House of Representatives
4 December 1929

12th Parliament · 1st Session



Mr. Speaker (Hon. Norman Makin) cook the chair at 2.30 p.m., and read prayers.

page 676

QUESTION

WINE BOUNTY

Mr GABB:
ANGAS, SOUTH AUSTRALIA

– Is the Prime Minister yet in a position to announce the policy of the Government in regard to the request for an increase of the wine bounty and its extension after 13th August next? If not, in view of the urgency of this matter, and the fact that the prices to be received for grapes by growers in the approaching season will be affected, will the honorable gentleman promise that a statement on the subject will be made before the House adjourns for the Christmas vacation?

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

– The honorable member for Angas (Mr. Gabb) and other South Australian members on both sides of the House waited upon me some time ago to urge the continuance of the wine bounty for five years and its increase from 1s. to1s. 9d. The Government has not had an opportunity to investigate the matter thoroughly, but because of the urgent need for an early decision, so that growers may have some security for the coming season, it has agreed that the present bounty shall be continued for at least one year. The action to be taken thereafter will receive early consideration by the Government.

page 676

QUESTION

CONTROL OF DEBATE

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– I rise to a point of order. I understood you, Mr. Speaker, to rule last night that you would take action to discipline any honorable member who made remarks to which exception was taken by other honorable members if the remark applied to them individually or collectively. I am not concerned about remarks that apply individually. Will you explain what you mean by remarks which apply collectively? If I criticize the actions of the Labour party, and members of that party take exception to my criticism, will you, sir, call me to order ?

Mr SPEAKER (Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

– As presiding officer I am responsible for the preservation of order and good conduct in debate and for upholding the dignity of this chamber. If language is used which reflects upon the parliamentary conduct of honorable members individually or collectively, or falsely presents the conduct of members during the proceedings in this chamber, I shall even although objection may not have been taken to it, insist upon its withdrawal. With the conduct of members outside this chamber I am not officially concerned, but, if during the course of debate, a remark is made that is offensive, or is untrue, or reflects improperly upon the honour and actions of a member or members, it will bo my duty to extend the protection of the Chair.

page 676

QUESTION

PHOSPHATIC ROCK

Mr McNEILL:
WANNON, VICTORIA

– Will the Minister for Trade and Customs make representations to the commission controlling Nauru and Ocean Islands with a view to a reduction of the price of phosphatic rock sent to Australia for the manufacture of fertilizers ?

Mr FENTON:
Minister for Trade and Customs · MARIBYRNONG, VICTORIA · ALP

– Nauru and Ocean Islands are managed by a commission representative of Great Britain, Australia and New Zealand. As Great Britain draws its supplies from a nearer source, the whole of the output from those islands is sent to Australia and New Zealand in the proportions of 75 per cent. and 25 per cent. respectively. I am not sure that these operations are controlled by my department, but I shall take steps to ascertain whether the price of the raw material used in the manufacture of fertilizers can be reduced.

page 677

QUESTION

TARIFF SCHEDULE

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– In the Melbourne Argus of yesterday is published a cablegram from the Midlands, England, stating that owing to the heavy cancellation of Australian orders for soft goods, because of the prohibitive tariff, the mills have been obliged to dismiss a large number of employees who are co-operating with members of other unions in demanding that grocers in Midland towns shall discontinue the selling of Australian produce and return the stocks on hand to the distributors. I ask the Prime Minister whether the Government, in drawing up the tariff schedule, considered the possibility of retaliation by Great Britain to the detriment of Australia, particularly by the cancellation of the preferences now given to the produce of the Commonwealth?

Mr SCULLIN:
ALP

– The known effects of past tariffs, as well as the probable effects of the new schedule, were fully considered by the Government. We know that whenever the tariff is raised to protect an Australian industry it affects similar industries in other parts of the world.

Mr Gregory:

– This tariff has been a sort of guessing competition.

Mr SCULLIN:

– There has been no guessing; it is the most scientific protective tariff we have had. We used to hear a great deal about scientific tariffs from the last Government, but their tariffs were scientific only in name; this is scientific in fact. If orders have been cancelled in other countries as a result of the tariff, the goods ordered will have to be made elsewhere, and, in this case, that means Australia. As regards the abolition of preferences, the honorable member knows that we are giving a greater degree of preference to British goods than we are receiving for Australian goods.

page 677

QUESTION

REBATE OF PETROL TAX

Mr LACEY:
GREY, SOUTH AUSTRALIA

– Has the Minister for Customs given any consideration to the request for a rebate of, the petrol tax to users of tractors, stationary engines, dye works, &c. If he has not already done so, will he, when the matter engages his attention, give consideration to making such rebate retrospective to the present time ?

Mr FENTON:
ALP

– I am finding things much as my predecessor found them in respect to the proposal to give this rebate. We have experienced much difficulty in exempting from the operation of the petrol tax the users of stationary engines, tractors, &c., and we are still trying to find some equitable method of dealing with the matter. I trust that such a method will eventually -be found. Asregards making the rebate retrospective, that is a matter for further consideration.

page 677

QUESTION

NAVAL DISARMAMENT CONFERENCE

Mr D CAMERON:
BRISBANE. QLD · NAT

– Will the Prime Minister inform the House whether the press report is correct that the Five-power Naval Conference will be opened in London on the 21st January? Is he yet in a position to inform honorable members what arrangements have been made for Australian representation at that conference ?

Mr SCULLIN:
ALP

– I had intended to ask leave to make a brief statement on this subject when the questions were finished. I have received from His Majesty’s Government in the United Kingdom a cable advising me that it will be represented at the conference which is to be held in London on the 21st January by the Prime Minister, Mr. Ramsay Macdonald, the Secretary of State for Foreign Affairs, Mr. Arthur Henderson, the First Lord of the Admiralty, Mr. A. D. Alexander, and the Secretary of State for India, Captain Wedgwood Benn. The Commonwealth will be represented at this conference by a Commonwealth Minister, and the Minister chosen for the duty is the Hon. J. E. Fenton, Minister of State for Trade and Customs. Mr. Fenton will leave for London next week.

page 678

QUESTION

FOOTPATHS NEAR PARLIAMENT HOUSE

Mr LEWIS:
CORIO, VICTORIA

– Has the Minister for Home Affairs noticed the unkempt and weed-grown state of the footpaths in the vicinity of Parliament House? If so, will he take steps to have the necessary labour employed to put them into a presentable condition?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– I shall have inquiries made into the matter.

page 678

QUESTION

CONTROL OF AIR FORCE

Mr WHITE:
BALACLAVA, VICTORIA

– Has the Prime Minister seen a statement published in the Melbourne Herald of the 2nd December, in the course of which he is reported to have said -

The suggestion that the Air Force should be taken over by the Army and Navy came from those departments themselves, and not from his Government.

Can the Prime Minister say who made the suggestion, and for what reason it was made ?

Mr SCULLIN:
ALP

-I made the statement published, and did so because there was a considerable amount of misunderstanding and misrepresentation in connexion with the matter, and I did not want it to continue. I refrained from making the statement for over a week, until I observed that the position was being misrepresented again’ and again in newspaper leading articles, in news paragraphs, and even in this House. I do not propose to say who were the officers who made the suggestion, or what their reasons were, because the suggestion was made in private conference with the representatives of the Defence Department. When the recommendation was made to the Minister and myself I said that the Defence Committee should report oh the matter to the next meeting of the Defence Council.

Mr WHITE:

– Will the Minister say whether the suggestion was made by the officials of the department or by members of the Defence Council?

Mr SCULLIN:

-In the case of both the Defence and Naval Departments, the recommendation came from the head, while the head of the Air Force dissented. It was agreed that reasons or arguments ought not to be published until the council had had an opportunity of discussing the matter and making its decision known. It is not advisable that the methods by which a decision was reached should be published. I give my assurance that neither the Minister for Defence, myself, nor any other member of the Government originated the suggestion, and, despite the strong reasons put forward, I, who presided over the conference, urged delay and further investigation, because we were not satisfied that the change was desirable.

page 678

QUESTION

DAYS OF SITTING

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– Will the Prime Minister inform honorable members whether it is the intention of the Government that the House should sit next Monday?

Mr SCULLIN:
ALP

– The Government has not decided that the House shall sit on Monday next. It is our desire to give, if possible, adequate notice ofsuch a change ; but I confess that the time taken over the passage of some recent measures through the House may make it necessary to increase the number of sitting days. However, we shall endeavour to avoid sitting on Monday, first because I wish to give a week’s notice to honorable members before asking them to come back a day earlier than usual, and, secondly, because I have asked the Premiers of the States to meet me in conference on Monday next. I wish to inform honorable members, however, that if progress is not more rapid in future than it has been in the past, it may be necessary to bring them back next Monday.

page 678

CANBERRA UNEMPLOYED

Mr CUSACK:
EDEN-MONARO, NEW SOUTH WALES

– I desire to make a personal explanation. A report appeared in certain sections of the press recently to the effect that a detachment of the last Government’s army of unemployed appeared on the steps of Parliament House, and desired to wait upon the Prime Minister as a deputation. The author of the report evidently misunderstood the situation, and the report should be contradicted. The deputation desired to see the Minister for Home Affairs.

Mr SPEAKER:

– The honorable member is entitled to make a personal explanation only when he has been wrongly spoken of or feels aggrieved on some personal matter.

Mr CUSACK:

– Will the Prime Minister inform me whether it is a fact that he refused to see a number of unemployed men who appeared on the steps of Parliament House, and desired to interview him?

Mr SCULLIN:
ALP

– It is not a fact. I have seen reports to that effect; but, if I attempted to answer every incorrect statement published in the press, I should be so busily employed that I should have no time for anything else. I do not say that the press manufacture these statements; but sometimes information is obtained from unreliable sources. I was not asked to meet the deputation, and therefore did not refuse to do so.

page 679

QUESTION

WHISKY DUTIES

Mr GULLETT:
HENTY, VICTORIA

– Will the Minister for Trade and Customs inform me who made the request for the largely increased measure of protection afforded to Australian whisky distillers under the new customs tariff?

Mr FENTON:
ALP

– Full information will be given in respect of all the items included in the new schedule as they come before us for consideration.

Mr Gullett:

– A request for these duties did not come before me while I was in charge of the Department of Trade and Customs.

page 679

QUESTION

MANDATED TERRITORIES

Visit of Brigadier-General Wisdom to Canberra

Mr BAYLEY:
OXLEY, QUEENSLAND

– Is the Prime Minister able to inform me when BrigadierGeneral Wisdom, the Administrator of the Mandated Territories, proposes to visit Canberra ? While the Administrator is here will the Prime Minister make arrangements for honorable members of this Parliament to meet him, with the object of obtaining first-hand information regarding the progress of the Territories which he administers?

Mr SCULLIN:
ALP

– Brigadier-General Wisdom is coming here; but I cannot say exactly when he will come. I shall gladly do all I can to make it possible for honorable members to meet him.

page 679

QUESTION

ABOLITION OF THE SENATE

Mr LACEY:

– As it is obvious that before long public business will be held up by the Senate, and as that chamber has become obsolete and inadequate, will the Prime Minister consider bringing in a bill at an early date to provide for the abolition of it?

Mr SCULLIN:
ALP

– Announcements of government policy are not made in answer to questions.

page 679

QUESTION

EGGS AND EGG PULP

Mr FRANCIS:
MORETON, QUEENSLAND

asked the Minister for Markets and Transport, upon notice -

  1. What are the conditions governing the export of eggs and egg pulp from Australia?
  2. What quantities of eggs and egg pulp were exported from Australia during the years 1927-28 and 1928-29, to what countries were they exported, and what were the quantities exported to each country?
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– The answer to the honorable member’s questions are as follow: -

  1. Eggs intended for export are examined, graded and packed under government supervision in accordance with regulations issued under the Commerce (Export Dairy Produce) Regulations. Preserved, washed, or damaged eggs are not allowed to be exported. Each egg is branded with the word “Australia,” as required by British Government regulations. As regards egg pulp, each egg is examined and broken into an approved receptacle under government supervision. The containers are new, and of an approved type.

2.-

page 680

QUESTION

COMPULSORY MILITARY TRAINING

Mr WHITE:

asked the Minister for Defence, upon notice -

Will he state whether any Defence authority was consulted before the Cabinet’s decision to suspend compulsory training, and, if so, who was consulted?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– No. The suspension of compulsory military training is a question of Government policy.

page 680

QUESTION

WAR LOAN INTEREST

Mr YATES:
ADELAIDE, SOUTH AUSTRALIA

asked the Treasurer, upon notice -

  1. What amount of interest has been paid to date on war loans, including the War Gratuity Loan and conversions?
  2. What amount is at present being paid on original loans and conversions?
Mr THEODORE:
Treasurer · DALLEY, NEW SOUTH WALES · ALP

– The answers to the honorable member’s questions are as follow : -

  1. £202,052,018.
  2. The estimated expenditure for 1929-30 is £17,802,101.

page 680

QUESTION

DESPATCH OF TELEGRAMS

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

asked the PostmasterGeneral, upon notice -

  1. Is it a fact that Morse telegraphic instruments are to be removed from certain post offices in the Commonwealth as a result of the proposed alteration in the method of handling telegrams, whereby telegrams will be telephoned through to these post offices instead of being despatched by Morse telegraph instruments ?
  2. If so,

    1. What are the names of the post offices in New South Wales and South Australia from which these Morse telegraph instruments are to be removed ; and
    2. How many postal clerk positions, in these two States respectively, will be abolished as a result?
Mr LYONS:

– The answers to the honorable member’s questions are as follow : -

  1. Yes, in conformity with the policy adopted almost universally where telegraph business is too small to warrant the cost of maintaining Morse facilities and where adequate means for telephoning telegrams are available.
  2. The policy has been in operation for some time, and many changes have been made throughout the Commonwealth with beneficial results. Information is not available at the moment in regard to the cases which are to be dealt with in New South Wales and South

Australia in the immediate future, but particulars will be obtained and supplied to the honorable member at an early date.

page 680

QUESTION

EXPORT OF LIVE KANGAROOS

Mr GABB:

asked the Minister for Trade and Customs, upon notice -

  1. Is it a fact that in the Melbourne press of the 19th ultimo, the following news item appeared: - 1,500 kangaroos shot - Deniliquin (N.S.W. ), Monday - A party of shooters killed approximately 1,500 kangaroos on Messrs. Falkiner and Sons’ Boonoke and Moonbria stations on Saturday.
  2. Is exportation of live kangaroos from Australia prohibited ?
  3. Is it a fact that £20 eachhas been obtained overseas for kangaroos?
  4. If the exportation of kangaroos is prohibited, will the Minister give prompt consideration to removal of the embargo, so that live kangaroos may be a means of wealth to Australia, greater than their skin export, and incidentally an object of education and interest to people overseas?
Mr FENTON:
ALP

– The answers to the honorable member’s questions are as follow : -

  1. Yes.
  2. Yes, except withthe consent of the Minister for Trade and Customs.
  3. I have no official information on this point.
  4. It is not considered desirable to remove the existing restriction. At the present time permission is freely given to export kangaroos in fulfilment of orders received from recognized public zoological gardens, and also up to tun kangaroos per annum bred in captivity by any one breeder. In any case if unrestricted exportation of kangaroos were allowed their value would obviously drop immediately.

page 680

QUESTION

CANADIAN-AUSTRALIAN TRADE

Appointment of Trade Commissioner

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

  1. What was the value of trade between

    1. Australia and Canada, and
    2. Canada and Australia, for the financial years ended 30th June, 1928. and 30th June, 1929?
  2. What was the date of the appointment of an Australian Trade Commissioner in Canada?

Mr FENTON:
ALP

– The answers to the honorable member’s questions are as follow : -

page 681

QUESTION

AUSTRALIAN NOTESFUND

Mr YATES:

asked the Treasurer, upon notice -

  1. What are the particulars to date of debentures and other securities in connexion with the Australian Notes Account?
  2. What are the circumstances accounting for the reduction in the New South Wales account from £2,000,000 in 1928 to £950,000, seeing that the £2,000,000 does not mature until 1930?
  3. What are the particulars to date of expenditure by the Commonwealth from the Notes Fund?
Mr THEODORE:
ALP

– The information is being obtained, and will be furnished as soon as possible.

page 681

QUESTION

TRADE WITH SOUTH AFRICA

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

What was the value of trade between (a) Australia and South Africa, and (b) South Africa and Australia, for the financial years ended 30th June,1928, and 30th June, 1929?

Mr.FENTON. - The answers to the honorable member’s questions are as follow : -

page 681

QUESTION

TELEPHONE CHARGES

Mr PROWSE:

asked the PostmasterGeneral, upon notice -

In view of the fact that preceding governments have offered special telephonic concessions to country dwellers, as an inducement for them to patronize this modern, time-saving invention, and in view of the manifold disabilities of the man on the land -

Will he reconsider his intention to raise the country call charge from 1d. to1¼d.; and

Will he provide easier grades in the country zone system ?

