables this Parliament to look after the welfare of the people. At present we are without sufficient power to protect the interests of the people against the corporations and combinations to which I have referred. I do not speak against them generally, because I wish to make it clear that in some cases they may operate for the benefit of the community; but it is necessary that we should be in a position to deal with corporations detrimental to the community. If we have the necessary power to control them, those who pool their capital in these corporations will see that their operations are conducted on proper lines. Before resuming my seat I should like very much to know whether anything can be done by the Government to give honorable members a full opportunity to consider these matters instead of rushing questions to a referendum at the present juncture, because I am very doubtful whether we shall succeed in getting the approval of the people for proposed amendments of the Constitution if we have not come to a common understanding as to what additional powers are necessary. We should be in a position to go to the people, not. as separate parties, but as a united Parliament, and tell them how necessary it is that the Parliament should be clothed with these powers. If we are in a position to do that, I believe that the people will respond to what is proposed. I ask the Prime Minister to ta*ke seriously into consideration the advisability of deferring these proposals. A referendum will cost anything from £80,000 to £100,000, and if it is to be followed in a few months by another referendum as the result of proposals sub- mitted during the proposed constitutional session, that is another matter for consideration. If we can submit proposals having the approval of the Parliament, and can with unanimity commend their acceptance to the people, there will be every chance that the powers asked for will be granted.
Debate (on motion by Mr. Hughes) adjourned.
Bill returned from the Senate with out amendment.
In committee (Consideration resumed from page 2536).
Clause 2 -
Section two of the principal act is amended -
by omitting from sub-section (1) thereof the word “ four “ and inserting in its stead the word “ seven “ ;
by inserting, after sub-section (1) thereof, the following sub-sections: - “ (1a) Where, prior to the commencement of this sub-section, the value of live stock has been taken into account in assessments made under the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, the person whose profits were assessed may, if hehas not made an election under the last preceding sub-section, elect within three months after the commencement of this sub-section, to have the assessments so made altered so that, in -determining hisliability to pay tax under that act, live stock shallbe taken into account at the value selected by him within the limits specified in the last preceding sub-section.
byomitting sub-sections (2) and (3) thereof and inserting in their stead the following sub-sections: - “ (2) For the purposes of this section ‘ live stock ‘ means live stock not disposed of at the beginning or end of the respective accounting periods which are required to be taken into consideration for the purposes of assessments.” “ (3) Subject to sub-section (1b) of this section, where any person entitled to elect under sub-section (1a) of this section fails so to elect within the period specified in that sub-section, . he shall be deemed to have accepted the existing assessments which, in respect of the value of live stock, shall thereupon be deemed to be correct, valid, and effectual.”
– I move -
That in the proposed new sub-section 1 (a) after the word” elect “ the words “ at his option “ be inserted.
If this amendment is accepted I shall propose a consequential amendment to insert after the word “sub-section” line 18 the words “ either to accept in respect to the value of live stock the assessment so made, or “ and a further amendment to omit the words “he shall be deemed to have accepted the existing assessments which in respect of the value of live stock, shall thereupon be deemed to be correct, valid, and effectual” with a view to insert in lieu thereof the words - his assessment shall be altered so that, in determining his liability to pay tax under the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, live stock shall be taken into account at the market selling value thereof.
The provision as it stands, which merely repeats the terms of the 1924 act, gives a taxpayer a right to select a value at which his live stock shall be assessed, and in default of his so selecting deems him to have accepted the existing assessments. In the existing assessments, if they were made prior to the passing of the 1924 act, live stock is in every case included at values which were declared to be invalid by the High Court in the Cameron case. As the invalidity of the values was in every case due, in part, to a constitutional effect, some doubt has arisen as to the competency of Parliament to force taxpayers to accept such assessment on failure to select some other values. The object of the amendments to the proposed sub-section is to remove any such doubt, and the lines on which the amendments proceed is to give taxpayers the option of electing to accept the existing assessments or of selecting within the limits provided, a value at which their live stock shall be assessed. For those who do not wish to take either of those courses, it is provided by an amendment which will be moved to proposed subsection’ 3, that live stock shall be taken into account at market selling values. The net result of the amendments will be that every taxpayer whose assessments continue to contain the invalid values will have submitted to those values of his own free and deliberate choice. As the proposed sub-section gives a fresh right of election to taxpayers who failed to elect under the 1924 act, there will be no need to express the amendments to be retrospectve. The department will carry the provision into effect by notifying every taxpayer concerned, and requiring him to state in writing which of the alternatives he desires to adopt.
