10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 11 a.m., and read prayers.
– I have received from Mrs. Givens, widow of the late Senator Thomas Givens, a letter thanking the House for its resolution of sympathy.
Assent to the following bills reported : -
Appropriation (Works and Buildings) Bill 1928-29.
Invalid and Old-Age Pensions Bill.
-I should like to know from the Prime Minister which authority, Commonwealth or State, is responsible for the medical examination of migrants before they leave Great Britain to come to Australia?
– The recruiting and medical examination of assisted migrants are the responsibility of the Commonwealth Government.
– In view of the fact that our police and hospital records show that our mental hospitals and institutions for the treatment of tubercular patients are being flooded with recent arrivals in Australia, will the Prime Minister state whether the examination of migrants is purely a medical one, and will he cause information to be forwarded to Great Britain that will guard Australia against a recurrence of the state of things that now exists?
– I suggest to the honorable member that his statement that our hospitals, mental and tubercular, arc being flooded with assisted migrants is extremely reckless, and that he would have been better advised had he asked whether I could have a statement prepared showing how many of these people have been received into such institutions. I assure him that he is entirely wrong in making such a sweeping statement. Unfortunately, there have been cases in which the medical examination in Great Britain has apparently not detected latent disease in would-be migrants, but the examination is the strictest possible, and, furthermore, inquiries are made into the characters of those who are brought out to Australia as assisted migrants.
– A case has come under my notice in which an assisted immigrant who. has been only two years in Australia is now practically in the last stages of consumption, and is anxious to return to his people in the Old Country. I should like to know whose responsibility it is to give effect to his wishes ?
– If the honorable member will bring under my notice the particulars of the case to which he has referred, I shall have inquiries made, and ascertain exactly what are the facts.
-I should like to know from the Acting Minister for Defence if there is any truth in the report that has been made public, that trouble occurred on H.M.A.S. Brisbane during its recent visit to Hawaii, and that one of the stokers was sentenced to three months’ imprisonment; also whether there is any truth in the allegation that the crew of the Brisbane were not allowed to land at Hawaii?
– On the 14th September, the honorable member for Lang (Sir Elliot Johnson) asked me a question relating to the report referred to by the honorable member, and the reply which I have had prepared will answer the honorable member’s question. The honorable member for Lang asked whether there was any foundation for the disquieting newspaper statement concerning an alleged mutiny on H.M.A.S. Brisbane during the recent trip to the Cook Centenary Celebration at Honolulu, and I informed the honorable member that I had called for a report on the matter. I have now received the following telegram from the commanding officer : -
No foundation whatsoever for disquieting newspaper reports concerning alleged mutiny on Brisbane. First information of any supposed discontent was received from Sydney newspapers. Cruise was particularly arduous and involved great deal hard work which was very well carried out by everybody. Officers andmen of Brisbane very much resent wild and unfounded statements which have appeared in the press.
– Is the Minister for Home and Territories aware that whereas in Melbourne bricks cost £31s. per 1,000 to the Government and £3 3s per 1,000 to the public, they cost £6 5s. per 1,000 in Canberra at the kiln ? Will the Minister make investigations to see if some reduction cannot be made in the price of bricks in the Federal Capital Territory so that homes may not cost as much in future as they have cost in the past?
– I shall have the necessary inquiries made immediately.
– I desire to ask the Prime Minister a question relatiug to the cost of the upkeep of Australia House as compared with the cost of Canada House in London, and perhaps in explanation I may be excused for reading the following paragraph from last night’s Melbourne Herald -
Statistics nowshow that whereas it costs Canada only 335,000 dollars (£16,750) a year to run Canada House in London, it costs Australia over 3,000,000 dollars (£150,000) to run Australia House in London. Australia House has a staff of 341, Canada House a staff of 148. And Australia has but a population of six millions, compared with nine and a half millions for Canada.
I ask the right honorable gentleman whether he will correct this paragraph if it is incorrect, or if it is correct, justify the increased cost of Australia House compared with that of Canada House?
– I have not seen the newspaper paragraph which the honorable member has read, and before answering the question I should like to see it in order to ascertain the basis on which the comparison is made. In any case the honorable member will have ample opportunity to discuss the question when the Prime Minister’s Estimates, which include the maintenance of Australia House, are under consideration in committee.
– I ask the Treasurer what will be the cost of administration per head of all insured persons under the scheme outlined in the National Insurance Bill, first through approved societies, and secondly through the Government Department?
– The consolidated revenue will bear no share of the cost of the administration of the National Insurance Scheme. The contribution of1s. a week by the employer and employee will cover the whole cost of the benefits and administration.
– In the case of approved societies?
– I should like to know if Mr. Collins, formerly Secretary to the Commonwealth Treasury, still retains his position as a Director of the Commonwealth Bank?
– No. Mr. Collins is not a director of the Commonwealth Bank in Australia. The position which he formerly held on the hoard of directors of the Commonwealth Bank is now held by Mr. Heathershaw, the present secretary to the Commonwealth Treasury.
asked the Minister in charge of repatriation, upon notice -
– Inquiries are being made and the information asked for will be made available as soon as possible.
asked the Minister for Home and Territories, upon notice-. -
Will lie inform the House of the names of all persons and companies in the Federal Capital Territory with whom the Federal Capital Commission has a contract or agreement at the present time?
– It is not clear to what contracts and agreements the honorable member’s question refers. Strict compliance with the honorable member’s request would involve the compilation of a very lengthy statement of contracts and agreements of all kinds, including leases, tenancies and many other matters which would come within the term agreement. If the honorable member will specify more definitely the exact nature of the contracts and agreements to which he refers, I shall arrange for the information to he supplied.
asked the Prime Minister, upon notice -
– The replies to the honorable member’s questions are as follow : -
aske the Prime Minister, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the AttorneyGeneral, upon notice -
– The replies to the honorable member’s questions are as follow : -
– On the 14th September, the honorable member for Batman (Mr. Brennan) asked the following question, upon notice -
I am now in a position to furnish the following information : -
– On the 13th September, the honorable member for Capricornia (Mr.Forde) asked the following question, upon notice -
I am now in a position to furnish the following reply: -
The following figures are representative: - 1908.- Queensland, 12,000,000; New South Wales, 2,000,000. 1918.- Queensland, 20,000,000; New South Wales, 2,200,000. 1928. - Queensland, 50,000,000; New South Wales, 8,500,000.
It is pointed out that the figures for 1928 are recent estimates, and probably include much more lightly infested areas than those of the previous years.
Other States. - No data available, but the total infestation is very light.
– On 12th September the honorable member for Wannon (Mr. Rodgers) asked me whether I had received a report in connexion with the International Cancer Conference and what were the views of the conference in regard to radium treatment. I have received an official report of the proceedings and also personal letters from medical friends who were present at the conference. The reports indicate that the generally accepted opinion amongst delegates was that the greatest results were to be expected from radium. Thegeneral tenor of the discussion indicated that in operable cases of cancer, radium application combined with surgical interference was the only effective treatment. The results recorded by the conference indicate that in the treatment of inoperable cancer 10 per cent. of the cases treated with radium were cured, while palliation was afforded in a much higher percentage of cases. In the treatment of cancer of the skin figures quoted indicate that of the cases treated 50 per cent. were cured. In the case of cancer of the tongue figures as high as 40 per cent. were quoted. Speaking generally the conference almost entirely supported the use of radium and there is reason to believe that there will shortly be a great extension in its use.
– On 12th September the honorable memberfor Ballarat (Mr. McGrath) asked me why such an important centre as Ballarat had not shared in the distribution of radium imported by the Commonwealth Department of Health. I am now in a position to inform the honorable member that the claims of Ballarat are at present receiving consideration in conjunction with those of all other hospitals throughout Australia. It is a matter of importance that the available radium should be distributed to places where it will be most useful, and in order that this result may be obtained, the condition of all secondary hospitals in Australia is being studied before finalizing the distribution of the remaining available radium. In determining the distribution of the radium the size of any hospital is not the only important consideration.
Allowance to Colonel Thomas
– On the 14th September the honorable member for South Sydney (Mr. E. Riley) asked me the following questions’: -
I am now able to furnish the honorable member with the following information : -
– On 14th September, the honorable member for Wide Bay (Mr. Bernard Corser) asked the following question : -
With regard to the application of the Queeusland Peanut Board for permission to introduce peanuts into Australia for seed purposes: - (a) What action has been taken by the Commonwealth Health Department; (b)Has any reply been received from the Queensland Department of Agriculture and Stock, to the letter from his department of 1st August last, and, if so, what is the nature of such reply?
I am now in a position to supply the honorable member with the information he desires : -
Permission was granted for the importation of half a ton of peanuts from the United States of America, subject to the following conditions: -
These conditions were communicated (by letter) to the Under Secretary, Department of Agriculture, Queensland, and to the Secretary, Queensland Peanut Board, on 1st August.
– I have from time to time laid upon the table certain documents relating to the negotiations prior to the signing of the Outlawry of War Treaty. I now lay upon the table three further documents: - (1) A note dated 23rd June, 1928, from the United States of America Chargé d’Affaires in London to the Secretary of State for Foreign Affairs; (2) A note dated 18th July, 1928, from the Secretary of State for Foreign Affairs to the United States of America Chargé d’Affaires in London; and (3) a note dated 18th July, 1928, from the Secretary of State for Foreign Affairs, on behalf of the Commonwealth Government, to the United States of America Chargé d’Affaires in London. These complete the documents relating to the negotiations.
The following papers were presented : -
Postmaster-General’s Department - Particulars of provision for buildings on Loan Estimates, 1928-29.
Renunciation of War - Further Documents relating to the Proposed Treaty.
Commonwealth Bank Act-Regulations Amended - Statutory Rules 1928, No. 94.
Lands Acquisition Act - Land acquired at Cook, South Australia - For Defence purposes.
Railways Act - By-law No. 48.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance of 1928 - No. 19 - Church of England Property Trust.
War Service Homes Act - Land acquired in New South Wales at - Albury, Glen Innes.
Debate resumed from 11th September (vide page 6579), upon motion by Dr. Earle Page -
That the bill be now read a second time.
.- This is a bill to impose new taxation, and, by means of machinery amendments, to close a number of loopholes in the act. The Treasurer, in his budget speech, said that he was not proposing any increase in taxation, but that statement cannotbe reconciled with the fact that this bill proposes that £300,000 of new taxation shall be raised from life assurance companies. It is true that there is to be no increase in taxation upon the comparatively well-to-do, but the Treasurer is roping in hundreds of thousands of people who hitherto were exempt from income taxation. The loop-holes that are to be closed have been discovered by financial experts, most of whom represent large companies. This closing up of loopholes in the income tax legislation is a proceeding with which we are now becoming familiar. Loth as I am to say, “ I told you so “ I cannot help reminding the Treasurer that many of these loop-holes by which people who should pay taxation are escaping their obligations have been pointed out by honorable members on this side from year to year. The effect of these evasions is that other people pay more, because if Parliament enacts legislation imposing taxation according to the individual’s ability to pay and some persons by sharp practice, even though it be legal, escape their fair obligation, others must pay more than their share in order to make good the loss. Most of the clauses may be more properly discussed in committee, but I propose to examine briefly some of the principles that are affected by the bill.
In my judgment the taxation of life assurance companies is inequitable. Life assurance is a provision made mostly by breadwinners for their dependants or for their old age, and because of it the obligations of the Commonwealth and the States are made lighter. For example, the Commonwealth Government saves a certain amount that it otherwise would have to pay for old-age pensions, and the States escape some of the provision they would have to make for widows and children. Therefore the taxation of life assurance companies does not commend itself to me and should not commend itself to this national Parliament. Under the Income Tax Assessment Act the premiums paid to life assurance companies up to £50 may be deducted from income: and this Parliament has thus recognized that provision of this kind, whether the assurance be for large sums or small sums, entitles the taxpayer to a concession. And I remind the House that this deduction is allowed to those who have taxable incomes of not less than £300 a year. Thus we encourage this form of thrift. But the bill is a negation of that policy, because a tax upon life assurance companies is a tax upon the policy-holders, and makes taxable hundreds of thousands of persons who are now exempt from Commonwealth income taxation. We should face this issue honestly. If this Parliament believes that small incomes should be taxed let us openly and frankly say so by a straightout amendment of the Income Tax Assessment Act, instead of adopting this indirect and underhand method. This tax is estimated to yield £300,000 per annum. Mutual life assurance companies are to be taxed on the net income derived from the invested funds of the companies ; those funds represent mainly the premiums paid by the assured. Non-mutual companies are to be taxed on the same class of income and upon any other income which they may distribute to their shareholders or add to their paid-up capital. Taxation of the dividends of shareholders in a non-mutual company is as equitable as the taxation of shareholders in any other company, and to it there can be no objection, but when we tax mutual companies we are placing an impost, not upon the dividends paid to shareholders, but upon the bonuses members receive; alternatively, we are increasing the premiums to be paid by those who have established mutual benefit societies to provide for their old age or dependants. According to the Taxation Commissioner’s report, 225,000 persons pay Commonwealth Income Tax. According to the statistics, there are in Australia over 800,000 holders of ordinary life assurance policies, and about 1,300,000 holders of industrial policies, or a total of over 2,100,000 policyholders. Allowing for some persons holding more than one policy, it is safe to assume that there are approximately 2,000,000 persons in Australia holding life assurance policies.
– In mutual and nonmutual assurance companies?
– There are not many non-mutual companies. Thebulk of the life assurance companies are conducted on a mutual basis. .
Mr.Fenton. - Fully 85 per cent.
– Yes. The Government therefore propose to include in the number of taxable persons nearly an additional 2,000,000 ; under our present income tax law, because of the exemptions provided, taxation is collected from only about 225,000 persons. It must be obvious to honorable members that, included in the 2,000,000 persons mentioned, there must be 1,500,000 who would not otherwise be taxed, unless as shareholders in a company. A majority of these are making some provision from small incomes against old age, or are providing an income for their widows and families at death. In order to raise an additional £300,000 a year, the Government now propose to introduce this form of taxation, which I submit is inequitable and unjust, particularly when one realizes that only last year the taxation on incomes was reduced. If there is to be any adjustment of taxation to raise an additional £300,000, some of the taxation which has been remitted should be restored, instead of taxation being imposed on a large number of persons, many of whom are receiving only the basic wage in industry, or are struggling on a small block of land in the country. Such persons, who are endeavouring to make some provision for the future, will be taxed under this measure. It is useless to argue that the companies will pay the tax, because as they are mutual concerns, the policy-holders must share in the charges imposed upon the companies. In consequence of the reduction of taxation on incomes from property, between 1923 and 1927, I find that persons in receipt of £3,000 a year are now paying £147 less than in 1923; those in receipt of £4,000 are paying £241 less ; “those in receipt of £5,000 are paying £346 less, and those in receipt of £6,000, £457 less than in 1923.
– Can the honorable member say how much is involved in those reductions ?
– For last year only, the reduction amounted to £1,300,000; but over the full period the amount would be greater. In view of the recent reductions made in the income taxation of certain Australian taxpayers, I submit that we cannot justify the raising of an additional £300,000 from policy-holders in life assurance companies. I do not wish to labour this question, nor to emphasize the inequitable nature of these proposals any further; the facts speak for themselves.
The Government’s proposals to close up certain loop-holes and remove anomalies in the existing act, can be more effectively dealt with in committee. I wish to express my thanks to the Taxation Department for making available some explanatory notes, prepared at the request of the Treasurer, which have enabled me to grasp many of the details of the amendments, which I shall discuss more fully in committee. *
A good deal of the work which we have to perform in removing anomalies would be unnecessary if we re-cast our income tax legislation, and abolished some of the wrong principles which have been introduced into it. Let me illustrate this point by referring to the provisions of clause 6. The practice has been to tax the whole of a company’s profits, after certain deductions have been allowed, on a flat rate of ls. in the £1, and when the profits are distributed in the form of dividends and reach the hands of shareholders a rebate of ls. in the £1 is allowed to the shareholders. That is what happens when the individual shareholder pays income taxation ; but if an individual shareholder has not an otherwise taxable income he is taxed at the ls. rate, and receives no rebate. This system has had the effect of disturbing the averaging system adopted by Parliament. It is now proposed, by this amendment, to rebate the extra tax charged to the individuals on such dividends without any loss of revenue. We do not, however, remove the injustice of this section, as I have pointed out on previous occasions, and are giving an incentive to certain persons to defeat the act. Let me give an illustration of the injustice of this practice. “ A “ receives £100 in dividends from a company, and, as he has no other income, does not receive a rebate of ls. in the £1. On the other hand, “B” receives £1,000 in dividends from a company, and receives a rebate of £50 because the company has paid that amount on the £1,000 it has distributed to him. He receives that £50 because tax at the rate of ls. in the £1 has already been paid by the company on those dividends. That is right ; but the injustice of the provision is that the man who receives only £100 in dividends has to pay the £5 company tax, because he receives no rebate.
– He has paid £5 in taxation through the company.
– Yes ; but, becausehe has not an otherwise taxable income, he does not receive a rebate. Parliament has provided that a tax of1s. is applicable to incomes of £1,000, but the man receiving £100 pays at an even higher rate than the person who receives £1,000 a year. This system is unfair, and cannot be justified. We have been told that we ought not to impose a heavy company tax because it would prevent small investors from placing their money in public companies. Do we encourage them by imposing a tax such as this? Under the present system, those with a substantial income derive benefit, whilst those with an income which would not otherwise be taxable are penalized. The remedy is simple. In imposing taxation we should treat companies and proprietors on the same basis, and after certain allowances have been made, all profits should be deemed to have been distributed. Taxpayers should pay taxation on the profits of the shares they hold in a company.
Clause 9 is another illustration of an amendment of the act which would be unnecessary if we adopted sounder principles of taxation. I do not wish to pose as an expert on matters of taxation, because I am not ; I have yet to meet one who is; but there are certain persons, many of whom represent big interests, who are always finding loopholes in our taxation legislation which we have to close up.
– They do not make the loopholes; they discover those we have left-
– Yes, and by driving in wedges, make them even larger. I do not wish to cast a reflection upon the courts, but at the same time I think that the courts permit certain litigants to go further in this way than they are really entitled to go. In clause 9 an attempt is made to deal with a remarkable situation. Under section 16 of the principal act onethird of the profits of a company can be placed to reserve and capitalized, and then distributed amongst the shareholders in the form of bonus shares, and be entirely exempt from taxation in the hands of the shareholders. As such shares pay only the company tax, that is an advantage to holders in receipt of large incomes and whose rates of tax are high.
– But such profits are capitalized.
– Yes, and issued in the form of bonus shares. The honorable member suggests that because such profits are capitalized they should be exempt from taxation. Is that so?
– If the honorable member invested one-half of his allowance it would be capitalized, but it would not be exempt from taxation on that account.
There may be some virtue in reinvesting a certain portion of one’s income ; but, should it warrant exemption from the payment of a just share of taxation? The mere fact that a sum has been capitalized before the taxpayer receives it, does not alter the position.
– But in the one case he has no option.
– But he is just as well off. As a shareholder he can exercise control. The persons who derive the greatest benefit from this practice are those who hold a controlling interest in a company, and elect to deal with their profits in this way, in order to evade taxation. Family companies are being formed to-day for the express purpose of evading the taxation which otherwise would be imposed upon the members of the company as individuals. There is no sound argument in favour of the exemption of bonus shares from taxation. A distribution of bonus shares is tantamount to a distribution of profits, and the full rate of income taxation should be paid by the individuals who receive them.
Under section 21 of the act one-third of the profits may be placed to reserve, and pay the company rate of1s. in the £1. I believe that by a judgment of the courts a distribution of bonus shares has been held to be a distribution of profits. If that is the case, the shareholder should pay according to the income he has received. He does not now do so. The Commissioner of Taxation can require the distribution of two-thirds of a company’s profits. As a distribution of bonus shares is regarded as a distribution of profits, if one-third is distributed in the form of bonus shares, only one-third more need be distributed. The effect has been that shareholders of companies have paid tax at the individual rate upon only onethird of the total profits, and thus have evaded to the extent of at least two-thirds of their income the taxation that this Parliament considered it had imposed upon them. This amendment of the law seems to provide a remedy for that defect.
– What happens in regard to the remaining one-third ,
– One-third is placed to reserve ; a second third is distributed in the form of bonus shares, and pays at the company rate of ls. in the £1; and the balance is taxable at the full rate for individual incomes in the hands of the shareholders; whereas it was intended that at least two-thirds should be taxed at the full individual rate.
– In future, the shareholders will be liable to the full rate with respect to two-thirds.
– That is the object of this amendment. My argument is that when profits are distributed, whether in the form of cash or bonus shares, the full rate should be paid by the individual shareholders. An illustration of what has happened is given in some notes which have been carefully and well prepared by the department. In the case of a company whose profits for a year total £15,000, the Commissioner can demand that two-thirds be distributed. If that sum of £10,000 were followed into the hands of the shareholders, the rate applicable to those shareholders as individuals would be charged. But the practice has been to distribute £5,000 in the form of bonus shares. That being considered a distribution of profits, the company has had to distribute only an additional £5,000. Therefore, out of a profit of £15,000, the full income tax rate has been paid on only £5,000, whereas it was intended that it should be paid on £10,000. According to the department, cases of that kind are becoming common. The remedy proposed would appear to a layman to meet the position; but I shall not venture to prophesy that that will be the result. I shall await events before concluding that it is effective.
It is proposed that the distribution of bonus shares shall no longer be recognized as a distribution of profits. I insist, however, that an injustice remains, and that if it- were removed there would not be in the act the loopholes through which leakages of taxation now occur. Family companies are formed solely with the object of evading the payment of the full rate of income tax upon at least one-third of their profits. Under the law as it stands, they can obtain exemption upon at least two-thirds, excepting that the company rate has to be paid upon onethird. That could be avoided if bonus shares were taxed in the manner adopted until recent years. Until two years ago, the profits of a company which were distributed in the form of bonus shares, in the year in which they were earned, paid the full rate of tax, and those placed to reserve were similarly taxed until something like four years ago. There are cases in which there has been a distribution of bonus shares from the profits that have accumulated over a number of years. They have always been exempted, and rightly so, because in such a case taxation would be a property and not an income tax.
– Are not bonus shares which are distributed in the year in which the profits are earned, subject to the full rate of tax?
– They are not now so liable.
– They have to pay the company rate.
– The company rate is imposed upon the whole of the profits. There may be a distribution of bonus shares from the profits made in the current year, as well as from those that in former years were placed in reserve. In the case of those whose income tax rate is as high as 5s. in the £, it is a substantial concession to be obliged to pay not more than ls. in the £. Let us consider the position of A and B. A receives from his company a cash dividend, and invests it; B receives from his company bonus shares, that are equivalent to a cash dividend, and invests the amount they represent. A pays with respect to his cash dividend the full rate according to his total income; while B pays with respect to his bonus shares no more than the company rate. Assuming that the income of each is £10,000 a year, A would pay at the rate of 5s. in the £ upon the amount he received as a cash dividend; while B would pay only1s. in the £ upon his bonus shares. The result is that those persons who are not engaged in the commercial world, and cannot form themselves into companies, are obliged to make up the shortage in revenue caused by others who evade the payment of their just share of taxation. Let me quote an extreme case to drive home my point. C is the proprietor of a business; D is a shareholder in a company. The net profit of each is £6,000.C applies his profit to the expansion of his business, and pays a tax of £1,000. D receives his £6,000 in the form of bonus shares, and at the company rate of1s. in the £ is taxed to the extent of only £300.
– He could sell the shares on the day following that upon which he received them.
– Yes, and have the cash in hand.
– Might not D pay a good deal more than £300 if his other receipts largely augmented his income?
– I am supposing that the sum named is the total income of both.
– Under the act only one-third of the profits can be distributed in the form of bonus shares. The balance of the distribution would be taxed at the full rate in the hands of the shareholders..
– On a pro rata basis, D is in a much more fortunate position than C. Let us assume that £6,000 represents one-third of the profits of each. C would pay upon that sum a tax of £1,000, while D would only pay £300. Or, let us suppose that a man’s total income derived from a proprietary business amounted to £6,000, and that another man during the same year earned a similar income, made up of £4,000 in cash and £2,000 in bonus shares. The first man would pay £1,000 in taxes, whereas the other would pay taxes amounting to £100 on the bonus shares, and another £500 on the £4,000 cash, making a total of £600. Thus, on the same amount of income one would pay £1,000 as against £600 paid by the other. I mention these supposititious cases to point out that the method of taxation is unjust, in that men in receipt of the same amount of income, but derived from different sources, do not pay the same amount in taxes, and that it offers inducements to taxpayers to evade taxation. In many instances profits distributed as bonus shares can be sold at their face value; yet the tax on them is fixed at the ordinary company rate. That is a generous concession to persons with big incomes.
Another matter covered by clause 10 is the taxation of mining companies. It is not easy to follow the law in this connexion, but I understand that the existing legislation provides that prospectors who discover minerals are taxed on their reward on the basis that it represents income earned in that year.
– Not if they do not make a business of opening up and selling leases.
– That point is not clear.
– That is the intention.
