House of Representatives
6 August 1930

12th Parliament · 1st Session



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

page 5407

PETITION

Guaranteed Price For Wheat

Mr. GIBBONS presented a petition frorn 202 wheat-growers in New South Wales praying the House to take steps to provide for the payment to wheatgrowers of a guaranteed price of 4s. per bushel for wheat harvested in the 1930-31 season.

Petition received and read.

page 5408

QUESTION

LOAN COUNCIL

Mr HUGHES:
NORTH SYDNEY, NEW SOUTH WALES

– Has the attention of the Prime Minister been directed to a statement appearing in the Canberra Times this morning which purports to give a digest of the recommendations made to the Loan Council by. Sir Otto Niemeyer, and some decisions of the council. Is this report accurate ? Does the Prime Minister propose to make a statement to the House on the subject?

Mr.SCULLIN. - I have not seen the statement to which the right honorable member has referred, but any report of that nature could only consist of conjectures.

Mr LATHAM:
KOOYONG, VICTORIA

– Does the Prime Minister propose to make a statement to the House before it rises respecting the decisions of the Loan Council?

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

– The only statement that I can make’ is that the council this morning unanimously agreed to adopt the scheme for the mobilization of exchanges which was discussed at a conference held with representatives of the banks in Sydney some little- time ago. I presume that honorable members are familiar with the details of it. The Loan Council has been discussing the subject of the balancing of the budgets of the Commonwealth and the States ; but as that matter affects the Governments individually more than it affects the Loan Council, and the various Governments require some time to prepare their figures in consequence of not yet having given detailed consideration to their budgets, it has been decided to hold a Premiers’ conference in Melbourne on the 18th August, at which Premiers’ and Treasurers will be in attendance. At that conference consideration will be given to the loan programmes of the various governments, with which is wrapped up the subject of the balancing of the budgets.

Mr LATHAM:

– Will that conference consider the expenditure of governments from revenue’ as well as from loan?

Mr SCULLIN:

– Obviously if the subject of the balancing of the budgets is to be considered, expenditure from revenue and loan alike will need to be discussed.

Mr GULLETT:
HENTY, VICTORIA

– Will the Prime Minister inform the House whether any of the decisions of the Loan Councilare likely to lead to a reconsideration of the budget proposals now before us ?

Mr SCULLIN:

– It is not usual to discuss matters of policy in replying to questions.

page 5408

QUESTION

INSULIN

Mr CURTIN:
FREMANTLE, WESTERN AUSTRALIA

– Has the attention of the Minister for Health been drawn to press statements to the effect that the insulin manufactured in Australia is inferior in quality to that obtained from overseas, and that the price of it is excessively high?

Mr ANSTEY:
Minister for Health · BOURKE, VICTORIA · ALP

– My attention has not been drawn to such statements, but if. they have been made, they are untrue. Insulin is being produced at the Commonwealth Serum Laboratories in increasing quantities for the use of hospitals and the public generally. The quality of it is first class, and the price charged for it lower’ than the prior charged for insulin in either America or England.

page 5408

QUESTION

SALE OF DISEASED MEAT AND IMPURE FOODSTUFFS

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Has the attention of the Minister for Health been drawn to the serious statements made in the Sydney Labor Daily on the 5th August, and endorsed by Mr. J. B. Cramsie, Chairman of the. Metropolitan Meat Board. Sydney, to the effect that tubercular and cancerous meat, and meat contaminated by other diseases, is being’ sold to the public? In order to protectthe health of the people will the Minister arrange for a thorough examinationto be made jointly by the Federal and’ State Health Departments of the foodstuffs supplied to the people, and especially of the foods and coloured sweets supplied to children?

Mr ANSTEY:
ALP

-My attention has not been drawn to the. report to which the honorable member has referred, but if it lias been endorsed by Mr. Cramsie, 1 should say that it is quite true. I understand that Mr. Cramsie has stated that diseased meat- is being sold. Possibly this is being done with the object of reducing the cost of living. I assure the honorable member that if the Commonwealth Health Department can, in co-operation with the Health Departments of thivarious States, do anything more than is being done at present to protect the health of the people, it will be done.

page 5409

QUESTION

TARIFF

EFFECT ou TRADE with Pacific ISLANDS

Mr ARCHDALE PARKHILL:
WARRINGAH, NEW SOUTH WALES

– In view of the fact that the existing tariff lias practically destroyed the business of a number of companies trading with the Pacific Islands, doos the Minister for Trade and Customs propose to take any steps to give such companies relief?

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

– The whole matter is being considered.

page 5409

QUESTION

GRAPE-GROWING INDUSTRY

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

– The Prime Minister informed me some weeks ago that Messrs. J. Gunn and Gollan had been appointed to make an investigation into the difficulties which are crippling the grapegrowing industry, particularly at Coonawarra, in South Australia. Is it still intended to hold that investigation; and, if so, when will it begin?

Mr SCULLIN:
ALP

– The preliminary steps in connexion with the holding of the investigation have already been taken, and certain conferences have been held with the grape-growers in South Australia. The investigation will probably begin in earnest next week.

page 5409

QUESTION

SALES TAX

Position of PHARMACEUTICAL Chemists.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Will the Prime Minister inform me whether it is a fact that pharmaceutical chemists dispensing prescriptions for the general public will have to pay sales tax on the ingredients of the prescriptions; and, if so, whether an exemption could not be granted to them in that regard?

Mr SCULLIN:
ALP

– Ordinary chemists who dispense prescriptions for the general public will not be liable to the payment of sales tax in respect of such prescriptions.

page 5409

QUESTION

CHRONIC NEPHRITIS AND OPTIC NEURITIS

Mr BAYLEY:
OXLEY, QUEENSLAND

– I direct the attention of the Minister for Health to the following telegram from Brisbane which appears in to-day’s issue of the Sydney Morning Herald : - “ The Queensland Government, on 26th July, replied to a communication from the Commonwealth Government approving of the proposed inquiry to determine the extent to which chronic nephritis and optic neuritis exists in Queensland, and the relationship, if any, between these diseases and lead poisoning,” said the Premier (Mr. Moore) to-day, when his attention was directed to a statement made in the Federal Parliament by the Minister for Health (Mr. Anstey) that no word on the subject had yet been received from the Queensland Government. ‘ Mr. Moore said that not only had a reply been sent on 26th July approving of the inquiry being instituted, but the Queensland Government, at the same time, had recommended that Dr. J. Coffey (Queensland Commissioner of Public Health) and Dr. L. St. Vincent Welch (Chief Medical Officer of the Queensland Department of Public Instruction) should be appointed as members of the committee of inquiry.

Will the Minister inform me whether he has yet received the communication which the Premier of Queensland has sent to him; and, if not, will he notify the Premier of Queensland to that effect, so that a copy of the original letter may be forwarded to him?

Mr ANSTEY:
ALP

– The statement made by me the other day was correct. No such communication has yet been received.

page 5409

QUESTION

IMPORTS

Mr ELDRIDGE:
MARTIN, NEW SOUTH WALES

asked the Minister for Trade and Customs, upon notice -

Will he supply the following information: - 1. (a) The value of dutiable goods imported from the United Kingdom in 1929-30 and the amount of duties paid; (fc) The value of non-dutiable goods imported from the United Kingdom? 2. («.) The value of dutiable goods imported from the British Possessions in 1929-30, and the amount of duties paid ; (6) The value of non-dutiable goods imported from British Possessions? 3. (a) The value of dutiable goods imported from foreign countries in 1929-30, and the duties paid; (6) The value of non-dutiable goods imported from foreign countries?

Mr FENTON:
ALP

– Such detailed information relating to the imports for the year 1929-30 could not be available for some months. The annual returns are not prepared in a form that would give the information sought, but the Commonwealth Statistician will be conferred with as to the possibility and the cost of preparing such a return.

page 5410

QUESTION

UNITED STATES IMMIGRATION LAW

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

asked the Prime Minister, upon notice -

  1. In view of the fact that Australian citizens have been refused permission to state they were Australian when signing clearance papers before leaving the United States of America, and have been compelled to state that they were Irish before being accepted, will he have inquiries made to remedy this state of affairs?
  2. Could this be done by officials to reduce the quota of the various nationalities, and prevent, the Australian quota being available for the number of Australians who have departed from the United States?
Mr SCULLIN:
ALP

– The matter to which the honorable member refers is one affecting the administration of the United States of America immigration law. If he will furnish me with particulars of any instance of the practice to which he alludes, I shall look into the question of whether it is competent for the Commonwealth Government to take any action in elation thereto.

page 5410

QUESTION

FILM INDUSTRY

Mr LONG:
LANG, NEW SOUTH WALES

asked the Prime Minister, upon notice -

  1. la it a fact that the Actors Federation of Australia recently sent a deputation to the Government conveying a commercial proposition relative to motion picture production in Australia; if so, will he inform the House of the result?
  2. Is he in a position to state whether there is any possibility of the proposition bearing any satisfactory results?
Mr SCULLIN:
ALP

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

  1. A delegation from various interested bodies, including the Actors Federation, recently waited upon the Assistant Minister for Industry (Mr. Beasley) in Sydney, and made suggestions in connexion with motion picture production in Australia.
  2. _The suggestions of the delegation are receiving consideration, but a definite decision has not yet been reached.

page 5410

QUESTION

TEXT BOOK MODERN HISTORY

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

asked the Minister for Trade and Customs, upon notice -

  1. Whether his attention has been drawn to a book entitled Modern History, imported from America, in which the following passage occurs : - “ Then the British collected a motley army composed chiefly of Colonial troops, and landed them on Gallipoli”?
  2. Whether this book has been adopted as a text book by the Melbourne University?
  3. Will he take any action to suppress further publication of the book in Australia?
Mr FENTON:
ALP

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

  1. No.
  2. No information on this point is at present available.
  3. The Commonwealth does not control publication in Australia. As regards importation, the prohibition applies to articles that are blasphemous, indecent, or obscene, and it is not suggested that the book comes within these definitions.

page 5410

QUESTION

SALES TAX EXEMPTIONS

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

asked the Treasurer, upon notice -

In view of the many families who make cakes for the supply of one or two shops, will the Minister consider placing cakes on the list of goods exempted from the sales tax?

Mr SCULLIN:
ALP

– Consideration is being given to a proposal to exempt from sales tax small retail shops, the keepers of which make some or all of their goods. The matter will be dealt with in committee.

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

asked the Treasurer, upon notice -

Is he yet in a position to state whether, in connexion with the sales tax, the Government has reached a decision with reference to the request of municipal and local governing bodies for an exemption from the operation of the tax of metal used for road-making?

Mr SCULLIN:

– It is not proposed to exempt from sales tax metal for roadmaking sold . to municipal and local governing bodies.

page 5410

QUESTION

UNEMPLOYED UNIONISTS

Mr KEANE:
BENDIGO, VICTORIA

asked the Minister representing the Attorney-General, upon notice -

What was the percentage of unemployed registered trade unionists for each year from 1922 to 1929 inclusive?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– The information ia contained in the following statement : -

page 5411

QUESTION

IMPORTED OREGON

Mr PRICE:

asked the Minister for Trade and Customs, upon notice -

  1. What are the names and addresses of timber merchants who cleared from bond stocks of 12 x 6 (and over) Oregon immediately prior to the June tariff schedule ?
  2. What quantities were cleared immediately prior to the operation of this schedule T
  3. What would be the increased amount of duty on Oregon cleared, as compared with that cleared under the previous tariff?
  4. What quantity of Oregon, on which duty has not been paid, remains in bond in the various States of the Commonwealth?
  5. What portion of this timber comes from Canada ?
Mr FENTON:
ALP

– The information will be obtained as far as possible.

page 5411

QUESTION

SUGAR AGREEMENT

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

asked the Prime Minister, upon notice -

  1. In connexion with the proposed inquiry into the sugar agreement, what provision does he propose to make towards giving representation to Western Australian consumers, or to enable witnesses from that State to voice their protests without unnecessary personal expense?
  2. In any agreement subsequently entered into, will he make such agreement conditional upon approval by the Commonwealth Parliament?
Mr SCULLIN:
ALP

– Details of the arrangements and procedure to be observed in connexion with the investigations of the committee of inquiry into the sugar industry have not yet been finalized. The matter is being considered in all its aspects.

page 5411

QUESTION

AIR ACCIDENTS

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

asked the Minister for Defence, upon notice -

Will he inform the House of the number of accidents and deaths that have occurred in the Royal Australian Air Force and the Civil Aviation Branch during each of the years 1927, 1928, 1929, and 1930?

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

– The information is being obtained, and will be furnished to the honorable member as soon as possible.

page 5411

QUESTION

CANBERRA HOTELS

Charges to Members of Parliament

Mr CUSACK:
EDEN-MONARO, NEW SOUTH WALES

asked the Minister for Home Affairs, upon notice -

  1. What are the rates charged to members of Parliament for full board at the various hotels at Canberra?
  2. Are any press representatives charged a rate lower than that paid by members?
Mr BLAKELEY:

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

  1. Hotel Canberra, 16s. per day, £6 per week; Hotel Kurrajong, 12s. 6d. per day, £3 15s. per week; Hotel Wellington, lis. 6d. per day, £3 5s. per week.
  2. Yes; but not for equivalent accommodation.

page 5411

QUESTION

PRESS TELEGRAMS

Mr CUSACK:

asked the PostmasterGeneral, upon notice -

Are press telegrams charged at bo much per word, the same as ordinary telegrams; if not, what are the rates charged?

Mr LYONS:
Minister for Works and Railways · WILMOT, TASMANIA · ALP

– Press telegrams are cheaper per word than ordinary telegrams. The rates charged for press telegrams are -

  1. Within any State - Not exceeding 26 words, 8d.; exceeding 25 words but not exceeding 50 words, lid.; exceeding 50 but not exceeding 100 words, 1s. 9d.; every additional 50 words or portion of 50 words, 8d.
  2. From any one State to any other State - Not exceeding 25 words,1s. 4d.; exceeding 25 but not exceeding 50 words, 1s. 10d.; exceeding 50 but not exceeding 100 words, 3s.6d. ; every additional 100 words, 3s.6d. ; every additional 50 words or portion of 50 words,1s. 4d.

The following special rates are charged for press telegrams within the Commonwealth relating to parliamentary proceedings : -

Not exceeding 25 words,1s. 4d.; exceeding 25 but not exceeding 50 words,1s. 8d.; exceeding 50 but not exceeding 100 words, 2s.; every additional 50 words or portion of 50 words, 8d.

The rates for ordinary telegrams are as follow : -

Not exceeding sixteen words - Within a radius of fifteen miles in any one State, 9d. ; beyond fifteen miles in any one State,1s. ; from one State to another State,1s. 4d. ; for each additional word in each instance,1d.

page 5412

QUESTION

FEDERAL CAPITAL

Invalid and Old-age Pensions Office - Leases.

Dr.MALONEY asked the Minister for Home Affairs, upon notice -

What is the distance from Parliament House to the Invalid and Old-age Pensions Department at Civic Centre?

In view of the empty rooms adjacent to Parliament House, will he remove the Invalid and Old-age Pensions Department in order to save the rental paid for the present inconvenient position?

If necessary, will the Minister consider the issuing of an ordinance cancelling any lease made by the late Federal Capital Commission ?

Mr BLAKELEY:

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

  1. Approximately one and a half miles.
  2. The question of the removal to vacant Commonwealthowned premises of the old-age pensions staff and other staffs occupying leased premises at Civic Centre will receive consideration prior to the date of termination of the leases entered into. There is no provision in the agreement to terminate the lease (or the old-age pensions office prior to the 31st August, 1932.
  3. Section 8 of the Seat of Government (Administration) Act 1930, states - “Any contract, lease or agreement to which the Commission is a party, which is in force or continuing immediately prior to the commencement of this act, shall continue in force as if this act had not been passed:

Provided that the Commonwealth shall be substituted as a party to any such contract, lease or agreement in lieu of the Commission.”

This act was proclaimed to commence on 1st May, 1930.

It is pointed out that the lease of accommodation at Civic Centre for Commonwealth departments was arranged by the Department of Works, as a part of the ordinary functions of that department, and not by the Federal Capital Commission.

page 5412

DARWIN

Adult Suffrage Ordinance

Mr WHITE:
BALACLAVA, VICTORIA

asked the Minister for

Home Affairs, upon notice -

  1. Did the Darwin Council telegraph the Minister saying that the ordinance being prepared substituting adult suffrage for a poll of ratepayers was too drastic and unsuitable for Darwin and asking him to withhold the passing of the ordinance until he received the comments of the council; if so, what was his reply?
  2. Was a draft ordinance prepared by the Town Council submitted to the Government Resident and forwarded to the Minister; if so, what became of this ordinance and the correspondence in connexion with it?
  3. Did the Darwin Council forward to the Minister a resolution passed on 9th April last as follows: - “That in view of the past difficulties, and the peculiar local conditions, this council views with alarm the proposal of the Government to provide in the New Consolidated Town Council Ordinance, for the election of councillors by adult franchise, and strongly urges upon the Milliliter the necessity for a re-consideration of the matter ?
  4. Did the Minister telegraph the Government Resident on the 14th June, about an hour before council nominations closed, stopping the council election; if so, what was the reason for this action?
Mr BLAKELEY:

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

  1. A telegram was received from the Darwin Town Council asking that consideration of the draft ordinance prepared by the Crown Law Officer in Darwin be deferred pending the receipt of the council’s views. The council woe informed that its request would be complied with.
  2. So far as I am aware, a draft ordinance was not prepared by the Darwin Town Council. The council submitted its comments on the draft prepared by the Crown Law Officer. These comments were received by me and are being taken into consideration in connexion with the preparation of the ordinance. The correspondence received by me is in the possession of the Department of Home Affairs.
  3. Yes.
  4. Such a telegram was sent to the Government Resident on the 14th June, but I am not aware that it was received by him about an hour before the council nominations closed. In accordance with the policy of the Government, it was decided that the elections for members of the council should be on an adult suffrage. As the necessary ordinances to provide for. adult suffrage could not be promulgated in time to apply to the election of councillors this year, a short ordinance was passed postponing the election.

page 5413

QUESTION

WIRELESS BROADCASTING

Equipment for Relay Stations

Mr LYONS:
ALP

– On the 20th June the honorable member for Martin (Mr. Eldridge) asked a question affecting the purchase oversea by the Postal Department of equipment for radio relay stations. I lay on the table as a parliamentary paper a return which will supply that information. Because of the heavy cost of preparing this return, I desire to avoid any further printing expense.

page 5413

QUESTION

BASIC WAGE AND STANDARD HOURS

Mr BLAKELEY:

-Onthe 29th July, the honorable member for Warringah (Mr. Parkhill) asked the Minister representing the Attorney-General the following question: -

What are the present rates of the basic wage and the standard hours to which they relate in the following cities: - (a) Sydney; (b) Melbourne; (c) Adelaide;(d) Brisbane; (e) Perth; (f) Hobart; and (g) Canberra?

I am now in a position to supply the honorable member with the following par ticulars : -

page 5413

HOUR OF MEETING

Motion (by Mr. Scullin) agreed to -

That the House at its rising adjournuntil 11 a.m. to-morrow.

page 5413

APPROPRIATION (WORKS AND BUILDINGS) BILL 1930-31

Bill returned from Senate without amendment.

page 5413

PAPERS

The following papers were presented : -

Postmaster-General’s Department - Detail s of Contracts let to overseas firms in connexion with Postal, Telegraphic and Radio Supplies and Equipment.

Australian Soldiers’ Repatriation Act - Regulations amended - Statutory Rules 1930, No.63.

page 5413

SALES TAX ASSESSMENT BILL

(No.l)

Second Reading

Debate resumed from 5th August (vide page 5315), on motion by Mr. Scullin) -

That the bill be now read a second time.

Mr.PROWSE (Forrest) [2.53].- The object of this bill is to adjust, to some extent, our adverse trade balance, but the Government has taken the wrong turning. For some considerable time, attempts have been made to bolster up industries that are not essential, and cannot be of service to this country. They are barnacles retarding the progress of the ship of state. Our national income has declined to the extent of about £70,000,000. For some time the trade figures have been against Australia, and every increase of the tariff has served only to aggravate the position. We are now unable to meet our overseas obligations. This Government has endeavoured to adjust the trade balance by further increasing the tariff, and placing embargoes upon the importation of certain commodities. That policy is getting Australia into greater difficulties. It is sheltering sheltered industries more than they were previously sheltered - industries that are not of service, but of disservice to the community. It has decreased the revenue of this country, and placed heavier burdens on those upon whom we have to rely for an improvement of our financial credit - the exporting primary producers. It seems as if some evil spirit is directing the Government, because its actions, although doubtless honest, could not have had a worse effect upon Australia. The taxpayers are being doubly penalized. We have already realized the effect of the embargoes and increased duties upon imports, because our deficit is increasing automatically. Our impoverished people are now being called upon to pay heavier taxation to meet a position which has been artificially created. I suggest to the Government that it would have been infinitely better to reduce the tariff, and to force the manufacturers of Australia to get their heads together in an effort to produce cheaper goods, and so retain the Australian trade. By that means the cost of living would have been reduced, and our imports, even under the reduced tariff, would have contributed the requisite revenue. At the present time, we are placing a heavier burden upon the primary producers, who are the backbone of this country. The introduction of the nine bills that are under discussion is the natural corollary to the policy of the Government. If it insists upon retaining the embargoes and increased duties in an effort to develop useless industries - which are useless because of the manner in which they are conducted - then, of course, this legislation is unavoidable. But, by further taxing our already impoverished people, we are retarding the development and progress of this country. The Prime Minister (Mr. Scullin) and -the State governments have admitted that the primary producer to-day is being asked to carry more than he is able to carry, and that his production costs leave him no margin of profit. Any sane government would know that, by increasing the burdens upon the primary producer, the exports from this country must automatically decline. The only sensible and sound way to adjust our trade balance is to reduce the tariff. The Government, in introducing this legislation, has “acted wrongly, and unless it alters its policy our financial position will become worse. I suggest to the Government that it reconsider the tariff schedules. Our sheltered industries cannot export their products and compete in the markets of the world, and therefore are not likely to bring a new shilling into Australia. We should concentrate on giving assistance to those industries that are likely to bring fresh money into this country.

Mr HUNTER:
Maranoa

.- One feels diffident about opposing any legislation proposed by the Government, particularly financial measures, having regard to the fact that it was returned in October last with an overwhelming majority, and that presumably a government so signally preferred by the people is giving them what they want. The Government’s policy having been endorsed by the people, one might almost say that these bills also have the endorsement of the electorates, for I recognize that the Government must get funds for the carrying out of its policy. During the last Parliament we were frequently reminded that taxation was not the only cure for our political ills. That is equally true to-day; in fact, increased taxation aggravates the ills, because it makes money scarcer in the hands of the people, and leaves less capital available for industry to provide employment. The Government should have given more notice of the introduction of the sales tax. Even after the information leaked out through the press that a tax on wholesalers was proposed, the Government still attempted to keep the matter secret. Having decided to introduce this legislation, the Government would have been wiser had it frankly stated its intentions, so that the people would have been prepared for it, and would have had an opportunity to inform themselves as to its meaning and application. Today there is nothing but chaos amongst the business community, particularly the wholesalers. The first indication published in the press was that the Government proposed to tax wholesalers, who the people are led to believe are middlemen without bodies to be kicked or souls to be damned - men who are not rendering any service to the community, but are more or less parasites, and, therefore, are the proper target for any attack. That opinion was often expressed in this Parliament by members of the Labour party when they were sitting in Opposition.

The Government was in too great a hurry to put this tax into operation. It should have consulted independent experts regarding the necessity for, and wisdom of, introducing such legislation. The need for consulting outside experts on financial matters, particularly in these difficult times, is becoming more and more urgent. We live in an atmosphere of political prejudice. A proposal emanating from one political party is sure to be opposed by opponents of that party. Therefore. no matter what proposal a Oovermne-.it may make, fully 50 per cent, of the people, because of their political bias or adhesion, will declare it wrong. So long as the people are led to believe that whatever is proposed by the fellow in the opposite political camp must be wrong, this country will be unable to lift itself out of the present slough of depression. That is why I say that the Government must bring to its aid independent experts, whose unbiased advice will be trusted, and will form the basis of an informed public opinion.