.- I was going to suggest . an amendment which, I think, should precede that moved by the Treasurer (Dr. Earle Page). Complaints are made that assessments are determined and not notified to taxpayers. Suppose an assessment is made, and it is decided that the taxpayer is nontaxable, he may know nothing about it, and may not be in a position to know where he stands in subsequent years. I suggest that after the word “assessment” in the proposed new sub-section 1 (a), the words “ of which due written notice has been given to the person whose profit* were assessed “ should be inserted.
– It is the intention of the department to write the following letter to every taxpayer affected : -
War-time Profits Tax Assessment Act 1926.
The above act contains the following provisions which relate to your assessments: - (Quote the section.)
You will observe that it is necessary for you to determine whether you will accept the existing assessments so far as regards the livestock values used therein are concerned, or have the assessments re-opened so that . the live stock shall be brought to account at values selected by you from within the limits sot out in the schedule hereto. If you do not make any choice on this subject, the law requires the Department to re-open your assessments so’ as to calculate the profits derived by your business by bringing your live stock on hand at the beginning and end of your accounting periods at the market values at those dates. The use of market values in your assessments will necessitate your declaring to the market values of live stock’ on hand at the beginning and end of the pro-war periods by reference to which the prewar standards of’ profits used in your assessment was calculated. It is very desirable, therefore, that you should consider this matter carefully, and choose between the existing values to bring the live stock to account at market values.
I assure the honorable member that a copy of that letter will be sent to every taxpayer who will be affected.
Amendment agreed to.
– I move -
That after the word “ sub-section,” line 18, paragraph (1a), sub-clause (6), the words “either to accept, in respect of the value of live stock, the assessments so made, or “ be inserted.
This will make the additional alternative possible.
Amendment agreed to.
.- I intend to move the following amendment: -
That after the word “assessments,” at the end of paragraph (2), sub-clause (c), the words “ provided that live stock purchased with the business are not live stock on hand at the ‘beginning of the first accountancy period within the meaning of this section “ be inserted.
This amendment deals more particularly with new businesses. At present owners are unable to receive the advantage of what they have actually paid during the period for stock, which, of course, is brought into account at the time. Instead of receiving the values that should rightly attach to the stock, under existing legislation, they are required to accept prices within what is known as standard values as fixed by the department.
– The Commissioner for Taxation says that in all cases purchased stock is- taken at purchase price.
– In one case, the sons took over the property of their father. A certain amount, of course, was paid, but they were not permitted to take ad - . vantage of the amount that they had actually paid for the business as a going concern, and had to accept the standard values as fixed by regulation. They consequently suffered a grave injustice.
– If the Government accepts the suggested amendment, it might lead to difficulties. I ask the honorable member to be good enough to discuss the matter with the Commissioner of Taxation and myself, so that, if possible, we may meet his wishes.
– I accept the Treasurer’s suggestion.
– I move-
That the words “he shall be deemed to have accepted the existing assessments, which, in respect of the value of live stock, shall thereupon be deemed to he correct, valid and effectual,”subclause (c), paragraph(3), be left out with a view to insert in lieu thereof the words “ his assessments shall be altered so that in determininghis liability to pay tax under ‘ the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, live stock shall be taken into account at the market selling value thereof.”
The amendment is self-explanatory.
.- This paragraph, as originally framed, required an explanation ; but I shall not ask the Treasurer to make it, because I agree wholeheartedly with the amendment that he has moved. It will be- remembered that, on the second reading of the bill, I took exception to thephrasing of this provision, and I pointed out that the declaration in the act that existing assessments must be taken to be valid and effectual did not necessarily make them valid and effectual. I said then that I had reason to believe that if the taxpayer failed to choose a value in the new schedule, and the department endeavoured to force upon him the existing assessments which have been declared invalid by the High Court, the tax could not be collected.
– In that case, we assess the taxpayer on market values, which would not suit him at all. .