– That applies to leaseholders. A man who makes a business of buying and selling leases undoubtedly should pay taxation on the profits he earns. That is the present law, and to it I offer no objection. We exempt profits on leaseholds because we regard them as accretions of capital. But a reward given to a man for discovering minerals is not income derived from buying and selling leaseholds, nor an accretion in the value of a leasehold. It is a reward for having made a discovery, and is taxed as income earned in that year, notwithstanding that considerable time and money may have been expended by him in his search before success attended his efforts. If that be the intention - I shall not be dogmatic and say that that is the intention - it should be amended. By treating rewards for such discoveries as accretions of capital we should encourage the mining industry. The income on such capital would, of course, be taxable. I realize that under the system by which incomes are averaged there might be an adjustment in some cases; but, on the other hand, a large sum of money received in one year as a reward for a discovery of minerals might have the effect of increasing the rate of tax during subsequent years in which the man’s income might be small. Whatever may be said of the proposal, it certainly is not likely to encourage prospectors.
– Is not the amount of the reward supposed to cover all the expenses involved and the efforts made in connexion with the search for minerals?
– I do not think so.
– It is not income.
– I agree that it is not income, and should not be taxed as such. It is, however, taxed as income.
Most of the remaining clauses have been included in this measure to give effect to the intention of Parliament in the past and to safeguard the revenue. I shall probably have more to say regarding some of them when the bill reaches the committee stage. I shall not do more now than refer again to the principles I have mentioned - the taxation of life assurance companies, the exemption of bonus. shares, and the inequitable system of giving a rebate of company tax to those in receipt of taxable income, and not to those who otherwise have no taxable income. The gravamen of my charge against this measure is that it brings into the field of taxation 1,500,000 persons who otherwise would not be in receipt of taxable incomes, while at the same times it reduces the rate of taxation in the case of persons with taxable incomes.
.- No doubt the innate modesty of the Leader of the Opposition (Mr. Scullin) precluded him from taking full credit for the views he has expressed in this House from time to time regarding those who escape income taxation. Had the Treasury accepted the honorable member’s advice, the year might not have ended with a deficit.
I intend to oppose strenuously any attempt to impose taxation on life assurance policies, which I regard as one of the most cruel forms of income taxation ever brought before a Parliament. This bill proposes to levy taxation on nearly 2,000,000 persons who at present are exempt from - income taxation. Among the -poorer section of .the community are many widows and children who hold life assurance policies. The Treasurer, in his attempt to remedy a deficit which would not have existed had there been a proper control of the country’s finances, now seeks to exact taxation from these people. Yet not long ago the honorable gentleman sought to exempt from taxation some of the wealthy companies in the country. It is true that the assets of the life assurance companies amount to approximately £350,000,000, but their liabilities are almost as great. The total value of the policies issued by Australian life assurance companies amounts to approximately £300,000,000, an average of about £150 each. Do honorable members stand for income tax being levied on about 1,750,000 of the poorest persons in the community ?
– It is done every day through the tariff.
– I warn honorable members opposite that persistence in such a policy will injure the party to which they belong.
-I should not worry about that. t
– I agree with the honorable member that the removal from office of the present Government would be in the best interests of this country, nevertheless, I shall not assist to place legislation of this kind on the statute-book. I merely warn honorable members opposite of the danger confronting them in the hope that, in an attempt at selfpreservation, they will refuse to pass such iniquitous legislation. The latest returns available show that the life assurance societies have invested 55 per cent, or £60,000,000, of their capital in bonds issued by Government and public bodies; £25,000,000, or 20 per cent., has been lent in mortgage on town and country properties ; while 10 per cent., or £10,000,000, has been lent to policy holders. ‘During the war the Government was glad to receive from them many handsome contributions to the war loan. In the time of their country’s need, these companies as sisted the Government, and by lending money on mortgage in the case of town and country properties, they have done much to develop the country. They have also assisted their policy holders during periods of financial stress by making them advances on their policies, with the result that many of them have been enabled to earn sufficient incomes to make them liable for the payment of income tax. The existing income tax legislation provides that income not derived from trading for profit or gain shall not be taxed. I have it on the best authority that the words “ profit or gain “ do not apply to life assurance societies in .England. The Privy Council has decided that mutual assurance companies are not conducted for profit or gain, that the bonuses distributed by them are merely a return to the policy holders. Many illustrations could be given of the benefits conferred upon the community by these societies. A life asurance policy taken out by a bread-winner is of inestimable value to his dependants in the event of his death. It frequently happens that some of the money received from it is reinvested by the widow, for herself and her children in order that later they may be, to some small extent, provided for. In my opinion, it is reprehensible that the Government should even contemplate taxing such investments. This national Parliament should do its utmost to encourage thrift of this description; but legislation like this will altogether discourage it. On the 15th September, the Melbourne Argus referred to this proposal in the following terms : -
Trading companies only pay taxation on their net profit. With life offices of the mutual type the only thing corresponding to net profits is their surplus, or the excess of receipts over payments. The proposal is not to tax the surplus, but to take the gross interest income and impose taxation upon it, although the amount received from that source is far in excess of the amount of any surplus. Taking seven of the principal life offices, their interest income is about £7,000,000, whereas their annual surplus is only £5,500,000. If the organizations were concerns trading for profit, and as such distributing profits among their shareholders, they would only have to pay on £5,500,000.
Either the Treasurer has been led into a grave error in proposing this amendment, or else he has been reduced to desperate straits to obtain a little extra money to meet the deficiency in the public accounts. Whatever may- be said in favour of the taxing of the £5,500,000 of annual surplus - and little or nothing can be advanced in support of even that proposal - every one must agree that it would be entirely wrong to tax the interest income of these companies of £7,000,000.
If the proposal of the Government he approved, these beneficient institutions will be taxed on an amount which has no relation to profit much more heavily than a brewing company is taxed. Seeing that an ordinary trading company pays only ls. in the £1 on its trading profits, there can be no justification whatever for imposing a considerably heavier tax upon any interest bearing income which is greatly in excess of the surplus distributed. The particulars, that I have given on this subject have been supplied to me by Mr. E. J. Starke, the general manager of the National Mutual Life Association, who is recognized as one of the greatest life insurance actuaries in the world. His remarks merit the most earnest consideration. The income of the mutual life assurance companies is made up of the aggregate contributions of the poorer classes in the community. If we could make a careful investigation into the position, we should discover that countless self-denials and many privations are suffered by these people to pay their premiums regularly. They have to deny themselves not only many luxuries, but also some necessaries of life, in order to meet their payments promptly. I can speak with some personal knowledge of this subject. I well remember that in the days which immediately followed the bursting of the land boom in Victoria hundreds of people had to forfeit their life insurance policies, because they could not meet the payments on the due date. Many hundreds of others underwent most severe trials in order to scrape together the few shillings required to keep up their payments. To a lesser extent that is always happening. It is shameful that such thrift should be considered by the Government to deserve taxation. This is no time for mincing words. I assert that it will be to our lasting and utter shame, as members of this Parliament, if we permit the Government to impose this taxation. If the Government considers that this is a suitable field from which to obtain taxation, it should make the matter one of policy at the coming election. That would be the fair and reasonable thing to do. Certainly we should not be asked in the dying hours of the Parliament to enter upon an entirely new field of taxation.
I plead with the Government to withdraw this objectionable clause, and if it is returned after the election to reintroduce the subject if it then thinks fit. If the Treasurer is not willing to accept this proposal I hope that honorable members generally will defeat the clause when the vote is taken upon it.
.- Seeing that some honorable members have been travelling almost all the time since Friday, I ask the Treasurer to defer consideration of the bill in committee until to-morrow, to give us an opportunity to study the amendments a little more closely. “While I have no desire to relieve any section of the community of taxation which should legitimately be imposed upon it, I have a great objection to the inclusion in taxation measures of retrospective provisions. They are dangerous, and liable to operate very unfairly. Earlier this year I moved an amendment to another taxation bill with the object of providing that taxation should be imposed upon incomes derived by Australian residents from capital invested outside of the Commonwealth. I contend that it is much more desirable that we should encourage people to invest their capital within the country than elsewhere; but by taxing income derived from investments within the Commonwealth and exempting from taxation income derived from investments outside we are practically inviting people to invest their money abroad. I should have been prepared to move a similar amendment to this bill but for the undertaking of the Prime Minister that the whole subject was being carefully investigated. A few nights ago the right honorable gentleman stated that the Government had not quite determined its attitude upon the subject. Seeing that the most careful investigation is necessary before the incorporation of such provisions in our taxation legislation, I am quite prepared to give the Government every opportunity to complete its inquiries. Consequently, I do not propose to move an amendment of that nature to this bill. I hope, however, that next year Parliament will deal with those who, with the object of avoiding taxation upon their incomes, consider it expedient to make their investments abroad. This enables them to avoid paying a single sixpence towards the expenses of government, although in many cases they have made the bulk of their wealth from their investments here.
. - The Treasurer (Dr. Earle Page) said, in his second-reading speech, that the aim of the Government has always been to keep our taxation law as simple as practicable. I am curious to know what the Treasurer regards as involved, if he considers that our taxation law is simple. Personally, I fail to appreciate its simplicity. It appears to me to be based on “ catch as catch can “ rules, with the Taxation Commissioner having the option to make additional regulations to suit himself. When by a perfectly legitimate interpretation of the law, anybody obtains any advantage, the Taxation Commissioner sets to work to nullify that advantage by introducing further restrictive laws of a retrospective nature. I join with other honorable members in offering my strongest objection to the, retrospective principles contained in this bill, although they probably concern mainly the accounting periods and rebates. I await with interest the Treasurer’s explanation in committee on the matter.
It is most regrettable that our taxation system cannot be simplified. Instead, amendments are added to the original act, every year, and it is becoming so involved that the average person has not the slightest chance of understanding it. As a result he has to seek the advice of professional accountants and taxation experts, who are paid ever increasing fees to interpret the law. This adds to the general cost of taxation. I commend to the Treasurer the following extract from Adam Smith’s The Wealth of Nations -
The tax which each individual is “bound to pay ought to be certain, and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to be clear and plain to the contributor, and to every other person. Where it is otherwise, every person subject to the tax is put more or less in the power of the tax-gatherer,….. The uncertainty of taxation encourages the insolence and favours the corruption of an order of men who are naturally unpopular, even where they are neither insolent nor corrupt. The certainty of what each individual ought to pay, is, in taxation, a matter of so great importance, that a very considerable degree of inequality, it appears, I believe, from the experience of all nations, is not near so great an evil as a very small degree of uncertainty.
Although I do ‘ not agree entirely with some portions of that extract, it expresses generally the sentiments of a very large section of the business community regarding the taxation to which we are subjected. I object strongly to retrospective clauses and to the ever increasing power that is given to the Commissioner of Taxation. It must be realized that the taxpayer and the tax-gatherer are as wide apart as the poles. The taxpayer ie perfectly entitled to take advantage of any loopholes in the taxation act, and, while it is but right that the Government should stop such leakages it is immoral to make the operation of the new law retrospective. I take strong exception to the wording of paragraph b of proposed new sub-section 2b of section 21, of the principal act which reads - where the Commissioner is satisfied that the company has withheld information or has furnished incorrect or misleading information for the purpose of avoiding tax in an ordinary assessment or under this section.
Power should not be given to the Commissioner to determine whether certain things were or were not done. I wish it understood that I refer to the Commissioner of Taxation quite impersonally. The legal rights of every taxpayer should be preserved. They should not be take, away by a provision of this description, which permits of no appeal from the finding of the Commissioner. There are half a dozen similar provisions in the bill which are calculated to make the administration of the taxation law of Australia tyrannical and arbitrary in character. That is not a proper condition of things, and I intend, when we reach the committee stage, to ask the Government to take further cognisance of that aspect of the matter.
– I rise, not to deal with the amendments proposed in the bill, but to make some comments upon the remarks of the honorable member for Warringah (Mr. Parkhill) on the desirability of simplicity and certainty in taxation. It would be very easy to introduce a simple scheme of taxation if the endeavour of this Parliament to make taxation fair and equitable were abandoned. It would be very easy to abandon the endeavour to tax dividends from companies fairly and in proportion to the income of the person who received them. If that endeavour were abandoned, there could be a company tax, and also a tax on individuals. But, from the beginning, the purpose of the Commonwealth Income Tax Assessment Act has been to charge income tax on dividends in relation to the income of the person who receives them. If honorable members examine the amendments proposed in this bill they will find that nearly every one of them is due to the policy of this Parliament of refusing to adopt the principle of taxation of dividends at their source. If that were done, we should have a relatively simple method of income taxation. But honorable members will recognize that such a change would involve the abandonment of a principle, and a step which would probably meet with their strenuous opposition. That is the main excuse for the complexity of our system of income taxation. There is another reason for it, which was admirably illustrated by one of the suggestions made by the honorable member for Warringah, that is the endeavour of the Government to be fair to all taxpayers, as evidenced by abundant provisions for lodging objections and appeals. Not only is there an appeal to the Supreme Court and the High Court, but provision is also made for a review’ of assessments by a Board of Review. The Board of Review has, generally speaking, been placed by this Parliament in the position of being able to override any determination of the Commissioner of Taxation. All those appeals increase the complexity of the system, and its expense to the taxpayers, but they are demanded by the taxpayers themselves. Our system would be much less expensive if everything were left to be determined by the -Commissioner, but, naturally enough, that course would be objectionable to many taxpayers. It is impossible under an act based upon the principles to which I have referred, to obtain the sweet simplicity of the period of Adam Smith - when conditions of society were so different from those of the present day that the taxgatherer was a person naturally regarded as open to corruption. It is very desirable that taxation should be simple and certain. Taxation becomes certain when the assessment has been issued, but it is impossible, in these modern days of complex business arrangements, for taxation to be at once certain, simple, and fair.
The honorable member for Warringah called attention to paragraph b of proposed new sub-section 2b, of section 21 of the principal act, which very well illustrates some of the principles to which I have referred, and suggested that there should be an appeal to a court from the decision of the Commissioner. If this provision is adopted by the House, its only effect will be that a company will pay tax according to the true facts. If what the Commissioner thinks to be the true facts are not the true facts, a company cannot be charged on them. To substitute a provision to insist that a court must first be satisfied that information was withheld, would really increase the expense to the taxpayer, and would not confer any benefit on him in the final result. It would merely introduce another element of complexity into what the honorable member has described as an already sufficiently complex act.
– In any case, provision is made for an appeal against the determination of the Commissioner.
– That is so. The company is taxed only on the true facts, and to provide an appeal in this instance from the opinion of the Commissioner that the company has withheld information would merely add another complexity and increase still further the expense of what certainly must be admitted to be an already complicated piece of administration.
Sitting suspended from 12Ji5 to 2.S0 p.m.
.- Previous speakers have dealt with various aspects of the amendment of the Income Tax Act as proposed in this bill. I intend to deal with the failure of’ the Government to take action in the interestsof the gold-mining industry. No longer ago than July last, the Prime Minister (Mr. Bruce) was in Kalgoorlie, and a definite promise was made by him that assistance would be given to the industry. This promise applied particularly to prospectors. On 2nd July a report appeared in the press of a deputation representing the whole of the local governing bodies on the eastern gold-fields, and also the Chamber of Mines, which waited on the Prime Minister. The Mayor of Kalgoorlie briefly summed up the case for the industry in the following words : -
He could speak from his knowledge of the gold-fields of this State for over a period of 30 years. It was now very difficult to get the right type of men for prospecting. It was not that they could, not get men of equal calibre to those of the early days, but the unfortunate position arose that where the prospector, backed up by syndicates or business men, found a property, he, if it were marketable, might get a certain cash consideration and the balance in paid-up shares upon which the Federal Taxation Department claimed a tax upon face value. This would strip him of all reward for his labours.
The definite reply given by the Prime Minister was -
He would give the subject of exempting the prospectors his immediate attention. The general question was one of assistance to the mining industry generally.
Thus it is clear that a definite promise was made by the head of the Government to give immediate attention to the matter. We now have a bill under which it is proposed to tighten up the Income Tax Act in some directions, to deal with persons who have found a loophole in it, and have escaped taxation; but as the Government has made no attempt to carry out its promise to exempt prospectors, I charge it with neglect in that matter. I have no desire to . impute motives - that would be a poor way of defending an argument - but I have no hesitation in saying that if the gold-mining districts of Western Australia had been represented in this House by a member pf the Country party, the pact Government would have given this industry help similar to that received by the producers of canned fruits, doradillo grapes, butter, and similar commodities. Primary producers say that taxation of the people in the interests of the local manufacturers is all very well, but if the primary producer is not to receive assistance the Country party cannot be expected to stand behind a government that advocates protection. Not only has this Government ‘failed to give the promised relief to the gold-mining industry, but it has also allowed an impost upon it to be continued. The position of this industry is as unenviable as it is unique. In 1914, at the beginning of the late war, the price of every commodity except gold rose. The price of gold remained stationary. Gold being the medium of exchange the world over, the price could not have gone up for any considerable period. During the war, a bonus was paid on gold, and for a certain time the industry secured assistance to the extent of £3,000,000 from that source ; but the price of fine gold to-day is £4 4s. Hid. per oz., the same as it was in 1914. The prices of mining commodities and Other goods necessary for the development of the industry, however, have increased by 100 per cent., and notwithstanding this fact the present Government continues to tax the industry. Prior to the war, no Federal tax was imposed on the proceeds of gold-mining, but when the cost of mining commodities doubled the Government saw fit to place this burden upon the industry. Can one wonder that the industry is now at such a low ebb? Its progress depends entirely upon the discovery of fresh fields. One is often asked why further discoveries are not made. Is the desire that was evinced by the’ old prospector to discover gold missing from the present generation? Gold is found in a new country because of the appearance of outcrops which are readily observed; but in various parts of known auriferous areas there may be in nature’s grip below the overburden hundreds of millions of ounces of the precious metal. Up to the present time no means have been invented of locating this hidden wealth except by what might be called “ blind stabbing.” Drilling has to be resorted to, and some mining companies in Western Australia have bored several miles in their efforts to discover ore shoots. The Government should not tax prospectors on their earnings as is done at’ the present time. A prospector may spend the best years of his life, eking out a bare existence through being backed to the extent of £1 or 30s. a week. With’ that small assistance he. is prepared to go out, it may be, for years in the hope that eventually he will discover payable gold. Prospecting is a passion with a man of that type. The Federal
Treasurer, through the Taxation Department, says to such a prospector, “Although you have been working for ten years to discover gold in payable quantities, although previously you have had no reward, although . you have shown indomitable spirit, and although in your old age you are at long last now in a position to reap the reward of your industry, this Government, which is supposed to stand behind private enterprise, seeks by way of taxation a high percentage of your income, small as it is relatively when compared with the large number of years over which your labours have been spread.” I protest against that treatment, because it is most inequitable. The Government has utterly failed to honour its promise to assist the prospectors. If I were a member of the Treasurer’s party, however, I feel that I should not have to go back to my constituents and say that the rewards given to other primary producers had been denied to the mining industry.
Let us consider what is said, by those who hold no particular brief ‘for the goldminers. The Development and Migration Commission, at the instance of the Government, investigated the conditions in the industry. I remember the time when the Minister for Home and Territories brought in a bill that was to work wonders for prospectors, and the Government said it considered the measure most necessary. I refer to the Precious Metals Prospecting Act, which was passed at the beginning of 1926. The sum of £40,000 was set aside to enable assistance to be given to prospectors ; but little benefit was derived from the measure, because, taking the Northern Territory and all the States together, only £4,000 was devoted to this industry, which was said to be in a. parlous condition. The Development and Migration Commission’s report contained the following remarks : -
The fundamental difference between the goldmining industry and most other industries is’ that gold mining deals with wasting assets, whereas other industries deal more with continuing or building assets. All’ mines by their very nature must have a beginning and an end. Every ton of ore extracted from a mine brings the undertaking just that much nearer to the end of its life, for ore in a mine is not replacable, and once the ore is gone the asset is gone. This fact should weigh when matters relating to taxation are under consideration.
Obviously a mine should not be taxed in the same manner as a continuing industry. The more vigorously a mine is worked the sooner it comes to an end. The opposite is the case with continuing* industries.
Prospecting of the old type, where men with gold-dish and shovel wandered afield in search of wealth, has practically passed the days of its usefulness, excepting in areas still unexplored. Future prospecting in Australia, to be productive, must be on a more extended scale where a number of men equipped with plant can undertake preliminary development work. Small prospecting organizations may be formed to carry on such work, and it appears desirable from the point of view of the industry, that such organizations should fall within the scope of the term “bona fide prospector.”
The Commonwealth Commissioner of Taxation at the instance of the Treasurer reaches out into those practically undeveloped portions of Australia and by means of harassing taxation prevents them from being developed in the only way possible - by the discovery of minerals. The area in Australia, devoted to the production of cereals, of butter and of grapes is relatively small. The fate of hundreds of thousands of square miles of country in the interior of Australia, and this is particularly true of Western Australia, depends upon the development of the known mineral resources. Unfortunately this Government, by its taxation proposals is interfering with that development. Apparently it is determined to exact from prospectors the last shilling of the small reward which they may look for in the development of this vast hinterland. I protest strongly against the Treasurer’s taxation proposals as regards the mining industry. The Government should take steps to redeem the promise of .the Prime Minister so that the gold-mining industry would receive fair treatment. I regret that the Treasurer has not seen fit to treat the goldmining industry in the same way that he has treated the butter or wheat producers, the growers of doradillo grapes and other sections of our primary producers. I trust he will agree to an amendment in the bill to provide for it.
– One or two points have been raised during the second-reading debate to which I desire briefly to reply; the remaining matters touched upon would, I suggest, be better dealt with in committee. In the first place the honorable member for Warringah (Mr. Parkhill) referred to the retrospective character of the bill. I point out that the retrospective features of this legislation are practically limited to those clauses which deal entirely with the question of the accounting period. Honorable members will recall that in my second-reading speech I pointed out that as the result of a judgment by Mr. Justice Lowe, of the Victorian Supreme Court Bench, the accounting periods agreed upon between the Commissioner and various undertakings, whose financial year does not correspond with that of the Commonwealth, could not be followed in future for the purposes of determinations under section 121, and that confusion would result if this position were not met. Accordingly there is in clause 4, a provision, which will apply retrospectively to all such determinations that have been made under the law as it stood. Confusion will thus be obviated. Apart from that matter and the averaging of incomes, which must go back to 1923, the provisions of this bill deal generally with the assessments for the current year, so that there is no reason to suggest that this measure is retrospective in the ordinary sense of the word.
The second point with which I wish to deal relates to the taxation of life assurance companies. There appears to be some confusion in the minds of honorable members who have dealt with this matter. I think it is a fact that almost from the time when income tax was first levied upon the people by the States, life assurance companies have been subject to this form of taxation by the State Parliaments, and so far as I” have been able to discover, no objection has ever been raised to it by members of any party of any of the State Parliaments. It is only when the taxation laws of the Commonwealth are being brought into line with those of the States that we hear these objections;
The following are the bases of State taxation : -
New South Wales. - Income from real property mortgages, less proportion of total expenses in New South
Wales obtained by using ratio of taxable income to total income.
Victoria. - Thirty per cent of “premium income” (ordinary department). Fifteen per cent, of “premium income” (industrial department).
South Australia. - Portion of the surplus divisible amongst policyholders which the Actuary certifies to be attributable to South Australia.
Tasmania. - Twenty per cent, of “ premiums received.”
Queensland. - Twenty-five per cent, of “premiums collected during the year” (ordinary department). Fifteen per cent, of “premiums collected during the year “ (industrial department).
Western Australia. - “Interest on investments,” less a deduction for expenses.
Looking further afield we find that life assurance companies are not exempt from taxation in England, New Zealand, and many other countries. I would point out also that the position with regard to investments of life assurance companies has changed very much within the last five or six years, because, consequent upon the Government’s policy to issue only taxable Commonwealth securities, the rate of interest which was paid on those securities has increased in every instance. During the war we were able to raise many tax-free loans at 4^ per cent. The first Commonwealth loan raised after the decision that they should be taxable was issued at 5-J per cent., and others were raised at 6 per cent. These, which were taken in substitution for the 4£ per cent, tax-free loans previously issued by the Commonwealth, largely fell into the hands of the life assurance companies, and to-day they are practically alone in their exemption from Commonwealth taxation. The honorable member for Maribyrnong (Mr. Fenton) pointed out that something like 55 per cent, of the investments of life assurance companies consisted of Government stock of the class referred to, so that apparently they are securing preferential discrimination over the investments of almost every other company. If one looks at the basis of exclusion of life insurance companies, one must realize that a strong case cannot be made out for the non-taxation of such investments. Interest paid on savings bank deposits, for instance, must be included in a taxpayer’s return, and is subject to taxation. Take the case of two men applying for membership of a life assurance society - one a perfectly sound, healthy man, and the other, who is suffering from lung trouble or some other disability. The sound man, after examination, is accepted as a good life, and becoming a member of the society, enjoys the advantage of having his risks shared by a large number of others in that association. The other man, being regarded as a “bad life,” cannot become a member of a life assurance company.
– Because actuarily it would he impossible to admit him.