Mr.LYONS. - The Government is fully seised of the desirability of granting telephone service to residents in country districts at the lowest possible tariff, and I might point out to the honorable member that the rates are very much less than the actual costs entailed. In fact, the ground rental itself for subscribers in areas of small density is less than the interest charge on the capital which has to be invested to provide the service. No increase has been imposed in the unit call fee for areas in which there are 300 or fewer subscribers. The amount remains at1d. per call, and this covers an area of five miles radius from the particular exchange to which any subscriber is connected. In regard to the last portion of the question, it is presumed the reference is to the trunk rates. Consideration was given to this matter, and easier grades were provided than those applying under existing conditions. The zones increase by stages of ten miles up to 60, and then of twenty miles up to 100. In this distance there are two extra zones as compared with the existing classification. Moreover, no increase in the rate has been made up to 40 miles. The rate is the same between 50 and 60 miles, and it is actually1d. less between 75 and80 miles.

page 681

QUESTION

POSTAL DEPARTMENT

Promotion of Officers

Mr TULLY:
BARTON, NEW SOUTH WALES

asked the PostmasterGeneral, upon notice -

  1. Is it a fact that an arrangement exists between the Deputy Director, Posts and Telegraphs, Sydney, and the heads of branches, to confine promotions to officers in the branch concerned ?
  2. Is it a fact that, of the promotions made in the accounts branch, as from November, 1928, all appeals by senior officers in the records sections have been disallowed?
  3. Is it a fact, that these appeals have all been disallowed during the present year?
  4. Is it a fact, that no special qualifications were possessed by the officers provisionally appointed, and who sustained all appeals? .
  5. Is it a fact, that of the officers promoted one was, when reorganization of the records section took place some years ago, made an excess officer and consequently transferred to the branch?
  6. Is it a fact, that the officer referred to is now in receipt of a higher salary than that of any clerk in the records, except the clerk in charge ?
  7. Is it a fact, that while the methods of the present Deputy Director are maintained these officers are in a hopeless position?
Mr LYONS:
ALP

– Inquiries are being made, and a reply will be furnished to the honorable member as soon as possible.

page 681

QUESTION

FEDERAL CAPITAL

Scurvy at Gorman House.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

asked the Minister for Home Affairs, upon notice -

  1. Is it a fact, that four inmates of Gorman House have been isolated at Canberra Hospital, the complaint being diagnosed as scurvy?
  2. If so, is he aware of any circumstances that could give rise to such an outbreak in a Commission hostel?
Mr BLAKELEY:

– The answers to the honorable member’s questions are as follow : - 1 .Certain residents of Gorman House are being treated in the, hospital for a slight infectious rash, which is not of a serious nature, and has no connexion with the complaint known as scurvy. The persons concerned have gone into hospital to obtain the benefit of the treatment available there.

  1. I am not aware of any circumstances in Gorman House that would account for the appearance of the complaint.

page 682

QUESTION

AMERICAN TRADE BALANCE

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

  1. What was the value of trade balances in favour of the United States of America for the financial year 1928-29?
  2. Is it a fact that the trade balance in favour of the United States of America for ten years (1918 to 1928) amounted to £212,916,949?
  3. If so, what methods does the Government propose to atdopt to bring about a more equitable balance of trade?

Mr.FENTON. - The answers to the honorable member’s questions are as follow : -

  1. £29,476,551.
  2. Yes, for the ten financial years ended 30th June, 1928.
  3. It is not usual to disclose matters of Government policy in reply to questions.

page 682

QUESTION

ANGLO-EGYPTIAN TREATY

Mr SCULLIN:
ALP

– On the 21st November the right honorable member for North Sydney (Mr. Hughes) asked me whether I would make a statement regarding the present position in Egypt, and yesterday the honorable member for Brisbane (Mr. D. Cameron.) made a similar request. In reply to these requests and for the information of the House, let me say that the position is as follows: - On the 22nd August last the then Prime Minister (Mr. Bruce) laid on the table of the House a paper containing the provisions of the proposed draft treaty which His Majesty’s Government in Great Britain were prepared to accept as defining the relations between the two countries and settling outstanding questions between them. This draft treaty was communicated to the then Prime Minister of Egypt (Mahomet Mahmoud

Pasha) in August last. A statement was also made to the House on the 22nd August last concerning the events which had led to the drawing up of the abovementioned draft treaty. The Egyptian Prime Minister returned to Egypt with the intention of submitting the draft treaty to the Egyptian Parliament for their consideration. In view of the fact that in July, 1928, the King of Egypt had dissolved Parliament and had postponed elections for three years, an election will be necessary before the draft treaty can be submitted to the Egyptian Parliament. After his return to Egypt, Mahomet Mahmoud Pasha found himself obliged to resign on the 2nd October last. A new government has been formed, with Adly Pasha as Prime Minister. It is proposed to hold elections at an early date. Nothing, therefore, will be done in connexion with the draft treaty until the elections are held and a government acceptable to the new chamber has been formed.

page 682

QUESTION

POSTMASTER-GENERAL’S DEPARTMENT

Position of Records Section Officers, Sydney

Mr LYONS:
ALP

– On the 27th November the honorable member for Barton (Mr. Tully) addressed to me the following questions : -

  1. Is it a fact that in the Records Section, Postmaster-General’s Department, Sydney, the officers are practically without hope of promotion ?
  2. Is it a fact that the officers have made application for transfer to other branches, also for promotion to higher positions in the Service, and that all such applications have been refused?
  3. Is it a fact that officers junior to those in question are being frequently promoted to advertised vacancies, notwithstanding that officers of the Records Section have been applicants for the positions advertised?
  4. Is it a fact that in all cases of appeal by officers of the Records Section against promotion of junior officials, not one has been successful?
  5. Is it a fact that the officers are, under the present administration, denied the opportunity of gaining wider experience ?
  6. Is it a fact that the Deputy Director of Posts and Telegraphs has had the whole matter placed before him personally, and has failed to help the officers concerned, although the opportunities to do so have been many?
  7. Will the Minister inquire into this matter, and obtain any relevant papers for perusal?

The questions raised by the honorable member have been carefully investigated, and all the evidence points to the fact that an endeavour has been made to conform rigidly and with impartiality to the requirements of the Public Service Act. All officers of the department have the right to apply for any position which would give them promotion, but, obviously, it is essential for the department to take into consideration the experience, knowledge, and general fitness of the applicant, and his claims must necessarily be weighed against those of all other applicants. Should any officer feel that he has not been equitably treated, or that adequate consideration has not been given to his claims, he has the right under the Public Service Act to appeal against a provisional promotion. It is the desire of the department, and it is greatly to its interest, that opportunity should be afforded for officers to widen their experience, but the exigencies of the Service must be taken into account, together with the special attributes of the particular officers concerned and the efforts they have put forward to prepare themselves for other and more responsible posts.

page 683

PAPER

The following paper was presented : -

North Australia and Central Australia - Report by the Minister for Home Affairs (Hon. C. L. A. Abbott) on his visit by aeroplane, June, 1020.

page 683

INCOME TAX BILL 1929

In Committee of Ways and Means:

Mr THEODORE:
Treasurer · Dalley · ALP

– I move-

  1. That a tax be imposed on income derived from sources in Australia at the following rates, namely: -

    1. – Rate of Tax upon Income Derived From Personal Exertion.

For so much of the whole taxable income as does not exceed £7,600, the average rate of tax per pound sterling shall be Threepence and three eight-hundredths of one penny wherethe taxable income is One pound sterling, and shall increase uniformly with each increase of One pound sterling of the taxable income by three eighthundredths of one penny.

The average rate of tax per pound sterling for so much of the taxable income as does not exceed £7,600 may be calculated from the following formula: -

R = average rate of tax in pence per pound sterling.

I = taxable income in pounds sterling.

For every pound sterling of taxable income in excess of £7,600, the rate of tax shall be Sixty pence.

  1. – Rate of Tax upon Income Derived from Property.

    1. For such part of the taxable income as does not exceed £346, the average rate of tax per pound sterling shall be that given by the following formula: -

R = average rate of tax in pence per pound sterling.

I = taxable income in pounds sterling.

  1. For such part of the taxable income as exceeds £546 but does not exceed £2,000, the additional tax for each additional pound of taxable income above £546 shall increase continuously with the increase of the taxable income in a curve of the second degree in such a manner that the increase of tax for One pound increase of taxable income shall be - 11.713 pence for the pound sterling between £545 10s.0d. and £546 10s.0d. 12.768 pence for the pound sterling between £599 10s.0d. and £600 10s.0d. 14.672 pence for the pound sterling between £699 10s.0d. and £700 10s.0d. 16.512 pence for the pound sterling between £799 10s.0d. and £800 10s.0d. 18.288 pence for thepound sterling between £899 10s.0d. and £900 10s. 0d. 20.000 pence for the pound sterling between £999 10s.0d. and £1,000 10s.0d. 27.600 pence for the pound sterling between £1,499 10s.0d. and £1,500 10s.0d. 33.600 pence for the pound sterling between £1,999 10s.0d. and £2,000 10s.0d.

    1. For such part of the taxable income as exceeds £2,000 but does not exceed £6,500, the additional tax for each additional pound of taxable income above £2,000 shall increase continuously with the increase of the taxable income in a curve of the third degree in such a manner that the increase of tax for One pound increase of taxable income shall be - 33.600 pence for the pound sterling between £1,999 10s.0d. and £2,000 10s.0d. 40.000 pence for the pound sterling between £2,499 10s.0d. and £2,500 10s.0d. 45.300 pence for the pound sterlingbetween £2,099 10s.0d. and £3,000 10s.0d. 49.600 pence for the pound sterling between £3,499 10s.0d. and £3,500 10s.0d. 53.000 pence for the pound . sterling between £3,999 10s.0d. and £4,000 10s.0d. 55.600 pence for the pound sterling between £4,499 10s.0d. and £4,500 10s.0d. 57.500 pence for the pound sterling between £4,999 10s.0d. and £5,000 10s.0d. 58.800 pence for the pound sterling between £5,499 10s.0d. and £5,500 10s.0d. 59.600 pence for the pound sterling between £5,999 10s.0d. and £6,000 10s.0d. 60.000 pence for the pound sterling between £6,499 10s.0d. and £6,500 10s.0d.
    2. For every pound sterling of taxable income in excess of £6,500, the rate of tax shall be Sixty pence.
    1. – Sates of Tax in Respect op Taxable Income Derived Partly From Personal Exertion and Partly From Property.

    2. For every pound sterling of taxable income derived from personal exertion, the rate of tax shall be ascertained by dividing the total amount of the tax that would be payable under Subdivision A if the total taxable income of the taxpayer were derived exclusively from personal exertion by the amount of the total taxable income.
    3. For every pound sterling of taxable income derived from property, the rate of tax shall be ascertained by dividing the total amount of the tax that would be payable under Subdivision B if the total taxable income of the taxpayer were derived exclusively from property by the amount of the total taxable income.
    1. – Rate of Tax Payable by a Trustee.

For every pound sterling of the taxable income in respect of which a trustee is liable to be separately assessed and to pay tax, the rate of tax shall be at the rate which would be payable under Subdivision A, B or C, as the case requires, if one individual were liable to be separately assessed and to pay tax on that taxable income.

  1. – Rate of Tax Payable by a Company.

    1. Subject to the last preceding Subdivision, for every pound sterling of the taxable income of a company, the rate of tax shall be One shilling.
    2. For every pound sterling of interest paid or credited by the company to any person who is an absentee, in respect of debentures of the company, or on money lodged at interest with the company by such person, the rate of tax shall be One shilling.
  2. – Additional Tax.

In addition to the tax payable under the preceding provisions, there shall be payable -

  1. in the case of incomes in respect of which the tax is calculated under Subdivisions A, B, C or D - an additional tax equal to eight per centum of the amount of the tax so calculated; and
  2. b ) in the case of incomes in respect of which the tax is calculated under Subdivision E - an additional tax equal to twenty per centum of the amount of the tax so calculated.

    1. – Super-Tax.

In addition to any tax (including additional tax) payable under the preceding provisions, there shall be payable, in the case of incomes in respect of which the tax is calculated under Subdivisions A, B, C or D-

  1. where the total taxable income is not less than Two hundred and one pounds and does not amount to One thousand five hundred and one pounds - a super-tax equal to ten per centum of the total amount of the tax payable under those provisions;
  2. where the total taxable income is not less than One thousand five hundred and one pounds and does not amount to Three thousand and one pounds - a super-tax equal to fifteen per centum of the total amount of the tax payable under those provisions; and
  3. where the total taxable income is not less than Three thousand and one pounds - a super-tax equal to twenty per centum of the total amount of the tax payable under those provisions.

    1. – Tax Payable Where Amount Would Otherwise be Less Than Ten Shillings.

Notwithstanding anything contained in the preceding provisions, whore a person would, apart from this provision, be liable to pay income tax of an amount less than Ten shillings, the tax payable by that person shall be Ten shillings.

  1. That tax in accordance with the foregoing provisions of this resolution shall be levied and paid for the financial year beginning on the first day of July One thousand nine hundred and twenty-nine.
  2. That the foregoing provisions of this resolution shall also apply to all assessments of income tax for financial years subsequent to that beginning on the first day of July One thousand nine hundred and twenty-nine made prior to the passing , of the Act for the levying and payment of income tax for the financial year beginning on the first day of July One thousand nine hundred and thirty.

The Commissioner of Taxation has furnished me with an explanatory memorandum which, for the benefit of honorable members, I shall read. It is as follows : -

  1. In parts A, B, and C are set out the original rates of tax imposed in 1915. These rates have been adhered to by Parliament in each subsequent year of the operation of the income tax as basic rates, upon which percentage increases have been super-imposed. Those increases have been varied from time to time. They reached their maximum point in 1920-21, when the ruling rates represented an increase of 705/8 per cent. on the basic rates. These peak rates operated for two years - 1920-21 and 1921-22. Then there began a series of reductions in the percentage increases, as follow : - 1922-23 - 10 per cent. making the supertax 53½ per cent. above basic rates. This reduction operated also in 1923-24. 1924-25 - A further 10 per cent., making the super-tax 38 per cent. above basic rates. 1925-26 - A further 12½ per cent., making the super-tax 20 per cent. above basic rates. This reduction operated also in 1926-27. 1927-28 - A further reduction of 10 per cent., making the super-tax 8 per cent. above basic rates. This reduction operated also in 1928-1929.

The percentage increases now proposed in existing rates, which are the original basic rates, plus 8 per cent., represent the following percentage increases in the original basic rates : - 10 per cent. represents 18.8 per cent. total increase. 15 per cent. represents 24.2 per cent. total increase. 20 per cent. represents 29.6 per cent. total increase.

The statement of these percentage increases will give honorable members a clear picture of the present burden of taxation, as it will enable them to compare the basic rates that operated in 1915 with those that have operated in succeeding years. In further explanation of the motion, the memorandum continues-

  1. Part D states the existing rate payable by a trustee. This provision was inserted in the Act for the first time in 1927, following upon a decision by the High Court that a trustee company could not be taxed at more than1s. in the £1 upon taxable income of any trust estatebeing administered by it, because the previous form of the law so operated, and notwithstanding previous declarations by courts that a trustee merely represents the beneficiaries of the estate. In many cases the rate of tax which would be payable by a beneficiary on the income exceeded1s, in the £1, and in other cases it was less than1s. Thus some estates were obliged to pay more tax than should have been paid, while others escaped with a lower tax than equity required.

We had a discussion in a previous session upon the necessity to apply the rate of tax to trustee companies in a different form from that which had been heretofore applied, because it had been held by the High Court that those companies were entitled to claim the rate of 1s. in the£ 1 -

  1. Part E. - The present rate of tax(1s. in the £1) payable by a company on its own taxable income, and also upon the income of absentees in the shape of interest paid or credited by the company to an absentee, in respect of debentures of the company, or on money lodged at interest with the company by the absentee.
  2. Part F -

    1. the existing additional tax of 8 per cent. increase in the basic rates applicable to all taxpayers except companies ; and
    2. b ) the proposed super tax ( described as “ additional tax “ ) of 20 per cent. of the existing rate of1s. in the £1 to be charged to companies.

The existing 8 per cent. additional or “super tax “ has never been payable by companies. The company rate of1s. in the £1 on total taxable income without deduction for dividends was fixed by the Income Tax Act 1923. It has not since been varied. It is now proposed to increase that rate by 20 per cent.

In some of the press criticisms, the writers have apparently assumed that there is to be a tax of 20 per cent. on company profits; but the increase will really amount to 2.4d. on the present tax of1s. in the£1 -

  1. In Part G. - The pronosed percentage increases in the existing rates of income tax (basic rates plus 8 per cent.) to be paid by every taxpayer except those companies which are liable to pay the proposed company rate of1s. plus 20 per cent. It may be repeated here that trustee companies are assessable at the rate appropriate to the class (personal exertion or property) and amount of income of the trust estate which would be payable on that income if one individual were liable to be separately assessed and to pay tax upon it. This provision regarding trustees has already been referred to under Part D of the resolution.

The particular percentage of the new increase in rate now proposed, which will be applicable in any particular case, will be determined by the amount of the taxable income upon which the taxpayer is to be assessed to pay tax, that is, the taxable income derived by him during theyear (or the period substituted therefor) immediately preceding the financial year for which the tax is being levied.

This actual taxable income is the taxable income of the last year in the averaging period by reference to which the average taxable income is calculated for the purpose of ascertaining the rate of tax payable by the taxpayer. The averaging system mentioned is expressed in section 13 of the Income Tax Assessment Act. The averaging period is five years where that number of years exists; otherwise it is a lesser number according to the circumstances.

It is somewhat difficult to follow this subject, and I have given honorable members the benefit of the full text of the Commissioner’s memorandum, so that they may have a clearer understanding of the proposal. Owing to the averaging system, a taxpayer may have a small income in the present year, but a high average, because of high net incomes in preceding years. But we think that the more equitable system is to apply to this year’s income the rate of increase applicable to the amount of income found after making allowance for the average of the preceding years. The memorandum proceeds -

The following are typical of possible cases, and are cited in order to illustrate the operation of the Government’s proposals: -

Actual taxable income of the last year in the averaging period, say, £4,000.

Average taxable income of the averaging period, say, £1,000.

Present personal exertion rate of tax on £1,000 is 7.29d.

As £4,000 actual taxable income falls into the class subject to 20 per cent. increase in rate of tax, this taxpayer’s rate becomes 8.748d., being 7.29d. plus 20 per cent.

The tax on £4,000 at 7.29d. is £121 10s.

The new tax will be £145 10s., which represents an increase of 20 per cent. on the former amount of tax.

Mr Prowse:

-Will the Minister make clear a point that he raised a few minutes ago? Under the averaging system, those who had a high income last year, and have a low income this year, are to pay a higher rate than is due, by virtue of the fact that their incomes last year were greater.

Mr THEODORE:

– If the honorable member will follow the examples that I am giving, he will be satisfied, I think, that the system proposed is the easiest and most equitable. I continue to quote examples -

  1. Actual taxable income of the last year in the averaging period, say, £1,000.

Average taxable income of the averaging period, say, £4,000.

The present personal exertion rate of tax on £4,000 is 19.44d.

Present tax on £1,000 actual taxable income at 19.44d. = £81.

Seeing that the actual taxable income falls into the 10 per cent. grade of percentage increases in rates, the new rate will be 19.44d. plus 10 per cent. = 21.384d.

Proposed tax on £1,000 at 21.384d.= £89 2s.

