12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 2.30 p.m., and offered prayers.
Postponement of Election
– Will the Minister for Home Affairs state whether it is the intention of the Government to defer the publication until after the adjournment of the Senate of the new ordinance decreeing residential qualifications in respect of the election of the Darwin Town Council?
– The ordinance is in course of preparation, and as soon as it has been drafted it will be signed and gazetted.
Alleged Poaching by Malays.
– The Melbourne Herald of 2nd August, contained the following account of alleged poaching carried on by Malays in the pearling waters to the north of Australia -
Reports have been current here lately that Malay pearlers from Timor and other islands in the north have again been poaching on the pearling grounds east and west of Darwin.
Local pearlers and trepang fishers naturally resent the annual visits of the poachers, who, however, are enabled to carry on in safety since there is not a single police patrol boat on the whole of this coast. The poachers fill up with valuable shell and trepang, pay no taxes or licence-fees, and their crews receive only “coolie” wages and are fed on a very low scale compared with the local men.
Some time ago one of our local pearlers - a well-known character in these parts - found a new field, a rich patch of shell along the coast, and made elaborate preparations to work it. His lugger was fitted with engines, the clivers were equipped with air compressors, and a rich return was expected when the little flotilla set sail.
But the poachers from the north had also discovered the patch, and, in communication with the blacks on shore, the irate pearling master, who was an Irishman with a good war record, learned that the poachers had worked out his patch with a fleet of five luggers, had cleaned up the job “ before last moon,” and had been seen sailing north again.
The report goes on to describe a chase on the high seas, in which the pearler donned a military uniform, boarded the Malay craft, threw their firearms overboard, and took possession of all the shell they had with them. That is how our northern seaboard is administered. Will the Minister for Home Affairs state what action the Government proposes to take to protect our Australian pearlers from foreign poachers, and to prevent the landing in Australia of Malays and other prohibited persons?
– I shall have inquiries made into the allegations contained in the newspaper report, and the Government will consider what action is necessary.
– Will the Prime Minister state whether the Government is pledged to a renewal of the sugar agreement? If the policy of protection is to be subject to review, is it the Government’s intention to submit to the dictation of Sydney manufacturers in regard to tariff changes, as was done recently when schedules were introduced without any inquiry by the Tariff Board, and even without discussion by this Parliament?
– It is not usual to disclose Government policy in answer to a question.
– In view of the short interval between now and the 1st September, will the Prime Minister inform the House what steps it is proposed to take to ensure that the sugar consumers of Australia will be fully represented at the forthcoming inquiry? Is it intended that, when nominations are received for a consumer’s representative, preference will be given to a woman?
– I do not propose to communicate directly with any one claiming to represent the consumers. I have made a public announcement asking all those who regard themselves as interested in this matter to forward nominations, from which a selection will be made.
– Is it the intention of the Government to make any provision for the payment of witnesses’ expenses at this inquiry, or will all witnesses who give evidence do so at their own expense?
– That is one of the details which will be worked out; but we do not intend that this inquiry shall cost a large sum of money. Whether or not any expenses will be paid to witnesses will be a matter for recommendation. The representatives on the committee will be paid by the bodies they represent, with the exception of the representative of the domestic consumers. The committee will visit such parts of Australia as it deems necessary; but I do not anticipate that much, if any, cost will be incurred in respect to witnesses’ expenses.
– Will the committee have power to inquire into the profits and accounts of the Colonial Sugar Refining Company?
– If the company chooses to reveal such information, yes; otherwise, no.
– The committee will have a very full reference; it will be asked to inquire into any aspect of the industry it thinks fit, including the profits of any company.
– I understood from what the Prime Minister said the other day that such evidence as would be heard before the committee of inquiry into the sugar industry would betendered voluntarily. Now I gather that the subject of expenditure has been giving some concern to the Government. Does the Prime Minister seriously propose to alter the policy of this country in regard to an industry in which millions of pounds have been invested, and in regard to which the national policy of the country has been already determined - does he propose to do this as the outcome of an inquiry in which evidence is not taken on oath, and which, in the very nature of things, cannot be complete and full?
– As I understand the right honorable gentleman, he has been giving his own views on the subject; but I do not know whether ho has really asked me any question.
– Will the Assistant Minister state whether he has yet had transcribed the notes of the deputation which waited on him about three weeks ago regarding the imposition of duties on glass which is not manufactured in Australia, and is not likely to be manufactured here for many years? On the assumption that the notes have been transcribed, what does the Customs Department propose to do about it?
– The notes have been
Transcribed by the typist; but to accede to the request of the deputation would involve the bringing down of another ta riff schedule.
– Well, I do not mind that, so long as it supports ray case.
– I am pleased to learn that the honorable member would support such action. The matter is under consideration by the Minister for Trade and Customs and myself.
– Is the Prime Minister yet able to state whether secondhand goods sold at auction or otherwise will be subject to the sales tax?
– We shall be able to discuss the details of the sales tax when the bill is in committee.
– Can the Minister for Home Affairs inform honorable members when it is proposed to transfer the Patents Office from Melbourne to Canberra?
– The matter is under consideration.
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions sire as follow : -
asked the Treasurer, upon notice -
– The following reply have been furnished by the Commonwealth Bank: -
The above figures represent thousands of pieces of paper.
asked the Minister for Defence, upon notice -
– The answersto the honorable member’s questions are as follow : -
asked the Minister For Trade and Customs, upon notice -
Does the Government intend to impose primage duty on goods imported into Australia under customs duty, but not cleared from bond prior to the 10th July, 1930, whilst goods previously on the free list, and held in warehouse in Australia prior to that date, are exempt from primage duty?
– Yes. All goods entered for home consumption on and after 10th July are liable to primage duty. Goods which had already been cleared on that date are not so liable. The condition of affairs indicated in the question prevails whenever a customs duty is increased.
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : - 1. (a) Yes; (b) Yes.
asked the Minister for Works and Eailways, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
– The matter will Ve carefully looked into. The embargo was necessary in connexion with the adjustment of the trade balance, and it would be impracticable to lift it for one State only.
asked the Treasurer, upon notice -
Will he lay upon the table a detailed copy of the trading and profit and loss account of the Commonwealth Oil Refineries for the year ended 30th June, 1929, also details of the amount allowed for depreciation?
– The only published particulars of the profits of the company and of the amount allowed for depreciation are those contained in the annual report and the balance-sheet and profit and loss account, a copy of which has been laid on the table of the Library. The company advises that it is not considered to be in the interests of the company te make public any of its transactions which may place it at a disadvantage in competing with the other oil companies operating in Australia.
asked the Treasurer, upon notice -
– The information is being obtained, and will be furnished as soon as possible.
– On the 1st August, the honorable member for Henty (Mr. Gullett) asked me how many of tbe 961 Southern European migrants who arrived in the Commonwealth during the six months ended 30th June, 1930, were of adult age. I am now in a position to say that, of the 961 Italians who arrived during the period mentioned, 632 were of adult age. This latter number includes 216 females, and the balance also includes former residents, visitors, and persons who landed for transhipment purposes.
Charges against Ratings - Retrenchment.
– On the 31st July, the honorable member for Flinders (Mr.
Holloway) asked the following questions, upon notice -
Under the existing Naval Regulations -
What is the procedure when charges are made against ratings?
Has the accused the right to be defended by an advocate?
Is it permissible that the officer formulating the charge can conduct the prosecution and adjudicate thereon?
Have instances occurred of this; if so, does the Minister approve?
If he does not approve, will he take the necessary steps to have such regulations made more democratic?
I am now in a position to inform the honorable member as follows: -
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : -
The following papers were presented : -
Australian Soldiers’ Repatriation Act - War Pensions Entitlement Appeal Tribunal - Report for year 1929-30.
Invalid and Old-age Pensions Act - Statement for 1929-30.
New Guinea Act - Ordinance of 1930 - No. 15 - Testator’s Family Maintenance.
Bill returned from the Senate with amendments.
– On behalf of the Minister for Works and Railways (Mr. Lyons) I move -
That, in accordance with the provisions of the Commonwealth Public Works Committee Act 1913-1921, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for investigation and report: - “ Establishment of telephonic communication between the mainland (Victoria) and Tasmania.”
I n explanation of the proposal, I submit the following statement by the PostmasterGeneral’s Department : -
The proposal is to establish a telephone service between Tasmania and the mainland. This service may be provided by the installation of cither of thu following two systems: - Submarine Scheme. - Five two-way telephone channels by means of a submarine telephone cable between Victoria and Tasmania, of which two will be immediately equipped.
Radio Scheme. - One two-way telephone channel by means of a radio telephone system with sending and receiving stations in Victoria and Tasmania.
No facilitiesat present exist for the transmission of speech between the residents of Tasmania and the mainland. Technical difficulties have in the past made the provision of this service impracticable. Scientific advances and improvements in electrical communication engineering have, however, now enabled these difficulties to be surmounted sufficiently to make possible the establishment of such a service which could be given either by means of a specially designed submarine cable or by the establishment of a radio system.
In order that the relative merits of the two systems may be considered, each is submitted as a distinct proposal. The alternative schemes do not admit of strict comparison because of the different facilities provided. A radio system of five channels is not immediately necessary, and would be impracticable on financial grounds; on the other hand, to lay a single channel cable would be unwise and uneconomical, as the cost of laying is a large item, and this cost does not vary appreciably with the number of channels, within limits, which the cable would provide.
The proposal is to establish telephone facilities between the telephone system serving the mainland and Tasmania by means of a submarine cable laid between Lome on the southern Victorian coast and Stanley on the northern coast of Tasmania, a direct distance of approximately 153 nautical miles. The cable will, however, connect with King Island at Naracoopa on the east coast of the island, and with the loop into King Island, the distance will be approximately 177 nautical miles. The cable will consist of three pairs of copper wires, “continuously loaded”.
Allowing for variations in the level of the sea bottom, and also deviations from course when laying, the length of cable required is estimated at 200 nautical miles. The cable will be connected to the mainland long distance telephone system at Lome, and to the Tasmanian long distance telephone system at Stanley.
It will be necessary to acquire small sites at Naracoopa, King Island, and at Lorne, but in the case of Stanley the existing postal site will suffice.
At Lome, Stanley, and Naracoopa, it will be necessary to provide suitable buildings to accommodate the carrier equipment, and these will be built of brick or reinforced concrete. At Naracoopa, a residence for the maintenance officer may have to be provided, as other accommodation may not be available there. The necessary amount for this has been included in the estimate.
The estimated immediate capital cost is: -
The annual charges for the submarine cable service are estimated to be £19,820.
The revenue has been estimated on the radial tariff basis as follows: -
– How were those figures obtained ?
– I believe they are based on the department’s supposition that as the scheme becomes better known it will be more extensively used.
– It is surprising that the population of Tasmania is expected to increase at the rate indicated.
Dr.EarlePage. - Why should therebe no increase in the revenue from radio, and an increase of 300 per cent. in the revenue from the cable service?
– The cable service has certain advantages; one of them is secrecy. Many people will use the cable service for confidential communications that they would not care to have broadcast in the air. The department believes that until wireless telephony is reasonably secret it will not command the same patronage as line services.
– That is an amazing statement to make in cold blood.
Dr.Earle Page. - Does not the Minister expect that within ten years that defect in wireless telephony will have been overcome.
– I hope that it will. Apparently the right honorable member for North Sydney (Mr. Hughes) has some advance knowledge of developments in wireless telephony; if so, the department will be glad of his advice and assistance. The departmental memorandum continues -
Radio Telephone Scheme
As an alternative to the cable scheme, this proposal contemplates a system of radio telephony across Bass Strait, providing telephonic intercommunication between the subscribers in Tasmania and on the mainland. Radio transmission is fundamentally unidirectional, whereas conversation is essentially bi-directional. Therefore, if two persons are to converse over a radio system, it is necessary to provide two channels - an outward and inward, i.e., one foreach “half” of the conversation. At each terminal special apparatus must be provided to combine the two uni-directional channels into one bidirectional channel capable of being connected to the ordinary trunk lines and subscribers’ telephones, since these operate on a bidirectional basis.
The proposal under this scheme, therefore, provides for -
The power rating of each sending station will be1½ kilowatts of carrier wave power in the aerial. The primary electric power supply for each station will be obtained from the transmission lines of the power supply authorities in each State.
At present, radio telephonic conversations are not secret. It is technically possible to design special additional apparatus that “ inverts “ speech passing over the radio portion of the link, so making it unintelligibleto an eavesdropper, unlesshe possess elaborate apparatus capable of “ re-inverting “ it. Not only are there difficulties to be overcome in the design of the secrecy apparatus itself, but also the use of it tends to reduce the hours of effective service; that is to say, there may be certain periods during which satisfactory non-secret service can just be continued, but the addition of the secrecy apparatus would cause the service to become unsatisfactory. Since it would be more or less guess-work to estimate the cost of an efficient secrecy arrangement, the apparatus for this requirement has not been included in this proposal. The specifications to which tenders are to he invited, will, however, contain provision for the addition of secrecy apparatus, and tenderers will be asked to quote prices forany such equipment that they may have developed.
Owing to natural phenomena such as sunspots, magnetic storms, and electrical variations and disturbances of the upper atmosphere, the radio service will be subject to irregularities. It is expected that under average conditions service will be maintained satisfactorily during the greater proportion of the hours of each day; experience with shortwave telephone service indicates that the periods of unsatisfactory working may extend over a few hours during sunrise and sunset. When the natural conditions are particularly adverse, the service for many hours during a day may become irregular, with intervals of total cessation of communication.
The only merit of the radio system so far as the Tasmania-mainland service is concerned, is its lower capital cost compared with a submarine cable. It provides only one complete channel of communication, yet its annual cost will be nearly the same as that of a cable capable of providing at least five channels. To increase the capacity of the radio system to two channels will almost double the eapltal cost, and very greatly increase the annual charges. The cable is inherently secret, whereas the radio system can only be made so with difficulty and added expense. The cable, moreover, provides a continuous service, apart from any fault which might develop and which experience shows is a remote contingency, whereas the radio system is subject to intermittency of service.
The establishment of a radio telephone link will necessitate the provision of two radio sending stations, one in Victoria and one in Tasmania, and two radio receiving stations, one in Victoria and one in Tasmania. The proposed sites for these stations must take into consideration, besides suitability for the radiation and reception of radio waves, the proximity of electric power mains and water supply, trunk-line pole routes, and accessibility by road. A site suitable for the Victorian sending station was acquired some time ago, and is located near Lyndhurst, approximately 29 miles south-east of Melbourne. The remaining three sites have not yet been definitely selected, but the Tasmanian ones will probably be in the vicinity of Carrick (between Launceston and Deloraine) and at or near Devonport. The other Victorian site cannot yet be indicated, but will be within reasonable distance of Melbourne.
The buildings proposed for housing the equipment and plant at the respective stations will be of a simple and economical type.
The Estimates provide for eight residences for the staff, two residences at each radio station. When the sites are finally selected it may be that reasonable proximity to settlements will render it unnecessary for the department to provide so many staff residences.
The annual charges for the proposed radio telephone link are estimated to be £18,940.
The estimated traffic during the year is greater than that which could be carried by one channel. Since the radio system can only provide one channel the full revenue that would be obtainable with the cable system during the first year could not be realized with the radio system. In addition, the revenue on the radio system will be further reduced by the natural disabilities previously described.
The revenue estimate has, therefore, been based on an average of 75 calls per day. This is considered to be a reasonable estimate of the average daily capacity of the channel.
The traffic from King Island, which is provided for by the cable, cannot be handled by the radio system, since its terminals will have no telephonic connexion with King Island. The potential revenue from King Island calls must, consequently, be excluded from the radio scheme.
In these circumstances the estimated revenue from the radio channel is £3,530 per annum on the basis of the normal radial tariff for trunk line services.
It has been decided by the Government to refer this matter to the Public Works Committee for investigation. The facts which I have just submitted to the House will provide the basis upon which the committee will work. It is not to be understood that the Government intends to proceed with the work immediately the committee submits its report. It will be generally admitted that a preliminary investigation into a subject of this kind is necessary, and the result of that investigation is contained in the details that I have just placed before honorable members. When the work will be put in hand will depend upon when money becomes available for it.
.- I do not pretend that I am in a position to discuss, in detail, the statement which the Assistant Minister (Mr. Beasley) has just made; but I am bound to say that the impression made upon me while listening to the honorable gentleman was that the department has not surveyed the subject with impartial eye. There can be no doubt whatever that the person who prepared the statement which he read desired cable and not wireless communication. The references to Sing Island made by the Assistant Minister were most interesting, and so also were his remarks about sun spots ; in fact, one could hardly listen unmoved to his observations on that subject. But we have to remember that wireless telegraphy and wireless telephony have made tremendous developmental strides in the last few years. It is not very long since we read in the press of a wireless telephonic conversation between persons in Australia and Great Britain and Canada. I, myself, have heard of persons in New York conversing with persons in Java, an astounding performance. The possibilities of wireless telegraphy and telephony are enormous, struggles with sun spots notwithstanding. In fact, the development of this system of communication has been so great as to cause one of the greatest mergers in the world’s history. The tremendously powerful cable companies have admitted themselves to be so hopelessly beaten, and have acknowledged in seeking this merger that their only safety was to be found in merging with the interests controlling the all-conquering system of radio. That we have enough spots on our own sun at present without paying too much attention to spots on the celestial body was revealed by the Assistant Minister. He wound up his stirring discourse with a painful peroration in which he said, “My dear friends, despite all that I have said, and despite what the Public Works Committee may discover in regard to this or any other system, nothing is likely to happen, because we have no money”. In a few moments we shall be immersed in our discussion of the Sales Tax Bill, and will be reminded afresh that want of pence is indeed a curse to man.
Poor Tasmania cannot get shins nor flying machines, and now it cannot get wireless telephony or wireless telegraphy. Apparently it can only get speeches. If I were a Tasmanian I should want something more. The department proposes to spend nearly £200,000 on this project, although it is admitted that the radio system would be very much cheaper. If I were a Tasmanian I should want the cheaper method of communication, because for one reason I should, in these times of financial stringency, be more likely to get it. I entirely disagree with the statements that have been made by the Assistant Minister, on behalf of the department, excepting only the references to sun spots, with which I am in hearty accord.
It is proposed to refer this matter to the Public Works Committee, although sites have been selected and other vital decisions made. Two cut and dried schemes have been prepared, one blessed and the other cursed by the department. The committee, whose business ought to be to inquire fully into the matter and report on the facts, is handicapped. And, further, it is told “Even if you avoid Charybdis you fall upon Scylla, for we are short of money “. The Public Works Committee is, doubtless, a most useful body. I have never been a member of it, but, during the many years it has been operating, it has done surprisingly little harm. What is it going to do in this case? Is it to try its teeth on this succulent morsel to no purpose? Why should not the Public Works Committee have a free hand in deciding what is the best method of communication between Tasmania and the mainland? As things are it cannot do that. The committee is warned against radio-telephony, which, for reasons which do not appear on the surface, is anathema to the department, while the cable, which is strongly favoured, turns out to be a glittering mirage. The Government says to it “Don’t you think that anything is going to happen, because it is not.” But despite this, if the members of the committee are men of high attainment - and I am sure that they are - if they are able to march with the times, as we shall all soon have to do, they will report in favour of the progressive system of radiotelephony.
.- I shall discuss neither the merits nor the demerits of either scheme placed before the House, because it is my intention to vote against this motion. Much as Tasmania may be in need of telephonic or radio communication with the mainland, this is not the time to give consideration to any scheme for that purpose. It is a sheer waste of time to refer this proposal to the Public Works Committee for investigation and report.
– [ appreciate the necessity for giving Tasmania some better method of communication with the mainland than it has at present, but I urge that, before anything is done in that direction, there should be a full and impartial investigation of the different systems of communication. At present we are faced with the most difficult problem of the future of the Pacific and Eastern Extension Cables. A merger has been brought about to ensure that the cable companies will not be completely destroyed financially. In face of the fact that these cables are becoming more or less obsolete, the Government has brought down a proposal to lay yet another cable. It is estimated to cost £135,000 more than a wireless system, and it seems to me that before anything is done there should be a full and impartial investigation of the whole subject. The evidence of experts should be obtained, so that before this proposal is again considered honorable members may have an opportunity to decide the right and proper method of communication between Tasmania and the mainland. It is almost impossible to have a full impartial inquiry, because of the limited number of experts in Australia from whom evidence can be obtained and their respective interests. Accordingly, I trust that the Assistant Minister will give the House the assurance that, before anything is done, before the report of the Public Works Committee is submitted to this House, the opinions, not only of the departmental engineers, but also of outside engineers, will be obtained. I ask the Assistant Minister whether, in view of our financial position, there is any chance of this work being proceeded with in the near future. If not, I consider that the inquiry should be delayed in view of the continuous progress of wireless communication. During the last four or five months telephonic communication has been established with Great Britain, which is something that was almost un- thought of four or five years ago. During the last ten years we have seen the most wonderful revolution in communications as a result of wireless development throughout the world. We have been given figures to show that in ten years’ time the revenue from this wireless system will be £3,530, an amount which is similar to the estimate for this year. Such a forecast is absolutely worthless to this Parliament or to the Public Works Committee in enabling it to come to a decision. I should like to know from the Assistant Minister whether there is the slightest chance of this work being proceeded with, in view of our difficult financial position. No doubt he can tell us what works are not to be undertaken as a result of the recent reduction in the Loan Estimates. I certainly believe that a further reduction of the Loan Estimates will be necessary, because I doubt very much whether we can raise in Australia £24,000,000 of new money this year. If this work is not to be proceeded with, the investigation should be delayed. The advance that is taking place in wireless will probably enable new light to be thrown on this proposal, and when it is once more before the House, honorable members will be in a much better position to consider it.
– I commend the Government for having introduced this proposal. In view of Tasmania’s many disabilities, its linking with the mainland by telephonic or wireless communication is long overdue. If the Government has determined, irrespective of what the decision of the Public Works Committee may be, not to proceed with this work, it would have been better to allow the proposal to stand in abeyance instead of leading the people of Tasmania to believe that they were to be given an additional and quicker means of communication with the mainland. The cost of this scheme should not be taken into consideration. Every State on the mainland is provided with telephonic communication, towards the establishment of which Tasmania has had to contribute its share. The Tasmanian taxpayers contribute to the maintenance of the various railways on the mainland. In those circumstances it is not right, that when a proposal is brought down to facilitate communication between Tasmania and the mainland, cold water should be thrown upon it by honorable members who represent the other States. 1 care not whether the communication is by radio or by cable. Tasmania requires a quicker .communication with the mainland, and that has been long promised to it. It is for the Public Works Committee to decide whether the scheme is cut and dried. No doubt this proposal bas been considered by the officers of the Postal and Telegraph Department, and I believe that their recommendations form the basis upon which the Public Works Committee will carry out this investigation. I trust that ere long Tasmania will be given a better and more rapid means of communication than it has at present.