– He must try to make provision for his family in case of his death by placing his surplus income at interest in a savings bank or other institution. Under the law as it stands, we say to that man, who cannot avail himself of the benefits of membership of a life assurance society, “ The income from your savings bank deposit is taxable.” But it is suggested that the sound man, able to insure, should be put in a different position altogether. We have already made a substantial concession to him by permitting him to deduct from his taxable income payments up to £50 in respect of life assurance premiums. In many cases this removes from the field of income taxation altogether many small salaried men in the community. Then it is said that the insertion of this clause providing for a tax of ls. in the £1 on life assurance companies will result in some awful catastrophe; that it will interfere with the payment of bonuses, or the basis on which bonuses are paid. Practically all of these companies have had their liability calculated on a basis of 3£ per cent. In some cases the amount is less and in one case it is 4 per cent. Their funds, however, are invested at rates of interest ranging from £5 10s. per cent, to £7 2s. per cent. There is therefore a margin of at least £2 per cent, between the basis on which their liability is actuarily calculated and th, actual profits earned. It is out of this amount approximating £2,000,000 a year that the tax in respect of life assurance companies will come. It will not interfere with the solvency of the companies, or ‘affect their present policy to any material extent. It has been urged also that there are certain inequities and complexities in our taxation laws, and the honorable member for Yarra (Mr. Scullin) has said that the only remedy is to recast the whole of our income tax legislation. Unfortunately, they are on a basis which was adopted by the Commonwealth some fourteen years ago; a tremendous amount zi taxation has been levied on that basis, and our Avhole system of administration has been built up on it. The only way in which it would be possible to simplify the procedure would be to levy taxation at the source, and allow a rebate subsequently. That, however, would be a complete departure from what we have been doing, though I admit it is carried out to some extent in various States. In New South Wales, for example, the company tax is 3s. in the £1, and the individual shareholder escapes further taxation in respect of his dividends on shares irrespective of whether he is a large or a small holder. The Commonwealth system follows dividends into the hands of shareholders, and provision is made for rebates in the case of those who pay a high rate. In the case of others, provision is now being made to put them in a better position than, they have hitherto occupied.
– Is it not a fact that the company tax in New South Wales is on reserves only?
– No; it is on the total profits and it is the substantial one of 3s. in the £1.
– A bill has been introduced, recently, reducing it from 3s. to 2s.
– Yes; but under the present law the tax is 3s. in the £1. Under the English system there is provision for a rebate; but that is entirely opposed to the principle of our legislation, so that if we are to go back to that system, we shall have to recast the whole of our taxation machinery. I do not think the time is opportune to do that.
Question resolved in the affirmative.
Bill read a second time. In committee: Clause 1 agreed to. Clause 2 -
Section 4 of the principal act is amended. . . .
by omitting the definition of “Partnership “ and inserting in its stead ….
Partnership ‘ means an association of persons carrying on business as partners or in receipt of income jointly, and includes a trust created by any person in respect of any income or income-producing assets under which the relatives by blood, marriage or adoption of that person are entitled to the whole or any part of that income or of the income derived from those assets, and which in the opinion of the Commissioner was created for the purpose of relieving that person from any liability which would have arisen under this net if the trust had not been created, but does not include a company;”.
– This clause, which deals with the definition of partnership, and must therefore be read in conjunction with clause 17, provides, in effect, that a “partnership “ includes a trust created by any person under which his blood relatives are entitled to the whole or any part of the income derived from the assets, and which, in the opinion of the Commissioner, was created for the purpose of relieving that person from any liability which would otherwise have arisen, but does not include a company. It is practically impossible to detach the definition clause from subsequent clauses. At any rate I mention clause 17 to illustrate my point to the committee. Under that clause the partnership would be assessed as if it were a single person without regard to the other partners. This raises two questions ; first, whether this procedure is fair ; and secondly, who is to determine whether this state of affairs has arisen? The Treasurer, in his second-reading speech, dealt generally with this question, as indeed he did with the bill, and he said that it was a common practice for a person who owned a great deal of property to form it into a family partnership, in which certain members of his family had interests, and that, he .contended, meant that the person concerned would not pay as much as if he had not formed the partnership. I ‘personally cannot see anything reprehensible in that. The true test of the question seems to bo whether the income from the property under the new arrangement is really passing to the other members of the family.
– Whether the person concerned was dummying?
– Yes, and I suggest that it is grossly unfair if an individual who makes an arrangement under which his family are partners with him, and pays the whole of the income or any part of it to them, is to be regarded under this definition clause, in conjunction with clause 17, as if he alone were the proprietor of the whole of the property. That aspect of the case seems, to me, to require some rebuttal. If a portion of the income derived from the property is being paid to the other members of the family, it is not being paid to the person in question, and it would be very unfair to expect him to pay the whole of the assessment on the property, which would, almost inevitably, be assessed against him at a higher rate than would be the case if the other members of the family were also assessed. I should say that it would be most natural, if such a family partnership were constituted, for the head of the family to retain some powers of management over the estate, because he would, in practically every instance, be the man who could manage it to the best advantage and derive the greatest return from it. So long as the proceeds were going to the members of the family, I cannot see why he alone should be assessed. He would become the chairman of directors - if I may use the term - of this partnership, and why should he be assessed as if he were the actual owner of the property? If on the other hand the partnership were formed into a company, he would be fairly entitled to become the chairman of directors of that company. That brings me to my second point. I should like to have some assurance from the Attorney-General with regard to these words, “ and which ‘ in the opinion of the Commissioner ‘ was created for the purpose of relieving that person from any liability which would have arisen under this act if the trust had not been created.” As the honorable member for Warringah (Mr. Parkhill) said this morning, those words frequently appear in the bill. They appear, for instance, in clause 7, which states - “Provided that profits which have, ‘ in the opinion of the Commissioner,’ been properly applied.” They are also to be found at the end of that clause, “shall be determined by the Commissioner, whose determination shall not be subject to objection.” They are to be found twice in clause 9, and also in clause 15. I do not even suggest that I have exhausted the list, but it will be clear from what I have said that the words appear fairly frequently in the bill. What I wish to ascertain definitely from the Attorney-General is whether those words exclude a matter from coming from the Commissioner’s opinion for re-hearing before some other board of review or court. It would appear to be perfectly clear that so far as the end of clause 7 is concerned there is no intention of allowing any appeal at all, because it says that the matter shall be determined by the Commissioner, whose determination shall not be subject to objectiou. This question should be made perfectly clear, particularly in the interests of the general public, because I think that one of the general objections in relation to clauses of this kind is against the Commissioner having power to determine a matter of his own volition without appeal to any one. That position is, obviously, undesirable. Needless to say, I am not criticizing the present Commissioner or any future Commissioner that may be appointed. But the Commissioner of Taxation is, by the nature of things, one of the parties to a dispute, and the general public is naturally reluctant that one of the parties to a dispute should also be constituted the umpire, and that, in fact, his opinion in the matter, which after all is only his opinion and which conceivably might be wrong, should not be liable to be appealed from and overriden by some hoard of review or court. If the Attorney-General replies that in every case where the words “ in the opinion of the Commissioner “ or some similar words are used in the bill, there does, in fact, under the original act as amended by this bill exist an appeal to some other authority, so that the taxpayer may always feel that he has a further court of appeal other than the decision of the department with which he is at the moment at dispute, then my objection in respect of the second point that I have raised falls completely to the ground, with the exception of the latter part of clause 7, which clearly states that the Commissioner’s determination shall not he subject to objection. I do not think that I have wasted the time of the committee by raising this point, because it should be clearly stated for the benefit of the general taxpayer that the existence of the words “ in the opinion of the Commissioner “ in the body of the bill in no way limits an appeal from the opinion of an individual, who after all is one of the parties concerned, to some outside body of appeal.
– The honorable member for Boothby (Mr. Duncan-Hughes) has raised two points in relation to the clause before the committee. The clause defines partnership to include certain trusts. Section 29 of the act provides that the general rule is that a partnership shall not be assessed in respect of its income, but that the partners shall be separately assessed in respect of their shares of income taken from the partnership together with any other income that they may have. The second sub-section provides that in the case of a partnership between husband and wife as to which the Commissioner is of opinion that the partnership was entered into for the purpose of relieving the husband or wife or both, from any liability which would have been incurred under the act if the partnership had not been formed, then the partners shall be assessed as a single person without any separation of interests. In that case the tax would be chargeable at a higher rate. That is already the law of the land. Now it has been found that that provision is being evaded iD two ways. In the first place trusts instead of partnerships have been created. The distinction between a trust and a partnership may sometimes be difficult to draw, but it is possible by apt and skilful conveyancing methods to establish a trust which has the same business effect as far as the sharing of income is concerned, as a partnership, but which does not amount to a partnership, because the beneficiaries under the trust are not carrying on business in common with a view to profit, that being the ordinary definition of partnership. Accordingly, “ partnership “ is defined in clause 2 of the bill to include what may be called “family trusts.” The existing section 29 refers only to husbands and wives. That section is being evaded by making a trust, not between husband and wife, but between a father and son, or a father and daughter. It is proposed to stop that sort of thing by the new clause. I have dealt with the two ways in which the existing legislation is being evaded, first by making a trust instead of a partnership, and secondly, by arranging a trust or partnership, not as between husband and wife, but between father and son or father and daughter. That is the reason for the modification of the law, but, in each case, the provisions will be limited by a requirement that the Commissioner must be of opinion that the partnership was entered into for the purpose of relieving the person from liability to pay tax. While the honorable member for Boothby was speaking, it seemed to me that he was not paying sufficient attention to this provision, namely, that there must be an intention to evade taxation, and it rests with the Commissioner to determine whether or not that intention is present.
-hughes. - Would not the form of the partnership relieve a person from a certain amount of taxation as a matter of course?
– No, not necessarily. In the case of a father and son who determine to enter into a partnership, and start a business as partners, no question of evasion could arise. But it would arise if the father had been carrying on a business for many years, and then took his son into partnership. It must then be determined according to the circumstances of the case whether it is a bona fide partnership, whether the father’s purpose was to give his son a share in the business and to make a career for him, or to relieve himself of liability to taxation. It is sometimes very difficult’ to determine what is the real purpose of such a transaction, but unless some endeavour is made to deal with it by law, it is certain that many serious attempts will be made to evade payment of the tax. To determine in what cases this purpose is present it is necessary to refer the matter to some authority. This clause provides that it shall he determined by the opinion of the Commissioner. The words used are - . . which in the opinion of the Commissioner was created for the purpose of relieving that person from any liability. . . .
The honorable member for Boothby asked whether the Commissioner’s opinion was final and conclusive. In this case it is not. I refer the honorable member to section 44 of the existing act, which provides for the powers of a board of review. Section 44 states -
The Board of Review shall have power to review such decisions of the Commissioner, Assistant Commissioner or Deputy Commissioner as are referred to it.
Sections 50 and 51 give the taxpayer the right to request the Commissioner to refer assessments to a board of review, and impose on the Commissioner the duty of referring the assessments when such a request is made. Section 44 provides that the act - for the purpose of revising such decisions shall have all the powers and functions of the Commissioner in making assessments, determinations and decisions under this act.
Honorable members will observe that the functions and powers of the board of review are not limited to the functions and powers of the Commissioner in making assessments, but that, in reviewing assessments it has all the powers of the Commissioner of arriving at decisions. Under section 21 of the act, the Commissioner has power to determine whether a sum, or a further sum not exceeding a certain limit, could reasonably have been distributed by a company to its shareholders. The board of review reviews such determinations of the Commissioner upon the assessment being referred to it. Section* 28 furnishes another example of the same sort of thing. The section is in these terms -
When any business which is carried on in Australia is controlled principally by persons resident outside Australia, and it appears to the Commissioner that the business produces either no taxable income, or less than the ordinary income which might be expected to arise from that business- then the persons carrying on the business in Australia may be assessed in a certain way. It will be noted that the words used are “when it appears to the Commissioner “ that certain facts exist. The board of review, therefore, will be reviewing the opinion of the Commissioner when he says “ it appears to me that so and so has happened.” There is no appeal, technically and strictly, from the Commissioner’s opinion as such, but there is a right to have an assessment reviewed by a board of review. The Commissioner must refer an assessment to the board of review if requested. When it comes before the board of review, that body has the same power to arrive at decisions as the Commissioner had originally, and may form its own opinion regarding the matter as to which the Commissioner originally formed an opinion.
– I should like a little more enlightment from the Attorney-General in regard to the first point raised by the honorable member for Boothby. Suppose a father creates a trust giving various interests to various members of this family - not pretended, but real interests. They are to get a real distribution of the profits of the business in connexion with which the trust is created. Suppose the father comes forward honestly and says, “My motive in creating this trust was to evade the high rate of income tax which I should otherwise have to pay; but I have taken this step with the distinct intention of benefiting the members of my family.” In that case, would the law regard that trust as liable to be taxed at the higher rate? In other words, if the person’s original motive was to evade the payment of the higher rate of tax, is it impossible for him to create, without penalty, a trust giving a real interest to the members of his family ?
– If a father desires to get rid of his property, he can do so, and then he does not derive income from it. In that case no question arises as to his liability to pay tax. But if, instead of adopting the natural course of transferring his property so that other persons become the owners of it, and have full management and control over it, he forms a trust, he lays himself open to the suggestion that he is not making a genuine transfer which will confer full rights upon his children.
– He does not set out to make a transfer of ownership of the property, but he is distributing the income in reality, and not in pretence. The “members of his family are not dummying for the father, but are getting a real share in the profits.
– If it is admitted that his purpose is the evasion of taxation, his case would certainly fall within this provision. I can answer that quite definitely. I point out, however, that if a man does desire to get rid of his property, and does not desire to retain, in fact, the degree of control over it, which he is pretending to abandon by the legal form which he adopts, it is a very easy thing for him to do so. He can make an ordinary transfer of property in full ownership, and then no difficulty arises. But when a person has been running a business for some years, and all at once brings in as partners three or four members of his family who have had nothing to do with the business, who may have businesses of their own, or who may be living in other parts of the country, it is a very easy conclusion to draw that his object is to evade taxation. The policy of Parliament, as already expressed in the case of husband’ and wife partnerships, is that no difficulty shall be placed in the way of a mau making a genuine transfer of property, but if he adopts a form which, under the appearance of a real transfer, enables him still to exercise effective control, he must be treated as if he were still the substantial owner of the property concerned.
– The explanation of the AttorneyGeneral does not entirely satisfy me on the point raised by the honorable member for Fawkner (Mr. Maxwell). What would be the position if a father formed a company with four of his sons, and they stood in the same relation to the father in regard to the disposal of the profits of the company as strangers would ?
– The last words of the clause expressly exclude companies.
– Let us assume, then, that it is a partnership, and members of the family are on the same footing as if they were strangers. The father would be dividing up the property, and relieving himself of taxation. Would he then be doing an illegal thing?
– There are many actions, the legal significance of which depends on the purpose or intention with which they are done. It is a matter of purpose or intention.
– Then of course the Commissioner would have to deal with the intention or the purpose, and would be the judge.
– Subject to the Board of Review.
– Will there be an appeal from the Board of Review to the ordinary courts?
– On this matter of fact the court would have to accept the opinion of the Commissioner or the Board of Review, whichever was the last to deal with the matter.
– That brings me back to my original objection that the entire settlement of what is legitimate or otherwise is vested in the Commissioner subject to the Board of Review; and as it is quite apparent from the explanation given by the Attorney-General that it is possible for a number of difficult and intricate questions to arise in coming to various determinations, it seems to me that the responsibility is one that should not’ rest entirely on the Commissioner.
– But it is quite possible for the Board of. Review to be just as good a judge of the’ matter as a court might be.
– If the honorable member’s contention is right, there is no need to have appeals from the Board of Review, yet in every instance appeals are permitted from the Board of Review.
– Only on questions of law. It was strongly desired by Parliament that the Board of Review should have the final decision on questions of fact, and that appeals from the board on questions of fact should be prohibited.
– That was also the desire of the taxpayers.
– It is not. always a question of fact that is subject to review.
.- In his reply to the honorable member for Fawkner (Mr. Maxwell), the AttorneyGeneral (Mr. Latham) said that if an owner in creating a trust of this kind does not pass over the control of his property to the members of his family he must be passing over his income for the purpose of evading taxation.
– I said that it was open to that suggestion and that the circumstances would be a matter for inquiry.
– When a grazier or farmer, instead of paying wages to the members of his family, pays them a proportion of the profits it is not a partnership, but in the opinion of the Commissioner the purpose of the original owner may bc to evade taxation, and evidently his decision is final.
– Yes, subject to an appeal to the Board of Review.
– A man may have seven sons. It may be too dangerous to him to pass over the control of the property to his sons, but he may divide the property into nine shares, retaining two for himself. If he were to pass over seven-ninths of the property to his sous, they might dispossess him at any time, but if, instead of paying wages, he gives each son one-eighth of the total profits, it may be regarded as a general partnership, inasmuch as the sons are working for a share of the profits.
– The payments to the sons, if they are genuine wages, would be regarded in the ordinary way as a deduction of outgoing.
– But they cannot be regarded as actual wages. In a good year the sons may get more, and in a bad year they may get less, but sometimes they may get nothing for their labours.
– Such men are really . working on shares.
– The whole question is whether it is a bona fide case or not, and that is a matter which is left to the decision of the Commissioner subject to revision by the board of review.
Clause, verbally amended, and, as amended, agreed to.
Clauses 3 to 5 agreed to.
Clause 6 -
Section sixteen of the principal act is amended by omitting from the first proviso following sub-paragraph (iii) of paragraph (b) all words from and including the words “ the amount “ and inserting in their stead the words “ the member or shareholder, except where the member or shareholder is a company, shall, where the rate of tax payable by him on income from property does not exceed the rate of tax paid or payable by the company, be entitled to a rebate in his assessment of the additional amount of tax due to the inclusion of the dividends, bonuses, profits or shares in his assessment:”.
Amendment (by Dr. Earle Page) agreed to -
That the words, “ except where the member or shareholder is u company” be omitted.
Clause also verbally amended, and, as amended, agreed to.
Clause 7 -
After section 10a of the principal act the following sections are inserted….. “ 10c. Where a taxpayer claims that …. or for any other reason whatever, income is derived partly from sources outside Australia, the question whether any, and if so what part, of the income is derived from sources outside Australia shall bc determined in accordance with the regulations, or, if there is no regulation applying to the case, shall be determined by the Commissioner, whose determination shall not be subject to objection.”
– The rapidity with which this bill, admittedly intricate, is passing through the committee is another indication of how impossible it is for honorable members to become familiar with all its details. We have had only a few days in which to study the measure. I wish I could give the Government that credit for trying invariably to simplify taxation legislation, which the Treasurer claimed in his opening remarks, but it seems to me that since I entered Parliament our taxation law has steadily become more difficult each year, until now very few honorable members would like to answer an examination paper upon it. We are becoming more and more dependent on this subject, on the opinions of experts outside, and the very fact that the bill is brought before us, as these measures generally are, in the closing days of the session, makes it more difficult for honorable members to discuss it armed with anything like expert knowledge, for such is not immediately obtainable. In his opening remarks the Treasurer said that a widespread practice had arisen, of private companies, which had been formed for special profit-making schemes and the distribution of the profit among shareholders, going into liquidation before any profit, had been distributed. In other words, the company is formed, the profit is made, the company goes into liquidation and pays over its assets to the shareholders, and they are exempt from income tax. One does not wish to defend that practice where it is obviously carried out with a desire to avoid the payment of income tax, but it seems to me that at least one distinction can be made which is not clearly made in the proposed new section 16b. Most of us .are chiefly familiar with companies which go into liquidation and do not pay 20s. in the £, and I should like to have it clearly set out in the bill that so long as not more than the paid-up face value of shares is distributed to the shareholders, no claim can be made in respect of income tax. It seems to me that the first amount to be paid, up to the face value of the shares, ought to be regarded as capital and not income. In this connexion 1 notice again that the words “ in the opinion of the Commissioner “ appear once or twice. I take it, of course, as the Attorney-General has explained in regard to a previous clause, that there will be an appeal to the Board of Review, but personally I cannot see any utility in the retention of the words “in the opinion of the Commissioner.” The proviso -
Provided that profits which have, in the opinion of the Commissioner, been properly applied to replace ti loss of paid-up capital. would be equally effective if it read -
Provided that profits which have been applied to replace a loss of paid-up capital.
The only other point I wish to stress is in regard to proposed new section 16c. but I shall defer my remarks on that point.
– Proposed sub-section b has been drafted to meet a recently discovered method of evading payment of income tax. It is becoming a practice for companies, particularly those engaged in the subdivision of land, to go into liquidation before the profits are received ; thus no dividends in the ordinary sense are paid, but the shareholders receive their profits in the form of dividends in liquidation, upon which, hitherto, income tax has not been charged. The proposed section is designed to reach such companies, but it would be obviously unfair to provide that everything received in liquidation should be regarded as income. Part of it is a repayment of the capital invested in the company; accordingly, there is a proviso that “profits which have, in the opinion of the Commissioner, been properly applied to replace a loss of paid-up capital, shall not be included in the income of the company for the purposes of this section.” Therefore, until the shareholders have received a return of 20s. for every £1 of capital invested, the tax will not apply.
– What is the need for the words “ in the opinion of the Commissioner V .
– Somebody must have the determining voice. If the section were worded “ have been properly applied to replace a loss of paidup capital,” every company would at once seek to take advantage of it. The capital of some companies has been reduced, and it would be a very fine thing for the shareholders if the proceeds of liquidation could be applied to return to them the capital they had already written off. But that would not be right. Therefore, somebody must determine whether the money has been properly applied to replace a loss of paid-up capital, and in ordinary circumstances the shareholders will experience no difficulty in securing the return of their capital. The clause is limited in that it provides that the money assessable shall only be the amount distributed out of income derived by the company, which would have been assessable in the hands of the members or shareholders if distributed, to them by the company when not in liquidation. Therefore, the amount assessable for income tax will be only that which would have been assessable had it been distributed as dividends during the life of the company. Section 16, paragraph b, sub-paragraph 1, provides that a shareholder shall not be assessable upon a dividend or bonus which is paid wholly and exclusively out of profits arising from the sale of assets which were not acquired for the purpose of re-sale at a profit. Honorable members will see that the proposed new section does not require that all liquidation dividends shall be taxed on the full amount, but, in so far as they represent profits which would have been taxable if they had been distributed during the lifetime of the company, they shall be taxable, unless they are paid wholly and exclusively out of profits arising from the sale of assets which were not acquired for the purpose of re-sale at a profit.
– How will that affect a company whose liquidation commenced some years ago and is not yet completed ?
– Clause 22, sub-clause 5, provides that the proposed new section 16b shall only apply in respect of companies going into liquidation at or after the commencement of this measure.
Proposed new section 16c relates to income derived from operations conducted in different countries. In such cases it is necessary to provide some means for determining what portion of the income is derived in each country. So far, little difficulty has arisen ; the matter has been dealt with administratively, with general satisfaction to the taxpayer. But recently, taxpayers have taken new ground, and legislation is necessary unless this Parliament is prepared to face the loss of very large sums of revenue. I can best illustrate the difficulties of the present situation by referring to three decisions of the law courts. In 1900, in Commissioner of Taxation v. Kirk (Appeal Cases 588), the question to be determined was the origin of certain income derived by Broken Hill mining companies. Ore was mined and partly treated in New South Wales, and some of it was further treated at Port Pirie, in South Australia, and was then exported and sold in England. The total income was the product of operations conducted in at least three countries, and a question arose as to whether the companies derived any income from New South Wales. After litigation in the Supreme Court of that State, the case went to the Privy Council, which, without laying down any principle, merely determined that the companies derived some income from New South Wales; no proportion or amount was fixed. Since then, business adjustments, have been made between the Commissioner of Taxation and the companies with reasonable satisfaction to the parties concerned. But businesses vary, and differences of opinion arise as to the apportionment of profits to the various countries in which the operations, which produce them are conducted. I shall mention two other recent decisions to indicate the need for clarifying the position by legislation. The first was the Commissioner of Taxation v. Lewis Berger & Sons, Australia, Ltd. (39 C.L.E. 468). This company manufactured and sold in one year paints, varnishes, and similar commodities of a total value of £303,000, of which £51,000 worth was sold in New Zealand. The total profits for the year were £35,000, and a dispute arose as to the apportionment of that amount between Australia and New Zealand. Taking the proportion of sales in New Zealand, to the total sales, the Commissioner calculated that £6,0,00 of the profits were attributable to sales in the dominion, But of this £6,000 the Commissioner, on the basis of the proportion of expenditure in Australia and New Zealand, calculated that only £132 was not derived from sources in Australia, whilst the Board of Review held that £3,000 was not so derived. The goods were manufactured in the Commonwealth, and some of the orders were received here; others, apparently, were obtained by commercial travellers in the Dominion. Notwithstanding that, of the £303,000 worth of total business for the year, only £51,000 worth was done in New Zealand, and that of expenses totalling £42,000, only £934 was incurred in New Zealand, the Board of Review decided that half of the profits from sales to New Zealand customers should be treated as earned in New Zealand, and the other half as income derived in Australia. That went to the High Court, and the decision of the Board of Review was upheld by the learned judge, who was not prepared to hold that the Board was wrong in law. There is also the case of Michell v. The Commissioner of Taxation 1928 (A.L.R. 25). In that case the main business of a partnership consisted in buying wool and skins in Australia and selling the same overseas, some in the raw state and some after treatment and manufacture there. The control of the business was in Australia, and the arrangement of its financial operations was made in Australia, but the bulk of its operations were carried on overseas. It was held that having regard to these facts the income of the firm for federal income tax purposes should he apportioned on the basis that not more than one half was derived directly or indirectly from sources within Australia. This also was an appeal from the Board of Review. Honorable members will recognize that there is no appeal from the Board of Beview on questions of fact, hut only on questions of law. The only matter to which the learned judge had to direct his mind was whether the Board of Review had proceeded upon any wrong principle of law, and again, he was unable to say that that had been done. In his judgment he said -
Looking at the matter broadly, and giving the best judgment I can upon the facts placed before me, I have come to the conclusion that the income of the business should be apportioned in equal parts as between Australia and places overseas.