This represents an increase of 10 per cent. in the present amount of tax payable.

So the taxpayer gets an advantage under this system, if his income in this particular year happens to be lower than the average for his averaging period. In these cases, I think that we ought to extend leniency. Now I give the third example -

  1. Actual taxable income of the last year in the averaging period, say, minus £1,000. (This represents the excess of allowable deductions over assessable income.)

There is no tax payable in this case, whatever might be the rate applicable to an average income, because there is no actual taxable income to be assessed.

Dr Earxe Page:

– What would be the rate of tax on taxable incomes in excess of £6,500?

Mr Latham:

– The basic rate, plus 8 per. cent. under Part F., and plus 10 per cent, under PartG.

Mr THEODORE:

– The present super tax is 8 per cent., and there is to be a 20 per cent. increase when the income exceeds £3,000. Part H. deals with the existing minimum tax of 10s. This amount of tax is only payable by the smallest taxpayers. It is not affected by the proposed percentage increases in rates. The principle of a minimum tax was introduced by the Income Tax Act 1926, when the minimum tax was fixed at £1. This produced £51,200 in revenue. Because of many complaints concerning the harshness of this tax on absentees whose incomes from Australian sources amounted to £1 or slightly over, the previous Government reduced the £1 to 10s. This reduction caused the total amount of the minimum taxation paid to drop considerably. The exact amount of minimum tax that will be collected at 10s. per taxpayer cannot be stated, but it is estimated to be not more than £20,000, and possibly less. Clauses 2 and 3 of the motion are the usual provisions which are required for the purpose of determining the period of operation of the new rates. Clause 3 applies principally to persons who are leaving Australia during an assessment year after having derived taxable income in that year. It authorizes the Commissioner of Taxation to collect income tax from those persons at the rates then in force, although they primarily relate to income derived during the. immediately preceding financial year. If that clause were not in the motion, it would not be possible to collect income tax from the persons indicated prior to their departure from Australia.

Mr LATHAM:
Kooyong

.- When honorable members read the actual motion before the committee they may be pardoned if they find difficulty in understanding it, but on reading the motion in conjunction with the financial statement made upon the introduction of the budget by the Treasurer, we see that its object is simply to carry out what has been stated to be, in part, the financial policy of the Government for the present year by increasing the income tax on the taxable incomes of individuals from £201 to £1,500 by 10 per cent, from £1,501 to £3,000 by 15 per cent., from £3,001 upwards by 20 per cent.; and by increasing the income tax on the taxable incomes of companies by 20 per cent. The original rates have been increased above the datum line by 8 per cent, and 20 per cent, as set out in Part F., and a super tax is imposed by Part G. on. individuals. The increased taxation on companies is levied under Part F. This is, undoubtedly, a large increase of income taxation to impose upon the country at the present time. Before saying anything generally on that subject, and the effect that the increased taxation is likely to have on industries and employment in the country, I should like to call the attention of the committee to the fact that the income taxation on all companies is being increased by 20 per cent. In 1928, the present Prime Minister when attacking the then Government for imposing a tax upon mutual life assurance companies, said -

But under a proposal that will he placed before honorable members during the present week, the circle of income taxation is to be extended to embrace many thousands of persons whose incomes hitherto have not been sufficient to render them liable to pay tax. The proposal is to tax the profits that are derived from the investments of life assurance companies, the bulk of which are mutual companies. They obtain their funds from bread winners, who wish to make provision for their dependants after their death. When you tax the profits they derive from investments, you either reduce the bonus that is distributed among policy-holders, or you compel the company to increase its premiums. The more the premium is increased, the lower is the sum for which the majority of persons can become assured. Therefore, they cannot make such substantial provision for their dependants in the event of their death. This will have a most detrimental effect upon tens of thousands of persons, many of’ whom are among the poorest of the community.

Mr Crouch:

– What is the date of that, speech ?

Mr LATHAM:

– The 11th of September, 1928. In the policy speech of the Prime Minister made prior to the 1928 election, and delivered at Richmond on the 4th . October, 1928, this statement appears : -

Notwithstanding his declaration of no increase in taxation, the Treasurer brought down a bill to raise £300,000 a year new taxation from life assurance offices. There are more than 2,000,000 life assurance policies in force in Australia and there are less than 250,000 income tax payers. Allowing for the number holding more than one policy this new tax will bring into the field of income taxation fully 1,500,000 persons who would otherwise be exempt. The tax on mutual life assurance societies is an imposition mainly on the dependants of breadwinners. It is iniquitous to tax the provident funds contributed to by hundreds of thousands of practically poor people. The Labour party will repeal the tax on ..mutual life assurance associations.

The Prime Minister, in his policy speech this year, repeated his declaration that, if returned to office, the Labour Government would repeal the tax on mutual life assurance companies.

Mr Theodore:

– The Leader of the Opposition might at least wait until the Income Tax Assessment Bill is introduced before saying that the Government is not honouring its promise.

Mr LATHAM:

– If the Treasurer assures me that such repeal is to be provided for in the Income Tax Assessment Bill, I will agree that what I am about to say would be beside the point.

Mr Theodore:

– I can assure the honorable member that that matter will be considered in connexion with the Income Tax Assessment Bill.

Mr LATHAM:

– As the Treasurer is not prepared at present to say whether this promise is to be carried out, and as no provision is made; so far as one can follow the figures of the Estimates of revenue, for the amount that would be lost to the revenue by this change, we can take it that another promise of the Government will not be carried out.

Mr Theodore:

– So far as I know there is no reason why we should not, when the Income Tax .Assessment Bill is being considered, honour the promise given by the Prime Minister.

Mr LATHAM:

– So far, apparently, no steps have been taken to honour that promise. If it is honoured then, according to the figures that have been placed before this House, the year’s operations will close with a deficit of £300,000. ‘ I am not advocating the repeal of the tax on insurance companies, but, Ministers having promised definitely at two elections held within twelve months that the tax would be repealed, I am surprised to find the Government proposing instead to increase it by 20 per cent.

This substantial and serious advance in the taxation payable by individuals and companies is rendered necessary because the Treasurer conceives that from this source £885,000 more must be raised than was budgeted for by the last Government. In other words, the late Treasurer estimated to receive £885,000 less from income taxation, and yet balance the year’s accounts and substantially reduce the deficit. The present Treasurer does not intend to reduce the accumulated deficit. He invites us to believe that the year’s operations will show a surplus of approximately £13,000. I do not propose to discuss the honorable gentleman’s estimates of revenue and expenditure, but I draw attention to the fact that, according to the Treasurer’s proposals, the deficit is not to be reduced, notwithstanding a tremendous increase of taxation. From income tax alone, he is expecting an additional £885,000, and from Customs duties an increase of £1,200,000 in only eight months of the financial year.

This proposal to increase the income tax is . a guarantee that at least one pledge given during the last election campaign will be fulfilled. Residing in the electorate of Fawkner, I saw there every day many Labour posters, and I noticed particularly one which was, in part, a copy of an English election publication; it showed, also, a map of Australia, and a lady with a basket of groceries, and the electors were- invited to vote for the Labour party because it would provide “fair wages, decent hours, work for all, and no tax on amusement.” Probably many people were misled into the belief that the last mentioned promise meant the repeal of the existing entertainments tax. Of course, it did not, but at least it meant that no further taxation would be placed on the amusement vendors, and that promise is being honoured, at the cost of a super income tax ranging from 10 to 20 per cent. What of the promise of fair wages? The discussion yesterday “afternoon on the coal industry must have satisfied honorable members of the truth of the assertions made by members of the late Government that this Parliament has no power to regulate, generally, wages and working conditions. All it can do is to establish tribunals of various kinds for that purpose.

Mr Theodore:

– Did not the last Government impose as a condition of the settlement of the coal trouble the acceptance of a reduction in wages?

Mr LATHAM:

– Are not the miners accepting a reduction of wages, despite the fact that the Labour party is in power in this Parliament? The debate yesterday afternoon was interesting and enlightening, and abundantly justified the attitude of the last Government. It is beyond the power of this Government to grant, by any direct legislative or administrative act, fair wages or decent hours, and it is an impertinence for one side to arrogate to itself all interest in such conditions. All of us believe in fair wages and decent hours, but we have to recognize that this Parliament is able to help the workers to realize them only by promoting the general prosperity of the community. No promise that this Parliament will insure good wages and shorter hours can honorably be given by any man who understands the limitations of bur constitutional power. Apparently that understanding has come to some honorable gentlemen very recently.

Mr Theodore:

– The honorable member’s late leader promised, in his policy speech, fair wages.

Mr LATHAM:

– No such promise was made by the late Prime Minister, though, of course, he believed in fair wages. The third election promise of the Labour party was “ Work for all.” The sad facts speak for themselves. The Government has disclaimed even the promises that were made to the disabled soldiers by the Treasurer as campaign director for the Labour party in New South Wales. If he is unable to honour that promise it is obvious that the Government cannot honour the promise to provide work for all. The present Prime Minister, when Leader of the Opposition, said that the then Government should recognize its obligations, and if it were unable to provide employment for all, at least it should provide sustenance for the unemployed.

The CHAIRMAN:

– I ask the Leader of the Opposition to connect his remarks with the motion before the committee.

Mr LATHAM:

– The increase of income taxation is rendered necessary by the undertaking of the Government that no further impost shall be placed on amusements. Valuable and necessary as amusements are, we should recognize that the money we spend on them is our surplus. Therefore, amusements are a fair subject for special taxation, especially in a time of financial stringency. Yet the proposal of the last Government to impose a tax of 5 per cent, on gross receipts from amusements - exempting those smaller enterprises whose receipts do not exceed £100 weekly - and 12£ per cent, on the hundreds of thousands of pounds sent to America annually for picture films, have been jettisoned, and, in their stead, the Treasurer is increasing the income taxation by £885,000. As far as possible industry and productive enterprise should be relieved of taxation, and I have grave apprehension that this tremendous increase will tend to create more unemployment. If this money were left in -the hands of those who earn it, much more work would be provided than if it be gathered into the Commonwealth Treasury. I regret the adoption of a .financial policy which has rendered necessary this staggering blow at industry in a time of serious unemployment. Of course, the financial policy of the Government must stand or fall as a whole; but I enter my protest against re- lieving from taxation interests that could be fairly taxed without prejudice to industry and the community generally, and against the placing of additional burdens upon the community, which, if sound principles were observed, would be quite unnecessary.

Mr BERNARD CORSER:
Wide Bay

– The proposed increase of income taxation is rendered necessary by the fact that the Government is relieving the amusement proprietors of the extra taxation proposed by the last Government. When the late Treasurer modified his proposals to the extent of exempting from the 5 per cent, tax on’ gross receipts the smaller enterprises whose takings do not exceed £100 a week he proposed to make good the loss by imposing a tax of 12£ per cent, on the £1,000,000 that each year is paid to America for picture films, and which at present escapes taxation.

Mr Theodore:

– The honorable member misapprehends the position. The late Government’s proposal was to take 5 per cent, of the gross receipts.

Mr BERNARD CORSER:

– The late Treasurer expected to collect £600,000 from the additional 5 per cent, tax on entertainment receipts, and when he modi”fied his proposals in order to give relief to the smaller men in the business, he promised to recover the amount he was surrendering by imposing a 12£ per cent, tax on the amounts paid to America for films. The present Government, while giving immunity to American film companies, is imposing upon the Australian people a super tax of 10 per cent, on incomes of £201, rising to 20 per cent, on higher incomes and the profits of companies. 1 protest against a policy which relieves the foreign capitalists and imposes extra burdens on the Australian people, particularly those in receipt of small incomes. Surely the American exploiters who take £1,000,000 a year from Australia should pay some taxation to the Commonwealth. The increases in income taxation proposed by the Treasurer are not necessary.

When the honorable gentleman assumed office he made a statement which would lead the uninformed to believe that he would not receive a penny as a result of the financial policy of his predecessor. He did not say that the budget of the right honorable member for Cowper (Dr. Earle Page) assured to his successor a revenue of £62,000,000. Now the Treasurer is proposing to swell that revenue to £64,000,0000. In addition to increasing the income tax the Government has substantially raised the Customs duties. Surely the increased receipts from this source make unnecessary the heavy burden he is proposing to place on the community through the income tax. The people of the community did not expect this increase in taxation, because during the election campaign many members of the Government party made the statement that if a Labour Government were returned to power it would reduce, rather than increase, existing taxes. The honorable member for Capricornia (Mr. Forde) is reported in the Bundaberg Times of the 19th September, 1929 as follows : -

In reference to the budget taxation proposals, Mr. Forde said they were preposterous, and would strike a blow at the pockets of the masses of the people. As the Sydney Daily Telegraph said, “ This budget is a blow at every wage-earner “. The increase of revenue duties on motor car chassis and motor truck chassis would be a serious additional burden on hundreds of thousands of suffering primary producers throughout the Commonwealth.

The extra duty on whisky, brandy, rum, tobacco - and the excise duty on locally manufactured beer and whisky - will, of course, be passed on to the consumers without serving any good purpose.

He’ told the people of his electorate that the imposition of this preposterous tax would serve no useful purpose because it Would be passed on to the consumers. Not only has the Government adopted that tax, but it has increased it. In this respect, also, the people have been deceived by the present Government. It is proposed to raise more money by taxation than is necessary. The Treasurer is underestimating the possible revenue and overestimating the probably expenditure, so that he will have an increased sum of money to juggle with. That has been the practice of Labour Treasurers as long as I have been associated with politics. Unfortunately, the people have to pay. I protest against the repeated statements of members of the Government that the financial affairs of the country were mismanaged by the last Government. Probably honorable members opposite keep on making these statements in the. hope that eventually they will come to believe them. During the past six or seven years the Commonwealth Parliament has become accustomed to passing measures for the reduction of taxation. The last Government should really be commended for what it has done. It reduced income taxation by 40 per cent., and raised the exemption limit from £100 to £300. The present Government proposes to impose a super tax on all taxable incomes over £200, so that we are retrogressing rather than advancing. While it was reducing income taxation, the last Government paid £40,000,000 off the war indebtedness. The last Government’s financial troubles were brought about by a shrinkage in Customs revenue of £2,500,000, due to the fact that it had so greatly encouraged local manufacturers. The last Government hoped that, even with this reduction of Customs revenue, the budget could be balanced as a result of increased general revenue following upon a good season, and that it would be unnecessary further to increase taxation. When the last Government came into power 750,000 persons were paying income tax, but before it vacated office that number was reduced to 250,000.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– Hence the deficit.

Mr BERNARD CORSER:

– The deficit was due entirely to the shrinkage of Customs revenue. The present taxation proposals, exorbitant as they are, do not’ surprise any one who has had previous experience of Labour administration. When the last Government assumed office, income taxation amounted to £4 5s. per head, and that amount was reduced to £2 0s. 8½d. a head before the last election. This Government proposes to raise increased revenue, not only by means of the tariff, but also through the Income Tax Department, and - it is doing so for political purposes. I protest against the Government’s . proposal to relieve the American picture interests of taxation. Those interests are taking a million pounds a year from this country, and yet it is proposed to relieve them of the burden of taxation, and to place it, among others, upon the shoulders of small income tax payers. The Government appears to be pledged to do this. I understand the Treasurer stated that the increased taxation was necessary to pay interest which includes interest on our war debt. If that is so, I propose, tomove an amendment to ensure that those citizens of Australia who served during the war should not be called upon to pay the super tax. I propose to show that it is not necessary that they should. The late Treasurer proposed to raise £600,000 by taxing the picture interests. As against that the present Government proposes to raise £1,285,000 by means of a super tax on incomes. The last Government proposed to impose a super tax on incomes over £2,000, which would have brought in £400,000 a year, so that the present Government will raise £885,000 from income tax in excess of what was proposed by the last administration. “With that amount of extra revenue it surely should be possible to exempt returned soldiers from paying super tax. Therefore, I move the following amendment :-

That the following proviso be added to subdivision g: - “Provided that the super tax hereby proposed to be imposed shall not be payable by any resident of Australia who was on active service outside Australia with the naval or military forces of any of the Allied Powers in connexion with the war between His Majesty the King and his Allies and the Emperor of Germany and his Allies which took place in the years 1914 to 1918 and whose military or .naval duties required him to be in any part of the field of operations in connexion with the war.”

I do not expect opposition from the Government on this amendment, because I have in my hand a pamphlet issued by the campaign director of the Labour party during the recent election, setting out the hardships inflicted upon returned soldiers in the past, and the relief it was proposed to afford them should a Labour Government be returned to power. Strangely enough the first measure of relief proposed by this Government is a super tax on taxable incomes over £200 for the purpose of paying interest on war loans. This money is to be raised from citizens who have already done more than their duty in connexion with the war. Even if this exemption is made, there should still be enough extra revenue derived from the super tax to meet the interest demands referred to. I hope that my amendment will be accepted by the Treasurer ^ as a recognition of the fact that returned soldiers should not be called upon to pay a super tax for the purpose of meeting interest on war loans.

Mr Theodore:

– I raise a point of order in connexion with this amendment.

Mr BERNARD CORSER:

– I expected that the Treasurer would.

Mr Theodore:

– If the honorable member expected that, and knew his amendment to be out of order, he was merely wasting the time of the committee in moving it. The Amendment is out of order because it should properly be moved on an income tax assessment bill, rather than on a rates bill. It provides for deductions, or special exemptions for a certain class of taxpayer, and is not therefore a proper amendment to incorporate in a motion which deals with rates.

Dr Earle Page:

– I submit that the amendment is in order. Paragraph 8 of the motion reads -

Notwithstanding anything contained in the preceding provisions, where a person would, apart from this provision, be liable to pay income tax of an amount less than 10a., the tax payable by that person shall be 10s.

Mr Theodore:

– That deals with the rate of tax.

Dr Earle Page:

– It deals with a class - of taxpayers, and so does the amendment of the honorable member for Wide Bay. I therefore submit that the amendment is in order.

The CHAIRMAN (Mr. McGrath).I rule that the amendment is in order. This is the proper place for it.

Mr ARCHDALE PARKHILL:
Warringah

– I wish to compare the proposals before the committee with those of the last Government, and with the promises made by the Labour party during the election campaign.

I regret that the Treasurer did not indicate in his statement that it was his intention to simplify our system of income taxation.