The many bills incidental to the imposition of the sales tax have been hurriedly prepared, and I pity the Commissioner of Taxation. While this measure is being discussed here, the Income Tax Assessment Bill is under consideration in another place; the Commissioner is receiving sheafs of telegrams daily, and almost hourly telephone messages from honorable members. He is doing his best to satisfy all parties ; but I do not think that any official of the Government thoroughly understands all that this tax will mean. It has been tried in many countries, and, as it is still in operation, one must conclude that it has been found worth while from a government financial point of view. It is almost certain that those countries experienced the same troubles as are now confronting our officials and merchants before the legislation was fully understood and operating effectively. A certain amount of sympathy must be felt for the Government and the officials in the difficulties through which we are passing, but I suggest that a good deal of latitude should be allowed to the merchants and manufacturers who, though anxious to conduct their business in accordance with the requirements of the law, are not sure what is expected of them or how their businesses will be affected. This tax has certainly proved profitable to governments in other countries, as is proved by the fact that in Germany it yields 37 per cent, of the total revenue from taxation; in Belgium, 23 per cent.; Canada, 29 per cent.; France, 21 per cent.; and Austria, 24 per cent. If it proves nearly so productive in Australia, those optimists who are hoping that it will break down of its own weight and be repealed at the end of twelve months are likely to be disappointed. I predict that it will not be repealed for a very long time, if ever.

Doubtless one reason which prompted the Government to introduce a sales tax was the seeming ease with which it can be imposed and collected. It is comparatively simple to tell the merchants that, on the 7th of every month, they must pay to the Treasury a tax representing 2£ per cent, of the value of the goods they sold during the previous month. It is very convenient to the Treasurer to get these regular monthly payments. For these reasons, this form of taxation will be popular with all governments. It has also the advantage that, as it will be passed on, merchants will have no inducement, unless short of cash, to represent their sales as less than they were. T.f the 24 per cent, tax is.to be passed on to the retailers, the merchants will be acting only as collecting agents for the Government, and, therefore, will have n,o personal concern in minimizing the liability. The tax will not, however, prove easy for the merchants; on the contrary, it will be particularly bad for those who act practically as bankers for country storekeepers. Most of their goods are sold on four months bills, which, in bad times, are renewed repeatedly. Although the merchants may be out of their cash for from four to twelve months, the Government will expect its 2$ per cent on sales, whether for cash or on credit, seven days after the close of each month. This is bound to react on country storekeepers, because, when their bills become due, the merchants will decline to renew them, saying - “ You must find the cash. We have paid out 2£ per cent, monthly for the last four months; we are now out of pocket 10 per cent, of our average monthly sales. In those circumstances, we cannot afford to give further credit.” One result will be the closing of many country stores, to be followed, possibly, by the closing of city warehouses.

When conditions are prosperous, any sort of tax can be imposed without causing much trouble, but in times of depression, when business is dull and prices are declining, it will be almost impossible to pay this tax. Merchants and manufacturers have told me that they experience difficulty in keeping their business going during this depression, and that, no matter what prices they quote, particularly for woollen goods, they cannot effect sales. For a - short time at least, in order to facilitate business, they will have to say to their customers: “Our price includes nothing for sales tax; we shall carry that. In fact. the price quoted is less than the cost “. For a period the merchants and manufacturers will carry the tax, but an ultimate increase of prices will be unavoidable. If the 2$ per cent, is not shown on the bottom of the invoice, it will be part of an inclusive price. So long as the tax is operative, the cost of living must be at least 2£ per cent, higher than it otherwise would be. The Government is really proposing a tax on consumption*, and consumption varies in different classes of society. The greater proportion of the consumption by the poorer, classes is of food, clothing, and other necessaries, but - the greater proportion of the consumption of the richer people’ is represented by services, which will not he taxed; therefore, this sales tax will fall proportionately more heavily upon the poor than upon the rich, and that will be contrary to the generally accepted political and social axiom that taxation should be distributed according to the capacity to pay.

Already the tax has created difficulties in the internal management of the merchants’ and manufacturers’ offices. I remember some of my fellow accountants saying some years ago that it would be to our interest to keep the Labour party in office in both Federal and State Parliaments. Before the advent of Labour Governments, there was little money in accountancy, although we managed to get a fair living. When Labour came into office, many chartered accountants began to make money, because the policy of Labour necessitated the employment nf experts to help taxpayers to understand their obligations. Labour Governments were always the- best friends of accountants and lawyers, who will benefit most from this sales tax by reason of the necessity for business people consulting them. The working people and the merchants will suffer, and, so in time will the Government, because a tax on consumption will decrease consumption, and consequently production.

The retailer will find himself in a quandary. If the goods are offered at an inclusive price, he will offer no objection, but if the sales docket contains an addition of 2£ per cent, in respect of the- tax, trouble may arise. Suppose that he has bought goods to a value of £100; the invoice will show an addition of £2 10s. for sales tax, making a total of £102 10s. The purchaser may resist the charge for a time, but eventually he will pay it. He will not be allowed, however, to charge up to stock £102 IO3. He will be compelled by the Income Tax Department to show in his books that he hae purchased £100 worth of goods, and in another column he must show that he has paid £2 10s. tax on behalf of the merchant. When he makes up his income tax return, possibly, he will not be able to include that £2 10s. when claiming deductions, hut he must include it on the credit side when reckoning the total amount of sales, because his sales would include the whole of his costs to include the tax paid by the wholesaler or manufacturer. Thus he will be paying tax on % per cent, at least more income than he should.

Let us consider what will be the position of a shirt-maker under the new legislation. He will have his store full of shirts, some of which have been made from material imported by himself, some out of material belonging to his customers, and some from material bought by him from wholesalers or others in the town. Most of these shirt-makers are not carrying on in a big way, but if they have to discriminate between the different classes of their own manufactures they will have to keep a staff of clerks and checkers almost as large as the number of shirt-makers in their factories.

Last year we heard many complaints from honorable members opposite against what they described as “ The Dog Collar Act”, meaning the Transport Workers Act. which required waterside workers, at ceitain ports, to be licensed. They said that a man should not be required to take out a licence in order to pursue his means of livelihood: Under the legislation we are now considering, however, manufacturers, wholesalers and importers must be licensed before they can conduct their businesses. Government supporters, when in opposition, opposed any sugges- tion of a turnover tax, but they are now adopting the same expedient themselves. Theyalso objected to provision for penalties in the Conciliation and Arbitration Act, but in the Sales Tax Bill provision is made for gaoling people if they do not pay their tax. This bill is capable of improvement. The Government is determined to put it into force, and can do it by reason of its big majority. We must reconcile ourselves to it, and we should offer our help to the Government to make it more workable, and less irksome on the people and on the business community.

Mr STEWART:
Wimmera

.I am aware that nothing I may say will prevent the passage of this legislation, but I wish to comment on the method of its introduction. It is proposed that Parliament shall adjourn the day after tomorrow, and between then and now this bill, which involves heavy taxation affecting every section of the community must be passed, not only through this House, but through another place as well. It is not desirable that we should proceed with such haste. Another objection is that, although the bill has not yet passed either House, the tax is already being collected, In short, we have here a very good illustration of taxation without parliamentary authority.

Mr West:

– The same thing applies to customs tariffs.

Mr STEWART:

– In this case, there is nothing to prevent us from passing the bill now, and bringing it into operation at a later date. Instead of having it come into operation on 1st August, it could be made effective as from the 1st September. A. tariff schedule must necessarily come into force automatically when it is tabled. Under the schedules which have been brought down since November of last year, millions of pound? are being collected from the people, although the schedules have not yet been passed by Parliament, and there is no certainty that they will be passed even next year. It is possible, if there is any ground for the prevailing rumours of a double dissolution, that next year we may be more concerned with fighting for our political existence than with passing tariff schedules. I am aware that the Government believes it to be necessary for Parliament to rise because the Prime Minister must attend the Imperial Conference, but I maintain that we could quite well continue to sit until we have d ealt fully with this legislation. The Government has embarked on a tariff policy of an exceedingly drastic nature. The importation of some goods has been totally prohibited; others are made subject to a surcharge of 50 per cent., while heavy increases of duty have been imposed on other individual items. On top of that, it is proposed to levy a primage duty of 2½ per cent. on all goods imported. Now we have this sales tax legislation which marks an entirely new departure, and which is bound to cause confusion among the business community, and will probably involve the creation of a new government department. Despite the assurances of the Government and its advisors that the tax will work smoothly, I very much doubt whether it can be collected without a great deal of friction. The Government is, therefore, committed to a policy of heavily increased taxation in the midst of the greatest depression this country has ever known. In the circumstances, any legislation involving new taxation should receive the most careful consideration of this House. The Government has sought to justify this extreme step by stating that it is necessary to balance the ledger. That is a most laudable object, but I agree with the Leader of the Opposition (Mr. Latham) that it is very doubtful whether is will be successful. With the prevailing depression in primary and secondary industries, I doubt whether the money is there to collect. The only certain result the tax will have is to increase the cost of living, and the cost of production.

The honorable member for Forrest (Mr. Prowse), and, I think, some speakers on the Government side also, referred to the probable effect of this tax upon the primary industries of the conntry. . Its effect upon the exporting primary industries will be particularly unfortunate. Recently legislation was passed through this House granting assistance by way of subsidies and bounties to various primary and secondary industries; but it is remarkable that in every case the assistance was for building up industries which do not export their products, but which are content to exploit the local market. The development of such industries will not help materially to balance the ledger.

Mr Martens:

– The honorable member ought to join the “ Cheer-up Society “ !

Mr STEWART:

– It may be true that I am in a pessimistic mood, but I usually say what I think, and speak as I feel. It is difficult to remain optimistic when I come into contact with my constituents, wheat-growers and dried-fruit farmers who, perhaps more than any other section of the community, are feeling the effects of the present economic depression. These are two of the important exporting industries which are of such value to Australia, sud it is depressing to observe that, although government assistance has been granted to other industries which are of purely local significance, the driedfruits industry has been left to struggle along without any assistance whatever. The position of the wheat industry at the moment is very grave. I have no desire to strike a pessimistic note, hut it is well to remember that wheat-growing is Australia’s greatest industry. Despite what has been said of the value of the wool-raising industry to Australia, it remains true that, having regard to the amount of labour employed, the capital invested, and the support accorded to country centres, the wheat-growing industry is undoubtedly the most valuable Australia possesses. To-day this industry is face to face with the greatest crisis of its history. There have been two or three bad seasons, at the conclusion of which the farmers were faced with a loss on their operations. With a record harvest in sight, the tragic feature is that on present values the crop is worthless as a business proposition. This problem affects not only the wheatgrowing industry, but also the nation as a whole. The essence of the problem is that it costs more under existing conditions to produce wheat than can be obtained for that commodity in the markets of the world. This proposal will accentuate the evil. I give the Government credit for having made an endeavour to assist the industry, and regret that its legislation was rejected by another place. But good intentions, laudable though they may be, will not help the wheat-grower. To use a homely phrase, the wheatgrowers are “ in the soup “, and nothing is being done to assist them. I believe that we are faced with a crisis of considerable magnitude. I voice that opinion, not because of a feeling of pessimism, but because I understand the position of our great primary industries. If there be any truth in the assertion that the prosperity of Australia is bound up with that of our primary industries, Australia is in for a very bad time. Nothing is -to be gained by blinking that fact. Those honorable members who represent remote constituencies, and have been compelled to remain in Canberra for several months, are not so closely in contact with conditions in the country as they ought to be, and when they return to their constituencies, particularly if they happen to represent primary producing interests in the wheat belt and the wool areas, they will be shocked at the acuteness of the economic position. The Government has justified this legislation, and its tariff proposals, by saying that the ledger must be balanced. We all agree that that must be done; but those of us who are outside the charmed circle of the Cabinet are justified in believing that the remedies which are being applied are too drastic, if the facts are not being hidden from us. I have an uneasy feeling that we have not been placed in possession of all the facts regarding Australia’s financial and economic position overseas.

Mr Thompson:

– Perhaps it is as well that we have not.

Mr STEWART:

– I disagree with my honorable friend. Members of this and another place should be told the whole of the facts. When Canadian 4$ per cent, bonds are at par, or at a slight premium, on the New York market, and Australian 5 per cent, bonds are down to £86, something is wrong. If the position is as bad as this legislation indicates that it is, we ought to be told the facts. The wisest course, I believe, would be for the Government to be absolutely frank with this House and with the people. If, however, that is not considered advisable, there should be a secret session of this House and another place. Let the Prime Minister, on behalf of the Cabinet, as well as Sir Otto Niemeyer, and any other individual who may have anything to divulge, place before us the whole of the information in their possession. We should put on one side all party feeling, and remember that we are all Australians. Let us agree upon a policy that will lift Australia out of her present position and place her once again on the high road to prosperity. If the policy adopted be unpalatable, let all parties be responsible for it, and not endeavour to seek a party advantage, as they are doing to-day. The present position has not been brought about in two or three years; it is the result of one party bidding against another for the favour of the electors until the bidding has reached such a height that it. has broken down. I do not say that that is the sole cause. I admit that the tremendous burden of taxation caused by the war has been largely responsible.

Mr Martens:

– We should be iD a happy position, but for that.

Mr STEWART:

– I agree with the honorable member. But for the hurden of our repatriation commitments, our pensions payments and the like, together with the losses that have been incurred upon soldier settlement, and the many other burdens that are a legacy from the war, wc could carry on quite easily. I admit that that is a big factor; but it has been accentuated by the practice of one party bidding against another for the votes of the electors. This Government is now endeavouring to solve problems that it has inherited ; but it must be held partly responsible for those problems, because of the attitude that its members adopted while in opposition. They then played the party game, just as the party at present in opposition is doing now, in an endeavour to gain a political advantage.

Mr Gullett:

– King Solomon.

Mr STEWART:

– King Solomon set, in different directions, an example that even the honorable member for Henty (Mr. Gullett) might find it profitable to follow. I have no wish to be sidetracked by the honorable member, although I am tempted to remind him of a few of his ‘sins of omission and commission. His policy counts for very little. I am not posing as a schoolmaster, nor endeavouring to lecture this House, and I hope that I have not left that impression. I am giving expression to what I honestly believe. I repeat that the party system must be held largely responsible for the present position. But that system, unfortunately, will not get us out of our difficulties. The fact that the proposals of the Government will rouse opposition to its party and its policy from one end of Australia to the other does not worry me so much as the , belief that they will not solve the problems with which we are faced.

It has been suggested that this ought to he a retail tax. That, I believe,, is quite impracticable. Assuming that we are to have a tax of this description, I believe that the best method nas been adopted for performing a very unpleasant task.

Mr MAXWELL:
Fawkner

.- Like the honorable member for Wimmera (Mr. Stewart), I know that nothing that I say will have any effect upon the result of this debate. I desire, however, to make a few observations before a vote is taken on the motion for the second reading of this drastic measure.

During the course of the debate, to which I have listened very carefully, three quite notable speeches have been made. It struck me that the speech of the Leader of the Opposition (Mr. Latham) was a model of reasonable, moderate, and suggestive criticism, and I hope that due weight will be given to it when the bill is being considered in committee. Then we had the speech of the right honorable member for North

Sydney (Mr. Hughes). If it was not very illuminating, at least it was exceedingly entertaining. The pathetic picture that he drew of a desolate parrot was rather amusing. It was not very complimentary to the people of Australia, however, to liken them to that luckless bird. By the way, it was not an Australian parrot, but an immigrant, which had evidently met a flock of Australian parrots; and that probably accounted for its condition when the right honorable member last saw it. Evidently the picture which he drew was intended to convey the impression - which it certainly did convey - that as the result of an unfortunate experience the people of Australia very closely resemble that luckless bird, which had very few feathers left, and was in an almost indecent state. But the most notable speech of all, to my mind, was that of the honorable member for Melbourne (Dr. Maloney). It was refreshing in its candid admission of his inability to grasp the full scope of these measures. I believe that every honorable member who has attempted to consider them in all their ramifications would make the same admission. It is one of the most difficult pieces of legislation of which I have ever had experience.

With other honorable members I appreciate the gravity of the situation of the Government in having to balance the ledger. The first thing to consider is whether the Government has done everything that is reasonably possible to effect economies. There are two main conditions which must be fulfilled, if the present situation is to be grappled with. In the first place we must spend less, and secondly, we must raise extra revenue. To my mind the curse of the Commonwealth is the extent to which the community has been divided into sections, each with its peculiar interests, and with these interests alone are the respective groups concerned. It is impossible in these days to obtain a straight put Commonwealth opinion on any subject; I mean, of course, an opinion formed with regard only to the general interests of the people. Therefore, the effecting of savings becomes an exceedingly difficult process. Whenever it is suggested that economies should be made by one sec- tion, those affected cry out, “By all means effect economy in any other direction you please, but not in this “. Similarly, when taxation is proposed, various sections exclaim, “By all means tax, but don’t tax us “. I desire to emphasize what has been well said by the honorable member for Wimmera (Mr. Stewart). If we are to grapple successfully with out present difficulties we must rise superior to party considerations.

The most memorable meeting that i have ever attended was that held in the Melbourne Town Hall in 1914, immediately after the declaration of war. Gathered on the platform were representatives of every shade of religious and political opinion, and they spoke as one man, and with one heart. The enthusiasm of the meeting was extraordinary. The sentiment by which the meeting was animated fused the diverse elements, and made them one. It is not necessary to remind the House of the miracles of achievement wrought by the people of Australia by that new enthusiasm, which elevated the community, for the time being, above petty individual and sectional interests, and made them one in their desire to further the interests of their country. Is there not a parallel between the condition of affairs obtaining then and now? We are faced with an industrial and economic situation of the gravest possible kind. Never before has our position been more dangerous than now. The danger may not be so obvious as that which threatened in 1914, but it is none the less real, and I am convinced, by the logic of facts, that we shall not surmount our present difficulties unless we sink our petty party differences and take counsel together to determine the best method of facing the situation. As the honorable member for Wimmera has said, remedial action will probably involve the formulation of a policy that will be in the highest degree unpopular; but, standing shoulder to shoulder, we ought to be able to commend such a policy to the people. If such action be taken, I am sure that they will respond as they did in the awful years between 1914 and 1918.

I confess, with the honorable member for Melbourne (Dr. Maloney), that I find it exceedingly hard to grasp the significance of this series of bills. That they are drastic proposals is unquestionable, and I agree with the honorable member for Wimmera that we should have had more time than has been allowed for their consideration. I understand that the Prime Minister is to meet a deputation to-morrow representing the Interstate Taxpayers Association, which will recommend that the operation of the tax be postponed until all the business interests of Australia have been consulted.

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

– But the tax is already being collected.

Mr MAXWELL:

– It is extraordinary that it should have been put into operation before Parliament has declared whether or not it favours this form of taxation.

In the short time that I have had at my disposal I have studied the history of the sales tax. I find that it has been tried throughout the centuries from the time of the Romans, and almost as often as it has been imposed it has been incontinently discarded. It was adopted in Germany in the seventeenth and eighteenth centuries, but it was found to operate so inequitably that it was soon abandoned. France and other countries have had to turn to it as a last resort in order to meet very grave situations, and Germany, too, has recently re-imposed the tax; but this country found its inequalities to be so great that it has imposed, in addition to it, a tax on luxuries at a much higher rate than before, with a view to equalizing the burden of the sales tax. On several occasions when the tax was levied in France, it was abolished. One writer, in the time of Louis XIV., remarked that it was so unpopular that the mere mention of it roused the people to a fury.

I shall point out a few matters in connexion with this legislation that are difficult to understand’. It is mandatory on all manufacturers and wholesalers in Australia, on the passing of the act, to have their names registered and to obtain a certificate. Assuming that the bill contains a definition of “manufacturer”, I should like to know whether the definition covers such a case as one that I have in my mind. I am thinking of the hard-working widow of a soldier, who, in order to maintain her family, adds to her income by baking cakes.

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

– Her establishment would not be regarded as a factory unless she employed labour.

Mr MAXWELL:

– If the definition is clear on that point, I am satisfied.

It is proposed to give the Commissioner of Taxation extraordinary powers in regard to the lodging of security by manufacturers and wholesalers when applying for certificates. The security must be “to the satisfaction of the Commissioner”. No limitation is fixed to the amount, nor is any indication given of the nature of the security that will be required. In the Canadian act there are precise provisions, both as to the extent and as to the nature of the security required from applicants for certificates. The minimum amount of security is 2,000 dollars and the maximum 15,000 dollars. The security must be a chartered bank or by bonds of an incorporated guarantee company authorized to do business in Canada, or by deposit of bonds issued by the Canadian Government. It appears to me to be highly desirable that we should define in this bill the amount and nature of the security required from applicants for certificates.

I agree with honorable members who have said . that this . is essentially a bill for detailed consideration in committee. I hope that at that stage of it modifications will be agreed to. But I should be far more satisfied if the Government would, even now, agree to postpone further consideration of the measure until it had been thoroughly examined by the persons who will be vitally affected by it. If, after the combined experience of all these interests had been drawn upon, a sales tax measure were drafted which was reasonably acceptable to them, it would be much more likely to be universally acceptable.

Question - That the bill be now read a second time - put. The House divided. (Speaker - Hon. Norm an Makin.)

AYES: 40

NOES: 25

Majority…. 15

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 -

) In this act unless the contrary intention appears “ goods “ includes commodities.

Mr LATHAM:
Kooyong

.- I move -

That after the word “ commodities “ the following definition be inserted: - “ Goods applied to his own use “ shall include goods transferred by the taxpayer into stock for retail sale by him, and “ applied to his own use “ shall hare a corresponding meaning.

Mr Scullin:

– I should be obliged if the Leader of the Opposition would agree to the temporary postponement of the further consideration of this clause. The Government is endeavouring to meet the point to which his amendment is directed.

Mr LATHAM:

– I am quite willing to accede to the wish of the Treasurer.

Amendment - by leave - withdrawn.

Clause postponed.

Clauses 4 to 10 agreed to.

Clause 11 -

  1. Every person who is,at the commencement of this act, a manufacturer or wholesale merchant shall, within 28 days after that commencement, become registered as prescribed, and give security to the satisfaction of the Commissioner for compliance with the conditions of the certificate.
  2. Every person who becomes a manufacturer or wholesale merchant after the commencement of this act shall, within 28 days after he becomes a manufacturer or wholesale merchant, become registered as prescribed, and give security to the satisfaction of the Commissioner for compliance with the conditions of the certificate. (7.) In respect only of the period commenceing on the first day of August One thousand nine hundred and thirty and ending on the twenty-eighth day of August One thousand nine hundred and thirty the following provisions shall apply: -

    1. Any person required by this act to be registered shall be deemed to be a registered person until in fact so registered;
    2. ) Every person so deemed to be a registered person shall, upon every purchase of goods by him for the purpose of sale, or for use in the manufacture of goods for sale, certify in writing to the vendor that the goods are purchased for that purpose ;
    3. Where in respect of any sale of goods the purchaser so certifies he shall be deemed, for the purposes of this act, to have quoted his certificate in respect of the purchase of those goods, and where he does notso certify he shall be deemed not to have quoted his licence.
Mr GARDNER:
Robertson

.- I wish to refer to the security to be given “ to the satisfaction of the Commissioner “ for compliance with the conditions of the certificate. This provision was referred to by the honorable member for Fawkner (Mr. Maxwell) in his second-reading speech. It is somewhat vague, because we do not know what form of security is required. If a bond of £100 is required, that will inflict a hardship upon many of the small manufacturers. I understand that there is a similar provision in the Entertainment Tax Act, but the amount of security is stipulated. In this case we are somewhat in the dark. It has been suggested that an insurance policy might be accepted as security. I wish to know from the honorable the Treasurer what is the exact position.

Mr.SCULLIN (Yarra- -Prime Minister and Treasurer) [4.16]. - Underthis clause every person who is a manufacturer or wholesale merchant shall give security to the satisfaction of the Commissioner for compliance with the conditions ofthe certificate of registration. Obviously security that would be satisfactory in one case would not be satisfactory in another case. The amount of security required from a small trader would not be so large as that required from a merchant with a big business. This is really a matter of administration, and the Commissioner has to be satisfied as to the amount of security.