– Can it be said that a principle of law is in any sense involved in making an apportionment?
– The learned judge said that it depended upon business judgment aud experience applied to the facts of the particular case, the nature of the business, and the mode in which it was carried on. He was not prepared to overrule the decision of the Board of Review on the ground that any wrong principle of law had been adopted. The question which arises in this connexion is of great importance, and vitally affects the revenue. In these two apparently diverse cases the Board of Review has thought it proper to apportion the profits on a fifty-fifty basis, and it is not at all’ improbable that such a course may be adopted in the future. We therefore have to consider the position which would arise in connexion with such products as Berger’s paints, which are manufactured in Australia and some of which are sent overseas, and in which case it was held that one half of the income derived from such sales was earned in Australia and one half overseas. On the export of such goods the Commonwealth would lose a good deal of legitimate revenue which has been paid without objection in the past.
– We cannot get away from the fact that there ought to be a proper body to decide this matter.
– The board is at present hearing such cases. Let us also consider the position in regard to imports. If this principle is applied to imports, any person, company, or firm which imports goods and sells them in Australia may obtain a ruling from the Board or the Court that one half of the profits were made in Australia and one half overseas. In that event Parliament would immediately be faced with the necessity of increasing the rates, and these would operate in the case of other people on all their income and not on only 50 per cent of it. It is open to argument that in the case of exports it is a matter of business judgment and experience, and if the Board of Review decides that it shall be on a fifty-fifty basis, it must be so. The inevitable result, however, would be a heavy increase in rates, which would have to be paid by those who conduct the whole of their business operations in Australia, and only a proportion would be paid by those whose operations are partly conducted in Australia and partly overseas. Generally speaking, every one has been satisfied with the principles which the Commissioner has applied; but if the two decisions given in 1927 and 1928 are to be regarded as precedents - and there is no reason to suggest that they should not be so regarded, as identical decisions on a fifty-fifty basis have been given in two dissimilar cases - the revenue will soon be seriously affected. The effect of this clause is that regulations can be framed to deal with cases where a definite rule can be expressed in a regulation. Other cases will be determined by the Commissioner as has been the practice in the past. It will not mean additional taxation for any one; but simply that if the Commissioner applies in the future the same principles, that he has applied in the past, the basis which has been in operation for so many years without substantial objection will be continued. If on the other hand the clause is not adopted, I suggest it will be very difficult to lay down in general legislation any principles which will apply to all cases. There would be serious loss of revenue, and the burden would fall more particularly upon businesses earning the whole of their income in Australia.
– I agree with what the Attorney-General (Mr. Latham) has said to the effect that if the law is allowed to remain in its present form, a serious loss in revenue will result. I cannot see any way in which we can definitely express in legislation what we require. It must be left to the determination of some one. “We are faced with the decision given in two different instances in connexion with different operations. The clause, however, is extraordinary in that the determination is left to the Commissioner, whose decision shall nor, be subject to any objection.
– I do not like that.
– I do not think any one does, but there does not seem to be any other way out of the difficulty unless we adopt the suggestion made some months ago by the honorable member for Swan (Mr. Gregory) and tax the profits of people in Australia irrespective of where they are earned. If these ex-Australian incomes were taxed we should not be faced with this problem. “We would have only to adjust cases where double taxation arose, and that could be done by an arrangement between the different countries as is now done by Great Britain. Great Britain has no problem such as this. The British Government taxes the incomes of the people who live in Great Britain, irrespective of the countries in which the incomes are earned. The whole of the income of residents of Great Britain is taxed as income earned in that country. .Certain adjustments are made between Great Britain and other countries in order to avoid double taxation ; that is what we ought to do in Australia. If the amendment moved by the honorable member for Swan to a previous amending taxation measure had gone to a division, it would have been carried.
– It would have been carried but for the Prime Minister’s promise, which I accepted.
– The right honorable gentleman’s promise was that he would go carefully into the matter, which was rather indefinite. I assume that the Government have considered and rejected the suggestion, and that is why we are faced with the present position. The British Government taxes companies on profits made outside of Great Britain.
– It has taxed the profits on zinc sent from Broken Hill to London. The income taxation should be paid here.
– Yes. If there are special circumstances to which Parliament should give consideration, such as encouraging the export of certain commodities, assistance could be given by bounties, and not in the remission of taxation. If a company operating in Australia exports goods at a profit, it should pay taxation upon the profits it makes on goods produced in Australia. The illustrations of the Attorney-General as to the methods of arriving at a basis of apportionment are extraordinary. I believe that the methods employed by the Commissioner in the past have in the main been satisfactory; but I do not favour a provision of this kind for determining such important matters, particularly when the decision of the Commissioner shall not be subject to any objection. In other cases provision is made for an appeal to the board of review, or on questions of law to the courts ; in this case there is to be no appeal, and of that I do not approve. “We have to take this responsibility. The Government has brought down a measure based on its experiences, some of which have been rather unfortunate. If we allow the present practice to continue, and its experiences are repeated and similar decisions given, some will be escaping payment whilst others will have to pay higher taxation in order to make up the loss in revenue. The committee cannot take that responsibility.
– “What is the real objection to a tax being imposed where the profit is made?
– The banks do not like it, because, they have to keep large sums of money in London.
– I am afraid we are too much influenced in a good deal of our legislation by big financiers in London.
– I was referring to banks in Australia.
– Yes, but their head offices are in London. I read a statement made recently when it was announced that the Government had refused to adopt the suggestion of taxing profits earned outside Australia, and I could not see that a sound argument had been presented against the system. At present, we are losing a considerable amount of revenue because we are not collecting taxation on such profits.Firms are operating in Australia to-day, earning large incomes and contributing very little in the form of taxation, because they can declare that much of their profit is earned outside Australia. They are exploiting the Australian market.
– That is done in the case of tin-mining companies.
– And with the producers of cinematograph films.
– Exactly. The companies controlling the distribution of films have declared that they are not making any profits because they have to pay huge rents, and also royalties, to the producers of films who are operating outside Australia. We are losing a good deal of revenue in this way. The Government has introduced this provision giving such autocratic powers to the Commissioner of Taxation because we are told there is no other way out of the difficulty; but we ought to adopt the course suggested last year, and make provision to tax all income of persons resident in Australia irrespective of where the profit is made.
.- It afforded me pleasure to hear the views expressed by the Leader of the Opposition (Mr. Scullin) respecting the methods of taxation that should be adopted. There is not the slightest doubt that the amendment which I moved in the early part of this year would have been agreed to by the committee had I not requested honorable members to refrain from voting for it because I relied upon the promise of the Prime Minister (Mr. Bruce) that the matter would be inquired into, and felt, also, that before legislation upon such lines was passed the fullest inquiries should be made, to avoid falling into error, and to indicate exactly where we stand. This principle has been in operation ever since an income tax has been imposed in Australia, and it is too important to alter without thorough investigation and mature consideration. I expected to receive from the Government a reason for its failure to bring forward legislation which would conform to the principle I then enunciated. It has been argued that many banking corporations in Australia are obliged to keep large sums of money in London for exchange purposes, and that they do not think it would be fair to be charged taxation in Australia on the profits which they make out of those transactions. The presence of those large sums of money in London is a very great advantage to the primary producers of Australia, in connexion with the transactions that take place in regard to their wool and wheat. At the same time, it cannot be denied that profits are being made out of the use. of Australian money. I can see no reason why profits derived in that way should not be taxed as are any other profits which are earned from the investment of Austalian money. If they are taxed by the countries in which they are made, there surely would be little difficulty in coming to an arrangement with those countries. A person who makes money in Australia, and invests it outside this country, should be compelled to pay taxation on the income which he thus derives. I know of Australians who invested big amounts in British war loans, that were free from taxation. Large sums have been sent also from this country to New Zealand ; and the investments in Siam tin mines have been enormous. According to a report which I received from the Stock Exchange, one wholly Australian company paid in dividends no less than £600,000. The lucky persons in Australia who increased their income enormously by the receipt of those dividends were not obliged to pay upon them a penny in tax here. That is not just.
– Did they pay income tax in Siam?
– I do not know what form of taxation is in force in Siam; but I contend that any person an Australia who receives a share of such profits should pay taxation upon the amount. I was hoping that the Government would have seen fit to alter the present system. Under the proposed new section 16c: -
Where a taxpayer claims that -
by reason of the manufacture, pro duction or purchase of goods in one country and their sale in another;
by reason of successive steps of production or manufacture in different countries; or
by reason of the making of contracts in one country and their performance in another, or for any other reason whatever, income is derived partly from sources outside Australia, the question whether any, and if so what part, of thu income is derived from sources outside Australia shall be determined in accordance with the regulations, or, if there is no regulation applying to the case, shall be determined by the Commissioner, whose determination shall not be subject to objection.
The questions the Commissioner will have to decide are extremely intricate ones, necessitating a great deal of consideration. Are we to regard this proposal as something in the nature of a motion of want of confidence against the Board of Review, that has been appointed to deal with such questions? That is how the matter appeals to me. The Government ought to withdraw it, and allow these matters to be determined as they have been formerly. I am not acquainted with any of the members of the Board of Review, nor with the manner in which it is constituted; but surely, with such intricate questions, which require close examination and careful consideration of the evidence submitted, a board of three is essential to determine the rights or wrongs of the case.
– Since I have sat in this Parliament I have rarely seen this committee stampeded to such an extent as it was upon the amendment moved early this year by the honorable member for Swan (Mr. Gregory). The result of a few hours’ consideration was that a very large number of honorable members were prepared to vote outright for a proposal to which few of them had given a moment’s thought when they entered the chamber. That the decision then arrived at to postpone the matter was a wise one is proved by the fact that in his latest budget speech the Treasurer (Dr. Earle Page) devoted no less than a page to the reasons which actuated the Government in its intention to refrain, at any rate for the present, from taking the step suggested. Whether honorable members are in favour of, or opposed to, the alteration, they must admit that no harm will be done by having the matter fully weighed and considered before a decision is arrived at. The Leader of the Opposition argued that the department was losing at both ends. May I, however, be permitted to point out that ever since the inauguration of the Federal Land Tax, absentees from Australia have been assessed at a particularly high rate, and allowed no exemption whatever. If there is superadded to that a tax upon income earned outside Australia, the department will be a gainer at both ends. The Attorney-General (Mr. Latham) has pointed out that a very large sum of money is involved. Doubtless there is a very good reason behind the proposal of the Government, and I am not anxious to dispute the wisdom of incorporating these particular provisions in the law ; but I cannot see that, because differing judgments may have been given in the High Court, and strange decisions by the Board of Review, we should takeit upon ourselves to remove from their jurisdiction the decision of these matters, and rest it in one person. If honorable members will glance at the clause they will see that the question involved isto be determined in accordance with the regulations, or if there is no regulation applying to the case, by the Commissioner, whose determination shall not be subject to objection. One of the weaknesses of this provision is that there is only such a final decision if there is no regulation applying to the case; in other words, so long as regulations have been prescribed there will be an appeal from the decision of the Commissioner; the decision will rest finally with the Commissioner, only in cases that are not dealt with by regulation. Without wishing to disparage any officer of the department I say that it is not wise to place this power in the hands of one person. It certainly would not be wise to vest it in a taxpayer. I do not think it would be wise either to place it in the hands of a Treasurer, although there is something to be said for throwing the onus of making a decision upon the political head of the department, who would have to justify his actions in this chamber. I do not suggest that there should be retrospective regulations; but surely where there is no regulation to meet a particular case there is neither reason nor justification for making the decision of the Commissioner absolutely final. To test the feeling of the committee, I move -
That the word “ not “, last line, proposed new section 10c, he omitted.
, - I shall deal first with the question of the taxation of ex-Australian income. It will be remembered that, as a result of a discussion which took place in this chamber, the Government, promised to inquire into that matter. It has done so, very exhaustively. The further it proceeded, the more difficult appeared to be the prospect of evolving a satisfactory method of taxing exAustralian income, and thus effecting the purpose of the honorable member for Swan, that of bringing more money into the Commonwealth.
– I did not view the matter in that light.
– If it would not bring in more revenue, and it proved infinitely vexatious, I do not think any honorable member would suggest that the tax should be imposed.
– It is a matter of equity.
– We found that the great difficulty which stood in the way was the fact that it invariably forced the imposition of double taxation. That would be extremely inequitable, especially in relation to British citizens who have invested money in Australia or Australians who have made investments in England or in British possessions. It is worth while considering the matter very closely from that aspect. The Government has done so. It has found that in every case in which taxation was imposed with respect to assets held outside the taxing country the force of circumstances compelled the making of a provision for the remission of the duplicate tax. New Zealand agreed not to tax the income received from such assets where a tax had already been imposed upon it in the country from which it was derived. The authorities in Canada decided that if a tax was levied in another country they would give a corresponding rebate. An arrangement entered into with the British Government prevents double taxation from being levied. That provision, which is embodied in section 18 of the prncipal act, operates substantially to the benefit of Australian residents. If we were to encroach on the fields of taxation controlled by the British Government - which we should do if we taxed income on British assets held by Australian residents - the British Government would probably revise the existing arrangement, which represents a substantial concession to us. While recognizing the desirability of preventing certain inequities, the Government also realized the need for caution. It, therefore, decided to ascertain the views of the governments of the countries in which Australian residents had large investments. Honorable members will understand that these investigations take time. The Prime Minister has communicated with the various Governments concerned asking for the fullest information on these matters. Pending the receipt of their replies, it would be unwise to pass hasty legislation, which might adversely affect the making of reciprocal arrangements with other countries. The Leader of the Opposition (Mr. Scullin) suggested that if this question of the taxation was settled we should have cut the Gordian knot in connexion with profits. But New Zealand, which does tax some ex-New Zealand investments, has found it necessary to legislate on lines which are almost identical with the proposals in the bill now before us. Section 88 of the New Zealand Act of 1923 reads -
Whenever by reason of the manufacture, production or purchase of goods in one country and their sale in another, or by reason of successive steps of production or manufacture in different countries, or by reason of the making of contracts in one country and their performance in another, or for any other reason whatever, the source of any income is not exclusively in New Zealand, that income shall be apportioned between its source in New Zealand and its source elsewhere, or attributed to one of such sources to the exclusion of the other, in such manner as may be prescribed by regulations made under this act; and in default of such regulations, or so far as they do not extend, then in such manner as the Commissioner thinks just and reasonable, having regard to the nature and relative importance of the sources of that income; and the income, so far as so apportioned or attributed to a source in New Zealand, shall be deemed to be derived from New Zealand, and shall be assessable for income tax accordingly.
New Zealand’s problem is very similar to ours, because she also is a primary producing country; the profits on the sale overseas of New Zealand produce must be apportioned between New Zealand and other countries. Her position in relation to imports is also similar to ours.
– Is there no appeal against the Commissioner’s decision?
– No; it may be done in such manner as is prescribed by regulations, or, otherwise in default of regulations, in such manner as the Commissioner thinks just and reasonable. It is clear from the cases referred to by the Attorney-General that, in the absence of definite lines upon which a simple and economical administration of the act would be possible, this power must be vested in the Commissioner. The fifty-fifty arrangement which has been suggested as a general principle by the court and the Board of Review would in some cases be absurd. The infinite variety of products sent overseas and brought into this country would necessitate a large number of different percentages and apportionments being made. Regulations would, no doubt, be issued, but they would deal only with the broad principles. It would not he possible to provide for every case by regulation. In cases to which the regulations would not apply the Commissioner would have to act on his own discretion.
– Does the New Zealand act provide for a court of review ?
– No. In this matter we are faced with the necessity of protecting the revenue. If we adopted a 50 - 50 basis when it should be a 98 - 2 basis, the result would be an enormous loss of revenue to Australia, and, as a result, we should have to increase the general rate of taxation, which would press harshly upon all other taxpayers in the community. In the case of many of our exports, the basis should be 95 - 5 or 90-10, rather than 50-50. The basis set out in this measure is regarded by the Government as the only possible one in the circumstances.
.- I support the amendment moved by the honorable member for Boothby (Mr. Duncan-Hughes), because I feel that the powers proposed to be vested in the Commissioner are far too arbitrary and comprehensive. It should be possible to devise ‘regulations to cover every possible case that might arise. To give the Commissioner power to make determinations merely because a case which is not covered by the regulation might arise, is too extreme a step to take. The Treasurer should agree to make this small concession.
– It would not be a small concession ; it would be a departure from the general principle, and would mean a difference of 5 per cent. in the general rate.
– The Government’s proposal will be exceedingly unpopular with taxpayers generally. I have sufficient faith in the tax-gatherer to leave the matter in his hands, but the average taxpayer is not so convinced of his impartiality. He does not believe in being subject to impositions in respect of which he has no right of appeal.
Clause agreed to.
Clause 8 (Taxation of companies).
– I move -
That proposed new sub-sections (5) and (6) be left out with a view to inserting in lieu thereof the following: - “ (5) For the purpose of ascertaining the taxable income of a company the principal business of which is life insurance there shall be excluded from the assessment the following amounts -
all premiums received in respect of policies of life insurance and all considerations received in respect of annuities granted and all income derived from any source whether in or outside Australia which, apart from the provisions of this sub-section, would not be included in the assessinent, and all expenditure exclusively incurred in gaining those premiums or considerations or that income; and
the part of the expenditure incurred in the general management of the business of the company (but not including any expenditure exclusively incurred in gaining or producing the income included in the assessment) which bears to that expenditure the proportion which the sum of the premiums, considerations and income mentioned in paragraph (a) of this sub-section bears to the total income of the company derived from any source whether in. or outside Australia.”
Since the bill was introduced it has been discovered that the method provided in this clause for calculating the amount of the taxable income to be charged with tax, will, in the case of a proprietary company, include the amount distributed by the company as dividends or added to the paid-up capital. It is therefore unnecessary to provide specifically for the inclusion of those amounts in the taxable income. It has been ascertained that the present wording of the clause would cause the distributions to shareholders to be included twice in the taxable income. This result is not intended. It is possible, therefore, to eliminate the present separate provisions for non-mutual life insurance companies and to provide one provision covering both classes of company. The amendment now submitted will do this. It has also been considered necessary to include a special reference to considerations received in respect of annuities granted and all payments made by the company by way of annuities granted, together with all expenditure exclusively incurred by the company in gaining the considerations in respect of the annuities granted. Consideration received in respect of annuities represents the purchase price paid for a fixed annual payment to be made during subsequent years. It does not represent income of a life insurance company in the same sense as premiums or interests and rents. It is in the nature of a capital receipt which is invested by the company for the purpose of enabling it to make the regular annuity payments. The clause as redrafted also deals with the elimination from the assessment of all expenditure directly or indirectly referable to exAustralian income and Australian income, such as interest from State Government securities, which is not being taxed. In ordinary cases, the terms of the act refer only to income derived from Australian sources and to expenditure incurred in gaining that particular income. Where, as in the present case, it has become necessary to indicate the assessable income by a process of exclusion of other income and all expenditure referable to that other income, it is necessary to make an apportionment of the general expenditure of the company for all its business, whether carried on inside or. outside Australia. In order that the apportionment may be properly expressed in legal terms, it has been deemed advisable to re-draft the relevant provisions of the clauseso that all confusion as to the real intention of Parliament on the point may be avoided. For these reasons the proposed amendment refers to income which the clause will expressly exclude from the assessment and other income which would not be brought into the assessment under any circumstances, and, as a consequence, an apportionment of the general expenditure of the company is provided for on the basis of the income which will be taxed and the income or receipts which will not
.- I take it that the object of this amendment is to prevent non-mutual companies from being doubly taxed. No one desires that they should labour under that disability. I am prepared to agree to the taxation of the dividends paid to shareholders of proprietary companies, or to the profits that are made by the shareholders, but not to the profits on investments that will go to policyholders.
– They are already taxed in that way.
– I agree to that being done, as it is done in the case of ordinary companies.
– We do not desire to tax companies twice in respect of their dividends.
– That is so. I take it that if we agree to this amendment we shall then be able to take a vote on the clause as amended, which covers the main question of the taxation of life insurance companies.
– That is so.
Amendment agreed to.
.- I ask the committee to reject this clause for the reasons which I and some other honorable members gave during the second-reading debate. It has been argued that some of the States impose this taxation. But surely we are not obliged to follow a bad example. Many protests have been made against the States imposing this taxation, for it really penalizes those who are attempting to make some provision for the uncertainties of life and for old age. It may be argued also that this taxation is justifiable because we tax people on their savings bank interest. The reply to that argument is obvious. The only savings banks depositors who are taxed are chose who are in receipt of an income of more than £300 per annum. If we agree to the taxation sought to be imposed under this clause we shall tax a great many people whose income is considerably below £300 per annum. Our income tax legislation also exempts from taxation premiums paid upon life insurance policies up to a maximum of £50. If the object of this proposal is to increase the revenue, it would be far better for us to remove the exemption from taxation of premiums. It has been pointed out that these life insurance companies handle money from nearly 2,000,000 people. There are more than 2,100,000 policies in force. Allowing for the holding of more than one policy in some cases, the income of the companies would undoubtedly come from nearly 2,000,000 different persons. I submit, therefore, that we are seeking to tax well over 1,500,000 persons whose incomes are below the statutory exemption, and we are doing it by a subterfuge. The honorable member for Warringah (Mr. Parkhill) said this afternoon that we were imposing indirect taxation of this description through our Customs Department. Insofar as we are taxing commodities solely to obtain revenue that is true. Some customs duties are imposed chiefly for revenue purposes. I am not speaking at the moment of the taxation on luxuries. Many of our alleged protectionist duties are really revenue duties. I have never supported these to any great extent, though I am an ardent protectionist. We should not attempt to impose this taxation by an underhand method.
– The honorable member should not call it an underhand method ; it is indirect, it is true.
– I did not mean to suggest that it was underhand as between the Government and the Parliament, but it is certainly underhand as between the Parliament and the people. The honorable member for Maribyrnong (Mr. Fenton) pointed out this morning that we are attempting to “rope in” more than 1,500,000 persons who are at present exempt from taxation. I object to that being done, and ask the committee to vote against the clause.
– I was under the impression at first that the amendment to this clause, to which we have just agreed, removed some of the vital objections to it; but I can see now that that is not so. I have a very strong objection to the taxation of life insurance companies which are operating on the mutual principle. The Leader of the Opposition has effectively replied to the argument of the Treasurer that savings bank depositors are taxed. He has indicated clearly that there is no analogy between that practice and this proposal. Savings bank depositors are only taxed upon the interest they receive from their deposits if their income from all sources exceeds £300 per annum. We have, roughly, 4,500,000 savings bank depositors. It is estimated that we have 250,000 income taxpayers. It will be seen, therefore, that 4,250,000 savings bank depositors are at present exempt from taxation. Many holders of small life insurance policies are also at present exempt from taxation because their total income does not exceed £300 per annum. But if we agree to this clause we shall oblige them to pay taxation, simply because they are endeavoring to provide for their old-age, or for a rainy day. We exempt from taxation payments up to £50 made as premiums upon life insurance policies, and also superannuation payments, because it is regarded that they are a form of thrift that should be encouraged. For the same reason contributions to friendly societies are properly exempted from taxation. In these circumstances it would be cruel for us to agree to this clause. The ex-Commonwealth Statistician, Sir George Knibbs, made some interesting remarks on this subject when addressing the shareholders in the Colonial Mutual Life Assurance Society recently. He said -
What all thosewho belong to a mutual society would do well to keep in remembrance is that the whole profits belong to the policy holders, and are distributed among them, in which respect it differs fundamentally from a proprietary company, and that is really the great advantage which we have in Australia, that our large companies generally are mutual and not proprietary.
Sir George Knibbs is quite right in that contention. The same distinction was made by the Privy Council itself, when an attempt was made to encroach upon the funds of the policy holders of Great Britain. In a notable case, Rex v. Styles, the Privy Council held that mutual life assurance companies are not formed for profit or gain, and that, therefore, their earnings did not come within the province of taxation. I hope that the Treasurer will relent in this matter. If the honorable gentleman penalizes the £7,000,000 which has been earned by insurance companies from investments, he will take £850,000 per annum from the policy holders. The Treasurer may claim that it will represent hut a few shillings from each individual policy holder, but over a period of ten years that extra taxation will amount to £3,500,000, which will be a noticeable additional burden upon those who receive small wages, and are endeavouring to provide for old age and a rainy day. One of two things must happen. Either the insurance companies will reimburse themselves by increasing their rates, or the bounties paid to policy holders will be reduced. I strongly disapprove of the raising of interest. Our insurance companies have done splendid work in investing their money in this country. They have advanced £10,000,000 to people engaged in rural pursuits, £25,000,000 to those desiring to build or purchase homes, and have invested something like £60,000,000 in war and other loans. The effect of this legislation will recoil upon the heads of its* originators, and it is almost certain that another Parliament will repeal it in the near future. I feel confident that the 2,000,000 policy holders concerned will have something to. say in the matter, as there is an important principle involved. I shall vote with my leader to have deleted every provision in the bill which adversely affects insurance companies, and I hope that we shall have the support of honorable members opposite who have definite views on the subject. The Treasurer is becoming more and more a law unto himself, a law almost like that of the Medes and the Persians, unalterable. I hope that the division on this clause will disillusion the honorable gentleman.