– I am glad that the Treasurer has brought this paragraph into line with the next paragraph dealing with new assessments. The honorable member for Maranoa (Mr. Hunter) asked me to show him, at the committee stage, wherein there was inconsistency between the clauses of the bill. The inconsistency was certainly in evidence; but it has since been removed by the Treasurer. Previously, market values obtained with respect to new assessments; but not to old assessments. Where the taxpayer failed to elect a value in the new schedule between the minimum and maximum limits, he would be assessed upon the basis of an invalid value.
– That would occur only when there was no election.
– That is so. The next paragraph, 3a, states that where any person fails to elect with respect to new assessments, market values shall apply. The inconsistency in the bill, as originally introduced, was a grave blot on it from a legal point of view. It was obvious that if the department could not directly impose a standard of value under a schedule that fixed differential rates between State and State, and the High Court held that it could not, then it could not do it indirectly merely because a person failed to elect some other value. The mere fact of a man failing to elect a value in the new schedule, which he might hold to be wrong, did not necessarily enable, the department to declare the old invalid assessment to be valid.
– The amendment completely removes any suggestion of that.
– That is so.. The amendment removes the great danger that I pointed out on the second reading, and brings this provision into conformity with the other clauses of the bill.
Amendment agreed to.
.- I propose to move the following amendment : -
That after the word “ thereof,” paragraph (3a), sub-clause (c), the following proviso be added: - “ Provided that such persons shall have the option of selecting the market selling value of live stock that applied to all assessments issued prior to the commencement of this act.”
The suggested amendment provides that where a new assessment is to be issued for any one year, and there are existing assessments for other years, a taxpayer shall have the option of having. all his assessments made upon the same basis, either elected values or market selling values. I ask the Treasurer whether he is prepared . to accept my suggestions ?
– That matter is already fully covered by another amendment.
Clause, as amended, agreed to.
Clause 3 -
Section three of the principal act is repealed and the following section inserted in its stead: - “ 3. Where in pursuance of the last preceding section a person elects to have his assessments made or altered, the commissioner shall, as soon as conveniently may be, makeor alter the assessments accordingly, and the assessments as so made or altered shall be deemed to be the assessments of the profits of that person under the War-time Profits Tax Assessment Act 1917-18 in respect of the years or periods to which the assessments relate.”
– I move -
That all the words from and including the words “ assessments made or altered “ to and including the words “ as so made or altered,” be left out, with a view to insert in lieu thereof the words “ assessments altered or made, the assessments shall, as soon as conveniently may be, be altered or made, accordingly, and the assessments as so altered or made.”
The provision as it stands, requires the commissioner personally to make or alter an assessment every time an election is made under the act. It is important that the assessor should be authorized in advance to make or alter assessments whenever and as soon as the occasion requires. The main object of the amendment is to remove any doubt as to the commissioner’s competency to do that. Advantage is taken in the amendment to re-arrange the wording of the clause to bring it into conformity with other parts of the bill.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 4 (Exemption on account of war services).
– I move-
That the clause be omitted, and the following clause be inserted in lieu thereof: -
Where the profits derived during any financial year or accounting period by any individual or partnership were, or are liable to he, assessed under the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, and that individual or any member of that partnership was, under any law of the Commonwealth or of a State relating to the imposition of income tax, entitled, by reason of being on active service during the war which commenced on the fourth day of August, One thousand nine hundred and fourteen, to an exemption from or a reduction of the income tax he would otherwise have been liable to pay in respect of income derived in that year or period, the assessment shall be altered or made so that there shall be deducted from those profits the amount of income tax which would have been payable, under the law of the Commonwealth or of a State, if-
) in the case of an individual - those profits; or
in the case of a partnership- ; the share of that member in those profits, had been the only income derived from sources within Australia by that individual or member during that year or period, and he had not, under the law of the Commonwealth or of a State, been entitled to an exemption from or reduction of income tax on account of such active service.
The assessment altered or made in pursuance of the last preceding subsectionshall be deemed to be the assessment of the profits of the individual or partnership under the War-time Profits Tax Assessment Act 1917, or under that act as subsequently amended, in respect of the year or period to which the assessment relates.