Mr Theodore:

– That will come later; we cannot do everything before Christmas.

Mr ARCHDALE PARKHILL:

– I agree that it could probably be dealt with more effectively in a comprehensive taxation measure such as has been promised for next session. But some reference might have been made to the subject by the Treasurer. Every taxpayer should be able to ascertain for himself the rate at which his income is taxable; but our method of imposing this taxation is an unfathomable mystery. Taxpayers are therefore obliged to accept the decisions of the departmental officers, or else incur the heavy expense of engaging taxation experts to transact their taxation business for them. One of the first principles of honest and decent taxation, if there is such a thing, is that the basis of it shall be stated in terms that the subjects of it can understand. I regret that our present involved system is being continued, and that the Government has not given any indication that it intends to simplify it.

As the Leader of the Opposition has pointed out, during the last election campaign the Labour party had a great deal to’ say about the iniquity of imposing taxation upon mutual life assurance companies. It was argued by Labour candidates that honest and thrifty citizens who, by great struggling, were able to make some provision for the future by taking out a life assurance policy, should not be taxed for doing so. But there is no indication in this measure of any intention of the Government to relieve these citizens of the imposts they are carrying. If the amendment of the honorable member for Wide Bay (Mr. Bernard Corser) is in order, it would appear to be in order also to include a provision to exempt these people from taxation in connexion with their life assurance policies. Had the Government provided for this it would have shown that its concern about these citizens was genuine. Apparently, all the Labour party desired was to obtain possession of the Government bench. The promises it made prior to the elections appear to have been forgotten.

The Treasurer, in an election address which was reported in the Labour Daily of Tuesday, 24th September, referred particularly to income taxation and taxation through the customs. L shall not deal with the latter” subject at the moment.

The report contained the following paragraph -

A Labour Government will exercise the greatest care that its administrative policy and its taxation proposals are framed in such a way that no avoidable harm will be done to industry. Half a century of economic study, has shown that a progressive income tax, graduated to meet the circumstances of incomes of varying sizes is the fairest of all systems of taxation, and is the least harmful to business and industry. A man with £10,000 a year in dividends from a business may pay £1,500 or £2,000 of that in taxation without in any way hampering or checking the success of his enterprise. For it must be obvious to all that if a business is a losing concern it will pay no income tax, and if ‘it is making but small profits it will pay only a proportionally small tax.

If additional revenue is required, it must come from direct taxation on large incomes and large landed estates.

The concluding paragraph is printed in heavy type. The last Government proposed to raise £400,000 in additional income taxation, and this was to be derived from a super-tax on incomes of £2,000 and over. Had the present Government accepted those proposals it would have shown that it really intended to impose additional taxation on large incomes only. But it has not done so. It is seeking to raise £885,000 more in income taxation than was proposed by the last Government, and it proposes to impose a graduated super tax on incomes - of £450 and over. Had the Labour party informed the electors during the election campaign that if it were returned to power it would do this, two things could have been known of it. The first is that it was honest, and the second is that it would not have been returned to power. Tens of thousands of electors voted Labour under the impression that only incomes of £2,000 and over would be subject to the super-fax, and they have been astounded to learn that incomes of £450 and upwards are to be super-taxed. The Treasurer can be assured that a great deal of resentment is felt on this account.

In the report from which I have just quoted, the Treasurer suggested that persons in receipt of incomes of £10,000 and over were paying only £1,500 or £2,000 a year in taxation.

Mr Theodore:

– That was only an illustration. “ ‘ ‘

Mr ARCHDALE PARKHILL:

– It was an absurd illustration, as the Treasurer should have known, for he has had years of experience as a State treasurer. A person in receipt of an income of £10,000 from personal exertion, pays in Commonwealth and State taxation, about £3,250 a year. If the income is derived from property the taxation is nearer £3,000 a year. I do not suggest that the Treasurer used this illustration with the deliberate object of deceiving his audience, but, unfortunately, it had that effect, and he should have known that that would be so. In fairness to his audience and his reputation, he should have been more accurate and careful.

I do not know on what authority the honorable gentleman stated that no harm would result to business if additional income taxation were imposed upon incomes which could afford to pay it, nor how he judged the latter. In this connexion I quote the following statement bv Mr. G. J. Cohen, Chairman of the Commercial Banking Company of Sydney, which appears in the 81st Annual Report of the Board of Directors for tha year ending the 31st June, 1929 -

It should bc remembered that there is a point at which capital becomes unproductive, a logical consequence of which is its withdrawal from the unproductive area. Since the assistance of capital is so vitally necessary to the development of Australia, surely our aim should be to encourage its healthy operation, and not to drive it away by unnecessary and burdensome restrictions - as is now being done.

We have reached the stage at which the capital that has been invested in many industries has become almost unproductive. [Quorum formed.] This heavy and punitive taxation that the Government intends to impose upon companies as well as individuals will inevitably result in a further increase in the cost of living and the consequent withdrawal of capital from industry. Therefore, we shall have, not increased employment, but a very serious decline in that which is being given at present by various industries. My sympathies go out to the public servant and the man in a small way of business. They have a fixed amount upon which to live. They have appearances to keep up, and, in many cases, heavy family responsibilities which are increasing. They have no means of supplementing their income, and no chance of saving any of that which they now earn. Yet the Government, without giving any indication of its real intentions while in opposition or during the recent election campaign, proposes to place further burdens upon them. The result will be to cause hardships as undeserved as they were unexpected.

This action is being taken so that the Government may exempt amusements from taxation. If it had accepted the Estimates of the previous Government, its receipts from the taxation of amusements would have been swelled by an amount of £640,000 annually. It has preferred to allow amusements to go free, and to tax the deserving middle class of the community. The Treasurer misled the public in regard to the intentions of his party with respect to taxation when he appealed for their support. He then said -

If Labour is returned Labour will abolish the amusements tax, which I cun only describe as a paltry and inglorious attempt to extract money from the children’s entertainments.

If the English language has any meaning, the phrase “Labour will abolish the amusements tax” -must have meant not only the withdrawal of the proposal of the late Government which was not then ‘ in force, but also the lifting of the tax which was then and still is in operation. Yet action in that direction is not proposed by the Government. The Treasurer is still giving effect to the “ paltry and inglorious “ policy of extracting money from the children’s entertainments, to the extent of £340,000 a year. . But he does not propose to take from the wealthy picture interests the additional £640,000 a year that the late Government intended they should pay. It cannot be said that those interests are unable to pay that tax. I quote the following from the monthly market report of C. H. Smith and McCaghern, members of the Sydney Stock Exchange, compiled to the 17th September, 1929-

When the Union Group were calling for capital in connexion with the Union Theatres (Victoria), Messrs. Smith and Johnson certified that net profits for the” year ended 30th June, 1928, were £97,639, which, on the then capital of £300,000, was equal to approximately 33 per cent. The incidence of the proposed taxation would indeed be severe if it could cripple such a profitable industry, and we do not think, for one moment, that, should the levy become law, existing dividend rates will be affected.

Those are the interests with which the Labour party is allied, and which it proposes to exempt from further taxation, preferring to place additional burdens on the backs of the public servants who are receiving ?450 a year and the men who in the mercantile and business life of this country have towork early and late to earn ?9 a week. Probably the reason for this action will be divulged by the Government later on.

I come now to the part which was played by the moving picture interests in the recent election campaign. It is well illustrated by the following quotation from the Exhibitors’ Herald-World, of the 28th September, 1929, the official organ of the moving picture interests in America, which is published weekly in Chicago. It says -

United States of America Picture Industry will Fight Australia’s Film Quota and Tax Law. (Special to the Herald-World. )

Melbourne, Australia, 24th September (by mail). - The United States of America motion picture industry is planning on a comprehensive campaign, in connexion with the Australian general election, to be held 12th October, relative to the proportion of American and British films, and the Government’s methods of taxing amusements.

American interests propose spending a great deal of money towards the campaign, and it is reported as being the first time that outside interests have intervened in Australian politics. Meanwhile, Prime Minister Stanley Bruce has announced important modifications in the Government’s proposals to tax amusement receipts.

That paragraph contains indisputable evidence of what was strenuously denied by the moving picture interests in Australia - that they were taking part in the election campaign. They spent a power of money in that campaign. When the people became tired of listening to propaganda against the Nationalist party in the picture theatres, which they paid exorbitant prices to enter, the moving picture interests decided that they could achieve their object more effectively by throwing the whole of their weight and influence behind the Labour party. From that time hoardings were plastered with posters, sometimes in electorates that were being contested by independent candidates, and always in electorates where Labour candidates were standing. In some cases, the name of the person who authorized the poster was that of an employee of one of the big picture interests. A similar practice was adopted in every other State. I hold in my hand an account for. a number of electric signs which were negotiated for by the honorable member for Wentworth (Mr. Marks) ana his committee. It amounts to ?11. I also have a certified copy of the cheque which was given in payment of that account, and it is signed by the directors of Union Theatres Limited. The following also is a certified copy of another account : -

Adyar House, 29 Bligh-street,

Sydney.

Union Theatres Ltd.,

Dr. to

The Theosophcal Broadcasting Station Ltd., (2GB, Sydney.).

Mr Gabb:

– He is not a member of the Labour party.

Mr ARCHDALE PARKHILL:

-I have not said that he is. I do not know what party he is a member of; but, to all intents and purposes, he was endorsed by the Labour party at the last election. I have shown that ?37 10s. was charged up to Union Theatres in connexion with the right honorable gentleman’s address, on the night before the election. That is only a fraction of the huge sum paid by the motion picture interests for the grossest misrepresentation over the air that the people of this country have ever heard.

Mr Latham:

– Was that account for only one night?

Mr ARCHDALE PARKHILL:

– Yes ; the period was from 8 p.m. to 9.15 p.m. These interests had the hardihood to issue a writ against myself, the Secretary of the Nationalist Association and the Sydney Morning Herald for stating what I have said here to-day. This did not for a moment prevent me from expressing my views. I knew what their intention was, but it had no effect on my addresses. I invite the attention of honorable members to the attitude of thi3 interest regarding the writ. They declined to proceed with it. They paid, not only for their own legal expenses, but also mine, and those of the Secretary of the Nationalist Association, which shows that they were simply attempting to use a legal gag to prevent free expression of opinion in an Australian election.

The CHAIRMAN:

– The honorable member’s time has expired.

Mr THEODORE:
Treasurer · Dalley · ALP

– Honorable members opposite, instead of confining themselves to the incidence of the proposed taxation, have taken advantage of an opportunity to ventilate grievances that they appear to. have concerning the recent election. Possibly the honorable member who has just resumed his seat thinks it better to attack the right honorable member for North Sydney (Mr. Hughes) in his absence, than to wait until he is here, when he’ would, no doubt, defend himself effectively.

Mr Archdale Parkhill:

– He should be here.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Is the Treasurer going to join his party?

Mr THEODORE:

– How that party will progress, and who Will join it, are questions that will cause more concern to honorable members opposite than to those on this side. What has been said by members of the Opposition concerning the Labour party’s attitude to the amusement tax constitutes a gross misrepresentation. It is true that we stated at the election that we did not intend to levy the amusement tax proposed by the late Treasurer, because we thought it most unfair. We objected to the method of its imposition. That, and the section of the people who would eventually pay it, were circumstances taken into account, lt is idle for honorable members opposite to pretend that it was intended as a tax against wealthy American film corporations. That could only have been assumed through sheer ignorance on the part of those who proposed it. It would be more reasonable for us to assume that it was known that the tax would apply to the patrons of the picture theatres and other places of entertainment, and, therefore, would not hit any foreign corporation. Does the exTreasurer honestly say that his proposal for a 5 percent, tax on the gross proceeds of all kinds of entertainments was going to be a tax on the American film corporations that were exporting films to Australia ?

Dr Earle Page:

– The proof of that is the support, financial and otherwise, that they gave to the Labour party.

Mr THEODORE:

– Then, why, after the protest was raised against this tax, did the late Government propose a £100 exemption for the benefit of small picture show proprietors? Why did it say that, in order to make good the loss of revenue, it would propose an entirely different kind of tax against the film corporations ? What a hollow pretence! It was realized that the right honorable member for Cowper (Dr. Earle Page) had made a gross blunder in proposing a tax of this kind, that would have had to be paid by children - by the families of the workmen who attend the picture shows.

Mr Archdale Parkhill:

– Then why not remove the tax?

Mr THEODORE:

– These crocodile tears of the honorable member for Warringah ! The member who pleads for the £10,000 a year taxpayer is attempting to make out that the amusement tax, which would undoubtedly be contributed by every youngster who attends a picture show, was an attack on the American millionaires.

Mr Gullett:

– Why did those “big fellows” support the Labour party?

Mr THEODORE:

– The late Government had been in power since 1922, and, if it thought that it could impose an effective tax on the wealthy film corporations that have managed to escape taxation, it is strange that it did not make a definite proposal in that direction, instead of waiting until the eve of the election, when it became terrorized by pending events. The amendment submitted by the honorable member for Wide Bay (Mr. Corser) cannot be accepted by the Government.

Mr Bernard Corser:

– Why not? If the Treasurer were true to the statements in the green pamphlet, the amendment would be accepted.

Mr THEODORE:

– Does the honorable member contend that it should be?

Mr Bernard Corser:

– Yes, in the circumstances.

Mr THEODORE:

– Are the circumstances different now?

Mr Bernard Corser:

– Yes, because the Treasurer says that the increased tax is required to meet the payment of interest on war loans

Mr THEODORE:

– I have said no such thing. The honorable member is most unscrupulous.

Mr Bernard Corser:

– The Treasurer said that increased taxation was necessary to pay the interest on Avar loans.

Mr THEODORE:

– I challenge the honorable member to produce any such statement by me. Neither on the public platform, nor in the budget speech, which definitely sets out my views regarding the Government’s financial proposals, have I said such a thing. I again ask him if he thinks that his amendment ought to be accepted as a matter of principle.

Mr Bernard Corser:

– Certainly. I would not ask the Treasurer whether it should be accepted or not.

Mr THEODORE:

– A similar proposal was made when the late Government was in office, and Mr. Bruce turned it down absolutely.

Mr Gullett:

– We did not undertake to make these amazing concessions to soldiers. The Treasurer promised more than that.

Mr THEODORE:

– The honorable member for Henty is quite accomplished at distorting the truth. Does he charge me with promising income tax concessions to returned soldiers ?

Mr Gullett:

– I have not suggested that.

Mr THEODORE:

– Then what does the honorable member mean? No such thing was promised. The Minister for Markets and Transport (Mr. Parker Moloney) desires to move a motion, and, therefore, I move that progress be reported.

Progress reported.

page 696

WINE GRAPES CHARGES BILL (No. 3) 1929

In Committee of Ways and Means :

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

-I move-

  1. – That, subject to a lower charge being prescribed by regulations made, and subject to exemptions allowed under order made, under the Wine Grapes Charges Act 1929, as amended by the act passed to give effect to this resolution, a charge shall be imposed at the rate of five shillings per ton in respect of all fresh grapes, and at the rate of fifteen shillings per ton in respect of all dried grapes, delivered after the first day of January, One thousand nine hundred and thirty, for use in the manufacture of wine, including the making of spirit for the purpose of fortifying wine, to a winery or distillery which handles not less than ten tons of grapes for such use during tho year in which those grapes are so delivered.
  2. That the charge imposed in pursuance of this resolution shall cease to be imposed upon a date fixed by proclamation under the Wine Grapes Charges Act 1929, as so amended, as the date upon which that act shall cease to bc in force.

The object of this motion is to rectify an omission from the ‘Wine Grapes Charges Act, in respect of the collection of the levy imposed upon wineries and distilleries. It is proposed to make a charge at the rate of 5s. a ton on fresh grapes, and 15s. a ton on dried grapes delivered, after the first day of January, 1930, for use in the manufacture of wine, including the making of spirit for the purpose of fortifying wine, to a winery or distillery which handles not less than ten tons of grapes for such use during the year in which those grapes are so delivered. Under the act, there is power to collect but not to enforce the levy. The charge on fresh grapes is 5s. a ton. and it is proposed, in addition, to make a charge of 15s. a ton on all dried grapes delivered to the wineries.

Mr Paterson:

– That is the maximum rate?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– Yes, subject t.o revision, according to the requirements of the Wine Overseas Marketing Board. The Wine Grapes Charges Act was passed in 1929, in order to provide funds to enable the board to carry out its functions under the Wine Overseas Marketing Act. The proposals now before honorable members have emanated from the board which was appointed in 1929 after a ballot bad been taken among the owners of wineries and distilleries throughout the Commonwealth. There are eight members of that board, seven of whom were elected by the co-operative and proprietary wineries and distilleries ; the- remaining member was appointed by the Commonwealth Government. Under clause 4 of the bill which is shortly to be introduced, power is given to enforce the collection of the levy. This could not be done under the original act, which provided for a penalty of £50 - an amount which might be much less than the amount of the unpaid levy.

Question resolved in the affirmative.

Resolution reported and - by leave - adopted.

Ordered -

That Mr. Parker Moloney and Mr. Theodore do prepare and bring in a bill to carry out the foregoing resolution.

Bill brought up by Mr. Parker Moloney and read a first time.

Second Reading

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

by leave - I move

That the bill be now read a second time.