– It does not follow because 2,000,000 policies have been issued by insurance companies that 2,000,000 different persons are insured, as many people take out several policies. The same remark applies to savings bank accounts. The honorable member for
Maribyrnong (Mr. Fenton) stated that there are 4,500,000 savings bank accounts in Australia, but it does not at all follow that there are 4,500,000 depositors. Therefore, the number of people whom this taxation will affect indirectly will be very much less than was claimed by the honorable member.
The Leader of the Opposition (Mr. Scullin)said that there are two alternatives to the proposal to tax insurance companies. I think that the honorable member agrees that it is necessary to collect additional revenue in order to continue the policy of this Government in regard to old-age, invalid and returned soldiers’ pensions, advances to the States, and the ordinary departmental work. But he suggested that it would be preferable to increase the general rate of taxation, or to reduce the amount of deduction for insurance premiums paid, which is now £50.
– I do not advocate that, but I argued that it would be more equitable to do that than to introduce the present proposal, which will impose additional taxation on people least able to pay it.
– In any case, those are two alternatives that would have to be seriously considered if this proposal is abandoned, because it is essential that we should obtain sufficient to balance our budget, which disclosed an estimated surplus of only £13,000.
It is suggested that this is a measure of taxation affecting low-salaried people. Unfortunately, we have an example of such taxation, not only in our customs revenue, but also in the taxation of joint stock companies. In many cases the shareholders of these companies have only small incomes, but they are, nevertheless, taxed through the comp’any tax. Many do not earn sufficient to receive the advantage of the statutory exemption of £300, so that they do not receive any real concession from the existing taxation law.
– I pointed that out earlier in the day.
– It is impossible to rectify that inequitable state of affairs.
– And now the Government is adding to the burden.
Dr.EARLE PAGE. - If we did not grant these exemptions we should increase the total amount of tax obtained from taxpayers generally. The allowance of £50 probably removes thousands of people from the. incidence of taxation, as it brings them below the £300 statutory exemption. If the £50 allowance were removed, it would very materially influence a large number of low-paid individuals. It is suggested that if this legislation is passed, and the proposed tax enforced, the immediate effect will be an increase in insurance premiums. I pointed out this morning that this tax would be paid out of the returns from investments which have been hypothecated for the purpose of meeting the liabilities of the various companies. The benefits given in return for premiums have been based on a 3½ per cent. or 4 per cent. valuation, and will be adhered to, the new taxes being met out of the surplus after paying that 3½ or 4 per cent. I admit that this may possibly lead to a slight diminution in the amount of bonuses paid.
Nobody has advanced an explanation why no protest has been raised in the States against this innovation. I have conversed with a man who controls a very big insurance company, and it has been admitted that an anomaly has existed that has been intensified by the issuing of loans free of taxation to insurance companies. Those companies have enjoyed greater returns because many of their investments have been free from federal taxation. The amount that will be collected as the result of this legislation will not be so large as that collected from the insurance companies as a result of State legislation. I contend, therefore, that they will not be penalized unduly, and I urge the committee to agree to the Government’s proposal.
– I shall not deal with this proposal at length, because I believe that taxation of this description can be best dealt with by the constituencies. Undoubtedly, the tax is an imposition on thrift and frugality. Thebroad principle on which it is opposed from this side ofthe chamber is that the policy of the Government is that of greasing the fatted pig. During its term of office, its indirect taxation of all descriptionshas increased, and has borne very heavily upon the basic wage-earner. On the other hand, it has made taxation remissions which have greatly benefited the recipients of big incomes. When it assumed office in 1922 the income tax payable on a taxable income of £1,000 was £43, while it is now £30, a remission of £13. The income tax then payable on a taxable income of £2,000 was £134, while it is now £94, a remission of £40. That payable on a taxable income of £5,000 was £695, and is now £489, a reduction of £206, while the income tax payable on a taxable income of £10,000 was £2,452 on the 30th June, 1922, and is now only £1,725, representing a remission of £727. The Government, therefore, has no justification for attempting to impose additional taxation on people who are earning only a small wage, and who are compelled, by economic necessity, to insure against risks, and to provide for their future. On the other hand, there is every justification for protesting against this further imposition on the basic wageearner, when the wealthy of the community have secured such enormous remissions of taxation from this Government.
.- I think that honorable members are all agreed as to the value of the work of the mutual societies. I was interested in the concluding remarks of the honorable member for Reid (Mr. Coleman), who suggested that the Government had done nothing to reduce taxation generally or to lessen the tax levied on those whose incomes are small. I remind the honorable member that an all-round reduction has been made, that the exemption has been raised so that the incomes of thousands who were previously included are not now taxable, and also that the child allowance has been increased.
Referring to the principle that the Leader of the Opposition (Mr. Scullin) has espoused in this debate, supported by other honorable members opposite, we know quite well that taxes are often passed on, and it is impossible to make sure that the burden falls on the shoulders of those intended by Parliament to bear it. Eor instance, the city land taxes are largely passed on to the public. A large proportion of the taxes levied on incomes is also passed on to the public, the bulkof whom are wage earners. No complaint is heard on that score, and, therefore, the Opposition appears to be straining at a gnat and swallowing a camel. So far as the mutual societies are concerned, it seems to me that if the bonuses were reduced the biggest policy holders would certainly suffer most, and the hardship imposed upon the small policy holders would be infinitesimal. If 2,000,000 contributors were taxed to the extent of £300,000, it would, mean an average of about 3s. per head. Those who hold the larger policies in the mutual societies would bear practically three-fourths of the burden imposed by the proposed tax, and therefore the impost upon the remaining contributors would be inconsiderable. Remembering the cost of Australia’s policy of protection, a tax that might not amount to 3s. in the case of the average small policy holder, and iu some cases might be only a fraction of ls, cannot be reasonably objected to. The tax proposed to be levied on the mutual companies is really a tax on profit that has been invested. We cannot escape from the principle that whatever tax is levied in a direct form, the burden is not usually borne by those who pay the assessment bill, but is passed on to the small Consumer. I have no hesitation in supporting the clause.
– I am surprised that the Government has proposed this increased taxation. I read in the budget speech that it had no intention to increase taxation in any way. The right honorable member for Balaclava (Mr. Watt) has made reference to the “trust to luck” budget, and has mentioned that it contains no proposal to increase taxation. Now the Treasurer comes along with a proposal to tax the most thrifty section of the community, forgetful of the fact that only a year ago he gave the wealthy section the benefit of a reduction in taxation.. In the dying hours of this session, the Government proceeds to impose an additional tax on those who can least afford to bear such a burden, and who should be encouraged in their thrift. Let me remind the Treasurer that in 1917-18, the indirect taxes amounted to £2 13s. Id. per head of the population, and in 1926-27 to £7 2s. 6d. Direct taxes in 1917-18 amounted to £2 5s. 8d., and in 1926-27 to £2 10s. 2d., making a total of> £4 18s. 9d. in 1917-18, and £9 12s. 8d. in 1926-27. Side by side with that alarming increase there has been a decrease in the taxes imposed on those who can best afford to pay them. The form of taxation under consideration was imposed for the purpose of meeting the expenditure caused by the late war. The patriots of this country were prepared to undertake any responsibility of that kind to ensure the succeess of the war, but now that safety has been secured this tax has been continuously on the decrease. We now have a proposal to increase by about £300,000 per annum the burden of the poorest members of the community. The honorable member for Robertson (Mr. Gardner) need not talk about the wealthy policy holders in the mutual societies, because most of the members hold policies ranging from £200 to £400.
– What would be the cost to each member on account of a reduction in bonuses sufficient to meet this taxation?
– No matter whether the premiums were increased, or whether the bonuses were reduced, the members of the societies would be taxed just the same. This is a contemptible way in which to treat persons of thrifty habits who make sacrifices in order to provide for the future. The present Government is living up to the name it has earned as the rich man’s Ministry. In the dying hours of the session it panders to those who live in wealth and luxury, while the poor and thrifty section, who cannot organize to protest against this form of legislation, have to submit to an unjust impost. If the Government had brought down a proposal to increase the tax levied on those with hig incomes, restoring a law that obtained a year or so ago, those concerned would cause a lot of trouble to the Ministry, because they supply the party funds of the Nationalist party. I realize that the Government has the necessary numbers to carry this proposal; but the issue will he revived before the electors. The sooner the election is held the better it will be. I have heard it suggested that the Government proposes to ask honorable members to sit next week. That may suit the Government’s game. Personally, I advocate brief debates and a few divisions on important subjects, so that the earliest possible appeal may be made to the people. The Opposition will probably be defeated on this clause, but I hope that early next year the Labour party will have an opportunity to rescind this provision.
Question - That the clause, as amended, be agreed to - put. The committee divided.
Majority . . . . 13
Question so resolved in the affirmative.
Clause, as amended, agreed to.
Clause 9 (Taxation of company where distribution not reasonable).
– This proposed amendment of section 21 is made retrospective by clause 22. Therefore, it is proper that some special information with regard to it should be given to the committee. Difficulties arising out of the interpretation of section 21 were brought before the Supreme Court of Victoria recently in the Kellow-Falkiner case. Section 21, as honorable members know, enables the Commissioner of Taxation to prevent what has been regarded as an evasion of the act in connexion with the distribution of income by a company. Under this section the Commissioner has a right to determine whether a sum or further sum, not exceeding an excess of two-thirds of the taxable income of a company over any amount distributed by it to a number of its shareholders, should reasonably have been distributed by the company. Section 21 is introduced by the words - “Where in any year a company has not distributed to its members or shareholders at least two-thirds of its taxable income, . . .
Honorable members will note the words, “ in any year.” In a later provision the Commissioner has to make a determination in respect of a financial year, and it has been held that he must apply his mind to the taxable income derived by the company during a financial year, that is to say, during a period ending on the 30th June of each year. Under section 32, it is permissible for the Commissioner to accept returns for a period known as the accounting period, other than a period ending on the 30th June. The accounts of many companies cover such other periods. Some concerns forward returns to the Commissioner for a period ending, let us suppose, on the 30th September, and it has been the. custom of the department to regard such returns as representing income derived during the preceding year ending on the 30th June. The act has been administered in that way, and no difficulty has arisen. Hundreds, possibly thousands, of assessments have been made on that basis. Now, however, the point has been taken that under section 21 the Commissioner must consider whether a company has, during a period of twelve months ending on the 30th June, distributed a reasonable portion of its income. It is impracticable for him to do that in the case of a company whose accounting period ended on the 30th September. I think I am right in saying that these accounting periods have been accepted by the Commissioner in lieu of the period ending on the 30th June, at the request of the companies concerned. But because the Commissioner, for the obvious convenience of the business of a company, has acceeded to the request, it now appears that section 21 is inoperative. This is one of the difficulties with which this amendment deals. It is proposed to make the amendment apply during the whole of the period of the history of section 21. In the circumstances this is proper, because, as I have explained, the differing accounting periods have been accepted by the Commissioner at the request of the companies concerned in lieu of the period of the financial year ending 30th June. But there is a further point. It is necessary under the same section for the Commissioner to consider what profits could reasonably have been distributed during some period of twelve months, and it has been held in the Kellow-Falkiner case that the Commissioner must apply his mind to the distribution that could have been made by the company during the twelve months, whether for the period ending 30th June, or some other period. As honorable members are aware, as a general rule the accounts of a company are kept in such a way that only when the financial year is over is it possible to consider whether a distribution of profits could have been made in the year by way of dividends. In some cases a company declares an interim dividend in the course of the year; but the general practice is to make up the accounts, ascertain the profits and distribute the dividend in the beginning of a new financial year. As I have stated, the court has held that the Commissioner must apply his mind only to such distribution of income as could reasonably have been made in the twelve months in which the profits have been derived. This again is an entirely new point. There is no meritorious substance in it at all. It arises out of the technical wording of the section. If now an alteration were made in the law, a large number of assessments would be declared to be invalid. The object of the first sub-clause now before the committee is to put this matter right.
– The view I wish to emphasize is that whenever there is reference in a bill to retrospective legislation, the business community assumes that its effect will be more far-reaching than is apparent on the surface. If, however, the term in regard to these particular clauses is to be interpreted as stated by the AttorneyGeneral and the Treasurer. I’ shall be perfectly satisfied.
Clause agreed to.
Clause 10 (Taxation of a mining company).
.- In my second-reading speech I protested against the taxation proposal as applied to mining companies, and I regret that the Treasurer (Dr. Earle Page), in his reply failed to indicate whether the Government intended to honour the promise of the Prime Minister (Mr. Bruce) that prospectors would be exempt from taxation. In reply to a deputation which waited on him in Kalgoorlie on the 2nd July last, the Prime Minister stated that the representations made would be brought before the Treasurer at the earliest possible moment. This is the first bill introduced since then to deal with taxation. The gold-mining industry, is in a parlous condition. The Development and Migration Commission, which made an inquiry into the industry, stated that its position was entirely different from that of any other primary industry in the Commonwealth. Prior to the war the price of gold was £4 4s. 11½d. per fine ounce and the industry was free from taxation. The price of gold is the same to-day, but there has been -an increase of 100 per cent, in the cost of the materials necessary for carrying on the industry. Gold-mining in Australia has become decadent, not because there is no more gold to be discovered, but because the price of the commodity has remained stationary whilst the cost of production has increased by 100 per cent. As a result, practically no men are going out to search for gold. We are all familiar with the gambling instinct that prompts a number of men to band together and “ grubstake “ a prospector. It is safe to say that there has not been a return of 10s. for every 20s. expended in equipping prospectors for this work.
– Not 5s.
– Probably the honorable member for Newcastle is right. If this enterprising spirit in a mining community .is not to be entirely destroyed, relief from taxation must be given by the Government. It is iniquitous to levy taxation on a man who finds gold after perhaps ten or fifteen years’ work, during which time he may have had practically no income.
– And his capital in the company may he represented in shares.
– As the honorable member for Swan has interjected, the prospector may get as his reward for a find 5,000 shares in a company and only £1,000 in cash, and the Government will levy taxation upon the market value of shares which, in a few months, may be worth nothing. Thus it is possible for the cash reward obtained by a prospector to be greatly reduced.
– I regret that, in my reply to the second-reading debate, I did not refer to the points raised by the honorable member for Kalgoorlie (Mr. A. Green), but I intimated that a number of matters mentioned by certain honorable members could better be dealt with in committee. The specific point raised by the honorable member should have been discussed on clause 5. This provision is inserted in the bill because a special deduction made in respect of ordinary companies has now been made general, so there is no longer a necessity to retain paragraph d of section 22. Some years ago the Government decided to exempt the gold-mining industry from income taxation altogether. It made a number of concessions to prospectors, and gave a certain measure of assistance to the industry by ‘special grant, but the concessions from this grant can only be obtained as a result of applications from the State Governments concerned.
– Yes; but to the extent of only £4,000.
– That is a matter for the State Government. All applications and any complaints about them should be made to that body. Regarding the position of prospectors, let me say that before I visited Western Australia some two or three months ago I answered certain letters on this subject, and in my replies I pointed out that no prospector would be charged income tax on the sale of his leases unless he were trafficking in them. The point really that has to be considered by the Taxation Department is whether the prospector has taken up his claim for the purpose of working it, or merely for the purpose of selling it at the earliest possible moment. If, in the opinion of the department, he is a bona’ fide prospector, he is free of income taxation. When I was in Western Australia, this question was not raised, and I therefore took it for granted that it had been completely answered by the statement made by the Treasury and the taxation office. If it is felt that the position is not sufficiently covered, I am quite prepared to insert an amendment in the bill when it is before another place, to exempt specifically from taxation the proceeds of the sale of a mining proposition which has been prospected and worked by a field prospector; but it is considered that the backer who is making his living in trafficking in leases should not be exempt.
– What does the Treasurer mean by field prospector?
– The man who is doing the actual work of prospecting. It would be quite easy to differentiate between the field prospector and the man making his living by buying and selling leases. If necessary, I am quite prepared to have a clause drafted to ensure that prospectors shall be exempt from taxation.
.- I do not think that the announcement of the Treasurer is at all compatible with his previous statement that all persons interested in prospecting except those making a living in trafficking in leases would be exempt from taxation. I wish to endorse the remarks of the honorable member for Kalgoorlie (Mr. A. Green) concerning the difficulties experienced in the gold-mining areas. The report of the Development and Migration Commission on the gold-mining industry contains an appendix showing the price of gold over a period of years, and with the exception of a short period when there was a premium given on a sale of gold, the price has remained stationary. Before the war it was £4 4s. lid. an oz., and to-day it is the same ; but at the same time there has been an increase in the cost of living and in wages of nearly 100 per cent. Is it any wonder that to-day, notwithstanding the ‘ wonderful latent resources and the enormous auriferous and metalliferous areas of this country, we have difficulty in trying to develop it? I know that under this bill it is practically impossible to improve the position other than to give effect to the definite promise that the definition of prospector shall include a person who. assists prospecting other than a- trafficker in leases.
– I am quite prepared to accept an .amendment if the honorable member can suggest a means whereby a differentiation can be drawn between the trafficker and the man who is doing the actual work of prospecting.
– When I was in Perth the other day I was asked to take up a share in a syndicate. I took up a £10 share fully paid-up. Other shares were paid up to £5. About 50 other persons, including the late manager of one of the big mines of Western Australia, took up shares. By collecting money in this way we are able to send men outprospecting. The idea is to assist the gold-mining industry on the understanding that those who are giving the assistance shall be free from taxation on the sale of any leases. I have never made a penny out of the assistance I have given to prospectors. In the early days I was associated with mining companies, but they did not traffic in leases. The company promoter would come along and say “I shall- arrange to give you £1,000 in cash and £5,000 or £7,000 paid-up £1 shares in a company that we are going to form.” The usual charge was 6d. or ls. each for the application and the allotment. The agreement provided that no shares were to be placed upon the market until the expiry of six months. As soon as the company was started, taxation would be demanded. I do not know the position to-day. In the early days I read in the Kalgoorlie newspapers of men who went insolvent rather than pay the tax that was demanded of them. I know that taxation was imposed upon the shares that I received. At that time we had the promise that those who were associated with prospecting should, in the event of a sale, be exempt from taxation. I stress that point to show that we should do everything within our power to encourage men to go out prospecting. I have known men to prospect for fifteen or twenty years before striking a good show, and no one deserves success more than that class of man. Something should be done to exempt from taxation the man assisting in prospecting. I do not think that the broker or company promoter should escape taxation in any shape or form. Only a few days ago I sent to the Treasurer a letter from the Income Taxpayers’ Association, asking for certain information on this subject. If he will promise to give exemption- under this clause as I have suggested, I can assure him that the people on the gold-fields will be exceedingly thankful.
.- The bill should contain a definition in regard to trafficking in leases. The Treasurer seems to have a wrong impression concerning the backers of prospectors. There can be found in any gold-mining community working men and men in small businesses who are prepared to putaway £1 a week of their wages with the ultimate object of backing prospectors. It is done more in the sporting spirit, because it has been shown that for every £1,000 expended in that way not more than £500 has been returned. It is not an ordinary business proposition. Under these circumstances why should these backers be treated as speculators or company promoters? The question oftrafficking should be investigated. I am. sure that if the Commissioner of Taxation visited Kalgoorlie and interviewed the workmen and shopkeepers there he would return satisfied that they could not be considered as “ bucket-shop “ men or men out to make large profits at the expense of others. The men in Kalgoorlie and other mining towns cannot be put in that category. If they were to withdraw their support from the prospectors there would be little prospecting carried out in Australia to-day. The day of the prospector going out alone with a few pounds’ in his pocket is past. There are few outcrops to be seen. He must get below the overburden which hides the gold from view. The Treasurer pointed out that the Precious Metals Prospecting Act was framed with the idea of assisting prospecting. We know very well that no State can obtain benefits under that legislation until the whole of its vote for prospecting has been expended. That is no way to assist the industries. In two and a half years only £4,000 out of £40,000 has been expended in this way. That clearly shows that the position in respect of prospecting has improved but little. At present the sword of Damocles is suspended above those who are anxious to encourage the gold-mining industry. If they expend their small savings in backing a prospector and have the good fortune to obtain some little return for the investment, they know not at what moment the whole of it will be absorbed by way of taxation. This Government would do well to introduce an amendment to remove this anomaly.
.- I have much pleasure in supporting the remarks of the honorable member for Kalgoorlie (Mr. A. Green) and the honorable member for Swan (Mr. Gregory). Their request should be given careful consideration by the Treasurer. There is no doubt that the prospector is entitled to more assistance than he is at present receiving. I am glad that the Treasurer has promised to draft an amendment with a view to inserting it in the bill when it is before another place. I am prepared at all times to support any legislation the object of which is to assist the gold-mining industry.
Clause agreed to.
Clauses 11 to 21 agreed to.
Clause 22 (Application of act).
.- Will the Treasurer inform the committee whether there is anything of a retrospective nature in any of these amending clauses ?
– There are retrospective provisions in clauses 4 and 9, and in part of clause 19, but all such provisions deal merely with the accounting period already referred to by the AttorneyGeneral.
Clause agreed to.
Title agreed to.
Bill reported with amendments ; report, (by leave) adopted.
Bill (by leave) read a third time.
Sitting suspended from 6.7 p.m. to 8 p.m.
In Committee of Supply: Consideration resumed from 13th September (vide page 6724) on motion by Dr. Earle Page -
That the first item in the Estimates under Division 1. - The Parliament - namely, “ The President, £1,300 “ be agreed to.
. When speaking on Thursday last I pointed out that one reason for the drop in our export of jam from 44,000,000 lb. in 1919-20 to 2,300,000 lb. in 1926-27, was the fact that Australian jam manufacturers were not getting sugar at world’s parity. A greater reason is the extra cost of manufacture brought about by the increased rates of wages awarded by Arbitration Courts. It is the duty of the Commonwealth Government to see that the agreement entered into with the Queensland Government is so policed that the jam manufacturers of Australia can get their sugar at world’s parity. That I am supported in this contention by Mr. Berchdolt, a member of the Sugar Board, is proved by the following : -
It seems to us that Mr. Berchdolt’s figures fully support the attitude we have adopted all along. With Belgian refined sugar being quoted at £15 17s.6d. per ton c.i.f. Australian port, why is not the present export price to the Australian manufacturer based upon this figure? As you will notice, the present rebate is on the basis of £12 15s. per ton, which makes our sugar cost £1711s.8d., and if our sugar was supplied to us as it should be on the f.o.b. European port value, we would then only be paying £15 17s. 6d. less the freight to Australia, or say about £14 per ton, and that, mark you, is a price for refined sugar, not for mill-white sugar.
This bears out my contention that our jam manufacturers are paying more than they ought to pay for their sugar. It would be in the interests of the sugargrower if the consumption of sugar in Australia were increased, because on every ton he now sells overseas at £11 a ton he suffers a loss. That loss could be avoided if the Australian consumption of jam were increased by giving the manufacturers their requirements at world’s parity. Fruitgrowers, sugar-growers, and the consumers of jam in Australia would all benefit. The reduction in the home consumption of jam manufactured in Australia amounts to nearly 40 per cent. The Colonial Sugar Refining Company can supply New Zealand with the best refined sugar at £21 10s. a ton, whereas the Australian manufacturer is paying £30 6s. per ton for the sugar he requires to provide for the home consumption of jam.
– The sugar supplied to New Zealand does not come from the same source as the sugar supplied to the Australian manufacturer.
– I understand that it is supplied by the Colonial Sugar Refining Company.
– But it is grown by black labour.
– I am well aware that it is grown by black labour in Fiji, but if the company can sell best refined sugar in New Zealand at £21 10s. a ton, surely it can supply Australian manufacturers with mill white at £21 10s. a ton, and mill white is quite good enough for use in the manufacture of jam. I hope that the Government will take this matter into consideration in the interests not only of the consumers, but also of the fruit-growers and sugar-growers of Australia.
