12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and offered prayers.
– The people have been waiting for a. considerable time to learn the Government’s policy in regard to B class wireless broadcasting stations. I understand that a sub-committee of the Cabinet has been investigating the matter. I ask the Postmaster-General when will the Government’s decision be announced?
– Within a few days a definite decision will be reached and announced to the House.
– The following telegram from Brisbane was published in the Sydney newspapers this morning : -
Owing to the shortage of loan money the suspension of the sewerage reticulation construction in Brisbane, for a time, is likely. The Mayor stated to-day that, owing to inability to obtain loan money, the council would be compelled temporarily to discontinue work when the scheme now in hand had been completed.
Will the Treasurer inform the House whether the Government intends to adopt the scheme I have proposed in pamphlet form for issuing Commonwealth Bank notes to sewerage authorities, to be redeemed at the rate of 5 per cent. per annum, in order to relieve the financial position, and enable works that are essential to the health of the community to be proceeded with!
– The matter is under consideration.
– I draw the attention of the Prime Minister to the following newspaper extract: -
LONDON, Thursday.- Though they have been in London three months, none of the Development Commission’s Australian Alms has yet been publicly exhibited.
The trade describes the Alms as very good, but the big distribution agencies are unwilling to undertake distribution unless they are rated under the British quota. This is being considered by the Board of Trade, which rules that scenicfilms must possess special entertainment value, otherwise they cannot count in the quota.
Meanwhile British theatres are stated to have difficulty in securing enough footage to comply with quota legislation. One film booking office was fined recently, and pleaded it could not keep up the supply of British films necessary.
Will the right honorable gentleman ask the Minister for Trade and Customs during his stay in London to take this matter up with the British Government with a view to insuring that Australian films, which are satisfactory to the people of Great Britain shall be exhibited there?
– I shall ask the Minister for Trade and Customs to investigate the matter.
– Has the attention of the Acting Minister for Trade and Customs been drawn to a newspaper statement that the proposed increase of excise duty on spirits for the fortification of wines will kill the retail wine trade in Australia?
– The Government decided to increase the excise duty on fortifying spirit after exhaustive inquiries had been made by the Senior Inspector of Excise of the Trade and Customs Department. The effect of the increased duty is that the industry will bear the cost of the export bounty of1s. 6d. per gallon on fortified wine exported. The resultant extra impost on wine sold on the Australian market will be 2d. per bottle on fortified wine or approximately one farthing per glass. This should not cause any increase in the local price to the consumer in view of the fact that some of the wine sold in capital cities to-day for 2s. 6d. per bottle, equal to 15s. per gallon, costs the retailer only about 5s. per gallon or10d. per bottle; so that even after allowance has been made for bottling and other expenses a profit of over 100 per cent. is shown. It will thus be seen that the extra cost of 2d. per bottle or approximately one farthingper glass would not justify an increase in the price charged by the retailer to the consumer. Representations have, however, been received from several winemakers protesting against the increased excise duty, and the Government will give these representations the fullest and most sympathetic consideration.
– Has the Minister, in common with most honorable members, received a circular from the Viticultural Society, in which it is stated that when the Acting Minister for Trade and Customs tabled the tariff schedule he quoted wrong figures; if so, has he any explanation to make to the House?
– A circular letter signed by thesecretary of the Viticultural Society of Australia has been brought under my notice. Paragraph 5 of page 2 of that circular states that wrong figures were quoted by me when I laid the schedule on the table of Parliament. That statement is quite untrue, because the figures that I quoted showed the average quantity of spirit used yearly for fortifying wine for consumption in the Commonwealth and the revenue therefrom, and not the total duty paid on fortifying spirit, which, of course, includes the spirit contained in wine exported. My figures were correct as applying to wines for consumption in the Commonwealth only.
– The Federated Millers and Mill Employees Association of Australia, Western Australian Branch, has communicated with the Government, and with me, urging that, in view of the heavy Egyptian tariff against imported flour, Mr. Buckland be appointed Australian Trade Representative there. I understand that he has offered his services gratuitously. Can the Prime Minister see his way clear to make the appointment?
– The matter was dealt with by the Minister for Markets, who has not favorably considered the suggested appointment.
– In view of the difficulty often experienced in reading the signatures on official correspondence, will the Prime Minister follow the example of the United States of America by instructing that all signatures on departmental correspondence be typed as well as written ?
– An instruction to that effecthas been issued.
– Representatives of various powers are conferring in London with a view to effecting such a readjustment of naval parity as will prevent unnecessary expenditure on armaments. In view of the possibility of an arrangement being reached which would reduce the relative power of Great Britain upon the sea, I ask the Prime Minister whether the representative of the Commonwealth has been instructed merely to support the British Government or whether the Commonwealth Government has a policy of its own which its representative is advocating? The right honorable gentleman will realize that if the naval power of Great Britain is reduced below a certain standard it will be incumbent upon us to increase our naval expenditure in order to ensure the security of Australia?
– Some time ago I made a general statement about the attitude to be adopted bythe representative of the Commonwealth at the Naval Conference. His instructions were not merely to follow the lead of any other government, but to watch the interests of the Commonwealth, and to represent its views to the Conference. Generally, he has been instructed to support a reduction of armaments and a lessening of the burden now on the shoulders of the people. On the question of security, his instructions were to see that the interests of the Commonwealth are preserved.
– In yesterday’s press the Prime Minister is reported to have said, when dealing with financial affairs, that credits have been made available, to be used by the banks for the purpose of making short-dated advances to their clients in all cases where the money is required for cropping, bringing new areas under cultivation, and similar purposes.Will he inform the House whether any limit has been set upon the period during which these advances will be made, or will they be made on the merits of each case?
– Obviously the making available of credits must be governed by the merits of each case. The Commonwealth Bank will advance credits to other banking institutions which make advances, those credits to be available mainly for the purpose of increasing both primary and secondary production. The applications will be made to the respective institutions, which, in turn, will submit them to the Commonwealth Bank. Every case will be dealt with on its merits.
– Last week, when moving that a paper containing an outline of the Government’s policy be printed, the Prime Minister stated that it was the most important matter which could be placed before the people of Australia, and he then invited constructive criticism from honorable members. I notice that this order of the day is placed almost at the bottom of to-day’s business-paper. Is the Prime Minister still of the opinion that this is the most important matter before the people of Australia, and if so, why has he taken action which is contrary to the views he expressed last week?
– It is true that, when moving that the paper containing the ministerial statement of policy be printed, I said that it referred to the financial and economic position of Australia, which was the most important question which this Parliament could consider; it is not the paper itself, but the subjects referred to in it, that I regard as being of paramount importance. It is also true that I invited honorable members to take advantage of the motion to offer constructive criticism; but, so far, I have not heard any. Legislation along the lines suggested in the statement of policy will be brought before Parliament. The position of this order of the day on the noticepaper to-day is due to the Government’s desire to deal first with the most urgent items of business.
– In view of the uncharted and dangerous state of the north-west coast of Western Australia, will the Minister reconsider his decision to withdraw the survey ship Moresby from the work of surveying the coast, seeing that the Geranium has already been withdrawn, and that the work is now at a standstill?
– It is regrettable that it is impossible, in view of the present state of the finances, to continue this work, but I point out that the late Government, which was not in so bad a position financially as is the present
Government, had struck this item off its estimates. Governments, like individuals, must cut their garments according to their cloth.
– Will the Minister for Home Affairs inform the House, (a) whether he considers that the gold-mining industry in New Guinea is capable of absorbing thousands of white men; (b) whether, in his opinion, it is in the best interests of the Commonwealth to grant leases up to 10,000 acres of gold-bearing territory; and (c) whether the condition that £3 per acre per annum must be spent on such leases is a sufficient guarantee that, inthe winning of New Guinea gold, whites, instead of Kanaka labour, will be employed where they can be profitably used ?
– The honorable member will find published in the press to-day a fairly full explanation of the ordinances which have been laid on the table of the House. An opportunity will be given to honorable members to discuss the ordinances, should they desire to do so. The ordinances on miners’ rights gives effect to what the late Government attempted to do, and thought it had done.
– Is the right honorable gentleman sure of that?
– Yes. The effectiveness of the ordinance previously promulgated was doubled, and this Government is merely giving legal effect to what the late Government contemplated doing. I admit that that, in itself, is not a sufficient justification for the ordinance; but, having gone into the matter carefully, I consider that the ordinance is justified on the merits of the case. However, if I were to attempt to give a full explanation of the matter at this stage, I might be called to order. A fairly full explanation of the ordinance has already been published. The Government has nothing to hide in the matter, and will give honorable members an opportunity to discuss it thoroughly should they so desire.
– Has the Tariff Board furnished a report on the request for an additional duty on bacon and hams cured and partly cured, and other pig products, and, if so, when will the Minister make it available to honorable members ?
– I shall have inquiries made, and, when the report is available, honorable members will have an opportunity of seeing it at the earliest possible moment.
– As the Federal Aid Roads Agreement has been drastically revised by the Commonwealth and the States, has the Commonwealth Government made provision for maintaining any control whatever over the roads that are to be constructed by the States; if not, will the Prime Minister take steps to ensure that a certain proportion of the road work constructed with the Commonwealth grant is carried out in country districts?
– No change has yet been made; but at the recent Premiers’ Conference an agreement was reached to alter- the roads agreement. When that has been done, the Commonwealth will have no control in respect of the class of roads that are to be built, and the States will be the sole authorities in respect of road construction within their boundaries. We believe the existing duplication of supervision to be costly and unnecessary. The Commonwealth, acting as the agent of the States, will collect the petrol tax on their behalf, to enable them to carry out their road construction. This will entailno other obligation, except that the money so collected shall be used for the construction or maintenance of roads.
– Will the Prime Minister give serious consideration to the advisability of retaining the present agreement until the States agree to reduce the motor taxation imposed by them?
– That question relates to a different subject. The Federal Aid Roads Agreement is an agreement for a period of ten years, and the recent arrangement with the States is to vary it. Instead of collecting approximately a tax of 2d. a gallon, and adding to it the revenue from a duty on chassis, thereby making to the States a grant of £2,000,000 a year, we are to collect a petrol tax of 2½d. a gallon. The States are to receive the whole of the proceeds of this tax, irrespective of its amount, though it is anticipated that the sum collected will approach £2,000,000. That arrangement will remain in force during the remainder of the term of the roads agreement. With regard to the petrol tax, no condition was, or will be, laid down in respect of any existing tax upon motors. The unanimous request made by the State Premiers was for a tax of 4d. a gallon, to be imposed by the Commonwealth on behalf of the States for road purposes, the States agreeing to relinquish a similar amount of taxation upon motor vehicles. When that subject came before the Premiers’ Conference, we would not agree to impose a tax of 4d. a gallon, so the request was altered to 2½d. a gallon. The request for increasing the rate is still under consideration.
– The Treasurer has issued, under the heading of Statutory Rules, 1930, No. 19, an amendment of the Treaty of Peace Regulations made under the Treaty of Peace Germany Act 1919-1920. It relates to the cancellation of contracts of sale not made in good faith and reads -
After Regulation61 of the Treaty of Peace Regulations the following Regulation is inserted : - 81a. - (1.) If, at any time, the Minister is satisfied that any tender for any property in respect of which a contract of sale was subsequently entered into was not made in good faith in accordance with the last preceding regulation, the Minister may, notwithstanding anything contained in these regulations, direct the Custodian to cancel the contract of sale and may, in his discretion, order the forfeiture of any moneys, or any part thereof, previously paidby the purchaser under the contract of sale, and may authorize the Custodian or his duly authorized agent to enter into and take possession of the property in respect of which the contract of sale was entered into. The Custodian shall forthwith give effect to any direction given by the Minister under this subregulation. (2.) The Custodian may, subject to these Regulations, sell any property the contract for the sale of which has been cancelled under the last preceding subregulation.
If the Custodian does take over any properties as not, in his discretion, having been sold in good faith, how will that action affect the recent arrangement entered into with Germany that any moneys received for sales of properties do not become the property of the Commonwealth, but revert to Germany?
– I think that the arrangement that was recently made with Germany related only to unliquidated exenemy properties. If the honorable member desires further information on the subject, I ask him to place his request upon the notice-paper.
– I suggest that the Minister might let me have the information in reply to the present question.
– That will be done.
Alleged Improper Recruiting Practices
– Does the Prime Minister know whether the Bruce-Page Government took any action with regard to a report made by the missionaries of New Guinea regarding the system of recruiting natives in thatisland? It was alleged that the natives were demoralized by their transfer to remote districts; that immorality resulted from the traffic, and that in the gold-mining areas mining managers and other responsible executives concealed mattocks, picks and other implements in bags of rice.
– The honorable member is imparting instead of eliciting information. I ask him to confine himself to the asking of a question.
– Was that report considered by the late Government, and was any action taken to prevent the alleged improper practices? If not, will this Government investigate the matter with a view to taking appropriate action ?
– The matter has not come under my notice, but I promise the honorable member that I will have it investigated, and make a statement upon it later.
Establishment or Branch Factories in Australia.
– Has the Acting Minister for Trade and Customs seen the statement attributed to the Minister for Trade and Customs, who is now in Great Britain, to the effect that two Manchester manufacturers were sending experts to Australia to investigate the establishment of branch cotton manufacturing concerns in this country ? Has his department any information to impart as to the correctness of that statement?
– Since the tariff schedules of this Government were placed on the table of the House some months ago, numerous inquiries have been received from manufacturers in Great Britain who are considering the establishment of factories in Australia. Certain representations have been made to those companies by the Commonwealth Government through its officers in Great Britain, offering them every encouragement to establish branch factories in Australia. The Minister for Trade and Customs has done excellent work in that regard, aud the Government hopes that at no distant date cotton-spinning and weaving mills will be established in Australia as the result pf its recent tariff programme.
– Will the Acting Minister for Trade and Customs lay upon the tabic the names of the firms in Great Britain, who, as stated by him, propose to establish factories in Australia for the manufacture of cotton goods, so that ‘ representations may be made urging the importance and suitability of Ipswich, Queensland, and the surrounding country for cotton growing and manufacturing?
– As a fellow Queenslander, I assure the honorable member for Moreton that I shall be pleased to cooperate with him in every way to advance the claim of the cities and districts of Queensland to the consideration of the cotton manufacturers of Great Britain.
– Is the Minister in a position to give the House definite information as to the names of the firms which propose to establish mills in Australia?
– There is a stage in all negotiations when it is desirable that the names of those concerned should be treated as confidential. When the time arrives when it will be in the interest of the people of Australia to know those names,. I shall be pleased to make them available.
– As nearly every other industry in Australia is receivingsome special concession, through the operation of the tariff or by some other means, I ask the Prime Minister whether the Government proposes to do something to stimulate the gold-mining industry of this country, which at present has to bear almost the whole burden imposed by the tariff?
– I shall be able to advise honorable members very soon what the Government proposes to do in regard to the gold-mining industry of Australia.
Reciprocity of Trade with Australia.
– Recently I brought under the notice of the Minister for Markets the possibility of trading with Scandinavian countries in our fresh and dried fruits. Has he had an opportunity to investigate the proposal to establish trade reciprocity between the two countries ?
– I am having the matter fully investigated and will inform the House.
asked the Prime Minister, upon notice -
– The information is being obtained.
Strength and Uniforms
asked the Minister for Defence, upon notice -
Battalion of the Commonwealth Military Forces prior to the suspension of compulsory training!
– The information will be obtained and a reply will be furnished to the honorable member as soon as possible.
asked the Minister for Defence, upon notice -
In view of the national importance of the uniform of the Commonwealth Military Forces, and in view of the fact that the women of Australia are desirous of knowing whether it is suitable for their husbands and brothers, will the Minister,- in order to save further expenditure, provide for a parade of men in the various uniforms at Parliament House, Canberra, or other suitable place, and invite the womanhood of Australia to give their verdict on the appearance of the proposed uniforms ?
– In view of the fact that consideration of cost and utility must predominate over the purely sartorial aspect, it is not thought necessary to take the action indicated by the honorable member in connexion with the provision of uniforms for the Australian Military Forces.
asked the Minister for Repatriation, upon notice -
– The answers to the honorable member’s questions are as follow : -
In carrying out this policy, however, discrimination must be exercised, because there are many cases where the degree of incapacity varies considerably from time to time, and in cases where the degree of incapacity is progressive, it would be unjust to make the pension permanent on the present degree of disability.
Importation bt New Zealand.
asked the Minister for Markets and Transport, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : -
Allocation from Federal Aid Roads Fund.
asked the Minister for.Works and Railways, upon notice -
– The answers to the honorable member’s questions are as follow: -
These amounts represent actual expenditure on roads. In New South Wales it has been possible by reason of the grant to withdraw funds from the Main Roads Board for use in the relief of unemployment on works other than roads. Taking these works into consideration the expenditure inNew South Wales under the grant is £255,710.
The State of Queensland has not yet submitted advice as to expenditure, but has forwarded the following information: -
Wet weather conditions are causing serious delay in this State.
asked the Minister for Home Affairs, upon notice -
– The replies to the honorable member’s questions are as follow : -
Date - Short description of proposed laws. 12th December, 1906. - Senate Elections, 1906. 13th April, 1910.- Finance, 1909; State Debts, 1909. 20th April, 1011. - Legislative Powers, 1910; Monopolies, 1910. 31st May, 1913. - Trade and Commerce, 1912; Corporations, 1912; Industrial Matters, 1912; Railway Disputes, 1912; Trusts, 1912; Nationalization of Monopolies, 1912. 13th December, 1919. - Legislative Powers, 1919; Nationalization of Monopolies, 1919. 4th September, 1.920. - Industry and Commerce. 1920; Essential Services, 1920. 17 th November, 1928. - State Debts, 1928.
Constitution Alteration (Senate Elections), 1906.
Constitution Alteration (State Debts), 1909.
Constitution Alteration (State Debts), 1928.
The referendums of 1011 cost £51,744. and that of 1026, £105.30/5. The aggregate cost was £211,800.
asked the’ Prime Minister, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the PostmasterGeneral, upon notice -
Whether his attention has been directed to an article in the Launceston Examiner of ‘the 28th February last, pointing out that places distant from 10 miles to 24 miles from Launceston receive mail matter throe times per week only, in accordance with a contract with the owner of a motor vehicle, and, further, that a passenger service motor travels from Launceston through these places daily? If so, will the Minister investigate the complaint with a view to a daily mail service being established to these parts, and also to provide that mails to the north-cast coast of Tasmania shall bc carried by the daily morning service motors, thus allowing residents of the north-east coast to reply to letters the same day as they arc received?