Mr Francis:

– What form will the security take?

Mr.SCULLIN.- The amount of the security would depend upon the nature and amount of business being done.

Mr LATHAM:
Kooyong

.- This clause requires that every manufacturer or wholesale merchant shall give security to the satisfaction of the Commissioner for compliance with the conditions of the certificate. An undertaking is not security. What is required under this clause is that some security for the performance of certain obligations shall be given. That security must take the form of a pecuniary guarantee by some other person, so that in the event of default a sum of money shall be available to satisfy the requirements of the law. It is not a common practice in taxation legislation in Australia to require security to be given for the payment of taxes. There is no such provision in the Land Tax or Income Tax legislation. Where goods are released from the custody of the customs into the hands of the importer without duty being paid, and are allowed to be stored by the importer, then, of course, security has to be given. There are provisions in the Customs Act for what are called customs securities.

Mr Crouch:

– There is a similar provision in the Entertainments Tax Act.

Mr LATHAM:

– That is so. Where a particular form of paying the tax in a lump sum after a certain period is adopted, then security is given. This legislation imposes an indirect tax, and, therefore, is similar to the Customs Act ; but I suggest, that there are distinctions that should be drawn between this legislation and customs legislation. In the case of the customs legislation the majority of importers never give security at all. There is no need for them to do that. It is something which may be required in certain circumstance.*. But this clause is to have universal application. All lawyers are accustomed to the giving of security for good behaviour, for compliance with an order of the court, or for the proper administration of an estate. The giving of securities costs money, unless a friend, who is able to prove that he is financially substantial, is prepared to come forward and give the required bond. Accordingly, to require security from ordinary individuals who are wholesalers or manufacturers in Australia, is to impose upon them a considerable expense, but it will be a fine thing for the companies which engage in this form of business. I should like to know why it is considered necessary that such security should be given at all. Of course there are risks of losing revenue, and the giving of security diminishes those risks. Butthis clause applies to wholesalers and manufacturers, who are more or less established. If it applied to retailers, who may be here to-day and gone tomorrow - we all know the vicissitudes of retail shops in the suburbs for example - we could understand the necessity for security.

Mr Scullin:

– This provision applies to persons other than merchants and manufacturers. It may apply to an importer.

Mr LATHAM:

– The clause with which the committee is dealing requires every person who is a manufacturer or a wholesale merchant, to give security. I am directing my remarks to the clause. Wholesalers and manufacturers have a certain degree of stability. I do not say that they are all able to meet their obligations, but, generally speaking, they are a substantial class. Before a man becomes a manufacturer or a wholesaler he generally has to be in a fairly large way of business. To require all wholesalers and manufacturers 10 obtain guarantee bonds from ner lain companies– because that is what this clause provides - is to put a lot of money into the pockets of those companies. I doubt whether that is worth while, having regard to the small risk of evasion in the case of relatively stable businesses. A3 an alternative, I suggest that consideration be given to the fixing of a small sum as the minimum security. In some businesses a tax of 2£ per cent, will not represent a very large sum. Payments are to be made monthly. I should shudder to think that securities were to be demanded in Australia according to Canadian standards. The minimum in Canada, I understand, is 2,000 dollars or £400. To obtain bonds for that amount would cost a considerable amount of money. Is that worth while having regard to such risks as there may be of evasion? I ask that this provision be seriously re-considered, especially at the present time when it is undesirable to impose further charges on industry.

Mr West:

– Could not a bond be given for security?

Mr LATHAM:

– A bond has to be paid for, and it can be obtained from guarantee companies, insurance companies, trust companies, and the like, which do this class of business. Of course, there is a charge for the risk assumed.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– This principle is applied in the Entertainments Tax Act. The amount of the security is based on the monthly average business of the manufacturer or wholesale merchant. The minimum is £100, and the maximum £1,000. A bond of £100 is not a large guarantee.

Mr Gregory:

– Why not insert a minimum and a maximum security in the bill?

Mr Latham:

– The stipulating of a sum of not less than £100, and not exceeding £1,000, would meet the position.

Mr SCULLIN:

– I am prepared to accept an amendment on those lines.

Amendment (by Mr. Latham) ‘ proposed -

That after the word “ Commissioner,” subclauses 1 and 2, the words “ in an amount not less than one hundred pounds, and not more than one thousand pounds “ bc inserted.

Mr HAWKER:
Wakefield

.- 1 suggest that the minimum be £25. The tax is payable monthly, and the Commissioner will require to hold bonds only in respect of payments for one month. That being so, a bond of £100 as a minimum would be unjust.

Mr Scullin:

– It would be a small amount from the point of view of the wholesale merchants and manufacturers.

Mr HAWKER:

– These persons will not all be large traders. The Commissioner should be allowed to exercise his discretion. We have uo evidence of the Commissioner being recklessly lenient in fixing the amount of securities.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– This provision covers not only monthly payments of the tax, but also the whole year’s registrations. Surely £100 is not a large sum as a guarantee.

Mr Latham:

– The collection is- made every month, so that there can be only one month’s payment outstanding.

Mr SCULLIN:

– Yes; but this provision covers registration also.

Mr Maxwell:

– There can be a check made every month.

Mr SCULLIN:

– Not necessarily, lt would not be possible to have a monthly check of the wholesalers and manufacturers’ books. A check may not take place more than once a year. Returns might be understated for six or twelve months. This provision involves more than one month’s taxation.

Mr CROUCH:
Corangamite

.- I ask the Prime Minister to give further consideration to this matter. Guarantee companies charge 2£ per cent.; that means that a bond for £100 will cost £2 10s., and one for £1,000, £25. Many small business men will be unduly penalized if required to pay £25 per annum before they can trade. I have in mind a man who has just commenced in a small way to manufacture special bicycles; for a time his turnover may not amount to £100 per annum, and to require him to pay £2 10s. for a bond of £100 would be absurd. I remind the Prime Minister also that the payments for these bonds are made largely to overseas companies.

Mr GREGORY:
Swan

.- The minimum security should be as low as possible. There will be no danger in a low minimum, because the fixing of the security will be at the discretion of the Commissioner. It would be wrong to require small manufacturers to pay £2 10s. to a guarantee company or a bank: indeed some of them might not be able to get the backing of one of these institutions. This charge will add to the cost of production.

Mr MAXWELL:
Fawkner

.- I ask the Prime Minister to consider the minimum security in the light of the definition of “ manufacturer “ which may cover a woman whose time is spent in making cakes for retail shops.

Mr Scullin:

– I intend to propose an amendment exempting a manufacturer whose turnover is less than £1,000 per annum, and a home worker whose turnover does not exceed £500. I am willing to accept a minimum security of £50.

Mr FRANCIS:
Moreton

.- I cannot agree that the guarantee required by the Commissioner shall be not less than £50 or more than £1,000. Even £50 is too high a minimum. It represents, at 2^ per cent., a monthly turnover of £2,500. Consideration should be given to merchants and manufacturers whose turnover is £1,000, or even much less per month. A minimum of £25 would meet all requirements, because all the Commissioner needs is security for one month’s tax. If the registered person does not pay within seven days of the end of the month, the Commissioner can call him to book.

Mr Scullin:

– After all, the Commissioner will have discretionary power as to the security to be required. I will accept £25.

Mr Latham:

– In those circumstances, I ask leave to amend my amendment by substituting “ Twenty-five “ for “ One hundred “.

Leave granted.

Amendment amended accordingly, and, as amended, agreed to.

Mr GREGORY:
Swan

.- I move

That the word “August” (first occurring) sub-clause 7, be omitted with a view to insert in lieu thereof the word “September”.

The object of the amendment is to postpone the date of commencement of the act, and, I think, every member of the committee would agree to increase

[ISO]

the rate if necessary in order to make good any resultant loss of revenue. I have never previously known proposed legislation to be put into operation before it had received the sanction of Parliament. Because of the representations that have been received from all parts of Australia, it is quite possible that another place will insist that the tax shall not operate until Parliament has approved of it.

Mr FRANCIS:

– What will happen to the taxes already collected?

Mr GREGORY:

– The tax has been in operation for only a few days, and there is yet time for the Government to rectify its error. Parliament should not allow the Government to impose taxation. This proposal is worse than ordinary retrospective legislation, because the trading community has had no opportunity to learn what the Government proposes. Even to-day, telegrams have been received asking honorable members to forward copies of the bill to different parts of Australia, so that the business people may know what the proposals of the Government are. The haste with which this tax is being imposed is outrageously unjust. If the Prime Minister says that a postponement of the tax will involve an increase of the rate to 3 per cent. I shall not cavil at that, because the people will, at any rate, have had at least a fortnight in which to prepare for the operation of the tax. So far, no taxation has been paid to the department. Some merchants may have added 2 per cent, to their invoices, but that can be refunded. The only amounts which may not be recoverable will be those which have been charged by a few retailers. I plead with the Prime Minister to agree to the amendment, and let the people have the satisfaction of knowing that before the tax was collected from them it was approved by Parliament.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The hurried application of this tax has worried me as much as any honorable member, and I have explained in my second-reading speech that the delay was caused by constitutional difficulties which involved the drafting of nine distinct bills. But for that obstacle the tax would have been introduced two weeks earlier. Fortunately, the initial difficulties are being overcome. Nevertheless, I would gladly accept the honorable member’s amendment did it not involve a loss of £500,000 of revenue. Bie has suggested that the loss might be recovered by increasing the rate. I wish to avoid an increase if possible. We have to bear in mind two facts, (1) that delay in operation will mean a loss of revenue which must result in an increase of the rate, and (2) any increase of exemptions also will mean a loss of revenue, and, eventually, an increase of the rate. We desire to spread the burden of the tax as widely as possible. The Government has felt obliged to exempt primary products, and, because of that, the percentage has been fixed at per cent., whereas lj per cent, would, probably, have sufficed if the tax had been spread over all sales. I ask honorable members not to press this amendment, because I cannot accept it.

Mr WHITE:
Balaclava

.- I make a final appeal to the Prime Minister to give favorable consideration to the amendment of the honorable member for Swan (Mr. Gregory). At the present moment we do not even know what exemptions will operate. No doubt, a’s the bill goes through committee, numerous amendments will be made to the list of exemptions. The sales tax is already being charged on many lines which may ultimately be exempted. This will involve a refund of the tax by the Taxation Department, and will impose a considerable amount of extra work on traders. I have here a telegram which I received from the president of the Melbourne Hardware Traders Association. It is as follows : -

Largest meeting hardware trade ever held in Melbourne. Unanimously protest against imposition of sales tax. Trading conditions too bad to pass it on. Impossible merchants to pay it out of profits. Result heavy losses. Urge you make strenuous opposition.

The Prime Minister should confer with the leaders of commerce as to the best date upon which his tax should come into operation. There seems to be a deplorable amount of confusion as to what constitutes a wholesale firm, and this and other points should be cleared up before the tax becomes operative. If the tax vere deferred for one month the Govern ment would lose a certain amount of revenue, but this would be more than compensated for by the greater security which would be felt by traders, and their better understanding of the taxation proposals.

Mr WEST:
East Sydney

.- I appeal to honorable members to display a little wisdom in the consideration of this amendment. They should remember that the tax is already in force. This bill is somewhat similar to an excise tariff schedule. If we give the people a month’s notice of its coming into force they will take steps to avoid .as much of the taxation as possible. It is an extremely difficult matter to get a refund from the Government. Once the money is in the Treasury it is unlikely that the taxpayers will get it back. Some date must be fixed for the coming into operation of this tax, and if the date were now altered it would be unfair upon those who have already paid. The honorable member for Swan (Mr. Gregory) will not win any credit for proposing this amendment. People will merely ask how many people does he know who are likely to benefit if the amendment is accepted.

Mr PROWSE:
Forrest

.- The Prime Minister might well accept ‘ the amendment of the honorable member for Swan (Mr. Gregory), and the revenue could be made up by doubling the impost for the month of September. I have no doubt that traders and the public would prefer to submit to such a double impost, rather than endure the confusion which must necessarily follow the immediate introduction of the tax. Clause 13 of the bill states that -

Any pei-son carrying on business as a manufacturer or as a wholesale merchant who fails within the times specified in section 11 of this act to become registered under this part or, fails within the time so specified to apply for a fresh certificate, or, in either case, to give security to the satisfaction of the Commissioner, shall be guilty of a separate offence for each day during which he fails to become so registered or so to apply for a fresh cerficate, or so, in either case, to give such security.

Penalty: One hundred pounds for each separate offence.

Our citizens desire to be law-abiding, and our desire should be to make it easy for them to keep the law. This is putting too great a pressure upon them. If we deferred the operation of the tax’ until September, revenue need not be lost, and the people would become acquainted with their liabilities under the act. I trust that the Prime Minister will reconsider his decision, and make the tax operate as from the 1st September, in accordance with the amendment of the honorable member for Swan.

Mr MACKAY:
Lilley

– I very much regret that it is necessary to impose this sales tax on the people, but it would cause a great deal of embarrassment if its operation were now postponed. We know that weeks of notice have been given ; merchants have been altering their price lists; they have been selling goods to retailers, and the retailers have, in some cases, been collecting the tax. Seeing that the general public are paying the tax, I am anxious to ensure that the Government shall get the benefit of the money collected. If the suggestion for postponement had come .before the 1st August, it would have had much to recommend it, but now that the money is being collected and industry is conforming to the tax, it would be foolish merely to postpone . it. I would prefer complete abandonment of the sales tax, and to see the amount of the tax saved by reduced expenditure.

Amendment negatived.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

.- - I move -

That the words “twenty-eighth day of August, One thousand nine hundred and thirty,” sub-clause 7, he omitted with a view to insert in lieu thereof the words, “ expiration of 28 days after the commencement of this act.”

The time allowed for registration will be 28 days after the commencement of the act, not 28 days after the 1st August.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 12-

  1. A registered person shall quote his certificate in such manner and under such circumstances as are prescribed.
  2. A registered person shall not quote his certificate except as prescribed.

Penalty: One hundred pounds.

Mr ARCHDALE PARKHILL:
Warringah

– I think that we should have some explanation from the Prime Minister as to what is meant in this clause by the words, “ shall quote his certificate “ and “ shall not quote his certificate”. In clause 4 of No. 2 bill the liability to taxation rests on a person who has not quoted his certificate. In No. 3 bill certain conditions apply to persons who do not quote their certificates. In clause 4 of No. 5 bill the trader is not under the obligation of producing his certificate; while in bill No. 6 he is required to quote it in connexion with the assessment of value for taxation purposes. Again, in bill No. 8 the taxpayer is required to quote his certificate.

Mr Latham:

– And if he does, certain results follow.

Mr ARCHDALE PARKHILL:

– That is so. An explanation from the Prime Minister in respect to this matter would be appreciated by traders.

Mr Scullin:

– What reference is there in No. 7 bill to quoting the certificate?

Mr ARCHDALE PARKHILL:

– In clause, 4 of that bill the following passage occurs : -

For the purposes of this act, the sale value of goods which are sold on or after the first day of August, one thousand nine hundred and thirty, shall be the amount for which those goods are sold by a registered person or to a person who has not quoted his certificate in respect to the purchase of those goods.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The object of quoting a certificate is to show that the trader is a registered person. A sale to a registered person is not taxable, while a sale to an unregistered person is. In respect of transactions to which the tax applies - that is, when a trader sells to a person who is not going to re-sell - thai person does not quote his certificate. If he buys the goods for his own use he is not permitted to quote his certificate because, in that case, the tax will apply.

Mr HAWKER:
Wakefield

.v The explanation of the Prime Minister is clear so far as it goes, but it would be helpful if he would indicate whether a trader who holds a certificate will be compelled to quote it on every occasion when taxable goods are the subject of a transaction. In some of the later bills there will be a discrepancy regarding the price or sale value on which the tax will be assessed. This discrepancy will be apparent as between the retailers who import for their own use, and who withdraw the goods under Assessment Act No. 5, which contains a special formula; and wholesalers who are not assessed for the tax until the goods reach another stage in their journey to the consumer. Some persons think that the formula in No. 5 bill is letting the retail importer off too lightly, while some retailers think that the conditions are too drastic in respect of some goods. If the wholesale importer did not quote his certificate, he would be on the same basis in regard to the payment of the tax as would the retail importer. It would be of considerable assistance to the committee, in considering the effect of the bills as a whole, if some clear indication were given of the circumstances under which certificates will have to be quoted.

Clause agreed to.

Clause 13 (Failure to register or give security) .

Mr MORGAN:
Darling Downs

– I draw attention to the particular severity of the penalty that is fixed by this clause. The clause provides that any person carrying on business as a manufacturer or as a wholesale merchant who fails to register shall be guilty of a separate offence for each day during which that failure continues; and the penalty is £100 for each separate offence.

Mr West:

– That is the maximum penalty.

Mr MORGAN:

– The effect is to provide a penalty of £100 a day. This will conceivably involve in serious embarrassment a number of people who are trading in distant parts of the continent. Notice has to be given within 28 days after the commencement of the act. Some persons may be prevented from giving that, notice by circumstances over which they have no control, and they will be liable to a penalty of £100 a day for each separate offence. That is altogether too extreme a penalty, and it ought to be revised by the committee. Moreover, it is entirely disproportionate to the straight-out penalty of £100 that, is provided for non-observance of any condition of the certificate or the wrongful quotation of the certificate.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The honorable member for Darling Downs (Mr. Morgan) has acted quite rightly in drawing my attention to this matter. At first sight I was startled by this provision. The bill as originally drafted fixed a penalty of £100 for failure to register. It was then pointed out by counsel that large traders would pay the £100 and there would be nothing to compel them to register for that year. To deter large manufacturers and wholesale merchants from failing to register, it is necessary to have a penalty that will make it unprofitable for them to do so. No commisioner who had his senses about him would prosecute a person who failed to register through no fault of his own, or because of an oversight, and no court would inflict a penalty of £100 a day in such a case. That is the maximum penalty, and it has been fixed so as to make it unprofitable for any one to fail deliberately to register. The operation of the act itself will depend upon registration. Without registration there will be no tax. Therefore, if the maximum penalty were £100 for failure to register in a given year, hundreds of traders could escape the tax merely by paying the £100. The Commissioner must be satisfied that failure to register is deliberate before he launches a prosecution ; and he must convince the court that the imposition of the extreme penalties warranted.

Mr GREGORY:
Swan

.- It seems clear that if a person fails to register, a fine of £100 will follow.

Mr Latham:

– No. The Acts Interpretation Act provides that the words that appear in the clause mean “ not exceeding £100 “.’

Mr GREGORY:

– I intended to propose an amendment providing that no offence would be committed if reasons for failure to register were given to the satisfaction of the Commissioner; but if the Leader of the Opposition assures me that the clause will not thereby be improved I shall not proceed with it.

Mr LATHAM:
Kooyong

.- It would be dangerous to provide that a man should not be guilty of an offence if he succeeded in satisfying a departmental officer that it was not hig intention to commit it. Any such provision should lay upon the person prosecuted the onus of proving before the court that he had a reasonable excuse for his neglect. But that, also, in my opinion, would be dangerous. lt would open the door to suck vague matters of opinion that in such a case as this the revenue authorities would be very loath to adopt it. In regard to the other matter that has been raised by the honorable member, the Acts Interpretation Act provides that where a section fixes a penalty, that penalty shall not bc exceeded.

Mr FRANCIS:

– Can the minimum penalty bc ls.?

Mr LATHAM:

– Yes. There is one other observation that I should like to make. A moment ago the Prime Minister said that the whole act depends upon registration, and that without registration there will be no tax. With due respect to the right honorable gentleman, I should like to remove an impression that may be conveyed by the use of those words. Such a statement may be regarded as an invitation to refrain from registration, in the hope that the offence will not be detected. I, therefore, call attention publicly to the provisions of clause 49, which reads -

Any person who, by any wilful act, default, or neglect, or by any fraud, art, or contrivance whatever, avoids or attempts to avoid tax chargeable under this act, shall be guilty of an offence.

Penalty: Not less than £60 nor more than £500, and in addition treble the amount of tax I payment whereof he has avoided or attempted to avoid.

I wish to advertise the fact that those who think that they will escape liability from tax because they happen to avoid registration will find themselves in a very surprising and difficult situation.

Mr NAIRN:
Perth

.- The clause provides that it shall be an offence if any person carrying on business as a manufacturer or as a wholesale merchant fails to give security to the satisfaction of the Commissioner. There is a difference between failing to register and failing to give security. Registration is required for the purpose of preventing manufacturers or wholesale merchants from carrying on their business in a surreptitious manner. The purpose of giving security, however, is to obtain a certificate that will enable the registered person to obtain the benefits of the act. During the first 28 days that the act is in operation there will be many hundreds of people, particularly in the distant parts of the continent, who will not be able to obtain a bank guarantee or a bond from an insurance company. A large number of small manufacturers will find themselves in that position. The certificate of registration can be withheld until the security is provided. I therefore suggest that as the failure to provide security is not really an offence, there is no occasion for imposing a penalty in such a case. I ask the Prime Minister to consider the advisability of deleting that provision.

Clause agreed to.

Clauses 14 to 16 agreed to.

Clause 17-

Subject to, and in accordance with the provisions of this act, the sales tax imposed by the Sales Tax Act, No. 1, 1930, shall be levied and paid upon the sale value of goods manufactured in Australia by a taxpayer, and sold by him or applied to his own use.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I move -

That after the word “ him “ the words “ or treated by him as stock for sale by retail “ be inserted.

This is one of a series of amendments that will have to be made to deal with a point that has given a lot of trouble; that is, the case in which a person manufactures some of his goods for sale by retail in his own shop. According to the advice we had, it seemed impossible at the time to frame a clause to get over this difficulty; but the draftsmen have got over it by providing that, on the transfer of a manufactured article to the manufacturer’s own retail business, the tax shall be chargeable on the wholesale price.

Mr WHITE:
Balaclava

.- A manufacturer of canned or boxed goods may have a box-making plant attached to his factory for the purpose of making boxes, and some of these he might take into use in his own factory. In such a case would the wholesale price be taken as the factory price, plus 10 per cent.?

Mr Scullin:

– In such cases goods would be taken over at their wholesale value, as though they had been sold to a retailer.

Mr LATHAM:
Kooyong

.- I am glad that the Government has accepted the principle of an amendment that I intended to move in order to prevent a manufacturer who sells goods by retail being charged tax upon the retail price, instead of upon the wholesale price, which would be the price at which the goods were sold by his trade competitors. The amendment now proposed by the Prime Minister (Mr. Scullin) meets the case, and I support it.

Dr EARLE PAGE:
Cowper

.- This amendment covers one aspect of the matter; but there is another point on which I should like to have a clear statement by the Minister, to allay a fear on the part of pharmaceutical chemists that they are to be regarded under this measure more or less as manufacturers, because they make and dispense prescriptions, although they are essentially retailers.

Mr Scullin:

– We are making provision for the exemption of retail chemists; but wholesale druggists will not be exempted.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 18- (1.) For the purposes of this act, the sale value of goods which are sold on or after the first day of August, One thousand nine hundred and thirty,’ shall he the amount for which those goods are sold to an unregistered person, or to a registered person who has not quoted his certificate in respect of that sale. (4.) For the purposes of this section, the amount for which goods are sold shall not be taken Jo include any amount payable in respect of sales tax.

Amendment (by Mr. Scullin) agreed to-

That after the word “goods”, first occurring, sub-clause 1, the following words be inserted: - “not being goods to which the next succeeding sub-section applies”.

Amendment agreed to.

Amendment (by Mr. Scullin) proposed -

That after sub-clause (1.) the following subclause be inserted: - “ (1a.) For the purposes of this act the sale value of goods treated by the manufacturer of the goods on or after the first day of August, One thousand nine hundred and thirty, as stock for sale by him by retail, shall be the amount which would be the fair market value of those goods if sold by him by wholesale.”