– I am sure that all honorable members regret the isolation of Tasmania and the disabilities under which it is labouring at. present. Most people will wonder why in the years when money was plentiful a better means of communication was not given to that State. The Assistant Minister has certainly explained that the latest inventions have made telephonic communication by cable a practical possibility, and for that reason this proposal has now been submitted to the House; but he has really condemned the proposal by saying that even if the report of the Public Works Committee is favorable to the construction of a cable to Tasmania, the work is not likely to be proceeded with. If that is the case, and the people of Tasmania are being deluded, why spend several hundred pounds in an investigation that can have no result. In the circumstances the motion should be withdrawn and postponed indefinitely. I mentioned in this House a fortnight ago that both the Public Works Committee and the Public Accounts Committee, because of their large personnel, were costing this country a considerable sum of money, and I suggested that the Government should at least withhold references to those bodies of proposals such as that now before the chamber until a late period of the year, so that some saving in expenditure could be effected. I urge the Assistant Minister to withdraw this proposal.
– I support the motion because improved communications between Tasmania and the mainland are long overdue. The people of that State have for a number of years been promised telephonic or wireless communication. Even at the last election that promise was made by practically every honorable member who represents that State, irrespective of party. Honorable members who represent the other States enjoy the privilege of being able to ring up their homes each night. Honorable members representing Tasmania are denied that privilege. The people of Tasmania have been neglected for many years, and have had to fight their own battles. The right honorable member for North Sydney (Mr. Hughes) said that the Bruce-Page Government had only promised improved communication to the mainland, and that this is another such promise. I cannot believe that. It has been said that the Assistant Minister has stated that after the Public Works Committee has reported on this proposal it may be shelved, but I do not think that if that report were favorable, Tasmania would be long denied improved communication with the mainland. The honorable member for Oxley (Mr. Bayley) says that he intends to oppose this measure, but I venture to say that if he were to-day living at his birthplace he. would change his opinion. I do not wish to discuss the respective merits of wireless telephony and cable. Experts prefer a cable service, althought it is slightly more expensive. Tasmania is entitled to the best system of communication available. The people of the mainland, who are given every means of communication, depend a great deal upon the produce of Tasmania, which is one of the most fertile spots south of the equator. The right honorable member for North Sydney has said that this Government has done nothing for Tasmania. I should like to know what the Bruce-Page Government did to improve the Hobart-Sydney shipping service. That service was neglected for many years. This Government has at least provided a regular shipping service between Tasmania’s principal shipping ports and the mainland. I trust that the Blouse will agree to the motion.
.- Honorable members on both sides of the House, irrespective of the party to which they belong, have been anxious for a number of years to provide Tasmania with telephonic communication with the mainland. This matter received consideration by the late Government, which was careful, however, to abstain from giving any promise, because it was recognized that the developments in radio telephony were so rapid and unpredictable that it would be unwise then to enter into a definite engagement. Nevertheless, all honorable members are interested in the provision of this communication, if it is possible to give it at a reasonable cost. It seems, on this occasion, that the Government is endeavouring to do something in the direction of honouring what honorable members opposite have described as an election promise. I am not aware whether or not such a promise was given; but this is a motion remitting the matter for inquiry by the Public Works Committee, associated with a distinct statement on behalf of the Government that it does not undertake to act upon the recommendation of the committee, whatever it may be, until the necessary money is available. There is a clear indication at the present time, that the money required for the provision of telephonic communication with Tasmania will not be available. That being so, notwithstanding my views as to the desirability of providing this communication, I think that we cannot justify the expense of holding an inquiry when it is not proposed to act immediately on the recommendation of the committee. There would be the cost of the meetings of the committee, and of the preparation of evidence for it in detail by skilled officers of the Postal Department.
It seems to me that this is an entirely unreal motion, and one introduced only for a political purpose. It is something like the reference to the Public Accounts Committee of the proposal to increase the grant of the Commonwealth to Tasmania. In that case, the present PostmasterGeneral (Mr. Lyons) promised, during the last election, that the grant would be increased if the Labour party was returned to office; but, of course, it has not been increased. An inquiry into this subject is being conducted by the Public Accounts Committee, and the decision rests with the Government and this House. It is now proposed to “quiet the people of Tasmania by holding some sort of inquiry into the subject of providing telephonic communication between Tasmania and the mainland. Having regard to the statement of the Minister that the Government is not now in a position to find the money for either of the schemes mentioned, this motion is only a political gesture. I do not object to political gestures on the part of governments or political parties; they are quite in accordance with the end and object of their being; but this motion is more than a gesture, because it involves action to the- extent of incurring the expense of an inquiry when there is no reasonable probability of further action being taken upon the recommendation of the committee. If this investigation is authorized, one does not know whether it will be necessary for the committee to take a trip to Lorne, where soothing zephyrs kiss the fern-fringed strand, or to visit King Island, where it is expected that £2 a day will be paid at the outset for telephone conversations, the amount eventually increasing to £1,000 a year. If this committee is to conduct its inquiries properly, it will have to go to Tasmania and inspect the sites for the various buildings. I am not suggesting that the committee would waste money; I am merely pointing out that if it is to submit an intelligent report on the proposal, some money will be expended, and it will be proper expenditure, because it will have been authorized by this House. The Minister has practically said that the recommendation of the committee will not be acted upon. We all know that the necessary funds for this work are not available, so the report would be laid aside, and the dust would gently fall upon it for months, or possibly years. Meanwhile there would be changes in radio telephony, and, probably, even in governments. The report, therefore, would be entirely useless. A vote against this motion would by no means be a vote against the giving of telephonic com- munication to Tasmania in the best conceivable form, whenever the finances enable us to provide that convenience. In the circumstances, we are not justified in incurring expenditure on the proposed inquiry. Every shilling that can be legitimately saved should be kept in hand.
– A great deal of complaint is heard should motions be submitted without the fullest details; but, in this case, the furnishing of certain particulars has aroused a storm of protest. I hold the view that, when any matter is discussed in the House, it is the duty of the responsible Minister to convey to honorable members the intentions of the Government, and to give the fullest information possible. I listened to the right honorable member for North Sydney (Mr. Hughes), and expected to hear something of outstanding interest regarding radio telephony, seeing that he is associated with Amalgamated Wireless Limited; but all we heard from him was carping criticism. He said that the Government had a cut and dried scheme, and that as a consequence it would allow no latitude to the Public Works Committee in its inquiry. If there are other methods whereby Tasmanian communications could oe’ better established apparently they are not known to the honorable member, for he made no practical suggestion on the matter. It is true that new developments are taking place constantly in the wireless world; but there is no reason why the Works Committee should not make full inquiry regarding the best means of providing the communication desired in the interests of Tasmania, and it is not restricted in any way. No honorable member will doubt the impartiality of the members of the committee, which can be trusted absolutely to take the best available evidence on the subject, and submit an unbiased recommendation to the Government.
The Leader of the Opposition (Mr. Latham) concluded by saying that this motion was merely a political gesture. That argument, of course, could be advanced in regard to any proposal that a government might submit to Parliament. I care not whether the motion is styled a political gesture, or given any other name, provided justice is done to Tasmania. It is impossible to construe a vote against this motion as being other than a motion against the interests of that State. Votes count for more than speeches in matters of this kind. Most honorable members will be forced sooner or later to the conclusion that those who oppose the motion are adopting a hostile attitude to Tasmania.
– Why refer this matter to the committee if there is no immediate prospect of giving effect to any recommendation that it might make?
– The Public Works Committee Act provides that works estimated to cost over a certain sum must be inquired into by the Public Works Committee. The second point in favour of the motion is that the proposed communication is urgently necessary in the interests of Tasmania, and, therefore, the Government feels that it is justified in proceeding with the necessary inquiry concerning the best means of supplying this communication to Tasmania. Turning to the financial aspect of the matter, I considered it proper to inform the House that the funds were not available at the moment; but surely honorable members are sufficiently optimistic to believe that, in the not far distant future, sufficient money will be procurable for this purpose. When the inquiry has been completed, it is hoped that the financial situation will be more favorable than it is at the present time. Those who adopt a different attitude ought to join a gloom club ; they decry every effort that is made to assist States and individuals that are in need of help. The honorable member for Warringah (Mr. Parkhill) is one of the principal offenders in that respect. Last night he spoke at length regarding the necessity for coming to the assistance of clerical workers and if this inquiry is not proceeded with a number of this class, of worker will be affected.
– Order ! It. is not permissible for the Assistant Minister to refer to what was said in debate last evening.
– The Leader of the Opposition contended that the Public Works Committee could not carry out this investigation without involving the
Commonwealth in a certain expenditure, and argued that on that account the investigation ought not to be made. I have listened to lengthy speeches stressing the need for meeting the requirements of clerical workers; yet, when an attempt is made to provide necessary employment; some honorable members are opposed to proceeding with it.
– I did not suggest that the Government should find employment for the Public Works Committee.
– The investigation of this matter can be safely entrusted to that committee. It will collect all the facts that are available, and may bring to light a good deal of information that is not now in the possession of the right honorable member for Cowper (Dr. Earle Page), and other honorable members who have seen fit to oppose it. The committee can be depended upon to arrive at an impartial decision. I am satisfied that the time is not far distant when the requirements of Tasmania in this direction will be met. Those who vote against the motion will be acting against the best interests of that State.
Question resolved in the affirmative.
Debate resumed from 30th July (vide page 4935), on motion by Mr. Scullin -
That the bill bc now read asecond time.
.- The eighteen bills that relate to the sales tax are designed to raise an additional sum of approximately £5,000,000 during the unexpired portion of the present financial year, and it is estimated that, over a period of twelve months, the application of the tax will increase the revenue to the extent of more than £6,000,000. It is impossible for any person to check those estimates, or, indeed, to make them with a considerable degree of accuracy. It is clear, however, that the effect of these measures, if passed by this Parliament, will be to increase substantially the burden of taxation upon the community.
These bills are the result of the policy of the Government, and of its general methods of finance. That policy, and those methods, on the basis of the tariff as it stood prior to November last, would have reduced customs receipts by over £8,000,000 per annum. The new duties that have since been imposed will result in a still further reduction of that revenue, and some of them will cause costs to be increased to the people generally. Therefore, the Government must find additional revenue in some other way. A few months ago, in a speech that I made publicly, I ventured to assert that the budget would show that the Government had to provide for additional revenue to the extent of at least 100 per cent. of the existing income tax. The Prime Minister (Mr. Scullin) and others referred with scorn to that statement. At the time, the income tax was estimated to produce £10,585,000. Since then we have learned from the budget speech that during the current financial year it is proposed to raise by means of additional taxation £12,550,000, of which £5,000,000 will be provided by the sales tax.
Whether this estimate is right or wrong I gravely doubt whether it will be possible for the Government to realize its expectations as to other revenues. In 1929-30, the value of imports to Australia was £131,161,633. In that year, the Governments of Australia had to find overseas, for interest and other governmental expenditure, a sum of about £35,000,000. Thus the total commitment overseas was greater than £166,000,000. The value of goods exported last year was £96,806,000. In addition, we exported gold to the value of £25,748,549, making the total value of our exports £122,554,549, leaving a balance on the wrong side of £43,601,000. Temporary loans, which, according to the budget speech amount to over £30,000,000, have been raised overseas. We all know that the Loan Council is meeting to-day for the purpose of discussing that and other questions.
In the light of these facts, let us consider what the revenue is likely to be in the current year under the financial proposals of the Government, so that we may ascertain whether even the sales tax will make up the leeway. If the exports this year reach last year’s figure - and I am afraid that that is extremely unlikely - their value will amount to about £97,000,000. The annual production of gold in Australia is valued at about £2,000,000.. If the whole of that production were exported, our total exports would amount to £99,000,000, which w ould leave a large deficiency to be made up overseas, assuming that the imports did not fall below the scale that they reached last year. In 1929-30, the collections of customs duties totalled £30,157,000. That sum was paid in respect of imports valued at £131,161,633, and represented an average tax of 23 per cent. It is estimated that, in the year 1930-31, the receipts from customs duties will total £27,900,000. The. Prime Minister, however, has expressed the view that the value of our imports will bo decreased by at least £40,000,000. I believe that honorable members on both sides will be inclined to consider that, in the light of existing conditions, it is highly probable that the reduction will greatly exceed £40,000,000. The governing factors are that £99,000,000 is the probable limit of our exports. This sum in list provide for over £30,000,000 for interest, &c, leaving at most £70,000,000, on a generous basis of calculation, for expenditure upon imports. Yet it is estimated that on the £70,000,000 worth of goods the collections from customs duties will not fall very far short of the collections last year on goods valued at £131,161,633! Is that likely? I cannot see that it is. It would involve an increase from 23 per cent, to about 40 per cent, in the average rate of duty collected on all imported goods. It is exceedingly doubtful whether the financial proposals of the Government will measure up. to the necessities created by the budget. There is in my opinion a serious risk of there being a grave deficiency in. therevenue, even if the sales tax is more productive than has been stated by the Government.
The Government has refused to deal with the position by making any substantial reductions in Commonwealth expenditure. I do not dispute that in the Defence Department certain reductions have been made that are weighing very heavily upon those individuals who are suffering because of them, and that other reductions have been made in the cost of the administration of the Federal Capital Territory and of development and migration work; but the fact remains that the Government has refused to effect any substantial reductions. It appears to me that the present rate of expenditure cannot continue, and that the public will insist upon a reduction when they realize fully the effects of the financial policy of the Government.
This sales tax is introduced for the purpose of obtaining a larger amount of revenue than has ever previously been obtained in the history of the Commonwealth, and at a time when, according to the Prime Minister’s budget speech, the income of the people of Australia has been diminished by between £50,000,000 and £70,000,000 per annum. If the House passes this legislation in the confident belief that it is going to square the ledger, there is a serious risk of it» being gravely disappointed.
– Is not the honorable gentleman taking rather a gloomy view?
– I do not propose to be diverted from the statement of what I regard as actual facts and reasonable probabilities by u charge of being gloomy. I am sorry indeed, as we all must be, that the position of the country is what it is to-day. We should bend all our energies to an improvement of that position. But it will not be improved by the adoption of a cheap, easy and superficial optimism.
I have set before the House the actual facts in relation to last year’s imports and duties, and the estimate of the Government with respect to this year’s customs revenue. Honorable members can ascertain for themselves, from the details of revenue that appear in the budget papers, the estimate of the amount to be received. I suggest that honorable members should address themselves to the present serious financial position with those facts as a basis, and should test the proposals of the Government to see whether they are likely to cope with it. I doubt very much that they will.
– The honorable member ought to give this lecture to his own party in another place.
– I am quite unable to perceive the relevance of the interjection, unless it is a suggestion that another place should reject the financial measures of the Government. I do not propose to discuss the question of the powers of second chambers or in particular of the second chamber of this Parliament in relation to financial measures. As honorable members know, only a Government can introduce taxation measures ; it is not within the power of an Opposition to propose even alternative taxation. But every effort has been made by honorable members on this side to bring about a reduction of expenditure. The honorable member for Angas (Mr. Gabb) did not support by his vote the efforts which were made. The matter is in the hands of the Government, and of its followers, who have voted solidly in support of the Government’s proposals. The responsibility rests on the Government, a fact which the Prime Minister has frankly admitted. He has made no apologies for the financial policy of the Government; but has defended it.
This legislation introduces a new and complicated system of taxation. The complications are particularly apparent at the present time, though some, no doubt, will disappear as the public become more familiar with the system. For the moment, however, the proposal has proved a perfect nightmare to the community as a whole, and particularly to the business community. From day to day we have long and sometimes bewildering explanations of particular points, while the columns of the press are filled with rulings on doubtful or disputable points. The result is the ‘public as a whole do not know where they are in regard to the buying and selling of goods. This tax has all the disadvantages of a new tax. A variation or increase of an old tax is different from the imposition of a new one. If old taxes are increased in amount the extra revenue can be collected with the same staff, and the cost of administration remains the same, while there is no disturbance of established channels of trade or of ordinary methods of business dealing. In the case of a new tax, however, a new department must be created.
It is obvious that there must be a new and expensive department to handle the sales tax. It is idle to suggest that the present Taxation Department will be able to handle this addition to the work it is already doing. I am familiar with the work of the Taxation Department, and I know that those employed in it are a particularly hardworked and hardworking set of Commonwealth officers. It would be quite impossible for them to administer efficiently a new and complicated form of Commonwealth taxation.
In addition to the cost of establishing this new department, or subdepartment or. branch - call it what you will, though, of course, it will not officially be called a new department - there will be the cost to traders of arranging their businesses to comply with the provisions of the law. The tax has been brought in, we have been told, for the purpose of raising necessary revenue, but it has been done in a very remarkable manner. Although the bills are not yet through Parliament, the public have .been informed of their liability, and the bills contain provisions to the effect that the tax is to be collected from the 1st August on all transactions falling within the scope of the proposed legislation. Yesterday a memorandum was circulated purporting to explain the tax. I could nope that a shorter and clearer summary for the guidance of the commercial community had been produced. I -recognize that this document is very useful. I find it useful as a lawyer, but I suggest that it is much more useful to a lawyer than to a business man, to whom it will present almost as many difficulties as the assessment bills themselves. I therefore suggest that a further memorandum should be prepared, one which will state clearly, without any reference to the machinery provisions of the act. where the liability lies, and what the liability is in respect of different classes of transactions. I am sure that such a memorandum would be of great help to the community, and it ought not be difficult to prepare.
This tax is described in the bills as a tax on wholesalers, importers and manufacturers. They are to pay the tax first, but it will, of course, be passed on. A turnover tax of 2£ per cent, on the business of importers, manufacturers and wholesalers will not, I venture to predict, be borne wholly, if at all, by that limited class of persons. The tax will be paid by the people as a whole, and will be reflected ici increased prices. It is a matter of surprise to me that the Government did not propose a straight out retail tax to be paid by means of stamps. I am aware that much may be said against such a proposal, as against this one, but it is an alternative that might have been more simple to operate. The attempts which have been made to pass on the tax have given rise to a state of confusion which can be excused only on the ground of the uncertainty which surrounds the whole matter in the minds of the public. I have here an invoice or bill which was issued in a Sydney shop within the last two or three days. It sets out that the cost of one yard of a certain material is 6d. Under that there is, “tax Id.”, making the total 7d., which represents an increase of 16£ per cent. I know of other cases in which 3d. articles have been increased to Bid.. an increase of 16£ per cent. Two and a half per cent, on ls. 8d. is £d. I present that calculation to the House. Any charge of ½d. on an article priced at less than ls. 8d., represents more than 2£ per cent, on the price of the article. It is difficult to avoid such increases of taxation as against the public. Take a retailer who is selling goods priced at ls. The smallest additional sum he can charge is ½d. He must choose between charging a minimum of ½d., and bearing the whole tax himself, a thing which he may not be in a position to do. At shops like Coles’ Stores, Brightlight’s, Woolworth’s, and places of that kind, a great many articles are priced at small sums upon which 2 per cent, could not be paid in any existing coin. I am convinced that if the tax brings in to the Treasury £5,000,000 it will cost the public vastly more than that. The result of the tax will be to subtract much more from the public than goes into the Treasury. That is a vicious principle in taxation, and is always avoided by fiscal experts as far as possible. Taxation in the form at present proposed appears to me to constitute a serious infringement of the principle that as nearly as possible 100 per cent, of what the public pay as a result of a tax should go into the Treasury. I am aware that the objection which I have just mentioned applies also to customs and excise taxation, but the necessary increase in prices beyond the amount of the tax appears to me to be so great in this case that the Government might well consider whether some other means of raising the money should not even now be attempted.
Much confusion has been caused in business circles because individuals engaged in trade are not certain where the tax will fall, or how it ought to be charged when they wish to recover it from the purchasers. At the present time wholesalers, manufacturers and importers, speaking generally, are sending out invoices showing the prices of goods at the old rates, and adding at the foot of the invoice 2-J per cent, extra for sales tax. Retailers are, in many cases, offering a cheque in payment for the amount as shown according to the price of the goods, but refuse to pay the 2£ per cent, additional, contending that the legislation imposes the liability, not on the retailers, but on the wholesalers, manufacturers, and importers. Accordingly, business is being held up, and people do not know exactly how they stand. Some- traders are adding the 24 per cent, as I have described, while others are increasing their prices in some measure in order to provide for it. Then the 2£ per cent, does not appear, and the purchaser may flatter himself that he is not paying it, though in fact he may be paying a great deal more. In some cases firms have announced that they will not charge the sales tax, and, of course, if they elect to pay it themselves they are within their rights in making the announcement. In Canada, I understand, there is a provision to the effect that a person who is chargeable with the tax on the sale of goods is entitled to add the amount of the tax to the invoice. I ask the Government to consider seriously whether a similar provision should not be introduced into these bills. If that were done, the amount of the tax would always be shown, and that would tend to diminish the risk of overcharge in respect of the tax, which might otherwise be concealed in an increased price for the goods.
– Probably, in some instances, 2i per cent, on the entire value of the invoice would be added, although the invoice included some exempt goods.
– That would have to be provided for, but it would be proper to provide that the taxpayer shall see on the invoice the amount of the tax with which he is charged.
These measures will be discussed in detail in committee, and I do not propose to deal with them at length now. But I shall invite the attention of the committee to a few examples of the manner in which this legislation will operate. Under Assessment Bill No. 5, an importer who imports goods and sells them to the public will pay sales tax on a sales value made up of (1) value for duty as defined; plus (2) duty, and plus (3) 20 per cent, of the sum of the items 1 and 2. Let us call the sum of those three items X. But if the importer sells to a registered wholesaler, who, in turn, sells to a retailer, the wholesaler will pay tax on the wholesale price, which may be more or less than X. The amount X is arrived at by adding 20 per cent, to the value for duty, plus duty, the assumption being that 20 per cent, represents the costs incurred by a wholesaler in carrying on lui business. Whether that 20 per cent, bears a true relation to the facts of business I cannot say, but I have received the following telegram from the merchants of Brisbane : -
Sales Tax Assessment Bill No. 5. Section 4 in providing basis on which retail importers will pay tax does grave injustice to wholesaler and through him to other retailers. Retailers should pay tax on landed cost of the goods plus an advance for overhead charges and profit calculated’ respectively on the margin usually carried by the various classes of goods concerned. Retailer importer will not pay on freight, insurance, shipping and landing charges, commission and exchange, and 20 per cent, addition too small in many trades while wholesalers’ value will include all these items as well as overhead and gross profit. This inequality is indefensible and unjust.
In the opinion of Brisbane merchants, the 20 per cent, addition to all goods will operate unjustly; they suggest that the addition should vary with different classes of goods. I recognize the difficulty of legislating to meet the views expressed, because if it is left to the Commissioner to determine in respect of different classes of goods what increased percentage shall be added to reach the taxable wholesale value, there will be grave objection in many quarters. At the same time,’ I ask that consideration be given to this clause; otherwise it will operate very unevenly between different classes of traders.