It has been found necessary to recast the original clause because it does not fully remove the anomaly which it was designed to remove. The clause as printed applies only to individual owners of businesses who had gone on active service in the recent war, and who are not entitled, under the principal act, to be exempted from the tax on account of their active service, and to partnerships other than those in which any member had received a refund of tax on account of his active service, as provided by the principal act. It would allow a deduction, in these cases, of the amount of Commonwealth income tax which would have been payable by theperson on active service if he had not been exempt from Commonwealth income tax, on account of his active service. It has been found necessary to go further than this, and to allow : - A deduction of State income tax which would have been payable by the person on active service if he had not been on active service. If the person had been a Victorian, he would have been exempt from State tax; if he had been a South Australian, he would have been entitled to pay a lower amount of tax on account of his active service. No concession was granted by any other State. It is necessary also to place all partnerships on the same basis in regard to these particular deductions. The first alteration made by the recast clause will place all partnerships on a common basis. The second alteration deals with the deduction of Commonwealth and State income taxes, as described. The third alteration merely alters and re-arranges the wording of the original clause to conform to the wording and arrangement of the amendments made in the preceding clause. The last alteration takes the form of an addition to declare that all assessments which are made or altered in pursuance of the provisions of the clause are to be treated as assessments for purposes of the Wartime Profits Tax Assessment Acts of 1917 or 1917-18. This is desirable in view of the fact that the 1924 act, and this bill relating to the earlier acts referred to, are not incorporated therewith as amendments. In regard to the cases mentioned by the honorable member for Hindmarsh (Mr. Makin), when speaking on the second reading, the commissioner, while recog- nising that an anomaly exists, cannot suggest any form of words’ that would meet such cases. Many anomalies are inevitable because of the complexities of the act itself, and the circumstances in which it originated.
.- Whilst 1 recognize the difficulty of framing an amendment to meet cases such as those to which I referred earlier this evening, the existing anomaly should not be passed over as lightly as the Treasurer suggests. A returned soldier who has entered into a partnership is deprived of certain deductions and exemptions because he is not directly engaged in the management of the business. The Treasurer asked me if I would extend the concession to all soldier shareholders. I would not pledge myself to such a wide application of it butI consider that a soldier who is a substantial shareholder in a business should be allowed a reduction. Perhaps we could fix the minimum proportion of interest in the business to be held by a soldier in order to qualify for the concession.
Mr.G. Francis. - Suppose that a returned soldier holds one-twentieth of the shares, and is not taking any part in the management, and is not even working for the company ?
– At the moment I am not in a position to say that such a percentage was sufficient to justify a deduction, but if a returned soldier had a one-third or one-fifth share he should receive consideration.
Mr.G. Francis. - That would mean discrimination between the small returned soldier who cannot afford the tax but has to pay it, and the big man who can afford it, but will escape it.
– The cases I have in mind are not of persons with big interests, but men of small means. When the honorable member speaks of discrimination, does he remember that the existing law discriminates?
– The amendment I have suggested goes a long way further than existing legislation.
– I admit that it is a considerable advance; but I desire a returned soldier, who has an interest in a business, whether he was directly concerned in the management or not, to get the advantage of the concessions which this Parliament gave. If any concession is given to one section, it should be applied all arouud, as far as is practicable.
– The existing qualification is that the soldier must have spent the greater part of his time in connexion with the management of the business. The honorable members remarks are applicable to any shareholder.
– Is it not a reflection on this committee that we recognize the existence of an anomaly, but cannot frame an amendment to remove it? I hope that the Treasurer will further consider the possibility of making provision to do justice to the people whose circumstances I have placed before him.
.- Surely it is possible to place the returned soldier in the same position in relation to wartime profits taxation as he occupies in relation to income taxation. Both those were imposed as war measures, and this Parliament particularly exempted soldiers from income tax, and tried to exempt them from war-time profits, tax also; but to obviate the possibility of improper evasions by the transfer of businesses to returned soldiers, it excluded any returned soldier who did not go into the danger zone or who went into the danger zone, but before he went on active service had not devoted the greater part of his time to the management of the business. The risk that necessitated the original safeguard no longer exists, because there can be no evasion now by transfer to soldiers. I therefore move -
That the following paragraph be added to the proposed new clause: - “ (3) Where the naval or military duties of any individual ormember referred to in the last preceding sub-section required him to be in any part of the field of operations in connexion with the war, where there was danger to life as a result of the operations of enemy force?, the commissioner may further alter or make the said assessment so that there shall be deducted from the said profitsso much of those profits as were entitled to an exemption from income tax by virtue of section 13 of the Income Tax Assessment Act 1915-21, and which would but for this sub-section be liable to war-time profits tax.”