This bill proposes to fix the maximum rate of levy on fresh grapes delivered to any winery or distillery at 5s. a ton, and on dried grapes at 15s. a ton. Under the act the levy was 5s. a ton on fresh grapes. This bill provides, in addition, the levy of 15s. a ton on dried grapes. Considerable quantities of doradillo and gordo grapes are dried each year and sent to the distilleries for conversion into spirit, which is used for the purpose of fortifying wine. The equivalent of dried grapes to fresh grapes has been calculated on a basis of 1 ton to “ tons, and, accordingly, the maximum charge on fresh grapes is fixed at 5s., and on dried grapes at 15s. a ton. It is clear that in an average year the levying of the maximum rate would result in the collection of some £25,000 or £30,000, which sum would obviously be greater than that required for the functions of the board. Therefore, the maximum charge is not likely to be imposed. It may be taken for granted that the board will recommend a considerably lower levy in respect of the coming season’s vintage. Under the act a winery or distillery is defined as a concern which handles not less than 10 tons of grapes for use in the manufacture of wine during any year in which a charge is imposed. Under that definition it might appear that a winery or distillery which accepts the delivery of 10 tons of grapes in any particular year would be required to pay, indefinitely, the levy imposed by the board, notwithstanding that in any subsequent year the quantity of grapes delivered might be less than 10 tons. Clause 2 (b) of the bill makes it clear that for the purposes of the levy the operations of any winery or distillery must be taken independently each year. That will prevent any levy being made on wineries or distilleries whose deliveries in any particular year are under 10 tons. Clause 4 has been inserted in the bill to provide for the requirements of the board. Under the act there was no power to enforce the collection of the levy, and this amending bill has been introduced to rectify that omission. Clause 4 provides -

After section three of the Principal Act the following section is inserted: - “ 3a. The charge imposed by this act shall be deemed, when it becomes due and payable, to be a debt due to the King on behalf of the Commonwealth by the owner of the winery or distillery to which the grapes, in respect of which the charge is payable, were delivered, and may be sued for and recovered by the Commonwealth in any court of competent jurisdiction.”.

That will overcome the defect in the act.

Mr Maxwell:

– On what principle does the board fix the charges?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– Presumably according to its requirements for publicity and advertising overseas. If the collections were maintained at the maximum rate they would yield, in an average year, between £25,000 and £30,000. But as the board was brought into existence with the approval of the overwhelming majority of the owners of wineries and distilleries throughout the Commonwealth, and as its members are elected by those engaged in the industry, it may be depended upon not to collect more money than it needs to carry out its functions.

If honorable members desire further information I shall be happy to supply it at the committee stage ; meanwhile I commend the bill to the House.

Debate (on motion by Mr. Paterson) adjourned.

page 698

COMMONWEALTH BANK BILL

Second Reading

Debate resumed from 3rd December (vide page 626), on motion by Mr. Theodore -

That the bill be now read a second time.

Mr WEST:
East Sydney

.- I have pleasure in supporting the bill, because its principal object has my hearty approbation. It deals with one flaw in our economic system to which this Parliament will be forced to give more attention in the near future.

Mr Latham:

– Would it not be a good idea to have at least one Minister in the chamber ?

Mr Gabb:

– I call attention to the state of the House. [Quorum formed.]

Mr WEST:

– We still depend mainly upon borrowed money and the receipts from customs and excise to keep Australia going and to find employment for our people. The evil of unemployment is world-wide, and it is largely due to a faulty economic system. For this no particular government is responsible, but we must devise means of remedying the present unhealthy state of affairs. I cannot understand the hostility to this bill, unless it be that the Opposition considers that its duty is to oppose all proposals made by the Government. The measure proposes to give to the Treasurer some control over the note issue. Obviously somebody must have such control, and the Treasurer is the most suitable person, because he is responsible to this House. Members of the Opposition are not justified in saying that a politician cannot be trusted to exercise wisely the power to permit or prohibit the export of gold; but the amendment of which the Treasurer has given notice will ensure that he will act only upon the recommendation of the Commonwealth Bank. I cannot imagine that any honorable member believes that private institutions and individuals should have unrestricted controlof the gold reserves, which have so much influence upon the financial stability of the country. So long as we have a gold standard it is desirable that the gold reserves of the Commonwealthshall be under government control. Some time ago the import trade was dislocated because of the state of Australian credit abroad, and £4,000,000 worth of gold had to be shipped to the other side of the world. I understand that this bill is introduced at the desire of the Commonwealth Bank Board. The board has asked that such a measure be introduced. Some honorable members do not seem to have read the bill. One would think from listening to them that it dealt with the ramifications of our entire economic system, but it merely authorizes the making of returns of the gold holdings in the country, and gives power for the control of such gold. I remember years ago conversing with the manager of the Queensland National Bank about the practice of the Chinese in drawing out large sums in gold - sometimes as much as £500 - and sending it abroad. He asked my advice on the matter. It was found that they were receiving an exchange profit of as much as from1s. 8d. to 2s. 6d. on each sovereign exported. I brought the matter under the notice of Mr. Andrew Fisher, with the result that an embargo was placed on the export of gold from Australia.

The honorable member for Gippsland (Mr. Paterson) expressed the opinion that we ought to follow the lead of Great Britain, but I point out to him that it is the practice of Australia to establish precedents, not to follow them. She has led the way in the matter of social reform, land transfer, the note issue, and unimproved land valuation for the purpose of land taxation. Only recently Mr. Snowden eulogized the system of land taxation operating in Sydney, and said that he would try to introduce a similar system in Great Britain. The fact that a system of gold control is not in operation on the other side of the world is not a sound reason why we should not introduce it here. If we were content to follow the practice of other countries we should never make any progress. The people of other nations are watching Australia for a lead in matters relating to social progress and improvement in the conditions of the people. I do not know how to-describe the attitude of the honorable member for Swan (Mr. Gregory) and the honorable member for Forrest (Mr. Prowse). They seem incapable of taking an optimistic view of anything. I thought that after the recent change of Government they would undergo a process of intellectual re-adjustment, and would see the error of their former ways. They have not changed, however, and are of no help in the task of improving conditions in Australia.

This bill is a step in the right direction. Everybody who has given any thought to the matter must realize that the protection of our gold supplies is essential. The Leader of the Country party (Dr. Earle Page) has suggested that a committee be appointed to inquire into the subject. To my mind, that is simply a means of preventing the measure getting through Parliament this session. What could a committee do? The bill is so simple that anybody can understand it. It provides for making a return of gold holdings in the country. Surely there .is no objection to that. The second portion deals with the export of gold, and that is the most important part. It provides that before any one can export gold from Australia, he must obtain the approval of the Treasurer. The letters written by the Commonwealth Bank Board on this subject make it evident that some such step has been necessary for a considerable time. The previous Government must have been aware of it, but had not the courage to bring down the necessary legislation. Power under this measure will rest in the hands of the Treasurer, and in what better hands could it be? It is desirable that the power should be vested in some person who is responsible to Parliament. This bill is an intimation to -the public that in electing the present Government to control the destinies of Australia they placed in power a body of men determined to guide the economic affairs of the nation along sound lines. Australia has drifted into a very unenviable financial position. She cannot maintain the present rate of borrowing. Recently, the prospectus was issued of a loan bearing interest at the rate of £5 14s. 4d. per cent. There were signs and advertisements posted on every public building throughout Australia asking the public for contributions. The payment of such high rates of interest for Commonwealth loans is crippling the industries of Australia. Insurance companies and benevolent societies find it a better proposition to invest their reserves in war loans than to lend them out on mortgage.

The time will come when the people will refuse to pay the present heavy interest rates. We shall have to float a redemption loan of £70,000,000 early next year. If the new loan is for a ten year period, and we have to pay £5 14s. 4d. per cent, for the money subscribed, we shall spend £44,000,000 in interest in the decade, and still owe £70,000,000 of principal. I sincerely trust that the Government will issue the loan at par, and at a low rate of interest.

We shall never be able to solve our economic problems nor provide permanent employment for all our people by borrowing money at high interest rates, and the Government, should face this fact fairly and squarely. Such money as we must borrow should be obtained in Australia if it can be had here. By going on the British market for our money we injure the workers of Great Britain, for we restrict the amount of money available in that country for industrial expansion and public works. Australia has given the world a lead in many things, and I am confident that it could lead the world in the re-adjustment of public finance. We have an intelligent democracy and wonderful resources in thi9 country, and we should be wise if we turned our attention to the important financial considerations which we should be facing.

We should give some attention, among other things, to the distribution of our wealth and production. A better distribution would assist us to overcome our difficulties and also beneficially affect our exports and imports. The gold coin and bullion of the country should be controlled by the Government. I do not suggest that the assumption of this control is all that is necessary to restore a proper financial balance; but it would tend to that desirable end. For the reasons I have given, I shall support the bill.

Mr LATHAM:
Kooyong

.- If this bill is passed a fundamental alteration will be made in our financial and credit system. If the provisions of the bill were put into operation, they would affect the whole of our external trade and commerce, and by their reaction our internal trade and commerce, our industry . and the amount of employment available here. The Treasurer did not give us much information in his secondreading speech, to show that these basic changes were necessary. He read a letter from the Chairman of Directors of the Commonwealth Bank, which recommended the adoption of the provision for the pooling of our gold reserves in the hands of the bank; but I do not think that the letter contained a recommendation for the adoption of the proposal to restrict the export of gold coin and bullion.

Mr Theodore:

– I assure the Leader of the Opposition that that recommendation was made verbally, and was supplementary to the letter.

Mr LATHAM:

– Before these proposals were made the Treasurer should have consulted the Associated Banks and the Chambers of Commerce of Australia, for they are vitally interested in this subject and must hold definite views in relation to it. Naturally the Treasurer consulted the Board of Directors of the Commonwealth Bank, but the other institutions I have mentioned should also have been approached. It would have been of great assistance to the House if their views had been stated by the Treasurer.

Australia must pay interest abroad on her debts, and she must also pay for the imports that come here. At present there are difficulties in doing so on account of circumstances well known to honorable members. Briefly these are the smallness of our wheat crop and wool clip; the low prices offering for our commodities, and the difficulties which we are encountering on the overseas markets. There is a lack of credit in favour of Australia in London, which is the financial centre of the world, and so there is need to export gold as a corrective. One of the objects of this bill is to provide for the mobilization of our gold resources. In this connexion it is proposed that -

Where the Treasurer is satisfied that it is expedient for the protection of the currency, or of the public credit of the Commonwealth, to obtain particulars of gold coin and bullion held by persons in Australia, or to require the exchange of any gold so held for Australian notes, he may, by notice in writing, authorize the bank -

to require any person to furnish particulars of the gold coin and bullion held by him; and

to require any person to exchange for Australian notes any gold coin or bullion held by him.

It is also proposed that -

The bank may, in pursuance of any direction given under the last preceding sub-section, by notice in writing -

require any person to furnish to the bank particulars in writing of the gold coin and bullion held by that person ; and

require any person to exchange with the bank for its equivalent in Australian notes, any gold coin or bullion held by that person.

These provisions differ materially from those of the Currency and Bank Notes Act 1928 of Great Britain. Section 11 of that measure empowers the Bank of England to “ call upon any person in the United Kingdom owning any gold coin or bullion to an amount exceeding £10,000 in value “ to furnish the bank in writing with particulars of it. The bank is also empowered to call upon such a person to sell it “ the whole or any part of the coin or bullion so held other than the part of it which is bona fide held for immediate export or is bona fide required for industrial purposes.” But these provisions are to have effect only “ so long as subsection 1 of section one of the Gold Standard Act, 1925, remains in force.” That sub-section provides that the bank must sell gold in bars containing 400 ounces of fine gold to any person who bona fide desires gold for immediate export from Great Britain. I refer to these provisions to show that the power conferred on the Bank of England to buy gold is limited by the condition that a free gold market must still be preserved.

Mr Theodore:

– It cannot be said to be a free market when restrictions and limitations are imposed upon it.

Mr LATHAM:

– From a practical point of view, it is free. Small amounts are not exported for exchange purposes.

The value of 400 oz. of fine gold is £1,557 10s. Gold is bought only when it is needed for a commercial transaction. This bill is essentially different from the English legislation in that the limitations to which I have referred are absent from it, and also because it confers upon the Treasurer power to prevent the export of gold. The measure has been considered by the Melbourne Chamber of Commerce, and in yesterday’s Melbourne press there appeared a telegram that had been sent from that body to the Prime Minister (Mr. Scullin) in the following terms : -

The Melbourne Chamber of Commerce considers that any mobilization of the gold reserves of the trading banks as authorised by the amending Commonwealth Bank Bill is, to the extent of the commandeering of the whole or a considerable part thereof, neither necessary nor desirable in Australian conditions. The arbitrary enforcement of such a policy would be a serious interference with a system that has stood the test of long experience. A change so radical would not only tend to hamper banking business generally, but the Chamber feels that it might be injurious to the credit of the Commonwealth and the States, besides disturbing public confidence. The present English exchange position can be met by co-operation between the Commonwealth Bank and the trading banks on sound lines, and it affords no justification for a change so extreme. The compulsory taking of any part of the gold holdings of the trading banks, and any embargo placed upon proposed shipments of gold should, so long as such are necessary, be subject to a guarantee of the provision of equivalent exchange requirements for the banks. The mobilization of the gold reserves in England arose from a number of causes, the most important of which do not operate here. The constitution of the central bank and public sentiment there minimized the risk of political interference. The Chamber earnestly hopes that if any gold is demanded from the banks under the act it will not be used for the purpose of note inflation. While’ it remains in the hands of the banks, the public feels that it cannot be used for such a purpose.

I particularly draw the attention of the Treasurer (Mr. Theodore) to the fact that the Chamber of Commerce expresses the view that the compulsory taking of any part of the gold holdings of the trading banks, and any embargo placed upon export, should be subject to a guarantee of the provision of equivalent exchange requirements for the banks. I presume that one of the principal objects of this measure is to make whatever provision is necessary for exchange requirements. I admit that, although I have con sidered the possibility, very great difficulty would be experienced in incorporating in the bill some provision requiring the bank to give exchange on London or anywhere else in return for gold compulsorily acquired, because the terms and conditions of the exchange would have to be settled by the bank; but I should like the Treasurer to give an assurance that these provisions will be put into operation only with the object of facilitating, and not of restricting bona fide transactions. The object of pooling gold reserves has been very well and shortly expressed by Professor Copland, of the University of Melbourne, in an addendum to an article which he contributed to a book published in 1929, entitled,’ Foreign Banking Systems. He uses the following words : -

The object would be to promote an economy in the use of gold in Australia, to enable a ‘ greater proportion of the reserve to be held in London, and to facilitate exchange transactions.

He was summarizing what he understood were the views of Sir Ernest Harvey, who, as honorable members are aware, is Controller of the Bank of England, and recently visited Australia. If the effect of the mobilization of the gold available in Australia will be to facilitate exchange, well and good; but I have a certain amount of doubt as to whether that will be the effect of the proposal. If, at the present time, the Commonwealth Bank held all the gold that is available, would it export it or continue to hold it! If it should adopt the latter course, would not the existing position be still further aggravated? But if, on the other hand, its desire were to export gold, it now holds more than is required, for reserve purposes, and could exercise its judgment as to whether it would be wise or unwise to export it. By a co-operative arrangement between the Commonwealth Bank and the other banks it should be possible to deal with the difficulties that now exist, without running the risk of prejudicing the credit of Australia. The effect of the operation of this measure will be to make our notes inconvertible; because, although it will still be possible to obtain gold upon presentation of notes at the bank, that gold can immediately be requisitioned again, and its export prohibited. Therefore, except for currency purposes in Australia, the gold will be useless, because it will be deprived of its utility in international exchange, and from a practical point of view the notes will be inconvertible.

In an article which appeared in the Sydney Morning Herald,Mr. A. C. Davidson, general manager of the Bank of New South Wales - who probably is as well qualified as any person in Australia to speak on this subject- after pointing out that Australia must face certain financial and economic facts, and stressing the need for a recognition of the position into which our trading and borrowing have brought us, said -

First of all, we must be prepared to give gold for our notes, whenever demanded and in whatever quantities. Secondly, we must ‘be prepared ‘to export gold when our trading and financial position makes it such that gold can be demanded from us; and similarly to import when necessary. There is much to be lost by shirking this responsibility. The world at large is not to be bluffed. If we have been spending too much; if the position in Australia is such that we have been living, so to speak, beyond our means; and if, as a consequence, our . price levels are high and out of line with the rest of the world, we must be prepared to allow our exchange rates to move towards, and even reach, the gold export point. This is the position to-day. We must, then, allow those who have to make payments abroad to withdraw gold from the note issuing authority and export it, if they are able to do so at a better rate than can bc obtained by buying exchange on London or on whatever place to which they may require to send the money.

The Treasurer has referred to the fact that at the present time the exchange rate on London is 35s per cent., and has stated that that high charge had created a difficulty in meeting commitments in London. In 1920 the exchange rate on London was £3 per cent.; yet the position was adjusted, in the ordinary course of trade and in accordance with the law of demand and supply. Imports were wisely restricted, with a consequent effect upon price levels in Australia.

Mr Curtin:

– That was due to bank policy rather than the decision, of the country.

Mr LATHAM:

– At any rate, equilibrium was restored without the interference of any government or political authority.

Mr Curtin:

– The check was due to the initiative of a group of interested parties.

Mr LATHAM:

– In the long run ths parties concerned must restore ‘ equilibrium; and they can do it without political interference. If a high exchange rate is an indication of a more or less abnormal condition, then the position in 1920 was much more abnormal than that which exists to-day.

The bill provides that any person who desires to export gold may apply in writing to the bank for the approval of the Treasurer. I draw attention to the fact that in the bill the term “the bank” is always used. A perusal of the Commonwealth Bank Act will show that’ the bank is a corporation, which may act by agents. The bank acts when the manager of a suburban branch acts. I suggest to the Treasurer the substitution of the words “ the board “ for “ the bank.” I am sure it is his intention that the matters which will be dealt with under this legislation shall receive the consideration of the board of directors of tho bank, and that action in respect to them shall not be delegated to a manager or any other person.

Lastly, the principle embodied in proposed new section 7c is not to be found in the English legislation, which has been safeguarded to preserve the free market in gold> Under the present bill that market would be restricted. The effect of passing the amendment circulated by the Treasurer would be that the proposed new section could be put into operation only when a proclamation had been made by the Governor-General-in-Council, on the recommendation of the board of directors of the Commonwealth Bank. The section provides that applications for permission to export gold must be made to the bank, that the bank shall report thereon to the Treasurer, and that the Treasurer “may, in his absolute discretion, approve or refuse approval to any application made under this section “. Exportation of gold without the approval of the Treasurer is made an offence. I suggest that it would be desirable to amend the provision so that the Treasurer would hot have the power to discriminate between applications made for permission to export gold. I am sure that, in making this suggestion, it will be understood that I am dealing with the matter on grounds of principle, without concern as to who the Treasurer may be, or what political party he may belong to. If the proposed new section is agreed to, after the proclamation has been made the bank will report, and the Treasurer will act as he thinks proper in his absolute discretion. He may allow one person to export gold, and refuse that permission to another man who may be his competitor. It is unwise to place the Treasurer of the Commonwealth in that position. Therefore, if the amendment to be proposed by the right honorable member for Cowper (Dr. Earle Page) is not adopted, I intend to submit an amendment in committee to require the bank to recommend approval or disapproval of applications, and to require the Treasurer to adopt its recommendations. Then the Treasurer would be in possession of the information that he ought to have regarding applications for permits to export gold, and, of course, the Secretary to the Treasury is himself a director of the Commonwealth Bank. There is a close liaison between the. bank and the Treasury, and that degree of liaison enables quite sufficient control to be exercised in any manner by the Treasurer in relation to this matter.