– Is it not a fact that the lower the sales value the better for the taxpayer?
– Yes; but when there is competition with another person selling the same line of imported goods this system of taxation operates unequally.
– The tax becomes lower if paid in certain circumstances than ii would be if paid in others.
– That is so; if the wholesaler sells direct to the public, heis charged tax on the sum of the value for duty and duty, plus 20 per cent. The wholesaler, selling to a retailer, however, is charged on his wholesale price which may represent an advance of more oi less than 20 per cent, on the value for duty, plus duty. Therefore, competitor* selling the same class of goods will pay sales tax at different rates.
– That inequality exists today, even in the absence of this taxation.
– Only as a result of individual action ; the inequality to which I. am referring, will be imposed by law.
Consider another case : A wholesaler or manufacturer who is also in a retail business retails his goods direct to the public and also to other retailers. To the latter he sell3 at the wholesale price on which sales tax will be paid by him. When., however, he sells his goods direct to the public, he will pay sales tax on the retail price. Thus the manufacturing wholesaler, who is also a retailer, has to compete against other retailers who buy from manufacturers by whom the sales tax has been paid on the wholesale price. When” selling direct to the public he has to pay the tax on the retail price, which in respect to many goods is considerably higher than the wholesale. Thcell ect of this legislation will be to confer a distinct advantage on retailers who buy from middlemen.
There will be other reactions from this legislation; and whilst I concede tha; many of the difficulties which are now alarming the trading public will be adjusted. I fear that in the process some injustice will be done.
– Let us amend the bill.
– Unless the Government is prepared to draft and propose amendments, alterations will be difficult-, it is not easy for private members to amend legislation of this character.
On the subject of exemptions I have no doubt a great deal will be said. Already honorable members are well acquainted with the cake problem. Cakes. 1 understand, are made of flour, eggs, butter, dried fruits, peel,- sugar. iyc.;. practically all the ingredients will bo exempt from sales tax, but the cake will not be. This anomaly, combined with the distinction between cake and pastry and the physical distinction is very narrow in respect of napoleons, cheese-cakes, and other borderline goods - will impose considerable hardship on people who are earning a living by the selling of homemade cakes. The problem of the sausage, which has confronted mankind through the centuries, becomes more acute in this legislation. I assume iu favour of thu sausage that it is composed of meat, dr meat and bread, and shall deal with it on that basis. Apparently, a raw sausage will be exempt from the tax, but a cooked sausage will not be, whilst a smoked sausage is still in the domain of dubiety and uncertainty. En fact, I have this day sought from the Prime Minister (Mr. Scullin) some enlightenment regarding it.
My attention has been called to the effect of the tax upon ships built abroad for considerable sums of money and brought to Australia, not for purposes of sale, but to render service to the community by carrying produce and passengers. Many of the cargoes they will carry, including coal and agricultural and pastoral products, will bc exempt from the sales tax, but the tax will be imposed on the vessels themselves. If the sales tax and primage duty are maintained for any considerable length of time, the effect may be so serious as to lead to a considerable reduction of transport facilities.
– Does the Leader of the Opposition suggest that ships will be subject to the sales tax?
– I do. If a ship remains in Australian waters beyond a certain period, it becomes subject to customs duty. I have had some figures prepared for me to show the effect that the imposition of the sales tax and primage duty will have on ships. A ship bought in the United Kingdom for £50,000 is subject to duty in Australia at the rate of 50 per cent. British preferential and 70 per cent, foreign. To that 50 per cent, there is added, in accordance with the existing practice, another 10 per cent. A £50,000 ship would, therefore, be subject to the payment of £27,500 in customs duty. The primage duty on it would amount to £1,375; and the sales tax, which would be imposed upon the cost of the vessel plus customs duties, would involve the payment of another £2,325, which would make the total cost of a ship built or bought in England for £50,000, no less than £81,200 in Australia. Last year, two very fine vessels, the Manunda and the Westralia, which many honorable members have seen, were added to the Australian mercantile fleet. If the primage duty and sales tax had been in operation at the time they were brought here, they would have cost £50,000 more than they did cost.
While I agree, speaking generally, that taxation of this nature should be imposed on an all-round basis, it is important that we should do everything possible to reduce transportation charges in Australia. I, therefore, ask the Government to consider whether it would not be highly desirable to exempt ships from the operation of this taxation.
It is proposed that the tax shall not be imposed upon goods imported by a government, or goods sold to or by a government. The exemption also covers governmental authorities. I ask the Government to consider whether this provision should not be withdrawn or modified. Honorable members know that the New South Wales State brickworks supply bricks to the public as well as to the Government. Apparently this taxation will not be imposed upon its sales, although it will be imposed upon the sale of bricks manufactured and sold by private brick-making concerns. Is that a fair provision? The Electricity Commission of Victoria sells briquettes and coal to the public. Apparently the coal will be exempt from the sales tax, but not the briquettes. The commission also sells electrical appliances to the public in competition against the private traders in these articles. If the goods supplied by the commission are exempt from the sales tax, while those supplied by private concerns are subject to it, a discrimination will be exercised against private traders which it will be difficult to justify.
It is provided that the full tax shall be paid within seven days after the expiry of the month in which the sales are made, although the seller himself may not have been paid for the goods. He may even have sold them under a hire-purchase agreement or some time-payment system, and the payments may extend over months or even years. I ask the Government not to insist in such cases that the tax shall be paid in full within the term specified in the bill.
– Excise duty has to be paid in full before goods are taken out of bond.
– That is true; but a merchant does not withdraw goods from bond until he has a good prospect of selling them promptly. He stores them in bond until he needs them. The Government should consider, in this connexion, the present position of storekeepers, and particularly those who are engaged in business in the country. In such districts as the Mallee district in Victoria, where, as the honorable member” for Wimmera (Mr. Stewart) knows, some farmers have not had a harvest for four years, and have not, in some cases, even got their seed back at harvest time, the resources of the storekeepers have been strained to the utmost in an endeavour to give extended credit to the settlers so that they may continue to live on their holdings until better times come. Behind the storekeepers there* are the merchants, and behind the merchants the banks, who are all finding their resources severely strained in giving credit to their respective clients. I suggest for the earnest consideration of the Government that the bill should be amended to provide that the tax should not be payable until the expiry of one month after the end of the month in which sales are made.
The Government would still get as much money as under the present provision, but the hardship inflicted upon the people concerned would not be nearly so great. I have received telegrams from chambers of commerce and other trading organizations throughout the Commonwealth requesting me to ask the Government to extend the time of payment of this tax to 60 days. I consider, therefore, that the request for an extension of the time of payment to 30 days after the end of the month in which the sale was made is moderate in every respect.
I have only referred to matters of major importance which seem to me to be worthy of attention in a secondreading speech. Doubtless, many other points will arise in committee which can be adequately considered at that stage of the bill.
Reverting to what I said in my opening remarks, I regret that the Government has seen fit to introduce this measure ; but. as it intends to persist in its present financial proposals, and will not agree to the suggestions that I have made for substantially reducing expenditure, 1 admit that it must obtain additional revenue because the budget must be balanced. The Government must, therefore, itself accept the entire responsibility for the introduction of legislation of this description.
.- I regret that the Government has introduced this proposal. If a gentleman with the trained legal mind of the Leader of the Opposition finds difficulty in understanding this bill, and the eight other? which deal with the same subject, how can the ordinary man in the street, or the ordinary business man expect to understand them? I have never in my long parliamentary experience known if to be necessary for a Government to introduce nine separate bills to give effect to what, after all, is a single taxation proposal. In my opinion, the revenue which the Government desires to obtain could be raised by a much simpler method than this. I suggest that special duty stamps should be placed on every invoice to the value of Id. in the £1 of the total invoiced value of the goods sold, and then, when the bill is paid, it should also be stamped to the extent of Id. in the £1 of its total amount. This, it seems to me, would provide the Government with practically the same amount of revenue that it hopes to obtain under this proposal. I do not think that it is desirable to oblige traders to embark upon the involved bookkeeping systems that this proposal will render necessary, nor that it is necessary to provide such heavy penalties for breaches of the law. A legal practitioner who spoke to me on this subject some little time ago said, “I do not know how Canada administers its sales tax legislation. Perhaps it has evolved its present system out of a long experience.” It seems to me that we could have devised a much simpler method than this. Our commercial community will undoubtedly be caused a great deal of unnecessary trouble in furnishing the returns required by this bill. A stamp tax of the kind that I have suggested would be very much more effective, and less costly. I know, of course, that such a tax might be evaded by certain dishonest individuals; but it could not be evaded in any factory or business house of any importance.
We have given the world a lead in many respects. Our legislation which provided for the granting of the Torrens title to freehold land has been copied all over the world, and so also has our secret ballot legislation, which was referred to in America for many years as the Australian Ballot Act. I believe that we could have evolved some new taxation principles which would not have required the introduction of nine bills to give effect to them, and which could have been easily understood by the ordinary man in the street. But, as I have not offered any objection to the introduction of these bills, I must, to that extent at least, as a supporter of the Government, accept responsibility for them, though I sincerely regret that it has been thought necessary to adopt this method of increasing the revenue.
. There has happened in connexion with the introduction of this measure what unfortunately has been too common in the legislation of this Government; Ministers have acted first and thought afterwards. This measure was outlined in the budget before the taxation expert who was to assist in drafting the bills, and in determining the means whereby the tax could be collected, had arrived in Australia. Now we find that the tax is actually being collected throughout Australia even before the measure has been discussed in this Parliament, and before anybody knows what its final form will be. It is true that in connexion with the tariff it is necessary to prevent loss of revenue by collecting duties so soon as the schedules are placed on the table of the House, because goods are continually coming in from overseas. This sales tax is in a different category. It is internal in application, and consequently it can be imposed at any time. In fact it was imposed on the 4th August, nearly a month after the proposal was outlined in the budget. There is no reason why the tax should not be imposed on the 1st September. It would be far better to delay this tax until it has been discussed in this House, and to make up for the loss of revenue during the next month by increasing the rate to 2f, or even, if necessary, to 3£ per cent, until such time as the loss is recovered. Surely it is unwise to impose a 2i per cent, tax before honorable members and the traders of this country are aware of its effect, and before the Taxation Commissioner is able to frame regulations and to issue instructions as to how the tax is to operate. It seems to me that unnecessary chaos and confusion is being brought about, and that a considerable hardship is being inflicted upon the people by the method of levying this taxation. Even now I urge the Government to take steps to let the people know the exact position before the tax is collected. This measure has to run the gauntlet not only of this House, but also of another place, before it can be said to operate. Bequests have already been made for many fresh exemptions, and I shall suggest other exemptions which are so reasonable that the Government will, I am sure, grant them. Surely these exemptions should apply from the beginning of the operation of the act, and not from some future time. The Labour party has been renowned in the Federal Parliament as the pioneer of new taxation. It was the Labour party that introduced the federal land tax, and gave the income tax its present form. It was the
Labour party which, for the first time in Australia, placed a primage duty on imports, and now it is, for the first time, imposing a sales tax. Some of the legislation introduced by the first Federal Labour Government is a monument to the greatness of the Labour party; but nearly all such monuments are gradually disappearing. For instance, the compulsory defence system of this country which was introduced by the Labour party, has now been abolished by the same party. Many other outstanding achievements of that party have been destroyed by the same party. The only measures that will remain upon our stattutebook to remind us of the Labour party’s activities will be the taxation laws of this country, laws, which, in the case of the primage duty and the sales tax, oppress the poor much more than the welltodo. Those laws have been brought down by a Government which has always claimed to be representative of the workers, although actually it has kicked them the hardest. The Government’s action reminds me of the old saying -
Perhaps it was right to dissemble your love.
But why did you kick me downstairs?
This increased taxation will make living, not cheaper,. but dearer. The tax is being imposed in such a way as to fall inescapably on the consumers at a time when our national income has declined by 10 per cent. The figures given by the Prime Minister showed a decline of £70,000,000 in the income of the people last year, and this year the decline will be considerably greater. Surely when we are faced with a huge reduction in our national income we should not impose more harassing taxation upon the workers, the consumers and the common people of this country. Before attempting to do that we should decrease governmental expenditure. The cost of government has been raised this year by 7 per cent., although our national income has declined by 10 per cent. One reason stated by the Government for its action is that it is giving a certain amount of money to the States for the relief of unemployment. That is really a State function which the States are able to carry out much more satisfactorily than the Federal Government; but to the extent to which this Government raises money from the people to be given vo the States for the relief of unemployment, it curtails the field of taxation left to the States. We have already received a protest from Sir James Mitchell and other State Premiers that the sales tax is a definite breach of faith on the part of the Federal Government in respect of its promise to the States early in the year that it would not attack this particular field of taxation and so prevent them from carrying out their ordinary activities? Let us contrast the sales tax with the tax which has been levied in New South Wales for the purpose of assisting unemployment. As I stated last night, the tax of 3d. in the £1 in New South Wales will be levied on those who are at work, or who have incomes. But the sales tax and the primage duty will increase the cost of every article purchased, both by those in employment and those out of employment. It is only reasonable that the ordinary man in employment should do something to help his less fortunate brother who is out of employment, but the sales tax and tho primage duty tend to make the poor poorer; and the sales tax is essentially undemocratic. Its operation is inverse to that, of the income tax, which makes a progressively higher levy as the income increases. The sales tax is a consumption tax, purely and simply. Other countries who have worked out the position, have found that, in the case of a man on a salary of £400 a year a 3 per cent, sales tax would absorb 3 per cent, of his income, because that income is all used in purchasing consumable articles; but a man with an income of £4,000 a year would pay a tax of about l£ per cent. The income tax increases as the salary or wages increase, but the sales tax rate diminishes as the . income * i increases. That principle is essentially undemocratic. The sales tax operates similarly to the customs duties, and both should not be in operation at the same time, as they penalize the smaller man. The offset to customs duties is of course a graduated income tax, but in addition to the application of high customs duties, a sales tax is being imposed which is estimated to bring in £6,250,000 next year. Although the Government has decreased its customs revenue by imposing high duties and embargoes, the price of goods in Australia has not been reduced. This Labour Government is imposing a treble tax upon the consumers. We have increased the price of goods, first, by our tariff policy; secondly by the sales tax; and thirdly, by further super duties and the primage duty. That could have been avoided had the Government pursued a different policy. It is estimated that next year there will be a decline of imports into this country to the extent of about £60,000,000. The Government estimates that customs revenue will be something like £27,000,000. There will also be £12,000,000 or £13,000,000 collected from excise, but I am dealing now with the imports.
– Does the right honorable gentleman think for a moment that that estimate will be realized ?
– -The Leader of the Opposition (Mr. Latham) gave some figures that suggested that the total value of exports from this country during the present year, including bullion and ordinary produce, would be about £100,000,000. “We have to raise by some means or other something like £35,000,000 to meet our overseas commitments, so that we shall be able to purchase from overseas goods to the value of only £60,000,000 or £65,000,000. If we raise £27,000,000 by means of customs revenue, that will represent an average tax of over 40 per cent, on those goods. In the past year the percentage has been something like 23 per cent. Two or three years ago it was only 18 per cent. This year, to produce the revenue, it must realize 40 per cent, which, I think, is impossible. Et has increased in , proportion to the increase of duties. This huge impost must increase the cost of living and the cost of production in Australia. Although those costs are practically strangling us, further imposts are being made which are likely to place this country in a dangerous position, if not to bring it to a dead end. Contrasting the action of the Federal Government with those of other governments, one must come to the conclusion that the Federal Government is standing in the way of economic reform. It is determined to maintain uneconomic standards which at the present time are impracticable tinless Ave provide more work and employ more men. We cannot employ more mcn unless we are able to produce goods at si lower cost, and to sell them overseas in competition with other countries. If the Government refuses to reduce governmental expenditure, our efforts to get out of the financial bog in which we are will be further crippled. More men “will be thrown out of work, and the vicious circle which has been responsible for much of the existing financial depression in Australia will be enlarged. Honorable members opposite are actually of that opinion, because hist night the honorable member for Bendigo (Mr. Keane) said that it would bc necessary next year to provide, not £1,000,000, but £8,000,000 or £9,000,000 to cope with the wave of unemployment that is likely to sweep through this country. Thu people’ of Australia ure entitled to expect from the Government remedial action, both pallialive and curative.
– They did not get relief in that respect from thu lute Government1.
– The hi to Government did relieve the people of taxation, but every action taken by the present Government in the last nine months has increased the burden of the poorer section of the community. The late Government raised the income tax exemption from £200 to £300, and gave additional exemptions for children, practically relieving from income taxation those in receipt of small incomes as well :is numerous other taxation concessions. Progress is not to be secured by direct government action in controlling industries. If a business or an industry is to be carried on profitably, it should he managed by -individuals who have some capital or interest of their own at stake.
I propose, first of all, to consider the necessity for this tax, and then to examine its character and its probable effect on Australia. The necessity for it arises in two ways from the policy of the Government, which has . decided to spend this year some £4,000,000 more than the BrucePage Government disbursed in 1928-29. The Ministry expects to receive £5.000,000 from the sales tax this year; but, if it bad kept its expenditure down to that of 1928-29, in which the national income of Australia was about £100,000,000 more than it will be this year, four-fifths of the justification for this tax would disappear. It is thus seen that the Government’s policy of increased expenditure is directly responsible for the tax. Its policy of embargoes, prohibitions, and super duties, which has seriously reduced the receipts from customs, also is largely responsible for the tax. Many men have told me that they have been offered in London, where the bank rate is 2£ or 3 per cent., business advances for a year at those rates, which would have enabled them to bring goods to Australia and continue to give employment in consequence of their importation. In many cases, the goods referred to are not being manufactured in Australia. Yet, because of the embargoes, prohibitions, and super duties, these men are unable to take advantage of the facilities offered in London. Had they been able to do so, the national income of Australia would have been increased, to the degree of the credit given making it possible to keep large numbers of persons in employment here in this time of crisis. Naturally, the customs revenue would have been correspondingly increased. So the policy of the Government, in depriving itself of customs revenue without reducing the charges borne by the people, who still have to pay as much as before for their goods, whether they are made in Australia or brought from overseas, is largely responsible for this falling off in the annual revenue.
Many persons still think that this taxation is being imposed for the purpose of liquidating the deficits of the three preceding years; but the fact is that the money raised by it will be used for current expenditure. In fact, this taxation does not cover the Government taxation for this year. The Government intends to meet £1,500,000 of expenditure this year with the windfall that has come into the Treasury in the liquidation of expropriated German properties.
– When the right honorable gentleman was Treasurer he received £7,000.000 unexpectedly.
– That was used in the reduction, of the national debt, with the result that there was a permanent saving of £400,000 annually in interest charges.
The sales tax, like the increased customs duties, will add to the cost of production, and must tend to reduce exports. To that extent it will lessen our purchasing power overseas, and correspondingly reduce our customs revenue. Australia, unfortunately, has earned a very unenviable reputation owing to the taxes imposed by this Government. An examination of the budgets of other countries that have introduced a sales tax shows that either they have not huge customs revenues, or do not raise large sums by income taxation. They resorted to the sales tax as a substitute for other forms of taxation; but this Government has imposed it in addition to the other heavy taxation burdens carried by the people. The sales tax has always been regarded as unsatisfactory in its character, and one that should be imposed only as a last resort, when a country has no other means of raising sufficient revenue to enable it to carry on its governmental operations, and when all other principles are subordinate to the question of adequacy. The income tax law of the Commonwealth is most difficult to understand. We have striven to give equitable treatment to individuals, and this policy has led us into a maze of complications which permit many, who should pay, to escape taxation, while it also inflicts much injustice oh others. This law is so obscure that no taxpayer can tell, when he submits his return to the authorities, what tax he will be called upon to pay. So technical is the work of preparing a federal income tax return that many business houses find it necessary to employ a considerable staff for the work, and not a few employ taxation experts. This entails very considerable expense, in addition to the inome tax paid. The intricacies of customs taxation, too, pass the comprehension of most persons. So wide is the ministerial and departmental discretion that is allowed under the various by-laws that this avenue of taxation is a maze of uncertainty. When ordering a machine from abroad, nobody knows whether he is entitled to a remission of the duty chargeable upon it. He dare not make a forward contract for its disposal without risk. This year we find that the policy of the Government of imposing embargoes and prohibitions on imports has seriously reduced our customs revenue. The bad times experienced by the people, owing to the fall in the value of wool, wheat, &c, and the heavy imposts already charged, have reduced the available sources of income taxation. So the Government adopts the brilliant idea of taxing, not profits, which it is quite reasonable to tax, but turnover.
The sales tax is in operation in about twenty countries, but the only other English speaking community that has introduced it is Canada. The Mother of Parliaments has not seen fit to impose this obnoxious tax, and the United States of America, too, which follows in most things the business instincts and traditions of Britain, has eschewed it. Although this Government refuses to accept as migrants the nationals of Soviet Russia, Germany, France, Italy, Belgium, the Philippines, Mexico, Austria, Porto Rico, Poland, and Roumania, it follows the example of those countries in the imposition of the sales tax, which is one of the few foreign things on which no embargo has been placed.
The Minister for Trade and Customs (Mr. Fenton) said last week that this was a simple tax; but one is not inclined to agree with that statement, in view of the fact that in Canada the impost has undergone nearly as many alterations as have been made to the income tax law passed by this Parliament, which is almost annually amended. I find that the sales tax in Canada was altered in 1.920 and in 1921, when discrimination was made between various goods. Then, again, in 1923, the tax was re-adjusted. Such articles as raw fur3, wool not further prepared than washed, and drainage tiles for agricultural purposes were added to the list of exempted articles, and the tax generally was raised to 6 per cent.; but in 1924 it was reduced to 5 per cent. In the latter year, text books and instruments of production in the primary industries were wholly exempted from the tax, and the rate of tax on boots, shoes, rubberware, biscuits, creosoted rail way ties, and various other goods, was fixed at 24 per cent. In 1925, vegetable plants, lasts, patterns, and dies for the manufacture of boots and shoes, certain material used exclusively in the manufacture of engines for fishing boats, and of well-digging machinery were exempted. In 1927 and 192S, there were other alterations, and in 1930, there was a further alteration either in the rate or in the articles to which the tax applied. So in Canada, in ten years, the tax seems to have undergone about nine variations. Its history is similar to that of the federal income tax, which has had about thirteen alterations in 15 years.