Some time ago I asked the Prime Minister in his capacity as Minister for Trade and Customs why a depot for the storage of sugar had not been opened in Hobart as well as in the other capital cities. His reply was that arrangements had been made with a company in Tasmania to store sugar. It is true that a tentative arrangement has been made with Henry Jones and Company, and that that firm stores about 400 tons of sugar, but it is asked to provide the space occupied by the sugar free of cost, and is also expected to pay the insurance on it. I do not think it is being treated fairly, seeing that the Colonial Sugar Refining Company supplies storage facilities and pays the insurance in the other capital cities. I. think that the Government, in making any future agreement with the company, should stipulate that Hobart shall have the same privileges as apply to the other capital cities. In answer to my inquiries why this has not already been done, the Controller of Customs points out that the facilites which have already been provided at Hobart are in excess of those obtaining at such centres as Townsville, Newcastle and Albany. I can quite understand that facilities provided in outlying centres are not expected to be up . to the standard of those provided in capital cities, but I claim unhesitatingly that the facilities given to the capital of Tasmania should be up to the standard of those provided in other capital cities. Tasmania is always liable to be isolated from the mainland by strikes. There is a strike in existence at the present moment, and the firm of Cadbury, Fry and Pascal], which has one of the largest factories in Tasmania, has just given its employees a week’s notice. The Government is in duty bound to extend to Tasmania more consideration than it gives to other States of the Commonwealth which are connected with one another by railways. If a shipping strike takes place Tasmania is at the mercy of the waterside workers or the seamen. The possibility of running short of sugar supplies affects not only the jam manufacturers, but also private citizens. I have seen the time when people have been running all over Hobart trying to buy a pound of sugar and not able to get it. The people of Tasmania should not have difficulty in getting the necessaries of life, and I hope that the Government will see that in any new sugar agreement provision is made to supply Hobart with the same facilities that are provided for the other capital cities.
I wish to bring before the Government the position of the Tasmanian evaporated apple industry, which has been supplying Australian requirements for the last 25 years. No other State has yet attempted to evaporate apples.
– The firm of Dearman and Sons has commenced to evaporate apples at Tweedvale in South Australia.
– The South Australian people started last year, but Tasmania has been supplying the whole of the market in Australia for 25 years. There are eleven factories in the Franklin electorate. It is therefore an established industry, and is producing one of the finest articles in the world. An effort has been made to develop a market overseas, but America, with its lower freights and greater facilities for getting its goods to the English market, is generally too strong a competitor. Last year, however, there was a glut of apples in Tasmania; there was at least 1,000,000 bushels lying on, the ground, and the manufacturer of the evaporated apples could buy his requirements at ls. for 50 lb. Any man with ordinary intelligence will recognize that a fruit-grower can make nothing out of his apples at that price, but, because of that low price, last year the evaporating factories were in a position to export. They sent 7,000 cases to the United Kingdom, and they received for them 6d. per lb. f.o.b. Hobart. The freight was l£d. per lb. In Great Britain and on the Continent there is a big market for evaporated apples with apples at a normal price, but it is absolutely impossible for the Australian manufacturers to export without a bounty. We have asked for a bounty of 2d. per lb. to enable our export trade to be built up.
– What do the producers get for the apples on the home market ?
– They receive lid: per lb., and they actually lost £d. per lb. on the 7,000 cases exported. But that trade helps the growers. The Government has repeatedly refused the request for a bounty, and I am unable to understand its attitude, having, regard to the fact that it has granted bounties on the export of dried fruits and wine. This differential treatment is manifestly unfair. The Development and Migration Commission, in its latest report, says -
At the request of the Board of Trade, the apple-evaporating industry of Tasmania is also being investigated.
Last year the commission sent to Tasmania two mcn, who spent a fortnight in investigating the evaporating industry. Their work could have been done in one day. They reported to the commission, and subsequently the chairman, with a staff of about five, went to Tasmania and conferred with the evaporators. After talking for some time, he asked them if they could stabilize the, industry if granted a bounty of 2d. a lb. I was present, and replied “ Yes, just as the peach industry has been stabilized ; it is still receiving a bounty.” The Board of Trade recommended that a bounty be not granted to the evaporating industry. Further representations were made to the Development and Migration Commission, which again sent two men to the island to further investigate the subject. That is the way in which the funds of the commission are being frittered away. This industry can be stabilized only by granting a bounty. The apples are shipped in 28-lb. boxes, at a price of 6d. per lb. f.o.b. To make 6 lb. of dried fruit, the evaporator has to use 50 lb. of green apples, for which the grower receives ls. If the bounty were granted to the evaporators the grower would receive 2s. a bushel for his apples; 7,000 cases represent 35,000 bushels, worth to the grower, at ls. a bushel, £1,750. But there is no reason why the export trade should not- be three times the present volume, and 21,000 cases would represent 105,000 bushels of green apples, or a return to the grower of £5,250. If a bounty were granted the green apples would be worth to the orchardist £10,500. With the Australian market and a potential market abroad, the evaporating industry is capable of helping the growers considerably and stopping the present colossal waste of a primary product throughout Australia. I hope that the Government will reconsider the advisability of assisting this industry, and remember that no State has a greater claim than another for a bounty on exports.
I have been unable to understand the Government’s reason for reducing the grant to Tasmania from £378,000 to £220,000. The Development and Migration Commission was asked to investigate the facts, but the Government has not carried out its recommendations. The commission’s last report states -
The recommendations contained in the commission’s first interim report for the expansion of the Agricultural Department were communicated by the Commonwealth Government to the Premier of Tasmania in May. 1027. The recommendations were wholly adopted by the Tasmanian Government, and effect has been given to them to a large extent in the financial year 1927-28. The cost has been defrayed by an allocation from the surplus which it was anticipated would be realized in that year as a result of Commonwealth financial assistance.
The commission recommended that the surplus should be used to finance the scientific bureaux that have been established in Tasmania, but the Treasurer has flouted that advice, and deducted the amount of the anticipated surplus from the Commonwealth grant. Other costs imposed upon the State Government by the commission, amounting to £29,600 for the current financial year, have been deducted. So far as I can see, the people of Australia are getting no benefits from the operations of this commission. Its annual report recommends that the Government of Tasmania should spend £105,600 over five years on topographical surveys of the mineral and forest areas of the State. What is the use of costly mineral maps when there is no mining in the country because of the cost of production? The honorable member for Kalgoorlie (Mr. A. Green) said this afternoon that the cost of winning gold is more than its value, and that is true of other minerals also. Why should we waste money on elaborate surveys and costly maps when the mining is finished, and timber mills are closed down? I am beginning to wonder whether it is worth while to continue the commission. Another illuminating paragraph from its report reads -
At the instance of the commission, tests on the utilization of Tasmanian apples for cider and apple brandy manufacture are proceeding at the Agricultural and Horticultural Research Station, Long Ashton, Gloucestershire, England, where a report dealing generally with the utilization of surplus apple crops is also being prepared.
For the last 30 years cider, as good as can be made in any part of the world, has been produced in Tasmania. The future of this industry, as of others, depends upon the development of markets, and the commission could more profitably turn its attention to that subject than to merely writing futile reports. Its references to the fat lamb industry are equally fatuous. The export of fat lambs would be a good trade if the Tasmanian people were producing enough meat for their own consumption, but they import approximately £100,000 worth of meat each year. Growers know that they can get for their lambs only from 15s. to 20s. at the freezing works, as compared with from 25s. to 30s. in the ordinary saleyard. In those circumstances, they are not likelyto take their stock to the freezing works until they supply the home market ; they will sell in the best market. The report of the commission on that subject was made, some time ago, but, although the freezing chambers are in existence, I have yet to learn that they have opened their doors for the reception of fat lambs. This body of experts dealt also with the berry fruits industry, and suggested the growing of strawberries for Brisbane. We know from experience that when they arrived there they were rotten. I devoted four nights to reading a huge typewritten report by the commission on unemployment; in my opinion, it was the greatest rubbish ever committed to paper. I cannot understand how any intelligent men could imagine that the recommendations in that report would provide a solution of the unemployment problem. The commission’s effort in that direction was a sheer waste of time. It is significant that in none of its reports has the commission referred to the Arbitration Court, the Navigation Act or the tariff. Those are creations of the Government, and the commission must not criticize them, although they are the principal causes of unemployment.
I wish to refer to the Tasmanian gram, in connexion with which a recommenda-tion appears in the report of the Development and Migration Commission. It reads -
It is the opinion of the Commission that Tasmania will require Federal financial assistance for some years to come, and it is recommended that subsequent to the 30th June, 1928, the amount of such assistance should be fixed at a definite sum per annum for five years thereafter. This period is suggested as the minimum period in which a fair judgment of the efficiency of the remedial measures can be made, and its adoption would enable definite plans to be developed under stable conditions.
What has the Government done? It has reduced the grant to a minimum and proposes to pay the amount for only one year, although the commission recommends that, in order to permit the Tasmanian Government to prepare and carry out a proper developmental scheme, it should be paid for at least five years. The Government in reducing the grant to the extent it has is not acting in accordance with the recommendations of the commission or the wishes of the Tasmanian Government. We were informed by the Treasurer that the grant would be £205,000, but we find that after provision has been made for certain expenses incurred by the Agricultural Bureau, the amount has been reduced to £183,000. The report of the commission is to the effect that the cost of this work should have been paid out. of the surplus revenue which the Government, up to this year, has had under its control.
I wish to refer to the marketing of produce, and in particular to the canned fruits industry. The Department of Markets has, I am pleased to say, adopted my suggestion in relation to the sale of peaches. The Canned Fruits Board passed a resolution to the effect that any one wishing to purchase apricots must also take double- the quantity in peaches. The result of that regulation, of which the : Minister approved, would have been that the buyers of apricots would have obtained their requirements at the canneries where they could get all they required. When I mentioned that possibility to the Minister he seemed surprised to think that we should have thought of such a thing. On the following Friday night the Minister called a meeting of the board in Melbourne, and as soon as the position was placed before the board it reversed its decision. The following week I received a letter from the Minister to the effect that the board had taken the matter into consideration, and had decided not to enforce the regulation. I advise the Minister in charge of the department to peruse the minutes of the Canned Fruits Board, as I am of the opinion that two members of the ‘board, and the secretary, are not fit to occupy the positions which they hold. If the Minister will do as I suggest, he will find that there is some justification for my statement. The regulation was brought into existence in an irregular way, and the whole matter should be investigated.
– What does the honorable member suggest was done ?
– The minutes set out that when the board met in Melbourne and passed this regulation a member who was absent attended the meeting. He had never received a notice to attend, and the matter should be investigated.
– What was the date of the meeting?
– I cannot give it, but it can be readily ascertained. The canned fruits industry is in a deplorable condition, and, according to a statement made by Sir William McPherson, 2,000 tons of peaches have been left on the ground at Shepparton. An article also appeared in a Melbourne paper to the effect that within two years the canned fruits industry would cease to operate at Shepparton and Leeton, owing to the difficulties at present confronting it. This deplorable state of affairs is due largely to the high cost of production in Australia. The canners have to pay the peach-growers £10 a ton. I have before me an extract- from a newspaper to the effect that at Sacramento, one of the greatest peach-growing districts in America, the crop this year will approximate 602,000 tons. As the price paid for the best quality peaches produced at Sacramento is £5 a ton, and for second grade peaches £3 a ton, we cannot expect to compete with overseas canners. I mentioned earlier that much of the waste could be eliminated and the growers benefited by selling fruit to jam manufacturers at £9 6s. 8d. a ton. It will readily be seen how difficult it is to compete with American canners who receive the first grade fruit at £5 a ton less than is paid in Australia. The fruit produced in the Sacramento Valley is of better quality because it is not affected by wind, and after picking is promptly transported to the canneries. Australian growers could not deliver fruit at anything approaching that price, and, therefore, it is impracticable to obtain markets in other parts of the world. Although it. is more difficult to grow apricots than peaches, the apricot-growers are not receiving a bounty. If the peach-growers cannot sell their fruit at a profit, it will be exceedingly difficult for the apricotgrowers to do so.
– Are not the apricotgrowers receiving a bounty?
– The apricot-growers receive £10 a ton for their fruit.
– So do the peachgrowers. They should both be treated on the same basis. Unless the Government finds markets there is not the slightest doubt that the canned fruits industry will go out of existence.
– Does the honorable member suggest that the Government is not doing all that it can?
– I should like to know if the Government has found a single market for our products.
A great deal has been said in this chamber concerning the shipping troubles which usually affect Tasmania most severely. The Government is at present subsidizing a shipping company for carrying mails from the mainland to Northern Tasmania. For the last 60 years we have had a passenger service from Hobart to the mainland, but since April last, owing to strikes and other causes, there has not been a regular passenger service.
Mr. C. Ruby. Because the shipping companies have said that the service is unprofitable.
– I shall deal with that phase of the question in a moment. The Bombala is now making a fortnightly trip between Hobart and the mainland, although the Tasmanian people previously had the benefit of a weekly service. When the Riverina, which was lost some time ago, was in the trade, a weekly service for the carriage of cargo and passengers was conducted. The Riverina, which was suitable for the trade, was 24 years old, and the Bombala is also 24 years old. When the Riverina was running between Sydney and Hobart she went right down the Huon and loaded 30,000 to 40,000 cases of fruit; but the shipping company have now two cargo boats picking up this trade, which leaves the passenger vessel without any cargo. If the company were to take off one of those cargo vessels, the regular vessel would be able to pick up 30,000 to 40,000 cases of fruit weekly. It is unfair to say that the service is not paying when it is conducted in that way.
Many of the transport troubles which Tasmania experiences are brought about by strikes and hold-ups of maritime and waterside workers. Only recently the waterside workers went on strike because they objected to the termsof an award. If the award had granted an additional remuneration, or improved conditions, there would have been no cessation of work ; but because it contained something of which they did not approve, they refused to carry on. We have a court, but it cannot be termed an Arbitration Court when its awards are not observed by both parties. Our Arbitration Act has been amended from time to time, but when a strike occurs the Government does not attempt to punish offenders under that act, but under the Crimes Act. I said at the time the act was amended that I did not think the new provisions would be of any use; nor do I think so now. The existing penalties were in the old act, but were never imposed, and they are not likely to beTasmania occupies an isolated position. Its only means of communication with the mainland is a shipping service. This Government can assist the State of New South Wales to the extent of ?133,000 in connexion with the reconditioning of a road, and the coal-miners of that State by granting a bounty of1s. a ton upon all coal mined for export; yet, whenwe ask it to keep the ships running to Tasmania, it says, “ We do not want to have anything to do with that matter; it is the business of the State.” I contend that it is the business of this Government, and not of the State of Tasmania, to see that we have a proper shipping service. That State hears its share of the loss on the trans-continental line and the cost of constructing the Hume reservoir, the north-south railway, and other works ; yet, when it asks to be provided with means for sending its produce to the other States it is met with a refusal. That is a wrong attitude for this. Government to adopt ; it should study Tasmania as much as any other State. Their isolated position is making the people of Tasmania talk secession. I wish to make it plain that I am not a secessionist; but that opinion is not likely to weigh with others who are in business, and who realize the extent to which they are persecuted by reason of the troubles that occur so frequently in . the shipping industry.
In 1923 this Government appointed a royal commission to investigate the disabilities caused by the Navigation Act. It travelled all over Australia, and after an investigation which lasted twelve months a majority of its members recommended that the coastal trading sections of the act should be repealed. The Government threw that report into thewaste-paper basket. Then the Public Accounts Committee conducted another investigation to ascertain the disabilities under which Tasmania suffered. Every honorable member knows that it recommended the repeal of the coastal trading sections of the Navigation Act and placed upon this Government the responsibility of seeing that Tasmania was provided with a proper shipping service; but the Government threw that report, also, into the waste-paper basket. What other evidence does it want in support of the fact that Tasmania’s disabilities are caused largely by the Navigation Act? I hope that before long action will be taken to amend the act in the direction desired. Cadbury, Fry and Pascall have given the whole of their assistants a week’s notice, because of the interruption caused to their business on account of the strike. Even if only one week is lost, it is impossible to regain that trade. It is said, “We must assist Tasmania with a money grant.” Money will not solve the problem. The cause of the disabilities - whether it be the Navigation Act, the Arbitration Court, or the tariff - should be removed, if the State is to be saved from disaster.
I wish to draw the attention of the Postmaster-General (Mr. Gibson) to a recent appointment to the position of Deputy Postmaster-General in the State of Tasmania. The man appointed may be very capable. I have not yet had the pleasure of meeting him; but I hope to do so upon my return. The former occupant of the position retired upon reaching the age limit. The man immediately below him commenced in the office as a boy, and worked himself to the top rung of the ladder. He is within two years of the age of retirement, and would have discharged the duties of Deputy Postmaster-General with a knowledge regarding the State much greater than that possessed by the gentleman who has been appointed. It is the most unfair and unreasonable treatment that could be meted out to a man who has worked himself up from the bottom to the top rung of the ladder. Instead of his being appointed to the higher position, the ladder has been pulled from under him. Such action will not encourage other young men to join the service and work hard with the object of attaining to the highest positions.
– He has the right of appeal.
– There is one matter upon which I wish to congratulate the Government, and that is the sale of the Australian Commonwealth Line of Steamers, upon which this country had lost over £11,000,000, and was losing at the rate of £500,000 a year. If the Government had continued to carry on that enterprise, it would have done wrong to Australia. Those ships are still trading to our shores, and the facilities afforded by them in the future will be greater than those we enjoyed prior to the sale.
But when the Government made the agreement for the sale of the Line, : it should have stipulated that Hobart. should . be a port of call. Instead of doing that, it required that the vessels should tradeto Australia, but disregarded the claims of “ The Speck.” As a member of the federation, Tasmania should be given privileges equal to those granted to other parts of Australia. All these pinpricks are causing the people of Tasmania to lose patience. It would appear that when there is any- service to be rendered, Australia must benefit, but not Tasmania. -When bounties are being given, other States receive them, but Tasmania goes without. When it is a question of erecting a sugar depot, it must be erected in Australia, not in Tasmania.
I come now to the question of road construction, for which this Government makes a grant. In some instances the policy adopted is a good one, but in others, it is not. Tasmania has spent upon macadamized roads a greater amount than all the other States combined.
– That is absolutely inr correct. New South Wales is spending £4,000,000 upon roads this year, while Tasmania has spent a paltry £6,000,000 altogether.
– I repeat that upon macadamized roads Tasmania has spent more than all the other States combined.
– With borrowed money.
– No matter how it is obtained, we have to pay for it. We are participating in the Commonwealth grant, but the effect of the expenditure of that money is a loss of revenue upon our railway system, because that which is to be the main road runs almost parallel with the main line. It is but natural that when a road is made attractive to motorists a greater number will travel upon it. That is what is happening all over Australia. The better we make the roads that run parallel with our railway lines, the more the railways will lose. I should prefer to have roads constructed as feeders to the railways.
– Tasmania has the right to select its own routes; that is no concern of the Commonwealth.
– They . have to- be approved by a Commonwealth inspector. It is a main roads, grant, and when . a
State wishes to spend the money upon another road the department will not allow it to do so.
– It is not solely a main roads grant.
– In any case, I am not sure that it is being wisely spent, because what we make in one way we lose in another.
The proposed bounty on coal will, in my opinion, do more harm than good.
– The position certainly needs investigating.
– There are six GOal mines in Tasmania which are now supplying practically the whole of the coal requirements of that State. If the price of Newcastle coal is reduced by 5s. a ton, the price of Tasmanian coal will have to be reduced accordingly. It is now 10s. a ton below the price of New South Wales coal. A further reduction of 5s. a ton will necessitate the closing of Tasmania’s coal mines, thus adding to the number of unemployed. In to-day’s newspapers we read that the directors of the Wonthaggi coal mines in Victoria are of the opinion that a reduction of 5s. a ton in the price of Newcastle coal will mean the closing down of their mine. Queensland supplies her own coal requirements, including gas coal. A bounty on New South Wales coal will affect the coal industry in Queensland as well as in Victoria and Tasmania. A reduction in the price of’ coal might be a good thing for the consumer; but if its effect is to close down a number of mines, the cure will be worse than the disease. Before granting a bounty on coal produced in New South Wales and exported, the Government should consider its effect on the coal-mining industry in other States. For the unsatisfactory position of the coal industry in New South Wales! the miners are solely to blame. Frequent strikes, stop-work meetings, and short hours have made it impossible for the mine-owners to sell coal at reasonable rates and make a profit. The seriousness of the position will be realized when we reflect that the South Australian Government is importing coal from England at 7s. a ton less than it can be obtained from Newcastle. There -have been more strikes among the coal miners in the Newcastle district than in any other industry in Australia.
– That is not true.
– It is. I hope that the Government will give further consideration to this matter before paying any bounty on coal.
.-The honorable member for Franklin (Mr. Seabrook) knows much about many things, but he specializes in apples. I feel certain that he is conversant with the whole of the apple industry from the time that the fair one, in fig leaves, condemned us all because of a bite of a golden pippin. I do not propose to follow the honorable member and his special grievances which he seems to enjoy so thoroughly, and under which the little island State is supposed to labour. Many suggestions have been made to overcome Tasmania’s difficulty. I, myself, made one when I interjected that Tasmania should be pushed over and joined to Victoria. The honorable member for Franklin, no doubt, will not take the suggestion seriously.-
I regret that the Treasurer is, presumably for good reasons, at present out of the chamber, for it is his duty to sponsor the budget now under discussion. I should like to congratulate him on something. I cannot congratulate him on his budget, or on his deficit; but I may be permitted to congratulate him upon his political longevity. It appears that he has established a record in point of time as Treasurer of the Commonwealth. When a man reaches advanced and venerable years, and others begin to congratulate him as successive anniversaries of his birth arrive, they do so with good will and enthusiasm; but in such circumstances it is not considered good form to remind him of his misspent youth. I therefore congratulate the Treasurer, with reservations, but without any painful - references - political, of course - of the kind I have mentioned. I congratulate him further upon the cheerfulness with which he accepts the kicks as well as the ha’pence incidental to his high office.
It is due to the committee and to my constituents that I should say something on the subject of financial geniuses mentioned by the Prime Minister. The right honorable gentleman paid the Leader of the Opposition (Mr. Scullin) a high compliment when he said that he had a flair for finance and an aptitude for figures. The Prime Minister could not have been more complimentary if he had been reciting the honorable member’s obituary. Although I am naturally a little envious at these compliments being paid to my honored Leader, I cannot deny the soft impeachment; he has indeed a flair for finance and an aptitude for figures. Then there is the right honorable member for Balaclava (Mr. Watt) who quite unexpectedly, was brought into the picture by the Prime Minister. It appears that by common consent he is a financial genius. At least, he was a financial genius by common consent until the Prime Minister, in a moment of pique, called upon him to choose between being either politically dishonest or not a financial genius after all. If we were called upon to make an invidious choice in this matter, I do not think that my decision would be such as to impair the reputation of the right honorable member for Balaclava as a financier. Nor must the honorable member for Henty (Mr. Gullett) be left out of the picture. I do not know whether he is a financial genius this year, but undoubtedly he was one when the last budget was presented by the Treasurer.
– The elections are too near for him to be a financial genius this year.
– The time is probably inopportune for a further exhibition of that financial genius which the honorable member displayed last year, when he described the Treasurer as “ The most tragic Treasurer we have ever known.” As a Victorian - though in no parochial spirit, but solely in the interests of Australia - I desire to refer to the southwestern portions of the Melbourne metropolitan area. It is dreadful to think that in those strongholds of Nationalism two financial geniuses - one at a safe distance and with a long gun, the other at close range - should make attacks upon the Government they discriminatingly support. I tender my sincere sympathy to the Government in the circumstances. It may be said that we have five financial geniuses to reckon with in this chamber - the Leader of the
Opposition (Mr. Scullin), because the Prime Minister says so; the Prime Minister himself, because he undoubtedly thinks so; the right honorable member for Balaclava (Mr. Watt), because I have proved him to be so ; the honorable member for Henty (Mr. Gullett), because his last year’s speech is still hanging on the wall ; and last, but by no means least, the Treasurer himself, who is a financial genius ex officio. Federal Treasurers do not grow on every bush; they require years of training in the administering of anaesthetics and a knowledge of dissection, including vivisection. In addition, a successful Treasurer in the present Government needs to know something of the methods of resuscitating the apparently drowned. In concluding this little essay on financial geniuses, I may be permitted to add that I am not one.
One feels a little timorous about approaching the budget seeing that the Prime Minister has laid it down that it is most unfair to make a charge without advancing excuses. I can only plead that I belong to an older and severer school which flatters justice and puts mercy through a strainer. The Prime Minister doubtless would have adorned, if he had only followed, the law. He would have become familiar with the methods adopted by prosecutors, which are to state the charge with clear, crude, sometimes almost brutal clarity, then to call evidence in support of the charge, and to leave it to the unhappy person in the dock, with such aid as he may be able to secure, to make his defence and to put forward any facts that he can think of by way of mitigation. When the Prime Minister was being scorched the other evening by my honored leader, he appeared to forget for the moment that he and the Treasurer were - in a purely political sense - in the dock, one of them being charged as a principal and the other as an accessory before, after and in the middle of the facts.
Not being a financial genius, as I have already modestly admitted, and as the honorable member for Angas (Mr. Parsons) has graciously granted, I listened very attentively to the Prime Minister. I had already listened to the honorable member for Yarra (Mr. Scullin). I should have listened to the Treasurer hut for the untimely intervention of Nature’s soft nurse which prevented, me from doing so ; but the Treasurer may rest assured that I read his speech and that I nearly know it off by heart. Therefore, not as a genius but as a common juryman, I may be permitted to form some opinion on the facts. I know, of course, that jurymen sometimes disagree, but so also do judges, and so do financial geniuses. The Prime Minister pained me and roused doubts in my mind when he was discussing the speech of the Leader of the Opposition by referring to what he was pleased to call “ alleged facts.” There is a nasty implication in that word “ alleged.” Sometimes it simply means, in. legal phraseology, “stated but not proven “ ; but, judging by the manner in which the Prime Minister used the expression I think there was an innuendo in it that some things had been put forward as facts which were really not facts. That, at all events, is how I interpreted it. I was surprised, therefore, upon a careful review of my leader’s speech and a reconsideration of the Prime Minister’s, to find that none of his facts, as facts, were challenged. It is true that causes were challenged, inferences were disputed, and conclusions . denied. All those things were done with tremendous verbosity by the Prime Minister; but the facts as put before the public by” the Leader of the Opposition remained and still remain entirely unimpaired.