– I have seen the newspaper article, and investigation of the matter is already proceeding.
– On the 12th March, 1930, the honorable member for Adelaide (Mr. Yates) asked the following question, upon notice -
I am now able to furnish the honorable member with the following information : -
– On the 13th March the honorable member for Brisbane (Mr. D. Cameron) asked the following questions, upon notice -
I am now in a position to inform the honorable member as follows: -
– On the 14th March the honorable member for Martin (Mr. Eldridge) asked the following questions, upon notice -
I am now in a position to furnish the following reply : -
– On the 12th March the honorable member for Martin (Mr. Eldridge) asked me the following questions, upon notice : -
I replied to parts 1 and 2, and promised to obtain the remainder of the information desired. I am now in a position to supply the following information : -
Use of Australian Electrical Equipment
– On the 14th March the honorable member for Corio (Mr. Lewis) addressed to me the following questions, upon notice -
I am now in a position to furnish the following information: -
Cost- Parliament House Roof - Sewerage
– On the 14th March, the honorable member for Bendigo (Mr. Keane) asked me the following questions, upon notice -
I am now in a position to advise him as follow : -
This figure represents the capital cost, including accumulated losses due to deficiency of revenue over annual expenditure, but does not include the cost of Parliament House and the Printing Office machinery (£680,311), or other expenditure for services carried out for different departments for which the Federal Capital Commission was not liable.
With regard to the cost of repairs to the roof of Parliament House, the following reply to a similar question asked by the honorable member for Melbourne on the 22nd February, 1929, was given by the then Minister for Home Affairs : - “3. (a) The cost to the Commission for repairs to roof under the gravelled area, nil;
Since the date of that reply approval has been given for the expenditure of a sum of £900 on maintenance work which has been partially carried out.
Promotion of Officers
– On the 13th March, the honorable member for Corangamite (Mr. Crouch) asked the following questions, upon notice -
I am now in a position to inform the honorable member as follow: - 1. (a) On permanent list; - Nil.
Provision is made for the balance to be promoted to lieutenants as soon as they have completed the necessary qualifying service.
Promotion above the rank of lieutenant is made under the following scheme, no examination being involved: -
All officers who have reached eight years seniority as lieutenant have been promoted to lieutenant-commander.
There are no officers who received their first training in the Royal Australian Naval College yet within the zone for promotion to commander. 4. (a) On loan - Twelve;
– On Friday last, replying to a question by the honorable member for Oxley (Mr. Bayley), I informed the House that the Government was awaiting further information before giving final consideration to the offer of certainshares in the French New Hebrides Company. A further communication from the High Commissioner has since been received and considered, and the High Commissioner has been instructed that the Commonwealth Government does not propose to proceed with the matter. The facts briefly are that on 13th February last the High Commissioner advised me that a Mr. Hagen offered the Commonwealth Government 10,708 shares in the French New Hebrides Company, which claims to own approximately 1,082,000 acres of land in the New Hebrides. The purchase of these shares would not give the Commonwealth Government a majority vote in the company. Similar offers have been made on previous occasions ; the last was considered in 1922, when the Commonwealth Government decided not to entertain it. Members will realize that such an offer raises a number of questions, some of a political and some of a financial nature; but in view of the fact that the Commonwealth would not, by the purchase, be gaining control of the company, the Commonwealth Government has decided not to consider the offer.
The following papers were presented : -
Export Guarantee Act; - Return showing assistance granted to 31st December, 1929.
Public Works Committee Act; - Fifteenth General Report of the Parliamentary Standing Committee on Public Works.
Debate resumed from 14th March(vide page 193), on motion by Mr. Theodore -
That the bill be now read a second time.
.- This bill proposes to effect important changes in very important legislation. One proposal affects thewhole basis of the Land Tax Assessment Act, by an alteration of the definition of “ unimproved value,” which it is proposed shall date back to 1910, when the Land Tax Assessment Actfirst came into operation. Another important change proposed by this bill is also retrospective in its effect, inasmuch as it is proposed to date it back to 1914, in order to deal with the taxation of certain Crown leaseholds, the taxation of which was abandoned in 1923. These changes, not only important in themselves, but also unusual in character, demand the careful attention of the House. The principle of unimproved land value taxation is that tax shall not be imposed upon the value added to land by work done, or the expenditure of money upon it by its owner or occupier, but that it shall be imposed upon the value of the land calculated as if the improvements upon the land had not been made. The unimproved value of land is principally determined by the character of the land itself, but is also very largely affected by improvements upon neighbouring lands and by facilities such as roads, bridges, railways and the like, provided by the expenditure of public money. The value of land generally is increased by the development of the country, and for that reason what is usually described as the “ unearned increment,” is the subject of taxation. The definition given in the principal act carries out this principle by defining “ unimproved value “ in relation to land as meaning -
The capital sum which the fee-simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that the improvements (if any) thereon or appertaining thereto and made or acquired by the owner or his predecessor in title had not been made.
The “value of improvements” is defined as the added value which the improvements give to the land at the date of valuation, irrespective of the cost of those improvements, with the proviso that in no case shall that added value exceed the cost, in effect, of making the improvement at the relevant date. It is now proposed to substitute for those definitions an entirely new set so far as unimproved land is concerned, and to date the alteration back to 1910; though I hardly believe that there are outstanding assessments going back as far as 1910. The law, even if it is desired to alter it retrospectively, need only be so altered to cover a period with respect to which objections are still pending; and I am, therefore, quite unable to appreciate why it is suggested that it is necessary to make this amendment retrospective to 1910. I am aware that from time to time the suggestion is made, and indeed it was made by the Treasurer in his second-reading speech, that if the courts give what might be described as an unexpected interpretation of a provision in a taxation act, and if the application of that interpretation would result in benefit to the taxpayers, it is proper to apply the principle of the decision retrospectively for all time; that for example the decision in the recent McGeoch case should be applied retrospectively throughout the whole period of land values taxation by the Commonwealth. But that contention is entirely wrong. The taxpayers have their rights; they are protected by law, and the law sets out clearly what they have to do. If they desire to object to an assessment, they have the right to have their objections determined by a board of review, the Supreme Court of a State or the High Court of the Commonwealth, and if they do not choose to follow that course, they can have no complaint if subsequently they discover that, if they had objected, they would probably have succeeded in the proceedings. I suggest that it ought to be clearly laid down that unless the taxpayer objects, he cannot expect to benefit by any subsequent decision of a court.
– The application of that principle would seem to give advantage to the litigious person.
– There is no real ground for that objection, because the act provides that persons are entitled to litigate in order to protect their rights and obtain a true interpretation of the law. That is the ordinary civic right enjoyed by every man or woman in the community. If the law intended that a taxation decision should be applied retrospectively and generally, surely it .would have said so. I may add, in reply to the Treasurer’s interjection, that it is quite impossible to apply the principle which it is contended should apply. Our income taxation has been in force since 1915, our land taxation since 1910, and our entertainments taxation since 1916, and it will soon become absolutely impossible to give taxpayers retrospectively the benefits of decisions of the courts. Consider the position that would arise in, say, 1950 or 1980. Obviously, it would be quite impossible to apply in favour of a taxpayer of the present day a decision of a court then given which might affect the consideration .of a provision which had been in the act ab initio.
I come now to the particular change that is proposed to be made. The effect of the first alteration proposed to be made by clause 2 of the bill is, shortly, ro limit the meaning of improvements to those which are tangible and visible upon the land at the relevant date. For example, if there is actually on the land at the time a house, a woolshed, fences and the .like, they are to be regarded as improvements, and the unimproved value of the land is to be arrived at upon the assumption that those tangible and visible improvements do not exist; hut if, originally, the land had been a swamp, and, as a result of- expenditure, had been converted into sweet and usable land, the work of draining the land would not be regarded as an improvement, and its unimproved value would be assessed as though there had not been expenditure of that character. That is a very far.reaching change, the effect of which is to make the unimproved value of land, as defined by the act, include an enhancement of value that is due solely to the work or expenditure of the owner or occupier of the laud. Such an alteration is not consistent with the fundamental principle of land values taxation, which is that a land-owner shall not be taxed upon value created by work that he has done or improvements that his money has effected. This proposed amendment arises out of a decision given towards the end of last year by the High Court of Australia in the case of McGeoch v. Tha Commissioner of Land Tax. It was held that an annual expenditure incurred for the purpose of keeping land in a prickly pear district free from pear was to bc regarded as an improvement and should be taken into account in arriving at the unimproved value of the land. By these amendments it is proposed to upset the effect of that decision.
Let us assume that there are two pieces of land, whose market price and whose improved value are equal, one piece being situated in a prickly pear district, and the other in a district that is free from pear. Let us assume, too, that the tangible improvements such as buildings, fences, &c, are also equal in value. In the one case an annual expenditure would be needed to keep the land in a clean state, in the other such expenditure would not be necessary. One would think that it would bc proper, when assessing the taxation to be paid, to make an allowance for that expenditure because upon an unimproved basis the former land is less valuable than the latter ; but under this proposed amendment the taxation payable’ upon those two pieces of land will be exactly the same, and it will still be called an unimproved’ land value tax. Upon an improved basis, of course, they ought to and would pay the same tax, because the market value would be the same, and they would sell for the same amount.
– They would not sell for the same amount if upon one it was necessary .to incur expenditure in order to clear the pear.
– I am assuming that they are saleable in the market for the same amount. If they were taxed upon an improved basis they would pay the same rate. Under this legislation, they are to be taxed upon what professedly is an unimproved value basis, and yet will pay the same rate of tax. The effect of the amendment, therefore, really is to add to the unimproved value an clement of value that is due directly to the work or expenditure of the owner or occupier.
If honorable members will look at the proviso at the end of the definition of “ value of improvements “ they will see that the object of this legislation is, in ascertaining the value of improvements, to exclude any amount in respect of work done or expenditure incurred for the purpose of preventing land or any improvements thereon from deteriorating, or of maintaining at its improved value land that has been improved, whether by means of destroying animal pests or vegetable growths, or of preventing such pests or growths from establishing themselves. I suggest that this Parliament should encourage expenditure to prevent the extension of prickly pear, to effect in. every possible way its eradication whereever it is now established, and to destroy animal pests and dangerous vegetable growths. It was decided in the McGeoch. case that expenditure which was incurred to keep lands free from pear was to be regarded as an improvement.
The Treasurer (Mr. Theodore) has made to this House a statement that is also contained in the twelfth annual report of the Commissioner of Taxation. It is that in the McGeoch case the High Court departed from prior decisions, and that, in effect, a change in the law was made by Its judgment in that case. A perusal of the case does not indicate to me that that is so. It was heard by” a bench consisting of the Chief Justice (Sir Adrian Knox), Mr. Justice Isaacs, and Mr. Justice Owen Dixon. The judgment of the Court was a majority judgment by the Chief Justice and Mr. Justice Owen Dixon, Mr. Justice Isaacs dissenting from it. All three judges agree that to support the contention made by the Commissioner in that case would be to alter the decisions given in the past by the court. I think I shall be able to show clearly that this case simply repeats and applies what for many years has been understood to be the law, and that there is no such over-ruling of previous decisions as the speech of the Treasurer would lead his hearers to suppose. The Taxation Department has been kind enough to furnish me with the report of the case, and from the majority judgment I quote the following: -
It is manifest from the facts stated in the case that the keeping of lands clear of prickly pear was brought about by the operations of the successive owners or occupiers upon the land, that those operations resulted in an enhancement of the value of the land, and that the benefit of them still continues. The operations, of course, involved the eradication, destruction and removal of plants upon the land. When the special case speaks of keeping the lands clear of prickly pear, it refers to the work of eradicating, destroying and removing plants which otherwise would- spread and deprive the land of utility and value.
The decision of this, court in Morrison v. Federal Commissioner of Land Tax (17 C.L.R:. 498) establishes that these operations resulted in an improvement within the meaning of the act. But for the suggestion which has been advanced that the decision in that case is inconsistent with the reasons given by the Judicial Committee in Toohey’s Limited v. Valuer General (1925 A.C. 439) it would be unnecessary to say more than that even if we did not agree with the decision on this point in Morrison’s case, as we do, we should feel ourselves bound to follow it as a decision concurred in by five justices which has stood unquestioned for fifteen years, and was expressly approved and acted, on by a full court in Campbell’s case (20 C.L.R. 46), in Fisher’s case (20 C.L.R. 242), and in Keogh’s case (20 C.L.R. 258), all decided in the year 1915. We think we are justified in assuming that if these decisions ran contrary to the intention of Parliament in enacting the definition of “ unimproved value “, the act would have been amended so far as necessary to ensure that effect should be given to that intention; but no such amendment has been made, , and the definition stands exactly as it did when those cases were decided.
Those cases were decided in 1918 and 1915, and remained unchallenged until last year, when it was submitted to the court that a case decided by the Privy Council had shown that the prior decisions of the High Court were wrong. A majority of the High Court rejected that contention. Their Honours proceeded to state -
Both in 1895 and in 1910, when the Federal Land Tax Act was passed, it was recognized universally in Australia that the clearing of superfluous timber from land was an improvement enhancing the value of that land, the benefit of which continued so long as the land was kept in its cleared state. And in many cases, the cost of clearing was among the most important items of the expenditure necessary to bring the land to a reasonably productive capacity. As was said by Griffiths, O.J. in Morrison’s case (17 C.L.R. at page 504 ) “ applying these principles the first question we are asked is whether certain operations are improvements . . .”
Then are set out a number of operations constituting improvements. They include ringing and clearing timber, clearing timber fallen through natural decay, storms, &c. There is° a list of what are regarded as land improvements in the ordinary sense. Finally, I quote this passage from the majority judgment in the McGeoch case -
We do not think the Judicial Committee decided or intended to decide that the conversion by the owner of a piece of swamp land, which in that condition was valueless, into valuable farm land by draining the swamp, could not be treated as an improve ment on or appertaining to the land, because at the relevant date there was nothing in existence on the land to show what improvement had in fact been made, and if we are right in this view the decision in Morrison’s case stands unaffected. Such a construction of the words of the act- the construction which the House is now asked by legislation to accept - as that suggested would in the case of the greater part of the rural lands in Australia result in the inclusion in the subject-matter of the tax the unimproved value of the land - of an amount wholly attributable to operations generally recognized as improvements, in fact, which had been effected by the owner at his own expense - a result which appears to us entirely inconsistent both with the expressed intention of Parliament, and with the theory underlying the imposition of the tax. lt would be difficult to obtain a more emphatic judicial pronouncement as to the clear intention of Parliament. His Honour Mr. Justice Isaacs, in a dissenting judgment, took a different view from that of the Privy Council in the Toohey case, but His Honour, in his judgment, states that he was a party to certain of the prior decisions of the court to which I have referred. He recognizes that the adoption of his view would- make a change in the law as it has generally been understood. He states at the beginning of his judgment that he considers that the new view gives to the statute an operation more simple and more practical for the Crown and the general body of taxpayers than the prior decisions of the court, in some of which he took part. It is obvious that in the majority judgment in the McGeoch case the judgments which have been regarded as operative for many years have been applied, and there is no reason for the contention that a surprising decision has been made. Mr. Justice Isaacs further states -
It follows from Toohey’s case that ‘ three main prior decisions of this court can no longer be regarded as authoritative on the questions now under consideration. They are Nathan’s case (16 C.L.E. 654), Morrison’s case (17 C.L.R. 498), and Campbell’s case (20 C.L.R. 49).
If His Honour had been in the majority instead of dissenting he would have over-ruled these decisions ; that . is what the majority refused to do. Consequently, it cannot be said that the decision in the McGeoch case is anything in the nature of a surprise or that it has altered what was long understood to be the true meaning of the act.
As I have suggested, and I submit that I am supported by the majority judgment of the High Court, this measure profoundly affects the whole basis of the act, and that being so, it should receive the very careful consideration of honorable members. It has been said that the purchaser of prickly pear land would, in fixing his price, take into account the amount which would have to he spent on the eradication of that pest. Of course he would do so ; but in determining unimproved values, the Taxation Department does not bind itself by the price paid by the purchaser. Two persons may purchase adjoining city blocks. One may purchase his block for £1,000 a foot, and the following week the other may buy a similar block, so far as unimproved value is concerned, for £1,200 a foot. The Taxation Department values each block irrespective of the purchase price paid by the particular owner. It is obvious that the department could not allow its operations to be controlled by the price paid by a particular owner.
This proposal, if adopted, is to he retrospective to 1910, and if Parliament approves of the measure in principle, I should like to know why it is to be made retrospective to that year. If it is not made retrospective, the only effect will be that in cases where objections have already been lodged taxpayers will have the right to proceed upon the basis of the law as declared by the court in the McGeoch and other cases. It has not been shown why the ordinary procedure should not he adopted.
I now wish to refer to the second main provision of the bill, which relates to Crown leaseholds. The amount involved in the adoption or rejection of this legislation does not appear to me to be so large as the Treasurer said. I call his attention to page 7 of the twelfth report of the Commissioner of Taxation, which was the report covering the years from 1925-26 to 1928-29. We know that there has not been much alteration in the figures in respect to Crown, leaseholds in recent years, as the question has been more or . less in a state of suspended animation. In his report, the Commissioner said -
The principle of the judgment is applicable to a large number of Crown leases, especially in New South Wales, Queensland and South
Australia. in those of such oases where the taxpayers have lodged objections to the tax on the legal grounds decided by the High Court as above mentioned, and the right of appeal to the court has not lapsed. the amount of tux involved as at 30th November, 1920, was £334,773. Of this amount £100,391 had been paid and £174,382 was outstanding.
An examination of the cases in which assessments covered leased lands which arc or were liable to resumption wholly or in part, or to reappraisement of lease rent, showed that £1,1 12,371 tax lias been assessed on such lands, of which £891,221 has been paid and £221,150 was outstanding at 30th November, 1929.
Therefore, the whole amount claimed is £1.112,371. The amount involved in objections which can be proceeded with is approximately £334,000, leaving the Commissioner with £777,598, which he has collected on assessments to which no objections have been lodged, and which, therefore, the Commonwealth cannot lose. The amount involved, therefore, is £334,773, of which only £160,391 has been paid, and which represents the total sum that the Commonwealth could be compelled to return. If the objections of lessees were upheld by the court the Commonwealth would, according to the calculations of the Commissioner, abstain from collecting another £174,382. That, does not involve the return of £1,000,000 or anything like it, as suggested by the Treasurer.