All economists agree that every lav which exploits a huge new field of taxation should have a sound principle underlying it to make it .fair to the average citizen ; but the sales tax cannot be supported on that ground. It is based on the bald proposition that the consumer must always pay. Being a consumption tax, the burden of taxation is to be shifted from persons with large- incomes to those whose incomes are small. It means that -the poor must do with less than they have been compelled to live on, and those in a slightly higher station in life may only maintain their present standard of living by reducing their usual savings. Every person must be affected by this tax - the poorer people to the greatest extent. Ultimately, the effect will be that, even if the prices of goods are not raised, the quality or quantity will, be affected for the worse, so that it always may be said to raise prices. A period of depression is the worst possible time at which to make radical alterations in our. taxation law. Every effort should be made to save industry from unnecessary dislocation. The imposition of a tax of this kind in a period of great depression must unquestionably affect all business dealings, and lead to the establishment of a higher price level when it is most important to effect a reduction of the existing level. It is universally recognized that there will be no real recovery in either Australia or any other country until the retail price level has been reduced in conformity with the decreases that have already taken place in the wholesale price level. It is true that during a period of depression a manufacturer may be compelled initially to carry the burden for a time, because of the competition that he has to face; but it cannot be doubted that, ultimately, it will be passed on, because it is essential for him to make a sufficient profit to enable him to continue his operations. This tax will discriminate, not only against the poorer class, but also between different types of manufacturers. The manufacturer who has a big sum invested in plant and equipment, and a comparatively small output, upon which he makes a high rate of profit, will not have to pay as substantial an amount as the manufacturer who has a comparatively small sum invested in plant and equipment and a big turnover, upon which lie realizes a small .percentage of profit. Consequently, difficulties and discriminations will arise throughout the whole field of industry.
The Government says that an attempt has been made to adopt the best method of collecting this tax, and it has decided to follow the Canadian method of making the manufacturer or producer its tax collecting agent. Under such a system there will bc double taxation in many cases, and evasion on a fairly grand scale, unless hordes of clerks, supervisors, and inspectors are engaged in the occupation of seeing that the law is observed in its entirety. It is claimed that the object of adopting the proposed form of collection is to secure a certain measure of. uniformity. Germany has had a lengthy experience of the operation of such a tax. The method adopted in that country is to add the tax to the price of an article whenever it is sold. Every article has affixed to it a ticket showing the amount of the tax. The advantage of that system is that the people know exactly what tax they pay, and that they are paying sales tax. Under the method proposed by this Government the people will not be able to obtain that information. The people may not remember that the Government is levying a tax on their consumption. At the same time, the revenue does not- receive the full amount that the consumer pays, as the cost of the article will probably be increased fairly substantially to enable the manufacturer and the retailer to make a profit, not only on the original cost of the article, but: also on the tax.
It has been argued that the Canadian system is simpler and fairer than any other. In his second-dreading speech the Prime Minister (Mr. Scullin) advised honorable members to read a .treatise on the subject published by the National Industrial Conference Board of New York. At page 90 of that publication the following paragraph appears -
A production tax on the Canadian model is administratively practicable, but at the cost of uniformity and simplicity. In the case of the Canadian tax, the resulting accounting complexity is augmented by a broad list of commodity exemptions, and by the requirement of monthly returns. One Canadian taxpayer complains: - Only those thoroughly conversant with approved commercial bookkeeping practice can appreciate the additional functions necessary in any organization to carry innumerable sales tax items from cost or billing clerks’ entries, through the various accounting stages of properly recorded taxin chided or tax-additional invoices, to the visible and segregated monthly aggregates acceptable to departmental inspections. Supplementary legislation and continued departmental bulletins have extended sales tax exemptions-
Apparently they are just as complicated and difficult to understand as the bulletins and regulations that at one time and another were issued in Australia in connexion with the income tax, and that eventually had often to be discarded. The paragraph continues - vertically from licensed wholesaler through to consumers by means of government funds - horizontally, from manfacturers for reprocessing to manufacturers of ships and farming implements, and to the milling industry - proportionately, from labour in repairs and installed contracts to freight in laid down cost, and in consequence, non-taxed sales invoices must be daily extracted from sales compilations, rebate claims must.be prepared, suspense accounts established awaiting judicial decisions or settlement of issues between Dominion and Provincial Governments, all of which must certainly be reflected in the cost of commodity production.
Sales taxes being payable monthly in respect to commodities invoiced, whether or not the manufacturer has received payment, create manufacturers unwilling banker for the Government during the period between remittance to it and receipt from the purchaser, and in the event of non-collection of accounts, they become penalized sureties.
Even the required monthly declarations upon oath of the correctness of filed returns, adds its clement of expense, especially when income tax regulations are satisfied with the use of a simple certificate.
That will convince honorable members that in Canada the procedure connected with the income tax is regarded as simple compared with that of the sales tax. The Prime Minister urged us to read that treatise to obtain information as to the successful manner in which the Canadian tax operates. Apparently he regarded it as justifying the decision of the Government to adopt this particular system. It does not appear that its operation will be accompanied by very great simplicity, and the business people of that, community do not seem to prize the tax very highly, or regard it as very successful.
Let us consider the effect that this tax, combined with other governmental taxes, must have on our principal industries. Take, first, agriculture. The primary producer will be placed in a serious position, because he will have to pay in connexion with every imported article he requires, not only the ordinary customs duty, but also a 2i per cent, primage duty, and a per cent, sales tax. The Government takes credit for the fact that it proposes to exempt from the operation of this tax the products of our agriculturists. Of what use is that to them ?
– It is of some use.
– It is of no use as regards his exportable surplus when a farmer is compelled to pay extra for everything that he purchases. What the wheat-grower, the wool-grower, and the butter producer are concerned about at the present time is the reduction of the cost of production, so that the prices that they receive for their exportable surplus may be profitable to them. In the case of the wheat that remains in Australia for local consumption, which, except in the case of Western Australia and South Australia, represents 30 per cent, of the total production, there may be a slight advantage if a little more bread is eaten; but the production cost of the 70 per cent, that has to be sold overseas will be increased by reason of the fact that the price of everything that the wheat-grower requires to carry on his operations will be raised as a result of the imposition of this tax. Agricultural implements should be exempted, as they are in Canada.
I agree that it. is wise and necessary to refrain from imposing this tax on food in the interests of the consumers. I should like to see exempted, not merely dried fruits and other primary products, but also canned fruits. I cannot see why any distinction should be drawn between canned fruits, and flour, bread, or any other food. There ought not to be any discrimination against the country man. The honorable member for Echuca (Mr. Hill) asked recently whether firewood was to be subject to the tax, and the Prime Minister gave an affirmative answer. Why should firewood be taxed, and the gas, coal, and electricity that are used by the people of the cities be exempt ? I trust that honorable members will be fair enough to agree to the inclusion of firewood in the list of exemptions.
Seeds that the primary producer needs, especially pasture seeds, also should be exempt from the operation of this tax, as well as of the primage duty. In many cases it is impossible to grow locally and collect the seeds that are required, and it is necessary to import them.
I come now to the difficulties that are likely to be encountered under the bill in its present form, and the regulations that are to be made to operate its provisions. Special provision will have to be made in the case of a wholesale manufacturer who is also a retailer. I shall not go into that matter, because it has been dealt with exhaustively by the Leader of the Opposition (Mr. Latham). But there is another case that is met daily in the business life of the community. A business concern purchases hundreds of thousands of containers for use in the marketing of its products. The maker of the containers is licensed. The purchaser finds that he has bought more than he requires, and sells a quantity to a dealer, who is unlicensed. That dealer resells them. The manufacturer will be obliged to collect the tax from him to pay to the Taxation Commissioner. The dealer when he sells must charge the tax even though he sells it to another licensed manufacturer or places goods in containers. He must get his money back. He must either collect the tax from the next licensed dealer, or pay it himself. In all these cases where goods pass successively through the hands of licensed and unlicensed dealers before reaching the final retail stage it seems to me that double taxation is inevitable or else book-keeping posts will be enormous. Unless something is done to remedy the position, there is considerable danger of double taxation being collected on transactions of this kind. Let us see what may happen in regard to ordinary invoice work. A wholesale house sends out 2,000 invoices every day ; 1,000 go to licensed persons - manufacturers, warehousemen, and so on - while the other 1,000 go to unlicensed persons. The invoice clerk, before sending out the invoices, must go down the list - which is changing from month to month - and find out who is licensed and who is not, so that it may be determined who shall be charged with the tax, and who shall not be charged because he is licensed. That will entail a lot of extra work, which will mean increased costs, and a higher cost of living.
– The honorable member for Warringah (Mr. Archdale Parkhill) complained yesterday that no work was being provided for clerks.
– This tax will make plenty of work for accountants and lawyers, but it will not be necessary or useful work, such as would have arisen from the taking of the census, which would have furnished us with data showing the result of the operation of the tariff. A firm like John Danks, in Pittstreet, Sydney, sells to the public as retailers, to manufacturers, to country storekeepers and to wholesale houses. Probably 5,000 or 10,00 invoices a day are sent out. Imagine the work involved in going down a list like that to see who is licensed, and who is not. I urge the Government, even at this late hour, to reduce its expenditure so that it may not be necessary to collect this tax. If it persists with the tax, in Heaven’3 name let it take off some of the customs taxation, so that the community will not be hit both ways. Let it, at any rate, if it will not go so far, remove some of the present anomalies in the operation of the tax. The Government should have a proclamation issued to the effect that the tax will not be collected until the 1st September, so that every one may see the completed legislation. It would be better to adopt this course, even if it were necessary to increase slightly the rate of the tax later, so that the public may be spared the confusion with which it is now threatened of having to collect an unknown quantity under uncertain conditions.
.- No honorable member of this House likes to take part in the task of imposing additional taxation on the people; nor are the people inclined to be well disposed towards a parliament which has this task to perform. It is necessary, however, for governments to have revenue; they cannot carry on without it. At the present time we are faced with the task of raising £65,000,000. I deal in round figures; since I have come into this House I seem to be capable of dealing only in millions. We are faced with the unhappy necessity of having to raise this enormous sum of money, knowing that, even after it has been collected, we will still be faced with a deficit of £6,000,000. Some honorable members are anxious to advertise our present unfortunate position, instead of taking a broad, national view of our problems, including the need for this taxation. I believe that if the public are told “exactly what our position is, if we take them into our confidence, they will be prepared to find the money which must be raised. ,The honorable member for Melbourne (Dr. Maloney) commented upon the fact that so many bills had to be introduced to impose this tax. That, however, is due to the manner in which our Constitution is framed, or at least the Government has been advised to that effect by Mr. E. M. Mitchell, K.C.
The present budget is practically the first honest budget which has been presented to an Australian Parliament. In the old days in New South Wales we had such Premiers as Sir Henry Parkes and Sir John Robertson, both of them good blusterers when it came to getting the people’s votes, but they had strange ways of presenting the national accounts. When there was a deficiency in the budget, they made it up by selling land at £1 an acre, and in those days Crown land was sold before it was surveyed. Then we had a Treasurer who afterwards became a member of this House; he was the daddy of the lot. The Centennial Park in Sydney was dedicated for public use to commemorate the hundredth anniversary of the settlement of Australia. There was to be a great function on that occasion, and Sir
Henry Parkes had invited all the Premiers of the States, and all the bishops, Soman Catholic and Anglican, and all the members of Parliament, to attend. He did things on a grand scale, but when the bill came in it was found that the revenue of the State was not equal to the demands upon it. The Treasurer, however, got over the difficulty by crediting the value of the park, £250,000, to the State revenue for the purpose of balancing the budget, even though the park had all along been government property, its control having simply been transferred from one department to another.
The right honorable member for Cowper (Dr. Earle Page) introduced a budget into this Parliament on the 8th June, 1923. At that time I used to criticize the budgets much more carefully than now. I used to go through them practically figure by figure. In 1923 the post office was in need of money, but, despite that fact, the Treasurer remitted £2,500,000 of land taxation, and borrowed £4,000,000 for the purpose of carrying on the post office.
– Not for the purpose of carrying on the post office, but for new works.
– The fact remains that in 1923 the right honorable member for Cowper, then federal Treasurer, borrowed £4,000,000 for carrying on the post office. Very little of that money has yet been paid off, and the total cost of the loan so far to the public has been £1,890,000. Oan we wonder why the present Government finds itself up against all sorts of financial difficulties ? The “present budget is the most truthful that has ever been presented in Australia. No attempt has been made in it to deceive the people. In this respect it resembles the last budget presented by the British Chancellor of the Exchequer, Mr. Phillip Snowden, which set forth the true position regarding England’s debt, and her expenditure on armaments. Previous Chancellors, such as Sir Winston Churchill, might have been men of very fine character, but they were pastmasters at deceiving the people. It is set forth in Mr. Snowden’s budget that it will take 146 years for England to pay off her war debt, while keeping her expenditure on armaments at the necessary level.
The first budget introduced by the present Government is a true reflex of the income and liabilities of the Commonwealth. It is the extravagance of the State Governments that has involved Australia in its enormous indebtedness. I asked recently to be given an opportunity to lay my views before the Loan Council. My request was not granted. Honorable members have little idea of the huge loan programmes the States have placed before that council.
– I should like the honorable member to indicate how he proposes to connect his remarks with the bill?
– I am trying to show that the present position of the Commonwealth is due to extravagant administration. The Loan Council is really a mutual admiration society. Each State Treasurer estimates what loan expenditure his State requires during the coming year, and puts his estimate before a meeting of the Loan Council. In March of each year the various departments of a State furnish to the Treasurer of the State lists showing the anticipated expenditure during the ensuing year.
– It is quite impossible for me to permit the honorable member to proceed on those lines. The honorable member must confine himself to the subject of the sales tax.
– If the business of the Loan Council had been properly conducted this taxation would not be required. I do not think that I am doing wrong in saying that.
– .The honorable member is quite in order in making a passing reference to such matters, but he will not be in order in dwelling at any undue length upon them.
– When a State Treasurer is furnished with the requirements of his departments, he submits them to the Commonwealth Treasurer at a meeting of the Loan Council. Unfortunately, no minutes are kept of the proceedings of that council. Honorable members would be surprised at the demands of the State Treasurers for loan expenditure. The whole system needs revising. The Commonwealth Treasurer is seriously embarrassed by the frequency with which the State Treasurers raise money by means of treasury-bills. In financial circles these are known as short-dated bills, bonds, or debentures; they have different names; but Australian Governments generally refer to them as treasurybills. When the Commonwealth Treasurer meets the State Treasurers at the Loan Council, he finds that the money secured by the States on these short-dated treasury-bills has already been spent, and that provision has to be made for their redemption. Out of a £10,000,000 conversion loan floated the other day, only £2,000,000 was left for public works after providing for redemptions. I asked a question on the subject in the House, but the reply I received was evasive, just as I expected it would be.
-I cannot permit the honorable member to proceed further on that line of argument.
– Then I shall deal with the Sales Bill. The representatives of David Jones’, Myer’s and other big emporiums are to-day conferring in Sydney. Many of these emporiums are manufacturers as well as retailers, and I have received from Mr. Charles Lloyd Jones, of David Jones, Sydney, the following instructive telegram: -
Sales Tax Bill provides that the product of a factory controlled by a retail firm shall pay sales tax on the retail selling price of that product. This is most inequitable and places retail traders who operate their own factories at a serious disadvantage when competing with traders who buy from outside manufacturers, as the tax in that case is only payable on the manufacturer’s selling price.
Upon receipt of this telegram I communicated with the Commissioner of Taxation ; but at the moment that gentleman is unable to answer questions relating to the tax. I can get no assurance that provision has been made to meet the position to which Mr. Jones has drawn attention. Injustice will be done if the sales tax has to be paid on the retail price and not on the cost price to the firm of/ the article it manufactures. Retail prices are generally from 20 per cent, to 30 per cent, higher than the manufacturer’s price. In a pair of boots the cost of labour may be only 4s. lid., yet the sale price of the article as it leaves the factory may be 15s. The retailer sells it for 30s. It is unjust to impose the sales tax on the 30s. instead of the 15s. The honorable member for Cowper (Dr. Page) has spoken of the income tax. Income taxation was first imposed in Great Britain by Sir Robert Peel for the purpose of wiping out a war debt. The rate of the tax has at times fallen as low as id. in the £1, but the tax has never been discontinued. The British Government thus always has the income tax machinery available to meet an emergency. No analogy can be drawn between income taxation and the proposed sales tax. No one pays income tax until an income is earned.
– A Labour Government can claim credit for introducing the sales tax.
– That is so, but Labour can do no wrong. Labour established the Commonwealth Bank. The Fisher Government constructed all postal works out of revenue, and when it went out of office it left a credit balance of £3,000,000 in the post office. Mr. Phillip Snowden has recently commented on the foresight and wisdom displayed by the Australian Labour Government in . dealing with the post office.
– There is no reference to that in this bill.
– I recognize that the sales tax bills are measures which can be more readily dealt with in committee. My prayer is that in future -Australia will never again have such a serious deficit as to justify the heavy taxation that the present position requires. No form of taxation is ever pleasing, but I trust that by means of what is now proposed we shall find ourselves with a surplus at the end of the year and in ‘ a position to give employment to. our people. The world is changing. You, Mr. Speaker, know as well as I do, that things must alter. Quite recently I saw the picture “ Disraeli “. When I was a boy I frequently saw Disraeli pass across St. James’ Square to call upon Lord Derby. One of the outstanding acts of his administration was to disregard tradition and to radically alter the conditions then existing particularly in factories, and in the coal-mines. Such changes were made over 60 years ago, and economic and industrial conditions are again altering. One direction in which an improvement can be effected is by having more liquid currency at our disposal for reproductive development work. That would enable the Government to dispense with further taxation, and increase instead of lower the standard of living in Australia. If, as some suggest, the conditions in Australia would improve under a lower standard of living, one would expect China, Japan, and India, and other countries where the standard is infinitely lower than it is in Australia to be prosperous. I trust that as a result of the Government’s action the financial position will shortly improve, and that it will not be long before Australia is again prosperous.
– I do not propose to delay the House very long in discussing this measure at this juncture, because I realize that it can be more effectively debated in committee. I desire, however, to make a few observations on the imposition of a sales tax, the reasons for its adoption, and to discuss whether this is the best method of dealing with the present economic situation in Australia. The Government has set out primarily to adjust our adverse trade balance; but the only effective step which it has taken in that respect has been to decrease imports. It has certainly taken a very drastic step in that regard, and the result has been a marked diminution in imports; but at the same time, the Government has introduced its policy iri such an unscientific, clumsy, ill-advised, and ill-considered manner that it has inflicted very great harm upon the country, and increased unemployment to a very marked degree. The Government has overlooked the most important way in which to grapple with this problem, and that is by reducing the cost of production, and enabling our primary, and even our secondary production to compete ki the markets of the world. If that were done, additional capital would be brought into the country, which would materially assist in improving our economic position. Under its present policy the Government is merely taking money out of one pocket and placing it in another. By taking money from the workers it is not increasing our national wealth. Under its present policy it is creating no new wealth, it is not bringing an additional ls. to Australia for distribution and for spending purposes.
– It is preventing money from going out of the country.
Mr. ARCHDALE PARKHILL.That is an easy matter, as no one has any money to send out. Honorable members opposite cannot truthfully deny that additional capital is not required. The action of the Government should be directed toward increasing our national wealth, and thus improving the spending capacity of the people.
– Would the honorable member be in favour of reducing interest rates?
Mr. ARCHDALE PARKHILL.The steps taken by the Government havenot had the least effect on increasing the spending capacity of the people. 1 should like to know what the honorable member for Calare (Mr. Gibbons) moan? by his interjection. Are he and the honorable members with whom he is associated prepared to make a clear and definite statement on the subject of interest? Are they willing to submit some concrete proposal with respect to the reduction of interest rates? From time to time sneering references arcmade to interest rate paid on government loans, and indirect references, are made to repudiation, which apparently is running through the minds of some honorable members opposite. On more than one occasion the . right honorable the Prime Minister (Mr. Scullin) has rightly repudiated the suggestions of his followers in that respect. What do they mean by such statements? If they do not mean repudiation of our interest liabilities, they should remain silent. Government loans are being floated and the interest rate to-day is 6 per cent. These loans have been taken up, not only by the wealthy persons in the community, but also by a large section of the middle class and working community who save enough to purchase a £10 bond. The only conclusion one can reach is that honorable members opposite have not any realization of what is meant by a reduction of the interest rate, and its effect upon finance generally.
As has already been mentioned, £14,000,000 has to he raised to balance the budget for the current year, £1,500,000 of which represents funds accruing from the liquidation of ex-enemy properties, leaving a balance of £12,500,000 to be raised by taxation. As I have mentioned on previous occasions, £1,850,000 is being obtained from income taxation, and therefore over £10,500,000 must come out of the pockets of the workers, who may or may not have taxable incomes. The man in constant work with a family of from three to six children has to pay far more than a person in receipt of £1,000 a year who has not a family to support. Under our present customs duties, a family man pays seven times more than the wealthy childless man; hut, in addition to the ordinary customs duties, he has now to pay a primage duty of 2½ per cent. and a sales tax of 2½ per cent. The exTreasurer (Mr. Theodore), in the budget speech he made in November last, said -
I think it can be asserted that taxation of every description falls ultimately upon the wages and incomes of all who labour by hand or brain; or upon rent, interest, and profits derived from land and property. Where the taxes are imposed in the first instance upon commodities they are ultimately a charge upon the income of the consumers, who pay increased prices for such commodities-
That is exactly what I have said -
To comprehend clearly the relative burden of taxation and the real incidence of its varying forms, it is necessary to treat all taxes as being deductions from income, as indeed they always are in the last resort. By this means our interest can be sharply focussed upon the crucial issue; namely, what incomes have and what have not an “ ability to pay.”
A more hypocritical expression than that contained in the concluding sentence has never been inserted in any budget speech. An examination of this Government’s taxation proposals clearly discloses that little consideration has been given to the ability of the people to pay the excessive taxation imposed. Honorable members opposite have seen the long queues of patrons outside the picture theatres waiting to obtain admission. These people have the money to spare, and consequently the ability to pay, but they have not been asked to pay. Has the man walking the streets vainly in search of work, or who is only in casual employment and has a family to support, the ability to pay? Yet he is the person who has to pay the usual customs duties, the primage duty, and also the sales tax. Where is his ability to pay? [Quorum formed.]
– In contrast to this proposal the Bavin Government of New South Wales introduced a tax of 3d. in the £1 on wages, and a corresponding tax on income from property and other sources. In this way those who have incomes are paying towards the maintenance of those who have not, and every honorable member, irrespective of the party to which he belongs, will agree that that is a more sound and equitable method. I have heard no complaint from employers or employees as to the fairness of its incidence. Whilst the sales tax has had considerable vogue in Europe and in Canada, the people of the United Kingdom will have none of it. The British Labour party considered it, and rejected it because of its unfairness. Legislators in the Mother Country would not touch it with a barge pole.
– It is a tax on the poor man.
– In its incidence it is distinctly a tax on the poor man. It will do nothing to improve the economic position of Australia by adding to the national wealth; on the contrary, it will make living harder for those who already find it hard, and will increase the difficulties of those who are only intermittently employed. It will arrest the downward trend of the cost of living, will reduce the value of wages, and allow to escape a large number of people who are enjoying incomes which might reasonably be subjected to further taxation. Professor Brigden has pointed out in a newspaper article -
Under the sales tax the following incomes would escape under the present circumstances and until the consumers pay: Professional incomes and salaries however large, and incomes from interest and Tent. Incomes from Government bonds will not be taxed under the sales tax, nor will sales of services as, for example, of advertising and of amusements, and the services of banks, brokers, and agents generally.