Mr HAWKER:
Wakefield

.- I support the amendment; but I again ask the Prime Minister (Mr. Scullin) if, in regard to the regulations proposed to be issued under clause 12, he can inform us of the manner and circumstances in which registered persons will be required to quote their certificates. I realize that the Prime Minister is the most overworked man in Australia to-day, and honorable members should show him every possible consideration by refraining from asking for unnecessary information ; but there is some uncertainty in the minds of honorable members, and, to some extent, also, of officials of the Taxation Department, as to whether, under some of the bills, there will be an alternative to quoting a certificate. This point applies more particularly to Bill No. 5; but it probably has relation to all the measures. Is it proposed to make it compulsory in all circumstances for a registered taxpayer to quote his certificate, or will he be allowed the alternative of choosing under which act he pays the tax-? He might prefer to pay it under the formula contained in Bill No. 5 rather than under that found in Bill No. 6.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– As honorable members are aware, each of these bills deals with different transactions. Bill No. 5 relates to the imposition, assessment, and collection of a tax upon the sale value of goods imported into Australia.

Mr Hawker:

– Imported directly by a retailer?

Mr SCULLIN:

– Yes. Bill No. 6 refers to such goods as aresold by the importer.

Mr Hawker:

– That would be a sale by a wholesaler to a retailer.

Mr SCULLIN:

– Yes. A person importing goods not intended for re-sale would have to pay the tax; but if he proposed to sell the goods to another registered person he would have to quote his certificate if he wished to avoid payment of the tax upon the importation of the goods, because the object of the measure is to tax the last transaction by a registered person.

Dr EARLE PAGE:
Cowper

.- I have received many telegrams from various sources, and one that I have from Brisbane merchants reads as follows -

Unless the Sales Tax Bills specifically empower registered firms to pass on the actual amount of sales tax to retailers, which is all merchants seek to recover, by adding it at foot of each invoice, then an all-round increase in prices greater than the tax is inevitable. Kindly reply immediately because present uncertainty and confusion is distressing.

Does the Government intend to do anything to meet this request f

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– We have gone into this matter. The tax can be charged only on the contract price of goods. The manufacturer or wholesale merchant may add the tax to the price of the goods, but the tax may be imposed only on the sale value, otherwise the tax would be charged on the sale value plus the tax.

Mr Maxwell:

– The manufacturer could not pass on the impost qua tax.

Mr SCULLIN:

– That is so. The ta”x could be paid on the contract price of the goods ; but it would require a different form of taxation law; that could not be done under the proposed legislation.

Mr LATHAM:
Kooyong

.- I have suggested the insertion of a new clause to bring about the result desired by the right honorable member for Cowper (Dr. Page). I recognize that I would not be in order in discussing it at this stage; but I hope that honorable members will not suppose that it is impossible to bring about this result. As I understand the matter at present, I cannot see why we should not provide that a person who pays tax on the sale of goods shall show in the invoice the amount of tax for which he is liable by reason of this legislation. The effect of the suggestion that I make in proposed new clause 19a is to prevent an undue exaction from the public, at least up to the point of time at which the sale on which the tax is payable is made. If the tax is included in the price of goods, no one can tell how much he is paying. Increasing the price is a most unsatisfactory way oil dealing with a definite tax of this kind. It is (very probable that unless the suggestion which I have made, or a similar one, is adopted, the public will pay a great deal more, even upon wholesale transactions, than if the law provided that the amount of tax should be shown on the invoice. I propose to discuss this matter more fully when the new clause of which I have given notice is under consideration.

Mr GREGORY:
Swan

.- I saw in the press that the Commissioner of Taxation was of opinion that it would not be possible for the wholesaler to add the amount of the tax at the end of his invoices. The invoices of wholesale drapers and hardware merchants, for instance, contain numerous small items at various prices, and it would be almost impossible to accurately estimate what a 2 per cent, tax on these items would be. In a matter of this sort the proper procedure would surely be for the merchant to show the 2£ per cent, sales tax on the invoice. It would be absurd to suggest that he should add 2 per cent, to each separate item on the invoice.

Mr Latham:

– I am told by the Treasurer that it would not be legal to show the 2^ per cent, in a lump sum at the foot of the invoice, though I cannot see why it should not be quite in order.

Mr GREGORY:

– There is no reason at all why it could not be done. The idea of compelling a merchant to show 2£ per cent, in respect of each item on the invoice is too ridiculous to think about. It would involve, in some cases, showing fractions of farthings. If that practice had to be followed we can be very sure that the merchants would inevery case err on the right side. I know a good deal about the hardware business. Many items handled by hardware houses are sold at fixed list prices, and when a man orders so many lengths of piping, so many bends, and so many taps, he knows exactly what they will cost and acts accordingly. I can see no difficulty whatever in showing the amount of tax in one line at the foot of the invoice.

Mr HUNTER:
Maranoa

.- I suggest that the Treasurer should temporarily postpone consideration of this clause. Like the honorable member for Swan, I believe that no wholesaler will err on his own side if he has to add. 2-J per cent, to the price of each item contained in an invoice.

Mr Scullin:

– There is nothing to prevent a wholesaler showing the total amount of tax at the foot of the invoice, but it would be a different . thing to put a provision in the act to compel him to do so.

Mr HUNTER:

– Persons who trade with wholesale houses know definitely where they stand in regard to prices. Certain lines are sold at the same price by all wholesale houses. If the amount of taxation is shown on each item the retailer may honestly refuse to pay the bill.

Mr Archdale Parkhill:

– Retailers are already refusing to pay this taxation. They have obtained counsel’s opinion which has fortified them in doing so.

Mr HUNTER:

– The trouble is that if a wholesaler cannot show this taxation in a lump sum at the foo.t of his invoice, he will be in a difficulty in claiming a deduction for it in the income tax return which he furnishes to the department, as it is included in his total sales, and lie will have to pay on the total.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The debate on this subject should occur when the Leader of the Opposition (Mr. Latham) moves the new clause of which he has given notice.

Dr Earle Page:

– Surely a fitting place to consider this point is when the clause which provides for the sale value of goods to be taxed is under discussion.

Mr SCULLIN:
YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I wish to make it clear that I am not resisting the proposal of the Leader of the Opposition. There is doubtless a good deal to be said in favour of the principles underlying it; hut I must be guided by the opinions, of counsel on the matter. This bill is intricate, and involves the consideration of certain legal principles. Consequently, the Government consulted Mr. E. M. Mitchell, KC, and Dr. Evatt, E.G., in regard to it. Both of these learned gentlemen have devoted considerable time to it. I am quite prepared to ask the draftsman to give careful consideration to the new clause which the Leader of the Opposition desires to have inserted. But in the meantime, I suggest that the clause seeks to give legal effect to the imposition of a tax upon the purchaser of goods whereas the object of the bill is to impose a tax upon the seller of them.

Mr Hunter:

– Surely the Treasurer does not expect the tax to rest upon the seller?

Mr SCULLIN:

– That is another point. What we have to remember at present is that the object of the bill is to tax the seller and not the purchaser. The constitutionality of doing what the Leader of the Opposition suggests may be questionable, for it may have some bearing on the question of intra-state trade. The Government has looked at this matter from all angles, and while I am pre pared to do everything within reason to meet the wishes of the Opposition I am not prepared to jeopardize the bill.

Dr Earle Page:

– Is the Treasurer certain that the bill is now resting on rock bottom?

Mr SCULLIN:

– Any one who 3aid that he was certain that legislation of this kind would stand the test of expert examination in the law courts would be a super-optimist. The Government has taken all possible precautions to ensure that the bill has been drafted according to well established legal principles. 1 suggest, however, that the debate on the points raised by the Leader of the Opposition (Mr. Latham) should be deferred until we are considering the new clause which he desires to insert.

Mr LATHAM:
Kooyong

.- I should like to refer to two points to which the draftsmen might direct their attention in considering this matter. I quite appreciate that under our Constitution we cannot, in one and the same measure, impose a tax on sellers and purchasers. The object of this bill is to impose a tax on the sales value of goods sold or otherwise dealt with. Because of the various methods iri which goods may be dealt with it has been necessary to introduce a number of bills. The new clause, for the insertion of which I shall move at a later stage, is not designed to impose a tax upon the purchaser. It is designed to provide that the seller, who has paid the tax, or is liable to pay it, to the Government, shall show at the foot of his invoice the amount of sales tax involved in the transaction, and shall have the same right to recover it from the purchaser as he has to recover the cost of the goods that are sold. I do not desire to go into the merits of my proposal at the moment, but merely to speak of the legal aspect of it. A tax is an exaction from the citizen by the Government; it is the imposition of u pecuniary liability upon the citizen which may be discharged by a payment to the Government. A provision which does not require that the payment of the tax shall be made by the purchaser to the Government is not a provision to impose taxation upon the purchaser. That is the first point to which I invite the attention of the legal advisers of the Government.

The other point was referred to incidentally by the Treasurer (Mr. Scullin) who said that it might be suggested that this provision involves considerations in relation to intra-state trade. All the bills that we shall consider in connexion with the imposition of this tax cover intrastate trade. Under our excise powers, we are able to impose taxation on goods manufactured or produced anywhere in Australia. “We have a perfectly general power in that regard. But apart from the excise power we can, under the taxation Dower conferred upon us by section 51 of the Constitution, tax anything at all provided that there is no discrimination between States or parts of States. There is no limitation of our taxing power based on any distinction between interstate and intra-state trade. Our income taxation is imposed irrespective of whether the income is derived from interstate or intra-state activities. Our taxation power is plenary. It is limited only by the procedure requirements of sections 53 to 56 of the Constitution, and by the provision that we must not discriminate between States or parts of States.

Mr Scullin:

– I ask the Leader of the Opposition whether he does not think that the words in his proposed newel a use -

The taxpayers shall have the same right to recover the said amount of sales tax from the purchaser as he has to recover the price of or other payment for or in respect of the said goods - do not really impose a liability upon the purchaser?

Mr LATHAM:

– Yes, but not a tax. The object of my new clause is to provide that if “ A “ pays a tax on goods sold to “ B “, he shall be entitled to show the amount of the sales taxation upon his invoice, and to recover it from “B” in the same way that he has the right, to recover the cost of the goods sold.

Mr Scullin:

– But the amount that would be shown at the foot of the invoice in that way would not be the amount of the sale?

Mr LATHAM:

– No; but the invoice would show the amount for which the goods were sold, and, separately, the amount of taxation payable upon the goods. These hills deal only with sales.

My proposed new clause reads as follows : - 19a. In the case of a sale by a taxpayer by reason whereof the taxpayer becomes liable to pay sales tax, the taxpayer shall state upon the invoice delivered by him to the purchaser of any goods from him upon the sale value of which he is liable to pay sales tax, the amount of sales tax payable in respect thereof, and the taxpayer shall have the same right to recover the said amount of sales tax from the purchaser as he has to recover the price of or other payment for or in respect of the said goods :

Provided that where the said price or other payment is payable by instalments the amount of sales tax shall be recoverable at the same time as the first instalment is recoverable.

If that clause were inserted in the bill, “ A “ would still have to pay the sales tax, but he would have the right to recover the amount of it, just as he has a right to recover the amount for which his goods are sold.

Mr WEST:
East Sydney

– I cannot see why there should be any difficulty about the imposition of this tax. The big stores in Sydney will doubtless display notices to the effect that sales taxation has been paid in respect of all goods sold by them. If a retailer sells a pair of child’s socks for 2s. the sales tax will amount to about id. It would save a lot of confusion and inconvenience if the tax were paid on, say, £100 worth of goods. If the retailer, when he bought £100 worth of goods, paid a sales tax of £2 10s., he would then be at liberty to dispose of those goods without the inconvenience of working out the tax on each individual sale. When I had a business, every article that I purchased was registered. The same principle should be applied in connexion with the disposal of goods by the ordinary retail businesses and warehouses. Imagine the confusion on a Friday night that will exist, say, in a big drapery establishment, when, in respect of every article that it sells for, say, ls. or less, the sales tax has to be calculated and charged. That is a ridiculous proposition. This tax, like the tariff, will operate indirectly, and will, therefore, not cause much inconvenience to the general public. The income tax operates directly, and is levied yearly. That causes much heartburning and financial stress for the time being; but no man, when he is drinking a glass of beer, objects to the indirect contribution that he is making to the customs revenue.

Mr WHITE:
Balaclava

.- Before the Prime Minister submits the proposed new sub-clause to his officers for revision, I wish to say a word or two about the desirability of keeping the 2½ per cent. tax as a separate item. If that is not done it may give rise to this position. Some firms, say, in the clothing trade, may keep the 2½ per cent. tax as a separate item, but others, who do not show the tax separately on their invoices, may take advantage of that by instructing their travellers to submit to their customers inferior goods under the guise of better quality goods, and to claim that the price of the sales tax has not been added. The sales tax should operate equitably. If it is shown on the invoice, any firm will be able to see exactly what sales have taken place, and the work, both of the trading community and the Government officials who are responsible for the collection of the tax, will be much simplified.

Amendment agreed to.

Amendment (by Mr. Scullin) agreed to-

That, at the end of sub-clause 4 the following words be added: - “but, when the goods are sold in bond, shall be taken to include the amount of any duty of excise to which the goods would be subject upon entry for home consumption.”

Clause, as amended, agreed to.

Clause 19 agreed to.

Clause 20-

Notwithstanding anything contained in the last preceding section, sales tax shall not be payable under this act by the person specified in that section upon the sale value of -

goods sold by him for export by the purchaser from him or exported by him for sale after export;

goods, being primary products which are derived directly from operations carried on in Australia in -

mining;

the cultivation of land;

the maintenance of animals, poultry and bees;

iv ) fisheries ; or

timber getting, and which have not been subject to any process or treatment resulting in an alteration of the form, nature or condition of the goods; or

the goods specified in the first schedule to this act ; or

goods in so far as they are the subject of a sale to or by the Government of the Commonwealth or a State, or to or by any authority under any such Government.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I move -

That after paragrapha the following paragraphs be inserted: - “(aa) goods sold by a dispensing chemist who sells goods exclusively by retail; (ab) goods, being medicines, sold by a society duly registered under any Friendly Societies’ Act of the Commonwealth or a State; (ac) goods made to the order of individual customers by persons who sell exclusively by retail; or (ad) goods sold exclusively by retail by an individual who manufactures some or all of those goods and total value of whose average yearly sales is not, or would not be, in the opinion of the Commissioner, in excess of One thousand pounds; (ae) goods manufactured by a person exclusively in his own home for sale the total value of whose average yearly sales is not, or would not be, in the opinion of the Commissioner, in excess of Five hundred pounds;”.

Those amendments meet the point raised by the right honorable member for Cowper (Dr. Earle Page).

Mr FRANCIS:
Moreton

– I ask the Prime Minister to exempt from the sales tax goods sold to hospitals, and to support my request I shall read a telegram that has been received from the Hospitals Board of Supplies. It is as follows : -

Hospitals Board of Supplies wrote Mr. Scullin 2nd August urging transactions of board be exempt from sales tax as board’s function is solely to act as buyer of goods and distribution of same at cost to Victorian hospitals. The board consists of representatives of hospitals all of whom give services gratuitously. Grateful if you can afford to give assistance to achieve our object.

All the public hospitals throughout Australia are supported mainly by charitable gifts. In addition, special appeals for funds are made by charitably inclined persons and many functions are organized by voluntary workers to supplement these gifts and special appeals. If the expenses of the public hospitals are not met by subscriptions and the result of organized voluntary efforts the loss has to be borne by the State Government, otherwise sick and injured persons would get little relief. Those who receive attention at the public hospitals are not in the main in a position to pay for their treatment. There are three classes of people whom doctors attend. The first class consists of the rich people who can afford to pay for special treatment at private hospitals. The second class consists of middle-class people who are treated at public hospitals and can afford to pay only a portion of the cost of treatment. The third class are those who cannot afford to pay for their treatment at all. This country must indeed be in a sorry plight if it is necessary to tax the requirements of public hospitals. Any government that would attempt to limit the facilities for treatment afforded to the poorer people must be regarded by the general community as unsympathetic and callous. I feel sure that the Government will, in these circumstances, exempt from the sales tax the requirements of public hospitals.

Mr MACKAY:
Lilley

.- I desire to give notice that I shall, when the schedule is before the committee, move an amendment to place on the exemption list all scientific and professional books. There are few booksellers making fortunes. Usually the margin of profit is so narrow as to make this class of business rather precarious. The primage duty alone will considerably increase the price of books in Australia, and if the sales tax is applied to professional and scientific books, the prices charged for them will be almost prohibitive. So one would suggest that works of fiction should be exempt from the sales tax. The booksellers must pass on this tax and, unless scientific and professional books are exempt, a hardship will be inflicted upon students, the parents of whom have, in many cases, made sacrifices to enable them to complete their studies. I ask the Prime Minister to give my amendment, when it is before the committee, favorable consideration.

Mr WHITE:
Balaclava

.- The honorable member for Moreton (Mr. Francis) has asked that the requirements of hospitals shall be placed on the exemption list, otherwise the State Governments’ responsibility in connexion with the upkeep of public hospitals will be increased. I fully endorse all that he has said. The public hospitals are the responsibility, not only of the State Go:vernments, but also of the Federal Go?vernment ; particularly the Caulfield Hospital, the Anzac Hostel, and other hospitals in which treatment is still being given to patients suffering from war wounds. It would indeed be a disaster if the comfort and treatment of those men were curtailed because of increased cost of the requirements of the hospitals brought about by the imposition of the sales tax. I endorse also the request of the honorable member for Lilley with regard to professional and scientific books. I have received a telegram from a bookseller in Melbourne stating that bookselling is a struggling business, and that the sales tax will close his establishment, and render eight persons idle. Apart from that aspect of. the tax, consideration should be given to parents with small means who have to buy educational books for their children at school. If they cannot afford the books more children will be withdrawn from the secondary and public schools, and this will throw a greater burden on the State schools.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I have a good deal of sympathy with the remarks of honorable members. Many proposals for additional exemptions might be received sympathetically by the Government but for the fact that it cannot afford to sacrifice revenue. So far as goods for hospitals are concerned I would be willing to forgo the revenue which the exemption of them would involve, did not the administrative difficulties render such exemptions impracticable. We do not exempt from customs duties articles which the merchants declare are imported for hospitals. Income tax is passed on by the manufacturer or merchant whether he supplies to hospitals or not. Probably the bulk of the requirements of hospitals are supplied by retail firms which have already paid the tax on the goods, and we could not trace those goods back with a view to refunding the tax.

Mr Francis:

– Goods are sold to hospitals on tender, and the quantity could he definitely ascertained.

Mr SCULLIN:

– That is so, but tenders would include many items that are on the exempt lists, The administration of such an exemption would involve great difficulty and prohibitive cost. Again, hospitals would have to be defined. Should private hospitals which charge high fees be exempt? Public hospitals also collect fees from those who. can afford to pay. The department would have to work out what percentage of a hospital’s supplies should be exempt, and what taxable; and so on. In regard to books, it would be difficult todefine what are professional and scientific books. We do not want to involve the Commissioner in the same difficulties as are now experienced in connexion with the censorship of imported literature. I am sorry that these proposals are impracticable, and cannot be accepted.

Dr EARLE PAGE:
Cowper

.- I understand that proposed paragraph ad is drafted to give immunity to small manufactures who retail their own products. The Prime Minister has proposed to exempt such sales if they do not average more than £1,000 per annum. This would not meet the circumstances of bakers. Bread and pastry are exempt, and so are the ingredients of cakes. Would it not be wise to exempt also cakes so that the whole business of a baker would be removed from the operation of the tax? The amount of revenue that would be lost would be insignificant.

Mr Martens:

– What about a manufacturer like George Adams who has 50 or 60 carts delivering cakes to retailers?

Dr EARLE PAGE:

– I recognize that big biscuit factories like Arnott’s and Swallow and Ariell’s cannot be exempted, but I wish to avoid the need for a baker in a small way of business having to keep a complicated set of books to discriminate between the sales of cakes and pastry. Perhaps when the schedule is reached the Prime Minister will agree to include cakes.

Mr SCULLIN:
Prime Minister and Treasurer · YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

– The object of the additional exemption is to obviate the need for pursuing small pastrycooks, and confectioners who manufacture a small quantity of pastry and lollies in their own establishments, and retail them direct to the public. They are really retailers, manufacturing a small proportion of their requirements, and to allow them to escape, a minimum turnover of £1,000 per annum has been specified. In regard to the baker, bread and pastry will be exempt, and he will not be taxed on sales of cakes unless his turnover in respect of them exceeds £1,000.

Dr Earle Page:

– If that is the meaning of the amendment I am satisfied, but I do not think it is.

Mr.SCULLIN.- That is the intention. If it is not accurately expressed I shall have an amendment inserted in another place.

Mr BELL:
Darwin

.- I support the remarks of the right honorable member for Cowper (Dr. Earle Page) regarding the exemption of imported garden and pasture seeds. I recognize that the Government must call a halt to the exemptions at some stage, but the exemption of imported seeds sold to the primary producer is just as important to him as is the exemption of his products. Australia is almost entirely dependent on overseas supplies of clover and English grass seeds, and I urge the Prime Minister to include them in the list of exemptions. Will the right honorable gentleman tell me the meaning of the words “ which have not been subject to any process or treatment resulting in an alteration of the form, nature, or condition of the goods “ ? Is the extraction of metals from ore a process or treatment resulting in such an alteration?

Mr Scullin:

– No, but the conversion of the metal into sheets is.

Mr BELL:

– I understand that timbergetting is the obtaining of timber from the forest, and conveying it to the mill and that timber up to that stage is exempt.

Mr Scullin:

– Yes.

Mr BELL:

– The average saw-miller employs his millhands to bring timber to the mill, and it will be difficult to differentiate between the exempt timber brought from the forest, and the timber that is cut into sizes and sold.

Mr Scullin:

– The miller will merely pay tax on the sawn timber as he sells it.

Mr BELL:

– Where is the exemption of the log between the forest and the mill ?

Mr Scullin:

– The log is the raw material of the saw-miller, and whether he wins it from the forest by the labour of his own employees or buys it from somebody else the saw-miller pays no tax in respect of it.

Mr.BELL. - But the man who, by hand, splits logs into staves, rails, palings, &c., and sells them to the user will have to pay tax?

Mr Scullin:

– I call the attention of the honorable member to proposed new paragraph ad -

Goods sold exclusively by retail by an individual who manufactures some or all of those goods, and total value of whose average yearly sales is not, or would not be, in the opinion of the Commissioner in excess of One thousand pounds.

Mr BELL:

– From that it appears that a man cutting timber in a small way will be exempt, but a man whose turnover is upwards of £1,000 per annum will have to pay the tax. I have sought elucidation on these points at this stage, because I have received many inquiries regarding them.

Sitting suspended from 6.15 to 8 p.m.

Mr BERNARD CORSER:
Wide Bay

– I suggest to the Prime Minister that in the schedule to the bill Australian sawn timbers should be included among the list of articles exempted from the sales tax. The timber-milling industry in Australia is suffering because of slackness of trade, and one of the chief causes of this is, of course, the large importation of foreign timber, which, in the past, has amounted to 500,000,000 feet a year. The Federal Government has done at least something to assist the industry, and the State Governments have also taken action. The timber industry in Queensland has not been able to market the full quota of 61,000,000 feet, which had been fixed as the amount that it was advisable to take from the scrubs each year. Bequests for additional protection have been made to the Federal Government by the millers, the merchants and the Australian Workers Union. Workers who have been affected to the extent of losing their employment are hopeful of the industry being freed of many of its burdens and that others will not be added. State railways have also suffered loss of revenue because less timber is being carried than formerly. I further suggest that to the list of exemptions in respect of materials used for the maintenance of animals, poultry, bees, &c., we should add materials used for the destruction of animal and vegetable pests. Considerable quantities of sheep and cattle dips are used by farmers, and fruit-growers have occasion to buy materials for spraying fruit trees. In order to assist the primary producers as far as possible the Government should exempt those materials from the operation of the sales tax, and I shall at a later hour move for the exemption of sawn timber, sheep and cattle dips, and sprays.

Mr NAIRN:
Perth

– I had myself intended to move for the exemption of Australian sawn timber. The exemption proposed in the bill is of little practical value to the timber industry. It is proposed simply to exempt timbergetting. Timber is got in two ways; by getting the logs out of the bush, and by cutting them into timber in the mills. Usually, a mill employs its own workers to get the timber out of the forest. J do not know of any case in which the millers employ separate contractors for this work, or purchase their logs from other persons. I shall support the proposal of the honorable member for Wide Bay (Mr. Corser).