I do not propose to review the history, of Crown leasehold taxation. It is a difficult and vexed subject, which goes back to 1914. It has had a stormy career in this Parliament, where opinions on it have differed very widely. There is value in a leasehold estate which can be taxed only when the rent which is payable under the lease is less than the economic rent. If, under his lease, a man is paying more than the land is worth, obviously the lease is a liability, and not an asset. It is necessary in order to ascertain the value of a leaseholder’s interest, to ascertain the annual rent being paid, and also to ascertain the economic rental value. The act fixes the economic rent by taking the arbitrary figure of 4£ per cent., and imposing a tax . upon’ the excess of that rent .over the annual rent, capitalized in accordance with a table of values. In 1914 provisions were included in this act purporting to tax Crown leaseholds. In 1918 the then Treasurer, Mr. Watt, directed that the tax should not be collected, and matters were left in that unsatisfactory state until 1923. In that year the then Treasurer, Dr. Earle Page, proposed to repeal the tax for the future, and . to repeal it retrospectively also. Parliament objected to the second part of the proposal, and I joined in the objection. I object to the taxation of Crown leaseholds on a number of grounds. I think that it is unfair in operation, and is not in accordance with the principles of the Land Tax Assessment Act. Furthermore. I regard it as a serious interference with the land settlement policy of the States. Nevertheless, at that time although it happened that I was not present at the debate in Parliament, I objected to a retrospective repeal of this taxation. The leaseholders said that they were not taxable under the act, and that their leases had no taxable value. My own view was that the Government should allow the issue to be fought out, and then let the law apply, whatever the result. I adopted the same view , when I subsequently became a member of the Government. Years of very expensive litigation followed, and the leaseholders have shown that they were right. Now it is proposed by the Government, after the fight is over and the other side has won, to alter the law so as to deprive them of the fruits of their victory.
In the Northampton Downs case, what has been decided is this : First, in order to apply section 28, sub-section 3 of the act. you must ascertain the annual rent, and as in the case of the leases in question, there is no annual rent within the meaning of the section, but a rent liable to adjustment or re-appraisement from time to time, it is impossible to apply the method of calculating the rent as laid down in the act for taxation purposes. Secondly, the court held that when land held by a Crown leaseholder is subject to resumption, it is impossible to apply the formula of the act, because it is not possible to determine that the leaseholder possesses rights in the whole are;) for the whole period of the lease. This decision does not come as a surprise. For many years the leaseholders contended that, upon a true construction of the act, they were not subject to taxation. Anyone who reads the speech made on the 16th October, 1923, by the right honorable member forCowper (Dr. Earle Page) will see that he there said that it was practically impossible to collect the tax under the act. The position today is that the Government has taken a chance of getting a decision in its favour. Now, when the decision has been given against it, the Government proposes to disregard that decision in all instances except the precise case of the Northampton Downs Estate. This is very like gaming with a double-headed penny. I consider that the Government should stand or fall by the court’s decision. Retrospective legislation is sometimes justifiable, but only in rare instances. It cannot be justified in this case in which the Government invited the taxpayers to wait until the court settled the issue. Legislation of this kind is far-reaching in its effect, because it tends to induce a lack of confidence in governments as such. I beg the Government to re-consider its proposals. This is a time when we can ill afford, from the wider point of view, to embark upon legislation of this character.
It is proposed to protect the taxpayers in cases in which decisions have actually been given. That is the very least that any government can do. I am not suggesting that these could be regarded strictly as test cases, but everybody knew that objections had been on the file for many years, and had not been dealt with because it was intended to obtain a decision of the High Court, on the principle involved. I therefore put it to the Government that it was not fair to induce taxpayers not to proceed with their objections to assessments by the Commissioner, pending a decision of the High Court, and then, when a decision was given, to introduce retrospective legislation to overcome the effect of the court’s determination. There is special force in the appeal which I am making, because the Commissioner, recognizing the difficulties which had arisen, addressed circulars to the taxpayers concerned, advising them that the collection of taxation on their Crown leaseholds might remain in abeyance. I propose to read two circulars, dated 25th July, 1925, and addressed to
Vestey Brothers, Darwin. The first related to assessments for the years 1910-23, and read-
Land Tax Assessment Act 1910-23.
Dear Sir, -
The attached notice of amended assessment shows as tax payable an amount of £449 4s.
The Commissioner has decided that the tax due to the inclusion in your assessment of a leasehold estate in Crown lenses in excess of that calculated on the values returned by you may remain in abeyance.
As the tax payable by you on the values returned would be nil, payment of the full amount shown in the notice may remain in abeyance, pending further advice.
Assessments for all years are under consideration forfinalization of the basic values upon which the tax payable in respect of Crown leaseholds is to be calculated, and you will be advised of any amount ultimately found to be payable.
The valuation as made at present has been included to protect the rights of the Crown in the matter.
The second circular referred to assessments for the years 1910-18, and was in the following terms: -
Land Tax Assessment Act 1910-18.
Dear Sir, -
The attached notice of assessment for land tax for the year 1922-23 totals £409 5s. 8d. Had only interests other than Crown leases been included in the assessment the amount of tax would have been £41s. 4d., and this amount should bepaid not later than 25th June, 1925.
Whilst the department claims that the assessment is correct, it recognizes that great differences of opinion exist amongst the taxpayers as to the correct method of valuing leasehold estates for the purpose of land tax. In view of this fact it is proposed to allow you to defer payment of the balance, namely, £405 4s. 4d., pending further notification to you. The valuation has been included in the assessment in order to protect the rights of the Crown in this matter.
Adams, Deputy Commissioner of Land Tax.
The ordinary procedure, when an assessment is made, is to require the taxpayer to pay the amount demanded within 30 days, and, if he objects to the assessment, to lodge his objection within 30 days of its receipt by him. He may require his objections to be heard by a court or a board of review. In these cases, the assessments were sent, as the circulars show, but the taxpayers were advised that they need not pay pending a decision as to the basie values upon which the tax was to be calculated. Naturally, many of them did not object, and, of course, they did not pay the tax within the 30 days. Now, because they did not appeal against the assessment within the time allowed in the act, apparently they are to be regarded as having acquiesced in what was done. In view of the admitted difficulties under which the Government of the day was labouring in relation to the collection of this taxation, the action of the Commissioner was probably taken with the consent , of the Treasurer of the day. In the circumstances, it was a proper and reasonable action. Every taxpayer who received a circular would understand that the assessments for all the years involved were under consideration with a view to determining the basic values of the leaseholds. All those taxpayers who were invited to allow their objections to” stand over until there had been a decision as to the real meaning of the legislation, should be preserved in their full rights as citizens.
– Does, the honorable member suggest that the circulars invited taxpayers to allow their objections to assessments to stand over until they had been ratified by a legal decision?
– I suggest that that is fairly to be regarded as the implication in the terms of the circular. The taxpayers were advised that the department had been regularized in some way, and the basic values determined. Every one knows that the Commissioner had adopted various methods to determine these values, and that the question had been the subject “of an inquiry by a royal commission. I do not blame the Commissioner for the difficulties in which he is involved, because they are due to the far-reaching character of legislation to which effect cannot be given. The Commissioner attempted to apply recommendations of the royal commission, but the taxpayers concerned objected, and everybody knew that this involved question was to be determined by the court. The taxpayers have been lulled into the belief that payment of the assessment could stand over until there had been a decision by the court. Obviously, this question could not be determined by the Government, as the Treasurer suggested.
– But there may have been a decision by Parliament.
– I am surprised to hear the Treasurer suggest that the circulars advised the taxpayers concerned that they need not pay because Parliament -might legislate further ou the matter.
– A royal commission was appointed to determine the basis of valuations.
– That is so. These Crown leases are re-appraised from time to time by the States and leaseholders are either taxed on the unearned increment in the form of increased rent, or they are allowed some portion of the unearned increment in order to encourage land settlement. This is a very important feature of Australian land settlement policy, and taxation by the Commonwealth of Crown leaseholds interferes radically with it. I submit to the Government that this tax has been repealed, and that as there are very serious objections to the retrospective nature of this particular legislation, it should be withdrawn. It is not likely that even the present legislation will be final, because it does not and cannot meet the decision of a Justice of the High Court in the Jowett case, that the proper basis for the capitalization of such a hazardous enterprise as a pastoralists on a large Crown lease was 15 per cent., which in most cases would leave no taxable margin above the £5,000 exemption. Therefore, it is unlikely that this legislation will do more than open the way to further litigation. In the Northampton Downs case one witness said that he had spent three years in preparing his evidence. If this bill is passed, taxpayers who have large sums at stake will fight their cases on the facts. Of course the small men will pay, as they always do, and will submit to the demands of the Commissioner; they can never afford to fight the Crown. I remind the Government that the Land Tax Assessment Act provides that land tax shall be a charge upon the land. A particular piece of land may have changed hands so often that it is impossible to find the original owner, but the tax is a charge upon the land in the possession of “whomsoever may be the owner at the time of assessment. That is an important consideration when we are dealing with a proposal to alter legislation retrospectively to 1910 in one instance, and to 1914 in the other.
As to the particular method proposed for assessing the value of Crown leaseholds, I shall have something to say in committee. The Government proposes also to exclude golf as well as horse-racing from the list of approved pastimes. All other athletic sports and exercises are more or less fostered by the Government, but golf and horse-racing are to be put on the same level. Whilst recognizing that golf courses benefit the community by maintaining wide open spaces in close proximity to large centres of population, the Government objects that golf clubs are exclusive institutions. The same objection may be urged against some tennis clubs, membership of which can be achieved only by election. The exclusiveness of many golf clubs arises almost entirely from the fact that they have already as many members as their links can reasonably accommodate.
I cannot perceive any .urgent need for the passage of this legislation. If it must be passed, that can be done as effectively next week or the week after as now. But I urge the Government to accept the decision of the High Court and withdraw the bill ; that is the wisest course to follow in the interests of the Commonwealth.
– I listened with interest to the close analysis of the bill of the Leader of the Opposition (Mr. Latham)) but in regard to some fundamental principles I entirely differ from the views he has expressed. The bill has two main features - the provisions relating to the definition of the unimproved value of improved property, and to the taxation of leases that are subject to resumption or reappraisement. Whilst the bill proposes to alter the wording of the definition of unimproved value, there is no intention to change the practice that has obtained since 1910, nor to depart from the interpretation given by the High’ Court in 1913. That ruling was . never challenged except in the Toohey appeal to the Privy Council against the
New South Wales Commissioner of Taxation, and that decision was not a guide to the administration of the Commonwealth act. The departmental practice that has been followed- since 1910 is still to be continued, and the wording of the definition is being altered only to that end. The bill does not impose additional taxation on any taxpayer who has been assessed for past years. The amend’ ments not only apply to the past; they are designed to protect the revenue of the future, because the decision of the High Court last year in the Northampton Pastoral Company case applies not alone to Crown leaseholds, the taxation upon which was repealed in 1923, but to all leaseholds, including those from the Government that were not within the category of Crown leaseholds that first became taxable . in 1914, and also to private leaseholds. The High Court’s decision seriously affects owners whose lands are leased because, obviously, if the lessee is to escape just taxation, the owner of the land must pay it. That is a point which the Leader of the Opposition has missed. The bill is merely to give effect to what has been recognized since 1910 as the intention of Parliament, and what, as a just and equitable method of valuation, was not challenged until 1929. In other words, the bill restores the status quo. But did honorable members gets that impression from the speech of the Leader of the Opposition? The ex-Treasurer (Dr. Earle Page) cannot deny that the amendment of the definition of unimproved value of improved property is to continue the practice of the department which he administered for five years.
– That is what I challenge.
– In committee the Government will be glad to have the benefit of the honorable member’s legal opinion, and if he can convince the advisers of the Government that the amendment does not achieve what it purports to do, it will be altered. The practice of the department since 1910, which was confirmed by the High Court in the Nathan case of 1913, was not upset until last year; the aim of the Government is to continue that practice. It is not attempting by subterfuge to increase land taxation. If it wishes to do so, it will bring forward its proposals frankly, and certainly will not make the increase retrospective. Retrospective leg slation is objectionable only if it is new, but if its purpose is merely to validate the intention of Parliament and the practice uniformly adopted by the department, no exception can be taken to it.
– In those circumstances it is merely declaratory.
– That is so. What the bill proposes has been the practice since 1910, and was confirmed by. the High Court’s interpretation in 1913.
– I pointed out that the 39J3 decision was exactly the same as the decision in 1929.
– But the decision in the McGeoch case upset the judgment of the court in 1913.
– The three judges of the High Court said that it does not.
– The fact is clear that the method of approaching the valuation has been entirely upset. The court has declared that the unimproved value can only be the value of the land in a state of nature. That was not the decision of the High Court in 1913. The practice of the department has been to assess the improved value of the property and deduct therefrom the value of the improvements on it. That was confirmed by the 1913 judgment and upset by the decision of the High Court last year when ii was declared that unimproved land is land which has never been improved. In the McGeoch case the matter in dispute was the valuation of a property that was liable to infesta’tion by prickly pear. Had it never been cleared and maintained in good condition, it would have been so infested with prickly pear that it would have been valueless. So far as I can ascertain, it was not originally infested with prickly pear, which, however, spread to it from adjoining properties, with the result that large sums of money had to be expended from year to year to keep it clean. If the land had not been occupied 20 or 25 years ago, the prickly pear would have swept over it and it would have become valueless. On that assumption the High Court has declared that the unimproved value of the land must be its value without any improvements whatever; in other words, the land was valueless because of its liability to infestation with prickly pear, although originally it was not infested.
– Was the land clear of prickly pear at the beginning of the lease ?
– There is no evidence that it was ever cleared of prickly pear. Money has been spent from year to year to keep it clear.
– That money was not spent for nothing.
– I am not challenging the wording of the act, although the purpose of this legislation is to alter that wording. Unless we take the improved value of the property and deduct from it the cost of improvements in order to ascertain its unimproved value, we upset the 1913 judgment and the practice of the department since 1910.
– That all depends on what improvements are taken into consideration.
– I disagree with the right honorable gentleman in his assumption that the land had never been touched. Obviously, if nothing had been done on it, it would now be so infested with prickly pear as to be valueless. But that is not the position; the land was kept clear. The question, therefore, arises whether we are to make any allowance because money has been spent on keeping the land clear of prickly pear. That depends on circumstances. A man who contemplates the purchase of a property, knowing that he will have to spend, say, £200 or £300 a year to keep it clear of prickly pear, places a lower capital value upon it than if he had not to keep it clear.
– Suppose the land is leased ?
– Whether the land is freehold or leasehold, the principle is the same. For the purpose of taxation, leasehold land is assumed to be freehold, and its unimproved value as such is ascertained. On that basis the rent is calculated, and by a process of calculation its leasehold value is also ascertained. The method of valuation is the same for both leasehold and freehold property. The decision of the court has upset both the practice of the department and the rulings of the past. All that the Government is now attempting to do is to revert to the status quo. The Leader of the Opposition (Mr. Latham) said that, although one of two blocks of land in the same locality may be liable to infestation of prickly pear and the other not so liable, they would pay the same tax. I submit that they would not pay the same tax because the block liable to infestation would have a lower unimproved value than the other.
– Not after this amendment becomes law.
– Yes, The honorable gentleman said definitely that no deduction would be allowed for the drainage of swamps.
– Under this amendment.
– The practice of the department will not be altered by the passing of this amendment.
– In that case, the department will be acting contrary to the amended law.
– That is not the advice I have received from the Commissioner of Taxation, who has had long experience in drafting taxation legislation.
– He has made a number of mistakes in the past.
– It would perhaps be as well for honorable members opposite not to say too much along those lines, for the Leader of the Opposition was AttorneyGeneral when some of those mistakes were made. That he sometimes made mistakes does not, however, prove that the Commissioner of Taxation is not a man of long experience and considerable ability. He has definitely stated that the Government’s proposal will not deprive taxpayers of existing allowances for improvement, or alter the practice of the department. Should any honorable member show that the Commissioner is wrong in this connexion, I am willing that the matter be again referred to the legal advisers of the Crown, with a view to substituting a provision which will ensure that the departmental practice of the last twenty years will be continued.
– Is the Prime Minister still prepared to allow a deduction for improvements in the case of expenditure incurred in draining a swamp?
– Yes; and also for the clearing of timber. Indeed, any expenditure that improves the value of a property will be an allowable deduction.
– What about annual expenditure in keeping down prickly pear?
– That will reflect itself in the capital value of the property. That is different from the decision of the court last year, namely, that because land is liable to infestation it must be assumed to be valueless.
– Will such annual expenditure be an allowable deduction?
– That all depends. If we say that the capital value of a property is not its market value, but what its value would be if it were not liable to infestation by prickly pear, then the cost of destroying the pear would be an allowable deduction; if, on the other hand, the capital value of the property is reduced because of its liability to infestation, then the annual cost of keeping it clear could not be allowed, as that would mean a double deduction. The new wording is that advised by counsel who represented the Crown in the McGeoch case, in order to continue the existing method of valuing land. If the Leader of the Opposition has superior knowledge, I hope that he will make it available to the House; but I shall need to hear something more convincing than I have yet heard to justify me in agreeing to change the wording of the definition in the bill.
– If the old method is to be continued, what is the reason for the alteration ?
– The judgment of the court, which upset the practice of the department since 1910 - a practice confirmed by the High Court in 1913 and continued until last year.
– What was the 1913 case?
– The Nathan case. This bill is introduced not so much to get over a judgment of the court as to express in clear terms the desire of Parliament and to protect the revenue.