The workers and the great masses of the people will have to bear this impost.
– They always do pay.
– Surely then it is the duty of a government that affects to represent the workers to devise a more equitable tax, the burden, of which will fall on the shoulders of those best able to bear it.
– What does the honorable member suggest?
Mr. ARCHDALE PARKHILL.I know what I would do, but it is not my responsibility to formulate a taxation policy for the Government. If the Government were mindful of the interests of the great masses it might easily have devised a system of taxation which would have produced the same amount of money withoUt pressing so heavily upon the workers, the middle classes, and the great masses of the people.
There are grave doubts in the minds of the general public as to whether the tax can legally be passed on. The history of its operation in Canada and all the available literature on the subject show that the tax is ultimately paid by the consumer. That being so, the Minister in charge of the bill should explain why the tax is not collected by means of stamps on the last sale. If that were done there would be no need to import an expert from Canada to explain to the Government and its officials the application of the tax. I cannot understand why that method has been neglected for the ambiguous and cumbersome scheme which is outlined in the bill. It would have been simple to compel the affixing of a stamp to the docket representing the last sale by the retailer to the general public. Presumably the Government fears that by that means the general public would be constantly reminded by whom the tax is being imposed and by whom it is being paid, and in order to avoid the political consequences of the resentment that would inevitably arise, the Treasurer is adopting the circuitous method of making the wholesaler a tax collector for the Government.
If that is not the explanation of the Government’s action, I ask the Minister in charge to explain why the tax is not collected by means of stamps, having regard to the fact that it will be ultimately paid by the last purchaser?
– The entertainments tax is collected in that way.
Mr. ARCHDALE PARKHILL.That is so. And if one buys in a Paris shop he finds that the sales docket bears a percentage addition in respect of the sales tax. Let honorable members not deceive themselves with the idea that this tax is popular in Canada. The Canadian Manufacturers’ Association condemns it as a tax on capital, contending that where there are no profits it must be paid out of capital. This has the effect of penalizing merchants holding stocks, and manufacturers. It stands to reason that the tax must be passed on. Few, if any, merchants could afford in the existing state of industry and commerce to pay a tax of 2 per cent, on their turnover. Reports of the annual meetings of companies show reduced dividends and often no dividends, and if their earnings had to bear a further charge of 2$ per cent, many companies would have to go into liquidation. When the tax is passed on, the cost of production has to be increased by 2 per cent. This means that goods which are keenly priced will not be manufactured to the same extent, and prices will increase. Where there is a margin of profit, and competition is not so keen, the 2£ per cent, will be added to each article when it is sold to the retailer, and he will pass the charge On to the consumer, probably with some addition. The legal position should be clarified. A definite pronouncement should be made as to whether the wholesalers are entitled to add at the foot of their invoices 2 per cent, to meet this sales tax, of whether they must re-price each article that they sell, and add the impost in that way.
– A number of articles are exempt from the tax. Does the honorable member suggest that these should be invoiced separately?
Mr. ARCHDALE PARKHILL.That could be done.
– This tax could be dealt with by the merchants and business houses in the same way that they dealt with the child endowment tax in New South Wales.
Mr. ARCHDALE PARKHILL That is so ; but my point is that the position should be made clear, because some retailers have questioned the right of the wholesalers to add this tax to their invoices.
– I point out to the honorable member that, under the Canadian act, the wholesaler is required to set out separately on his invoice the amount charged in respect of the sales tax.
– In all the circumstances, it must be apparent to all honorable members that the position should be” made transparently clear in the interest of the whole community.
I appeal to the Government also to amend the bill to provide that State business enterprises shall be on the same footing as private enterprises, at least in relation to the business they do with the general public. The bill at present contains a provision that the tax shall not be applicable to goods sold to or by a government.
– Government trading concerns should be put on the same footing as private trading concerns.
Mr. ARCHDALE PARKHILL.That is my contention. At present government business enterprises in New South Wales are enjoying a 10 per cent. preference over private business enterprises, and if there is added to that preference an additional 2½ per cent. in respect of the sales tax, it will be almost impossible for private concerns to compete against them; at any rate, it will be distinctly unfair to give them that additional advantage.
– What about the constitutional difficulty in regard to the imposition of Commonwealth taxation on State instrumentalities ?
– The New South Wales State brickworks already pays income and other taxation, and so does the State joinery works. I do not think that there will be any constitutional difficulty in providing that they shall also pay the sales tax.
I appeal to the Government to add to the list of exemptions seeds used for primary production. Most of our seeds are imported to-day. We obtain a large quantity from New Zealand. The purchase of these seeds is necessary for the production of wealth by our primary producers, and if we make it difficult for them to obtain seeds, we shall retard progress, and prevent an increase in our national wealth. We shall also hamper the development of primary industries.
I also ask the Government to extend the period within which this tax must be paid.
It is provided in the bill that the tax shall be payable within seven days after the end of the month in which sales are made. The period in which payment may be made should be considerably extended.
It has been stated that goods purchased by contract prior to the 6th July last are not subject to this taxation, but this is not clearly stated in the bill, and I submit that it should be stated there.
I shall reserve any other remarks for the committee stage of the measure.I intend then to bring under the notice of the Government several suggestions, which, in my opinion, would make the incidence of this taxation less severe than it will be if the bill is agreed to without amendment.
– It has been stated during this debate that previous Labour Governments have introduced legislation unique in the history of Australia. This measure is also unique. When federation was consummated, the people were led to believe that it would not cost more per head than must be spent to register a dog; but the first Government soon disillusioned the people in that regard and showed them that federation cost at least as much as it cost to register a ship. It has been said that the imposition of this taxation will lead to confusion and trouble, but I disagree with that view. In my opinion the process of obtaining revenue by means of the sales tax is meritorious, because much simpler than the process of obtaining it by means of customs taxation. Here is a list of some of the matters to which persons who import goods must give their attention -
Duty as per voucher.
Wharfage and entries.
Customs officers’ examination.
Bond or wharf storage.
Bills of lading.
Exchange and petties.
Agency and commission.
Customs entries and clearing.
Sorting and stacking.
Sighting and verifying.
Insurance and stamps.
I do not think that all importers bother about these requirements, but I am sure that they will find it much easier to ascertain the amount that they must pay in sales taxation than to find out how much they must pay in customs taxation.
Generally speaking, I offer no objection to the list of exemptions contained in the bill. It is true, as an honorable member opposite has pointed out, that it will be difficult to collect this taxation from some people. For instance, it would be manifestly impossible for the Government to collect a tax on every load of wood that is carted, although, on the other hand, it could keep tally of the fuel handled by some of the big city fuel merchants, whose turnover exceeds £10,000 a year in some cases. I understand that there is a “ bottle-o “ merchant in Sydney, who was recently called upon to pay something like £2,000 in income taxation. In a case like that it would not be difficult to collect the sales tax, although it would be hard to keep a record of all the bottles handled by marine store dealers who operate in a small way.
I object strongly, however, to the proposed exemption of newspapers from this taxation. Recently the proprietors of the Sydney daily newspapers announced that the price of their newspapers would be increased by 50 per cent. They justified the increase by saying that the duty on newsprint had been increased by £1 per ton. Most of these newspapers are sold by news agents, so the increased postage rates will not affect the position very much. _ I have ascertained that the average weight of the six issues of the Sydney Morning Herald in a week is 2 lb. 9 oz. One hundredweight of paper would thus be sufficient to enable the Sydney Morning Herald, to supply a subscriber for about 42 weeks. The tax on newsprint is ls. a cwt., but with the increased price of the newspaper, the proprietors of this publication will collect 10s. 6d. on every cwt. of newspapers sold. A simple calculation enables one to ascertain that in order to recoup itself, for the £1 per ton additional duty that is being imposed on imported newsprint, the Sydney Morning Herald Proprietary is collecting £10 from its readers. That is extortion and exploitation of the worst kind. Some of the smaller newspapers are collecting 30s. from their readers for every ls. that they have to pay in extra duty on newsprint.
– The Labor Daily is doing the same kind of thing.
– There is some excuse in that case, for that paper is rendering a public service, whereas the other newspapers are doing their best to ruin the country, or, at least, to prevent it from developing along sound lines. There is hardly an issue of the Sydney Morning Herald which doe3 not criticise honorable members of this Parliament because they will not agree to reduce their parliamentary allowance. Newspapers which indulge in that kind of silly sophistry will receive no consideration from me. If honorable members of this Parliament were to collect 30s. for every ls. of extra taxation which they have to pay because of the present depression, the newspapers would make a howl about it that could be heard all over the world. Some of the wealthy newspapers in America, those controlled by the Hearst interests, for instance, have an annual turnover of about £15,000,000 a year. These wealthy newspapers are a menace to the nation. The big newspaper concerns of Australia are gradually absorbing the smaller newspapers, and before very long journalists of capacity and intelligence will find that there are very few proprietaries to which they can apply for employment. At the present time if a journalist shows marked ability a newspaper like the Guardian may increase his salary by £200 or more, but when all the big newspapers merge, and a combine is formed, that is not. likely to happen. The newspapers are gradually becoming too wealthy, and they afford this Government a splendid field of taxation. Instead of permitting the “ newspapers to increase their price by -£d.; the Government should levy that amount of taxation, and bring them into lino with the rest of the community. Because the newspapers have to pay an increased duty of £1 a ton on newsprint, they are taking £30 out of the. pockets of the people.
The Government should place on the exemption list all the requirements of municipalities or shires, such as coal, coaltar, gas, and electric light. The revenue that would be derived from a tax on those requirements would be small, but the clerical work involved on the part of the municipalities and shires would be considerable. The Government has been subjected to much criticism. The honorable member for Warringah (Mr. Parkhill) indulged in a good deal of that rhodomontade which is so characteristic of him. He suggested that the Government’s proposals were unscientific. But I would point out to him that not one member of the Opposition has placed any tangible scheme before the Government. When the Opposition met in caucus to prepare its proposals, it realized that the ship of State had been badly battered and strained, because of the difficulty of navigating the ocean of adversity in which it found itself, but all that that party could do was to make impracticable suggestions. It imagined that if members of Parliament could be persuaded to surrender a small percentage of their salaries, that would, to some extent, remedy the financial depression. But any economy exercised in that direction would be as a drop of water in the ocean. It would seem that the members of that party after cudgelling their brains as to how the ship of State could be repaired came forward with a number of dummy bolts, one of which was not only without a head, but did not have a decent screw on the end of it. The honorable member for Warringah mentioned many articles that he contended should be exempt from the sales tax. I should like to know whether, if an honorable member sells his right to represent a constituency for, say, £3,500, the proceeds would be exempt from the sales tax.
– Is the honorable member referring to the constituency of Dalley?
– I do not think so. I forget the name of the electorate, but I think the member concerned received about £3,500, because his constituents preferred to be represented by a person who could see above his spats.
– The honorable member is silly.
– If there is any honorable member in this House to whom the term “ pusillanimous “ can be correctly applied, it is the honorable gentleman who used the word “silly.” I suggest that if one with a sobriquet such as he is known by allows himself to become over-pusillanimous he is likely to expose himself to self-destruction. The Government has introduced proposals, which it hopes will, to some extent, balance the ledger, but I advise it not to try to do too much in its first year of office. After seven years of the maladministration, incompetence and inertia of our predecessors, Australian finances are in an unprecedentedly chaoticcondition; but there is no reason why we should not spread our efforts to balance the ledger over a period of years. The Leader of the Opposition (Mr. Latham) has asked that the merchants and manufacturers should be given a month’s credit in respect of the operation of the sales tax, but if that request were granted it would involve a good deal of bookkeeping and expense. It is therefore not warranted. The amount involved in the application of a 2£ per cent, tax is too small to cause much concern to the merchants and manufacturers. Honorable members opposite have said that this tax will be passed on. No one has suggested otherwise. Since the Government is to surrender customs revenue to the extent of £7,000,000 or £8,000,000, it must impose additional taxation to make up that loss. If a manufacturer of this country made a motor car and sold it, a 2£ per cent, tax would not be nearly so much as the duty that the importer has to pay on a car’ that he brings into thu country. This tax, although small, will produce considerable revenue, but I consider that it should bear more heavily than it does upon the wealthy people of this country. They should contribute their fair share towards the revenue of the Commonwealth. Of course, if a man pays £1,000 for a motor car, he will contribute a large sum to the Commonwealth revenue. It must not be forgotten that all the articles of food required by the workers are in the list of exemptions, and, therefore, they will not suffer to any great extent under this tax. I suggest to the Government not to exempt the newspapers from the sales tax. They seize every opportunity to subject the Government te captious criticism. They should be made to pay to the Treasury the amount that they are taking from the pockets of their readers. For every £1 that the newspapers pay in customs duties, they are taking £30 from the public. If the Government did such a thing, the press would be loud in its protest. If the Government finances are to be subject to review, the finances of the newspaper companies should be also. The press is indeed getting a fair deal from this Government. The newspapers are emphatic about the necessity for raising £1,000,000 at the expense of the public servants and the parliamentarians, but they keep very quiet about the £250,000 that the Australian taxpayers are finding to enable special postal concessions to be given in respect of press telegrams. If the press is so anxious to improve Australia’s position this is not the time to charge the public an additional id. for newspapers and to that extent increase the cost of living. The big newspapers are making profits. When the Sun, a few months ago, decided to advance the price to 2d. the Sydney Morning Herald hung back for a while and refused to fall into line. By that means it obtained 40,000 additional subscribers. Now on top of that it wants an additional 50 per cent, profit under the pretence that the money is to be paid to the Government in the form of customs duties. That is an absolute falsehood, and I invite the Sydney Morning Herald to review the figures that I have placed before this House. Neither the politicians nor the public generally have anything to thank the newspapers for, and consequently there should be no favour shown to them. They should pay their fair share towards the Commonwealth revenue.
Mr. Hill (Echuca) [8.42].- I propose not to discuss the merits or demerits of the sales tax, but to deal only with one aspect of it, which concerns particularly industries with which I am more or less associated. Several honorable members have said that it will be difficult to pass on this tax to the consumer. The fruitcanning industry will have a great deal of difficulty in passing on this tax to the consumer. Few canneries have been established in Australia. There are three in the Goulburn Valley; one at Leeton, in New South Wales; one at Adelaide; one or two in Melbourne; and one or two in Sydney. So it cannot be said that there are canneries in every constituency. If that were so, no doubt my remarks would be supported by honorable members generally. As it is, they are not likely to receive much consideration in this
House. I fail to understand why the fruitcanning industry has been singled out for differential treatment as compared with the dried fruits and dairying industries. I agree that the products of the dried fruits industry and of the dairying industry should be free from the sales tax. The dried fruits industry is in an exceptionally bad condition, and the same may be said of the fruit-canning industry. Yet one is to be taxed and the other is not. At one factory in the Goulburn Valley, fruit, such as pears, peaches, and apricots, are received both for canning and drying. On one side of the factory is a dehydrator which dries the fruit, and on the other side are the big machines for the canning of fruit. If the fruit subjected to the drying process is exempt from this tax, while on similar fruit that is canned the tax is imposed, an anomalous position will be created. Milk, and the products of milk, such as butter, cheese, preserved milk, powdered milk, &c., are exempt, so it appears to me that the incidence of this tax has not been carefully investigated. I do not know who is responsible for this extraordinary decision, but I intend to move in committee that canned fruit be exempted.
It would seem that the Government is determined to tax the fruit-grower out of existence. Everything used in the orchard is already taxed - spraying material, spraying machines, orchard implements of all kinds, tractors, petrol, oil, and a hundred and one other things. I appeal to honorable members opposite who represent primary producers to stand behind me in protesting against the imposition of this unfair tax on that section of the community. Everything used in the canneries is taxed, from the expensive processing plant down to the sugar, tin plate, shooks, &c. In addition to this, the primage duty has been imposed, and now the sales tax is to be levied on jams and canned fruits. One wonders if the primary producers will soon be required to wear an appliance over their heads to register the quantity of air they breathe, so that that also may be taxed.
There are three co-operative canneries in the Goulburn Valley, and that at Shepparton is the largest in the British Empire. The other two are also large employers of labour, and the three together employ not less than 1,500 persons. Another cannery at Leeton, New South Wales, employs some hundreds of persons. The three factories in the Goulburn Valley process from 60 to 70 per cent. of the total pack of canning fruits in Australia. Large areas of orchard land were opened up during and after the late war for the purpose of soldier settlement and other closer settlement. The Victorian Government spent millions of pounds in the conservation and reticulation of water for irrigation purposes, so that intense cultivation might be carried on ; but soon after the Goulburn Valley had been settled, the large cannery at Shepparton was found to be totally inadequate for the purpose of processing the fruit, and thereupon two other factories, at Kyabram and Ardmona, were established on co-operative lines by the growers themselves. Owing to the Victorian Government settling so many men in the industry, it was soon found that the fruit grown was considerably more than could be processed by the proprietary and cooperative canneries, and the former refused all fruit other than that required for the local market. That left the burden of the export trade to the co-operative canneries in the Goulburn Valley. I have beard it said that the proprietary canneries would be pleased to see the cooperative undertakings closed up. An individual associated with the proprietary canneries would willingly, it has been said, spend £200,000 for the special purpose of cutting out two of the co-operative canneries. By heaping tax after tax upon the co-operative companies, the Government is only helping the proprietary canneries. If the former were forced into liquidation, all the men now profitably employed on these fruitgrowing areas, which are eminently suited for the purpose, would be driven to the crowded cities, and would further swell the ranks of the unemployed.
About 70 per cent. of the Australian output of canned fruit has to be exported in. competition with the surplus of California, which is dumped on the British market, and sold at whatever price can be obtained for it. The United States of America, with a population of 120,000,000, has a huge local consumption, and its surplus, though small, is probably larger than the whole of Australia’s exportable surplus, with the result that it comes into direct competition with Australian canned goods. With the exception of Canada Britain is practically the only market to which our canned fruits can be sent. Two of the cooperative companies in the Goulburn Valley are in difficulties to-day, and the factory at Leeton is probably in a somewhat similar predicament. If these canneries are closed, large areas which now support thousands of orchardists will become sheep walks and cattle runs.
Bounties have been given to this industry over a period of years. A fairly large bounty was granted by the BrucePage Government on the condition that the industry put its house in order, so that less bounty would be required from year to year. Heroic efforts have been made to place the industry on its feet. This year an application was made for a bounty, and the Government promised £4,000 for assistance in the export of apricots. That sum is so small as to be almost useless. Immediately afterwards, the Government brought down a proposal to tax the shooks used by the canneries, and this meant an impost of £7,200. In 1930, £260,387 was paid as a bounty on iron and steel, £55,000 on sulphur and £118,967 on cotton, while it is also proposed to pay a sum not exceeding £67,500 per annum for three years on shale oil. Up to £20,000 per annum is to be granted for five years to encourage the growing of flax in Australia, and a similar sum is proposed to be provided to encourage the manufacture in Australia of sewing machines.
– The honorable member will not be in order in proceeding far on those lines.
– I am endeavouring to impress upon honorable members the difficulties under which the co-operative fruit canneries are labouring. Not one shilling’s worth of the products of the industries to which I have just referred will be exported. No less than 98 per cent. of the exports of Australia are primary products, yet the Government is taxing every primary industry out of existence.
– To what products does the honorable member desire the exemption to apply?
– To all canned fruit, preserves, jams and sauces. These canneries are unable to pass increased taxes on to the public. The whole industry is being worked on an unprofitable basis, owing to the tremendous taxation to which the orchards and the canneries are already subjected, and owing to the high wages paid in the canneries. I think that wherever high wages can be legitimately given, they should be paid, but there comes a time when even wages must be reviewed.
If the sales tax were imposed on all exported canned goods, it would mean an increased tax of £30,000, and if it applied only to the canned goods consumed locally, it would amount to about £10,000. I do not think that the persons employed in the canned fruits industries will continue to be hewers of wood and drawers of water for those who hide behind huge tariff walls, and not content with that protection, seek further help in the shape of bounties at the expense of the exporting primary producing industries. We have not been permitted to discuss the tariff schedules or the primage duty, and no indication has been given as to when we shall be.
– Next year.
– If they are not to be discussed until 1931, 1 am very much afraid that some of these industries whose cause 1 am advocating will go out of business, and, as a result, thousands of people will lose their employment. Another imposition is the duty on shooks, which, some time ago, was 5s. and 6s. per 100 super, feet. I understand that the Tariff Board reported in favour of 8s. and 9s. The Government, however, raised the rates to 12s. and 14s. Not content with that extraordinary tax, the timber interests, in their greed, sought the outrageous rates of 18s. and 20s. The Government now proposes to deliver a knockout blow, by the imposition of a sales tax of 2-£ per cent, on the sale3 of canned fruits. If the tax is to be imposed on sales for home consumption only, the industry will be affected to the extent of approximately £.10,000. These factories are not outof<late concerns; they have the finest machinery that is to be found in any part of the world, and are run on the most modern lines. Everything possible is done to reduce the cost of production. The only people who to-day are going to the wall are the canners and the orchardists. The employees in both orchard and cannery are receiving award rates of wages. I should not object to that if the canners and orchardists could afford to pay them; but they cannot. In fact, for several years the growers themselves have not been receiving full rates for their fruit; they have been paid £2, £3 or £4 a ton upon delivery at one or more factories, and have had to wait for the balance until the fruit has been processed and sales effected. I have no hesitation in saying that if the disabilities under which this industry labours were removed, it would not be long before the canneries would be able to operate without a bounty and without being bolstered up in any shape or form. I further assert that, if the shackles which bind the industry were taken off it, instead of there being four factories in the Goulburn Valley and the Murray Valley, as is the case at the present time, there would be scores of factories, employing thousands of men and women all the year round. Why has this Government spent so many millions of pounds upon the Murray river waters scheme, and the Victorian Government £13,000,000 upon water conservation and reticulation, largely in the Goulburn Valley? if we could only adopt a basis for processing that would enable us to sell our canned fruits overseas, the prospects in the Goulburn Valley would be exceedingly bright. When we reach that stage, many thousands of unemployed who, to-day, are walking the streets of our cities and towns, will be provided with remunerative employment of a healthy character.
I appeal to the Government to exempt this industry from the sales tax, which is only one of the many that are imposed upon it. Its claim warrants the favorable consideration of every honorable member. I have been putting up a hard fight in different directions to keep these canneries going, and to make it possible to keep the orchardists on the land. This, and other similar industries have a favorable effect upon decentralization, in which every honorable member believes. If the Government will give assistance in the direction sought, a load will be lifted off the minds of these people. The following letter, from Mr. W. Young, of Toolamba West, the president of the Australian Fruit-growers Association, sets out the position from the point of view of the canners : -
I have been instructed by the executive of the above association, which represent 98 per cent, of the canning fruit-growers of Australia to protest emphatically against the imposition of the sales tax on canned fruits. This consists purely of two primary products, viz.: - Fruit and sugar, which, in themselves, are exempt from the tax, but owing to the perishable nature of our fruit, we are compelled to can same in order to make it available to the consumer.