It appears to me that the proposals in the bill are so new in Australia that it is difficult to estimate exactly what would be the effect of. putting them into operation. The position in England is different. London is the financial centre of the. world, and has centuries of experience behind it. It supplies credit, more or less, to all nations. There the matter is dealt with, not by interfering with the export of gold, but by raising or lowering the discount rate for the purpose of attracting gold to, or repelling it from, the London market. We ought to have the fullest information before a farreaching change is made in the credit system of the Commonwealth. If the amendment to be moved by the right honorable member for Cowper is not accepted, I intend to submit an amendment providing that the operation of the measure shall be limited to six months. The bill is brought forward, admittedly, I understand, to meet an existing condition of affairs that is regarded by the Treasurer and his advisers on the Com monwealth Bank Board as an emergency which, it is hoped, will soon be past.

Mr Curtin:

– The honorable member did not apply that argument to the Transport Workers Bill.

Mr LATHAM:

– That is a very successful statute of pre-eminent value to the whole community. The present measure could be made of similar value to the community. All I am suggesting is that we ought to have more information than . has been supplied, and a closer examination than has been made, before its operation is made permanent. If, at this stage, its operation were limited to six months, it would be possible to see the effect pf the experiment, and it would be easy to re-enact it, if it were found to be a success. If it is passed, I hope that it will prove as valuable as has the Transport Workers Act.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I did not anticipate any opposition to the bill, seeing that it results from a recommendation by the Board of Directors of the Commonwealth Bank, who realize that there is a danger of depleting the supply of gold. The right honorable member for Cowper (Dr. Earle Page) desires a committee to be appointed to inquire into the probable effect of the measure before it is put into operation. But during the period in which such a body would be deliberating, if a profit could be made by the export of gold, an opportunity would be afforded to deplete the supply of the commodity. Therefore, the amendment would be dangerous. We must protect the assets of- the people.

Mr Paterson:

– But .we have .to pay our debts.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– Yes; and this bill has been brought down so that, if gold were demanded in payment of debts, we should have it. A scarcity of gold hampers the business of a country. There should be no shortage of this medium of exchange. If a combine exported most of the coal in Australia, it would cause a great scarcity of that commodity, and the action would be detrimental to our interests. A Government would not be worth its salt, if it did not take steps to prevent the depletion of our coal supplies. The same argument could be applied to any other commodity, whether gold, wheat, meat or butter. The honorable member for Kooyong (Mr. Latham) sought to compare the Bank of England with the Commonwealth Bank; but they are not comparable. We are bound to guarantee every note issued, and we have to be prepared to give gold for it on demand. But that is not the position in Great Britain. Although the British Government stands behind the Bank of England, that institution is not called upon to guarantee the notes of the private banks. Therefore, wc should take steps to see that we have sufficient gold in the country to meet requirements.

The argument has been advanced that the Commonwealth Bank should be free from political control. If there were no such control of the bank, the present bill would still be necessary, because the directors of the bank would see the need to put the principle of the measure into operation.

Mr Paterson:

Sir Robert Gibson’s letter did not ask for half so much as the bill contains.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I do not object to the Opposition trying to establish the best case it can; but the Government and its supporters are bound to take all necessary steps to protect the interests of the producers of this country. The exporters realize that the Commonwealth Bank stands behind the trading banks. The Government does not hope to obtain any kudos from the introduction of this measure; it is merely submitting it in compliance with the recommendation of the directors of the Commonwealth Bank. The Government could easily spend the whole of its time in passing ‘ labour legislation ; but this bill is required in the interests of the country generally. It has been said that it is useless to keen gold lying in the vaults of the bank. I realize that it would be ridiculous to do that. I am satisfied that when the gold is obtained it will be used. If we could repay, in gold, a loan falling due in Great Britain we should do so.

Dr EARLE Page:

– The gold would be lost then.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– I would as soon have a Commonwealth note as a sovereign. I see no danger in passing the bill, and the

Government is to be congratulated upon its introduction.

Sitting suspended from 6.15 to S p.m.

Mr ARCHDALE PARKHILL:
Warringah

– We have heard during the discussion of this measure a number of able addresses.

Mr Theodore:

– And we are about to hear another.

Mr ARCHDALE PARKHILL:

-The one exception was the speech of the Treasurer (Mr. Theodore), which, like his other second-reading speeches this session, was exceedingly meagre and unilluminating. Several honorable members have adorned their speeches with copious extracts and references to high authorities such as J. M. Keynes, Sir Reginald McKenna and a number of other experts probably less known but equally authoritative. These honorable members addressed themselves largely to the subject of the gold standard, and some of the statements quoted by them were wholly misapplied in their subsequent arguments. In addition, their references to the gold standard have mostly been irrelevant to the subject under discussion.

The bill provides for two things, first, the obtaining of a record or census of all the gold available in Australia, and to this of course there can be no objection; and, secondly - and this opens up a field of argument - the prevention of the export of gold from Australia, except with the consent of the Treasurer. Probably this bill would be regarded as quite innocuous if it represented the full extent of the Treasurer’s intentions in respect of finance and banking, but there is a fairly widespread opinion abroad that this measure is merely a prelude to subsequent measures which will embody the Government’s proposals in regard to the note issue. The decision that gold shall be exported from Australia only with the consent of the Treasurer is a departure from the system adopted by the Bank of England, because that institution places no embargo upon the export of gold.

Mr Theodore:

– It has placed a restriction, though not an embargo, upon the export of gold.

Mr ARCHDALE PARKHILL:

– As a general rule I am averse to this Parliament parting with any of its statutory functions. In the past certain powers have been transferred to outside officials which this. Parliament should be responsible for exercising. Parliament should insist upon keeping these powers in its own possession. I take a different view in regard to the control of banking in Australia, and think that the Commonwealth Bank would do well to follow -the practice of the Bank of England. It is a mistake to interweave politics with the administration of our banking system. The Treasurer, who is now seeking exclusive powers over the export of gold, represents a party that has on its political platform the nationalization of banking and all the means of production, distribution and exchange. There is, therefore, grave danger in mixing politics with the banking administration of this country. The Treasurer has forecast an amendment relating to a proclamation by the Governor-General, but that will not in any way affect the Treasurer’s control of the export of gold, and, when in committee, I propose to make some further observations on this subject. I content myself now by saying that the authority for controlling the export of gold should be the directors of the Commonwealth Bank. Apart from that. I am prepared to vote for the passage of the bill.

The Treasurer has had some experience of the financiers of Great Britain. He will remember the great difficulties that he met with, as a result of his land legislation in that State, when floating a loan for Queensland. He will remember, too, that in the coming year he has to renew loans amounting to something like £70,000,000. In view of his wide financial experience, he must be prepared to accept responsibility for the passage of this measure and its consequences.

It has been suggested by the Leader of the Country party (Dr. Earle Page) that this bill should be referred to a select committee. I am opposed to that. This legislation was introduced in this House last Thursday, and the financial institutions of this country - the Chambers of Commerce, the Chambers of Manufactures, the banks and other institutions - if they desired to make representations to the Government have had ample opportunity to do so. As no representations have been made by them, we can assume that there is no real fear on their part of any disastrous effects from the passing of this bill. In addition, it is a reflection upon the capacity of honorable members to suggest that a measure should be referred to a select committee. There should be enough brains and ability in this Parliament to decide whether this legislation will be for the benefit of the community. I see no reason why this measure, any more than any other, should be referred to a select committee. I am also opposed to the amendment which has been suggested to provide that this legislation should come up for review at the end of six months. The Government should know its own mind, and if it passes this legislation it must be prepared to take responsibility for the consequences. In committee the only amendment I shall support will be one to provide that the authority to permit or refuse permission to export gold shall be vested not in politicians but in the directors of the Commonwealth Bank.

Mr THEODORE:
Treasurer · Dalley · ALP

– A good deal of the discussion on this bill has been based upon the somewhat unreasonable fear of the manner in which the powers it seeks to confer will be exercised. The Government had no desire to introduce during this brief session, in which there is so much other work to be done, a bill to amend the Commonwealth Bank Act, but the Board of Directors of the bank urged in the strongest terms, by correspondence and verbally, that some action should be taken, because the situation was becoming emergent. For that reason only was the bill introduced. I do not say that the necessity to restrict or prohibit the export of gold is emergent or even urgent, but the need to concentrate the gold reserves in the hands of a central authority is urgent, and, indeed, emergent. The reason was stated clearly in the letter from Sir Robert Gibson which I read when moving the second reading of the bill. Because of the exchange position, demands are being made on the Commonwealth Bank for gold for export, and honorable members can realize to what lengths that export might go, and how menacing it might become to the Commonwealth Bank, which is the note issuing authority. The exchange position is difficult, and the cost of remitting money is high, and increasing. The adverse trade balance may not be rectified within the next twelve months, and honorable members can easily imagine that if, in the meantime, no corrective or precautionary measures were adopted, and the demand for gold continued, the reserve might dwindle below statutory requirements. That is a possibility that the directors of the Commonwealth Bank wish to avoid. The private bankers also realize that danger, and, if necessary, they might, rather than see the Commonwealth Bank seriously embarrassed, bring to its assistance their holdings of gold. But they do not regard this as their immediate obligation. The directors of the Commonwealth Bank, on the other hand, consider that they have an immediate obligation to protect the gold backing of the note issue. The most important portion of the bill is that which gives authority for the concentration of all gold in the Commonwealth Bank; but the board also asked that the Government should seek from Parliament power to restrict or prohibit the export of gold.

Mr Hawker:

– Not in the letter from Sir Robert Gibson.

Mr THEODORE:

– I hope the honor able member is not suggesting that I am misrepresenting the facts. Both the Governor and the Chairman of Directors of the Commonwealth Bank have represented to the Government that it should seek power to restrict or prohibit the export of gold.

Mr Maxwell:

– Has the Treasurer ascertained the opinion of the Board of Directors regarding this measure ?

Mr THEODORE:

– The draft was submitted to the board before it was introduced to the House, and the directors, in consultation with me, suggested the amendment which I have circulated, providing that the power to restrict or prohibit the export of gold shall operate only after the issue of a proclamation on the recommendation of the board. As this recommendation is a prece dent condition, it follows that the proclamation will not issue until in the opinion of the Commonwealth Bank Board it is really necessary. .

If that amendment is made the bill will give effect to the wishes, and indeed, the suggestions of the Commonwealth Bank authorities. I do not wish honorable members to misunder-stand the position; because this bill has practically no bearing on Government policy. It was not initiated by the Government; it originated with the board of directors of the bank, and but for their urging, would not be before th, House.

To allay the concern of some honorable members I assure them that the Government does not intend to interfere with the convertibility of the Australian bank note, and the bill is not designed to do that directly or indirectly. Moreover, the Government has no desire to interfere with the free marketing of gold. If the necessity arises for placing a restriction on the free marketing of gold, it will be done on the initiative, not of the Government, but of the Commonwealth Bank Board, probably after consultation with the chartered banks.

Mr Latham:

– Is .the Treasurer prepared to accept an amendment to express in the bill his assurance that he will be guided entirely by the Commonwealth Bank Board ?

Mr THEODORE:

– The amendment 1 have circulated does that. No restriction can be placed upon the export of gold until a proclamation has been issued in accordance with a definite recommendation by the Commonwealth Bank Board. After the proclamation has been issued, the executive government will exercise its discretion, as indeed it must. It would be contrary to political propriety to compel the executive government to act in accordance with the advice of a subordinate authority. When the authority of the executive government is requisitioned, discretionary power must rest with it. The bill and the amendments I have circulated were drafted in the Crown Law Department, and there is no sinister purpose behind their phraseology. A proclamation can issue only on the recommendation of the Commonwealth Bank Board, and such a recommendation cannot be made until an emergent situation has arisen. When such a situation does arise, the board should have the power to take corrective action.

Mr Latham:

– The amendment which the honorable gentleman has circulated will still leave to the Treasurer of the day discretionary power to grant or refuse permission to export gold.

Mr THEODORE:

– That discretionary power can be exercised only after a recommendation by the Commonwealth Bank Board and the issue of a proclamation. Do honorable members think that if the Treasurer were advised by the Commonwealth Bank to approve, or not to approve, of the export of gold he would act contrary to that advice ?

Dr Earle Page:

– The bill does not refer to emergent conditions, but the Minister for Trade and Customs has power under the Customs Act to prohibit exports or imports in emergent circumstances.

Mr THEODORE:

– The power conferred by the Customs Act would not be effective in regard to the export of gold, because the penalty for breach of a prohibition under it is merely a nominal fine. The power of prohibition must be so effective that the purpose of the Commonwealth Bank will be achieved. I hope that it will not be necessary to place any restriction on the export of gold. It would not be pleasant for the Commonwealth Bank to have to advise the Treasurer to exercise that power. But the coin and bullion that might be concentrated for the purposes of a central goldreserve amount to approximately £40,000,000. With unfavorable exchange conditions and to redress the trade balance a considerable proportion of that sum might be demanded in the course of twelve months for shipment abroad. If to satisfy such a demand the gold reserve were dwindling to a dangerously low level, emergent action would have to be taken to retain a sufficient backing for the note issue. We need not expect that that will happen, but we must have power to take precautionary measures if the necessity should arise.

The honorable member for Warringah (Mr. Parkhill) referred to the attitude of the trading banks towards the bill. They have not manifested any clamorous opposition to it ; their attitude has been one of mild approval, although they have issued certain warnings. The Leader of the Opposition asked whether I had consulted the associated banks and the Cham bers of Commerce. I have not done so, but I have had a long conversation with the general manager of the Bank of New South Wales in Sydney. He was good enough to show me a letter which he wrote to the Governor of the Commonwealth Bank traversing this subject. He does not entirely agree with what is being done, but he does not entertain such apprehensions as have been voiced by honorable members this afternoon. I am not at liberty to quote the whole of the letter, but there can be no harm in my reading one paragraph. He states, inter alia -

The maintenance of the gold standard requires that gold may be obtained for Australian notes from the issuing authority whenever demanded, and in whatever quantity, except possibly for trivial amounts, as is the case in England.

He says that the maintenance of the gold standard requires that gold may be obtained for Australian notes. We know that. The obligation under the Australian Notes Act relating to the convertibility of the notes issued is that those who have notes may make a demand for gold, and have that demand satisfied. We know that we must be ready to ship gold in the event of exchanges going against us, and the trade balance being an adverse one. If it can be done by shipping gold, by all means let us do so. That is our opinion, and it is not likely, therefore, that we should interfere with the free movement of gold, providing it does not menace the necessary reserve which is the backing for the Australian note issue. Surely no honorable member can take exception to that policy. I have noticed during the discussion of this bill that some honorable members have not spoken quite candidly. I do not think that the right honorable member for Cowper (Dr. Earle Page) stated his case as frankly as he might have done. I do not say that in any offensive sense, but he did not state exactly what he was driving at. He is against this proposal, yet he knows that some step must be taken immediately in order to meet the position in regard to the exchanges. The Commonwealth Bank, with the consent of the Government, is trying to do this by concentrating gold under the control of the bank, and is using that gold to facilitate exchanges. The honorable member does not agree with that proposal. The alternative openly advocated in some quarters is to increase the interest rate.

Dr Earle Page:

– I did not suggest an alternative at all.

Mr THEODORE:

– No ; but that is my impression as to what the honorable member wanted.

Dr Earle Page:

– I suggested that one of three things might be necessary, namely, to concentrate gold, to export, or, if necessary, raise the interest rate.

Mr THEODORE:

– My own opinion is that we may be able to avoid an increase in the interest rate if we concentrate the gold, and use it in a rational manner. I know that there is an opinion held generally among bankers that there ought to be an immediate increase in the interest rate, and I have no doubt that their reasoning is quite logical. My objection to that course is that although an increase in the interest rate would tend to rectify the exchange position, and make it difficult for importers to bring goods into the country, it would react also to increase the price of money to manufacturers, primary producers, and others who need accommodation from the banks. In my opinion, interest rates cannot be used in Australia in the same way, or with the same facility, as the bank rate is used in London. The result of an increase of interest rates here is not so immediate or so certain as that which follows movements in the Bank of England rate. If the Governors of the Bank of England increase the bank rate, as they had to do recently, that stems the outflow of gold from Great Britain, and tends to attract funds back to London. Almost immediately the position is rectified, and the bank has an opportunity within a few weeks of reducing the bank rate again. Nobody can say that there would be any such quick response here to movements in the interest rate.

Dr Earle Page:

– The rate would be increased on deposits first.

Mr THEODORE:

– The increase would be more likely to take place on the rate for advances.

Dr Earle Page:

– Both would be increased.

Mr THEODORE:

– It would be the increase in the rate for advances which would tend to prevent the inflow of goods to Australia. If the advance rate were increased it would be necessary for the banks to increase the deposit rate also, or they would not attract funds. If they increased the advance rate, and not the deposit rate, they would merely be profiteering, and there would be an outcry against them. I do not suppose that there is any sinister motive behind the suggestion of the banks that the interest rate should be advanced. The directors of the Commonwealth Bank have to take full responsibility for the rates of interest charged. I have no control over them, nor has the Government. The main thing to be accomplished in this hill is to effect a concentration of gold in order to facilitate exchange transactions.

I propose to consider favorably one or two minor amendments which have been proposed, and which do not affect the general policy of the bill, but might make it more workable. I shall also ask the committee to agree to the amendment I have already referred to, which will meet the objection that the bill might be used for political purposes.-

Question put. The House divided.

AYES: 40

NOES: 24

Majority . . . . 16

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

Dr EARLE PAGE:
Cowper

.- I move -

That the bill be referred to a select committee for full inquiry as to its provisions,. and more particularly as to the effect the proposed embargo on the export of gold will have on the maintenance of the gold standard in Australia.