The decision in the Northampton Downs case means that there is no leasehold value in any lease which is subject to resumption, in whole or in part, or to re-appraisement of rent at any time. A man may have a lease for a term of 40 years, one half of the lease being liable to resumption after twenty years. Whatever the legal position may be, surely it is not right, in fact, to say that that land, which might have a considerable leasehold value were it not for the liability of a portion of it to resumption, has no value as leasehold land because some of it might be resumed af ter twenty years. That such land has a value is shown clearly by the profitable sales which sometimes are effected. Yet, according . to this judgment, it has no leasehold value, and, therefore, should not be taxed. I point out that, if the amending legislation is not passed and the judgment of the court is to stand, a private owner of land who has leased his property to another will be taxed, whereas the lessee will escape taxation. One fundamental principle of taxation is that every one morally liable to pay taxation should not be allowed’ to escape his just share of taxation. That law, however, under existing conditions, does not apply to a leasehold property if any portion of it is subject to resumption or appraisement at any time. Surely such property has a leasehold value if the actual rent is below the economic rent. The Treasurer did not say, as stated by the Leader of the Opposition, that the Government was likely to be involved in a legal liability to refund over £1,000,000 received in taxation, but that £1,100,000 was involved- some legally, and some morally. Of £800,000 which has been paid in tax on Crown leaseholds, the lessees have a right of appeal in respect of £160,000. As the law stands, they may get a refund. But will honorable members opposite say that, merely because those men. objected to the taxation, they are entitled to a refund, while others who did not formally protest, should not also be granted a refund? The Leader of the Opposition said that, under this bill, many small land-holders would pay taxation, whereas the bigger landholders would escape. The position is that only the larger lease-holders who lodged objections are likely to benefit unless this amending legislation is passed ; the others paid their taxes years ago. In Western Australia every penny of the tax on leaseholds was paid.
– The people of Western Australia believe in justice.
– The Government wants to do justice by ensuring that those who are morally liable to pay taxation actually pay it. If certain persons are entitled to a refund because they have received a favorable judgment from the Court, others with a moral right, to a refund should also receive it.
– I have always resisted that principle.
– That would be only a proper action for the Government to take.
– It would involve £1,100,000 of public money.
– Financial considerations should be no excuse for wrong-doing.
– The Government does not say that the collection of this money was immoral. It was collected under the authority of an act passed by this Parliament. But only those who lodged objections are likely to receive any benefit from the decision of the court. That is contrary to the practice of the department and to the definition accepted until recently. About £800,000 of this leasehold taxation has been paid. There is a right of appeal in respect of £160,000 of that amount, and if the High Court decision stands, the money must be refunded. There is no legal claim in respect of the remaining £640,000, but there is a moral claim equal to that in respect of the £160,000. About £200,000 of the tax is outstanding, and there is a right of appeal in respect of £170,000 of that amount. There is no right of appeal in respect of the remaining £30,000, but when the department tries to recover that sum the taxpayers concerned can raise the objection that the tax is not legally enforceable, and that those who have held hack all these years and have not paid their taxes are to benefit, while those people who paid promptly are to suffer. We must bear in mind that they paid at a time when the country was at war.. During all those years the tax was paid by the bulk of the taxpayers, comprising practically all the small men. A few shrewd head*, who could afford to engage counsel, lodged objections, and they alone would benefit if we allowed the High Court decision to stand. The plea of the Leader of the Opposition (Mr. Latham) to-day to remit this taxation, has no more virtue than the similar plea made in 1923, which he then opposed, and which, I remember, was so eloquently opposed by the honorable member forFawkner (Mr. Maxwell).
– I was opposed to it in fact, but I was not in the House at the time.
– I am taking the statement of the Leader of the Opposition to-day. He said that at that time he was opposed to the remission of this taxation.
– That was my opinion, but it was not stated in the House.
– The Leader of the Opposition objects to making this legislation retrospective. As I said earlier in the debate, retrospective legislation is fundamentally wrong only when it imposes something new. The suggestion has gained ground outside, much of it by illinformed criticism, that this Government is now trying to hit at the land-owners of this country by imposing additional taxation, and making it retrospective in order to collect a considerable amount of revenue. That suggestion has no foundation whatever, because no new tax is being imposed. We are proposing merely to collect outstanding taxes. The majority of the land-owners have paid this tax, but the minority have refused to pay it. They have seized upon technicalities to upset the rule that has been maintained for so many years. The Leader of the Opposition misled the House, although I do not say that he did so intentionally. I have not consulted with the Commissioner of Taxation with respect to the charge made against him, because I did not anticipate it, but the Leader of the Opposition has certainly done him an injustice. It has been suggested that the Commissioner of Taxation issued circulars, one in 1925 and others earlier than that.
– Only in 1925. I read the particular circular.
– The Leader of the Opposition has charged the Commissioner of Taxation with issuing a circular to taxpayers, and he read into that circular the suggestion to the taxpayers that although this tax on Crown leaseholds was due, they need not pay it at the moment because the Government was considering the basis of the tax and so on. The suggestion running through the remarks of the Leader of the Opposition was that the lessees had been asked to suspend payment of the tax, pending a decision by the court in the matter.
– That is the only reasonable interpretation, having regard to all the circumstances.
– That statement is not borne out by one scintilla of fact, and nobody knows that better than does the ex-Treasurer.
– What does the Prime Minister suggest?
– Let me state the facts. There was considerable controversy as to the basis for ascertaining the unimproved value of leasehold estates. That has been the subject of investigation by one royal commission and another, and at the time of issuing the circular, if a royal commission were not actually sitting, its report was being considered by the department.
– The report was received on the 12th December, 1924, and the Government’s statement, following the finding of that commission, was made almost immediately.
– The calculations,in respect of that report, have continued ever since.
– The statement of the Government was madealmost immediately.
– That is another matter. The then Government’s declaration was that it intended togive effect to the recommendations of the commission.
– And the taxpayers immediately challenged that.
– No. The circular sent out by the Commissioner of Taxation was to the effect that the whole basis of assessing the values of leasehold estates was under consideration, and that the department was then endeavouring to apply the formula laid down by. the royal commission in its report submitted at the end of 1924. To suggest that the Commissioner of Taxation would come to the
Government and say, “ The decision of the court is against us; let us introduce legislation so that we can heat the taxpayers,” is tantamount to charging Lim with being prepared to go to any lengths in order to gain an advantage over the taxpayers.
– There is no suggestion of that.
– As a matter of fact, the suggestion of the Leader of the Opposition is that this Government after obtaining an adverse decision from the court, has immediately introduced legislation to defeat that decision. I would point out to the honorable gentleman that the preparation of this case had been going on for years; that the Commissioner, when under the control of the ex-Treasurer, strongly resisted these claims, and that the judgment of the court was given just about the time of the change of government. The suggestion is that this Government, and no one else, fought these claims. I ask the ex-Attorney-General whether the late Government would, on the last analysis, have prevented these. cases from going before the court.
– We would have facilitated every case going to the court, and have accepted the decision of the court.
– Probably counsel was chosen by the ex-Attorney General.
– It was very good counsel. The late Government would have accepted the decision of the court without hesitation.
– Let us test and nail down that statement by ascertaining the attitude of the late Government towards the decisions of the court in taxation matters. The Leader of the Opposition has developed h wonderful virtue since he has been in opposition. It is a virtue which he possessed when sitting in the corner, and trouncing the government of the day for bringing down retrospective legislation to defeat the decisions of the court. But he changed his view when he became a member of a government.
– Section 21 is the only case.
– There were more cases than that. The Income Tax Assessment Act was amended in 1924 in order to deal with the live-stock case.
– That was before I was a member of the Government.
– I am taking the exTreasurer in my stride, and I ask the Leader of the Opposition to exercise a little patience. As a matter of fact, retrospective income tax legislation was on five occasions introduced into this House during the regime of the Bruce-Page Government.
– At whose instance?
– At the instance of the government of the day.
– And supported by the then Opposition.
– Yes, when the legislation was sound, but not otherwise. Between the years 1915 and 1924 retrospective legislation was brought down on five occasions. The Leader of the Opposition was a member of, that Government in 1928.
– Section 21 is the only case, and that had exceptional circumstances attaching to it.
– Retrospective legislation in respect of income tax was brought down in the years 1924, 1925, 1926, 192S and 1929, and in every case it was to defeat the judgment of the court. Yet the ex- Attorney-General has said that the late Government would have accepted the decision of the court. When did the honorable member become a member of the Ministry?
– In December, 1925.
– In December, 1925, the Leader of the Opposition became a * member of the Ministry. Yet he says that only in one case was he associated with retrospective income tax legislation, and that in this case the late Government would have accepted the decision of the court. Let me inform him that the Income Tax Assessment Act of 1926, dealing with bonus shares, validated all past acts of the Commissioner of Taxation in (a) refunding tax previously collected on bonus shares, and (b) omitting bonus shares from assessments. It also authorized the Commissioner, notwithstanding a judgment by the High Court that a certain taxpayer had been legally assessed on bonus shares, to accept from that person in full settlement of his assessment, the amount of tax payable by him if the shares were excluded from the assessment. That was the case of James v. the Commissioner of Taxation. Notwithstanding the decision of the court, retrospective legislation was introduced to validate the past assessments of the Commissioner. That was clone in 1926, when the Leader of the Opposition was Attorney-General.
– That was a concession.
– Then I shall take a c,ise which was not a concession. Take the case of 192S, which the Leader of the Opposition says was the only one with which he was associated.
– That is the only one that I can think of. I have not had the opportunity afforded to the Prime Minister of turning up information. I certainly remember the 192S case.
– The honorable member’s statement was emphatic, and I am glad that I have refreshed his memory. The Income Tax Assessment Act of 1928 amended retrospectively to the year 1922-23 the wording of section 21 of the principal act, following upon a judgment of the Supreme Court of Victoria, declaring the true interpretation of section 21 to be entirely different from what had been always understood to be the intention of Parliament. “ That is exactly the same principle that we have embodied in the bill that i3 before us to-day.
– I have disputed that.
– The new wording merely expresses the original intention in effective terms. It was made to operate retrospectively so as to enable the Commissioner to determine against the taxpayers whose objections or appeals had not been determined when the 1928 act became law. Let us take a more recent case. Last year there was a case which the Leader of the Opposition seems to have forgotten. The Income Tax Assessment Act of 1929 validated all past determinations of the Commissioner under section 21 of the Income Tax Assessment Act 1922. or of that act as subsequently amended. No additional tax became payable for any past year above the tax previously assessed. In that case, as i ii the other case, the legislation anticipated the decision of the court. What is the use of the honorable gentleman saying that, if the late Government had been in power, it would have accepted a judgment of the court altering the whole of the practice operating since 1910? What is the use of his parading this newly-found virtue and condemning the things that were practised by the previous Government for five successive years? In the majority of such instances I supported the late Government. I always gave my support when it was clearly the intention of Parliament to place a just imposition on the taxpayers of Australia, and to prevent those who used their acumen and employed technical legal devices from escaping taxation. This Government is now doing precisely what was done by its predecessor. If there is one word in this bill that departs from the practice and the definition of unimproved value obtaining since 1910, the Government will amend it, because it is its intention to maintain the status quo, the definitions and the practice of the judgment of 1913. which was upset by the decision of the High Court last year.
The Leader of the Opposition (Mr. Latham) wants to know the purpose of the bill. He suggested that it does not involve such a large sum as the Treasurer claimed. It affects the amount of £330,000. Is that not a large sum of money? Is that not an important consideration when the country is in its present condition? The Leader of the Opposition suggested that the pastoralist? of Australia have been passing through a bad period; that the Commonwealth Government should not press for its just and legal rights. The Land Tax Act provides for the treatment of any cases of hardship. I suggest to the Leader of the Opposition that it is not only those who refused to pay their taxes who have had a bad year. Does he seriously advocate that the Government shall not collect this money, and at the same time shall retain the taxes that have been paid? If he does not, he implies that the Government shall, on moral grounds, refund the £160,000 already collected. If the honorable gentleman’s contention were sound, this Government would be morally obliged to relinquish £1,100,000 of land taxation. Is this Parliament prepared to shoulder that responsibility? The £330,000 that would be involved by the rejection of the bill is made up of £160,000 liable to refund, and a further £170,000 that has not been collected. Further, if the measure is not passed this week the Government runs a risk of losing £84,000 of tax assessed which is involved in the three cases shortly to come before the High Court.
The suggestion has been made that there is something wrong in the Commonwealth Parliament exercising its rights under the laws of the land to protect its revenues, because the High Court has declared that a section of an act means something different from what was originally intended. We are bound as -a government, and this Parliament is bound as a parliament, to hold the balance true between the various sections of the country, and not to allow one section to escape its obligations.
We can deal with the taxation of golf links when in committee. There is a strong case for that taxation. Golf clubs are exclusive bodies and, in the main, occupy very valuable areas of land. I have in mind one golf links that was sold for over £150.000, and another that is estimated to be worth nearly £250,000. These courses are beautiful areas of land very often near large centres of popula-.tion.
– They are the lungs of the cities.
– Then let them be open to the populace as such. Let them be used as park lands, and not as exclusive properties accessible only to the few. That argument cannot be sustained. Many golf links could be adapted for utility purposes and still leave available suitable areas for the lungs of cities. Surely when the country badly needs revenue these highly valued areas should pay their quota of land taxation. Do honorable members who represent the Country party contend that golf links should be exempt from taxation while farming areas have to bear that levy?
The intention of this bill, which represents the advice of counsel representing the Crown in the land taxation cases recently before the High Court, is to maintain the position that has ruled since 1910, and to preserve the position of the Commonwealth Government in its rights to land taxation. I do not say that the Government will refund the £640,000 already collected if this bill is rejected. It will refund only what it is compelled legally to refund, the amount of £160,000. That will involve the Government in this principle: that it is prepared to relinquish what has been evaded on a legal technicality, while it will not refund taxes to those who may have a moral case for a refund. The responsibility for that will be on those who oppose this legislation. Its rejection would merely benefit those who have, on legal technicalities, objected to pay taxation similar to that which has been collected from a number of other taxpayers for a period of years.
.- On one occasion, in this chamber, the present Attorney-General made a very wise statement which has a close bearing on the bill at present before the House. He said that financial consideration should not be used as an argument in support of a palpable injustice. I submit that, as we have established a High Court of Australia, we should abide by its rulings, whether they be to the advantage or disadvantage of the Government. The intention of the bill to impose an injustice on a section of the community, because of a financial consideration, is a very serious one. The wool industry of Australia is down to the point of the cost of production, and the wheat-grower is in much the same position. This bill intends to extract from such people a payment which they had a reasonable expectation of not being called upon to pay. The right honorable the Prime Minister referred to the position in Western Australia. If those people paid taxation, and it has been determined that it was unreasonable for them to pay it, the amount collected should he refunded to them. When Parliament previously discussed this subject, I said that this was an undue infringement upon State rights. In assessing their pastoral leases, the different State Governments expected to reap the advantage of the inherent value in those leases, and they charged accordingly. What right has the Commonwealth Government to intrude and superimpose its values, so depreciating the States’ inherent values? I contend that the people concerned are being taxed twice. They are taxed on the income derived from the leases and on the machine - the land; - with which they produce their incomes. No other section of the community is taxed on the machine by which it earns a taxable income. This machine is leased to certain individuals to grow wool, and those people are taxed on the income derived from that .machine. Why should they be taxed on the machine itself? It remains the property of the State. I am opposed to the Federal Government coming in and depreciating that State asset.
I was rather pleased at the statement made by the Prime Minister to the effect that, in his interpretation of unimproved land values, this bill would not effect any change of definition or practice. But why this change in the wording describing unimproved land value? I should be satisfied if the right honorable gentleman were Commissioner of Taxation, as he is reasonable,, serious and honest in his intention that improper practices should not take place. But I am fearful that he has been ill-informed. I consider that the last paragraph of proposed new section 3 will inflict considerable injustice. If the land is inherently subject to certain ills, will those ills be taken into consideration when its value is assessed? I instance land to be found in Western Australia and other places where, when the timber is killed and cleared, the country becomes impregnated with salt. Would that be taken into consideration when assessing the unimproved value?
– There is also land to be found in Gippsland, the North Coast of New South Wales and elsewhere which, when heavily timbered, is not affected by the bracken pest. But when that land is cleared it becomes brackeninfested. That reduces its productivity and lessens its value. I should like an assurance that such factors will be taken into consideration when assessing unimproved value.
The Taxation Department is attempting to inflict a. gross injustice in one case of which I know in Western Australia. A block of 2,000 acres of land was purchased about a year ago which had been freehold for over 40 years. Twelve hundred acres of it had been ring-barked and kept scrubbed until, by bush fires and other means, it was practically cleared, and the other 800 acres had remained in its virgin state. A gentleman who had resided in the district for 80 years told me that it would cost £16 an acre to-day to bring the 1,200 acres into its present state. It was infested with ferns and could have been purchased for £2 15s. an acre. The Taxation Department is insisting upon an unimproved valuation of £2 per acre, whereas, in its unimproved state, it had no value at all.
It is vital to the welfare of the nation that people should be encouraged to bring as much land as possible into productivity. But if the cost of clearing these pests is not to be considered in determining the unimproved value of land a gross injustice will be done. We have many pests which cause a great deal of trouble, such as the prickly pear, “Patterson’s curse,” and others which I could enumerate. If the department refuses to allow the cost of dealing with these, as well as animal pests, to be taken into account, it will retard land development and settlement. The original provisions, with the exception of the one relating to recurring growth, should be retained. It would be reasonable to take the sale price of the land in the open market, under legitimate conditions, as a fair starting point. Then the difference between the value of virgin country of a similar character in the same district, and the cost of bringing the land into the improved condition in which it is purchased, should be considered. That would be a simple basis upon which to determine this vexed question. We have to remember that bracken fern spreads rapidly when land is cleared of its forest growth, and an expenditure of many pounds an acre is required in some places to cope with it. The Commissioner of Taxation should bear these things in mind in making his assessments. That is all I desire to say on the general question. I shall withhold any other remarks upon the subject for the committee stage of the bill.
,- The Prime Minister has enumerated instances in which this Parliament has passed legislation with a retrospective effect in regard to taxation. We should not be so much concerned with that aspect of the subject, as with the merits of the case under consideration. These matters should all be determined upon their merits. I have no doubt that the Prime Minister intended to be fair when he said that if it could be shown that this measure would extend this particular field of taxation he would withdraw it. He said that this measure would not impose any taxation that had not already been assessed. It is true, of course, that assessments have been made, but they have been purely nominal. They’ have been held over with the assent of the Government on the understanding that a decision would bc given by the court as to whether this class of taxation should be retained or not. The court has decided that the assessments are illegal and void. I reiterate that lessees were invited to take no notice of the assessments,, because it had to be determined whether the method adopted by the department was in accordance with the provisions of the act. I understood from the Prime Minister that the department is maintaining that it has made no alteration in principle in the making of its assessments, but has adhered to the practices that have been followed since Commonwealth land taxation was first imposed in 1910. If that is so, the department has for many years been following » method of assessment inconsistent with decisions which various courts have given ever since the taxation of unimproved lands was introduced.
– What was the intention of Parliament in regard to this class of taxation ?