I would like to point out that our fruit cannot be considered as harvested until it is placed in the tin container, any more than wheat can be considered harvested until placed in a bag, or dried fruit in a cardboard carton.
We cannot see the difference between our product and condensed milk, which is exempt from the tax, and which is a primary product placed in a can for the very same reason as our fruit, and I feel sure you will realize the justice of our claim for exemption.
This industry, which includes 40 per cent, of returned soldiers, has already been hard hit by the prevailing depression, and is being carried on at a loss ‘to growers, canners, and government concerned. So much so that we have had to apply to successive governments, your own included, for bounty assistance, and we cannot bear this tax and carry on. It is the last straw.
I hope that, when the bill is in committee the Government will agree to the exemption from the tax of canned fruits, jams/ preserves, and sauces.
.- There is probably not an honorable member of this House who does not regret the necessity for the introduction of this measure. I listened with a considerable degree of interest to the speeches of honorable members opposite, and the impression that they have left on my mind was that taxation could be avoided at the present time. Unfortunately, however, that is not the case. The position had to be met by definite action, and the burden had to be distributed as fairly as possible over all sections of the community. That is the object which the Government Las in view. The right honorable member for Cowper (Dr. Page), and the honorable member for Warringah (Mr. Parkhill) have disagreed with the proposals of the Government, and argued in favour of im portations on a larger scale than the Government is prepared to allow.
– I did not say that.
– That is the impression that was left on my mind. The position in which we now find ourselves has been caused by the application of a mistaken policy over a lengthy period. Succeeding governments have borrowed large sums of money without paying due regard to the development of our primary industries, with a view to meeting the additional interest charges that resulted from that borrowing policy. It was imperative that we should meet the position squarely, and endeavour to discharge our overseas obligations. When I asked the honorable member for Warringah if he favoured a reduction of interest charges he suggested that those who believed in that policy wished to repudiate their responsibilities. The primary producers of this country are being urged to increase production so that Australia may be enabled to meet her commitments abroad; at at the same time the interest charges that they are called upon to shoulder have been made more burdensome. As the working man is obliged to purchase less, because of the existing economic conditions, surely it is reasonable to ask that the man who is receiving interest upon the money that he has loaned should at least permit the rate to remain at the level at which it stood when condition? were normal.
– The honorable member will not be in order in proceeding along those lines.
– It was necessary to restrict in some cases, and in other cases to prohibit importations. That action has had, and will have the effect of reducing our revenue. It was necessary, therefore, that this tax should bt imposed. The Government has not added considerably to the amount of taxation payable by individual taxpayers; per capita it will be less in the present year than it was in 1927. An equitable basis has been adopted which has not placed upon primary producers the restrictions that resulted from the methods of previous administrations. But there is inconsistency about it. I agree with the honorable member for Echuca (Mr.
Hill) and one of the most glaring inconsistencies in this bill is the fact that while the container for butter is exempt the container for fresh fruit is taxed. Prom my knowledge of fruit-growing and dairying industries I know that the dairying industry is in quite as good a position as the fresh fruit industry. When I say that, I do not mean that containers for butter should not be exempt from this taxation. What I mean is that containers for fresh fruit should also be exempt. Our primary producers have had placed upon them the responsibility to increase the volume and value of exportable produce, so that Australia may be in a position to meet its commitments overseas, and we should, therefore, see that as few restrictions as possible are placed on the human energy that is required to bring about that production. I trust that in the near future the Government will be able to pay even greater recognition to this principle by exempting f rom this form of taxation those industries which have been called upon to bear the responsibility of increasing the production of exportable produce. It has been said time and time again that the only way in which Australia can meet its present position is to reduce the costs of production, and that this can be done only by reducing wages. At any rate, this was the impression left on my mind by the remarks of honorable members opposite. The present position has not been brought about because the purchasing power of the individual worker has been too great, or because the individual worker has not proved efficient in his work. It is due entirely to the extraordinary development of machinery. Those who are in control of industry are replacing human beings with machinery.
– How does the honorable member connect his remarks with the bill?
– The economic position makes it necessary for the Government to change its taxation policy, and seek different avenues for raising revenue to carry on the cost of administration.
-It is possible for the honorable member to venture too far on those lines.
– I shall endeavour to confine my remarks to the bill; what I am endeavouring to do is to show how necessary it is for certain exemptions to be made. The development of machinery has justified the Government in adopting the policy of exemptions in industries closely associated with primary production. The tax proposed by the Government is not only fair; it is also absolutely essential to enable the Government to meet the financial position created by past administrations, and to meet the changed conditions brought about by the extensive use of machinery instead of human beings. If we are to increase the purchasing power of the primary producers, enabling them to bear the extra responsibility of the taxation proposed, we must continue the policy of decentralization by developing secondary industries closely associated with primary industries, and at the same time comprehensively exempting them so that they may not be hampered excessively. In that way we shall provide employment in rural communities for the surplus populations of our cities. The argument advanced by the honorable member for Echuca was logical. The honorable member has voiced my only objection to. the Government’s proposal. The bill as a general principle of taxation is perfectly sound; it is the only way in which the present Government can meet a difficult position which has been brought about by careless borrowing overseas by other administrations.
– There are spots and blemishes upon this measure when viewed from any angle. Candidly, it does not commend itself to me, and we have yet to hear one honorable member who is in love with it. Australia, in its present hour of adversity, reminds me of a parrot I saw in an old ship captain’s cottage at North Sydney. It had, in its palmy days, been a beautiful bird, but when I saw it it was a deplorable object. Hardly a feather was left ! So it is with this unfortunate community. What with income tax, increased customs taxation, increased excise duties, primage duty, land tax, and now this sales tax plucking our plumage, we have hardly a feather left. No doubt this tax, or something like it, is necessary; and I am not prepared to dispute that the state of our economic and financial health calls for drastic treatment. Certainly the present proposal does not fall short in that respect. Whether the remedy is worse than the disease is at best an open question. Certainly it appears hardly calculated to help us much. The ideal tax is one that is easyto collect, and is paid by persons who do not know that they are paying it. Customs and excise taxation has this merit - if merit is the term to apply to it - and many people live and die in ignorance that they have ever made any substantial contribution towards the cost of government by paying these taxes. Had additional taxation been imposed through the Customs House, we should have heard very little about it. We have grown used to being fleeced in this fashion, as were our fathers before us - the method has become by long usage to a certain extent respectable.
I cannot forsee precisely the effect of this tax upon the community; but, one thing is certain, the people will have to pay it. No doubt all of us have received hundreds of letters from persons imploring us to see that the burden of this new tax shall not fall upon them, but the great majority of our 6,000,000 inhabitants are inarticulate. Yet we may assume that the buck will be passed, and that, ultimately, the masses will have to pay it. The effect, of course, will be to reduce the purchasing power of wages by increasing the cost of living, and make necessary, or, at all events, desirable, increased wages. This being done, there will naturally follow an increase in the cost of living, again, in turn, making necessary a further increase in wages: and so on. Unhappily, those who object to the measure are not able to show how we are to be saved by other means. Our lot is indeed most unfortunate, yet against this tax we set our faces saying, “Let this cup pass.” The proposal shocks us: it is novel; we distrust it, and find it odious. I am fairly certain that the tax will cause endless confusion.
A suggestion made by the honorable member for Warringah (Mr. Parkhill), with whom I do not agree on many occasions, seems to merit consideration. If the person who bought the article paid the tax the procedure would be, at any rate, simplified. The tax could not be collected twice, and every one would know exactly what he was paying. Those carrying on a business would have nothing more to do than to affix at the foot of a bill or invoice the amount of the tax. When we go to the cinema or the theatre we pay entertainment tax in that way.
The effect of the tax uponindustry must be far-reaching. There are not many canneries in my electorate, butI certainly sympathize with those engaged in the fruit industry, who at the present time find it so difficult to dispose of their products. If Australia could find a market for all the fruit it could grow, our troubles would soon be atan end. No country in the world, not even California, can produce such fruit as ours, or in such quantities. Like the honorable member for Echuca (Mr. Hill), I can see no difference between condensed milk and canned fruits for the purposes of this tax. They are both primary products put up for sale, and if it is a good thing to exempt the one, it is equally good to exempt the other.
It is difficult to say what articles should be exempted from the tax, and what should not. I assume that newspapers will be exempt, and periodicals.
– The exemption will apply to any publication registered at the General Post Office for transmission by post as a newspaper. I received that assurance from the Commissioner for Taxation himself.
– I should like to hear from the Minister whether it is proposed to exempt road-making material and machinery. This Parliament has voted £1,000,000 to provide work for the unemployed, and £2,000,000 more is to be made available for road work. Much of that money will be spent on materials, such as cement and bitumen, and on machinery. It would be folly to tax purchases for which we supply the money. Much of the expenditure in the State of New South Wales for the relief of unemployment is being undertaken by the municipalities, which are finding work for those within their boundaries; largely in road-making. It would be folly to tax the materials and machinery used for such works.
But it is of no use belabouring the Government for having introduced this tax. What is the alternative? This is a question not so easily answered. How does it come that, so much taxation is necessary? That is a question which is more easily answered. The honorable member who has just resumed his seat spoke of the policy that has been pursued for years in this country. It was a pleasant policy. Borrowing is always pleasant, though paying one’s debts is unpleasant. For years we have been borrowing lavishly. We have been living in riotous extravagance, and are now called upon to foot the bill. Perhaps this Government is acting too abruptly. The way it has chosen may not be the best way. I do not think that it is. If I had my way I should not impose this tax. But I cannot have my way. Some taxation must be imposed. The right honorable member for Cowper endeavoured to persuade us this afternoon that if he had been in office this would not have happened.
– lt might have been something worse, judging by his past record.
– It is by his past that we must judge him. It came with somewhat of a shock to hear the right honorable gentleman preaching economy, and whipping with rods this Government because of this sales tax. I do not believe in the sales tax, but, then, I did not believe in the policy of the previous Government which has made extra taxation inevitable. The right honorable member for Cowper spoke as if this Government were the chief . among sinners. Let us look at the record of the previous Government. He spoke of the effect of this’ tax upon the unfortunate workers ; increasing the cost of living and penalizing -industry ; but what has been the effect of his policy on the workers ? The year he came into office, customs and excise taxation amounted to £32,700,000, and in 1929-30 he budgeted for customs and excise revenue to the extent of £43,000,000. While in office he collected in revenue over £150,000,000 more than was received during the previous seven years, and he spent or budgeted for during that period £176,000,000 in excess of the expenditure for the previous seven years. This afternoon he spoke about the national debt. An honorable member on the Government side asked “What about the deficit?” The right honorable member replied that the deficit represented money spent wisely in order to redeem part of the national debt, whereby he claimed a saving of £400,000 a year. But the facts are these. When the right honorable member assumed office, our net national debt was £335,000,000, and when he went out of office it was £349,000,000. So that despite the crushing burdens of taxation he imposed and the vast revenues he received he actually increased the net Commonwealth indebtedness by £14,000,000, while he increased our overseas debt bv £42,000,000.
– But our war debt was reduced by £45,000,000.
– I rise to a point of order. I submit that the administration of the right honorable member for Cowper (Dr. Earle Page) as Treasurer is irrelevant to the Sales Tax Bill, which is now under discussion.
– I understand from the discussion that has proceeded, that the right honorable member for Cowper dealt with Commonwealth finance, and I therefore rule that the right honorable member for North Sydney (Mr. Hughes) is quite iu order in discussing the subject.
– The right honorable member for Cowper said that the deficit had been incurred in a good cause; yet the fact is that he did not decrease, but increased, the public debt, and also our overseas debt by £42,000,000. When he came into office there was a surplus of £7,000,000, but when he went out there was a deficit of £6,000,000. The right honorable member claimed in the 1929-30 budget that he decreased our national debt by £4,914,000, but there was an overdraft of approximately a similar amount in the Commonwealth Bank. What is the difference between an overdraft and a deficit?
I join with my fellow citizens in deploring the imposition of this tax, which is almost the last straw. When I asked my friend, the sea captain, how his parrot had got to look as he did, the captain replied, “He has been in bad company
That is what must be said concerning the people of this country. For some years we have been proceeding along a rosestrewn, but a dangerous path. The Commonwealth has been borrowing money right and left, and has been importing millions of pounds worth of goods, for which it has paid with borrowed money. It is not to be wondered, therefore, that we are in a bad way. But we cannot turn back the hands of the clock; we must deal with the position as it is. The AttorneyGeneral (Mr. Brennan), when speaking on another measure, referred to a certain proposal as a political gesture. I suppose this can be regarded as a political gesture, though it most certainly is a most unfortunate one. The Government would be well advised to have kept to the old and well tried method of customs taxation, which, if applied in the usual way, would have passed practically unnoticed. No one is conversant with the proposed law, or how it is to be administered. It has come into operation before the measure has been passed by Parliament. If I ask the Treasurer, or any of his colleagues, for information, they cannot give it. Usually there is some one available to assist the Minister in charge of a bill, but, in this instance, no one seems to know what its effect will be. Our position seems to me to be a fit subject for prayer. Perhaps I could best conclude by saying, in the words of the Litany, “ From this and all other evils, Good Lord deliver us “.
.- As suggested by the right honorable member for North Sydney (Mr. Hughes), this tax cannot be equitably imposed, and, therefore, we wish to avoid it. The honorable member for Echuca (Mr. Hill) , who represents, as I do, a fruit-growing district, referred to two or three canneries on the mainland, but apparently overlooked the fact that one of the largest canneries in the Southern Hemisphere is established in Tasmania. That State will be as seriously affected by the imposition of this tax as any State in the Commonwealth. I realize that it is difficult to discriminate between fresh and processed fruit; but it is unfortunate that although fresh fruit is to be exempt, processed fruit is subject to the tax. This phase of the matter was exhaustively discussed with the Minister, who said that if canned products or manufactured articles of any kind were to be exempt, it would be difficult to determine from whom the tax should be collected. The imposition of a sales tax, which, apparently, cannot be avoided, will place a very heavy burden upon primary producers, not only in connexion with canned fruit, but with respect to fertilizers and other commodities also. The middleman, who is making a big profit on all the commodities he handles, could afford to pay the additional impost of 2% per cent, without increasing -retail prices. A tax on fertilizers could easily be ‘borne by the merchants, who make a very high profit in selling to primary producers. As stated by the honorable member for Echuca, most of the export trade in canned and dried fruits is carried on by co-operative companies, the local demand being met by private companies. The co-operative concerns operating in Tasmania export the bulk of the berry fruits, while the private companies convert the balance into jam or preserve it for sale in the local market. The honorable member for Echuca said that the imposition of a tax on shooks would be a hardship upon the growers of fruit used for canning, but I understand that shooks are on the exempt list. For a number of years the dried and canned fruit-growers have had the benefit of a drawback on shooks, although large quantities of timber suitable for case-making are available in Australia. On- numerous occasions deputations have waited upon the Minister asking for a removal of the drawback, but they have always been informed that a withdrawal of the drawback would be detrimental to the dried fruit-grower. This has had the effect of seriously interfering with our timber industry, which could employ thousands of men, and also reduce the cost of fruit cases. “While shooks are being imported in this way, large quantities of suitable Australian timber are going to waste. This causes a good deal of unnecessary hardship to a large number of timber-workers in Australia. Heavy impositions have already been imposed upon fruit exporters. The Canned Fruits Board placed the equivalent of an embargo on Tasmanian produce; that State exports only canned apricots, and the board provided by regulation that the sales should be in the proportion of two cases of peaches to one of apricots. Thus the Tasmanian product was left on the British market, and a lower price had to be accepted for it than was obtained for canned fruits from the mainland.
– The products from the Leeton cannery, which is a Government establishment, are exempt from this tax.
– It should not be exempt if it is to enter into competition with the products of other factories. All the Tasmanian factories are either cooperative or privately-owned. Members of the Opposition asked why this taxation is necessary. Having been on the treasury bench for six years they should know. I do not blame them, however, for the seriously decreased prices of our primary products. I do not claim special exemption for fruits when other commodities have to bear the tax, but the Government has promised to review the list of exemptions from time to time, and if the tax produces more revenue than is estimated, canned fruits should be amongst the first additions to the list. The primary producers are more entitled than any other section of the community to consideration, because they cannot pass on the additional burden. One member of a State Parliament said that the easiest way to increase the revenue would be to double the land tax. This Parliament is not likely to propose a desperate expedient of that nature. The sales tax will be spread over all sections of the community, and I do not think that much of it will be passed on to the consumer. The merchant will have to accept his share of the burden by being content with a decreased profit. Although I believe that the load on the primary producer should not be increased at the present time, I realize that the Government is compelled to ask all sections of the community to bear their share of the extra taxation that is necessary to balance the nation’s finances.
.- I regret that the Government has seen fit to introduce this objectionable system of taxation, which will hit all sections, and some people very hard. Whilst’ I recognize that a sales tax is easy, to collect, and is practically the only source of direct revenue still open to the Go1vernment, I fear that it will do a great deal of harm by increasing the costs of production and living. All the governments, and all sections of the people, should be prepared to adopt means of reducing these costs; unless they are reduced, our primary industries will hot be able to carry on. For the last 50 years I have been engaged in growing wool and wheat, and stock-raising, and I have never previously known such a serious time for the primary producer. The Government and the public probably do not realize how bad the position is. The conditions in the pastoral industry have never been worse. The drought has continued over the greater portion of the sheep-growing areas of Queensland for four years, and New South Wales, South Australia and parts of Victoria have experienced drought for the last two or three years. These conditions, combined with the decline in the price of wool and stock, have made the position of the woolgrowers and stock-raisers worse than at any time during the last 50 years. Although primary produce, generally speaking, will be exempt from the sales tax, nevertheless the tax will hit the primary producers very hard, because it will increase the cost of production, and they are the only people in the community who will not be able to pass it on. We read in the press reports that the prices of wool have risen, and the general public construes this to mean that the troubles of the wool-growers are over. I am sorry to say that that is not so. Wool prices fell 55 per cent, below last, year’s prices, and they have not recovered more than 10 per cent.; in other words, the wool clip, instead of yielding about £60,000,000, will, probably, be worth not more than £30,000,000 or £35,000,000. Although before the war the price of wool was lower than it is now, the growers were doing very much better, because their cost of production - represented in a large measure by taxation - was very much lower. The increase of taxation which the Government is now proposing must raise the cost of production.
The wheat-growers are in an even worse position. For the last three seasons over the greater part of the wheat areas the drought has been more or less severe, and wheat prices have been low. Some growers have reaped no. crops for a couple of years, and others only a quarter or half of their normal harvest. Only a bumper harvest and good prices this year will put them on their feet. A good crop is fairly well assured, and had the Wheat Marketing Bill been agreed to the farmers would have stood a chance of being placed on their feet. Unfortunately, that measure was not passed. The responsibility for its rejection does not rest with the Government but with a majority of the members of another place. In my opinion, the defeat of that measure has done the wheat-growers of this country an incalculable injury.
– Does the honorable member think that the scheme could have been financed this year; that additional taxation amounting to probably £7,000,000 or £8,000,000 could have been raised ?
– There is no certaintly that so large an amount would have been required. I think that the scheme could have been financed. I think also that the wheat-growers who cannot pass on taxation, and are penalized by our protectionist policy, are entitled to the consideration which that measure would have given them. I regard the proposal for a guarantee of 4s. a bushel as being in the nature of a bounty to the wheat-growers - a bounty to which they are as much entitled as are other sections of the community to the benefits which the protectionist policy has conferred on them, and from which the wheat-growers derive no benefit.
The honorable member for Echuca (Mr. Hill) has explained the position of the producers of canned fruits. I shall not repeat his statements, except to say that I entirely agree with him that these primary producers should be exempt from the sales tax. X see no reason why canned fruits should be subject to the tax while dried fruits and other primary products are to be exempt. Unless the decision of the Government in this connexion is altered, hardship will be inflicted on the producers of canned fruits.
The remarks of the honorable member for Echuca as to the effect which the sales tax will have on the fruit-growers in his electorate, apply with equal force to my electorate in which large numbers of fruitgrowers are to be found. Among them are many returned soldiers, who are, perhaps, in a worse position than are any other primary producers in the country. Some of these men are settled on land which is suitable only for wheat-growing or wool-growing. They should be given some encouragement. It is most unfair that they, of all persons in Australia, should be singled out for harsh treatment. I do not think that they are getting the fair deal that they expected. They certainly will not get it if the Government refuses to exempt canned fruits and jam fruits from the operation of the sales tax.
The main concern of both governments and people should be to reduce the cost of production, and with it, the cost of living. By no other means can the primary producers of Australia, on whom the country depends, again enjoy prosperous times. They are in anything but a prosperous position at present. The primary producers of Australia produce about 95 per cent, of the country’s exportable products, and over 70 per cent, of its wealth. Unless they are encouraged by fair legislation, it will be a serious thing for Australia. This country depends on its primary producers, particularly the woolgrowers. In order to reduce the cost of production, and of living, all costs must come down. I realize that this is a difficult question; but every person in the community, including the workers, must be prepared to make some sacrifice. I hope that effective wages will not be reduced; but I am firmly convinced that nominal wages must come down. After all, it does not matter to the worker what nominal wage he receives so long as his effective wage is maintained. During recent years the Australian worker has received a higher nominal wage than before the war; but it is doubtful whether he is any better off than he was when the nominal wage was lower. If he can get for a lower wage more of the necessaries of life than he can get now, then he will be in a better position. Not only will nominal wages have to fall, but profits must also bc reduced. The profits of the wool-growers have been reduced until they have entirely disappeared - I speak from experience. I say definitely that it is impossible to grow wool or mutton at a profit to-day. As wool and mutton are being sold at less than cost price, it will bc seen that the pastoralists have made their sacrifice.
– The people who buy the mutton are not getting it any more cheaply.
– I regret that that is so. There should be some system which would ensure that a reduction in the price of sheep would mean a reduction in the price of mutton. It would not be difficult to evolve a system which would give the growers of primary produce a better price for their products and, at the same time, enable the consumers to get those products more cheaply. The trouble is that the system of distribution is wrong. A proper system, of distribution would enable meat, milk, and fruit to be sold at rauch less than existing prices. The present is not the time for increasing taxation. The Government may say that it cannot raise revenue in any other way, but I do not hold that view. I agree with the Leader of the Opposition (Mr. Latham) and the right honorable member for Cowper (Dr. Earle Page) that very nearly the amount to be derived by means of this tax could have been obtained by a reduction of the expenses of government. That method should have been adopted before a proposal of the nature of that now before us was introduced. I hope that, even at this late hour, the Government will reconsider its policy in this respect, and at least put the producers of canned fruits and of fruits i rom which jam is made in the same position that other primary producers are in.