The speech made by the Treasurer in concluding the second reading debate on the bill indicated clearly the need for obtaining more information. The honorable gentleman has shown that his own mind is in a fluid state by the fact that he. has changed his position materially since the introduction of the bill. If the bill is passed in its present form it may affect adversely to a serious extent the prosperity, progress and employment of Australia. We need the guidance of the practical men associated with the banking institutions of this country in dealing with a subject of this description. Their testimony before a select committee of honororable members - not a committee of outside persons as suggested by the honorable member for Warringah (Mr. Parkhill) - would be invaluable in helping us to reach a wise decision.

In my opinion the speech just delivered by the Treasurer showed that it would be advisable for us to follow the English Act, although it was not delivered with that object. The Treasurers admitted that there were fundamental differences between this bill and the English Act. One of these is that under this proposal an embargo may be placed upon the export of gold, while under the English Act no such embargo can be imposed. Although there may be something to be said for the concentration of our gold, it seems to me that very little can be said in support of the proposed embargo. Even Great Britain, which produces no gold, does not place an embargo upon the export of gold. Why, therefore, should Australia, which is a gold-producing country, do so? This and other aspects of the matter could be investigated by a select committee.

One grave consideration which should hinder us from passing this bill without the most careful investigation of all the facts of the case is that at present the Australian note issue has an official backing of only 25 per cent. of gold. But securities and gold coin and bullion are held in the various banks in the different States which help to give the notes a much greater backing. I suppose that the private banking companies of Australia are holding over £20,000,000 worth of gold. The gold in the possession of the Commonwealth Bank and the private banks would probably cover the note issue to the extent of between 95 per cent. and 105 per cent. That is a strong position, and I urge the Government not to disturb it without consulting the great private banking institutions which for many years have assisted to finance the country. When the Labour party issued the first £7,000,000 worth of Commonwealth notes it held against them only 25 per cent. of gold; but it provided that a sovereign must be held against every additional note issued. At that time, therefore, the Labour party was of the opinion that the notes should have a substantial gold backing. The exigencies of the war caused us to move somewhat from that position ; but we should not move further from it than is absolutely essential. The following table shows the percentage of gold held in various countries against the notes that have been issued : -

Italy. - Not less than 40 per cent. of the note issue and sight obligations to be held in gold or foreign securities convertible into gold.

Greece. - Bank to retain a reserve of not less than 40 per cent. of notes in circulation and other demand liabilities.

Japan. - The Bank of Japan may issue convertible notes for 120,000,000 yen against Government loan bonds, treasury bills or other certificates and commercial bills. For all other issues the notes are to be against an equivalent value of gold and silver coin or bullion. Silver coin and bullion shall not exceed one quarter of the total amount of such reserve.

Netherlands. - The ratio cover varies between 20 and 40 per cent.

South Africa. - Forty per cent, of the note issue to be secured in gold and the remainder in commercial paper or trade bills.

Bulgaria. - Reserve to be not less than 33 J per cent, of the note issue.

Belgium. - A reserve of at least 30 per cent, must be’ in gold.

If Australia takes from the private hanking companies the gold that they hold and retains in the’ Commonwealth Bank because of heavy exports a bare 25 per cent, of gold as a backing for our notes the credit of the country may be curtailed severely and suddenly; at any rate we should get into a most dangerous position. We ought to do our best to protect and strengthen our currency and credit.

As these are matters of vital concern to the nation we should obtain the most expert advice available before doing anything that will interfere with the existing situation. I feel that the position is so serious that it is encumbent upon me, as a representative of the people, to do everything possible to save this country, if not from immediate difficulty, certainly from future trouble. I could not remain silent and allow a bill of this nature to pass unless the fullest possible evidence had been obtained to show that its passage was essential for the welfare of the country. The private banking companies ‘could be consulted quite easily through the Commonwealth Bank or some other channel. The Treasurer has said that the bill is required urgently, but he has not suggested that there is an immediate necessity for placing an embargo, upon the export of gold. There may be a necessity to concentrate our gold; but that could be done by the method laid down in the English Acts of 1925 and 1928. The practice of Great Britain in relation to the convertibility of notes and the handling of gold by the Bank of England has been successful for the last four years. It has stood the test of experience and we should be satisfied to follow the same practice. At any rate, we’ should need very strong reasons for departing from it.

Mr LATHAM:
Kooyong

.- I second the motion. The reason why the members of the Opposition voted against the second reading of the bill was that the Government had intimated that it intended to retain in the ‘ measure the provisions which would allow the Treasurer to exercise, from time to time, an absolute discrimination between applicants desiring to export gold. Seeing that the bill proposes to make a fundamental change in the financial and credit system of the Commonwealth, there is every justification for the appointment of a select committee to enquire into the whole subject. We have insufficient information before us at present to justify a departure from the existing practice. Even if there is need for an alteration we should at least hold an inquiry with the object of considering the various alternatives. I trust that the motion will be accepted by the Government.

Mr THEODORE:
Dalley’ · ALP

.- Obviously the Government cannot accept the motion. To do so would be to defeat the purpose for which the bill has been introduced. In my speech in introducing the bill, and again in the speech which concluded the debate on the second reading, I stated quite clearly that the Government is acting upon the definite recommendation of the Commonwealth Bank on this occasion. The directors have made urgent representations with regard to the immediate concentration of our gold. A select committee of the House could not do justice to the subject without an extended inquiry. It could not submit a report within the next week or two. Doubtless many, people would ask for permission to give evidence upon the subjects with which the committee would deal. Some of this evidence would be useful, and some would be useless-; but the proceedings of the committee could not be contracted into less than six months unless very great restraint was placed upon witnesses. The right honorable member for Cowper (Dr. Earle Page) said that the views of the private banking companies and the Chambers of Commerce of Australia should be ascertained. It is not necessary to appoint a select committee to discover the views of those bodies. Representations have already been made on behalf of some of them, in some cases through the Commonwealth Bank, and in others through the newspapers. It has been shown quite clearly that the attitude of these institutions is not uncompromisingly hostile to the proposals of the bill. Some of the banks, like some honorable members opposite, seem a little apprehensive of the effect of this measure; but the speeches that I have made upon it should have been quite sufficient to show that there is no need for misgiving, nor for the fear that the Government may misuse the powers which is seeks to obtain.

Question resolved in the negative.

In committee:

Clause 1 (Short title and citation).

Mr LATHAM:
Kooyong

.Subclause 1 reads -

This Act- may be cited as the Commonwealth Bank Act 1929.

I move -

That the following words be added: “and shall continue in operation until the thirtieth day of June, one thousand nine hundred and thirty.”

The amendment is proposed because the motion to refer the bill to a select committee did not commend itself to a majority of honorable members. Between now and the 30th June next the Treasurer and the Government will be able to examine the whole question thoroughly, and ascertain exactly how the provisions of the measure are operating. There will be ample opportunity to ask Parliament for an extension of the operation of the Act if that course should be deemed necessary. The measure has avowedly been introduced as a result of representations made by the Board of Directors of the Commonwealth Bank, with a view to meeting a situation which the Treasurer has described as “emergent.” In other words, it is not proposed that it shall be a permanent measure. If experience should show that it is an appropriate instrument for dealing with circumstances such as those that exist at the present time, and if those circumstances should still be in existence in the middle of next year, it will be open to the Government to appeal to this Parliament to extend the operation of the powers that are now being conferred. The amendment will meet all the requirements mentioned by the Treasurer, and. avoid the objections that he raised to the reference of the bill to a select committee. The honorable gentleman said that the board of the bank desires that the bill shall be passed. There is a slight divergence of opinion on that point. We on this side distinguish between provisions relating to the mobilization of the gold reserve on the one hand, and the prohibition of the export of gold on the other. We consider that those two matters stand on different planes. The amendment will provide ample opportunity for the consideration of what is nothing less than a striking innovation in the financial affairs of the Commonwealth, which will affect private business and industry in many of its ramifications.

Mr THEODORE:
Treasurer · Dalley · ALP

– I cannot accept the amendment. It appears to me that it exhibits an unreasonable lack of good faith in the Government. Why should the Government be asked to pass legislation to meet an emergency, and yet be placed under the obligation to re-enact it at the end of six months if the emergent conditions should continue? It is highly probable that a proclamation will not be issued. In any case, it will be issued only in the event of urgent necessity demanding the adoption of that course. That necessity, however, may arise at any time within the next 12 or 18 months; the menace will be present so long as the existing monetary conditions continue, and there is a tendency to drain gold from Australia. No person can say that that tendency will have passed by the end of June next. On the contrary, there is every reason to suppose that it may continue throughout the next calendar year. If the principle underlying the amendment were widely adopted we should be legislating in halfyear periods. No reasonable argument can be advanced in justification of the proposal. The only excuse is that the Government cannot be trusted with legislation of this character ; and that is not a sufficient justification for accepting the amendment.

Dr EARLE PAGE:
Cowper

.- I support the amendment. The whole of the arguments adduced by the Treasurer in support of his refusal to accept my motion that the bill be referred to a select committee are in favour of his acceptance of this proposal. He has said that there may not be a proclamation. If there is no proclamation within the next seven months he will not experience the slightest difficulty in seeking in this Parliament an extension of the operation of the act. Meanwhile, he will be able to secure advice regarding the best means of handling gold, operating a central bank, and dealing with the whole financial position, in a manner that is not possible at the present time. When the act is in operation every person associated with finance in Australia will exhibit a readiness to evolve the best system that can be devised to keep our monetary exchanges in good order. The imposition of a limitation of six months would be evidence, not of want of confidence in the Government, but of hesitation to believe in the efficacy of the particular remedy suggested by the Government. The Ministry has acted, not on its own initiative, but entirely on the advice of its experts. Those advisers are embarking on an uncharted sea in Australian finance. Surely it is reasonable to ask that, after six months, the bark be brought to port for overhaul, so that we may see whether we have equipped her in the best possible way. I trust that the Government will reconsider the matter, and accept the amendment.

Question - That the words proposed to be added (Mr. Latham’s amendment) be so added - put. The Committee divided.

AYES: 22

NOES: 40

Majority . . . . 18

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Clause agreed to.

Clause 2.

After section 7a of the Principal Act the following sections are inserted: - “7b. - (1.) Where the Treasurer is satisfied that it is expedient for the protection of the currency, or of the public credit of the Commonwealth, to obtain particulars of gold coin and bullion held by persons in Australia, or to require the exchange of any gold so held for Australian notes, he may, by notice in writing, authorize the Bank -

Mr LATHAM:
Kooyong

.- Proposed new section 7b provides that, where the Treasurer is satisfied on the matters referred to in the section, he may, by notice in writing, authorize the bank to require persons to do certain things. It may require any person to furnish particulars of the gold coin or bullion held by him. The bank is a corporation constituted under the Commonwealth Bank Act, and I suggest that it should be made clear in the bill that the Board of Directors of the bank is to act in relation to the important matters with which the bill deals. Under the measure as it stands, the board could delegate to any officer of the bank power to act on its behalf, and I put it to the Treasurer that it would be wise to substitute for the word “Bank” the word “Board,” which is defined in the Commonwealth Bank Act as the Board of Directors of that bank.

Mr Theodore:

– I accept that amendment.

Mr LATHAM:

– Then I move-

That the word “ Bank,” proposed new section 7b, sub-section 1, be omitted, with a view to insert in lieu thereof the word “ Board.”

Amendment agreed to.

Mr LATHAM:
Kooyong

.- Proposed new section 7b provides that the Treasurer may authorize the bank to require any person to furnish particulars and also toexchange gold coin or bullion held by him for Australian notes. The same words appear in sub-section (2) as in sub-section (1). There is no doubt that in sub-section (2) the words “require any person “ &c., will apply to a specific person who will be required to furnish particulars to the bank and to exchange gold coin or bullion fornotes. I am sure that it is not intended that the Treasurer should authorize the bank to require, say, John Brown, or William O’Brien, to do these things.

Mr Theodore:

– There is something in the point raised by the honorable member, and I shall accept the amendment of which he has given notice.

Mr LATHAM:

– This will enable the Treasurer to give general authority to the bank to require any person it thinks lit to submit returns, and to require him to exchange gold coin or bullion for notes. I move -

That the words “ any person,” proposed new section 7b, sub-section (1), paragraph (a), be omitted with a view to insert in lieu thereof the word “ persons.”

Amendment agreed to.

Amendment (by Mr. Theodore) agreed to-

That the word “direction,” proposed new section 7b sub-section (2) be omitted, with a view to insert in lieu thereof the word “ authority.”

Dr EARLE PAGE:
COWPER, NEW SOUTH WALES · FSU; CP from 1920

.- I now raise again the point that I took in my second-reading speech. If it is possible for this change to be effected by voluntary action on the part of the banks, it would be preferable to any form of compulsion. I ask the Treasurer whether the banks themselves might not be approached to see if a feasible scheme, satisfactory to himself, and to them, could be devised for a rearrangement of the functions of the Commonwealth Bank into a central bank and a trading bank so as to remove any objection there might be to handing over gold to that bank.

Mr THEODORE:
Treasurer · Dalley · ALP

– I would make inquiries in that direction if it were necessary, but there is already close consultation between the Commonwealth Bank and the private banks. On the passage of this bill, I do not apprehend the least antagonism between them. I think that there will be a ready co-operation between the trading banks and the Commonwealth Bank.

Dr Earle Page:

– If they suggest a better method of co-operation, will the Treasurer be prepared to consider it?

Mr THEODORE:

– After the bill is passed, I believe that the private banks will make certain arrangements with the Commonwealth Bank that will prevent drastic action under this measure, and that will be satisfactory to them.

Proposed new section 7b further amended, consequentially.

Proposed new section 7c - 7c ( 1 ) . Any person who desires to export gold from the Commonwealth may apply in writing to the bank for the approval of the Treasurer of the export of the gold.

Mr THEODORE:
Treasurer · Dalley · ALP

.- I move-

That before sub-section (1 ) , proposed new section 7c, the following sub-section be in serted: - “ (1a.) Where, after the receipt of a recommendation from the Board, the GovernorGeneral is of opinion that it is expedient so to do, lie may by Proclamation prohibit the export of gold from the Commonwealth, except in accordance with the provisions of the succeeding subsections of this section, and thereupon gold shall not, while the Proclamation remains in force, be exported from the Commonwealth, except in accordance with those provisions.”

This amendment was circulated on the second reading of the bill. Effect will not be given to the provision, except on the issue of a proclamation.

Mr LATHAM:
Kooyong

– I support the amendment. Its effect is., to put the proposed new section 7c into operation only when- a certain proclamation has been made. It leaves standing the provisions that enable the Treasurer to distinguish between applications, permitting export in some cases and refusing it in others.

Mr Theodore:

– That is a very remote possibility.

Mr LATHAM:

– While accepting this amendment, I reserve my right, to submit the amendments that I have circulated regarding the remainder of the proposed new section.

Amendment agreed to.

Proposed new section 7o consequentially amended.

Mr LATHAM:
Kooyong

.- Honorable members have before them a draft of some amendments that I intended to submit. I move -

That the word “ Treasurer,” proposed new section 7c, sub-section (1), be omitted, with a view to insert in lieu thereof the word “ Board.”

The object of the amendment is to provide that the board of directors of the Commonwealth Bank shall deal with the whole matter, and that the approval or disapproval of the board shall be the determining factor. I had already circulated amendments designed to secure that the board should report to the Treasurer upon applications for permission to export gold, stating whether it approved or disapproved of any particular application, and that the Treasurer should be bound by that recommendation. Upon further consideration I think it doubtful whether it is proper to provide in a statute of this Parliament that a Minister shall be bound by a decision of an external body, and I, therefore, do not propose to proceed with amendments which, provisionally, [ have circulated. I desire to attain the substance of the suggestions that I have made by substituting the word “Board” for the word “ Treasurer “ and if that amendment is approved I shall then move to strike out sub-clause 2, to amend subclause 3 so as to read that the board may, in its absolute discretion, approve or refuse approval to any application made under this section, and, in addition, to amend sub-clause 4 so as to read that any person who exports gold without the approval of the board shall be guilty of an offence. It might be desirable to provide that the board shall forward to the Treasurer all applications made under this section, with a report thereon, so that the Treasurer may have full information respecting all applications, and the decisions of the board thereon.

The question is whether the approval of the export of gold should be in the hands of the Treasurer or in the hands of the board_ of the bank. I suggest that any decision affecting the matters dealt with by the bill should be given by that financial and commercial authority, the board of the bank.

Mr Paterson:

– The Treasury is represented on the board.

Mr LATHAM:

-r-It is represented on the board by the Secretary to the Treasury and he is in close liaison with other members of the board.

Mr Gregory:

– Could not the Commonwealth Government, having superior powers, prevent the export of gold, if it so desired, by proclamation?

Mr LATHAM:

– Under the Customs Act the Government is able, by action taken in pursuance of section 111, to prohibit ‘the export of goods at any time if it thinks proper. That would constitute a high act of State. The proposal at present before the committee is that the export of gold shall be subject to control after a proclamation has been made, and that is the proclamation referred to in the amendment which has just been passed. When the proclamation has been made what may happen under the clauses of the bill as they stand, is this - a business man “ A “ with large interests abroad applies to the bank for permission to export gold. Another man “B,” a competitor of “A,” also applies to the bank for permission to export gold. The bill requires that the bank shall refer the application, with a report thereon, to the Treasurer, who then has absolute discretion to approve or disapprove of the respective applications. That places the Treasurer in the position of having to determine between one business man and his trade competitor; and to decide whether either or both should be allowed to export gold. It may be that a decision would have to be given as between two important banks. It would therefore be unwise for this committee to place any political Minister in the difficult position of having to determine between “ A “ and “B.” In. ‘the event of such an emergency it would be far better for the decision to be left to the board of the bank.

Mr Lewis:

– Of what use would be the report submitted to the Treasurer if the board of the bank signified its willingness to allow the export of gold?

Mr LATHAM:

– It would keep the Treasurer directly in touch with every movement of gold.

Mr Lewis:

– But the mischief would then be done.