– The “intention of Parliament “ is a vague term, the meaning of which can be determined only by « legal interpretation of the language of the act. The taxation of unimproved lands was first introduced into Australia !by the New South Wale3 Parliament in 1895, and from that time onward frequent discussions have occurred as to whether -allowances should be made under the heading of improvements for recurring and annual charges as distinct from capital charges. Many years ago, the then Chief Justice of New South Wales, Sir William Manning, delivered a judgment in the ex parte Thomas case in accord with the decision recently given in the McGeoch case before the High Court. His Honour, in the course of that judgment, said that, the act of a man in ring-barking trees led to processes of nature by which the pasture was, by degrees, improved. The same conclusion was reached 30 years later by Mr. Justice Pring in the Hopkins case. He said -
Improvements may be roughly divided into two classes: (1) Constructive, such as clams, fences, buildings, &c. ; and (2) destructive, such as the eradication of noxious weeds or animals, clearing, ring-barking and suckering.
The Leader of the Opposition (Mr. Latham) has quoted a number of cases in which judges of the High Court have adopted the same principle. He mentioned the Morrison case and the cases of Campbell, Fisher and Keogh. The Keogh case is very much to the point. The dispute in that case was as to whether an allowance should be made for a recurring charge for the removal of suckers. The judge held that it should be taken into account and an allowance made in respect of it.
I venture to suggest that the Prime Minister has not been quite correctly informed on the subject or he would not have said that the object of this bill is to enable the officers of the department merely to carry out the practices which they have followed since 1910. If, however, the department has been carrying out these practices since that time, it has done so in the face of decisions of various law courts in Australia, some of them going back to pre-federation times, and some being decisions of our own High Court delivered particularly in 1913, 1915 and 1928. It would probably be more correct to say that the department is seeking to obtain legislative authority for adhering to an illegal practice which it has endeavoured to force upon certain land-owners since 1910.
If we compare the present bill with the existing act, we shall find that the two agree except in regard to the prickly pear. At present, the unimproved value of land is ascertained, to put it briefly, by taking the price at which the land might be expected to sell, and deducting from that its value in its present state of improvement. The present proposal follows that line. It is true that it splits up the definition. As regards land which has never had any improvement on it the definition is - “ Unimproved value” in relation to unimproved laud means the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require.
That is a plain honest definition of the unimproved value of land which has had no i in pro vernon t on it, hut in order to ascertain the unimproved value of land where improvement has been effected the bill adopts the existing definition with a substantial variation; that is to say, the mode of ascertaining the unimproved value is first of all to ascertain the selling price of the land and deduct therefrom the present value of improvements - in that respect the bill follows word for word, T think, the existing act - but that is qualified by the following proviso:–
Provided further that in ascertaining the value of improvements no amount shall be included in such value in respect of any work done or expenditure incurred for the purpose of preventing land, or any improvements thereon, from deteriorating, or of maintaining land which has been improved, at its improved value, whether by means of destroying animal pests or vegetable growths, or of preventing such pests or growths from establishing themselves, or by any other means, but, in respect of fences and other structural improvements, effected for any of those purposes, which are on the land at the time as at which the value is required to bc ascertained for the purposes of this act, an amount shall, subject to the preceding proviso, be included.
Shortly, the substantial variation which this proviso makes is said to be necessary to meet the McGeoch case, or the prickly pear case. I do not think we need worry much as to what has been done by past governments. I think we should examine the prickly pear decision, which is a fair example of the principle involved, to see whether this ‘ particular amendment should be made. I submit that there is no good reason why recurring expenditure on eradicating prickly pear or any other vegetable pest should not be allowed for in assessing the unimproved value of land. The only question is whether this expenditure is an improvement. The Prime Minister (Mr. Scullin) used the words, “ Any expenditure which improves the value of the property is an improvement.” I heard a great number of *’ Hear, hears “ from honorable members who sit behind the Government when the right honorable gentleman made that declaration, and I ask the House to be guided by it. There can be no doubt that expenditure on keeping down prickly pear improves the capital value of land. It was admitted in the McGeoch case that prickly pear if not kept down will soon take possession of land, and that the value of land completely covered by prickly pear is negligible. The removal of the pest is, therefore, something which adds to the value of the property, and it makes no difference to the principle involved whether that addition to the value be effected once and for all, or every year, or every three years. The Leader of the Opposition (Mr. Latham) gave one illustration to show how- adversely the bill may bc expected to affect the better-class farmer compared with the careless farmer, and I may be pardoned for giving another simple illustration, the case of two farmers holding adjoining properties on prickly pear land who’ have both cleared off the pear. They start on an equal footing as regards the land and the value of the improvement effected, but one is industrious and keeps down the prickly pear, whereas the other is a dirty farmer and allows his land to fall again under the influence of the pest. There is no doubt that if either of these two fanners is to be given consideration as regards taxation it should be the industrious man, but this bill will give him no advantage. On the contrary, it will impose a liability on him. The unimproved value of his land will be ascertained by reference first to the sale value of it as improved, less the value of the improvements. The capital value of the farm of the man who looks after his land is increased, but under this bill he is not to be credited with anything but the original cost of removing the prickly pear. No credit is to be given to him for the annual or recurring cost of keeping his laud clean. In effect, he will he called upon to pay tax on a higher value than that of his careless neighbour who does not keep his land clean. That, I am sure, is not desired by any government. The prickly pear pest is a cause of national loss to Australia. Other serious vegetable and animal pests occasion the loss of millions of pounds. This is, therefore, a national question.
Farmers who keep their properties clear of pests are deserving of every encouragement, and there is no ground for singling them out for taxation by making no allowance for their expenditure in ridding their property of pests on the ground that it is a recurring expenditure.
I do not want to say much about the taxation of golf clubs. There is a good deal of cost involved in maintaining golf links.
– A lot of labour is employed by golf clubs.
– That may be so; and it might be contended that golf clubs are not the only sporting bodies that might be selected for taxation. But I do not want to say very much on that point.
I wish to associate myself with the remarks of the Leader of the Opposition about the undesirability of making legislation of this character retrospective, notwithstanding what past governments have done. I think there is something to be said in favour of taxing the unimproved value of leaseholds. If the owner of a freehold is entitled to a concession in respect of his taxation because a portion of his estate is cut out of leaseholds, there should be a corresponding right of taxation in regard to those leaseholds in cases where they are not paying their fair economic rent. It is highly undesirable that taxation, especially of land, should be made retrospective. In the last fourteen years many of those lands that will be affected by this legislation must have changed hands over and over again, and the taxation imposed under it will fall on those who should not be called upon to pay it. The taxation that has to be paid largely influences sales of land. This matter should not have been allowed to remain in abeyance year after year. Considerable amounts will be in arrear if the taxation is imposed, and serious hardship will be caused if payment is demanded in the existing period of depression from those who hold the lands involved.
Mr.West. - They knew that their lands had been assessed.
– I am aware of that. But they also knew that a considerable doubt existed as to the validity of the assessment. They were invited to allow the matter to stand over pending a deci sion being given by the court, and they did so. That decision is in their favour. When a taxpayer objects to an assessment and his objection is upheld by the court, he has a vested right in the advantages of that decision. When a decision has been given against him it is not right that the Taxation Commissioner should ask this Parliament to legislate to set it aside.
– Blame Parliament, not the Commissioner.
– When a wrong is done, it is the duty of Parliament to remedy it. If the honorable member for East Sydney (Mr. West) agrees that it would be wrong to reverse the decision of the court, and that Parliament, is the proper body to put the matter right, he will act logically if he votes against this measure.
Sitting suspended from 6.10 to 8p.m.
.- Every government faced with the task of passing retrospective legislation, and imposing retrospective taxation, finds itself in a very difficult position, because it knows that such legislation and taxation is not only abhorrent to the Parliament, to the people, and to the country, but is also distasteful to the government concerned. It is customary, therefore, for governments to follow such a course only after having exhaustively examined every other alternative, and then only in conformity with a general consensus of opinion. On several occasions the late Government was faced with the unpleasant task of passing retrospective legislation, but in practically every instance its action met with the general approval of the people and of the Opposition. I may mention one or two instances to indicate the nature of the retrospective legislation passed by that Government. When the Income Tax Acts were consolidated by the Hughes Government in 1922 it was inadvertently omitted to make provision for carrying on the operations of the 1915-21 act in connexion with subsequent assessments for those years. When this fact was fully seised by the department in 1924, the Government took steps to rectify the position by passing retrospective legislation. Another instance was in connexion with the operation of section 21 of the act which had always been operating on the basis that if the accounting period of companies whose incomes were taxable was from, say, September to August or from April to March, the year for which the accounts of the companies were made out was taken as the year on which the Commissioner of Taxation assessed the profits of the companies. But the court held that under the act the only year that could be taken into consideration was the financial year of the Commonwealth, and in order to validate the assessments made by the Commissioner a retrospective act was passed. In such cases there must be general agreement as to the necessity for such action. A similar course was taken in connexion with bonus shares. In that case we were carrying out the expressed wish, intention, and determination, not of our government, but of a previous govern- .ment, so as to maintain the confidence of the people in the matter of taxation laws.
We must, therefore, examine this measure oh its merits to see if there is anything in it which justifies retrospective legislation which, in the case of unimproved values, is to be retrospective for a period of twenty years, and in the case of Crown leaseholds for sixteen years. This is a land tax measure; but the retrospective legislation passed by the last Government was in connexion with income tax. Land taxation is a first charge on the asset, which is the land, and it has to be paid before any other debt on the land - it goes with the land all the time. Income taxation, on the other hand, would only be paid after all ordinary secured debts had been paid.
– - No ; income tax is just as much a first charge.
– A debt secured by a mortgage on the land would have precedence over income tax. Land tax has precedence over all other charges ; it is already secured in the land by the act. It is absolutely essential that no land tax legislation we pass shall engender lack of confidence on the part of the financial institutions which lend money on the land as security, and that there shall be no doubt in their minds as to their security. In altering vital principles by amending the definition of “ unimproved value,” as is being done in this instance, and making the legislation retrospective for twenty years, we are doing something which, unless it can be satisfactorily explained, will lead to distrust, and a lack of confidence by investors at a time when it is essential that there should be greater confidence in our position.
Another important portion of this measures relates to Crown leaseholds, in connexion with which an amendment retrospective for sixteen years is being made. It is particularly unfortunate that this retrospective legislation should be in relation to Crown leaseholds. At this particular time our credit overseas is not as good as it should be. We should remember that it was retrospective legislation in relation to Crown leaseholds in Queensland which led to the Government of that State being practically banned from the London loan market for three or four years. Actions such as it is proposed to take may have the effect of damaging our credit still further by recalling that incident instead of improving the confidence of those with whom we have financial relations overseas by letting them forget it. In these circumstances I am sure every one welcomes the declaration of the Prime Minister that no attempt is being made in this bill to alter the law as it actually stands, although it is difficult to understand that that is so. If there is no alteration why is a new law necessary? The right honorable gentleman further stated that if we can show that the law as it stands is being altered by his bill he will accept such amendments as will enable it to be clearly understood that the past practice will be observed. It is, however, idle to protest that no alteration is being made in the law. A new definition of “unimproved value “ is being incorporated in the Land Tax Assessment Act by means of this bill. The judgment of the High Court in the McGeoch case shows definitely that they are satisfied that their interpretation of the law on that occasion was in accordance with practice and tradition The
Chief Justice and Mr. Justice Dixon, in the case McGeoch v. The Commissioner of Land Tax, as reported in the Australian Law Journal of 15 1 h November. 1929, said-
They were of ‘ opinion that the eradication of prickly pear was analagous to the clearing of timber from laud which had uniformly been regarded as an improvement, us also has the maintenance of the effect of that improvement by destroying and thus preventing the growth of suckers, whether the question was as to improvement in fact or as to an improvement within the moaning of the Land Tax Assessment Acts. Indeed, the clearing of land in order to make it fit for pastoral or for agricultural purposes in a country in course of settlement is in the opinion of their Honours an outstanding example of “ improvement”.
They went on to comment on the construction of the words by the Commissioner, and stated further that -
Such a construction of the words of the act an that suggested would in the case of the greater part of the rural lands in Australia, result in the inclusion in the subject-matter of the tax - the unimproved value of the land - of an amount wholly attributable to operations generally recognized as improvements in fact which had been effected by the owner at his expense - a result which appeared to their Honours entirely inconsistent both with the expressed intention of Parliament and with the theory underlying the imposition of the tax.
Notwithstanding those opinions, we have the statements of the Prime Minister and the Treasurer that the intention of the first part of this bill is to alter the construction placed upon the act by the learned judges mentioned. Not merely does the party which I have the honour to lead support the interpretation which these judges have given to this section, but we say that if it is capable of misinterpretation we are prepared to move an amendment which will put the interpretation of the judges absolutely beyond doubt as being the law of the land. We shall oppose first of all the inclusion of the proviso in the bill ; and if that is unavailing, we shall move that a further subsection be inserted which will remove all doubt on this point. I shall supply the Treasurer with a copy of the amendment which I propose to move, and which, possibly, he may be able to accept in view of the declaration of the Prime
Minister. The proviso, as we propose to amend it, will read -
Provided, however, that in respect of land purchased by the owner, which at the time ho so purchased it, was infested with noxious vegetable growths such as prickly pear, bracken, blackberry, lantana, nooghoora bur, and such other noxious weeds as may bo proclaimed rendering necessary for effective use of the land the carrying out of work and the expenditure of money in the eradication or destruction of the same, the added value which the improvements so made gives to the land shall bc taken into consideration in ascertaining the value of improvements for the purpose of determining the unimproved valueof the land.
Any one who gives this measure the most cursory consideration must come to the conclusion that’ what I suggest is absolutely just. The whole principle upon which unimproved land values taxation is based is that it is only the communitycreated value of the land that should be subject to land taxation, and that the value of the land imparted to it by the individual efforts of the land-owner should not be taxable. A land-owner is entitled to the value of the improvements he makes as the result of his labours, and that principle is adopted in connexion with unimproved land values taxation. Apparently, the actual practice of the department, up to the present, has been in accordance with this principle. It works back from the improved value of the land as ascertained by market values.
– A part of the unimproved value would be part of the communitycreated value.
– The unimproved value is the community-created value in addition to which is the value created by the owner himself, which should not be taxed under what purports to be a tax on the unimproved value of land. What the Government is attempting to do is to tax values created by individual effort instead of working on the communitycreated value basis. As the practice of the department has been to recognize the principle I have enunciated, I am astonished to find that this legislation has now been brought forward.
I find in appendix 2 of the 1925 royal commission’s report on the method of determining the unimproved value of laud held under Crown leases, a table showing exactly how the unimproved value is arrived at in certain cases. It is ns follows: -
The method of arriving at the unimproved value of a sold property is illustrated by the following: -
At that time, before the McGeoch case, the department permitted deductions for clearing land and for timber treatment, and also allowed a percentage deduction after the money was expended. If wo propose to further the development of country districts, we must aim, by our taxation policy, to encourage people to go into those districts aud work the laud. We must encourage men who take up ureas, overrun with pests such as prickly ‘ pear, lantana, &c, which not only prevent production on the areas themselves, but constitute a constant menace to neighbouring blocks. It must be remembered that land thickly infested with noxious weeds is, if situated on a watershed, a very grave menace to a wide area of surrounding country. Not only are the seeds carried by birds, but they are also carried down stream and distributed over adjacent lands. It is essential that some encouragement out of the ordinary be offered to settlers to go on to such lands, clear them, and make them productive. Moreover, it must be remembered that settlers, besides dealing with such pests as may be on- the land when they take it up, have also to contend with latent pests, such as bracken fern, which only come into evidence after the country has been cleared. To enable this land to be improved to its full productive capacity, there should be allowed a deduction in respect of all expenditure incurred in eradicating these pests to bring the land into full production before we assess its unimproved value for taxation purposes. When a man takes over a badly infested area of land everything he spends in the eradication of those pests should be allowed to him as a deduction. That is only a fair thing. That is what the Chief Justice said should be the practice of the Commissioner, and he endeavoured to apply it in the McGeoch case McGeoch was trying to prevent noxious weeds from spreading to his land from adjoining areas already infested, so that the moneys spent by bini on this work were considered to be a reasonable deduction. In the course of his judgment the Chief Justice said -
Prior . to the acquisition of the said lands by the appellant the said lands and other lands in the near neighbourhood of the said lands became menaced by prickly pear. The said lands have ever since continued to be menaced by the said prickly pear, and if the prickly pear had not been prevented from establishing itself thereon by the expenditure thereon hereinafter referred to, the whole of the said lands would have become thickly infested with prickly pear. Other lands iti the neighbourhood on which the said prickly pear has not boon prevented from establishing itself have become thickly infested with prickly pear, and 760 acres of the said lands on which the said prickly pear was not prevented from establishing itself have also become and still are thickly infested with prickly pear.
At this time, when wc are trying by every means in our power to secure the maximum primary production for export, we should show some readiness to meet the men on the land in this regard. We should encourage by every means in our power those who are willing to take up these abandoned or neglected lands, and make them productive. Therefore, I trust that the Government, especially in view of its appeal to the primary producers, will adopt the suggestion I have made. We must remember, when legislating on such matters in this Parliament, that the system of unimproved value adopted by us is almost invariably followed by the State governments and shire councils. Therefore, the system we establish will affect not only the big land-holders assessed for Commonwealth taxation, whose holdings produce much of the wool aud a considerable portion of the wheat grown in Australia, but also practically every land-holder who pays taxes to State governments, or rates to shire councils. Thus, if we adopt a system which will encourage production on the large areas, it will in its turn produce the same effect upon the small landholders throughout the length and breadth of Australia.
If the Government keeps these matters in view it must realize that the amount at stake here is ‘immaterial. I ask the Government, in the first place, to leave the actual definition where it stands. If it is true that the practice of the department has been to do substantially what has been suggested, then let my proposed amendment go through because, in that case, it cannot possibly do any harm, and it will incorporate the principle in legislation in such a way as to guard against any danger in the future. I trust that the Treasurer will take action in this direction when the bill is in committee. If not, I shall try to convert the committee to my point of view.