Mr MORGAN:
Darling Downs

– I support the proposal that these articles be exempted. An exemption applying simply to timber in the log does not go far enough. The idea in the mind of the Government seems to be that timber-getting ceases when the tree is hewn down and the log drawn to the mills. I contend that the manufacture of timber does not really begin until the log is being sawn at the mill. If the Government is generous in this matter it will concede the point, and allow the exemption to apply from the time the timber is manufactured. With the building trade in the depressed condition it is in to-day, the timber interests can present a very solid case for this exemption. To restrict the exemption to timber in the log would be to take a very short-sighted view of the matter. I also associate myself with the suggestion that sheep dip, and other materials required for combating diseases and pests affecting animals, should be exempted. To allow those materials to remain outside the list of exemptions would be to impose further taxation on the primary producer, and that, I understand, the Government desires to avoid.

Mr MACKAY:
Lilley

.- As this clause now stands no effective relief wild be given to the timber industry. It would be absurd to make the tax payable on the .logs brought in from the bush, and again on the timber which went out from the mills. My experience of timbergetting differs from that of the honorable member for Perth (Mr. Nairn). In the forest areas with which I am familiar, gangs of men usually cut the logs in the bush and sell them to the saw-millers. If the saw-millers are required to pay the tax on the product of their mills the price of timber will be considerably increased. Undoubtedly, all this taxation will be passed on to the public, and this, in turn, will increase the cost of living. The timber industry is one which deserves sympathetic treatment by the Government. I urge upon the Minister representing the Treasurer that he should include sawn timber among the list of exempted articles.

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

– At an appropriate time I propose to move that oatmeal and rolled oats be exempted from the operation of this tax. I cannot understand why the Government should exempt wheat and wheat products, and make the tax apply to oat products. The production of wheat and oats is really very similar. They are gown, harvested and milled in practically the same way, the only difference being that the milling of oats is a little more complicated ‘and expensive than the milling of wheat. Both products, when milled, are bagged and sold to the public in the same way. The Government might just as well impose the tax on chops or bacon and eggs, as on oatmeal or rolled oats, which are very widely .used throughout Australia as a breakfast food. Not only will this tax on oat products, if allowed to remain, tend to increase the cost of living, but it will also impose a hardship on the primary producer who grows oats. To begin with he is in all things on the same level as the man who grows wheat, but wheat products will be exempt. Oats for milling purposes can be grown only in districts with a favorable rainfall In South Australia, in my electorate, there ‘are at Mount Gambier two oatmeal mills, which have been operating for a great number of years, and which handle tens of thousands of bushels of oats each year. The oat-grower has never sat on the doorstep of Parliament seeking concessions by way of a bounty or any other kind of government assistance. These men have been prepared to take the rough with the smooth, and, frequently, they have had one rough year after another. I hope that the Government will not do anything disadvantageous to them. For some reason, there is to be an exemption in the case of semolina. I have not the slightest idea of what are the ingredients cf semolina, but I believe that it is a breakfast food. If it is made from flour, why should it be exempt and sales of rolled oats and oatmeal be subject to the tax? At the appropriate time I shall move for the inclusion of rolled oats and oatmeal in the list of exemptions.

Mr WHITE:
Balaclava

.- All that the honorable member for Barker (Mr. M. Cameron) has said in regard to oatmeal and rolled oats applies equally to whole-meal and meal products, loose or compressed, manufactured in Australia for human consumption. They are breakfast foods, and come within the same category as the others that have been mentioned. I do not know who suggested that semolina should be exempt; probably it is a regular breakfast food of members of the Government. As this is exempt, the exemption should also apply to the closely allied foods mentioned by the honorable member for Barker and myself.

Mr D CAMERON:
BRISBANE. QLD · NAT

. -The Brisbane Merchants Association has written to me on behalf of those of its members who are engaged in the wine and spirit trade in regard to containers which are returnable by customers. The letter reads as follows : -

It is a custom of the trade, where wines or spirits are sent out in bulk, to charge tha containers to the customers as a record only, on the understanding that this container is always credited at full value when returned empty by the client.

These containers are practically portion ‘of the merchants’ plant for the delivery of his wines and spirits to his customers, and the value of same represents a very considerable portion of the gross ‘sales value of the wine and spirit business, but, - as same is credited at the full value, there is no profit on sama as would be on an ordinary sale.

We shall be glad if you will place these facts before the Minister, and ask him to provide in the bill when it comes before the House, that the tax shall not be levied on these containers, or, in other words, that the Department of Taxation will accept the net value of the merchants’ sales each month after credits for containers returned have been allowed. The Prime Minister has laid it down that it is not the intention of the Government to levy this tax twice, but in the matter of these containers, which are probably returned every month by a customer, it would mean that if the tax is charged on the gross value of the wines and spirits plus the container, the tax would be paid upwards of twelve times in one year on one container - on the value thereof.

I hope that, before we reach the schedule, the Prime Minister will give me an assurance that the tax will not be charged on these containers every time they are sent out filled with wine.

Mr GARDNER:
Robertson

.- I support the proposal of the honorable member for Balaclava (Mr. White) to exempt whole-wheat and meal products. It is worth noting that a considerable quantity of wheat is used in the making of whole-meal bread; and, as there is likely to be a record harvest of wheat, no handicap should be placed upon its use in that direction.

Mr PROWSE:
Forrest

.-I draw the attention of the Minister in charge of the measure to the absence from the list of exemptions of agricultural machinery, sheep dip and cattle dip. I hope that, when the schedule is under consideration, they and other requirements of the primary producer will be included. If the cost of agricultural machinery be increased, additional obstacles will be placed in the way of the production of that wealth which is so necessary to this country at the present time.

Mr ARCHDALE PARKHILL:
Warringah

– I urge the Prime Minister to consider the necessity of exempting ships from the sales tax. At a later stage I propose to move for their addition to the list. I put it to the right honorable gentleman, that if a container is to be exempt, there is no reason why ships should not also be exempt, because they contain all the produce that enters and leaves Australia, as well as that which is carried round our coasts. If they are subject to the sales tax, the cost of goods will be increased very materially to our primary producers, to whom this country is looking for some relief in these days of economic stress. The Leader of the Opposition (Mr. Latham) pointed out in his second-reading speech that a ship which cost £50,000 in England would be liable to a customs duty of £27,500, a primage duty of £1,375, and a sales tax of £2,325, which would bring the total cost in Australia to £81,200. I submit that this is a reasonable case for exemption. I appreciate the fact that there are many things which the right honorable gentleman would like to exempt, but that he cannot possibly do it if he is to get the revenue that he has estimated will be received. But ships carry goods for the benefit of the whole community, and any increase in the cost of those goods will have to be borne by those of our people who ought to be able to purchase the whole of their requirements at the lowest possible price, so that they may keep down the cost of production.

Mr GULLETT:
Henty

.- I appeal to the Prime Minister (Mr. Scullin) to exempt agricultural machinery. I know that such an exemption would involve the surrender of a substantial sum.; but the case in favour of it is so strong that I am sure it will receive from the right honorable gentleman his serious consideration. I referred to this matter during the budget debate. The Prime Minister will remember that an embargo was placed upon the importation of agricultural implements and machinery, and to show their appreciation the manufacturing companies in Australia agreed to reduce their selling price within the Commonwealth by 5 per cent., on the condition that there would be no increase in the cost of labour and material. Now, however, the Government proposes to place a 2$ per cent, sales tax upon agricultural implements and machinery, and thus make the position an impossible one for the manufacturers. I appeal to the Prime Minister to stand by the agreement that he made with them. If the taxation on the output is increased at the selling point, it will be quite impossible for them to make that 5 per cent, reduction. This tax falls with particular severity on this class of manufacturers, who are retailers and direct distributors. A considerable number of their sales are made on special terms. Of course, interest is included in the time payment terms, and, unfortunately, this tax will be charged on the selling price, plus interest charges. Thus it will have a harsh effect upon the men on the land. The tax, in effect, will probably be increased in some cases from 2i to 3 per cent. Distant States, such as “Western Australia, will especially suffer, because, by the time an agricultural machine is sent by a manufacturer in Victoria to Western Australia, the cost in a new pioneering district will probably be 25 per cent, above the net selling price in Melbourne, owing to the cost of packing, freight, commission, and time-payment terms. This extra cost to the man on the land in Western Australia will represent a discriminatory charge of from 10s. to 12s. 6d. on a machine such as a 10-ft. header, compared with the tax imposed on a farmer in Victoria. One of the Government’s main pleas is that the farmers should grow more wheat; but legislation of this character only handicaps them in their operations. When cornsacks and superphosphates are exempted, why should we impose the sales tax on the agricultural machinery by which the grain is won ! I realize that the surrender of this tax would mean considerable loss to the Treasury; but the policy of the Government should be consistent.

Mr WHITE:
Balaclava

.- I had intended to advocate the exemption that has already been asked for by the honorable member for Forrest (Mr. Prowse). The Prime Minister has been reminded that when certain prohibitions were made, and agricultural implements were included in the list, the manufacturers gave a definite promise to reduce their prices by 5 per cent; but if a sales tax of 2£ per cent, is now levied, that reduction will be lessened to the extent of 50 per cent. I submit that since cornsacks and superphosphates are exempted, agricultural implements should be placed on the same basis. As the Deputy Leader of the Opposition (Mr. Gullett) has pointed out, this tax would fall with particular severity on the farmers in Western Australia, because of the high cost of sending implements there.

Mr PATERSON:
Gippsland

.- The honorable member for Barker (Mr. M. Cameron) gave notice of his intention to submit an amendment to the schedule to place outmeal on the exempted list. The honorable member for Fawkner (Mr. Maxwell) and I agreed that that would be a most desirable amendment. I point out to the Prime Minister that the object of the honorable member for Barker could be achieved in this clause by amending paragraph 6 to make it read “ Goods, being primary products which are derived directly from operations carried on in Australia in and for the maintenance of Scotsmen, animals, poultry, and bees.” That would automatically and inferentially include oatmeal.

Mr STEWART:
Wimmera

.- There is no reference in the schedule to binder twine and sewing twine. A supply of binder twine will be a particularly important article on the farm this season, because many farmers will be cutting a two-years’ supply of hay, and I ask the Prime Minister to include this commodity in the list of exemptions.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– A request has been made in relation to containers that are used many times. I point out that there will be no difficulty in that regard ; the tax will be paid only once. Reference has been made to ships. If an exemption were granted in the sale of ships because they have a long life, the same argument could be applied to machines. The Government has given considerable thought to the exemption of agricultural machinery. It has deliberately avoided applying the sales tax to over £200,000,000 worth of taxable goods in order to exempt the produce of the primary producers, but if many further exemptions are to be made the bill may as well be withdrawn.

Dr Earle Page:

– What about beer?

Mr SCULLIN:

– We imposed on beer a special excise duty which will return more revenue than would be obtained from a sales tax on that commodity. The Deputy Leader of the Opposition (Mr. Gullett) presented a good case, for agricultural machinery, which I had heard earlier in the day, but the exemption of those machines from the sales tax would mean a loss of revenue of £120.000 a year.

Mr Prowse:

– But the farmers would be better off to that extent. They cannot afford to pay the extra impost.

Mr SCULLIN:

– The Government must balance the budget, and it intends to do so.

The Deputy Leader of the Opposition said that we should stand by the agreement with the agricultural implement makers; but I point out that the Government did not undertake not to impose the sales tax on agricultural machinery. If this tax is passed on to the primary producers, they will get their machines at a price 2£ per cent, lower than they were paying before the embargo was imposed on the importation of agricultural implements.

Mr Gullett:

– But the Government has made the 5 per cent, reduction impossible.

Mr SCULLIN:

– I should say, that the sales tax would be assessed on the sale price of a machine at the factory, say, in Melbourne, and that the farmer in a distant State would not be under the special disadvantage mentioned by the honorable member for Henty .(Mr. Gullett), compared with the farmer in the State in which the machine was manufactured. I do not anticipate that freight charges would be taken into consideration in determining the amount of the sale3 tax. Spread over a period of five years this tax on a machine costing £100 would be only 10s. a year. It has been said that we have exempted bags and other things used by the farmer. That is true. I was hoping that we could raise the necessary revenue by means of a sales tax of li per cent.; but owing to the tremendous number of exemptions granted, the rate had to be doubled. The subject of binder twine has been mentioned ; this was raised last week and I had intended to look into it. I have been too busy to do so, but I shall seek an opportunity to consider the request.

Dr Earle PAGE:

– What is the position in regard to imported grass and fodder seeds?

Mr SCULLIN:

– We have exempted Australian seeds, but I am afraid that we cannot extend the exemption to imported seeds.

Mr GREGORY:
Swan

.- The statement of the Treasurer is surprising, having regard to the conditions which prevail in Australia to-day. The market price of metals, wool, and wheat is very low; yet we are expected to export more of these commodities than formerly in order to correct our adverse trade balance. It appears to me that if beer, cigarettes and cigars can be exempt from the sales tax, much more important commodities, such as metals, wheat, and wool, could also be exempt; for the former articles arc luxuries, while the latter are, in some cases at least, necessaries of life.

I urge the Treasurer to give special consideration to the granting of some concessions to the mining industry. The present price of tin, zinc, lead, and copper, as every one who is interested in mining knows, is as low as it has been at any time during the last 30 years at least, yet we expect the mining companies to employ men to win these metals for export.

Mr McTiernan:

– If the companies produced more, could they sell more under existing conditions?

Mr GREGORY:

– That, of course, would depend upon the prices obtainable. I have been asked also to request the Treasurer to make provision for cyanide, explosives, and copper sulphate used as a flotation re-agent in mining to be placed on the exempt list. Copper sulphate is also sold to primary producers for the spraying of fruit trees, the pickling of wheat, and so on.

The Wiluna Gold Mining Company proposes to use large quantities of oil in its flotation plant. This company is operating 400 miles inland, and is already labouring under extreme disabilities. I hope, therefore, that the Government will be able to see it way clear to exempt flotation re-agents.

The price of the metals mined at Broken Hill is, as every one knows, very low, and if we impose additional burdens upon the mining companies there it may mean that they will have to dismiss more men. The dismissal of a single wageearner engaged in primary production involves the dismissal of five other wageearners engaged in other occupations. It is highly desirable, therefore, that we should make it possible for primary producers of all classes to keep in employment as many men as possible. It will be regrettable if the imposition of the sales tax on commodities used in mining operations results in the dismissal of men.

The Government has allowed Oregon used in underground mining operations to be admitted free of customs duty, but it is now to be subject to the primage duty. This will have a very serious effect upon the Broken Hill mining field. In this connexion I have received a letter which contains the following paragraph : -

Already a primage at the rate of 2£ per cent., equal to 2.75 per cent, effective rate, is levied upon all imported timber used in mining. The 2J per cent, sales tax will become 3.375th of the f.o.b. value, making a total tax upon Oregon used underground of 6.125 per cent, of the f.o.b. value. By special decision Parliament has made Oregon for use underground in mining free from all countries. This tax is thus not in accordance with that declared policy.

It must be apparent to all honorable members that we cannot build up an export’ trade in minerals or anything else by placing additional burdens upon industry.

I am particularly desirous that the Government shall add to the list of exemptions from sales taxation, sheep dip, binder twine, and a few other commodities used by primary producers, the taxation of which would not yield much revenue to the Government, but would place additional hardships upon the primary producers. Many farmers, because of adverse conditions, have not had a decent harvest for three or four seasons.

I sincerely trust that the Government will give favourable consideration to the requests that I have made.

Mr LATHAM:
Kooyong

.- All honorable members recognise that the Treasurer is in a very difficult position. This bill was introduced for the purpose of increasing the revenue, and every addition to the list of exemptions must have the effect of reducing the revenue which the Government hopes to receive from this source. At the same time, it seems to me that a distinction is being drawn between various requests for exemption. As the honorable member for Swan (Mr. Gregory) has pointed out, it is essential if the mining industry of Australia is to be maintained, let alone developed further, that it must be allowed to carry on without additional. imposts. Recently this House passed a bill which provided that the Government should guarantee the debentures of the Wiluna Gold Mining Company in Western Australia. Consequently, Parliament is particularly interested in the success of that venture, because the public revenues will be affected by it. But the extra taxation imposed on mining companies by this measure may make all the difference between success and failure to them. I am informed that a sum of £5,000 is involved in the imposition of this taxation upon Oregon used for mining purposes at Broken Hill. Everybody knows the position of Broken Hill at present. The mining companies there are endeavouring to secure drastic reductions in wage rates, because the industry is in such a precarious position. It is the last straw that breaks the camel’s back. The imposition of this taxation may break the back of the mining industry in Broken Hill. Special consideration should therefore be given to that industry, not because the imposition of this taxation may make it less profitable than it is at present, but because it may involve it in complete failure.

There is another matter to which the Treasurer would be wise to direct his attention. It is provided in the bill that sources of power, such as electric current and gas, shall be exempt from this taxation. In Broken Hill and other mining centres compressed air is equally a source of power, and is sold as a commodity, and yet it is not exempt.

Mr Scullin:

– Is not the supply of compressed air a service?

Mr LATHAM:

– A plant has been installed at Broken Hill for supplying compressed air to all the mining companies. Compressed air is a commodity and not a service. Some years ago certain persons exercised their plumbing abilities to lead a pipe round a gas meter, and others exercised their abilities as electricians to alter the electric wiring in dwelling houses with the object of enabling families to reduce their gas and electricity bills. Some of these persons were charged with the larceny of goods and convicted. I suggest, therefore, that compressed air is goods and should be exempt.

Mr PROWSE:
Forrest

– I must confess that the remarks of the Treasurer in regard to agricultural machinery greatly disappointed me, for they seemed to be totally inconsistent with a statement made by the right honorable gentleman early this session. On that occasion he said -

Development of primary industries for the production of exportable wealth and the extension of Australian manufacturing will help to balance our . external trade and enable us to employ our people, and eventually to maintain a larger population.

Later he said -

The Government has devoted much attention to the necessity for stimulating the export of primary products.

This is a remarkable way to stimulate the export of primary products ! The laying of additional burdens upon primary producers must surely defeat the desire of the Government to increase our export trade. Some time ago this House passed a bill which provided for the payment of a guaranteed price of 4s. a bushel for export wheat. The measure was rejected by another place. If it had not been rejected, the Government would have been obliged to find between £7,000,000 and £8,000,000 to make up the difference between the guaranteed price of 4s. and the actual price obtained for the wheat overseas, which it is generally agreed will not be more than 3s. a bushel. The farmers therefore are . not only losing the 1s. a bushel, but are also being called upon to bear an additional burden in the shape of this sales tax. On the other hand, the. general community is being saved the payment of the difference between the proposed guaranteed price and the price at which wheat will be sold overseas. It is political hypocrisy to impose burdens upon people who are already crushed, and when the Prime Minister, who claims to recognize the importance of primary production in respect of restoring the financial stability of this country, imposes greater burdens upon the primary producers, he is outdoing the Pharaohs of ancient Europe.

Mr THOMPSON:
New England

– It seems to me from the statement of the Prime Minister that the Government has not given sufficient consideration to the fundamental principle of policy involved in this taxation. He appears to be much concerned whether certain commodities should be exempted or taxed, and it is quite obvious that if the Government had not rushed this proposition it might have been able to submit to the country a much better scheme. The various suggested exemptions of commodities or articles associated with primary production are of vital concern to that section of the community which, at the moment, enters more into the economic life of Australia than docs any other section. I refer to the primary producers. I urge the Government, before it is too late, to reconsider the imposition of this tax upon agricultural machinery. The Prime Minister has said that it represents only £2 10s. in every £100, and that in ordinary hire-purchase sales the payment would be spread over five years at the rate of 10s. a year. But this is only one of many hundreds of small items of expenditure incurred by the man on the land, and this extra payment of 10s. a year on each of many articles makes his lot practically impossible. This tax will have a moral as well as a material effect. The moral effect of taxing the man on the land £2 10s. for every £100 invested in machinery will intensify his worries. Binder twine and many other articles required on the farm are to be taxed. This tax must have the effect of increasing the economic depression. The Government would have been wise to adopt one of two alternatives. The first is to impose a sales tax of 1 per cent. or 1¼ per cent. on the whole of the taxable commodities in Australia. The Prime Minister has stated that £200,000,000 worth of taxable commodities have been exempted, and that has made it necessary to increase the rate of tax. The other alternative is to extend the list of exemptions so as to impose the least burden upon that section of the community which can ill afford to bear it and at the same time increase the rate of the tax on other commodities. I suggest to the Government that it would be a sound and wise policy to exempt all the articles that are required in the process of primary production. I urge it to give mature consideration to the requests that have been made by honorable members on this side of the chamber.

By including agricultural machinery in the list of exemptions much of the soreness that is rampant throughout Australia, because of this tax, would be removed. The people would then know that the Government had a genuine desire to assist the man on the land to whom we are looking to rescue Australia from its present economic depression. There is in the community a bad feeling, not only against the Government, but also against the Federal Parliament, and I suggest that it could to a great extent be removed by placing on the exemption list all the commodities that affect primary production.

Mr CURTIN:
Fremantle

.- I urge the Treasurer (Mr. Scullin), in respect of the list of exemptions from the sales tax, to give special consideration to the mining industry, and particularly that part of it known as the gold-mining industry, which requires, among other things, timber, explosives and machinery for the treatment of low-grade shows throughout Australia. During the last ten years gold-mining has been one of the few industries in the Commonwealth that have not been assisted in some specificway by the fiscal policy of this Parliament. Goldmining has had to face continuous rising costs; but, unlike other industries, the price of its product has remained stationary. An increase in the production of gold would be the most valuable contribution that could be made for the alleviation of our difficulties. Anything that prejudices the production of gold is not only a detriment to the industry, but also a positive disservice to the nation. Strong representations have been made to the Government that the industry is in need of substantial financial assistance, but unfortunately circumstances have made that impracticable. It is, therefore, the duty of the Government to assist the industry in other directions,. This tax represents, not an alleviation of the problem facing industry, but an aggravation of it to the extent of £2 10s. for every £100 worth of materials required by the industry. Any addition to the capital costs of the industries of this country is, in the present crisis, a disservice both to the producer and to the country. That argument is perfectly valid as applied to the agricultural industry. I quite recognize the logic of the contentions that have been put forward by honorable members opposite. I regret that this tax has become necessary. Everybody regrets that; but, in imposing this tax, we should take the long view, and do nothing to increase materially the running costs of important industries. I would restrict my classification of the important industries of Australia to a comparative few. There are a number of industries that can well afford to pay this tax, and I see no reason why they should not contribute towards the rectification of the financial position. But industries whose exportable surplus is sold overseas should not be unnecessarily taxed. Gold-mining is one of the industries that should be exempt from this tax. That argument would be valid as applied to the base metal industry; but gold must be the rectifier of the international disadvantage that Australia is suffering at present. We need gold for the purpose of meeting our obligations overseas. The greater the output of gold in the next five years the sooner will this country emerge from its present crisis. If the Government is not prepared to give financial assistance to the goldmining industry, it should at least not add to its difficulties by bringing it under the sales tax.

Amendment agreed to.

Mr GULLETT:
Henty

.-I move -

That the following new paragraph be inserted: - (af) Agricultural implements and machinery.”

I have already briefly expressed my views on this subject; but one or two remarks of the Prime Minister (Mr. Scullin) call for some comment. The right honorable gentleman pointed out that, if the Government acceded to this respect, it would surrender revenue to the extent of £120,000. This Parliament has the choice of collecting revenue by the imposition of a sales tax on agricultural implements and machinery, or of collecting it from other sources available to us. or it may bring about a reduction of expenditure in directions where savings can obviously be made. In the national interest it would be wiser to impose this sales tax upon beer instead of upon agricultural implements and machinery. A 2i per cent, sales tax on beer in bulk would not add to its price.

Mr Scullin:

– We have increased the excise duties on beer.