Mr LATHAM:

– The honorable member is looking at this subject from a viewpoint entirely different from mine. The power to determine the export of gold should be vested, not in any Minister, but in the board of the bank, which would base its decision upon financial and commercial considerations, and “therefore would not be subject to the risk of suspicion that political issues had influenced its decision. The Treasurer, in receiving reports on the applications, will have up-to-date information as to gold movements, and that, I suggest, will be valuable to him as Treasurer of the Commonwealth. I have already said that the Government has power, under the Customs Act, to prohibit the export of .gold. I can conceive of that power being exercised only in remarkable circumstances. The bill is designed to deal with certain financial and commercial difficulties which have arisen, and the Treasurer has, in effect and substance, said that he will be guided by the advice of the board.

Mr Theodore:

– In the case of individual movements of gold.

Mr LATHAM:

– The only object of this amendment is to show that upon the face of the bill, and to secure that the opinion of the board, as distinct from that of any Treasurer, shall be the determining factor. I hope that the Treasurer will, in the interests of sound, government, accept the amendment.

Mr THEODORE:
Treasurer · Dalley · ALP

– I cannot accept the amendment moved by the Leader of the Opposition. After a proclamation has been issued no Commonwealth Treasurer would be likely to act capriciously and build up trouble for himself by running contrary to the advice of the bank authorities. The amendment, if carried, would, I imagine, bring in its train even greater difficulty than that which the Leader of the Opposition is seeking to avoid. If the bank had unfettered discretion as to the export of gold, it would be said that that institution, being a trading bank and a competitor with other banks, had been given a decided advantage over them in respect of trading operations. In many countries in which there is a national bank comparable with the Commonwealth Bank, but perhaps having larger reserves, the final authority under their bank acts is usually the Minister for Finance or the Chancellor of the Exchequer. Such executive authority would not be exercised lightly, and only in the most’ exceptional circumstances would the advice of the Commonwealth Bank be departed from. I cannot imagine such a situation arising in Australia, and I see no necessity for the amendment moved by the Leader of the Opposition.

Dr EARLE PAGE:
Cowper

.- I trust that the Treasurer will re-consider his decision. I understand that the object of the bill is to make the procedure in connexion with the export of gold as automatic as possible, and this amendment, if carried, will simplify that procedure. The Treasurer has suggested that the bank board might be placed in a difficult position in respect of determining gold movements because of the bank being a competitor with other banks. But from what source would the Treasurer get information to enable him to determine a dispute?

Mr Theodore:

– I said that there would be great objection if the decision were left with the bank board.

Dr EARLE PAGE:

– The objection to political considerations is greater than that to financial considerations. The less we intrude politics into finance the better it will be for Australia. It seems to me that instead of the Treasurer avoiding trouble he will place himself in a greater difficulty by having the final determination in his hands. In Great Britain the Bank of England has the final decision, and it is given without the approval of the Chancellor of the Exchequer, as an automatic act, because that institutionis guided by financial and not political considerations. Our financial operations should be divorced as far as possible from political considerations, and the sooner we get into everybody’s head the knowledge that we cannot cure all our economic disabilities by political action the sooner will Australia begin to prosper again. The Commonwealth Bank at present is free from political bias or direction, and the Treasurer would be wise to accept the amendment of the Leader of the Opposition, thus rendering a service to the community at large, and at the same time removing much of the outside objection to this bill.

Question - That the word “ Treasurer “ proposed to be omitted (Mr. Latham’s amendment) stand part of the clause - put. The committee divided.

AYES: 37

NOES: 24

Majority . . . . 13

Amendment negatived.

Clause further consequentially amended and agreed to.

Title agreed to.

Bill reported with amendments.

Motion (by Mr. Theodore) - by leave - proposed -

AYES

NOES

That the report be adopted.

Mr LATHAM:
Kooyong

– I desire to explain briefly why members of the Opposition pressed certain amendments to a division. We do not dispute that in urgent and emergent circumstances special action may be necessary to mobilize the gold of Australia so that the Commonwealth Bank may be enabled to discharge its functions as a central bank. One of the functions of a central bank is to provide facilities for the most economical utilization of gold reserves, and to the attachment of that responsibility to the Commonwealth Bank there is no objection by honorable members on this side of the House. We believe, however, that a mistake has been made by taking power to prohibit the export of gold by Ministerial action, because of its possible prejudicial effect on Australian credit. To introduce safeguards and make the bill more serviceable to the trade, commerce, and finance of the Commonwealth certain amendments were moved. They were resisted by the Government, which must, therefore, accept full responsibility for the bill in its present form.

Dr EARLE PAGE:
Cowper

.- I regret that the Treasurer did not see fit to accept the amendments moved in committee for the purpose of improving the bill and preventing its having a prejudicial effect on the credit of Australia. The rushing of such a measure through this House after a debate extending over less than two days is a disgrace to the Parliament.

Mr SPEAKER:

– The honorable member is not in order in reflecting on a decision of the House.

Dr EARLE PAGE:

– It is unfortunate for the credit of Australia that the Government has acted in this way. The bill should have been allowed to lie on the table for a reasonable time so that expressions of opinion concerning its provision, might have been received from distant parts of the Commonwealth.

Mr Theodore:

– It has been read in the head offices of all the banks in Australia.

Dr EARLE PAGE:

– The full context of the measure cannot yet have reachedWestern Australia, which is surely entitled to some consideration. The Commonwealth Bank Board and the Cabinet did not make up their minds in regard to the bill in a couple of days; probably they deliberated for many weeks before deciding what policy they should adopt. The private financial institutions also should have had a reasonable opportunity to form their judgment of the proposal. The disposal of a bill of such far-reaching importance in a few hours without affording financiers an opportunity to understand what is being done must tend to prejudice Canberra in the eyes of the people ; they will receive theimpression that the Federal Parliament has withdrawn into this isolated spot for the purpose of rushing business through almost surreptitiously. On behalf of the Country party I enter an emphatic protest against the action which the Government has taken. We have recorded our disapproval by our votes, and we have indicated ways in which the bill could have been made of real value to the people. For the bill in its present form, we on this side of the chamber take no responsibility, and I am satisfied to leave it to the arbitrament of the people.

Question resolved in the affirmative.

Report adopted.

Mr Theodore:

– I ask for leave to move the third reading.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– I object.

Leave not granted.

page 717

WINE GRAPES CHARGES BILL (No. 3), 1929

Second Reading

Debate resumed from page 698 on motion by Mr. Parker Moloney.

That the bill be now read a second time.

Mr PATERSON:
Gippsland

.- I raise no objection to the bill. Apparently dried grapes as well as fresh grapes should come under the provisions of the act. Although I do not think that it would pay any wine-maker to dry grapes for the purpose of avoiding the levy, yet if grapes have been dried and are to be used for winemaking, the levy should be paid in respect of them. The last clause of the bill gives power to levy and. collect the amounts due under the act. One reason why the necessity for such a clause was not foreseen when the original act was introduced was that in previous acts of the kind, such as the Dried Fruits Act, the act dealing with butter export, and the Canned Fruits Act, the levy was on what was exported, and not upon the total production. No difficulty arose over the collecting of the levy in those cases, but it has been shown that a difficulty might arise in collecting this levy, owing to the fact that it is not imposed on wine for export, but upon the raw material for the making of wine, whether for export or not. The bill has my support.

Mr GABB:
Angas

.- I congratulate the Minister on thus early bringing down a necessary amendment to the present act, so as to make it efficient and workable. I believe that, up to the present, it has been necessary to make advances on loan to the Wine Overseas Marketing Board so that it may function. The honorable member for Gippsland (Mr. Paterson) pointed out that in other similar acts the levy had been imposed only upon what was exported, but that in this case it was desired to collect a levy on all wine produced whether for export or for the home market.

Mr Paterson:

– And quite justly so.

Mr GABB:

– I am not objecting to that. A vote was taken some time ago in South Australia as to whether the Wine Overseas Marketing Act, which this board will administer, should be put into operation, and of the wine-makers, 17 voted in favour of the proposal, and 26 against it. That indicated clearly that there was very solid opposition to the proposal amongst the wine-makers of South Australia, and I am, therefore, glad that in this amending bill provision has been made, not only for striking a levy, but for its collection under the law. As the levy is to be paid by the wine-makers, at any rate in the first instance, and as their opposition to it is so evident, the surprising thing is that such a provision was not included before. Perhaps there will be some resentment over the enforcement of the levy. It may be said that in the final analysis, this payment of 5s. a ton for fresh grapes will re-act against the growers. Personally, I am not sure that it will.

Mr Paterson:

– Not so long as the Government has power to fix prices as a condition of paying the bounty.

Mr GABB:

– The levy cannot re-act detrimentally against the growers so long as the Government can fix prices, and providing that the demand is sufficiently stimulated by the bounty to absorb all the grapes grown; but I am afraid a ls. bounty is not sufficient to ensure this. According to the statement of the Prime Minister this afternoon, the Government does not propose to increase the bounty on wine, for the next year at any rate. I am .sorry that this is so, because the present bounty is not sufficient to ensure a demand for the entire grape crop of South Australia. I know that, the South Australian representatives in this Parliament did their best to obtain from the Government a bounty of la. 9d. for a period of five years. We were not so successful in our representations as we could wish, but the matter may be reviewed at a later date. If this increased bounty had been granted, there is no doubt that the board would have been able to function more successfully. The Prime Minister stated that the present bounty of ls. a gallon on export wine would be paid for a further twelve months, and that the position would be reviewed before the end of that time. I thank the members of the Government for affording us every opportunity to approach them on this matter, and to state our case. Even our political opponents must admit that the Prime Minister has always shown himself ready to listen to our representations. We must realize, I suppose, that the Government is faced for the present time with many financial difficulties. It is not in as good a position as the last Government was. It has assumed office only to find an empty Treasury; nay, worse, it is faced with an accumulated deficit of approximately £5,000,000. Therefore, it is at least something to be thankful for that the Government has consented to continue the bounty of ls. for twelve months. We have always the opportunity to approach the Government, and I hope that, when we place the matter before Ministers again, we shall be able to convince them that u bounty of ls. a gallon is not enough. 1 do not propose to enlarge upon the need for a bounty at this stage, because I have already done that on two occasions when on deputation to the Minister, and on two other occasions I had interviews with the Prime Minister. My predecessor in this House erred, I think, in that, while he was a supporter of the last Government, he unduly harassed and heckled it on this matter, thus estranging some- of the support which he might have had. I . do not propose to follow that course. I hope that the essential justice of our case, placed before Ministers in a spirit of sweet persuasiveness, will be sufficient to induce the Government to grant a greater measure of assistance to the wine industry than the previous Government did during its last year in office.

Mr HAWKER:
Wakefield

.- I hope that this bill will go through all its stages as an agreed measure. It ie substantially the same as that passed by the last Parliament, but its introduction has been rendered necessary because of a flaw in .the drafting of the previous measure which made it practically ineffective. On the 2nd October, of this year, the Chairman of the Wine Overseas Marketing Board, Mr. J. Wallace Sandford, made the following public statement in Sydney-

In wine, as in so many of tlie products^ of this great and fertile country in which we live, production has increased with such rapidity during the last few years, that the position has become acute, and the Wine Overseas Marketing Board will, it is hoped, be able to secure some alleviation. Three months have now passed since the board held its first meeting, and in some directions expressions of impatience have been heard at what has been regarded as inertia, or, at any rate, as an absence of a definite policy. The position is. however, that almost at its very first meeting the board found to its dismay that the Wine Grape Charges Act, which was to provide the sinews of war, possessed a defect so grave that an amendment is imperative. . . . The predicament in which the board finds itself is disappointing, for all its members are sincerely anxious to establish and develop some policy that will be of advantage to the industry at the earliest possible moment. The impasse that has. arisen is, as you see, through something over which it has not control, and the enforced delay has further aggravated the present unsatisfactory situation.

The main object of the present measure is to remove the difficulty encountered by the board. The other provision of the bill imposes an alternative charge on dried fruits delivered to distilleries, and should meet with general approval. While I support the amending bill, I wish to draw attention to one phrase in the statement which I have just read. The chairman said that it was hoped that the board would be able to secure some alleviation of the present unsatisfactory position. This bill, in the absence of an increased bounty, will be able to secure only a slight alleviation of the difficulties under which the industry is labouring. The surplus production of wine in Australia is about 4,000,000 gallons of beverage wine; that is, wine after it has been fortified, and is in a state to be marketed. Except during the years when the bounty was at a higher rate than to-day, the export of wine from Australia has never been anywhere near 4,000,000 gallons. In 1926, the imports into Great Britain were 1,756,000 gallons. In 1927, they amounted to a little more than 4,250,000 gallons, while in 1928, which was the year when the bounty began to operate at its present reduced scale, the importation amounted to 1,733,000 gallons. It must have been clear to members of the Cabinet that the mere appointment of a board to control the marketing of wine overseas could effect only a slight alleviation of the difficulties confronting the industry, when it is remembered that there is an assured market for little more than half the surplus output from Australia. The board can probably, by degrees, create a considerable demand for Australian wines overseas, but improvement in this direction can only be slow when, as stated by the Minister, the maximum revenue of the board will be only £25,000 to £30,000 a year. If the introduction of this amending measure had been combined with a provision for the restoration of the previous bounty, it would have enormously increased the effectiveness of the board. Had the bounty been increased the vignerons would not now have been facing the spectre of the grubbing axe. They were engaged in a flourishing industry until a few years ago. I certainly expected the Prime Minister to announce that some increase in the bounty would be granted. When this subject was last before this House he and the present Minister for Markets, who is in charge of the bill, supported a bounty of1s. 9d. per gallon. I had hoped, considering their numerical strength, that the Labour representatives from South Australia would have had more influence with the Government than the Nationalist representatives had with the last Government.

Mr Stewart:

– Surely party considerations should not enter into a subject of this description. That would be a spoilstothevictor policy with a vengeance.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– I presume that the honorable member for Wakefield will admit that a bounty of1s. 9d. per gallon was required more urgently then than it is now.

Mr HAWKER:

– I do not admit that. The wine-growers are nearer to disaster to-day than they have ever been, because of the large accumulation of wine in their wineries.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– Had the bounty of1s. 9d. per gallon been given years ago the wine-makers would have been much better off now.

Mr HAWKER:

– That is so ; but their situation is the more urgent to-day. When the bounty was reduced it was argued by some honorable members that the British preference granted about that time would be so advantageous to Australian wine-growers that it would offset a reduction of the bounty. On the other hand, those engaged in the industry and some honorable members, including the Prime Minister and the Minister in charge of this bill, contended that the blending of light wine with heavy wine in Great Britain would defeat the object of the preference. Apprehension was also felt that the making of so-called British wine from must imported free of duty from southern European countries would lead to a decrease in the consumption of Australian wine. There was room for a difference of opinion on these issues at that time, but there is no room for it now, for the increase in the consumption of this so-called British wine has been tremendous.

Reverting for a moment to the interjection of the honorable member for Wimmera (Mr. Stewart), I think it fair to say that the honorable members or the other side of the chamber who represent South Australian constituencies have worked just as hard as the honorable members who sit on this side of the House to get the bounty restored. I make the statement without any qualification that all the private South Australian representatives in this Parliament have co-operated most harmoniously and keenly in this connexion.

It is essential that this bill shall be passed before the end of December to enable the Wine Overseas Marketing Board to continue its operations. For that reason I trust that the bill will have a speedy passage through both houses of the Parliament.

Mr CAMERON:
BARKER, SOUTH AUSTRALIA · LP; NAT from 1925; UAP from 1931

– I have no opposition to offer to the measure. By the courtesy of the previous Minister for Markets (Mr. Paterson) I examined an advance copy of the bill prepared by the previous Government, and, with one slight alteration, it was couched in exactly similar terms to the measure now before us.

I regret exceedingly that the Prime Minister cannot see his way clear to increase the bounty to ls. 9d. per gallon. I hope that honorable members generally realize the serious plight of this industry in South Australia. Until a few years ago the wine-makers of my constituency were in a sound financial position; but successive governments placed returned soldiers and others on newly-developed irrigation areas in South Australia and compelled them to plant a certain proportion of wine grapes. The consequence has been an over-production of wine. In these circumstances it is only reasonable that the Government should assist the industry. I believe that if we can tide it over the difficult period through which it is now passing, there will be no fear of the use of the grubbing axe) as suggested by the honorable member for Wakefield (Mr. Hawker), for if the grubbing axe is used now it may not be long when the same areas may have to be replanted to meet the demand for our wines. If the bounty could have been increased for onlY twelve months it would have been of great assistance to the industry. I trust that even at this late hour the Prime Minister will sympathetically reconsider the representa tions of the wine-makers and grapegrowers, and grant them some additional relief.

As the honorable member for Wakefield has said, it is essential that this bill shall be passed speedily so that the Wine Overseas Marketing Board may function as it was intended it should.

Mr PAUL JONES:
Indi

.- I heartily support the bill. The proprietors of the wineries and distilleries in Victoria have urged that the bounty should be continued and if possible increased. This industry has made wonderful progress, and if it. is adequately encouraged it will become even more valuable to the Commonwealth. A measure such as this should have been placed upon the Statute Book years ago. [Quorum formed.] Had a bounty been provided for the industry when it was first trying to get a footing it would by now have been flourishing.

I support the bill because it will enable the Wine Overseas Marketing Board to function more effectively. The revenue from the levy that is to be imposed will enable the board to explore new markets. A year or two ago there were in London millions of gallons of our wine for which no market could be found. I trust that the board will be able to get rid of any glut that may exist. Australian wine compares favorably with that which is produced in any other part of the world, and is vastly superior to the- so-called British wine made from must that is imported from countries bordering on the Mediterranean. That wine is a serious menace to our industry, because competition by it renders practically ineffective the British preferential tariff on Australian wines. If the winemakers do not prosper they cannot purchase grapes from the growers, who thus run the risk of seeing their crops rot on the vines. I trust that this measure will enable the board to advance the interests of the winemakers and thus help the growers and the industry as a whole.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendment or debate.

Report adopted, and bill - by leave - read a third time.

House adjourned at 10.33 p.m.

Cite as: Australia, House of Representatives, Debates, 4 December 1929, viewed 22 October 2017, <http://historichansard.net/hofreps/1929/19291204_reps_12_122/>.