The second part of the bill provides that the legislation shall be retrospective in regard to the taxation of Crown leaseholds. This proposal for the retrospective alteration of the law appears to me to be a fitting climax to the most stupid and tragic legislative enactment ever perpetrated by the Commonwealth Parliament. Even if this legislation be passed it will not settle the matter. Other points of litigation will arise, and we shall find ourselves in a vicious circle of successive legislative amendments followed by costly litigation. Sixteen years after this legislation was first enacted, and seven years after the law was repealed, disputes are still arising. It appears to me that all those who have paid taxes under the- law as it stands should be allowed to object and argue the matter before the court if the law is now altered. That surely is a moral right. The Government now proposes to alter the law because it at present provides the taxpayers with just that opportunity of fighting successfully the law as it stands. I predict that if the course proposed by the Government is followed it will raise new administrative problems over the whole field, and we are already sick to death of them after sixteen years of trouble. Parliament had one try at this legislation in 1914 and, according to the judgment of the High Court, it failed. Two judgments have been given by the court on this matter. One was on the facts in Jowett’s ,case, when the court held that there was no taxable interest in his estate. The second case was in regard to the interpretation of the law, and the court held that the law did not allow the taxation of certain of these interests. Now it is proposed by the Government that because certain persons escaped taxation under the law as it stood, we should alter the law retrospectively. That is not the usual practice in regard to persons who are able to escape the supposed but not expressed intention of the law in such matters. Honorable members will recollect that many alterations have been made to the law relating to the taxation of companies for the purpose of ‘ preventing rich persons evading their due taxation by the formation of successive more or less bogus companies. Nevertheless, when we have brought down ‘ such legislation, we have never made it retrospective in an attempt to catch those who have already successfully defeated the intention of the law. It has applied only to the future. The matter we are now discussing is, I contend, on .all fours with those amendments of the company taxation law. The Prime Minister said that if the proposed amendment is accepted it will confer benefits upon certain wealthy persons. My answer is that the same thing applies in the case of the company law to which I have referred. Wealthy persons only were affected in those cases. They formed successive proprietary companies because they were wealthy and because they wished in that way to evade taxation. But Parliament did not pursue them in the same way as it is proposed, by means of this legislation, to pursue the land-holders.
In 1923 the last Government brought down a proposal to repeal the Crown leasehold taxation legislation as from 1917. That is to say, three years collections were to be made. It was understood that if that legislation were passed, assessments made at that time, totalling £750,000, would be paid by the taxpayers. Already there had been paid £690,000. Some of it was due in subsequent years, but there was a sum of £380,000 outstanding for the first three years. If my proposal, made when I was Treasurer in 1923, had been adopted we should have received in hard cash’ £750,000. Parliament, however, insisted upon attempting to collect the whole amount. To-day, after the matter has been considered by two royal commissions, and after the most heroic efforts on the part of the Taxation Department to collect the money, we find that altogether we have collected only £833,000, and that if this law is not passed, £160,000 of that will have to be given back. That is all we have to show for our trouble, although it has cost us £20,000 a year for seven years, together with a further £20,000, I should say, for legal expenses, making a total of £160,000. “We are really worse off now after all that trouble and expense than we would have been if my suggestion had been adopted in 1923. We should, in that case, have had £750,000, with no liability and no worry such as we have had since. Even this £833,000 is a continually diminishing quantity. Two years ago it amounted to £909,000, but as a result of the application of the system evolved by Mr. Duffy, of Melbourne, prominent in Labour circles, and Mr. Warren Kerr, also of Melbourne, as members of a royal commission, successive reductions have been made in the amount payable, so that to-day it is £76,000 less than it was two years ago. If we proceed as at present, it is on the cards that the receipts will be still further reduced.
It is worth while examining the history of the Crown leasehold system as it will help us to determine whether or not it is proper to alter the law retrospectively at the present time. The legislation with which we are now dealing was enacted in 1914. It was not imposed for war purposes. The provision formed part of the Labour party’s policy as announced during the election campaign immediately preceding the war, and it was for the definite purpose of hitting the big men in the far west. Incidentally, it conflicted with the main purpose of the Federal Land Act, with which the Labour party of 1910 set out to smash up the big freehold estates of the Commonwealth. It must surely have been evident that a tax on land owned by the Crown could not in any way help in the breaking up of freehold estates. The land was in the posses sion of the Crown, not of private persons. These leasehold areas had been let by various State Governments at reduced rentals to pioneers willing to go into the back country to open up areas, and make them productive, because by so doing they were able to secure bigger profits than if they had stayed in more comfortable situations nearer home. The effect of the Commonwealth legislation of 1914 was to defeat the legislative policy of the various State Governments of that time. The State Governments had evolved this phase of their land policy for the purpose of inducing persons to go into these remote areas. Notwithstanding this, however, the Federal Government imposed a tax, even though at that time practically half the total area of Crown lands in Australia were unoccupied. The total area of Crown lands at that time was . 1,730,000,000 acres, and the total freehold amounted to 170,000,000 acres, making a total of l-,900,000,000 acres. Occupied Crown lands totalled 968,000,000 acres, leaving 760,000,000 acres unoccupied. These special concessions were made to encourage the occupation of these huge areas. Of this 900,000,000 acres, 700,000,000 acres were devoted to cattleraising and 200,000,000 acres to sheep. As every one knows, during the last ten years the position of the cattle industry has been extremely precarious. Many owners of large estates and individual cattle-growers who have been engaged in the industry for 60 or 70 years have one after the other become bankrupt as the result of continuous drought conditions and low prices for beef. Our woolgrowers are now facing the same difficulties owing to the low price for wool.
It is extraordinary in these circumstances that the Government should select this period in our history to impose taxation upon those remaining in these two important industries. This tax was, as I have stated, imposed in 1914 by a Federal Labour Government by the mere insertion of a few words in the Land Tax Act, indicating that in future Crown leases, many of which were hundreds of miles from other freehold settlements, should be taxed in the same way and according to the same formula as that which” applied to the taxation of leaseholds in cities. It seems to me that the efforts of the Taxation Department officials during the last sixteen years to find a satisfactory and equitable basis for the taxation of Crown leaseholds were as gallant, but as futile, as were the magnificent efforts of Australian soldiers on the heights of Gallipoli. In the first place the Commissioner attempted to settle this vexed question on the basis laid down in the act - 4£ per cent, capitalization of the lease and 4-J per cent, tables to arrive at the difference between the reserved rent and the economic rent. Because of the confusion and consternation that resulted, The Treasurer of the day, Mr. Watt, suspended the collection of the tax until such time as a royal commission could examine the position and make recommendations. A royal commission was thereupon appointed, consisting of three gentlemen, of whom one was Mr. Curry, for many years chairman of the Western Lands Commission in New South Wales, and therefore accustomed to dealing with huge areas of land. After many months of investigation this commission declared that the task set the Taxation Commissioner to determine the freehold basis of Crown leases was practically impossible. A second royal commission was appointed to deal with this matter, and after a careful examination of the position it declared that, with 21 alterations in the method of valuation, a practical and satisfactory system of valuations could be adopted. The department then tried to find the value, on the 4£ per cent, set of tables, between the economic rent and the reserved rent. Then it tried tables based on 8 per cent, and 10 per cent., and finally gave up the task as utterly hopeless, and turned to another basis - the averaging of average net returns. Finally, when Parliament determined in 1923 that this taxation should be collected, it was discovered that the Commissioner had really no definite and uniform method for. determining the basis of value. Accordingly, another royal commission was appointed, and this body recommended an alteration of the entire system which had been in vogue up to that time. Prom what I have said, honorable members will understand readily enough how haphazard and confusing has been the method for determining the basis of taxation. The 1925 royal commission recommended that the following general principles should be observed in the valuation of improved Crown leasehold areas in order to determine their freehold unimproved value : -
Can honorable members imagine a more haphazard system than that? And yet this was the best recommendation that could be put forward by experienced men who had devoted many months to the examination of witnesses and consideration of evidence by expert valuers. They advised the Commissioner to compare the results of recommendations 2 and 3, and if there was any great variation to adopt No. 3 as the more reliable in accurately reflecting disadvantages. Following the presentation of the report of the 1925 royal commission, the Taxation Commissioner immediately set to work to collect the tax; but, as the Leader of the Opposition (Mr. Latham) mentioned this afternoon, there has been delay due to the fact that the Commissioner has been endeavouring to determine the new basis of valuation. This delay is not really the fault of the Commissioner. It is due entirely to the new system which he was expected to apply.
I have already shown that following the application of this system the amount collected by way of taxation has consistently diminished. “When the debate took place in this House in 1925 it was stated that Crown leaseholders owed over £2,114,000 in taxation. Under the system recommended by the commission, which included Mr. Warren Kerr and Mr. Duffy, both absolute independent commissioners, the total amount of assessment has dwindled to £1,043,000; a reduction of over £1,000,000 between the amount assessed in 1923 under the old method and the total under the latest system of assessment. In 1923 the amount collected was £690,000, but now, after seven years of unremitting effort on the part of the Commissioner, involving an expenditure of probably £20,000 a year in administration, and at least another £20,000 in litigation, we find that the total amount collected is £833,000. I understand that this amount is diminishing. When I was Treasurer I asked the Commissioner to furnish me with a fortnightly statement showing the amount of collections. I believe that the same system is in force to-day, because in the figures given by the Treasurer on the 15fh September last, it was shown that the amount collected was £833,543; but on the 15th November, two months later, it was only £83’3,213 - or a reduction of £330 even at this late stage. In one year, as the result of the application of the new formula, no less than £460,000 was lost, and in another year £160,000. The Commissioner also has not been successful in those cases which have been taken before the court. It may interest honorable members to know that the original amount of Mr. Jowett’s assessment in respect of Crown leasehold taxation was £87,000. That was reduced under the new method of assessment by £17,000. But Mr. Jowett contested three assessments on the ground that he had no taxable interest in respect of the leases in question, and finally his total assessment was reduced to £9,000 or less than oneninth of the original amount. We had a similar experience with Sir Sidney Kidman. His assessment was something like £200,000, but after investigation it transpired that he had overpaid the department on account of his freehold and. leasehold land tax. It is possible that if other cases were successfully contested on the decision in the Northamp ton Downs case, we should lose the whole of the £160,000 outstanding.
Ever since this matter has been in dispute we have always contended that, owing to the intricate system involved, if the court would lay down the principle of valuation, it should be applied generally. The previous Government was prepared to adopt this course, because it had experienced so much difficulty in working out a basis of valuation. Although the department has had the advice of expert valuers, and has had before it the reports of three royal commissions, the principle upon which the valuation is determined is not even yet satisfactory. In practically every case, payment has been made as the result of compromise and discussion between .the Commisisoner and the taxpayers with a reduction of the taxpayer’s assessment. In this way an adjustment has been made and litigation avoided. We found also that during the period when this tax was being collected the Queensland Government, having no doubt in view the large number of Crown leaseholds in that State, made certain that there would be no freehold value in the leases and consequently no taxation for the Commonwealth by increasing the rents for sheep country. In fact, the State Government increased rents for practically all leaseholds. There was a retrospective re-appraisement of these leases back to 1917 in some cases, and possibly earlier than that. 1 always had the impression that the reason which actuated the State Government at that time was that it was determined to get any money which might be in these Crown leaseholds for itself, rather than allow the Federal Government to get it by means of a tax on Crown leaseholds. If that was the objective, the State Government was fairly successful, for there was very little left of the difference between the increased rent and the actual economic value of the lease. Subsequently it was found that that re-appraisement by the Queensland Government was excessive, and, in 1923, as the result of a further reappraisement, the holders of leaseholds of cattle stations had their rents reduced to a level comparable to those existing previously. That the Queensland Government had absorbed the whole of any difference between the actual reserved rent and the value of the lease was shown by the fact that many properties were abandoned.
It is difficult to understand why, fourteen years after the passing of the act and seven years after the repeal of this provision, we should now be asked to alter the whole basis of the act. We are asked to do that at a time when the wool industry is experiencing a period of great depression. The forcing of this measure through the House will lead to a great deal of unfavorable comment on the other side of the world. Although the motive of the Government may be good, it is almost impossible to get from it the information we desire in regard to this matter. It is now proposed to pass retrospective legislation in respect of Crown leaseholds despite the knowledge that similar action in Queensland some time ago did incalculable harm to Australia’s credit. It is particularly unwise to revive these unpleasant memories at a time when we most desire to re-establish ourselves in the eyes of the world. I urge the Government to proceed slowly in this matter ; the passage of the bill should be delayed until the feeling regarding it on the other side of the world can “ be ascertained. Before passing it, we should be quite certain that it will not injure Australia. I shall oppose the second reading of the bill for several reasons. First, I desire to retain the present definition of “ unimproved value “. If that definition is not retained, then I desire that the amendment that I have foreshadowed shall be passed. Secondly, I am opposed to the proposed alteration of the law in respect of Crown leaseholds, for it can have only a harmful effect on our credit. It is wrong in principle, and consequently should not be accepted by this House.
– The House is entitled to a great deal more enlightenment regarding two aspects of the subject before it. In respect of the definition of “unimproved value”, the Government claims that the clearing of prickly pear from land is taken into consideration when the unimproved value of the land is deter mined. I submit that there is no evidence that that is so. Indeed, all the legal decisions so far given are opposed to that view; they are to the effect that the exclusion of prickly pear and other pests should be regarded as improvements. This matter has been in abeyance for a number of years. Some land-holders have paid the tax; others have made arrangements with the department for payment, while still others have refrained from paying. The last section has done so at the suggestion of the department. It was understood that a test case would be heard, and that the decision of the court in that case would be taken as a basis for making assessments of taxation, and a standard on which payment should be made. The decision of the court was against the Government, which, notwithstanding its professed willingness to abide by the court’s decision, will not now accept its judgment, but asks Parliament to take from the taxpayer the fruits of the victory he gained in the law courts of the country. It is true that this Parliament has rights in the matter of taxation; hut so has the taxpayer. Although, obviously, the interests of the taxpayer and those of the tax-gatherer are as far apart as the poles, I submit that, when the courts have interpreted the law, that interpretation should be accepted by the Government as readily as it would expect the taxpayers to accept the court’s decision. There is no moral reason against the Government’s view being given effect to in the future; but no government when defeated has a right to ask Parliament to place it in the position of a victor.
In reply to the Government’s contention that the exclusion of prickly pear and other pests from land is taken into consideration when the unimproved value of the land is first determined, let me refer to the case of Jowett v. Federal Commissioner of Taxation, which was decided in Brisbane in June, 1926. In his summing up, Mr. Justice Rich said -
The prevention of the growth of prickly pear, not merely its removal, is to be considered an improvement.
Those words are perfectly clear. Further on in his judgment, dealing with the Foxborough lands, His Honor said: -
Foxborough stands on a different footing . . . The freedom of the land from prickly pear must be treated as an improvement. If the growth of the prickly pear had not been checked by early removal, what would be the condition of the land? Would the price of the land be any different if the prickly pear which would have been there had not been stopped from growing? The expenditure of keeping the pear down on “ Foxborough “ gives the land its present value. If the expenditure had not been made, the land would not have its present value. The Land Tax Assessment Act, Section 3, says that you must regard the land as if the improvements had not been made. If the prickly pear had not been constantly eradicated the land would have been unimproved, and covered with prickly pear.
He went on to say -
The decisions in the High Court- such as Commissioner of Land Tax v. Nathan ( 1 ) , Morrison v. Federal Commissioner of Land Tax (2), and McDonald v. Deputy Federal Commissioner of Land Tax (3) - are in line with this opinion of the Privy Council. Assuming the removal of the pear is an improvement and, instead of supposing the improvement not to have been made, you deduct the value of the improvement from the improved value of the land, you are acting contrary to the section of the act, and the decisions of the Privy Council and of this court. I consider, then, that there- is no lessee’s estate in land given up entirely to prickly pear.
There could be nothing more conclusive than that decision, which followed several others to the same effect, namely, that the lessee of Crown lands is entitled to regard the exclusion of prickly pear as an improvement. Despite those decisions, the bill contains the following proviso : -
Provided further that in ascertaining the value of improvements no amount shall be included in such value in respect of any work done or expenditure incurred for the purpose of preventing land, or any improvements thereon, from deteriorating, or of maintaining land which has been improved, at its improved value, whether by means of destroying animal pests or vegetable growths, or of preventing such pests or growths from establishing themselves, or by any other means, but, in respect of fences and- other structural improvements, effected for any of those purposes, which are on the land at the time as at which the value is required to be ascertained for the purposes of this act, an amount shall, subject to the preceding proviso, be included.
I have never been a willing party to the passing of retrospective legislation, but have invariably raised my voice against it, because I regard it as unfair. If this bill merely meant the collection of revenue from people who had not already paid their taxation, as the Prime Min ister indicated this afternoon, I should have no objection to it. But it means more than that, for it provides for the collection of taxes on a different basis from that laid down by the courts of the land. That is entirely unfair. It is true that some land-holders have paid their taxes rather than go to court, and it is contended that, if the court’s interpretation is accepted, they have a moral right to a refund of the amount paid. That may be so; but even so, it does not decide what is right and what is wrong with respect to those who have not paid their taxation and have obtained a favorable judgment from the court. At this stage we should be concerned only with acting justly towards those persons who still owe the tax. We should see that they will be asked to pay only what the courts of the country say they ought to pay. _ The Government is departing from the principle of abiding by the decision of the court, and is endeavouring to extract taxation from land-holders on an entirely different basis.
The Prime Minister (Mr. Scullin) referred to measures introduced by the late Government, the effect of which, he said, was retrospective. On this point I would only say that although the present Government has been in office a few months, it has already, at the instance of the Taxation Department, introduced one piece of retrospective legislation. If it remains in office half as long as the Bruce-Page Government was in power, it is likely that many more bills of a similar character will be introduced. The whole system of taxation in this country is conducted by the Taxation Department most litigiously. The department allows no taxpayer who has committed even a minor breach of the act, or a taxpayer in whose favour the courts have given a decision, even though the amount involved be small or the issue trivial, to escape without further litigation on appeal to the law courts or to the Court of Review. On several occasions I have, in this House, stressed the need for revision in our methods of taxation. To-day, no man in this country knows on what basis he is paying income or land tax. No effort is made by the department to simplify the method of taxation. On the other hand, year by year, our system of taxation, through the action of those administering the department, is becoming more involved, and the taxpayer has not the faintest idea whether he is being justly treated. In fact, grave injustices are being done in many instances. More information should be made available by the Government on the bill before the House. This legislation will not only open more widely than ever the door to litigation, but also establish additional legal processes, the end of which cannot be foreseen. I urge the Government to seek some simpler method of dealing with taxation, and, by enabling the people to understand it, to bring about a feeling of confidence between the taxpayer and the taxgatherer.