Mr GULLETT:

– That is no reason why beer should be exempt from the sales tax. The farmers and pastoralists will pay additional income tax, and new customs duties have been imposed on the goods which they must buy, but they are not exempted from this tax on those grounds. In those circumstances there seems to be some political motive for the exemption of beer. Newspapers also have been exempted. I have no objection to any big interest escaping this appalling tax, but I cannot see that the imposition of a duty of fi on newsprint is a sufficient excuse for allowing newspapers to escape the sales tax. As a specific instance of possible economy, the Leader of the Opposition (Mr. Latham) suggested that the maternity bonus should not be paid to parents who are in receipt of an income of £300 per annum and upwards. That would have saved £120,000.

The CHAIRMAN:

– Order !

Mr GULLETT:

– I merely mention the maternity bonus by way of illustration. It would be a thousand times better for the people, as a whole, to save £120,000 in that way than to screw that amount from the men on the land by means of a sales tax on agricultural implements and machinery. A few weeks ago the Government was prepared to guarantee to the farmer a minimum price of 4s. per bushel for his wheat, and it is proposed to assist primary production in many other ways. This taxation is the very antithesis of that policy. It is the worst form of taxation because it is levied at the source and on the most important founts of national wealth. Therefore, I ask the Prime Minister to promise the committee that he will give further consideration to this matter.

Mr MORGAN:
Darling Downs

– With all respect to the Prime Minister, I contend that the case made out by the Opposition is a good one. I realize the responsibility that we take upon ourselves when we ask for these additional exemptions, but the friendly gesture which the

Government has already made to the primary producers by the exemptions included in the schedule will not be complete while agricultural implements and machinery and binder and sewing twines remain taxable. The statement that the exemption, of them would involve a loss of £120,000 of revenue has been effectively answered by the Deputy Leader of the Opposition, who stated that such a loss could be made good by an additional tax on beer, whisky and amusements.

Dr EARLE PAGE:
Cowper

.- I urge the Prime Minister to reconsider his decision not to exempt those goods which are essential to export production. The exemptions already contained in the schedule are primarily in respect of the foodstuffs of the people. Whilst it is not only essential to keep down the cost of living in order to reduce the cost of production, at the present time it is probably even more necessary to ensure that we shall increase our export trade. That the present financial crisis is largely due to the absence of credits on the other side of the world is generally appreciated. The adverse exchange position can be rectified only by an increase of exports. Unfortunately, the value of our exportable commodities has declined, and I am afraid that the decline will be more or less permanent. Our only recourse is to increase the total volume of them and so restore the value to the level of recent years. Unfortunately, the costs of production are so great that many farmers experience difficulty in carrying on. The Government was so impressed with the serious state of the wheat industry that it offered a guarantee of 4s. per bushel, taking the risk of involving the Commonwealth in the loss of many hundreds of thousands, and possibly millions, of pounds. As the Government was willing to risk that loss and make it good from revenue in order to increase export production, it might reasonably be asked to take steps to. ensure that the incidence of the sales tax will not cripple the exporting industries. It is possible to draw a clear line of demarkation between the goods that need and those that need not bc exempted. The Prime Minister has objected to the exemption of agricultural implements on the ground that it would sacrifice £120,000 of revenue. I venture to suggest that if he will agree. to the proposal to exempt the implements of production, pasture seeds, &c., the gain to the national income, the saving in exchange, and the increased receipts from income tax, will more than compensate the Government for any loss. What the Treasurer will lose on the swings he will recover on the roundabouts. Moreover, such a policy will stimulate those producers who are very much depressed by the decline of world prices for wool and wheat. Since the Government introduced the Wheat Marketing Bill prices for wheat throughout the world have dropped considerably, and in consequence there is throughout Australia a depression amounting almost to paralysis of effort. In New South Wales State assistance is being given to men to purchase agricultural machinery. In those circumstances, how stupid it is for this Government to levy a special tax on the machinery of production. In the best interests of the nation I again urge the Prime Minister to relieve the primary producers of the. sales tax in respect of the essential requirements of the exporting industries.

Mr HAWKER:
Wakefield

.- This tax illustrates what is meant by the description of the budget as the “ takeall “ budget. It exhausts one source of revenue after another, and finally imposes a tax that strikes at the very roots of production. “ Takeall “ is a disease which, by attacking plant roots, shrivels an apparently good crop to almost nothing. The sales tax is like a “ takeall “ fungus, reducing the wealth of the country and the capacity of industry to give employment and provide incomes for taxation. I hope that the Prime Minister will relent, and allow this small concession to the largest and most important section of Australian economic life, a section upon which the recovery of Australia’s financial position largely depends, and a section, which probably is in the greatest difficulty to-day.

Dr EARLE Page:

– And practically the only exporters.

Mr HAWKER:

– That is so. As was pointed out by a previous speaker, agricultural machinery is frequently bought by farmers with advances made by State Governments. For this Government to put a tax on articles f6r which the State Go vernments have to make advances, when those State Governments are in as great or even greater difficulties than our own Federal Treasurer, is about as absurd and destructive a form of taxation as could be conceived.

Mr FRANCIS:
Moreton

.- I urge the Treasurer (Mr. Scullin) to reconsider his determination, and to exempt agricultural implements and machinery and binder twine, &c, from the payment of the sales tax. The primary producers . of Australia have ‘been in difficulties for years past. Many of them have not been earning even the basic wage, and the Government should endeavour to relieve them of taxation rather than to burden them with more. It is an unpardonable thing that they should be subjected to this extra taxation. Australia’s great need to-day is to export as much primary produce as possible, and to encourage this export, costs of production should be reduced in every possible way. Despite this, however, practically all the legislation brought down by this Government has tended to increase the cost of production to primary producers. If we make it impossible for them to produce cheaply they cannot be expected to export at a profit. Most of our difficulties are due to the fact that a high rate of exchange is operating against us, and it is impossible to obtain credits overseas. This, again, is largely the result of our inability to export at a saleable price. It has been stated that if this request for exemption is granted the Treasury will lose £120,000 a year. I suggest that this sum would be more than made up by a favorable turn in the rate of exchange, and by the increased income tax paid by primary producers if conditions are made satisfactory for them. There are many ways in which the lost revenue could be made up, and the Treasurer should not have much difficulty in arranging a suitable alternative method.

Mr BAYLEY:
Oxley

.- I regret that the Treasurer has not been able to see his way clear to add ships to the list of exempted articles. It is difficult to see how any one can regard a ship as something which is for sale. It is not. It is bought, and held by the person who buys it; and it is used for the benefit of the whole community. The only thing which is sold by the owner is the service which the vessel is able to render to those engaged in primary and secondary industries, and to the consuming public. The imposition of a sales tax on vessels can have only one result - to increase the price of commodities to all and sundry. We have frequently heard honorable members on both sides of the House express their regret that freights have been so high on vessels trading between Australian ports. How often have we heard the honorable member for Darwin (Mr. Bell) when discussing the timber industry, point out the difficulty experienced by Tasmanian saw-millers in competing against timber imported from Sweden and Puget Sound. The manufacturers of cement in Brisbane say that it is impossible to compete against the cement brought from overseas. The freight on cement is less from European ports to Townsville and Cairns than it is from Brisbane to those ports. If the Government persists in its determination to include ships in the ambit of the sales tax, the effect will be to increase still further the freights on the Australian coast. I realize the difficulties with which the Treasurer (Mr. Scullin) is confronted. I know that he has been besieged with requests to exclude items,but I appeal to him to consider this particular request on its merits. Let him not summarily dismiss it simply because the fiat has gone forth that the tax shall be payable on certain articles. I know that some honorable members will say that all ships required in Australia should be built in Australia. I do not propose to debate that matter, beyond saying that it would cost about twice as much to build them here; but, according to the bill as it stands, the sales tax will have to be paid on them no matter where they are built. A ship built in Great Britain and brought to Australia will, in all probability, remain on the Australian register for 25 years or more. The Oonah is much older than that. I remember as a boy this vessel being on the Tasmanian run, and she still plies between Melbourne and Burnie. The Bombala was brought out here 26 years ago. The companies which buy ships to trade in Australian waters will reimburse them selves for this tax at the expense of those who travel by them, or who ship cargoes. I hope that the Treasurer will reconsider his decision, and consider whether it is not possible, even at this late hour, to include ships in the list of exempted articles.

Mr HILL:
Echuca

.- Last evening the Treasurer was unavoidably absent from this chamber when I spoke on the canned fruits industry. Clause 20, sub-clause d of the bill deals with articles -

  1. . being primary products which are derived directly from operations carried on in Australia in -

    1. mining;
    2. the cultivation of land;
    3. the maintenance of animals, poultry, and bees;
    4. fisheries; or
    5. timber -getting, and which have not been subject to any process or treatment resulting in an alteration of the form, nature, or condition of the goods;

I pointed out last night the anomaly which would be created by making the tax payable on canned fruit while exempting such articles as dried fruit, and the products of milk, such as butter, cheese, condensed milk, and concentrated milk. Thereare three large canneries in my district, and I am interested in this matter. If milk products and driedfruits are to be exempted, then the Government should, in all conscience, exempt canned fruits also. I propose to speak on this again later, and to move an amendment of which I have given notice. Seeing that the industry is in a very serious position to-day, I hope that the Treasurerwill accept my amendment.

I also wish to enter an emphatic protest on behalf of the farming community against the proposal to collect this tax on the sale of farm implements. Some little time ago an agreement was entered into between the Government and the farm machinery manufacturers, the effect of which was to give the manufacturers a clear field for their operations in Australia. To some extent, I agreed with that arrangement. Even while believing that the duty on farm machinery is too high, I am not prepared to run down the Australian manufacturers of farm implements. As a practical farmer, I have had a long and lively experience in the use of farm implements. It is as well to state both sides of the ease, and I should like to say a word in support of this particular Australian industry. I believe that it has been of incalculable benefit, not only to the farmers, whether wheat-growers, orchardists, or any other sorts of farmers, but to the public as well.

Mr GREGORY:

– The farmers have paid well for the machinery they bought.

Mr HILL:

– I agree that we have paid a good price; in fan!. I think we have paid rathe;’ too much. Whether the implement manufacturers have made excessive profits 1 do not know, but I believe that they make in Australia absolutely the best farming implements which can be had in any part of the world. They are made in Australia, by Australians, to suit Australian conditions. It is only necessary to consider for a moment some of the implements which have been invented and made in Australia for certain purposes to realize what service they have been to us. For instance, the stump-jump implements have been in-valuable in the development of the Mallee. In fact, I doubt whether the Mallee could have been developed at all without them. Again, the reaperthresher and harvester are the finest implements in the world for the purposes for which they are designed, and they have, I believe, materially reduced the cost of production. Prior to the introduction of the combine, which is an Australian invention, the farmers required a large drill, a set of harrows, a scarifier, three teams of horses or three tractors, and three men, to do what can be done to-day by one man with one team and one machine. These splendid modern machines are on the market because they were invented and are being manufactured in Australia. The brains of the farmers are incorporated in them. I give a lot of credit to the manufacturers; but it must not be forgotten that if agricultural machinery had to be imported it would not be an easy matter to get in touch with the manufacturers overseas to suggest improvements. I believe that the local manufacturers would be the first to credit the farmers with having suggested many of the improvements that have been made. I am prepared to pay a little extra duty to make it possible for the machines to be manufactured in Australia ; but I consider that the present duty is too high. The hope of Australia to-day is the primary producer. We cannot manufacture money, and the only way in which we can obtain revenue is to export our products. Very shortly our great wheat industry will holdpride of place among all industries, both primary and secondary. The Government apparently thought so when it brought down legislation for a compulsory pool,, and guaranteed a minimum price of 4s. a bushel for this year’s wheat crop. But that proposal has now gone by the board, and to-day thousands of farmers who mortgaged everything that they possessed and purchased machinery and fertilizers on time payment are living on the credit that the.y can obtain from the grocer, the butcher, the baker, and the wholesaler. The Government does not realize fully that if it kills the goose that lays the golden egg we must all go under. If the primary producer lives, no one else dies; but if he dies, who will live? Taxes are heaped on the primary producer to a crushing extent. A million tons of superphosphate are used annually in Australia, and on the rock which is required to manufacture that quantity primage duty to the extent of £18,250 has to be paid. Other exactions are, £13,000 on the 125,000 tons of sulphur used annually, £1,000 on nitre, and £10,625 on the 12,000,000 cornsacks that are needed to distribute the superphosphate throughout Australia. With anything like favorable weather conditions there will be a harvest of at least 200,000,000 bushels this year. Assuming that the yield is only 150,000,000 bushels, 50,000,000 cornsacks will be needed, and the primage duty will amount to £44,270, bringing the total on all the items I have mentioned to £87,145. That does not take into account the primage duty and other taxes that are imposed on woolpacks, bran bags, sewing twine, binder twine, tin plate, shooks, and many other things which are used by the farmers. I am associated with a cooperative fertilizer company that has reduced the selling price of superphosphate to £4 10s. for the present season’s requirements, compared with a price of £5 7s. 6d. two years ago. In addition, it has made a rebate of 7s. 6d. a ton to its shareholders on their cash purchases. I mention this to show how the farmers are endeavouring to organize and cut down the cost of production. Yet the Government imposes a primage duty and other taxes that tend to raise the cost of production ! Had other superphosphate manufacturers followed the lead that we gave, and sold their product at the same price, the saving to the farmers on 1,000,000 tons would have been £1,250,000. Only last week we paid primage dues amounting to £165 on two small part shipments of rock. The imposition of this tax must place an additional burden upon the man on the land. There is not the slightest doubt that, in the coming year, it will be necessary for the superphosphate manufacturers to raise their prices slightly.

I know that it is impossible . for the Prime Minister to investigate every item; but I sincerely hope that, when he thoroughly understands the case thathas been made out for canned fruits, he will see the wisdom of adding them to the list of exemptions. The manufacturers of farming implements and machinery agreed to sell their products at 5 per cent. off list prices; but I believe that, on account of the competition which is associated with the distribution of farm machinery, they would have consented to a further reduction of 2½ per cent., or 5 per cent., if the Prime Minister had pressed for it.

Mr Stewart:

– They ought to have done it voluntarily.

Mr HILL:

– I suggest that they be approached with the proposal that they

Agree to an additional reduction of 2½ per cent. The imposition of a primage duty of 2½ per cent. on implements that are imported gives to our local manufacturers an advantage to that extent, and that also should be taken into consideration.

Mr JONES:
Indi

.- I am pleased that many primary products are to be exempt from the sales tax. I realize that the prosperity of this country is bound up with the welfare of our primary industries. But there are other items that I should like included. The gold-mining industry deserves well at the hands of Australia. Practically all other primary industries have been supported in one way or another; but the gold-mining industry has never been shown any consideration. It is bearing the burdens of high tariffs and of other impositions that have raised the cost of production; but it is the one industry that cannot pass on additional costs, because the price of gold never varies. Therefore, there is greater justification for coming to its assistance than to the assistance of many other primary industries. To my mind it has been made the Cinderella of Australian industries. The value of gold produced in this country is approximately £630,000,000, of which over £300,000,000 worth has been obtained from Victoria. I notice that the sales tax is not to bo payable upon the sale value of the following: -

Goods, being primary products which are derived directly from operations carried on in Australia in -

mining;

the cultivation of land;

the maintenance of animals, poultry. and bees;

fisheries; or

timber getting, and which have not been subject to any process or treatment resulting in an alteration of the form, nature or condition of the goods.

I should like the Prime Minister (Mr. Scullin) to state whether firewood used in mining operations is to be exempt. The account for firewood at one mine in Gippsland amounted to £1,000. At a mine in Bendigo recently the account was £2,000. That is a very big item for a struggling industry to meet.

Mr Archdale Parkhill:

– Firewood is exempt.

Mr JONES:

– I am pleased to hear it. The provision that I have read says that the goods must not have been subject to any process or treatment resulting in an alteration of their form, nature, or condition. This firewood is altered in form, because the trees are cut into lengths before the wood is delivered at the mine. I was doubtful, therefore, whether, on a strict interpretation of the provision, it would be exempt.

I should like to see explosives exempted. They are a very costly item in mining operations, and we should do nothing at this critical period in our history that would place a further handicap upon the gold-mining industry. The discovery of gold in Western Australia in the ‘nineties practically saved this country from disaster, and another rich find of gold would he of incalculable value to the Commonwealth. No less than £27.000,000 of gold has been shipped to the other side of the world in the last 12 months, and this has done much to assist in correcting our adverse trade balance. Our present output of gold is only £2,000,000 worth annually. Of the total output of £630,000,000, Victoria has produced over £300,000,000 worth, and Western Australia £160,000,000 worth, of which no less than £87,000,000 worth came from East Coolgardie, including the Golden Mile. There are hundreds of square miles of unexplored auriferous country in Australia, and who in this chamber will be so bold as to suggest that another rich goldfield will not be discovered? Every possible assistance should be given to the mining industry.

Mr FRANCIS:
Moreton

.- The honorable member for Indi (Mr. Jones) said that he was pleased to see so many primary products included in the schedule of exemptions from this tax, and the Prime Minister remarked that millions of pounds worth of primary produce had been exempted. I point out, however, that such goods as bacon and ham are not produced on the farms of Australia. The farmers certainly raise the pigs, but they will get no relief from the exemption of bacon and ham from the sales tax; the relief will be received by the owners of bacon factories and by the consumers. Similarly, the exemption of bread does not afford relief from this tax to the primary producers; it benefits the bakers and the consumers.

Mr Scullin:

– There would be a vigorous protest if the Government levied the tax on wheat.

Mr FRANCIS:

– Of course. I welcome all these exemptions; but I point out that the producer receives no relief from the exemptions of such goods as bacon, ham, bread, butter and cheese, &c. These goods are the manufactured articles made from primary products after they have passed out of the possession of the primary producer. Similarly, the exemption of dried fruits gives no relief to the orchardist. I urge the Prime Minister to grant the primary producers direct relief by the exemption of agricultural implements, binder twine and all the goods which they use on the farm, because we look to them to assist in correcting the adverse trade balance, and restoring Australia to a condition of prosperity. The present proposals of the Government grant them no relief in the articles they buy to produce and market their products. If an exemption were granted on farming implements and machinery it would certainly afford them direct relief.

Question - That the paragraph proposed to be inserted be so inserted (Mr. Gullett’s amendment) - put. The committee divided. (Chairman - Mr. McGrath.)

AYES: 24

NOES: 31

Majority . . . . 7

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I move-

That the following paragraph he omitted: - “(d) goods in so far as they are the subject of a sale to or by the Government of the Commonwealth or a State or to or by any authority under any such Government.”

The Government has decided that the only protection from this tax to be given to State instrumentalities shall be that accorded under the Constitution. I have circulated a proposed new clause providing that the act shall be read and construed subject to the Constitution.

Mr ARCHDALE PARKHILL:
Warringah

– I had intended to propose that at the end of this paragraph we should insert the words “ except goods sold to the public by such government or authority,” my object being to prevent State instrumentalities from getting the advantage of exemption from the sales tax while industries conducted by private enterprise would have to meet it; but, as the Prime Minister has agreed that the only protection that government goods shall receive is that accorded by the Constitution, it is unnecessary for me to proceed with my amendment.

Mr HUGHES:
North Sydney

– I should like to know precisely the position of municipal instrumentalities engaged in road-making work. The materials of road-making are cement, sand, metal, and bitumen, and the money with which these materials are bought is to a large extent supplied by the Commonwealth and State Governments. Since this Government provides a fair proportion of the money, it seems to me to be very foolish to impose a tax on the materials bought with it.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– It is not proposed to exempt from taxation the sale of any goods, unless they are goods which fall within the classes specified in the first schedule.

Mr NAIRN:
Perth

.- While there may be something to be said for exempting goods sold to a government, it seems to me that there is no reason why goods sold by a government should be exempt. The sales of bricks by State brickworks, for instance, should be subject to taxation, like the sales of bricks by a privately managed brickworks. But sales to a government should be exempt from taxation. The Western Australian Government proposes, as soon as it can raise the necessary money, to purchase another motor ship at the cost of £200,000. The sales tax on such a vessel would be £5,000. I do not think that a State Government should be obliged to pay that tax. To impose it is practically to take money out of one pocket and put it in another.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 21- (1.) Every manufacturer who, during any month -

  1. makes any of the sales specified in section eighteen of this act; or
  2. applies to his own use any goods specified in sub-section (2.) of section eighteen of this act, shall, within seven days after the close of that month, furnish to the Commissioner a return in the prescribed form -
  3. in cases to which paragraph (a) of this sub-section applies - setting forth the aggregate of the amounts for which the goods were sold during that month, together with the aggregate of all discounts, rebates, deductions or other credits given during that month in respect of those sales, and such other information as is prescribed;

Amendment (by Mr. Scullin) agreed to-

That after paragraph (a) sub-clause (1.) the following paragraph be inserted: - “ (aa) treats any goods as stock for sale by him by reta il ; or “

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I understand that the honorable member for Perth (Mr. Nairn) desires to move that the words “ seven “ be omitted, with a view to insert in lieu thereof “thirty”. I have given careful consideration to this proposal, and while I cannot go so far as the honorable member desires to go, I am willing to meet him half way. I have circulated an amendment to omit the word “ seven “ and insert “ fourteen “ ; but I am prepared to extend the time to 21 days. I cannot agree to go further than that, because it would involve the amendment of the clause which provides for the collection of the tax. If the tax could not be collected until 30 days after the end of the month in which the sale is made, it would mean that we should not be able to include in the returns for this financial year the amount due in sales tax for the month of June, which would leave us about £500,000 short of our estimate of revenue from this source. I, therefore, move -

That the word “seven”, sub-clause (1.), be omitted with a view to insert in lieu thereof the words “ twenty-one “.

Mr WHITE:
Balaclava

.- I am glad that the Treasurer has been able to make even this extension of time; but I still contend that the payment of the tax should not be demanded until 30 days after the end of the month in which the sale is made. The right honorable member will appreciate that practically all wholesale business is conducted on a 30-days basis. Retailers who pay their accounts within 30 days usually deduct2½ per cent. dis- count. I suggest that the period be 30 days after the end of the month in respect to every month except June, and that for June it be 21 days. This would overcome the objection of the Prime Minister.

Mr Scullin:

– I shall have the honorable member’s suggestion examined, and, if it is found to be practicable, an amendment to that effect will be introduced in another place.

Amendment agreed to.

Amendment (by Mr. Scullin) agreed to -

That after paragraph (i) the following paragraph be inserted: - (ia) in casus to which paragraph (aa) of this sub-section applies - setting forth the aggregate amount which would be the fair market value of goods treated as stock for sale by retail* if those goods were sold by the manufacturer by wholesale.”

Clause, as amended, agreed to.

Clauses 22 and 23 agreed to.

Clause 24- (1.) 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 sub-section (1.) of section eighteen of this act. shall, within seven days after the close of that month, pay sales tax upon the sale value of the goods sold.

Amendments (by Mr. Scullin) agreed to -

That the words “by him during any month, in the cases provided for by sub-section (1.)”, sub-clause 1, be omitted with a view to insert in lieu thereof the words “or treated by him during any month as specified in sub-section (1.) or (1a.)”.

That the word “seven”, sub-clause 1, be omitted with a view to insert in lieu thereof the words “twenty-one”.

Clause, as amended, agreed to.

Clause 25 agreed to.

Clause 26- (1.) Where the Commissioner finds in any case that taxhas been overpaid, he may refund the amount of tax found to be overpaid.

Amendment (by Mr. Scullin) proposed -

That the following sub-clause be added: - “ (3.) Where the Commissioner is satis- fied that sales tax has been paid under the provisions of any other act upon the sale value of goods used in. wrought into or attached to goods, the sale value of which’ is subject to sales tax under this act, the Commissioner may refund so much of the tax paid under this act as is in his opinion equivalent to the tax paid under that other act upon the sale value of . the goods so used wrought into or attached “.

Mr Gregory:

– Why is the word “ may “ used in this clause ? The Commissioner should be obliged to refund any amounts overpaid.

Mr Scullin:

– This provision has been copied from our income tax legislation.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 27 to 65 agreed to.

Clause 66 (Release of offenders).

Mr GREGORY:
Swan

.-I am surprised that a penal provision of this kind should be contained in the bill.