– I realize that this is a measure for discussion in committee ; but there are one or two features to which I desire to refer now in the hope that when the Minister rises to reply ho may enlighten the House concerning them. Of all the proposals of the Government for raising an additional £12,500,000 by means of taxation during the present financial year, the sales tax is causing the business community the greatest concern. It is no doubt true, as the Leader of the Opposition (Mr. Latham) has said, that this proposal, with all its complications and anomalies, is in the nature of a nightmare to the average business man. There are very few persons, even among honorable members of this House, who really understand the incidence of this taxation. I have not the slightest doubt that the traders in the various States will have to employ additional clerical assistance to enable them to furnish the returns required by the Government. That, of course, may not, in itself, be an unmixed blessing; but unfortunately, very few of our traders can afford such additional assistance at this time, for they are even now finding it difficult to keep their heads above water. Very few importers and maufacturers in Australia are at present making a clear profit of 2£ per cent, on their annual turnover, while very many are carrying on their operations at an actual loss. The point has been raised as to whether the importers and manufacturers can legally pass this tax on to the general community. If they cannot do so, ruin faces many of them. If they have to close their doors, additional unemployment, and therefore, greater suffering to the community, will be caused. There does not seem to me to be any doubt but that this tax can be passed on, but the passing on of it must necessarily increase to the consumers the cost of all goods, including the bare necessaries of life, at a time when it is highly desirable that all costs should be reduced.
It is provided in clause 24 of the bill that -
Every person liable to pay tax upon the sale value of any goods sold by him during any month, in the cases provided for by subsection 1 of section 18 of this act, shall, within seven days after the close of that month, pay sales tax upon the sale value of the goods sold.
T support the request made by the Leader of the Opposition this afternoon that the time within which the tax must be paid shall be extended. I have received from the Brisbane Chamber of Commerce a letter enclosing a copy of a telegram sent by the chamber to the Prime Minister in regard to this matter, which read as follows: -
Brisbane Chamber Commerce, on behalf commercial associations mentioned in lettergram, 11th July, respectfully urges that act should allow licence-holders 60 days to pay monthly sales tax, similarly to time allowed on income land tax assessments. Only small amount wholesale sales payable 30 days after end of month, and large amount credit has to be given from two to six months. If relief suggested not given afraid many manufacturers and wholesalers unable secure necessary financial accommodation pay tax seven days after end of month.
The request contained in that telegram is reasonable, and I trust that it will be granted. It will not cause any reduction in the amount of revenue received by the Government from this source, but will only delay the first payments to some extent. I am sure that the honorable member for Kennedy (Mr. Riordan), and the honorable member for Herbert (Mr. Martens) will agree with me when I say that many wholesalers in Queensland have given small storekeepers in country districts long credits, and have faithfully stood by them in the difficult times through which they are passing. If no extension of the time for the payment of this taxation is granted, these wholesalers will be seriously embarrassed. I, therefore, appeal to the Government to give the most sympathetic consideration to this request.
I have also received a telegram from the Brisbane Merchants Association, which reads as follows: -
Sales tax assessment No. 5, section 4, in providing basis on which retail importers will pay tax does grave injustice to wholesaler and through him to other retailers. Retailers should pay tax on landed cost of goods plus an advance for overhead charges and profit calculated respectively on margin usually carried by various classes of goods concerned. Retail importer will not pay on freight insurance shipping and landing charges commission and exchange and 20 per cent. addition too mall in many trades while wholesalers’ value will include all these items as well as overhead and gross profit; this inequality is indefensible and unjust.
These provisions of the bill were also referred to by the Leader of the Opposition (Mr. Latham), the honorable member for Warringah (Mr. Parkhill) and others. I sincerely trust that the Government will accept an amendment in committee designed to meet this objection raised by the Brisbane Merchants Association.
Certain provisions of the bill may also cause great difficulty to the various municipal authorities in our capital cities, and also to local governing authorities generally. Clause 20 of Bill No. 1, dealing with exemptions, provides that sales tax shall not be payable in respect of-
I have received a communication from the Lord Mayor of Brisbane which points out that this taxation may seriously embarrass local governing authorities in general, in regard to the purchase of goods and material for local governing purposes. I know that it is unreasonable to ask that the list of exemptions shall be increased very greatly, for that would prevent the Government from achieving the end that it had in view in introducing the bill; but I trust that serious consideration will be given to the advisableness of assisting local governing authorities in any way that they can be assisted without too greatly reducing the revenue from this source.
At least one State Government - there may be others - has arranged for unemployed relief stores to be supplied through the members of the Retail Grocers Association in that State. I should like to know whether such supplies will be exempt from taxation. If they are not, many anomalies will inevitably occur. These retail grocers will have already paid the increased price due to the tax to the wholesale merchant or manufacturer, and they will be precluded by the law from passing the increase on to the Government. The whole thing must so work out that the unfortunate men, whom the Government seeks to assist, will receive goods to the value of 19s. 6d. instead of fi. That is one of the anomalies connected with this tax that ought to be adjusted. There is a very narrow margin in the profits of such commodities as bread, cocoa, tea, sugar, jam, honey, rice, sago, flour, salt and soap, which are the main items given to those in destitute circumstances. No doubt a considerable discussion will take place upon the various items concerned when we reach the committee stage.
Recently I received a communication asking me to try to ascertain whether sheep and cattle dips and similar preparations for the destruction of animal pests are exempt from the sales tax under the clause relating to maintenance of animals, and on inquiry I was informed that these articles are not exempt from the operation of the tax. We have had most interesting references to the exemption of various items, the honorable the Leader of the Opposition directing attention to the anomaly that exists in connexion with that essentially domestic commodity, the sausage, which is subjected to different treatment under the sales tax, according to its processing, whether it is raw, cooked, or smoked.
I shall refer briefly to the remarks of the right honorable member for North Sydney (Mr. Hughes), who, in his peroration, stated why he thought it had become necessary to impose the sales tax. His statements were an injustice to the Bruce-Page Government. I deplore his attitude in the matter, which makes it necessary again to place on record the facts with regard to our national debt during the regime of the Bruce-Page Government, covering the years 1922-29. During that period the national debt increased by £220,000,000, £207,000,000 of which amount was incurred by the States, and £13,000,000 on behalf of the Federal Government. Admittedly our federal debt increased by £58,000,000 during that period, but that amount was expended on new works- valuable assets that still exist. In addition, £45,000,000 was paid off our war debt, so that the actual federal increase during the period mentioned amounted to £13,000,000. There was a decrease from £65 to £59 in the federal per capita debt, or £6 per head. The State debt, unfortunately, increased by £21 per capita over the same period. I thought it but fair once again to place those figures on record, as it seems to me to be entirely improper that, for political or any other purposes, an honorable member should make statements that convey a wrong impression to the people of Australia.
I entirely support the contention raised by the honorable member for Warringah (Mr. Parkhill) that, if this taxation is necessary, we should find some simpler means by which it can be put into effect. I agree with him that if we adopted the method that is favoured in some countries in Europe, of making the purchaser pay the tax and registering its receipt on the invoice in the form of a stamp or some similar device, a great deal of anxiety would be lifted from the members of our business community who are now so greatly perturbed about the proposal
– Before addressing myself briefly to the bill itself, I desire to refer to the random and irresponsible statements made earlier in the debate by the right honorable member for North Sydney (Mr. Hughes). The honorable member for Brisbane (Mr. D. Cameron),, has already quoted figures concerning the national debt which afford a complete answer to the right honorable member whose statements were remarkable for their absence of accuracy and for their evidence of prejudice against the right honorable member for Cowper (Dr. Page). The audacity for which the right honorable gentleman is noted displayed itself in the attempt that he made to place the blame for the necessity to introduce this tax upon the administration of the right honorable member for Cowper. A more childish argument could not have been used. I am very glad that the honorable member for Brisbane (Mr. D. Cameron) quoted the actual figures, of loans raised and loans redeemed during the Bruce-Page regime which prove that the charges made by the. right honorable member for North Sydney (Mr. Hughes) were quite groundless.
The need to introduce a sales tax is simply due to the tremendous fall that has occurred in our revenue. The present Government is faced with the task of raising a huge revenue to meet, among other obligations, some heavy and inescapable post-war - commitments. In addition, it has to provide for invalid and old-age pensions that are growing so rapidly in the aggregate, that one wonders how much longer the Federal Government will be able to meet its commitments in that regard. The war obligations of th* Government amount to more than £30,000,000 a year, while its civil pension obligations amount to over £11,000,000 a year, a total of over £41,000,000 for these two items alone. In addition, the Federal Government has to make big payments to the States. However, I am not at all concerned about them, even though they involve the raising of Commonwealth taxation, for the simple reason that by every Id. that we return to the States we reduce their necessity to tax the same people. The revenue that the Commonwealth Government has to raise to meet its obligations must be extracted from a people who have recently undergone a drastic curtailment of their national income. In the circumstances I should feel very ready to sympathize with the Government, and very slow to censure it if, before bringing down these new taxation proposals, it had boldly faced the financial position, and cut down expenditure within its control in keeping with the drop in the national income. It has not done that. Had it, for example, begun by reducing the salaries paid to members of Parliament, honorable members would have been able to show the people that they realize that sacrifices have to bc made, and that they are prepared to set an example. I am satisfied that a curtailment of expenditure within the control of the Government is inevitable. It may temporarily delay the course of events, but I am absolutely ure that it can no more prevent their eventual occurrence than it can prevent the harvest from ripening, or the tide from coming in. This lack of courage on the part of the Government in refusing to face the position by curtailing expenditure makes it necessary to raise millions more in new taxation than would otherwise be necessary. It is imposing taxation of a kind that must add to the cost of living, and cost of production and which in like ratio, will reduce wages by reducing the purchasing power of the community. Wo have heard a lot of talk about the Government’s determination to maintain wage standards, but it must be obvious to honorable members that every penny of unnecessary taxation which is extracted from the pockets of the people tends to lower those standards which the Government is boasting its determination to maintain. It expects by this tax to raise some £6,250,000 per annum, more than £500,000 per month. It expects to raise £5,000,000 this yea.r because there are only ten months of the year in which this taxation will be collected before the 30th June next. Actually the Government intends by this tax to collect £6,250,000 per annum. I am satisfied that if the Government had faced the posi- tion boldly, and had had the courage to make reductions that were possible iti governmental expenditure at least half the taxation which it is proposed to impose under these bills would have been saved to the taxpayer. Had that been done, we might have had’ a sales tax of only li per cent., instead of 2 per cent., or alternatively we might have had a 2^ per cent, sales tax levied on only half of the volume of products, in which case we should have exempted from taxation all those things in respect of which the tax will constitute the greatest hardship. In the present circumstances, with practically no substantial curtailment of expenditure, we can only regard this taxation as being at least twice as heavy as it need be. It will increase production costs in no uncertain degree and if there is one thing needed more than another at the present time it is to improve our trade balance by lowering production costs in harmony with the falling prices overseas, so that exports may be stimulated, instead of being discouraged.
– In what way would the honorable member lower costs?
– We can lower costs by reducing governmental expenditure. The greater the amount of governmental expenditure which those who produce something have to carry, the bigger is their burden, and the higher their production costs. We shall never improve our financial position here or overseas by merely pursuing a policy of negation. The curtailment of imports may be necessary - I have no doubt that it is - but to depend upon a negative action only to balance the ledger and to improve our credit overseas is as futile as trying to climb a hill in a vehicle whose only equipment consists of brake.* to prevent it from slipping back. We must have a positive policy as well as a negative policy and the first and foremost plank of the positive policy should be the encouragement of the production of exportable commodities by a reduction of production costs. This sales tax will operate mercilessly in the direction of increasing costs and it will discourage export. The bill lends itself more to a discussion at the committee stage rather than at the second-reading stage, and 1 propose to say something more on this subject when it is beiug considered in committee.
I wish to refer briefly to one or two extraordinary anomalies under the bill. The honorable member for Echuca (Mr. Hill) has mentioned tonight the anomaly of dried fruits and canned milk products being tax free, while canned fruits are taxable. There ure other things which are just as unexplainable.We find that wheaten meal is free from tax while oatmeal is taxable. The decisions of the Government appear to have been made at random. Quite apart from the fact that there appears to be a discrimination in connexion with the taxing of one product and the exempting of another similar product, there is discrimination in the incidence of taxation on the same goods in the hands of different people. For example, the manufacturer who sells to a retailer pays a tax on the wholesale value of the goods, but if a manufacturer is his own retailer, he pays taxation, not on the wholesale value of the goods, but on the retail value of the goods. That is most extraordinary. It is ruled by the Taxation Commissioner that retailers who manufacture any of their lines, must pay sales tax on the price for which those lines are sold retail. Then it is further ruled that where the relations between a legally independent* manufacturer or wholesaler and a retailer are such that either substantially controls the other, sales tax is payable in respect of goods sold or transferred by the manufacturer or wholesaler to the retailer, on the value which, in the opinion of the Commissioner, would be the fair market value of the goods when sold by that manufacturer or wholesaler in the ordinary course of trade. If that rule is to apply to two businesses which are controlled to a great extent by the one individual, or by a number of the same individuals, it surely should apply to businesses, both the manufacturing and retail side of which are controlled by the same individual. I think that this section calls for some amendment in the committee stage.
– Much has been said during this discussion, by honorable members opposite, regarding the indirect nature of this form of taxation, but none of the arguments advanced by them has definitely shown the Government how this money, which it is absolutely necessary to obtain, could otherwise be raised. We have been told thatthe customs revenue has diminished by some £8,000,000. The Leader of the Opposition (Mr. Latham) has made certain suggestions, and, when a previous measure was under discussion, he made other proposals which, he said, would, if adopted, permit of a. saving of £4,000,000. Even allowing for that saving, there would still be the loss of some £4,000,000 of customs revenue to be made up. The honorable member for Warringah (Mr. Parkhill) has criticized the proposals of the Government, and he has suggested that the best way of raising revenue is by means of a stamp tax on all retail sales. That honorable member spoke of the confusion that will result from the operation of the Government’s proposals; but no greater confusion could result than that which would, inevitably, follow the application of his proposal. For instance, 50 per cent. of the retailsales, particularly of a big business, consists of small articles of a value of 2½d., 3d. and 4d., and, despite the high intellectual capacity of the honorable member for Warringah, I think that he would find it difficult to determine what stamp tax would be necessary to apply in order to collect 2½ per cent. on a2½d. sale. That would be one of the difficulties that would result from the operation of a stamp tax on retail sales. It would be impossible to correctly estimate the amount of stamp tax to be levied on articles retailed at1d., 2d., or 3d. If the sales tax were not applied in the manner proposed in these bills it would not return the amount of revenue which the Government expects to receive under this new taxation measure.
– Under astamp tax proposal, all small shopkeepers would have to issue a ticket with every transaction.
– That is so. The owner of every grocery or other small retail shop would be obliged to obtain stamp tax tickets and attach one to each purchase. In fact, he would require to be a mathematician to calculate the percentage of stamp tax that would return to the Government an amount equal to -2i per cent, on the cost of the article purchased. Therefore we may dismiss from our minds any idea of substituting a stamp tax for the Government’s proposal. Much has been said about the probable confusion that will result from the application of this new tax. There may be some doubt in the minds of those who will have to pay the tax owing to the fact that certain classes of goods are exempt; but I am sure honorable members opposite will not condemn the Government for excepting certain’ articles. On the contrary, they will agree that the Ministry has acted wisely in this matter. I believe that the right honorable the Prime Minister will take a reasonable view of any sensible suggestion that .may be made concerning any of the provisions of the bills when they are being discussed in committee.
I come now to the point that has been raised by some honorable members who mentioned the difficulty which retailers may encounter in estimating the percentage of taxation to be applied to each article sold to the general public. Some honorable members appear to think that the proprietors or managers of drapery establishments will be at a loss to correctly estimate the amount of taxation to be added to the sale price of articles, and also which articles shall be exempt. The statement of the Prime Minister on this point was absolutely clear. He indicated definitely that the tax will be payable on the last sale from the wholesaler to the retailer. There mav be some difficulty in adjusting all the details because new machinery has to be created for the collection of this newtax. If there is some confusion in the minds of the public, this need not be wondered at, in view of the fact that some honorable members who heard the right honorable the Prime Minister explain the provisions of these bills appear to be unable to understand what was in his mind.
– The Prime Minister himself was unable to explain certain provisions in the bills.
– In moving the second reading of Bill No. 1 the Prime Minister clearly indicated the manner in which the new tax will be collected, and he admitted frankly that in the administration of the act certain difficulties may be experienced owing to the setting up of the new machinery required to collect the tax. But the right honorable gentleman stated clearly that it would be collectable on the last wholesale transaction. If the manufacturer . sells direct to the retailer the manufacturer will pay the tax on the amount of the sale. Similarly, if an importer sells direct to a retailer he also will be called upon to pay the tax.
– In many instances, an importer sells direct to the general public.
– In that case, the importer would be required to add the amount of the tax to the goods in bulk.
– He would pay the taxation through the customs.
– This new taxation system will not be so complicated as some honorable members would have us believe. In recent years, a somewhat similar form of taxation, known as the endowment tax, was passed by the Lang Government in New South Wales, and it has been continued by the present Nationalist Government. Under that measure, a levy of 3 per cent, is made on wages, and, so far as my knowledge goes, it has not caused any confusion or disturbance in industry. It is true that the employers object that it is an added burden to industry, but I do not purpose discussing that aspect, of the New South Wales scheme iti the debate on thi? measure. In, some respects, the New South Wales endowment tax resembles these taxation measures.
– That taxation is easy to collect.
– Of course it is passed on. I do not deny, that, wherever possible, all these forms of taxation are passed on to the general public. But I do not think we need pay much attention to the complaint that the retailer will experience extraordinary difficulties in ascertaining the price which he must charge for his goods. I take it that, when purchasing from a wholesale house, the retailer will estimate the amount of overall taxation which is paid, and will add it to the retail price. There need be no serious trouble over the business. If a manufacturer knows that he has to pay 2£ per cent, on all sales made direct to a retailer, is it not natural to assume that, unless competition prevents him, he will add the amount of the tax to the overall cost of goods? The retailer, to recoup himself, will then estimate the added price to be charged for individual articles in all bulk purchases from wholesale houses. In this way, the tax will be passed on to individual purchasers. In the case of the larger retail establishments, tho heads of departments will, I presume, determine the prices to be charged for all taxable articles in their departments. In some cases they make 60, 70, 100 and even 150 per .cent, profit. Special lines may be sold at cost price, or even below cost, when it is desired to draw the public. I am speaking particularly of what occurs in the drapery business. If, at sale time, it is decided to but down prices to the extent of 20 per cent., are retail houses thrown into disorder? To say chat the sales tax will cause confusion among retailers is to talk sheer nonsense. A little doubt may arise in regard to cases such as that mentioned by the honorable member for Balaclava (Mr. White), but, where wholesalers sell in quantities to retailers, there is no question as to who will pay the tax. I am well aware that sometimes wholesale houses sell to retailers at different prices, but that is because one retail house is prepared to take a big order when it can obtain a line of goods at a particularly favorable price. If any honorable member imagines that there is any hard and fast rule about the prices which wholesalers charge to retailers they are mistaken. There may be slight confusion until the machinery for the collection of the tax can be put into smooth operation; but retailers need not be afraid that it will cause them any trouble. Honorable members opposite appear to me to have been setting up a man of straw.
Members of the Labour party realize that the imposition of increased taxation is unpalatable. The indirect taxation which the people have been paying for years through the Customs Department has not been noticed by them, and I venture to say that 12 months hence the ordinary retail purchaser of goods will not realize that he is paying the sales tax. The £8,000,000 a year that has been lost through the drop in customs revenue was formerly collected on goods purchased overseas with borrowed money, on which Australia was charged high rates of interest.
– That £8,000,000 was really capital, and not income.
– That is so. Previous Ministers imagined that the Commonwealth could meet the cost of government by customs taxation, but it is now found that other means must be adopted.
The honorable member for Warringah (Mr. Archdale Parkhill) and others, appear to have developed a wonderful solicitude for the working classes. . I am afraid that their anxiety about the welfare of the poorer sections of the community is rather belated. When speaking from the public platform I have sometimes been told that the Labour party is a class conscious party, and that all its legislation inflicts hardship on that section of the community that provides the capital required for the carrying on of industry. Now the honorable member for Warringah has discovered that the Government is oppressing the working classes, and he claims to have a soft spot in his heart for them. A book published in the United States of America entitled General Sales, or Turnover Taxation, states- ^
As against these tendencies of general sales or turnover taxes to burden disproportionately the poorer elements of the population must be set the almost universal practice of exempting, or, at least, of taxing at special low rates, foodstuffs and other items that constitute the major portion of the expenditures of the poorer classes, but a smaller fraction of the expenditures of the richer classes. If the renting of dwellings, as a service, is untaxed, and foods are entirely exempted, the entire distributive character of a general turnover tax is changed. The poorer classes are practically entirely relieved of its burden.
Under this tax practically all foodstuffs will be exempt. From 50 to 75 per cent, of the earnings of the workers is spent on rent and food. The average worker is paid not more than £250 a year, and it is safe to say that £175 or £200 out of his income is used in the purchase of goods and services that will be exempt from the tax. Those persons with incomes ranging from £750. to £1,000 a year do nol have nearly such large families as those of the bulk of the workers, and a good deal of their earnings are disbursed in the purchase of goods that will be subject to the tax. It is a fallacy to assume that the burden of this tax will be borne principally by the poorer section of the community. It is based upon expenditure on the items that are covered by it; and as the commodities that are necessary to preserve life are exempt, those who have a comparatively, low income, and cannot afford to purchase luxuries, will largely escape. The mau who buys an £800 motor car will pay more on that one transaction than the average worker will pay in nine or ten years. It is an equitable tax. The honorable member for Warringah (Mr. Parkhill) has too much intelligence to believe that the people who understand the. application of such a measure will accept his statement, and I can only assume that he has indulged in political propaganda with the object of discrediting the Government, just as the newspapers have been doing. Apparently any stick is good enough to beat the Government with.
I do not view with pleasure either the necessity for or the application of this tax. It must bc remembered, however, that even if the economy suggested by the Leader of the Opposition were practised, there would still be a big difference between revenue and expenditure that would have to be made up in some way, and a higher tax on incomes would be opposed by honorable members opposite, on the ground that it would press harshly upon those who are engaged in industry. This is a time, as the Prime Minister has said, when all sections of the community must assist to get Australia out of the existing financial difficulty. I do not deny that a large portion of this tax will finally be borne by the great mass of the people ; but the proportion that will fall upon the very poor people, whose expenditure is mainly upon foodstuffs and the other necessaries of life, will not be so great as that which will be paid by the people with big incomes, who have a great deal to spend upon luxuries and high-priced clothes. Honorable members opposite have not attempted to put forward an alternative proposal with the exception of a retail tax, which I believe would be absolutely unworkable and would create endless confusion.