.- The arguments that have been adduced on both sides of the House, for and against this amending legislation, must convince those who are familiar with land and the disadvantages under which the men who are developing this country suffer, of the impossibility of defining what is unimproved land value. No assessor can go on to any land and say what is its unimproved value, particularly when the holder has spent years in its improvement and maintenance and the eradication of pests. I have a great deal of sympathy with the Taxation Department in its-, effort to assess land values according to the definitions set out in our legislation. It is unfortunate that most of those who are responsible for our taxation legislation and its operation are unfamiliar with the conditions of work on the land. I have always maintained that it is quite impossible to assess the unimproved value of land carrying forests or infested with prickly pear or other pests, such as bracken fern and blackberry bushes. In fact, I go so far as to say that that class of land has no unimproved value at all. The Treasurer, when introducing the bill, seemed to agree with that idea because he said that if. the decision of the court were to be adhered to the value of much of the land in the Commonwealth that is infested with prickly pear or other vegetable growth would be negligible. We all know that such land has no value. Those who support the principle of taxing unimproved0 values have always argued that we should tax, not the effort of the individual, which brings about the improved condition of the laud, but the enhanced value given to it by way of road and rail facilities and adjacent improvements.. The community gives no value to land that is covered with prickly pear, forest or scrub, because, even if road and rail facilities were provided, that land would still produce nothing. Its valuecould not be assessed. But immediately an individual goes on that land, and makes the first effort to improve it, value is created, and, under our present method of assessment, the unimproved value is increased. The main feature of the Prime Minister’s defence of this measure was that it does not attempt to disallow improvements upon the land when estimating the taxable unimproved value. But I would point out that this is a question more of assessing the expenditure on maintenance. Take for example, two allotments of land side by side, both infested with prickly pear or other pests when the holders first take possession of them. One man clears his land and maintains it. The other neglects to do so, perhaps because of lack of capital. If, in ten or twenty years’ time, one allotment is free of vegetable pests and the other is infested with them, what is the value of the latter? The Treasurer has said that its value would be practically, nothing. In that, case, the unimproved value of both properties must be nil. Surely, when we attempt to assess the unimproved value, we should take into account the expenditure or effort upon the land to maintain it and keep it free from pests. It is impossible to separate the expenditure on land originally infested with vegetable pests from the cost of maintaining it. Although one year land may he cleared, next year there springs up other growth which in turn must be eradicated. Every year more and more money has to be expended to bring the land into a state of productiveness. Therefore, we cannot separate the first year’s expenditure in clearing land from the next year’s expenditure in maintaining it.
Since we have adopted the system of assessing the unimproved value of land for taxation purposes, we must define what is meant by the unimproved value so that our tax collectors may know how to assess improvements. It is obvious that the man in the street must become confused when he tries to understand our taxation laws. Even many of those who frame our laws are unfamiliar with land and its working conditions. I do not suppose that any of the taxation officers have a practical knowledge of clearing and maintaining land. The man who is doing the most important work in Australia, that of opening up and developing land which otherwise would produce nothing, is suffering a grave disadvantage because of the taxation burdens that are being imposed upon him principally because of lack of knowledge on the part of those who frame and operate our taxation legislation.
The case in opposition to the bill has been well argued by the Leader of the Opposition (Mr. Latham) and the right honorable member for Cowper (Dr. Earle Page). I support the amendment foreshadowed by the right honorable member for Cowper, although it does not overcome the objection that I have to the bill. Clause 2, if passed, will materially alter the existing legislation. After setting out what the unimproved value shall be and the method of defining it, the clause reads -
Provided further that in ascertaining the value of improvements no amount shall be included in such value in respect of any work done or expenditure incurred for the purpose of preventing land or any improvements thereon from deteriorating, or of maintaining land which has been improved, at its improved value, whether by means of destroying animal pests or vegetable growths, or of preventing such pests or growths from establishing themselves. . . .
I take exception to clause 2, because its operation would be unfair to the taxpayer. I cannot understand why money expended in maintaining the land is not to be allowed in estimating the unimproved value, particularly when the original expenditure in cutting “the growth is to be taken as a fair deduction. Those expenditures must be taken together. I feel sure that the Prime Minister wishes to deal fairly with the taxpayers, but, unfortunately, he has no practical knowledge of their work. I admit that he has taken a great interest in taxation legislation and that his arguments have shown him to be possessed of a considerable knowledge of our taxation system. It is grossly unfair to the men who have done the important work of developing the land, to disallow expenditure on maintenance in estimating the unimproved value of land.
It is not fair or just to make this legislation retrospective. It is argued that the Commonwealth Government stands to lose £330,000 if this bill is rejected. I disagree. If the interpretation of the High Court is correct, in regard to the definition of what constitutes improvements, as separated from unimproved value, these people have been unfairly taxed, and they do not owe the “ money. I base that statement on the assumption that the whole of that amount could be. recovered if all parties concerned went before the court for a decision. I < do not suppose, actually, that that could happen, as the cases would not be on all fours. The court’s interpretation of the definition is precisely as I and the ordinary man understand it. In the circumstances these people were never liable foi the tax, and the Commonwealth Treasurer, therefore, cannot lose money if this bill is rejected. It is unfair that those people who were unfortunate enough not to get their case before the court should be com- “pelled to pay because of some legislation that we have the power to carry in this Parliament, while those who were fortunate enough to appeal to the court escape taxation.
– Doe3 the honorable member propose that the amount collected should be. remitted?
– The money has not been collected.
– A considerable amount has been collected.
– The money should not have been collected if these cases are similar in nature to those successfully upheld on appeal to the High Court.
– It would involve a refund of £160,000 in those cases where objection has been lodged.
– That makes no difference to the justice of the case. If these people have paid taxation on an unjust assessment the Commonwealth is not morally a loser, as the taxpayers are entitled to n refund. Taxation is very necessary, as the Government needs the revenue, but it must be within the law. The High Court of Australia - the interpreter of our laws - has tested the method of assessment, and declared it to be unfair. Even if the matter involves the refund of £160,000, that should be done in the interests of common justice, and in order to retain the confidence of the people of Australia and of the world. This Parliament has no right to introduce legislation that will mulct these people in taxation that has been declared to be unjust. I disagree with the fundamental principles of this measure, and shall certainly vote against it if the Treasurer is not prepared to amend it so as to give justice to the people I have mentioned. I believe that is the consensus of opinion of honorable members, and I hope that they will not be overweighted by the financial consideration that is used as an argument in support of a palpable injustice.
– I. desire to deal with one or two points that have been raised during the debate. Honorable members opposite who have spoken in criticism of the bill have adopted the argument that this measure proposes to alter the law relating to land taxation, and to make that alteration retrospective. They contend that, as a consequence, the whole procedure is unfair to those who are subject to land taxation in Australia. I thought that I made it perfectly clear when moving the second reading - it certainly was made quite clear by the Prime Minister this afternoon - that it is not intended to alter the law as it has been administered with respect to land taxation in Australia; but that this bill is intended to declare the law in the way that Parliament originally intended it to be administered, and in the way in which it has been administered for twenty years.
It is contended that the judgments of the High Court last year in the McGeoch case, and in the Northampton Pastoral Company case, relating to Crown leaseholds, were contrary to the intention of Parliament when it originally passed the Land Tax Act. In order to show that those judgments practically set aside the intention of Parliament, I quoted from the reports of several royal commissions to whom was remitted the specific question as to the wisdom or otherwise of persisting in this class of taxation.
The question whether taxation of leaseholds was fair was remitted to a royal commission appointed by the Commonwealth Government about 1918. The Leader of the Opposition (Mr. Latham) did not refer to that aspect of the matter when he presented his case this afternoon. How does he deal with the situation with regard to the justice and equity of taxing leasehold estates in Crown lands? That very matter was submitted to a royal commission, which took evidence upon it, and finally reported to Parliament to the effect that such a form of taxation was just and equitable.
– But that it ought to be radically altered in reference to the 4£ per cent, basis.
– I am speaking of the investigation made by Sir George Knibbs.
– I refer to the later one.
– The right honorable W. A. Watt, who was then Commonwealth Treasurer, suspended the collection of the tax pending investigation by the commission of which I speak. It took evidence in the various States primarily concerned with this method of taxation, and finally reported that there was no good reason why such a form of taxation should be discontinued. In effect, Sir George Knibbs said that there was less objection to the taxation of Crown leaseholds than there was, possibly, to the taxation of freehold estates in land. It seems to me that it has been established half a dozen times that Parliament not only originally imposed this tax, but from time to time reviewed the justice of its incidence, and decided to continue it. Now, after the lapse of fifteen years, a judgment given by the High Court of Australia sets aside the obvious intention of Parliament, and involves the Treasury in a refund of a large sum of money. It also involves the consideration of the moral right of people who have paid the tax to a refund of a still larger amount. All that the Government asks Parliament to do is to authorize the collection of the tax, and the administration of the law with regard to land taxation in the same way that it has been administered for the twenty years prior to the judgments delivered in the cases that have been referred to this afternoon. The bill can be said to do no more than to more clearly express the original intention of Parliament. There is no justification for the inference that it in any way alters the law as it has been administered, that it imposes new taxation, or extends the area of land taxation.
– The judgment in the prickly pear case altered the law.
– I am sure that honorable members who have criticized the bill have entirely misunderstood its intention, and have also quite misunderstood what was involved in the judgment given in the McGeoch case.
– We cannot very well misunderstand what is expressed in paragraph b of proposed new section 2.
– I assure the honorable member that expenditure incurred in the eradication of pear or other vegetable pests, or in clearing the land, or doing work that obviously improves its value, will be taken into account in arriving at the unimproved value. That is intended to be done under the provisions of this bill.
– It does not say so.
– The honorable member may say that his understanding of the bill is contrary to my interpretation of it. After all he is a layman, and so am I.Neither of us can pretend to understand the full purport of language such as that embodied in a bill of this kind, which is drafted by legal men, highly-trained experts, who were given the task of framing a law to carry out what I have expressed - the intention to make more clear the will of Parliament when the original act was passed.
– Will the honorable gentleman make that explicit in a further amendment.
– I certainly shall if it is necessary to do so. I submitted to the Commissioner of Taxation the amendment foreshadowed by the right honorable member for Cowper (Dr. Earle Page), and asked for his opinion upon it. I make no apology for giving his opinion, instead of my own, because the matter involved is highly technical. Only a highly-trained legal man, or men who have been engaged in the administration of this law for years, can tell the real effect of a clause of this nature. What is the use of my reading the amendment of the right honorable gentleman and pretending thoroughly to understand what its effect would be, or to give an authoritative interpretation of the new definition in the bill? I would not for a moment set myself up as an authority of that kind. There is nothing more difficult to understand than the terminology of taxation laws, and especially that which has been the subject of numerous judgments of the High Court. Each of the phrases employed has already been subjected to numerous decisions and interpretations by the High Court and the Privy Council, and those versed in such matters are best able to arrive at the legal meaning of the words employed. It is the legal meaning that we have to consider, not the ordinary common-sense meaning.
– That is the reason why the law has had to be amended so often.
– It is because we have had to amend it so often, because it has been subjected to the intense consideration of so many legal minds - those advising the taxpayers as well as those advising the Commissioner - that we have to leave it to legal men to say whether or not our intentions and the policy of the Government are being carried out.
– Even the judges differ.
– Yes. Mr. Justice Isaacs dissented from the majority decision of the High Court in this very McGeoch case.
– That is all the more reason why the wording should be explicit.
– Let us hope that it will be so, but, so far as I can see, it is utterly impossible to be explicit in the bill itself.
– Is it not a fact that while judges differ as to the legal meaning, laymen differ as to the so-called common-sense meaning of an act of, Parliament?
– No doubt, and I am afraid that the Minister who was his own lawyer in a highly-technical matter of this kind would have a fool for his client. We should probably have more difficulty if we tried to express our intention in “ plain, common-sense language” in a bill of this kind than if we followed the usual legal phraseology.
– Of course, it is not a matter of common-sense language, but of making business for the lawyers afterwards.
– The honorable member for Adelaide (Mr. Yates) is surely not asking us to disregard the existence of the High Court and the Privy Council.
– I suggest that the proposal of the honorable member for Darwin (Mr. Bell) is sensible.
– The Commissioner of Taxation comments as follows upon the amendment foreshadowed by the right honorable member for Cowper (Dr. Earle Page) : -
The added value of all improvements mentioned in Dr. EarlePage’s proviso would be taken into account in ascertaining the value of improvements under the provisions of the lull as drafted, subject, however, to the proviso (to the definition of “ value of improvements”) that the added value shall in no case exceed the actual cost of such improvements.
– If the Commissioner of Taxation would explicitly say that, there would be no doubt about it in the event of a new Commissioner coming into office at some later period.
– The right honorable member exhorted the Government not to proceed with that partof the bill which relates to Crown leaseholds lest misunderstanding should be created overseas and more damage done to Australia’s credit. He said that there might possibly be some suggestion of repudiation or something of the kind. It is regrettable that an argument of that description should have been used. Surely we should be able to discuss measures like this upon their merits. Are we to regard the impression that our legislation might create overseas as the deciding factor in dealing with it? Surely it is not a worthy argument for an honorable member of this Parliament to rise in his place and say “ Do not do this lest someone overseas may misunderstand it.”
– That has already been suggested from overseas.
– Such a suggestion indicates that a government should be dictated to by interests other than those of Australia. This is altogether a matter of domestic policy.
– But it affects overseas money invested in Australia.
– Are we to be eternally guided by the prejudice or bias of someone in London or New York?
– The Treasurer could surely take reasonable steps to avoid misunderstanding.
– Let us avoid misunderstanding here in this House. If there is anything wrong with the bill let honorable members point it out. But do not let us suggest that we should be guided by the opinions of people in London or elsewhere overseas and not by the merits or demerits of a bill.
– Does the Treasurer think that we should ignore the effect of our legislation outside of Australia?
– No ; it is the responsibility of the Government which brings down the bills to weigh the possible consequences of them. But there is in Parliament altogether too much of this holding up of the danger to our credit that may result from the passing of certain legislation. It inspires others outside and overseas to use the same argument for the dropping of such measures.
– Our credit abroad has already been damaged by our not considering this aspect in the past.
– In which case?
– In the case of Queensland, of course.
– In the case of Queensland the same error arose. A proposal was introduced into the Queensland Parliament which dealt with certain purely domestic questions such as leasehold tenures and rentals of leaseholds. That matter surely should have been decided by the Queensland Parliament; but it was made an issue in the money market of London. Does the right honorable member for Cowper (Dr. Earle Page) justify the carrying of a controversy of that kind to London?
– When London money is invested in Australia, we must: consider the effect of our legislation on the London money market.
– Does the right honorable member suggest that because London money is invested in Australia the people who have invested it here should have the right to dictate our domestic policy to us?
– I have not suggested that they should do so.
– That is what is involved in the honorable member’s argument.
– I say that the fact that London money is invested here should bc taken into account.
– Every responsible government will consider the possible effect of its legislation or administrative acts upon the credit of the nation; but I suggest that it is wrong to make that one of the issues in dealing with a measure of this kind. I strongly deprecate such action.
– We should shut our eyes to it, I suppose ?
– We should consider the proposals submitted to us on their merits.
– Surely it is the duty of this Parliament to protect the interests of everybody who has money invested here.
– Of course it is. It is also our duty to consider the rights of the people and the rights of our leaseholders whether they are resident or absentee. It is most unfortunate that the suggestion should have been made at this juncture that this bill may lead to misunderstanding on the part of financiers in London, and that, therefore, our credit may be damaged. It is a most unhappy suggestion.
– The necessity for making it is to be deplored very much uki re.
– The right honorable member does not help things or remove any of our difficulties in the London money market or elsewhere by suggesting that there is room for misunderstanding and misconception in regard to this bill.
– The Treasurer knows very well that I helped him in 1923 when I was Commonwealth Treasurer, and he, as Premier mw! Treasurer if Queensland, was in difficulties on the London money market.
– If the right honorable member helped me on that occasion
I am duly grateful for it; but, to be perfectly frank-, 1 did not see any beneficial effect from his efforts. I do not say that unkindly. But the fact remains that when I went to Loudon in 1924 I had to face an absolute barrage of opposition, antagonism, bias and prejudice which took many long months to break down.
– I hope the honorable member does not suggest that I was responsible for that.
– I do not suggest that the right honorable member created any difficulties.
– Was not actual help given by the Commonwealth Government?
– There might have, been; but if was not given in direct cooperation with myself or at my suggestion.
– Why cannot the Treasurer admit he was given help?
– I did not seek any active co-operation from the Commonwealth. I assume that the Commonwealth Government or any State Government would do what it could to break down such ruffianly opposition as Queensland encountered at that time. But we were left to our own resources to break it down for ourselves.
A good deal of argument has occurred with regard to the retrospective provisions of the bill; but it is known, I am sure, to the Leader of the Opposition that the measure would be ineffective unless it was retrospective.
– That is, in so far as Crown leaseholds are concerned.
– Yes ; and to a lesser extent also as regard the freehold, lands t,o which the McGeoch judgment would apply.
– The effect in that connexion would be relatively slight.
– That is so. Unless the measure were made applicable as far back as 1914 in regard to Crown leaseholds it would be entirely ineffective and inoperative; and, so far as the principle itself is concerned, it would have this effect, that no tax collected was properly collected and therefore should be refunded.
– But why so beyond 1914?
– That is only in respect of those cases to which the
McGeoch judgment would apply. As to leaseholds, Parliament in 1914 definitely intended to apply the land tax to Crown leaseholds ; but according to the judgment of the High Court in 1929 the operation of the tax in that regard was nugatory, and the tax should not have been collected. In these circumstances, surely it is right to ask Parliament to re-declare the law, and to give authority for a practice which has been carried on for fifteen years. We are asking for authority to collect taxes already assessed, and in the majority of cases, already paid. That is all that is proposed in the bill in that connexion.