I shall restate the position very shortly. The Prime Minister himself said that the Government had inherited in 1922 a surplus of £7,400,000, and that at the end of the present financial year there was a deficit of £2,600,000. He added that the Leader of the Opposition had said that notwithstanding that the Government had come into office when there was an overflowing treasury it had “ frittered away “ the whole of the surplus and involved the country in a deficit. The Prime Minister said that the Leader of the Opposition had made that statement, and up to that point he admits that what he said is true. There can be really only one word in dispute in the whole sentence, and that is “frittered.” I unsuccessfully searched through the speech of the Leader of the Opposition to find any reference to the word. I thought it was an inapt term to apply to the spending of millions of pounds. You cannot be said to fritter away £14,000,000 by spending it at a rate of £7,000,000 at a time. The word is quite inappropriate when used in that sense. You may cart away £7,000,000 in a lorry or move it with a tractor, but to speak of frittering it away in such circumstances is to be guilty of an absurd misuse of language. That i§ the only point, I suggest, up to this stage on which there is any disagreement between the Prime Minister and the Leader of the Opposition. We may, perhaps, attribute to unpoetical license the use of the word “ fritter “ in these circumstances by the Prime Minister.
The right honorable gentleman went on to say that the Leader of the Opposition “might at least have given the people the facts.” I suggest that there is another innuendo here that my leader gave something as facts which unquestionably were not facts. What are these facts that he might have given? The Prime Minister said that £7,500,000 was spent in debt reduction, £7,400,000 on naval construction, £350,000 in scientific and industrial research, and large sums in aviation, geophysical surveys, prospecting for oil looking for precious minerals, and so on. What the Prime Minister doubtlessly intended to say was that the Leader of the Opposition ought, in mercy, to have given these excuses. But it is a difficult thing to give convincing excuses, and that, after all, is not the peculiar province of the prosecutor, but rather of the defendant. Let us, to use a familiar phrase of the Prime Minister, “ make the position perfectly clear.” We do not deny that the Government has spent this money. On the contrary, we affirm that it has done so. To that extent we are in entire agreement. We do not suggest that the money has been hidden in a cave in expectation of a rainy day that might come after the election, nor that anything of that sordid character has been done. We admit that the money has been spent.
– And the Government’s defence is that it has spent it.
– That is so. We have stated the financial position of the country in all its dreadful nakedness. It remains for the Government to make its defence or provide its explanations. The Prime Minister, when speaking from the other side of the table the other night, said that we would have the country believe that this money, had been’ spent, and that there was nothing to show for it. And this from the gentleman who has a flair not for finance, but for facts! On the contrary, we have gone to some trouble to show where the money has gone. We shall go to a little more trouble to show it still more clearly before the budget debate concludes. We shall also show that a great deal of it has gone where it should not have gone. The facts, from which there is no escape, are that at the end of June, 1923, there was an accumulated surplus of £7,500,000, and at the present time there is a deficit of over £2,500,000. In other words, the Government has slipped £10,000,000. That is not a poetic fiction, but a fact. Let us state the national debt figures in some detail, as officially supplied by the Treasurer’s department. The following table excludes debts on account of the States, but includes debts on account of the Federal Capital Commission, and the figures are, as at the 30th June each year: -
In other words we have not only slipped £10,000,000 in our revenue, but we have also slipped £14,200,000 in our public debt. These incontrovertible facts are alarming, and I suggest that the Government and its supporters should direct their attention to them instead of arguing all around them. Surely it is right that we, as an Opposition, should endeavour to focus attention on the outstanding fact that the finances of Australia are drifting seriously.
It must not be taken for a moment that while we admit that this money has been spent we approve of the manner in which the bulk of it has been used. There is the expenditure on defence, for instance, to which the Prime Minister grandiloquently says “ we are committed “ and on which we have spent over £7,000,000. We say that much of this money has been inexcusably wasted. The honorable member for South Sydney (Mr. E. Riley) dealt effectively with this subject the other night. I assert definitely that, in view of the present world situation, there is no justification whatever for the expenditure of millionson cruisers. It must not be taken for a moment that the Labour party approves of the lavish expenditure of this Government, which should be responsible, but which is evidently most irresponsible. It has been said that a certain amount of money has been spent in industrial research. We should like to have convincing proof that, in the present state of the public finances and the imperative need for economy, this expenditure can be justified. We are now looking for results. It may be that the expenditure on geophysical surveys of which the Prime Minister says so much may be justified at some distant date. It may be that the money spent in searching for oil will also be justified some day. It may be that the Prime Minister will be able to justify the use of his Aladdin’s lamp in looking for precious stones. But the burden of proof in all these matters rests upon him, and we wait in vain for him to discharge it. It is a matter for regret that the Prime Minister should have called to his assistance in defending the position the youngest recruit in this Parliament, the honorable member for Martin (Mr. G, Pratten). While it is a rule, and I think a good rule, not to challenge the maiden utterances of a new member, it is hardly playing the game for the Prime Minister to take shelter in the immunity from criticism which a new member enjoys. It is not quite fair to the new member. Since we are invited to discuss it, let rae say that I thought that the speech was characterized by modesty, simplicity, and, above all, by brevity, and especially upon the last quality I tender him my hearty congratulations. I think that the honorable member will be the very last to claim for himself the attributes of a financial genius, but it is likely that he does know something of finance from his association with business matters. The Prime Minister, with warm approval, quoted the honorable member as saying that when a wellmanaged company experiences a temporary setback it falls back on its reserve funds and uses them until conditions improve. It is interesting to read just what the honorable member for Martin (Mr. Graham Pratten) did say. Speaking of the Government, he said -
Because of the deficit it does not contemplate the curtailment of its programme. It has not called upon its shareholders, the people of Australia, to increase their contributions; but proposes to adjust its organization to meet the existing conditions, and relies on the huge resources of the Commonwealth to enable it to recover next year.
It will be noticed that the Prime Minister’s version of the unfortunate illustration of the honorable member states that a well-managed country will fall back upon its reserve fund in times of emergency. That is exactly what Australia should have done. It has “experienced years of phenomenal prosperity. Money has poured in through the customs in almost uncountable millions. Where has that money gone? I have shown that our public debt is increasing, that the Government has a deficit, and that now, after all those years of phenomenal, unexpected, and almost unbelievable revenues, the Government is unequal to the situation. At the very first breath of disaster it is budgeting for a deficit of £2,600,000. The honorable member for Martin suggested that we should rely on the huge resources of the Commonwealth. T shall put to the honorable member a comparison which, I am confident, he will understand. Suppose that this hypothetical company of which he spoke possessed a pastoral lease, and that over a long series of years it had had substantial and amazing profits such as have been enjoyed by the Commonwealth Government. Suppose,too,that on the sixth year, through “temporary” misfortunes to which reference has been made, the company found itself with a deficit. What would the shareholders say of their chairman of directors, if in his report, he stated, “ Gentlemen, it is true that we have had a setback. It is true that our profits for the last five or six years have been collected and are dissipated, and that we have a large overdraft. But I ask you, gentlemen, to rely with confidence on the boundless possibilities of this splendid property upon which your sheep are running”? That would be precisely a parallel with the case instanced by the honorable member for Martin. The analogy of the honorable member was unfortunate, because it brought out, and the Prime Minister was foolish enough to accentuate it, the fact that our surpluses have been dissipated, and that there is no reserve to offset our reckless expenditure.
It is worth remarking too that, apparently, our setback is not altogether temporary, for the Treasurer is cheerfully budgeting for another and similar deficit. More than that, the figures of receipts and” expenditure and customs receipts that are available go to show that the next deficit will be greater than the Treasurer is anticipating, and for which he is budgeting. The Prime Minister curries favour confidently with his friends by saying that it is most undesirable to increase taxation. The right honorable gentleman even made the suggestion, which was palpably influenced by the imminence of the general election, that we of the Labour party entertain, the’ sinister intention of retrenching the public service. That, of course, is too absurd to pursue further. While I agree with the Prime Minister that it is undesirable to increase general taxation, I suggest that it is even more undesirable, to be falling into debt, and at the same time remitting taxation to those best able to bear it. Notwithstanding our financial difficulties, the position of the public debt, and the increase in taxation generally, this Government has thought fit to placate its best-placed critics by remitting £400,000 to the richest landlords of Australia. While taxation is undesirable and unpleasant, I warn those honorable members who are supporting the Government that if that state of affairs continues, either additional heavy taxation or bankruptcy is inevitable.
Having dealt with the statements which he attrbuted to our Leader, and having made innuendoes in keeping with them, the Prime Minister said that we had made no suggestion dealing with the problem. I am not here to defend the Leader of the Opposition, as he would not desire it,, and I am certain he does not require it. But
I think that that was about the most audacious thing that the Prime Minister said in a more than usually audacious speech. Those who have some recollection of the history of budgets in Australia will remember that, during the discussion on the budget last year, the right honorable gentleman rose to answer the representatives of Labour and, disposing of our criticism in a large way said, “ Let them come down to details and show us what savings they propose to make. How are they going to cut down the expenditure? How are they going to balance the finances ?” The right honorable gentleman admitted that the balance of trade was bad, that our public debt was increasing, and that all that we had said was true. Yet he asked what we were going to do about it. The responsibility, for the moment, did not rest upon us to answer that question in detail but, in anticipation of a similar question on this occasion, the Leader of the Opposition, having made a general survey of the financial position of Australia, came down to details and drew attention to a long series of items of expenditure, which he called upon the Government to explain and justify, if it could. We still call upon it to justify and explain those items - if it can. The items related to only one of a number of departments, and totalled at least half a million. The Prime Minister, in reply, said, “ As to these matters of what he called petty detail that the Leader of the Opposition has gone into, and after all they amount to less than £1,000,000, I shall deal with them in due course when we are dealing with the several departments.” The right honorable gentleman did not make his original challenge when the estimates of a department were under review, but during the general discussion of the budget. He was answered in a debate on the general discussion, yet we still await details and justification for the expenditure connected with his own department. We suggest that the right honorable gentleman might reasonably be expected to understand his own department; we do not ask him to explain the expenditure of all the departments - whose expenditure runs into a great deal more than £1,000,000. The Prime Minister postponed the matter until a later date, and perhaps in the early hours of the morning; just when we are getting ready to “fold our tent like the Arabs, and as silently steal away.”
It is curious that when dealing with what he termed petty details, the right honorable gentleman had another complaint about our leader. He said, that that gentleman, in talking about the balance of trade, had quoted figures of such enormous dimensions that they almost staggered the imagination. They did stagger the imagination of the Prime Minister, and between his staggered imagination from figures that are too large, and his contemptuous disregard of figures that are too small, there remains a great deal to be explained by the Treasurer, the greatest of our financial geniuses. I shall quote the words of the Prime Minister in order toillustrate his attitude on the big subject of imports and exports, in respect of which he said that the Leader of the Opposition spoke in figures of such magnitude as to stagger the imagination. They are as follows -
In dealing with the customs tariff, he again took a point which he has often taken, and which has become very nearly an obsession with him; he said that any increase in our imports would inevitably indicate that the country was going back. The honorable member should remember that the prosperity and wealth of Australia have been increasing in recent years, and that even in countries which are highly protected, when prosperity increases, requirements increase concurrently. Even a country which is providing the greater part of its requirements by its own production, will in such circumstances increase its importations from other countries. The greater the prosperity of a country the greater its imports will be, because as its wealth increases its requirements are augmented. Therefore, that part of the honorable member’s criticism did not cause me the slightest anxiety.
There is much in that statement that is remarkable as being a mixture of the obvious and the absurd - obvious, of course, in the sense that if we have not prohibition the greater our prosperity the greater our imports will be. Taken in an absolute sense, that will probably be so. When trade is active and money abundant it is very likely that imports will show an increase; but the absurdity lies in the assumption that that states ment of the case has any important bearing on the point under consideration. It is not a question of the volume ofimports except in its very important relationto the volume of exports. So far from it being true that the Leader of the Opposition had said that any increase in the imports would inevitably indicate that the country was going back, I have heard my leader half a dozen times say in this chamber something entirely different. He has pointed out, not that the fact of the imports being greater than the exports in any particular year indicated financial instability - that might occur in an individual year and even for two years - but, as the lessons of history prove beyond doubt, that when we have conditions prevailing under which the imports exceed the exports over a long series of years this usually end in disaster. Not only does history prove it to be so, but every sound economic theory supports it. That, of course, is the answer in that regard to the Prime Minister.
The right honorable gentleman blended comedy with tragedy a little in connexion with our sinking fund, about which the Treasurer and the Prime Minister are both exceedingly self-complacent. When the .right honorable gentleman was dealing with the sinking fund I was inspired by a member of the Opposition to interject that the Government had floated more loans than it had sunk. The Ministerial forces, then ranged in full numbers behind the Prime Minister, were most concerned that I should not succeed in getting in my interjection. With one voice,, like trained choristers, they endeavoured to prevent the obvious retort to .the Prime Minister’s contention regarding his blessed sinking fund, namely, that he had floated more than he had sunk. The fact, of course, is that, notwithstanding its reduction of the public debt by the sinking fund, the Government has on the whole increased the public debt. There is no mystery about that. It is on record, and is not open to dispute. Therefore I marvel that a responsible man at the head of the Government should claim credit for’ the amount by which the public debt has been reduced by the sinking fund. In truth and in fact the public debt has been increased, in the aggregate. This tremendous public debt under which we groan was. incurred in comparatively abnormal times. It . is a legacy of the war, and having been produced under war conditions it is nothing less than disastrous that it should be continued progressively to the bad in normal and even in prosperous times, and in days of peace. That is the position as we present it to the country.
One contention of the Prime Minister to which I might make reference before I conclude is that the Government had sunk the debt for which it had nothing to show, and had incurred new debt in connexion with certain reproductive works. He instanced the post office. That is rather an illusory consolation when faithfully examined. Let me take an illustration which may again appeal to the honorable member for Martin and other honorable members whose private affairs are not regulated by millions but by much lesser sums, and whose unhappy lot it is occasionally to ‘have to raise money on more insignificant security than the whole assets of the Commonwealth of Australia. Let us suppose that an honorable member has a loan upon a part of hia estate. It is a grazing proposition, and for some reason or other is not producing very much. His banker calls attention to the fact that he has another area on which he is growing wheat fairly successfully and making profits. It is very likely that the banker will either insist on the mortgaging of the wheat-producing area, or at least will suggest that the mortgage be transferred to the better, asset. If, on the mortgage being so transferred, the profits from the wheat farm are used for the purpose of reducing the overdraft, and improving the owner’s position generally, so much to the good; but if no such progress is made, and the overdraft is increased from year to year, the owner will have gained nothing at all by transferring the loan from that part of his securities which is producing revenue to that part which is producing very little. That, at all events, is how the matter appears to me when reduced to its elements.
I still ‘have a number of things to say that are applicable to various parts of the budget on which I had intended to speak in this general discussion, but if I may conclude without profanity in the words of one who said, “ You cannot bear them now,” I would say to the committee that, perhaps, it cannot bear them now; at all events, I shall leave them for another occasion. I have endeavoured to assist in focussing attention upon things that really matter in connexion with the finances of Australia. Other speakers on this side have availed themselves of a similar opportunity. We have endeavoured to disperse the clouds that obscure the outstanding facts about which there should be no dispute hwatever, and which are not only disquieting, but positively alarming. After six years of unparalleled prosperity, Australia finds itself with a deficit, without reserves- and with its public debt mounting from year to year. We must grapple with this situation. The Government has had years in which to justify itself, and it has failed to do so. The final evidence of its failure is in the budget. If Ministers can justify themselves before the electors as the financial administrators of this country, then the electors are much more easily gulled than I imagine them to be.
– I have been twitted in many quarters upon my long silence. There are several reasons, and at least two important ones, why I have refrained from participating in the debates in this chamber. One is that I am a diffident speaker under all conditions. I find it extremely difficult to address honorable members in this chamber. I do not know that anything I could say would be of national importance;, but I desire to express my exact thoughts so far as lies in my power. There is no reason why I should camouflage my opinions in any way. So far as I can see, I am on my political deathbed, and sometimes I think I can hear the political death rattle in my throat. Possibly as I proceed with my remarks other honorable members will hear -a similar sound.
– Is it political suicide?
– No.; but I cannot help myself. I entered this House as a political neophyte, and I still regard myself as one, and my position has been such that political life has been made rather difficult for me. I wish to place on record my appreciation of the fair treatment that has been extended to me by every honorable member. If I have failed in any way it is due wholly and solely to myself. Ministers, members, and heads of departments have all treated me with courtesy and consideration, and if -I shortly come to the end of my political career I shall always retain pleasant recollections of my personal association with honorable members. Of course, on the other hand, I realize that I may not die politically. The press, also, has been fair to me, because, after all, most sections of the press are saturated with party virus. I could say something frightfully nasty about a certain newspaper in my own State, but I do not intend to spoil my record. I have never uttered one bitter word about any one since I have been a member of this House, and I wish to preserve that record a little longer. I may, perhaps, be permitted to relate an incident which has some bearing upon what I propose to say. I well remember the first political speech which I tried to make from a public platform in Fremantle. I have to confess that it was a most miserable attempt. I am afraid that I completely lost my bearings, and talked a lot of rubbish. Naturally, I went home in a most miserable frame of mind, and concluded that I was the biggest fathead that had ever appeared on a public platform. But next morning, to my surprise, the journal to which I refer, in commenting upon my meeting, said something like this : - “ This man has a very pleasant way of speaking. His matter is good. As a matter of fact, he is a fine speaker, and also a great personality.” I concluded that the reference was satirical, until I noticed that a later comment referred to me as semiparty and said that I was certainly anti-Labour. I was an independent Liberal. I took the trouble to inform the newspaper that although I was not opposed to party politics based on principle and policy, I was against machine-made party government, and that I had ‘ no party leanings, that is, as party politics are understood in this House to-day. I then discovered that the writer of the comments concerning my political character had made a mistake, and that, after all, I was not the great man that I had been declared to be. From that day to this I have . been, according to the journal in question, the biggest fool in Fremantle. I could say a lot of nasty things about that newspaper, but I will not do so. I am content that the people of Fremantle, with whom I have lived for over 30 years, completely vindicated me, and trusted me the whole of the way. Actually, they gave me a free charter, a blank cheque. My one regret is that I have not, by way of public service, been able to fill in the cheque for a greater amount, and in that way justify more fully the trust which they have reposed in me. I should like the people to know that, had it been in my power to do anything for Australia or for Western Australia, no sacrifice on my part would have been too great. However, holding the views which I do - I do not suggest that necessarily they are right - it was utterly impossible for me to render that public service to the electors in Fremantle and to the people of Western Australia and Australia that I should have liked to give. I regret this very much, but if ever the opportunity comes I shall be prepared, and shall not hesitate to sacrifice myself in their interests.
Having made this explanation, I feel that the way is now clear for me to say what I think about the budget. I do not propose to discuss it at any length. From my point of view, the great array of figures contained in the Treasurer’s statement, the subtle deductions, the close analysis, the excuses, and the promises, are not what the people of Australia want. If you are in a bog and feel yourself sinking deeper and deeper, you will not feel that you are being helped very much if your friends on firmer ground come along and deliver you a lecture on, say, the latest system of logarithms. What you want most of all is a stout rope thrown to you by means of which you may be hauled out of the bog. That is what Australia wants to-day. I am notsaying one word against the Treasurer’s budget. It may be an honest attempt to present the facts of our present financial position. But this budget, like other budgets of recent years, both Federal and State, is remarkable more for what it conceals than what it reveals. It reminds me of the attitude taken up by a quack doctor. I have no desire to say anything disrespectful of the medical profession, the members of which I hold in the highest esteem ; but I suppose we all have had some experience of quack doctors, and speaking of this budget, and having in mind the simile that presents itself to me, I am reminded of the interview which conceivably might take place between a man with a sore toe and a quack doctor. The latter, when summoned to administer relief, probably would look profoundly wise and say something like this - “Ah! you are suffering from a lesion of the metatarsal joints in a pedal extremity!” The. person with the sore toe would then think along these lines, “ What a wonderful man he is ! How profound is his knowledge ! I have been carrying this foot about with me all my life and I never knew that I had one of those things in it!” But, unfortunately for him, the toe is still sore, and so he applies to the “ quack “ for relief. Then the “ quack,” still looking profoundly wise, sits down to write a prescription in dog Latin. This again impresses the man with the sore toe. He feels that it is all so wonderful that the prescription must have in it the necessary curative properties. Unhappily he is disillusioned when he finds that the application of the remedy specified affords him no relief, so, presently he begins to doubt the soundness of his judgment as to the profundity of the knowledge of the “ quack.” In the end, he is compelled to resort to the remedies used by his poor old mother. He applies a bread poultice, or possibly a linseed meal poultice, and a cure is effected. There is no doubt that the people of Australia fully appreciate the wonderful array of figures in the Treasurer’s budget, as well as the deductions, the explanations, and the analysis of figures by the several honorable members who have contributed to the debate. But I think that Australia is saying - “My head is aching .and my feet are sore, and I want so much to get relief. I have tried all these remedies before, and they have never cured me, so I am beginning to doubt whether they will on this occasion. I have a wonderful estate, full of natural resources, and only a small number of people to maintain. I have no less than thirteen boards of directors and nearly 700 members on these boards. These men are continually pouring out rivers and oceans of oratory, of invective, criticism and advice. They are all telling me what
I should do to be cured. Their, talking makes the Tower of Babel look like an anthill. But my head is still aching, and I am wondering if, after all, I shall not have to look to the simple remedy of honest work and fair dealing among my people to cure me.” Until Australia gets that, all the governments in the world will have no effect on her destiny. Let me quote figures showing the position of Australia to-day ; but before I begin I wish to make it plain that I am not a pessimist. I believe that Australia will rise above all her troubles. She will solve all her difficulties, and will ultimately become the standard bearer in the march to a better and more complete civilization than history records. Thatwill happen when her leaders are so placed that they can inspire us with a clearer and truer conception of national life and duty; but not until then. Nearly every honorable member believes that I have a rooted and eternal objection to .party politics. That is hardly true. I always have believed that we should be better governed under some system of proportional representation that would give the people an opportunity of expressing their desires, and some system of elective ministries under which ministers would be responsible to Parliament and Parliament directly responsible to the people. I have no objection to party government, based, as in the early days I understood it to be, on policies and principles that are almost forgotten to-day. Now I hope that I have made my position plain. I. have been consistent in my attitude. Not that I say that consistency is a virtue. Sometimes it is a weakness and a fault. I have never deviated from my opinion, and I have had no reason to do so. The following is an extract from one of my first political speeches.
– When was it made?
– In 1914. It readsIn my opinion the present system of political control has no relation to what has been for many years known as the party system, lt appears to me to have begun its active life in about 1911, and has developed into a purely mechanical machine system, depending for its life on sectional or class hatred, in. which independent thought and action can have no part.
I said that in 1914, and I say it now. That is the system in vogue to-day, and I do not think that it operates in the interests of Australia. Let us see what has happened during the seventeen years since 1911, when pre-selection and caucus domination began to separate the two big elements that make up society and to place them in hostile camps - capital and labour; employer and employee. We cannot get away from that position. Honorable members may say that I am a dreamer, a visionary, or anything else; but the facts stare us in the face, if finance counts for anything, and I think it does. It has been said that government is finance and finance is government, and there is a. lot of truth in those words. In any case, finance means a lot in every walk of life. If we cannot finance our homes, trouble will be the outcome ; if we cannot finance our businesses, commercial disgrace in the insolvency court will bethe result. If we cannot efficiently and effectively finance our country, unemployment and industrial trouble must ensue. Let us compare our financial system of seventeen years ago with that of to-day. Up to 1911, we had been controlled under the old system of party politics, and we had been borrowing money for 69 years. The first loan was floated in London 69- years prior to 1911, and during that period we borrowed £267,000,000.
– The States borrowed’ that.
– The States arethe Commonwealth. We borrowed that sum at approximately per cent. The debt per capita, after deducting sinkingfund payments, was £58, and the interest bill slightly over £2. In 1911, a year of low values overseas, we sold enough overseas to pay for what we bought, to meet our interest bill, and to leave a surplus of between £3,000,000 and £4,000,000. At that time we had established most of the principal harbours and railways in theCommonwealth. We had under cultivation over 12,000,000 acres of land. Wehad 93,000,000 sheep, 14,000,000 cattle, and 1,100,000 pigs. Let us examine theposition since the evolution of the new system of politics. Since 1911, eliminating war commitments altogether, thisbeing only fair, we have borrowed over £500,000,000 at over 5 per cent. We haverenewed nearly all our maturing debtsat that rate of interest, with the result that Australia to-day has a national: debt of £140 a bead and an interest bill of about £7 a bead. What have we done with this money ? Take 1926-27, a prolific year when high prices ruled overseas for our primary produce. In that year we had 16,793,000 acres of land under cultivation, an increase of over 4,000,000 acres compared with 1911 ; we had 99,215,000 sheep, which represents an increase; 11,963,000- cattle, and 989,000 pigs, both of which represent a decrease.