Mr Scullin:

– This clause also has been copied from the Income Tax Assessment Act. It has been in that act for many years, and there . have been no objections to it.

Clause agreed to.

Clauses 67 to 72 agreed to.

Postponed clause 3 agreed to.

Mr LATHAM:
Kooyong

.- I move -

That the following new clause be inserted - “ 19a. In the case of a sale by a taxpayer by reason whereof the taxpayer becomes liable to pay sales tax, the taxpayer shall state upon the invoice delivered by him to the purchaser of any goods from him upon the sale value of which he is liable to pay sales tax, the amount of sales tax payable in respect thereof, and the taxpayer shall have the same right to recover the said amount of sales tax from the purchaser as he has to recover thepr ice of or other payment for or in respect of the said goods:

Provided that where the said price or other payment is payable by instalments the amount of sales tax shall be recoverable at the same time as the first instalment is recoverable.”

The object of this new clause is to endeavour to get rid of the serious confusion which at present exists in the commercial community. It is obvious that the tax is not to be borne, in the last resort, by the wholesalers, manufacturers, and importers upon whom it is directly imposed. It will be reflected in the price of the goods which are sold, and it is useless to disguise that fact from ourselves. Some increases will be made in the price of goods because of the imposition of this tax. I suggest that it is important that this Parliament should do everything in its power to prevent the price of goods from being unduly increased to the public. One step in that direction would be to adopt this amendment, and to provide that where a person has paid or is liable to pay sales tax he shall show the amount of the tax upon the invoice delivered by him to the purchaser. It is proposed in the amendment that a distinction shall be drawn between goods upon which the tax is payable, and goods upon which it is not payable, and that there shall be a record on the invoice of the amount of the tax, which will represent 2- per cent, of the value of the goods upon which the tax is payable. It has been explained to honorable members that the tax is payable only once. This proposal, if adopted, could not lead to any double payment of tax. It would go very far to prevent the public from being charged more than the amount of the tax. I do not say that it would go the whole distance, because, in the case of retail sales, the currency which is in use in this country is not of sufficiently small denomination to make it possible to pass on precisely and accurately the amount of the sales tax upon small purchases, but the adoption of this, proposal would prevent some pyramiding of taxation which would otherwise take place. It may be said that the adoption of this proposal will mean that the tax is in effect being imposed upon the purchaser from the wholesaler or manufacturer. That will not necessarily be the case. The wholesaler or manufacturer may, by way of discount or some other means which can readily be arranged, bear a portion of the tax himself or conceivably the whole of it. But even in that case there is much to be said for showing the amount of the tax upon the invoice. At present a great deal of confusion exists in the public mind as to whether the seller has the right to collect the tax from the buyer. In the strict sense he has not such a right, but in exactly the same sense he has not the right to sell his goods on certain terms to a particular individual. It is a matter of bargaining. If a proposing seller has an article which he considers is worth £100, and he has to pay on the sale of it a sales tax of £2 10s., he can then if he so desires refuse to sell under £102 10s. In so doing he would be perfectly within his rights. Any person who is contemplating buying that article would be within his rights in saying that the pricewas too high, and that he was not prepared to pay more than £95 or £100. Nolegal right to charge sales tax against a purchaser exists at present. It is simply a matter of bargaining, and prices haveto be adjusted, and .will be adjusted, having regard to the fact that the salestax exists. » The new clause provides the means whereby the precise amount of the sales tax will be shown upon every transaction of sale to which this legislation applies. It will still be open to a seller if he thinks proper to bear a portion of the tax himself, and from thepoint of view of the public I submit that the amendment that I propose is very desirable. At an earlier stage the PrimeMinister said that there was a doubt whether such a clause would be valid. He said that he had been advised that there was such a doubt, and he suggested’ two grounds of possible objection. The first ground was that the introduction of this provision would impose a tax upon the purchaser; apparentlyin addition to, or, perhaps, as an alternative to, the seller. That is a proposition which I am quite unable to follow. Therelations between the Government and the taxpayers are as they would be if thisamendment were not in the act. It is theseller who alone is liable to pay the tax to the Government. The purchaser from the seller would be liable to pay theamount of the tax to the seller, but not to the Government. The amount that theseller pays as tax is an exaction from the citizen by the Government. Theamount that the purchaser pays to the seller is not a tax, and, accordingly, it appears to me to be plain that there would not be two subjects of taxation comprehended within this measure if the amendment which I propose were adopted. There is still only one subject of taxation.

It may then be asked whether it is within the power of the Commonwealth to provide who shall bear the burden of tax, apart from dictating its direct incidence. It appears to me that it is within the power of the Commonwealth so to provide. For many years there has been a section in the Customs Act which provides that where the customs duty is altered and there is a contract for the sale of goods duty-paid, the contract price shall be altered accordingly. If the duty is increased, then the vendor who has sold goods duty-paid is entitled to obtain from the purchaser the additional amount of duty. That section was challenged some years ago in the High Court. I was in the case as counsel, and I argued it first in the Supreme Court and, subsequently, in the High Court. Upon the argument in the Supreme Court, my contention was successful, namely, that the provision referred to was beyond the power of the Commonwealth. In the High Court the decision of the Supreme Court was unanimously reversed. It was said that it was within the power of the Commonwealth in customs taxation to determine that, as a result of the imposition of new duties or the removal of duties, the contract between the individuals should be varied. It is true that in arriving at that decision reference was made to the history of customs legislation, and it was found that it had been not an uncommon provision in that legislation. We have already been informed in this chamber that this is a common provision in sales tax legislation, and, so far, the cases are analogous. But I would put the proposition upon a broader ground, that the Commonwealth Parliament has the fullest possible power of taxation under the Constitution. Under section 51 the only limitation upon our powers of legislation with respect to taxation is that there shall not be discrimination between States or parts of States. Some years ago the contention was raised that the land tax was beyond the constitutional powers of the Corn- monwealth, and it was argued- that the object of the land tax was, not merely to collect revenue, but also to break up large estates and to bring about a different system of land-holding in the Commonwealth. It was, accordingly, urged that there should be no indirect object in taxation in order to bring about a result other than the mere payment by particular individuals of money to the Commonwealth. That contention was. rejected in the High Court and the Privy Council. I consider -that this Parliament is able to deal with the incidence of taxation and the indirect effects of taxation. One of the objects of taxation is, frequently, not to raise revenue, but to bring about some other result altogether; perhaps to reduce the consumption of liquor, or to increase the consumption of something else. Taxation is not to be regarded as a power limited to the mere passing of provisions for the collection of money from particular individuals.

My proposal is reasonably incidental to the proposed system of sales taxation, as a means of ensuring that it will work in accordance with the intention of Parliament. If that intention is that only the amount of the tax shall be extracted from the pockets of the people, it is within the power of Parliament to prevent the adoption of means and methods, such as the raising of prices, to extract more from the people. Accordingly it appears to me that this proposal is within the legislative competency of the Commonwealth Parliament. A suggestion has been made that in some way it affects intra-state trade. Much of our legislation, does so. This Parliament has no specific power to legislate upon intra-state trade as such, but it has power to legislate upon many other subjects - bills of exchange, for instance. Some bills of exchange are interstate and others intra-state, but this Parliament legislates in respect of all of them. Similarly in our taxation legislation no distinction has been drawn between intra-state and interstate transactions. Indeed, if that were done it would be a gratuitous assumption of obstacles to Commonwealth legislation, especially after the decision of the court in the Engineers’ case that the Commonwealth Parliament has power to legislate to the limit of the express powers, which are not to be restrained or restricted by any doctrine of implied restrictions in favour of State instrumentalities or intra-state trade. The Constitution does not say that, whilst the Commonwealth can legislate on foreign and interstate trade, it cannot legislate on intra-state trade. It merely confers a positive power to legislate upon foreign and interstate trade, and many other subjects, and in regard to each of them this Parliament can legislate without concerning itself as to whether any intra-state question is involved. Bankruptcy is one of those subjects; it is concerned with the settlement of debts and transactions, most of which are certainly intra-state. For the reasons I have stated it appears to me that there is no legal objection to the inclusion of these provisions, which on their merits seem to be desirable.

Progress reported.

NEW BUSINESS AFTER 11 p.m.

Motion (by Mr. Scullin) - by leave - agreed to -

That Standing Order 70 be suspended for the remainder of this sitting to enable new business to be taken after 11 o’clock p.m.

page 5455

CONCILIATION AND ARBITRATION BILL

In committee: (Consideration of Senate’s amendments).

Mr BEASLEY:
Assistant Minister · West Sydney · ALP

– I move -

That the amendments be disagreed to.

I do this with a full realization of the meaning and purpose of these amendments. I assure the committee that only after exhaustive consideration and examination of their various features, and their effects upon the bill as it left this chamber, did the Government decide that this motion should be moved. The Government feels that it was returned to power with a definite mandate from the people to preserve and amend the arbitration and conciliation legislation of the Commonwealth in such ways as are essential to ensure greater simplicity and general improvement, and prompt settlement of disputes. At all its stages in this chamber the bill was the subject of close debate and the most critical examination, and it was thought by the Government at all events, and by members on this side of the House generally, who, after all, in the political sphere are the true representatives of the bulk of the people, that the bill was of such a character that it should receive full endorsement. Unhappily, in another chamber, and by those who cannot be regarded when expressing their own personal opinions as expressing the views of the majority of the electors of Australia, the bill has been amended in so serious a fashion as to disturb many of the principles which the Government hoped to have definitely fixed and established in the arbitration legislation of this country. For the dual reasons, therefore, that the bill, as amended in another chamber, does not now properly express the policy of the Government, and that the material amendments which have been effected in a chamber, the majority of the members of which do not express current political thought, the Government has, after earnest deliberation, determined on the course I am now proposing. I am hopeful that, in the event of this motion being agreed to, and on completion of the further action necessary for the rejection ‘of the amendments, when the bill again leaves this chamber the members of another place will see fit to re-consider their attitude. I find it difficult to believe that men who have not been subject to the test of the polls since the defeat of the last Government, and whose political beliefs, without doubt, are not in line with those of the majority of the electors, will consider themselves warranted in adhering to a course which is so contrary to the policy of the Government of the day. In asking the committee to support the motion, I express the wish that, without undue delay, and in the interests of the community in general, it will be practicable again to bring the bill before the House in a form acceptable to the Government.

Mr LATHAM:
Kooyong

.- At this stage of the session I do not propose to debate again the various features of this bill. I have stated before that the people, at the last election, gave a mandate to the Government to retain the system of federal arbitration, and no action taken by honorable members on this side of the chamber has been inconsistentwith that declaration. We are as truly representative of the people as is the Ministerial party, with its temporary and swollen majority. The amending Arbitration Bill was presented by the Government as a simplification of the system of arbitration. I remind honorable members that the bill was received with a storm of protest from all quarters in Australia, from employers and employees alike. It satisfied nobody, and it is useless for the Assistant Minister to pretend that an honest and sincere effort by the Government to carry out the clear mandate of the people has been defeated in another place. I am glad to say that in this chamber the Government had sufficient good sense to accept a considerable number of amendments suggested by the Opposition. It is impossible now to debate the individual amendments that have been made in another place. We all are aware that suggestions have been made there that a conference should be held between the two Houses, and because I hope and anticipate that such a development will take place, I abstain from dealing with the amendments in detail.

Mr Crouch:

– A lot of the amendments accepted by the Opposition in this chamber have been rejected in another place.

Mr LATHAM:

– The honorable mem- . ber must recognize that many provisions to which the Opposition was opposed were carried on the voices, because it is not the practice of the present Opposition to waste the time of the committee by dividing it on every proposal which does not meet with the approval of honorable members on this side. Belying upon the holding of a conference between the two chambers I refrain from further remark at this stage, and I suggest that probably the best course to adopt will be to vote at once on the motion, in the hope that, as the Assistant Minister indicated in his concluding remarks, we may have another opportunity to consider the amendments, possibly in a slightly different form.

Dr EARLE PAGE:
Cowper

– If the original bill introduced by the Government represented its mandate from the electors in regard to arbitration, that mandate seems to have undergone as many changes as a chameleon. At one stage the bill disappeared from public view for several days, pending further incubation, and reappeared in a much altered form. I understand that even in another place many amendments have been made on the motion of the representative of the Government, and that those alterations are involved in the general motion of rejection which the Assistant Minister has made this evening. I repudiate the suggestion that the bill, as introduced, represented the mandate of the people; but as I understand that we may have another opportunity to discuss what its final form shall be, I shall reserve my further remarks.

Question - That the motion be agreed to - put. The committee divided.

AYES: 36

NOES: 22

Majority . . 14

AYES

NOES

Question so resolved in the affirmative.

Motion agreed to.

Resolution reported; report adopted.

Ordered -

That Mr. Anstey. Mr. Blakeley, and Mr. Beasley be appointed a committee to draw up reasons for the House of Representatives disagreeing to the amendments.

Mr BEASLEY:
Assistant Minister · West Sydney · ALP

– The following reasons have been drawn up by the committee for disagreeing to the amendments of the Senate -

  1. Because the amendments contain provisions which are contrary to the principles of the bill.
  2. Because the amendments do not effectuate the policy for which the Government received a mandate at the last elections.

I move -

That the reasons be adopted.

Mr LATHAM:
Kooyong

.- The committee, which has worked with such efficiency and despatch in drawing up the agreement, is to be congratulated on the result of its effort. The committee says that the House of Representatives disagrees with the amendments made in the Senate because they contain provisions which are contrary to the principles of the bill. If any one can discover what are the principles of the bill, mutilated as it now is, I shall be glad to meet him. The other reason given is that the amendments do not effectuate the policy for which the Government received a mandate at the last election. I have for many years been trying, without result, to discover what is the industrial policy of the Government. I am certain that it cannot be discovered from this bill.

Question resolved in the affirmative.

page 5457

SALES TAX ASSESSMENT BILL

(No. 1.)

In committee: Consideration resumed from page 5455.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I am not out of sympathy with the object of the Leader of the Opposition (Mr. Latham) in moving for the inclusion of this newclause, but I regret that I cannot accept it. I have consulted the legal advisers of the Government, who in turn consulted independent counsel on this very matter. They took into consideration the case cited by the Leader of the Opposition. They point out that in that case a very eminent judge of the Supreme Court held that what is being attempted here with regard to customs duty is bad, but on appeal to the High Court his judgment was upset. The Leader of the Opposition relies on the judgment of the High Court. Upon that I make two comments. The reason given by the High Court was that this practice was always followed in customs legislation. The court relies largely upon the historical aspect of the matter. That view, I contend, is not relevant in this instance. My second comment is that, although the High Court declared at one time that this practice was good in law, it does not necessarily follow that the present High Court would uphold that ruling. The fact is that if the amendment of the honorable member be accepted, we shall have power, not only to impose a sales tax, but to authorize the vendor to collect or impose the tax on somebody else.

Mr Latham:

– The vendor has to pay the tax whether he collects it from somebody else or not. He cannot defer payment until he has collected it.

Mr SCULLIN:

– We must remember that this is an excise bill. In pursuance of our power to impose excise duties, we are imposing an excise duty on manufactured articles, and collecting it on the sale of goods by a manufacturer. The amendment of the honorable member proposes to gi ve to the taxpayer the right to collect the amount of the tax from the purchaser, which is equivalent to the imposition of a tax on the purchaser.

Mr Latham:

– Has any counsel really advised the Government to that effect? Of course, the amount collected by the vendor from the purchaser will be the same as the tax, but it does not amount to the collection of the tax.

Mr SCULLIN:

– The bill provides that the tax shall be paid by the manufacturer to the Government on the sale value of the goods sold by him. It is a tax payable by the vendor on sales made by him. I am advised that the honorable member’s amendment, if agreed to, would have the effect of imposing ultimate liability on the purchaser. This is construed as the imposition of a tax upon a subject of taxation other than that dealt with in the remainder of the hill. The opinion of counsel is that we should run a grave risk if we adopted the proposed new clause. However, though we cannot accept the new clause, there is nothing to prevent the vendor showing the amount of the tax on the invoice or bill.

Mr Latham:

– Will the Treasurer accept the proposed new clause if it is amended to read that “ the taxpayer may state upon the invoice “ instead of “ shall state upon the invoice “, and that in that event he shall be entitled to recover the amount of the sales tax from the purchaser ?

Mr SCULLIN:

– That would have the same effect; it would authorize the vendor to recover the tax from the purchaser. The purpose of the proposed new clause moved by the Leader of the Opposition (Mr. Latham), is to compel the vendor to show the amount of the tax on the invoice or bill. There is nothing in the bill to prevent him from showing it if he likes. If we merely say that he may state the amount of tax it will not alter the present position. The purpose of the honorable member’s proposed new clause is to compel the vendor to show the amount of tax,’ and to authorize him to collect it from the purchaser. - I am advised that the second provision, particularly, is ultra vires. I am also advised that a constitutional objection could be taken to this as a regulation of intrastate trade, insofar as it purports to affect sales within a State.

Mr Latham:

– I can understand the other objection, but this is unintelligible to me as a lawyer.

Mr SCULLIN:

– We have power to impose only one form of taxation in the bill; that is, a tax on sales. That does not give power to authorize the collection of the tax. I regret that I cannot accept the proposed new clause. I am advised that if we did, we should run a grave risk of having the whole act declared invalid.

Mr WHITE:
Balaclava

.- I make a final appeal to the Treasurer to accept the proposed new clause. If the latter part of the clause, stating that the taxpayer shall have the same right to recover the amount of the tax from the purchaser as he has to recover the price of the goods, is omitted, there could still remain an instruction to the vendor to show the amount of the tax on the invoice. The Treasurer will admit that, for computation purposes, this would greatly help his own department. It will take an army of taxation officers to police this act in any case. If it is definitely shown at the bottom of the invoice that 2^ per cent, on the value of the goods amounts to so much, it will be easy to check the sale, and that it will not contravene any law. Surely there could be no objection to including in the machinery clauses of the bill a provision to the effect that -

In tlie case of a sale by a taxpayer by reason whereof the taxpayer becomes liable to pay sales tax, the taxpayer shall state upon the invoice delivered by him to the purchaser of any goods from him upon the sale value of which he is liable to pay sales tax. the amount of thu sales tax payable in respect thereof.

The Government has’ not shown any readiness to agree to proposals for the simplification of the bill. This will be a most serious tax on industry. During the second-reading debate last night I put forward a suggestion which, I think, was quite workable, to the effect that the tax should he collected on raw materials at the source of manufacture and at the customs. That, I submit, was a reasonable suggestion. But, as that cannot now be done, the right honorable gentleman might make a few concessions to the trade. I have received letters from various people in business in the clothing trade in particular. They point out that, if this provision be not made, many traders will advertise that the sales tax is not being paid, and will use that as a selling feature. The honest trader, who states on his invoice the amount of the sales tax, will be passed over in favour of less scrupulous men who pass the tas -on by lowering the quality of the goods.

Mr CROUCH:
Corangamite

– One of the principal arguments used by honorable members opposite against the imposition of this tax was that it would be passed on to the purchaser with a further amount added. Now they argue that some traders will advertise that the tax is not being charged. Therefore, their previous opposition was so much “hot air.” The proposed new clause that has been moved by the Leader of the Opposition (Mr. Latham) provides that a mere liability to pay the tax shall entitle the seller of the goods to saddle the purchaser with it. A similar provision in the Customs Act properly provides for payment previous to its being passed on. Such a proposal is both ridiculous and iniquitous.

Mr ARCHDALE PARKHILL:
WARRINGAH, NEW SOUTH WALES · NAT; UAP from 1931

– I am sorry that the Prime Minister (Mr. Scullin) has not agreed to accept the proposed new clause. The responsibility will be upon the manufacturer to forward the tax to the Government monthly. If this amount were placed on the invoice as a separate item, it would be passed on, and less would be paid by the genera] public than will be the case as the bill stands at present. The friends of the working men of this country are thus taking a course that will impose upon the consumer, who ultimately will have to pay this tax, compound interest on the cost of administration, together with the cost of the adjustment that will be necessary if each item has to be priced and charged separately. The proposed new clause provides a much more simple way of dealing with the matter. But, if the Prime Minister has been advised that it must not be accepted, it is useless to discuss the matter further.

Mr HUNTER:
Maranoa

.- The Prime Minister (Mr. Scullin) has raised the hope that,if something suitable were offered to achieve the purpose desired, he would accept it. I trust that he will endeavour to incorporate a suitable provision when the ‘bill is in another place. From a business point of view, it would not be wise to make it compulsory to state the amount of the tax on the invoice; but there should be the power to do that if it is thought desirable.

Mr Scullin:

– My advice is that there is nothing whatever to prevent that from being done.

Mr HUNTER:

– If that were done, it is a moot point whether the total amount of the goods sold, plus the tax, could subsequently be sued for. The object of the new clause proposed by the honorable the Leader of the Opposition is to give to the wholesaler the power to include the amount in the total price in cases where he has to sue for or otherwise claim it.

Mr Scullin:

-He could charge up the whole amount at the contract price, and show on the invoice that it included a certain amount for taxation.

Mr HUNTER:

– He certainly could do that. But the view that he will take is that, if he is obliged to make a claim on account of the insolvency of his customer - and there will be quite a number of insolvencies - or for any other reason, he will lose the amount that he has already paid. I know, of course, that there is a provision which entitles him to obtain a refund later. Another view is that it will be very difficult to include the tax in the total amount, particularly nowadays when the wholesaler sells almost retail to the different stores. At one time, stores bought by the gross; now they buy by the third of a dozen or the twelfth of a dozen. The Leader of the Opposition (Mr. Latham) wishes to give the wholesalers the power to include the tax in his invoice, where it is necessary for him to prosecute.

Another viewpoint is that of the purchaser. If the tax is to be absolutely disregarded in the case of the seller, logically, it must be disregarded also in the case of the purchaser when he writes up his books. He will not be entitled to show it as a purchase; he will only be entitled to show the net amount of the goods purchased. Although the tax is one on sales, and the seller is responsible for the payment of it, the purchaser cannot look to the income tax authorities to allow him to charge it as a debit unless it is included in the price of the goods. I should like the Prime Minister (Mr. Scullin) to see if some means can be found for meeting the wishes of the Leader of the Opposition, possibly in the direction of giving power to the seller to show the tax as an expense, just as he is entitled to do in the case of customs and excise duties.

Mr LATHAM:
Kooyong

.-I appeal to the Prime Minister to consider this matter further. He has said that, on the merits of the proposal, he does not feel adverse to it, but that there is a probability of either the provision itself or the whole act being invalid if it is included. The right honorable gentleman, of course, has merely repeated the substance of what he has been told. I draw his attention to the fact that this very point has already been decided by five judges of the High Court in connexion with the Customs Act. Thai act contains a provision for passing on additional duties. Section 152 reads -

If after any agreement is made for the sale or delivery of goods duty paid any alteration takes place in the duty collected affecting such goods before they are entered for home consumption then in the absence of express written provision to the contrary the agreement shall be altered as follows: -

It then provides for the passing on of an increased or a decreased duty. It was contended that legislation which provided for the removal of the burden’ to a person other than the importer was unconstitutional - a case very similar to this. The five judges dealt with that point, and not one of them rested his decision upon the nature or history of customs taxation as such, though reference was made to the history of customs legislation, in which this was a common provision. I shall quote the critical passages from the judgments, to show that they are not based upon the history of customs legislation, but that that history is referred to for the purpose of supporting a decision the grounds of which arc independent of the particular character of customs legislation. It is pointed our that, iu imposing indirect taxation, it is one of the functions of the legislature to determine by whom the tax shall ultimately be borne, apart altogether from the determination of the person by whom it shall be paid in the first instance. The Chief Justice at the time, Sir Samuel Griffith, said -

The defendants also contend that section 152 is ultra vires of the Commonwealth Parliament. The answer to the argument may be put very briefly. Amongst the powers of legislation conferred upon the Parliament by section 51 is a power to make laws with respect to taxation (section 51, pi. 11.). Now, laws with respect to taxation necessarily include many provisions besides the imposition of taxes, and all such provisions as are reasonably incidental to the exercise of the power of taxation are, irrespective of the express provisions of section 51, pi., 39, authorized by the express grant. It is obvious that one effect of the imposition of new taxation through the customs (which, in practice, takes effect immediately on its being proposed in Parliament) may be to work a great hardship, and even injustice, in the case of agreements which have been already made for the sale or delivery of goods of external origin if the seller is saddled with the hurden of the added taxation. It would be a very lame and impotent legislature that, being entrusted with a power of imposing customs taxation, could not make provision to avoid such injustice. I have, therefore, no difficulty in holding that section 152 is within the power to make laws with respect to taxation.