In deprecating the retrospective character of the proposed new law, the right honorable member for Cowper (Dr. Earle Page) said that the retrospective laws, for which he was partly responsible as a member of the previous administration, had relation only to income taxation. He quoted a number of cases of income tax law amendments being made retrospective, and said that in those instances the facts fully justified such action. Surely there is just as strong a case to justify the giving of a retrospective effect to this proposal ? Two taxation measures of 1924, which had a retrospective effect, and for which the right honorable member was largely responsible, were the Income Tax Assessment Act, which had relation to live stock, and the War-Time Profits Tax Assessment Act. A reference to these measures appears on page 358 of Report of the Royal Commission on the Constitution, in Appendix D. Attention is drawn to the case of Cameron v. Deputy Federal Commissioner of Taxation, which is reported in 32, C.L.R. at page 68, particularly in regard to certain income tax regulations. The Income Tax Assessment Act 1915-1918 had provided that for the purpose of computing the profits derived from any business the value, as prescribed, of all live stock not disposed of at the beginning and end of the year should be taken into account. The report stated : -
The position arose that live stock had not been validly taken into account in the assessments of any taxpayer for any of the seven financial years to which the Income Tax Assessment Acts 1915 to 1921 were applicable. As those acts were repealed before the case was decided, the position could not be remedied, except by special legislation.
In those circumstances, the two acts to which I have referred were passed and were given a retrospective effect for the seven years.
– Does the Treasurer object to that?
– Not at all; I think that the acts were justified.
– I said that retrospective legislation required justification.
– Apparently the right honorable member justifies the legislation to which I have just referred, because it was introduced by a government of which he was a member. But all other such legislation must be regarded as wrong!
– That is not what I said.
– Surely that legislation was justified.
– It seems to me that the right honorable member is prepared to justify legislation of this description introduced by his government, but to condemn it when introduced by another government.
– We should deal with each case on its merits.
– That is so ; and a measure is not wrong merely because it has a retrospective effect.
I wish now to refer to the Income Tax Assessment Act of 1928, upon which the Leader of the Opposition (Mr. Latham) made some comment. That measure was introduced by the right honorable member for Cowper, who was then Treasurer, but the Leader of the Opposition, who was Attorney-General in that government, was fully cognizant of the effect of it.
– That is the amendment to section 21. I thought it was proper at the time, and still think so.
– Is there really anything in that retrospective taxation measure differing in principle from what is in the measure we are now considering?
– I suggested in my speech that there is. Everything depends on the merits of each case.
– It seems to me to depend also on the side on which an honorable member sits. The act of 1928 amended retrospectively to 1922-23 the words of section 21 of the former act, following upon the judgment of the Supreme Court of Victoria, declaring the true interpretation of section 21 to be entirely different from what was always understood to be the intention of Parliament. The new wording merely expressed the original intention in effective terms. It was made to operate retrospectively, so as to enable the Commissioner to determine against the taxpayers whose objections or appeals had not been determined when the 1928 act became law. And in every particular that is exactly what is being done by the present bill. The act of 1928 was intended to express more clearly the intention of Parliament and had the effect of denying to aggrieved parties access to the court after one judgment had been secured.
– That does not make this bill right.
– I am merely showing that the late Government did what the present Government is proposing to do.
– The Commissioner of Taxation probably drafted both speeches.
– That is quite possible.
– The language used is the same in both cases.
– As the honorable member has suggested, the Leader of the Opposition (Mr. Latham) may have adopted as one of his speeches, the language used by the Commissioner of Taxation.
– I can assure the honorable member that it was my own speech.
– I am ready to admit that my second-reading speech was largely based on a statement by the Commissioner of Taxation. I adopted that statement for the sake of greater accuracy and to make my explanation of the intentions of the department clearer. I think it must be admitted that there is no new principle of taxation in the measure, and that it does not impose new taxation. All that it does is to re-declare the law, and express more clearly the original intention of Parliament which has from time to time been endorsed by judges of the High Court, and has been followed by the Taxation Department with regard to the administration of the Land Tax Assessment Act.
Question - That the bill be now read a second time - put. The House divided.
Majority . . 15
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 (Definitions) -
.- This clause makes vital changes in the Land Tax Assessment Act by altering the definition of unimproved value, and even now I suggest that, if it is possible to allow further time for the consideration of a matter so technical in its character by those immediately interested and concerned, the Government ought to grant it. I fear that there may be litigation as to the meaning of these new provisions, and surely it is desirable to avoid that if possible. It would be an unfortunate thing if the effect of these extensive amendments were to be found in expensive litigation.
.- I suggest that the clause should be considered, not as a whole, but paragraph by paragraph. I second the request made by the Leader of the Opposition (Mr. Latham) that further time should be given for the consideration of these definitions. I am satisfied that if the Government will consider the points submitted during the debate the passage of the bill when we next meet will be expedited. Otherwise we are likely to be at cross purposes, and to discuss at great length points upon which we might be in agreement to-morrow if the Government would consider further the matter of drafting. We have already had the spectacle of alterations being made which subsequently were found not to be all that was desired. The language used by the Parliamentary Draftsman has been found to be such as needed amendment as soon as Parliament next met. It would expedite business if the definition of unimproved value were held over until tomorrow. In the meantime the Government might consider whether it could not more explicitly state its intention, so that there might be no doubt as to the law, no matter what government was in power or what commissioner was administering the act.
– If the passage of the bill would be facilitated by postponing its further consideration until to-morrow, it would undoubtedly be the wiser course to report progress. The Government has no desire to pass hurriedly through Parliament an imperfectly drawn measure which would only give further cause for litigation. It is our desire to avoid that. But great care has been devoted to the drafting of the clause which deals with the definitions. Senior and junior counsel appearing for the Crown in the McGeoch case were asked to advise on the drafting of the necessary new definition, and I understand that their advice has been carefully followed. The provision has also been subjected to the closest scrutiny of the Crown Law Department and the Commissioner of Taxation. If, however, time would be saved and the passage of the bill facilitated by deferring its further consideration until to-morrow, pending the consideration of some of the points raised by the Leader of the Opposition (Mr. Latham) and the right honorable member for Cowper (Dr. Earle Page), I have no doubt a postponement could be granted. Nevertheless, it is important that the bill be passed at an early stage. There are still current objections to certain assessments, and litigation is pending, and to defer the decision of Parliament, would be to lead to the possibility of probable litigants being involved in legal costs. The matter would possibly be further complicated by a hearing before the High Court at an early date. The Prime Minister, .1 understand, has no objection to the postponement of the further consideration of the bill until to-morrow.
War. Service Homes: Evictions - Marine Survey: Laying-up of the “ Moresby.”
Motion (by Mr. Scullin) proposed -
That the House do now adjourn.
.- Last Wednesday, I asked the Prime Minister (Mr. Scullin), -without notice, a question affecting the occupants of war service homes, who are in arrears with their repayments. I have received letters from a number of these men who have been threatened with eviction by the Deputy Commissioner in Brisbane. The Prime Minister replied sympathetically and informed me that the Minister in charge of the War Service Homes Department had already communicated with the Deputy Commissioners in the different States instructing them to give the utmost consideration to all such cases. He said that the Minister had taken a more than lenient view of every deserving and necessitous case, and that “ every genuine case of hardship, due to unemployment or other causes, has been sympathetically considered by the Minister “. To give an example of the cases that have been brought under my notice, I quote the following letter which I have received from a correspondent at Nundah, dated the Cth March last: -
I take the opportunity of placing before you the unfortunate position 1 am placed in regarding the home I have purchased from the War ‘Service Homes Commission. I have been paying same off at £3 2s. lOd. per month since 11th December, 1922, but having had only four months’ work during the past sixteen months, I have gone into arrears £29 ls. 2d. (about nine mouths’ rent). I have culled each month at the local office and advised them I was out of work and last week the arrears clerk told me that the Commissioner could only allow mc another fortnight to make up some of my arrears. This expires on the 12th of this month, and 1 think it very hard if I. have to lose my home. I may mention that, in order to try and overtake some of the arrears, I paid an extra IDs. in January, £1 in July,’ £1 in August, £1 in November, 1929, and £2 extra in January this year. Work is very hard to secure, and I nave used every means in my power to secure same, but up to date my efforts have not been successful. I regret to say that I have had to fall back on the local Government for relief rations since last Christmas.
The reference is from Dr. Cilento, and is satisfactory to my correspondent. He goes on to say -
I might mention that prior to losing my position I was in arrears through illness, and since being unemployed I have paid into the War Service Homes just on £20, and thereby I contend that I have done everything in my power to honour my contract.
Either the Deputy Commissioners ha’ e not received the instructions that the Prime Minister told me had been issued to them, or there must be some other explanation of the delay that has occurred in giving effect to them, because I have received from the Deputy Commissioner in Brisbane a letter dated the 13th March last, the day following that on which I asked my question, in which he makes the following statement in regard to the man whose case I first raised -
At the present time his account is £28 19s. 2d. in arrcar, and, whilst I sympathize with him in the circumstances which he states have caused the arrears, I think you will agree that every consideration has been extended by the Commission, and regret that it is not possible to allow the account to fall further into arrear. There is no desire to take steps towards regaining possession of the home, hut unless he is able to submit a proposal for the pament of instalments falling due and the gradual liquidation of the arrears by a small additional sum monthly the Commission will lie reluctantly compelled to consider this step. No action will be taken for the moment, and to enable him a further opportunity of submitting a proposal the matter will be reviewed again on the 9th proximo, by which time I trust he will be in a position to do so.
The Government cannot deal harshly with the occupants of War Service Homes who, because of unemployment, are forced into arrears. A definite instruction should be sent to the Deputy Commissioners in the various States so that hardships that otherwise must necessarily arise will be obviated. I feel sure that the whole House is sympathetically disposed towards every family which is affected by unemployment. We all have distressing cases brought to our notice from time to time. I am pleased that some landlords are rising to the occasion and are protecting those who have been thrown out of employment. I strongly urge the Minister to take this matter up immediately with the Deputy Commissioners, and in deserving cases to see that some relief is granted. The cases of men who have fallen into arrears through abuse of drink or neglect to take work that is offered come within a different category; but where it can be proved that men are in arrears because of unemployment, or other causes beyond their control, the Government should set an example to the community.
.- I desire to raise a question of national importance. I refer to the laying up of the survey ship Moresby. L realize that in these days of financial stringency every avenue of retrenchment must be explored, and that in the piping days of peace, when discussion on disarmament is popular and our soldiers and sailors do not loom so largely in the public eye, even defence expenditure must be curtailed.
I submit, however, that the work of the Geranium and Moresby has been invaluable not only from a defence viewpoint, but also to the mercantile marine. The work of these vessels may be considered as important as that of our lighthouse service, and I do not think that the Government would consider for a moment any retrenchment in connexion with the latter service, because of inability in the matter of expense to maintain it at its proper standard.
There does not appear to be any valid reason why the work of the Moresby, which has been so effectively continuing the survey work carried out by vessels of the Royal Navy for 100 years, should be interfered with. If Matthew Flinders, who declared that he would completely chart the Australian coast, were alive, he would be astounded to find that this Government was declining to continue the important work.
A survey of the Australian coast was at one time being undertaken by the Geranium, which was loaned us by the Royal Navy, and that work was later taken up by the Moresby, which has also rendered valuable assistance- in that connexion. Over 100 inaccuracies have been corrected in the charts of the Australian coast, including the charting of the Sir Edward Pelew group, which was found to be 10 miles out of the position shown on the chart; Sandy Cape, which was 2£ miles out, in longitude, and the north-west lighthouse, Xi miles out of its charted position. The Moresby has been engaged on a triangulation survey of the Barrier Reef which, if completed, would be invaluable to ships trading along the Australian coast. This vessel has often carried out very important salvage work, such as with the Montoro and Cooma when those vessels went ashore.
– There is a tale attached to the grounding of the Montoro.
– That may be so ; nevertheless the Moresby rendered valuable service after the Montoro grounded.
A complete survey can be regarded as an effective maritime insurance to ships trading on the Australian coast. Moreover, the personnel of that vessel is, with the exception of the commander, who is a valuable officer loaned to us, entirely Australian and within a couple of years the complete personnel of the Moresby would be Australian born.
If the Government desires to ensure the safety of life at sea it should explore other avenues in which to reduce expenditure instead of impairing a very efficient service. It should endeavour to raise money to ensure a continuance of such necessary work, possibly by collecting contributions from shipping companies or imposing a tax on steamer passengers’ tickets. I do not think that such a proposal would meet with very strong opposition, because the need for an efficient survey is greater to-day than it has ever been on account of the increasing tonnage of ships.
Until 1925 a vessel of the Royal Navy was assisting our own ships, but it has been withdrawn, and extensive survey work is now being conducted by it around the coast of Borneo and further north. We cannot expect the vessels of the British Navy to return and do this work for us gratuitously, particularly as we pride ourselves on being selfcontained in this regard.
If a serious maritime disaster, accompanied by loss of life, were to happen, some blame might not unfairly be placed at the door of the Government for such an expensive economy. It needs no stretch of the imagination to picture this happening to a ship sailing on a charted course at night in bad weather. During the day, the Treasurer deplored the fact that certain statements which had been made would have the effect of belittling Australia in the eyes of the world, but what greater mistake could we make than allow it to be alleged that Australia is lagging behind such countries as Portugal, Siam and China in the matter of maritime survey work?
I make an earnest appeal to the Government to consider ways and means for finding the £50,000 per annum to again place the Moresby, which cost £120,000 to equip, in commission in order to ensure the safety of passengers and crews as well as the ships which have, in many cases, to transverse practically uncharted seas.
– I understand that while I was absent last week the honorable member for Lilley (Mr. Mackay) raised the question of threatened evictions from war service homes in Queensland. He has now mentioned two such cases. The honorable member should have brought this matter under my personal notice as other honorable members have done.
– I sent particulars of both cases on to the Minister.
– How long ago?
– The Minister was in South Australia electioneering last week
– The honorable member should keep quiet. I was here yesterday.
– I said last week.
– The honorable member for Lilley said that he sent the particulars to my office yesterday. If the honorable member had brought them under my notice I would have given them my sympathetic consideration just as I have done in other cases.
– The Prime Minister’s promise on “Wednesday does not coincide with the letter I received from the Deputy Commissioner on Thursday.
– The Deputy Commissioner in each State has to deal with each case as it arises. As soon as I took office I issued instructions to the effect that all such cases should be sympathetically considered. “When I took over the “War Service Homes Department, a number of tenants were under notice of eviction, and I immediately issued an order to the effect that no tenants were to be ejected until I had an opportunity of fully considering each case. That has been done, and I believe in every instance of hardship, such as those mentioned by the honorable member, sympathetic consideration has been given and no injustice done.
– On what date were such, instructions issued?
– When I took office.
– Then it would appear that the Deputy Commissioner is not observing those instructions..
– I do not think any of these men have been evicted, and they will not be without my authority. There are some instances where the arrears of rent have been in evidence for four or five years although the tenants have not been out of work for longer than a few months. The honorable member for Lilley will agree that the Government cannot carry such cases indefinitely. The War Service Homes Commission must be conducted on business lines.
– What evictions were pending when the Minister assumed office?
– A great many were in the coal-mining districts where men have been out of work for nearly twelve months. In such cases I think it only fair to give them a chance to get back to work, and in every instance where it has been shown that men are “ tryers “ the department has been fair to them. Many of these men would have been turned out of their homes had it not been for the order I issued on assuming office. Action had already been taken in some cases, and I gave instructions that no tenant was to be turned out without my authority. There are cases where men are still out of work, and in connexion with which the Deputy Commissioner has been able to make some business arrangement with them.
– What arrangements can you make with men out of work?
– Before a tenant is actually ejected I have to study the full particulars of his case.
– Are the individual cases referred to the head office, or does the Deputy Commissioner exercise his own judgment?
– The Deputy Commissioner exercises his own judgment up to the point where these men are about to be turned out of their homes. When it reaches that stage the matter is brought before me. If the honorable member will see me about these cases, I can assure him that I shall give them the fullest consideration possible.
– Particulars of the cases are in the Minister’s office now.
– The honorable member has not given me very much time to look into them. If these men have been unemployed for a considerable period, I shall see that genuine cases are given every consideration, and that they are not subjected to any harsh treatment.
.- The honorable member for Balaclava (Mr. White) has again referred to the laying up of the survey ship Moresby. AsI have said before,I regret very much, as the Minister in charge of this work, that such a stop has been rendered necessary, and I have no desire to belittle the very fine work that has been done by the officers on this vessel in charting the Great Barrier Reef. We have to consider, however, in view of the Commonwealth’s present unsatisfactory financial position, whatcuts in expenditure we can make. N either the honorable member, nor any other member of the House, has suggested any other means whereby we may save £60,000.
– I suggested that the cost of carrying on this work might come from the shipping companies.
– I am prepared to explore that possibility, but I am not as optimistic regarding the result as the honorable member seems to be.
– There is also the tax on passage money.
– As urgent as the work may be from the point of view of the honorable member, I do not think that that would be a wise course to pursue. Let me point out, however, that if we sin in this respect, we do so in excellent company. When the last Government prepared its Estimates just before the débâcle, expenditure on this work was ruled out. The reason was that the then Treasurer found himself in a tight corner. We found ourselves in a still tighter corner, because we had to cut a further £183,000 from the proposed expenditure even as pruned by our predecessors. We could not see our way, in the circumstances, to replace an item of expenditure which had been dropped. The point is that a trust fund of £320,000 which had been set aside for this work from 1924 to 1928 had become exhausted. The honorable member made a comparison with Portugal, but I would remind him that the littoral of Portugal was surveyed hundreds of years ago. As a matter of fact, sailors from that country were setting forth to discover new lands long before Australia itself was discovered. The Government cannot see its way to find £60,000 for this work at the present time. In fact, we must discover means of making further cuts in our expenditure, and I am determined to go on with this purpose, even though it may involve me in a measure of unpopularity. After all, this survey work cannot be compared with the expenditure on lighthouses. The Great Barrier Reef is not on the coast of Australia, and ships would have to be a long way out before they could be wrecked on the reef. Moreover, it is well to recall that a great deal of the Australian coast itself is not surveyed at all, and we shall probably be surveying it for the next 100 years.
– A naval authority has estimated that at the present rate of progress it will be 300 years before the Australian coast is completely surveyed.
– Well, that supports my contention that the suspension of this work for a year or so is not immensely important.
– Is this ship being laid up only temporarily?
– Yes; but I do not wish to be misunderstood: We cannot put the vessel into commission again until we obtain funds for the purpose, and I cannot see any immediate prospect of that. I realize the importance of this survey work. I have all along been a strong advocate of a proper survey of the north-west coast of Western Australia. The old chart in some places represents the coast as being a mile away from its actual position. Nothing that any honorable member can say can further impress upon me the importance of this work, but the Government is compelled to cut its coat according to its cloth.
Question resolved in the affirmative.
House adjourned at 10.29 p.m.
Cite as: Australia, House of Representatives, Debates, 19 March 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300319_reps_12_123/>.