– I shall point out another way of dealing with the position.
– I am not so stupid as to assume that only those who sit on this side are capable of making good suggestions. I believe that, if the Prime Minister is shown that an injustice is likely to be done to any section of the community, he will be prepared, so far as the financial position- will allow, to grant exemptions.
.- Whatever alterations are found to be necessary, will no doubt be made when the bill reaches the committee stage. I realize that the Government has had laid upon it the obligation of finding a certain amount of money, and that that is the reason for the introduction of the measure. It has refused to reduce expenditure by cutting down the salaries of members of Parliament and public servants, and, therefore, has budgeted for an additional £5,000,000 from this tax. In my opinion, this is the clumsiest legislation that has ever been forced upon a long-suffering public. The honorable member who has just resumed his seat regards it with equanimity, and believes that it will work smoothly; but I can see extraordinary anomalies and difficulties in it. Simplification ought to have been the principal consideration when it was being framed. I make no reflection upon the gentleman who was brought from Canada to work out the details, nor upon the parliamentary draftsman, who was set a most difficult task. Our Constitution is different from that of Canada, and it will be exceedingly difficult to police the measure in the way intended by its framers. It will merely hobble along in red tape. In considering the Government’s action I am reminded of the eastern potentate who, on being told by his Sultana, on a bright, sunshiny day, that she did not have sufficient money to meet her needs, turned to his Grand Vizier and said - “Let us tax the merchants.”
The last speaker conveyed the impression, which is held, generally, by members on the Government side, that there are scores of wholesale firms which can be taxed, and that they will pass the tax on to some one else. I point out, however, that the trend of business in these days is for the firm that imports the goods to sell them direct to the public, not for those goods to pass first through a wholesale house and then from a retailer to the public. All honorable members know of the success that has been achieved by the chain stores and departmental stores in the different States, because they sell direct to the public, and can thus reduce their prices. The honorable member for Brisbane (Mr. D. Cameron) pointed out that many merchants are not making a net profit of 2½ per cent. I am in a position to confirm that statement. The honorable member for Eiverina (Mr. Killen) has stated that many of the growers of wool and wheat are, to his knowledge, operating at a loss. I, as a manufacturer, a wholesaler and a retailer, know that there are many merchants who are not making a profit of2½ per cent. Numbers of wholesale hardware houses, softgoods firms, and engineering shops have recently gone out of business, thus causing additional unemployment. This tax, which will have the effect of raising prices and of reducing the value of wages, will undoubtedly create further unemployment.
The Leader of the Opposition (Mr. Latham) has drawnattention to some queer anomalies in the bill, and has shown how ludicrous they are. For example, cake is not exempted, but pastry is ; and, if there should be a combination of the two, who will pay the tax? The honorable member for Macquarie (Mr. Chifley) has said that it will be paid by the last wholesaler. But who will be the last wholesaler in such a case? Another anomaly referred to by the Leader of the Opposition related to the domestic sausage, which, in different forms - raw, cooked, or smoked - is to have different considerations applied to it. Again, semolina is to be exempt, for what reason I fail to understand. It looks as though the Prime Minister, like the eastern potentate, had said to the Treasurer, or vice versa, “ What are we going to leave out ? We must not tax the people who put us into Parliament - it being generally understood that the working people support the Labour party - “We must not do anything that will have the semblance of an interference with their food.” Probably, he has been told that they have semolina for breakfast; and, as a consequence, it has been exempted from the operation of this tax. I wish that I could believe, with the honorable member for Macquarie, that no difficulty will be experienced. There are many products made from wheat, such as the different whole-meal products and breakfast foods and others that are made specially for diabetics, that should also be exempt.
For the benefit of the honorable member for Macquarie (Mr. Chifley) let me point to some of the difficulties of collecting the tax. At the present time retail stocks are not subject to the sales tax, consequently, the retailer will he obliged to keep the stocks he has in hand separate from anything coming in after the 1st August. The honorable member says that the last wholesaler pays the tax, but, as I have pointed out, many importers sell direct to the public, as in departmental and chain stores. In this connexion I asked the Prime Minister a question, but he could not tell me what was to be done, although I see that provision is made in Bill No. 5 to meet the case of the importer who sells to the public.He will pay sales tax on an amount which exceeds by 20 per cent. the duty-paid value of any goods, plus the duty payable upon them. Honorable members can see the possible effect of that class of taxation on chain stores, which depend on a small gross profit, as compared with wholesale firms which charge a bigger profit because their turnover is less than that of the chain stores. This is a difficulty which will cause endless trouble in the Customs and Taxation Departments, and every kind of firm.
– It will not cause so much trouble as will be caused if the Government does not secure the revenue.
– I shall deal with that point. Every honorable member has received numerous telegrams asking whether this or that commodity is to be subject to the tax, and in nearly every instance we have had to communicate with the taxation office here. The State branches of the Taxation Department have been definitely instructed to refer everything to Canberra.
– And the law has not yet been passed.
– Although the Prime Minister, in introducing the bill, said, in reply to a question, that the tax would not operate until it had been passed by
Parliament and the act had been proclaimed, the tax is actually to operate before the bill has passed the second reading. It is distinctly unfair to, foist this kind of legislation on the commercial world. Although there will certainly be deliberate offenders who will try to evade the tax or try to create confusion as to who is or is not a “ registered person,” who is the last wholesale merchant or. who constitutes the manufacturer’ -the man who supplies the raw material or the one, who makes it up into the finished articles - there will also be unwitting offenders who cannot interpret the act. i do not think that any honorable member will be able to interpret it with all its complexities. I admit that the Government has to find revenue. We know that the nation’s revenue has dropped. In business, when revenue is dropping, overhead iscut down. But this Government has refused to cut down overhead. It is still an expensive spending machine, which is content to embark upon a policy of buildingbaths and roads in the Federal Capital, and lighthouse ships that are not wanted, andof paying bounties on all sorts ofthings, and now it proposes this sales tax calculated to hit every one in the community. It is incomprehensible to me why some simpler alternative was, not employed. Some have suggested a stamp tax.. As the honorable member for Macquarie has pointed out, the fact that the infinitesimal rate ofdutyon small transactions cannot be worked out is the greatest objection to a stamp tax. I can assure the honorable member, however, that it can be made tq work quite easily. It is working very smoothly in European countries at the present time. My objection to it, however, is that the man who makes the smallest sale pays the most tax. Nothing less than a halfpenny stamp could be applied to any transaction, and a halfpenny stamp on a sale of 2½d, would represent something like 15 per cent. It is a way of raising revenue I do not commend, because it taxes the poorest citizen. The honorable member referred to the ease with which a stamp tax could be imposed on wages. The system is now in operation in Victoria as an unemployment tax. Every person in receipt of a salary of £300 a year has to put a stamp on his wages receipt each week.
– That makes no difference to the price of goods.
-It does not, whereas the sales tax does. It raises the price of living. It reduces the value of wages. It adds expensive overhead charges. All firms of any size will have to employ additional staffs. Honorable members may say that that means additional employment. On the contrary, the tax will create unemployment, becauseof the increase in the cost of living. The additional labour that will have to be brought into the offices of these firms to handle this taxation will not stimulate production. I submit that the law should be made as simple as possible. The Government has made up its mind that it must get £5,000,000. Let simplification be its guide. Gladstone said -
Let the laws he simple and just so that the people who have to obey them will understand them, and thus make easy the government of a country.
I ask whether the tax could not have been made simple by taxing the fountain of production - the raw material used by the manufacturer, and the imported article at the customs. The primage duties could have been made 5 per cent. at the customs, and2½ per cent. could have been charged on the raw material used in manufacture. The £5,000,000 could have been raised in that way. All the expensive overlapping of the wholesaler, retailer, and consumer could have been avoided by taxing atthe source. All factories are registered, and every factory has to send in to the State statistical branch data concerning the number of hands employed, the. wages paid, the amount of raw material used, and the value of that material after manufacture. The Production Bulletin, on page 136, shows that the value of raw material used for manufacturing in Australian factories is approximately £236,000,000, of which 2½ per cent. is approximately £5,500,000. Some honorable members have stated that we should not tax the products of our primary industries. Well, if we exclude the raw materials which are the product of agricultural and pastoral pursuits, we reduce the total by £13,000,000, leaving approximately £223,000,000, 2½ per cent. of which is about £5,000,000. Even if we exclude food and drink, the value of which is £98,000,000, we are left with £125,000,000, upon which a tax of per cent, would yield £3,500,000. This material has ultimately to be taxed in the form of manufactured, goods, but in that form it will be unfairly taxed, because there will be included in its value the cost of fuel, light, wages, and the like.
Now let us consider what revenue could have been derived by an increase of the primage duty. In 1927-28, goods to the value of £147,000,000 were imported, and in 1928-29, the value of imported goods was £144,000,000. 2£ per cent, on £147,000,000 is £3,500,000, and on £144,000,000 is approximately £3,000,000. As a result of the Government’s prohibitive tariff provisions and super charges, the value of imported goods has been greatly reduced. The Government estimates that for this year £90,000,000 worth of goods will come into Australia, but even if we put the figure down at £60,000,000, an extra primage duty of 2£ per cent, would yield a return of £1,500,000. This, added to the return from a tax on raw material, would give a total return of approximately £5,000,000. Why, therefore, does the Government propose to embark on this extraordinary form, of taxation which is so complicated and difficult to collect, when if could obtain the same result by taxing the same stream of trade at the fountain head? If ever there was a ridiculous tax, it is this. It will react strongly against the users of all kinds of commodities. It will affect every business, every wholesaler, and every retailer. Apparently the Government has not considered the effects. It is so easy to tax the raw materials that I marvel the Government has not gone into that aspect of the matter. In Canada, the raw materials are taxed, and they are taxed again upon sale. In that country the sales tax is called the “nuisance tax”; we should call ours the “ irritation tax “. lt should be remembered that the sales tax was introduced in Canada to find much needed revenue for a Government which was practically committed to a policy of freetrade. Here it is proposed to collect the tax in a country which already imposes very heavy duties on imports. The Government should give further consideration to the bill. It has covered itself in every direction against evasion of the tax, but the legislation is so drafted that in some cases, particularly in regard to the retail trade, the tax is being charged where it is not meant to be charged.
In view of the confusion which must be created the Government should withdraw the bill, and consult with commercial leaders regarding its incidence. The tax is universally condemned; it will restrict trade, confuse business, raise the cost of living, lessen the value of wages and cause unemployment. I am advancing a workable proposition and my criticism is constructive. I do not agree with the honorable member for Macquarie (Mr. Chifley), that we on this side of the House are not interested in the working man. I am interested in him to the extent of desiring that this taxation, shall be imposed in a form which will do him the least harm. I hope that the Government will suspend the operation of the tax, at least until 1st September, when some more workable proposition can be brought down.
.- The honorable member for Macquarie must be very optimistic indeed, if he imagines that the Government can impose taxation to the extent of £6,500,000, which is the estimated amount - though probably it will be more than that - without affecting the cost of living or increasing the cost 1 of production. He compared the living conditions of a man of £250 with those of one with an .income of £1,000 a year. He mentioned that the man on £250 a year generally had a larger family than the other. Then he told us that retail drapers often made a profit of 100 to 150 per cent, on the goods they sold. How will the numerous children of the worker fare when an extra £6,500,000 in taxation is collected? No doubt the retailers’ profit will be charged upon the extra amount paid. Can the honorable member seriously assert that this extra taxation will not have the effect of increasing the cost of living of workers? Of course it will. No matter how taxation is imposed, ultimately it comes down to, and must be paid by, the producers and the workers.
I suppose we must support this hill. I support it very .grudgingly indeed. I recognize that the financial position of the country is grave, and that the Government must have money. The question is, how can it be obtained? I do not suppose we could have a better instance of the difficulties imposed on members of Parliament by their having to meet in Canberra. Here we are in this remote spot where there is under consideration new legislation concerning principles of which we have had no experience, and there is not a soul we can consult with, not one person whom we can ask regarding the effect of this legislation on trade and commerce. It is all very well for the honorable member for Macquarie to smile and say that it does not matter, but he must realize that the whole future of the country depends on its trade. It is a scandalous thing that instructions should have been issued by the Commissioner of Taxation regarding the collection of this tax, although the necessary legislation has not yet been passed by Parliament. I have nothing to say against the Commissioner, who is an estimable officer - this intolerable position has been forced upon him by the retrospective nature of the bill - but I resent this bureaucratic control. No one knows what form this legislation will assume before it is passed by the other chamber. It would be preferable to impose a sales tax of 3 per cent. to become operative from the 1st September, than a tax of 2½ per cent. to be levied before the bill has been passed by Parliament. In the present circumstances, no one really knows what the bill provides, or the opinions of the Commissioner of Taxation upon its provisions. If the measure had been passed by both Houses of the Parliament, as the Constitution provides, before the tax became operative, and had been fully discussed by both branches of the legislature, the commercial community would have had an opportunity to understand its provisions. I assume that the members of another place will recognize that the Government must raise additional, revenue; but they too will admit that the Government has made very little effort to reduce the cost of administration. Notwithstanding our population of only 6,500,000 persons, the cost of government in the Commonwealth including that of the States, last year was £193,000,000. All this has to bc raised from a comparatively small number of taxpayers upon whom taxation has been increased to an alarmingextent. In addition to existing imposts, we now have this measure, the effect of which will be retrospective. I trust that when it reaches the committee stage, the Government will be induced to amend it so that it will become operative as from the 1st September, even if, in order to make up the deficiency which will result from an alteration in the date, the Government should increase the rate to 2¾ per cent. or 3 per cent. Although the proposal is to impose a tax of2½ per cent. forthe current financial year, taxation in this form is usually increased before it reaches the consumer. The honorable member for Macquarie (Mr. Chifley), who said that the impost was small, should realize that an importer who nays £50 taxation on £100 worth of goods has to make a profit on the £150. In these circumstances, importers and manufacturers must increase their prices possibly by 5 per cent, which will have the effect of further increasing the cost of living, particularly to the poorer section of the community. The Prime Minister (Mr. Scullin) has estimated that this tax will return approximately £6.250,000 in one year; but the amount to be derived depends very largely upon the exemptions. I do not think that any honorable member is qualified to determine the revenue likely to be obtained from this source. According to a return showing the revenue obtained from a similar tax in Canada,I find that in 1924, when it was reduced from 6 per cent. to 5 per cent., the revenue amounted to £24,000,000. Canada has a population of 9,000,000 against our 6,500,000, but I should imagine that the spending capacity of the people in Australia would be about equal to that of the Canadian people. In 1925, the tax returned £17,000,000; in 1926, £20,000,000; in 1927. when it was reduced from 5 per cent. to 4 per cent., £21,000,000; in 1928, £18,000,000; and in 1929. when it was reduced to 2 per cent., £16,500,000.
Mr.Lewis. - The tax was also imposed on retail sales.
– There were a number of exemptions which altered the posi tion considerably. In 1929-30, when the rate was reduced to 1 per cent., £13,000,000 was received. The Government should have introduced a stamp tax on all sales which would have been much easier to collect, and would not have caused the 3ame confusion in commercial circles. On the basis of the Canadian figures, I believe that the sales tax of 2½ per cent., unless the exemptions are increased, is likely to produce some £8,000,000 to £10,000,000.
– The Go vernment will need it all.
– That may be so; but the imposition of this tax will add to the burdens of the people, and particularly the primary producers who are already seriously handicapped. Numerous tariff schedules imposing excessive customs duties have been tabled, and have become effective before honorable members have had an opportunity to debate the Government’sfiscal policy. Surcharges of 50 per cent. have also been imposed on imported goods. When I asked the Prime Minister to remove the embargo on agricultural machinery, which is costing the primary producers of Western Australia 12½ per cent. more than it costs the primary producers in Victoria, he said that no concessions in this direction could be made. In addition to this and other heavy imposts borne by the man on the land, a primage duty has now to be paid. In theEstimates recently passed, provision was made for all sorts of unnecessary expenditure in order to pacify individuals and organizations and make good the Government’s election promises. The wheat harvest this season is likely to be 200,000,000 to 210,000,000 bushels for which approximately 3s. a bushel will be obtained, but the cost of production is in the vicinity of 4s. a bushel or more.
– How does the honorable member suggest that the cost of production can be reduced?
– As I have said on many occasions, by reducing the heavy imposts placed upon the requirements of primary producers which in recent years have been increased 100 per cent. and by repealing many of the Government’s socialistic enactments.
– Cheaper production has been the cry of the honorable member’s party for many years past.
– A small section of this Parliament has been trying to get the country back to the conditions existing prior to 1920. The Government has made no reasonable effort to effect economies. Small amounts saved in one direction have been thrown away in another. Now we are proposing to tax the poor people, taking plenty of care that the effects shall not fall upon us personally. The Government is budgeting for a revenue £4,000,000 in excess of that of last year. There is not the slightest doubt that the customs revenue this year will show a considerable decline and as the depression becomes worse the receipts from excise duties also will fall. Through depression, unemployment, and high taxation, the income tax will be much less. These factors, combined with the failure of our demand upon the Government to economize, compel us to support the bill. I cannot see any hope of brighter conditions in the future so long as we continue the present reckless policy. Not only will this tax continue after the present year, but I shall be surprised if the Government is not compelled next year to increase it to 5 per cent. The time has arrived wheu we should tell the people when and how we have drifted into this deplorable financial bog, and warn them frankly and fearlessly that the road we have been travelling for years leads to national bankruptcy and ruin. It is the duty of a parliamentarian, profiting by his political experience, to endeavour to lead the people and not to be wholly led by them.
– Hear, heart The honorable member’s party, when in power, received many bitter warnings.
– The cure which the Minister prescribes is the very opposite from mine. He would build a wall of China about Australia in order to make it self-contained. I say that we shall restore prosperity to it only when we throw open the doors, and induce our people to go on the land and produce wealth.We should endeavour to lead the people instead of being led by them. Too long have we presented policies to the nation that suggest the window-dressing of sharp salesmen. We have been cajoling the people with flashy and specious promises, each political party trying to outbid the other for power and emolument. The public mind has become depraved by false economic nostrums and debasing privileges to certain sections. The Minister for Trade and Customs (Mr. Penton) knows to what I am referring. But I have sufficient faith in the people to believe that if we place the facts candidly and without exaggeration before them we can make them realize that only by* work and the production of wealth can the nation be made great and prosperous.
– Two hundred and fifty thousand people are refused the right to work.
– And the policy pursued by the honorable member’s party is merely accentuating unemployment. Will the amending arbitration bill, designed to hand over all industrial powers to trades union leaders, either assist industry or find employment for our extra workers? The time is ripe for the party to which I belong to place the future of the country above every other consideration, and to preach to the people the economic truth that we cannot sell unless we buy. Australia is a debtor country and must export over £30,000,000 worth of goods annually to pay interest overseas. The insanity of our policy is shown by the retaliatory policy of other countries. We should let the people know that we cannot maintain a high standard of living unless we produce the wealth to pay for it. Too long we have been living on borrowed money, but people will not be persuaded to produce unless the value of the product is greater than the cost of production. Under the economic conditions we have built up in Australia, who dares to say it will pay to produce wheat? Destroy the wheat-grower and you will have destroyed Australia.
– The honorable member is deprecating the borrowing of money, but for thirteen years anti-Labour governments have been pursuing a borrowing policy. The present Government has the courage of its convictions.
– Does the honorable member ask me to believe that if the present Government could borrow money it would not do so? Has not the Prime
Minister told the House that he would need to borrow £30,000,000 from the Old Country ?
– The honorable member should not make a loose statement like that.
– The right honorable gentleman said in his budget speech that the Commonwealth would need to borrow £80,000,000.
– I said that it would be necessary to fund £30,000,000 worth of debt in London in the name of the Commonwealth and the States. The honorable member is suggesting that the Commonwealth Government intends to go on the London market for a new loan for £30,000,000. That is quite erroneous.
– At any rate it is necessary for the Commonwealth to get a credit of £30,000,000 overseas to pay its debts - principally in respect of interest on loan obligations. We shall thus add to our public debt, £30,000,000, on which probably 6 per cent, will have- to be paid. It may be idle now to tell honorable members on both sides of the House, in their present state of economic intoxication, that there will be a day of retribution, but surely the great wave of unemployment, and the destitution among so many of our people, should convince them of the relentless effect of departure from sound economic laws, and that after years of over-borrowing, public waste, and absurd socialistic legislation, the inevitable day of reckoning is fast arriving. We are imposing this sales tax so that we may set at rest the doubts of the people in the United Kingdom, and make them believe that we are setting our house in order so that they will be induced to lend us another £30,000,000. But are we to continue in the future as in the past? For the last eight or nine years Australia has enjoyed bountiful harvests, and high prices for its staple products of wheat and wool. We have continued to drift until to-day nearly 20 per cent, of our workers are unemployed, and asking for doles. We are here to legislate for the good of Australia, and the Empire of which it forms a part; but we have betrayed the trust that has been reposed in us. This Parliament is solely responsible for the drift that has taken place, and a striving party prepared to take all risks is essential to enable us to make good. I believe that this tax will cause great disruption of trade, as well as considerable expense. By the imposition of a stamp duty on retail sales, the Government would get as much revenue as this tax will produce, without causing so much disruption. I hope particularly that the Government will favorably consider altering the date of the coming into operation of this tax. If necessary, let the rate of the tax be increased; but let it operate from the 1st September, instead of the 1st August, and let an announcement to that effect bemade as speedily as possible. Itis improper forthe Government to say that taxation will be imposed along lines outlined by the head of a department before itknows what sort of an act will be passed by Parliament. While I support the proposal for further taxation because I realize that the Government must obtain additional revenue, I regret that the Estimates do not contain greater evidence of a desire to economize. I regret that the Government itself did not propose a temporary reduction of the salaries of members of Parliament, and of the Public Service. An examination of the report of the Public Service Board reveals that there, is enormous waste in the Public Service. That waste should end. Every section of the community should be compelled to bear its fair share of taxation. The true wealth of the country depends upon its primary production. So far as manufacturing is concerned, we are like people who take in one another’s washing; we cannot compete in the world’s markets with one manufactured article. It is useless to tait of maintaining a high standard of living when18 per cent. of our peopleare unemployed. We in this Parliament must put our house in order, and accept our share of the sacrifice necessary. No honorable member wishes to make political enemies of a strong body of public servants; but the position of the country demands action.What the condition of the country will be in twelve months; time unless the Government economizes: and reduces taxation Heaven only knows..
Debate (on motion by Mr. Prowse). adjourned.
Houseadjourned at 12.4 a.m. (Wednesday).
Cite as: Australia, House of Representatives, Debates, 5 August 1930, viewed 6 July 2017, <http://historichansard.net/hofreps/1930/19300805_reps_12_126/>.