– Stock was worth more in 1926-27.
– That is another matter. In that year of plenty and high prices, what we sold did not pay for our overseas purchases by some £6,000,000. That added to our overseas interest bill left us approximately £30,000,000 in debt. That is what the new system of government has done for Australia. What have we got for that money? This is what we have got for all the money we have borrowed. We have an enormous aggregation of people in the cities, where a large percentage of them live by exploiting one another and struggling for the lion’s share of those credits. Country party representatives will agree with me in that. It is questionable whether more than 10 per cent, of the people in the cities devote their energies to anything that matters in the economic scheme of . things. Thousands of them are living lives of luxury and ease; many more are doing nothing very important, while some are actually hindering others who might be doing useful work. There are palatial city buildings many of which we would be better without. After all, a cottage that you can pay for, is better than a magnificent building which is loaded with debt and anxiety. Millions of pounds worth of motor cars have been imported into this country; at least they cost millions of pounds, but what they are actually worth is another matter. They were bought, from a national viewpoint, with borrowed money. It would have been better for the people of Australia if the Government had said - “We will not obtain credit abroad in order that you may buy motor cars; you can either build those cars here, or go without.” It will take a little longer to walk to the bankruptcy court than to ride there in a high-powered motor car bought with borrowed money, which is the way people usually get there. We have the skill, the material, and the labour here to manufacture cars, and there was no need to borrow money abroad with which to buy them. The other day I asked a series of questions concerning the sum of £10,000,000, which we recently borrowed in America. I asked was it a fact that Australia would be called upon to pay approximately £13,000,000 in interest during the currency of the loan of 28 years and still owe the original £10,000,000. I asked, further, whether it was a fact that all the benefit that Australia would receive for these huge commitments was something under £9,000,000. The answer to both those questions was in the affirmative. When we realize that even this £9,000,000 has to be accepted in the form of manufactured goods, it is seen that we are in truth pawning our country. The cost of living has been raised to such an extent in Australia that it is now practically impossible for a man to keep himself and family on the basic wage. In 1911 the average wage for a shop assistant was £3 a week ; to-day it is £4 12s. a week. But £3 in 1911 would buy as much as £6 will buy to-day. High cost of living means a lower birthrate, and recent statistics on this point are very alarming. A nation’s greatness depends on the home life of its citizens, and a home without children is not a home at all. We are borrowing money to bring in immigrants from all over the world. Some of them are very fine people; but I do not think that -we can get the best kind of immigrants by offering them a bribe. We should make conditions so attractive in this country as to induce people to come here of their own accord. Wealthy people say that children are in the way. Perhaps it is just as well that they hold this view, because the children of the wageearners generally make the best citizens. In my view, children may be regarded as the joy of the early morning of married life ; they are the sunshine of its meridian, and the pride of its twilight. At the present time, we have an inflation of values which may and certainly will collapse unless we bring them down to the parity values of our goods on the world’s markets. I was building bouses for .a contractor in Melbourne during the boom period of 1886 and 1887, the notorious boom which everybody remembers well; I did not invest money in property at the time, chiefly because I had not any to invest, but, in any case, I had no faith in the prices which were then ruling. I was asked by a young man to look at a house he had bought in Brunswick, and to give my idea of its value. I told him that it was worth £450. He said that I must be wrong, as he had paid £1,000 for it, and that he would be able to get £1,100 for it if he put it on the market. I told him that the value was not determined either by what he paid for it, or by what he could sell it for. It was a worker’s home, such as every working man should have. As such, it was worth only what a working man could afford to pay in rent and leave a reasonable profit on outlay and the working man’s wages must sooner or later be determined by the world parity value of our goods on the world’s markets. That must be so, because it is the parity values of our goods on the world’s markets that must determine the value of all our possessions, and also of our services to one another. We are a debtor nation, and must sell in the world’s markets to meet our obligations and live. View the position in any way we like, we must come back sooner or later to the world’s parity values. Our progress as a nation depends upon our ability to sell our goods at a competitive price on the world’s markets.
– The price of wheat is now coming down on the world’s market. How can that help us ?
– It cannot help us, and that is our trouble. We have been building up a standard of values that have no intrinsic worth. The period of coming back is difficult. It is easy enough to go ahead. A man is quite happy if he builds a .house to-day and its value goes up to-morrow, but he is not so happy when the period of deflation sets in, particularly if he has a mortgage on his property. Sooner or later put parity values of our production must determine the values of our possessions and our services to one another in Australia.
We have sown in Australia the loveliest crops of discord and antagonism in the industrial world, on the co-operation of which the whole structure of our economic life rests. Never at any other period in the history of Australia have feeling and schism between employer and employee been so bad as they are to-day. It is all very well to tell the employee that his master is a scoundrel. It is like telling a boy that his father is no good. There may be a modicum of truth in the assertion, but it is always far better to let the boy find out the truth about his father than to create feelings of animosity or enmity. We have people rush-, ing hither and thither in search of excitement, mistaking it for happiness and satisfaction. Are we maintaining or building on the foundations made by our forefathers when we are chasing tin hares or racing goats or horses to the extent our people are doing to-day? We cannot, and never shall, advance if we think of nothing but sport and pleasure. Inflation of values, creating among the people the idea that they need not work, and that all they have to do is to have a good time riding about in motor cars - all this desire for excitement and pleasure, which is really not pleasure, because there is no satisfaction to be got out of it, is destroying the love of home life and the family circle, the true centre of happiness and national greatness.
We have made it impossible to sell our produce on the world’s markets by our attempt to bolster up artificial conditions by charging each other more and more for essential commodities. The price of sugar is £14 a ton f .o.b., but the people of Australia are paying £37 10s. a ton for the sugar that they consume. Our best butter has sold in London last year at an average price of ls. 7d. per lb. retail, after 2d. per lb. has been, paid to get it there. Yet the people of Australia are paying 2s. per lb. for the butter they consume; the idea being to maintain artificial conditions. Bread made from flour ground from Australian wheat is sold in London at 7d. and 8d. for the 4lb. loaf. The people of Australia are paying ls. for a 4-lb. loaf. After all freights have been paid, Australian meat is sold in London at 6d. and 8d. per lb. retail.
– That is wrong. The honorable member is referring to the wholesale price.
– The wholesale price in London of hind quarters of beef is nothing like 6d. or 8d. per lb. Nor is mutton sold at that price. For the last twelve months in London the average price of beef and mutton has not exceded 5d. per lb. wholesale. Yet the people of Australia are paying lOd. and ls. per lb. to bolster up an artificial condition of affairs that should not exist, and without getting anything in the nature of intrinsic value. It is true that I have advocated the payment of a bounty on the production of butter, but only as an expedient. I do not regard the payment of a bounty as the solution of our difficulty. It would not bring down the cost of production, but it would certainly not be a continuance of the system of bolstering up an artificial condition of affairs by charging the people of Australia considerably more than they ought to pay. That system only intensifies the trouble. It reflects on the cost of producing that which we must sell in competition on the world’s markets.
I have given my views of the present system of party and machine control. It does not allow to any Minister or member a chance to do his best for Australia. It is not fair to either. It is dangerous, inasmuch as it is leading us into a great deal of trouble which otherwise could easily be avoided, but which we shall have a difficulty in overcoming. Australia is faced with one of the most difficult economic and industrial problems which it has ever had to meet. I am not a pessimist, as some people think I am. I try to look things fairly and squarely in the face. It is useless to try to dodge a difficulty. When I was a boy I had a dog which was very fast. My experience was not sufficient in those days, but now I have come to the conclusion that it could best be described as a political dog. When I took him out hunting hares he would course along in good style when the going was good, but when the hare took to a hill, as invariably it did, the dog would never go after it. He preferred to run round the margin of the hill in the hope of meeting the hare on the other side, but he never succeeded. Australia to-day is trying, to dodge its difficulties, but they must be faced sooner or later, and the sooner the better. I have been described as a freak, a visionary, and an idealist. As a matter of fact I am simply a keen business man who is fairly well acquainted with the ethics of trading, and after all is said and done, the control of a nation is very much the same as the control of a big business concern. In the control of our nation we should do what a keen business man would do - we should do our level best to get back to sanity.
Many of my votes in this chamber have been questioned, especially the vote I recorded on the Conciliation and Arbitration Bill. People have said to me, “ You are an employer of labour, and we expected you to support that measure of compulsion. Why have you not explained your attitude?” The opportunity for giving that explanation is now open to me, and I propose to take advantage of it. I have had long experience both as a worker, under all sorts of difficult conditions, and as an employer. Having studied this problem closely, I voted as I thought wise. I did not doubt the Government’s sincerity in endeavouring to bring about a better state of affairs by compelling obedience to the Arbitration Court’s awards. No doubt the Government honestly regarded that as the solution of the industrial problem ; I did not. I considered the amendment to the Arbitration Bill one of the most important measures considered in this House since I have been a member of it.
– Why was the honorable member absent from so many of the divisions upon it?
– I was not; I voted against the bill. The ostensible purpose of the measure was to compel both parties to honour the terms and conditions of awards. Apparently, the view of the Government was that until that time only the employers had been compelled to obey the awards, the workers doing so only when it suited them, and at other times flouting the decisions of the court. Undoubtedly, that had happened in some cases, but one must look at the matter from the workers’ point of view also. They say, and say rightly, that even though the employers may not commit overt breaches of awards they are dishonouring the spirit of them all the time. Although the Arbitration
Court fixes the wages and conditions of employment, it has no power to fix the values of commodities; consequently, any apparent gain from an increase of wages is taken away from them again through the increase in the prices of commodities. Thus the worker is placed in the position of a dog chasing his tail. If he gets an increase of 2s. 6d. a week, that amount will be passed on to the community, and the chances are that he will be required to pay a little more in excess prices than he has gained. The wage-earner’s standard of values is the amount of necessaries and comforts he can provide for himself and his family. And it matters very little to him whether the provision of them costs £1 or £10 a week, but these are the inalienable rights of every decent Australian citizen. Under present conditions, the effective wage is less than it was in 1911. My own firm operates under thirteen different awards, and I know that the effective basic wage today is less than the standard wage was before the war. In 1911 the standard wage of a shop assistant was £3 a week; to-day it is £4 12s. Frankly facing the facts, I could see no advantage in legislating to compel parties to obey the letter of awards when the employers could not be made to obey the spirit of them. We know that the spirit of awards is being broken by employers every hour of the day, and there is no means of preventing them from breaking it; indeed, many of them are obliged to increase their prices when costs are raised, and by a system of combination they can do that in greater ratio than the increase in wages awarded by the court. I hold, also, that a criminal law cannot be successfully and satisfactorily applied to industrial matters any more than a policeman can successfully intervene in a matrimonial tiff. His interference only widens the breach between the parties and hastens the divorce proceedings.
– The honorable member may not discuss a matter that has been already decided by this Parliament.
– I understood that in the budget debate honorable members may discuss any subject.
The TEMPORARY CHAIRMAN.The honorable member may not now dis cuss an act passed by this Parliament. I have allowed him some latitude, but he cannot continue in that strain.
– I wished to explain my reasons for voting against the Arbitration Bill, and as I have had a wide experience, I thought my remarks would be of interest to the people. However, I need not refer again to any specific piece of legislation. The time has gone by when the wage-earner can be treated as a chattel to be used only for the purpose of adding to the wealth and comfort of others. At one time he may have had the humble idea that the Almighty had created him to be subservient to his masters, do his job well, and look for his reward in the next world. But to-day he says, “I am a human being, with the same longings and aspirations as the biggest magnate in the land. I came into the world in the same way as he did, and I shall go out in the same way, and I do not see why my struggle for some of the good things of life on the short journey from the cradle to the grave should prejudice my chances in the hereafter.” Yet there is a tendency on the part of some people to consider the wage-earner a chattel. We cannot promote industrial harmony by the display of force any more than we can produce wealth by wielding a golf club or a billiard cue. Industrially we cannot compel the best class of workman to do what he does not want to do. It is difficult to prevent good men from doing what they want to do, and it is hard to prevent men from stopping others from doing what they themselves will not do.
The best way to get an Australian to do a thing is to make him want to do what you want him to do, for once a good Australian wants to do a thing he is going to do it, do it quick, and do it well. I learned that in my young days, when I was in charge of a job in Melbourne, and I quite inadvertently hired Sandy McDonald. After I put Sandy on I discovered that he was what was known then as a red-hot social revolutionary. I was in a quandary, but I soon discovered that Sandy was completely master of the job, both technically and practically. It was most important for me to make good, or I should lose my job. I realized that if
I could get Sandy going he was likely to he of great assistance in helping me to hold the job, so I sidled up to him and said, “ They say that you are one of these socialists, Sandy.” He glared at me and replied that he was. “ That’s strange,” said I, “but in a way I am one, also.” “You!” he retorted, “why, you are a capitalist’s pimp; you’re no socialist.” I said, “Yes I am, Sandy, and seeing that we are both freaks in our own way, don’t you think we could make up and get along pretty well together?” But Sandy would have none of me. I remembered reading somewhere how a chap managed an impossible wife by letting her manage herself, so I decided to try it on with Sandy. I let him feel that he was boss both of himself and to an extent of me, too. Before long, Sandy had “ taken hold of things,” and it was great to have him coming along and pointing out how we could improve on this or how we could get over that difficulty. He was one of the best mates and the ablest workman I ever had. Of course, I did not let him know that he was helping me to hold my job, but I fancy he knew, and I believe he was glad. There are scores of thousands of Sandy’s in Australia. They are like the wild mustang of the desert, bred and matured in nature’s wide expanses, every fibre of their being pulsating with freedom. They chafe at control, they jib at coercion; but, once you get them headed right they are all initiative, enterprise, and resource, and all determination and loyalty; but somehow we are getting them headed all ways - or, maybe, we are leading them all wrong. Australians have proved their worth in every field of life’s activities; in sport they have been supreme; in the air and under the water; as inventors and scientists, they have held their own; and on the battle-field, when death was the dread issue, they have not failed their country.
There is a good deal more that I could say upon this phase of our industrial life, but I shall reserve any further comments I have to make until some such future occasion.
Motion (by Mr. Latham) agreed to -
That the House, at its rising, adjourn until to-morrow, at 11 o’clock a.m.
Waterfront Dispute : Summonses against President andSecretary, Melbourne Branch Waterside Workers Federation.
Motion (by Mr. Latham) proposed -
That the House do now adjourn.
.-! do not usually trespass upon the time of honorable members at this hour of the night, but I make no apology for doing so upon this occasion, because I intend to raise what I regard as an urgent and important matter. I have received from the Premier of Victoria, a communication stating that yesterday afternoon summonses were served upon the President and the Secretary of the Melbourne Branch of the Waterside Workers Federation of Australia, for offences alleged to have been committed against the Commonwealth Arbitration Act with respect to the working of the Karoola and the Lutana. To my knowledge the Premier of Victoria worked unceasingly during the whole of last week to effect a settlement of the dispute on the waterfront, which lasted less than a week. I also was not idle; and other men whoare connected with the industrial organizations of the Australian Labour party worked tirelessly to restore peace in the shipping industry.
– And successfully, apparently.
– Their efforts proved successful, because on Saturday afternoon a resolution was carried by a large majority of the delegates who had assembled in Melbourne from all parts of Australia, affirming that the men should be instructed to resume work; and advice to that effect was sent out. Yesterday morning the president and secretary of the Melbourne branch of the Waterside Workers Federation conveyed that instruction to their members, who resumed work that afternoon.’
– What is the charge?
– I understand that these officials are charged with having done something in the nature of inciting or encouraging men to refrain from working the Karoola and the Lutana. The summonses were received by them subsequently to their having advised the members of their branch to resume work.
That advice was acted upon, and the men are still at work. There is practically no trouble in Victoria at the present time. There is a slight hitch in the negotiations with the Port Phillip stevedores, but it is hoped that that will be overcome tomorrow.
– Who issued the summonses ?
– They were issued on the authority of the Commonwealth Attorney-General. The Premier of Victoria has informed me that he is very greatly perturbed, because he is interested in’ the preservation of industrial peace in his State. He and the industrial leaders had almost effected a settlement of the trouble when this firebrand was throw into the arena. It may upset the whole of the arrangements that have been come to. I want to know what was the motive behind this action of the Government.
I may be told in plausible language, by the Prime Minister (Mr. Bruce) or the Attorney-General (Mr. Latham) that the law has been broken, and that it is the duty of the Government to uphold it. In anticipation of such a rejoinder, let me make two observations. The first is that, under the criminal code of this country, no crime has been committed, and the second is that the laws which we passed to deal with industrial matters were originally designed to prevent and settle industrial disputes, not to promote them. If peace is desired in industry, those summonses ought not to have been issued. If the instruction to issue them was sent out before the decision to resume work was arrived at, they should be withdrawn immediately. If, on the other hand, it is not peace that is wanted, I can conceive of nothing surer to create prolonged trouble than this action of the Government.
I ask, in all seriousness, what is the intention of the Government? Last Tuesday night I heard the Prime Minister emphasize the seriousness of the threatened outbreak, which, he said, by interrupting the transport services on the waterfront, would aggravate unemployment, prevent the export of our produce, and intensify the existing financial position. The trouble would be no less serious than it threatened to be a week ago, if it should break out afresh. I suggest that this Government should join with the Government of Victoria in its efforts to bring about and maintain industrial peace. If the Federal Government cannot do any better than has been done in this case, it should stand aside and leave the matter in the hands of persons who are likely to achieve more fortunate results. In the existing circumstances I cannot describe this action of the Government as other than foolish, provocative, and unjust. There is no warrant for it. Any law designed to prevent or settle industrial disputes cannot be upheld or made popular, or even win the respect of the decent members of a community, if its penal provisions are put into force as they have been in the present instance. There is only one course for the Attorney-General to take, if he earnestly desires to preserve industrial peace upon the waterfront and to promote it where it does not exist. It certainly exists to-day in Victoria and New South Wales. If he does not wish to nullify what has already been done, he should withdraw these summonses and retreat from the foolish position that has been taken up.
.- I also desire to protest against the action of the Government in having summonses served upon officers of the Waterside Workers Federation in Melbourne. I am sure it “was with feelings of heartfelt rejoicing that the people of Australia - I except the Government - hailed the peace that was in sight in connexion with the trouble on the waterfront. Having had a fairly long experience on the waterfront, I know something of the questions in dispute, and I can say that the waterside workers have a definite grievance against a judge of the Arbitration Court. Court.
– They always have.
– The honorable member has never been a wharf labourer. If he had spent four or five years on the wharfs of Australia he might be a little more broadminded in his attitude towards the working class. It says a great deal for the waterside workers that they are able to concentrate upon principles and to accept what they ought not to have accepted because of their desire to preserve industrial peace. This Government has consistently refused to assist in the preservation of industrial peace in Australia; but on every possible occasion it has wielded the big stick in the shape of the penal sections of the Arbitration Act, the Crimes Act, or the Immigration Act. Some of those provisions, of course, have proved to be a fiasco. In its determination to precipitate industrial trouble, which is so necessary to the creation of a political atmosphere favorable to itself, the Government has gone to lengths that are not only tragical, but also disgraceful. The history of the Government’s latest action has been traversed briefly by my leader (Mr. Scullin). Every honorable member is aware that in the principal ports the position is quite satisfactory. In Queensland and Western Australia the men, smarting still under the indignities to which they have been subjected, have not yet accepted the instructions of their conference. What has this Government done to induce those men to decide to resume work? They have the capacity to think, and they can distinguish right from wrong. To-morrow morning when they read of this vindictive action of the Government they will conclude that they have been justified in refusing to accept work. The people of Australia may well ask, “What is the intention of the Government; what is behind this move?” Is it that once again, in an endeavour to save itself from disaster, the Government is doing everything possible to cause an industrial dispute in Australia, as it did in 1925? Is that the Government’s intention? If it is not, one can only conclude that the summonses were issued by irresponsibles Under instructions from irresponsibles. If the action of issuing summonses by the Commonwealth Government was not meant to create industrial trouble, it must have been taken by irresponsibles. I refuse to believe that the Government is irresponsible in industrial disputes. In the past this Government has wielded the “ big stick,” and apparently it will continue to wield it. It is doing everything possible to exploit the waterside workers of this country. It works hand in hand with a section of the community which is adopting a similar policy. Indeed, one wonders whether there is some sinister understanding between the two. I refer to the ship-owners, who, in no desire to end the trouble, have told the waterside workers that while they remain on strike at one port, the ship-owners will refuse to meet them in conference. The attitude of the Government and the shipowners is not that of men desiring peace. One cannot dissociate the present trouble from the forthcoming election on the 17th November.
.- The history of this matter is not unknown to honorable members. In December of last year a noovertime strike, arranged by the Waterside Workers’ Federation, took place. The alleged justfication for that strike was that there was undue delay by the Arbitration Court in hearing the claims of the federation. An order was made by the court, the result of which was that the men returned to work upon their giving an undertaking to obey any award which might be made by the court in the future. An award, to come into operation on the 10th September, 1928, was made. Before that date the Waterside Workers’ Federation, after much propaganda in the press and otherwise, arranged a conference to consider whether its members would obey the award. The conference was held, at which a resolution was passed declaring that the federation repudiated the award as pernicious and vicious. It was announced that the resolution was carried unanimously. When that happened it would have been proper for the Government to take action at once. Instead, it waited in order to allow considerations of reason, commonsense and honour to a promise given to prevail. But the Waterside Workers’ Federation repeated daily its challenge to the law and to the Parliament which made it. The issue was clear - whether an award obtained by a body of employees at their own request and which, in addition, they had promised in advance to obey, was to be obeyed, or whether, if it displeased them, they were to be at liberty to dispute it and hold up the trade of Australia. The matter remained in that state for about a week. On Saturday morning last, application was made, by my instruction, after full consideration, to the Chief
Judge of the Arbitration Court for liberty to institute a prosecution of the federation under section 6 of the Arbitration Act, whch was enacted in 1904 and has remained on the statute-book ever since. Alternative charges are being laid under section 6a, which was enacted in 1920 and has remained continuously on the statute-book. There then occurred a withdrawal of the resolution of repudiation of the award in these terms -
That, in the opinion of the conference, no good purpose can be served by preventing members from presenting themselves for employment under Judge Beeby’s award, as the resolution repudiating theaward has served its purpose for the time being. To persist with it any further would be detrimental to the best interests of the federation, as a whole, by preventing negotiations with the shipowners, and thereby endanger the members of the federation with reprisals.
It will be observed that not only is there in that resolution no real withdrawal of the repudiation, but there is also a claim that the repudiation has in some manner accomplished its purpose. It has been plain to all observers that the real effect has been to consolidate the opinion of the public of Australia against this deliberate defiance of the Arbitration Court and the law of the land. The position to-day, according to my information, is that the branches of the federation are paying but little attention to this resolution. In Sydney the men are possibly working under the new award, but in no other port aru they working fully under its terms. Those who have spoken this evening on behalf of the Opposition, have admitted the position in Queensland and Western Australia. My information is that the position is the same in South Australia and Tasmania, namely, that the waterside work is not being done, while in Victoria it is not being done under the terms of the new award, which is the crucial point.
– In what way is the award not being observed in Victoria ?
– I understand that there was no offer at the second pick-up which would take place in normal circumstances.
– I am informed that they are working absolutely in terms of the new award, with the exception of a slight hitch among the Port Phillip stevedores, which is being adjusted.
– These slight hitches may be viewed from different angles. Grave loss and suffering have already been inflicted upon Australian industries. There has been serious unemployment both on land and sea. Australia is dependent upon the efficient maintenance of prompt transport. Yet the transport trade of Australia by sea has been held up. Hundreds of thousands of pounds have been lost already by one week’s stoppage of work. Wheat, maize, wool, butter and sugar, which should be exported, are not being shipped, and the gravest consequences have already resulted from this entirely illegitimate and unjustifiable deliberate action on the part of the Waterside Workers Federation. If, in circumstances such as those I have outlined, no proceedings were instituted, it would be an invitation to a recurrence of similar action. I agree with honorable members opposite that our arbitration law is for the prevention and settlement of industrial disputes.
– But not in the way the Government is administering it.
– One of the methods that has been adopted since 1904 is to penalize lockouts and strikes with a view to preventing them.
– The law has never been administered so stupidly before as it is being administered to-day.
– When the Leader of the Opposition states that the institution of a prosecution would be justification for the declaration of a strike to-morrow, I suggest that he is allying himself with a^i action the significance of which he does not really understand.
– I know what will be the result of this action.
– The Government has a responsibility to the people of Australia to administer the laws which this Parliament has made as their representatives. That responsibility is discharged by the institution of a prosecution in such serious circumstances as now present themselves. The matter is now before the courts, upon which the responsibility of judicial decision depends.
Question resolved in the affirmative.
House adjourned at 11.21 p.m.
Cite as: Australia, House of Representatives, Debates, 18 September 1928, viewed 22 October 2017, <http://historichansard.net/hofreps/1928/19280918_reps_10_119/>.