– Make a straight out exemption by adopting the terms of section 13 of the Income Tax Assessment Act.
Mr.SCULLIN.- The honorable member’s suggestion goes further than I intend. My proposal is to confine the deduction to a soldier who served in the danger zone. My amendment may involve some consequential amendments of the act.
– It is impossible for me, at the moment, to forsee all the effects of the honorable member’s amendment of my amendment. I, therefore, cannot accept it offhand, but I undertake to give consideration to it, and, if possible, to give effect to it when the bill is before another place. The desire of the Government is to treat the soldier as liberally as possible, and to remove any anomalies that may operate detrimentally towards him. There is an important difference between the income tax and the war-time profits tax. One applies to the income of an individual, which may be derived from personal exertion, and the other to the profits of a business. It is true that the individual ultimately receives the profit from the business, but the income from a business which is carried ou while a man is on active service can scarcely be regarded as income derived from personal exertion.
– I realize the Treasurer^ difficulty in attempting to estimate the effect of my amendment. I accept his assurance that he will give the matter favorable consideration, and I ask leave to withdraw my amendment.
Amendment of the ‘ amendment, by leave, withdrawn.
Amendment agreed to.
Clause 5 agreed to.
,- I move -
That the following, new clause be added to the bill:- “ 5a. - For the purposes of section 15 ( 13 ) of the War-time Profits Assessment Act 1917-1918, the amount of losses shall be ascertained upon the same basis on which the profits are ascertained.”
The object of the proposed new clause is to rectify one of the most serious anomalies in the act. Losses are calculated by cue method, and profits and capital by another. I desire that all three shall be calculated by the same method. The method of determining war-time profits is most inconsistent, and cannot be reconciled with the ordinary principles of accountancy. Losses are recouped on what is termed market values, but in the calculation of capital, which determines profits, what is known as the elective system, which gives a fictitious value, is employed. By that means a greatly inflated profit is arrived at. All. I ask is that there should at least be consistency and equity. I believe that my amendment will remove many existing anomalies.
– It is impossible with the honorable member’s suggestion, as it was with the amendment of the honorable member for Yarra (Mr. Scullin), to foresee all its effects. In some cases it may benefit the taxpayer, but it may prove to be a two-edged sword that will also injure him. The object of the bill is to provide relief for the taxpayer, and the Government would not like to include anything in it which would even indirectly injure him. I shall have a full inquiry made into the suggestion, and will have the effect of it, and the Government’s view of it, stated in another place.
– Is it not merely a matter of the method of administration ?
– The suggestion is that if, by the choosing of low values a fictitious loss is shown, the carrying of that loss forward may enable the taxpayer to avoid the payment of taxes on profits made in subsequent years. Does the honorable member for Hindmarsh intend to make the suggested provision retrospective, or does he wish it to be applied only to the assessments still to be made ?
.- I would not expect the suggestion to be applied to assessments already completed, which, I presume, have been accepted by the. taxpayers concerned as satisfactory.
– Only twenty central office taxpayers assessed under the War-time Profits Tax Assessment Act did not accept the invalid basis. The taxpayers generally evidently thought that that basis was the best for them.
– It is not my desire to disturb a system that is regarded by the taxpayer as equitable, but I think the Treasurer will recognize that an injustice is possible under the present method. On the Treasurer’s assurance that he will, if possible, meet my wishes in another place, I shall not move the amendment I have in mind.
Amendment, by leave, withdrawn.
Title agreed to.
Bill reported with amendments; report, by leave, adopted.
Bill, by leave, read a third time.
House adjourned at 9.59 p.m.
Cite as: Australia, House of Representatives, Debates, 2 June 1926, viewed 22 October 2017, <http://historichansard.net/hofreps/1926/19260602_reps_10_113/>.