It is clear that that judgment does not rest on the history of customs” legislation. Mr. Justice Barton said -

Now, it seems to me that a provision such as section 152 finds its proper place in a Federal Customs Act. The making of provision for the alleviation or. removal of that which would otherwise, in the execution of n contract for sale, made before the imposition of a new or increased duty, but to be performed at a date which happens after the intervention of the duty, is an adjustment of a kind necessary for securing the equitable operation of the law. It is true that it affectscertain contracts, and that legislation upon contracts is ordinarily the province of the State and not of the federation. But this is a case of the adjustment of obligations which necessarily are affected fairly or unfairly, but directly, by the federal law, and it is impossible to say that in such a case as this thiendeavour to prevent the unfair effect is nol within the competence of the makers of that law.

The provision question has long been usual in customs acts. It finds a place for mamyears in English customs acts, such as those of 18 and If) Victoria, and 39 and 40 Victoria

I do not, however, base my opinion on these enactments. It rests on the reason of the thing.

Mr. Justice Isaacs was equally clear on this point. He remarked -

It is plain that in the case of a direct tax the end of the legislature is achieved by imposing it on the person intended to pay it, and by incidental provisions securing not only payment by him, but also that it is he who shall pay it in reality. But in the case of indirect taxation, which imports by the above definition the legislature’s expectation and intention that the person immediately paying shall indemnify himself at the expense of another, the legislative intention is not necessarily achieved by leaving the matter unprovided for; it may be frustrated without such a provision …

A priori, therefore, upon the common understanding of what is meant by imposing a customs and excise duty, the power of enabling a vendor to add such an increased duty would exist . . .

This a priori reasoning is supported by legislative practice which, for a very long period, has adopted it . . .

Mr, Justice Higgins said

If in imposing a tax Parliament thinks that the tax will cause injustice as between parties to a contract unless the burden be transferred or shared, a law for transferring or sharing the burden of the tax would, in my opinion, bea law with respect to taxation . . .

Mr, Justice Rich observed

This section falls within the ambit of sec- tion 51 (ii) of the Constitution. Although incidentally section 152 affects contractual obligations, in substance it deals with taxation by determining its incidence. Such a power is included in the express authority to make laws for the peace, order, and good government of the Commonwealth with respect to taxation.

One could hardly get a clearer authority than that judgment to show the validity of a provision of this character. In the Customs Act the liability is transferred, irrespective of whether or not, in fact, the importer has paid the duty. The law takes care that the importer pays customs duties just as it will see that the seller pays under this measure. If we were to accept for a moment the proposition that we are impotent to determine the ultimate incidence of taxation, we should adopt a most cramping principle, which has never been recognized by this Parliament.

Mr D CAMERON:
BRISBANE. QLD · NAT

– I regret that the Prime Minister cannot see his way clear to accept the amendment submitted by the Leader of the Opposition. I received a telegram this afternoon from the Brisbane Merchants Association, as follows: -

Unless the sales tax bills specifically empower registered firms to pass on the actual amount of sales tax to retailers, which is all merchants seek to recover, by adding it at foot of each invoice, then an all round increase in prices greater than the tax is inevitable. Kindly reply immediately because present uncertainty and confusion is distressing.

They ask that specific power should be given in the bill to enable firms to pass on this tax. I agree with the honorable member for Maranoa (Mr. Hunter). If the Prime Minister cannot accept the amendment submitted by the Leader of the Opposition, I urge him to bring down in another place an amendment which would definitely confer this specific power on registered firms. The right Honorable gentleman has said that there is nothing whatever now to prevent them from adding the tax at the bottom of their invoices; but I suggest that the granting of the proposed specific power would meet the position. When this bill was brought down last week, the Brisbane merchants held a meeting, and decided to add the tax at the foot of each invoice. I believe that the merchants in the southern cities came to the same decision, which is undoubtedly the fairest and most reasonable method to adopt, as it would pass on only the actual amount of the tax. Subsequently the Queensland branches of firms having head offices in the south received instruction? not to adopt that method, but to bring about an all-round increase in prices, instead of adding the actual amount of the tax on the invoices. It would be most difficult to pass on the tax in the latter way, because a firm handling hundreds or thousands of different lines would find it almost impossible to add exactly 2? per cent. to the prices of individual items. This method would probably result in the consumers paying a far greater amount than the actual increase brought about by the tax.

Mr HAWKER:
Wakefield

.- I understood the Prime Minister to say that, because of the constitutional aspect of the proposal embodied in the amendment, he was afraid that, if he accepted it, it might mean the loss of the whole bill. We have already agreed to new clause 71a under which, if any particular clause were unconstitutional, the rest of the measure would stand.

Mr Scullin:

– I am afraid that that clause would not help us in this case.

Mr HAWKER:

– I was under the impression that clause 71a met the position. Perhaps a proviso could be added to clause 19a which would have a safeguarding effect similar to that which clause 71a has in regard to the bill as a whole. The importance of the incidence of this act at the outset is so great that I hope that the Prime Minister will obtain further legal opinion on the matter.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I am willing to accept the latter suggestion; but counsel has been consulted already, and I cannot take the risk of having the whole incidence of this tax upset. I point out to the Leader of the Opposition that the judgments which he has read were considered by the counsel who advised the Government in this matter.

Mr HUNTER:
Maranoa

.- I shall discuss the practical, and not the legal, aspect of the subject. This tax will undoubtedly be passed on by the wholesalers, or many of them will be forced out of business. Not 5 per cent. of the wholesalers at present in business in Australia are making 2½ per cent. on their turnover. If this tax is not passed on specifically, the price of commodities will undoubtedly be increased by more than 2½ per cent. Unless the amount of taxation payable on a particular invoice can be shown in a lump sum at the foot of it, merchants will be obliged to have two or three columns on their invoices in order to distinguish the items that are taxable from those that are not taxable, and the amount of tax will be indicated in a separate column. If this has to be done, it is more than likely that, in order to avoid going into fractions, more than the2½ per cent. will be charged in some cases. I feel certain that a way could be found to give legal sanction to the making of a statement at the foot of invoices of the total amount of tax payable in respect to them. If this could be done, it would be beneficial to the public, for it would ensure that not more than 2½ per cent. would be charged in taxation; and it would be beneficial to the department, for it would render unnecessary a’ minute examination and dissection of the accounts of merchants by departmental officers. It would be most difficult for an inspector to analyse the accounts of a merchant to ascertain first, which sales were subject to taxation and which were not; and, secondly, how much taxation was payable. I hope, therefore, that the Government will be able to find a means to the end which it is desired to achieve.

Proposed new clause negatived.

Amendment (by Mr. Scullin) agreed to -

That the following new clause be added: - “ 71a. This act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would, but for this sub-section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power.”

First schedule.

The following goods manufactured in Australia : -

Dr EARLE PAGE:
Cowper

– I move -

That the following item be inserted: - “ Agricultural, pasture, vegetable, and garden seeds.”

I shall not press this amendment to a vote if the Treasurer will give me an assurance that sales of locally-grown seeds are exempt from taxation under the provisions of clause 20.

Mr Scullin:

– I assure the right honorable member that that is so.

Amendment - by leave - withdrawn.

Mr GREGORY:
Swan

.- There appears to be no doubt that bags and sacks used for the marketing of primary products are exempt from the tax, but I should like to see a specific provision inserted in the schedule for the exemption of bags used for the marketing of fertilizers.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– In order to remove any doubt about the matter,I move -

That at the end of the item “ bags and sacks” the following words be added: - “ and items specified in this schedule.”

Mr BELL:
Darwin

.- Agricultural lime is almost as important to some primary producers as ordinary superphosphates. I should like to see it included in the exemptions.

Mr Scullin:

– If it is used as a fertilizer it will be exempt.

Amendment agreed to.

Mr FRANCIS:
Moreton

– I move -

That the following item be inserted: - “ Bicarbonate of soda.”

I hope that the Treasurer will accept the amendment in the interests of primary producers engaged in the manufacture and marketing of butter. Butter is included in the list of exemptions, and it seems only reasonable to include bicarbonate of soda, parchment paper, and salt, which are largely used in the manufacture and marketing of butter. Containers and packages used in the marketing of primary products are exempt, and as parchment paper is really part of the containers in which butter is marketed, it should also be exempt. The other two items are essential raw material for the manufacture of butter, and I accordingly urge the Prime Minister to include them in the items exempted from sales tax. The exemption of these items will not affect the revenue very greatly, but will materially benefit those engaged in this important industry. As the country is passing through a period of grave depression, there isno doubt that the local consumption of butter will diminish, and it will be necessary, if the industry is to be maintained in its present position, that more butter shall be exported. But if we increase the cost of production, it is unlikely that we shall be able profitably to export larger quantities. In view of the tendency of prices to fall, I ask the Government to give this industry the additional assistance which the exemption of these relatively unimportant, items would afford it.

Amendment negatived.

Silling suspended from 11.58 p.m. to 12.30 a.m. (Thursday).

Thursday, 7 August. 1930.

Mr MACKAY:
Lilley

– When speaking on clause 20 I indicated that I would move, when the schedule was being discussed, an amendment to include in the list of exemptions, scientific and professional books. The Prime Minister has stated reasons for not exempting this class of literature, but to keep faith with the representations that have been made to me, I move -

That the following item be inserted: - “Books, scientific and professional “.

Amendment negatived.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I move -

That after the words “ goods specified in this schedule “, in the item “ Boxes, cases, and crates,” the following words be inserted: or in paragraph 6 of section 20 of this act “.

The effect of this amendment will be to include boxes, cases and crates, &c, other than those items which are specified in the schedule. At present an anomaly exists, because the schedule exempts boxes for butter, which is specified as exempt, but not cases for fruit, which, being a primary product, is exempt. Under this amendment the list of exemptions will include cases for fruits or any of those things specified in clause 20.

Mr PATERSON:
Gippsland

, - The honorable member for Riverina (Mr. Killen), who is unable to be present, asked me, on his behalf, to move an amendment which, if carried, will have the effect of including in the exemption list, boxes, cases and crates used as containers for citrus and other fruits.I understand that that amendment isunnecessary, because it is covered by the amendment moved by the Prime Minister.

Mr Scullin:

– That is so.

Mr Francis:

– Will the Prime Minister also include in the list of exemptions crates for cheese?

Mr Scullin:

– They have already been included.

Amendment agreed to.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I move -

That the following item be inserted: - “ Cigars “.

Cigars were omitted inadvertently.

Mr Francis:

– What about tobacco?

Mr SCULLIN:

– That will be included later. Cigarettesand cigars are exempt from this tax, because they are included in the special revenue duties.

Amendment agreed to.

Mr HAWKER:
Wakefield

– I have circulated an amendment to include in the exemption list, cotton seed cake and linseed cake for feeding livestock.

Mr Gullett:

– That comes under the item “ Foods for poultry, birds and livestock.”

Mr HAWKER:

– If that is so, my amendment is unnecessary.

Mr GULLETT:
Henty

– I move -

That the following item be inserted - “ Cake “.

Mr Paterson:

– That would come under the item “ pastry “.

Mr GULLETT:

– Another amendment is to be moved to separate “ cakes “ and “pastry.” I refer, of course, only to cakes made by manufacturers which are largely consumed in restaurants and tearooms. The peculiar thing about the omission of cakes from the exemption list is that there are kindred articles, such as pastry among the exemptions. Then again cakes are made up entirely of exempted articles, such as butter, dried fruits, sultanas, flour, milk products, and sugar. Even the gas or electricity used to make them is exempted. Practically every ingredient in the manufacture of cake is exempt, yet the cake itself is taxable. Restaurant and tearoom keeping has for many years been a precarious business. Yet those establishments cater for the great class of city workers, such as office boys, junior clerks, typists, and others. Their luncheons consist mainly of a pie, a sandwich, and a slice of cake. Manufactured cake is a fairly cheap commodity, and is consumed by tons of thousands of our city workers. As a foodstuff, it is really a necessary of life, and, therefore, should be included in the exempted list.

Mr Scullin:

– The restaurants make a lot of their own cakes.

Mr GULLETT:

– A tremendous business is done in bought cakes, otherwise a tax on that article would yield little revenue. The manufactured cake is not a high-class article. The high-class cake is usually termed the home-made cake. It is used in the better class tea-rooms. I appeal strongly to the Prime Minister to exempt this item from the sales tax..

Mr ARCHDALE PARKHILL:
Warringah

– I realize that revenue must be obtained, but I appeal to the Prime Minister, in the interests of democracy, to exempt from the sales tax educational books such as those used by school children and scholars.

Mr WHITE:
Balaclava

– I agree with what the Deputy Leader of the Opposition (Mr. Gullett) has said in regard to the need to exempt cakes from the operation of the sales tax. I can see no’ difference between pastry and cakes. The same ingredients are used in each case. It is an unfair discrimination to tax one and not the other. If cake shops with a turnover of less than £1,000 are to be exempt, their prices will be 2i per cent, less than those of the large restaurants, which employ a considerable number of hands. They are big buyers of produce, including flour, eggs and dried fruits. Cake and pastry are sometimes combined in the one comestible, and if tax is to be collected on the cake content and not on the pastry, difficulties will arise.

Mr. SCULLIN (Yarra- Prime Minister and Treasurer [12.47 a.m.]. - I appreciate the temper of honorable members; otherwise I would suggest that they might save time by moving to add to the schedule everything not mentioned in it. The inclusion of pastry and the exclusion of cakes and biscuits may seem anomalous; but the idea is to exempt small pastrycook shops which produce on the premises the goods they retail. To make the exemption more effective I proposed an amendment, making it apply to all establishments whose annual turnover did not exceed £1,000. Many cake and biscuit manufacturers are in a big way of business, and sell their products wholesale. The others are retailers, and it is not the purpose of this bill to tax retail business. The Deputy Leader of the Opposition (Mr. Gullett) has urged that as all the ingredients of cakes are exempt, the composite product also, should be exempted. I remind him that the raw materials of all manufactures are exempt.

Mr Gullett:

– Because the tax is collected at a later stage.

Mr SCULLIN:

– That applies also to cake. The manufacture of cake is a big business, and one firm has factories and shops in several States. I am sorry that I cannot extend the exemption to cakes.

Mr GULLETT:
Henty

– I am afraid that this tax will lead to a big change over of cake-making businesses ; the big factories will decline, with a resultant dislocation pf employment. Probably, restaurants and tea rooms will undertake the making of their own requirements in order to evade the tax.

Amendment negatived.

Amendment (by Mr. Latham) agreed to-

That the following item be inserted : - “ Compressed air.”

Mr HILL:
Echuca

.- I move -

That after the word “ Dried “ in the item “ Dried fruits “ the words “ and canned “ be inserted.

I have already spoken at length regarding the need for including canned fruits in the list of exemptions. If the industry is forced to pay this tax, the already overburdened growers will be obliged to accept lower prices for their goods. This will force many of them to leave their holdings and seek work in the cities. If the Government persists in taxing canned fruits it must take the responsibility for the inevitable closing of one or more of the big co-operative canneries, throwing many people out of employment and forcing growers off the land.

Mr PATERSON:
Gippsland

– I support the amendment. When Minister for Markets I received annually deputations from those engaged in the canned fruits industry, asking for assistance in the form of an export bounty. Each year that proposal was submitted to the Board of Trade, in order that it might recommend whether an amount should be drawn from the primary production trust account for the payment of a bounty on exports. In some yours the bounty amounted to about £10,000. I understand that a. sales tax of 2$ per cent, ‘on the canned fruits consumed in Australia would represent about £10,000 per annum, and it would be absurd to provide on the one hand £10,000 for the payment of an export bounty in order to assist a struggling industry, and ou the other hand, to extract from that industry a similar amount by means of further taxation. As the honorable member for Echuca (Mr. Hill) pointed out, dried fruits and canned milk productsare exempt; in those circumstances there appears to be no particular reason or justification for excluding canned fruits.

Dr EARLE PAGE:
Cowper

– About five or six years ago there was a tremendous glut of canned fruits in Australia. Certain fruit pools had been -formed after the war, hut they were not able to get rid of all their stocks, until the Government, by means of an intensive advertising campaign, and the reduction of the price on the local market from ls. 3d. to 10½d. per tin, was able to increase the consumption from one tin to three tins per head of the population. Even with that considerable increase the consumption per head was still lower than in America. The canned fruits industry is in a difficult position. It has to export, a. big proportion of its pack, and can only do so with the aid of a subsidy. If by increasing the price of canned fruit to the Australian consumer we contract the local market, further assistance will have to be given to the industry to enable it to sell a greater proportion of its produce overseas. The effect upon the finances of Federal and State Governments will be such that any advantage gained by the imposition of the tax on this commodity will be nullified.

Mr FROST:
Franklin

.I join with the other honorable members who urged that canned fruits should be exempt from the sales tax. I think, however, that a definition of canned fruits will be necessary. Do they include fruit pulp? I received yesterday a telegram from Tasmania asking ii fruit pulp is exempt; I referred the matter to the Treasurer who told me that he was not sure that this product could be added to the list. I appreciate the amendment moved by the honorable member for Echuca, because I know the disabilities under what the canned fruit industry labours. Last year the Government had to pay a bounty on the export of surplus raspberry pulp. It would be foolish to impose extra taxation on an industry which is kept going only by Government assistance. The small fruits industry employs more hands per acre than any other primary industry, and absorbs seasonal labour that otherwise would not be employed. If the Prime Minister will include canned fruits in the list of exemptions, he will render great assistance to a very deserving section of primary producers.

Mr MACKAY:
Lilley

.Of all the primary producers, none are more deserving of consideration than fruit-growers. On a previous occasion the honorable member for Echuca spoke eloquently in favour of the exemption of the fruit canneries in his district. I desire to say a word in behalf of the pineapple canneries in Queensland. There are large areas under crop in my district, and I know something of the difficulties these people have to contend with, not only on account of the low prices which prevail from time to time for their product, hut also because of the high cost of transport. It costs about 8s. a case to transport the fruit from Brisbane to Sydney. The result is that a great deal of it is canned, and in that form is very popular all over Australia. If canned fruits were included in the list of exemptions it would be only just to a large section of people, and it would, moreover, remedy the anomaly of having dried and fresh fruits exempt, while canned fruits are subject to the tax.

Mr CURTIN:
Fremantle

– I again urge the Government to give sympathetic consideration to the requirements of the mining industry. I agree that it is very important that the greatest amount of revenue possible should be collected by this tax, but I wish to emphasize the specially irksome conditions under which the mining industry is carrying on. I ask the Minister to consider carefully how far, if at all, it is possible for him to relieve the goldmining industry of at least part of the obligation which will be imposed upon it by this legislation. I particularly stress the importance of exempting the machinery required to operate the new low-grade mines which are being opened up for development, not only in Western Australia, but in various other parts of the Commonwealth. I regard machinery for mining purposes as capital expenditure, and ask the Treasurer to view it in that light. Explosives and timber enter into the running costs of the mining in-dustry, but machinery is part of the capital cost. I feel confident that if the industry is given a chance it will, during the next year or two, provide employment for a large number of men who would otherwise have to remain out of work, and will, in addition, make a material contribution towards meeting our national liabilities.

Mr BAYLEY:
Oxley

.That the Treasurer recognizes that fruit is a necessary article of diet is shown by the fact that he has seen fit to exempt fresh fruit from the incidence of this tax. I point out, however, that there are many places in Australia where it is impossible for the people to get fresh fruit. Canned fruit is the only sort that people living in the far-western districts are able to obtain. Anything that will increase the cost of that fruit to the people is to be deplored. The Treasurer has exempted the containers in which the fruit is marketed-

Mr Scullin:

– Only the containers for fresh fruit; that is, the cases. The tins in which canned fruit is packed are not exempt.

Mr BAYLEY:

– Then we have another reason for complaint; the Government certainly should exempt the containers. We h ave placed a large number of returned soldiers on the land to grow fruit, and many of them are producing fruit for canning purposes. Canned fruit is not a luxury; it is a necessity. Unfortunately, owing to tlie difficulty of placing fruit on the market, it has, in the past, been a. luxury for many people in the country. We should strive to make it easy for as many people as possible to have fruit, either fresh or canned, on their table. .1. cannot understand why the Treasurer (Mr. Scullin) should exempt so many articles of food, and refuse to place canned fruits on the list of exemption?.

Mr FRANCIS:
Moreton

I desire to associate myself with theappeal to the Prime Minister (Mr Scullin) to exempt canned fruit in all its forms from this tax. I also wish to join in the appeal of the honorable member for Oxley (Mr. Bayley), and the honorable member for Lilley (Mr. Mackay) for the exemption of pineapples, and to acid that, in my opinion, canned tomatoes should also be exempt. It has been pointed out that dried and fresh fruit arc already exempt, so that I am at, a loss to understand why the Government should not also include canned fruits. Since the war, an effort has been made to find overseas a market for Australian canned fruits. Many repatriated soldiers have been placed on the land to grow fruit. Large quantities of fruit have been produced, and the difficulty has been to find a market for it. A sum of £10,000 has been spent for a number of years to assist in the marketing of dried fruits, and a much larger sum has been spent to foster the taste for our tinned fruits in the United Kingdom. Considerable success has attended those efforts. The margin of profit has been low, but the aggregate return has been large over the amount of fruit exported. The efforts of past governments to open up and consolidate overseas markets will be nullified by the action of this Government. I cannot see that there is any real argument for not placing tinned fruits on the schedule. When the products of milk, such as condensed milk, powdered milk. &c., are admitted, and when fresh and dried fruit are also exempt from the tax, I do not think that Allah himself could suggest any sound reason for refusing to exempt tinned fruit.

Mr Scullin:

– I wish that I could call on Allah to help me now.

Mr FRANCIS:

– Well, call on him to help you” come to a decision to place tinned fruits on the list of exemptions.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– As I said earlier, once we start to make exemptions of any kind, we must discriminate, and, therefore, lay ourselves open to charges of inconsistency. The honorable member for Moreton (Mr. Francis) was considerably more inconsistent in his argument, than is the schedule. Earlier in this debate, he picked’ out a number of exemptions such as bread, flour, cream, sugar, &c, and said that they would benefit, not the primary producer, but only the consumer and manufacturer. I point out to him that if what he said in respect to them is true, it is equally true in respect to canned fruits.

Mr Francis:

– I am arguing in favour of uniformity in the schedule.

Mr SCULLIN:

– I regret that 1 cannot meet the wishes of honorable members. We went fully into the question of canned fruit. All exports are exempt as it is, so that the marketing of goods overseas has been provided for. That has made a very big gap in our revenue. Dried fruits were specially exempted, because of the very serious condition of the industry- I admit at once, that the exemption of dried fruits, and the non-exemption of canned fruits, constitutes an anomaly, but we believed that it was justified m the circumstances. It must also be remembered that dried fruits are more a primary product than are canned fruits, which are really a manufactured article. The request of the honorable member for Franklin (Mr. Frost), regarding products from his district, shows how wide we may be compelled to open the door if we open it at all. We cannot very well agree to exempt canned fruit unless we apply the exemption also to fruit pulp, fresh kept fruit, jams, &c.

Mr Hill:

– There is no need to exempt fruit pulp.

Mr Francis:

– I want pineapple pulp exempted.

Mr SCULLIN:

– Yes, and somebody else, I have no doubt, would have quite a good case for the exemption of jams. While I agree with the honorable member for Oxley that fruit is a very desirable article of diet, I point out to him that, from the point of view of the consumer, there is an even better case for exempting jams than for exempting canned fruits. Jam enters much more widely into the diet of the people than canned fruits do. If we keep on adding to the list of exemptions, we shall find before long that we have made very heavy inroads into our revenue. I am sorry that I cannot accept the proposal for the exemption of canned fruits.

Mr HILL:
Echuca

.- I cannot allow this to go by without entering a further protest. I feel sure that if the Prime Minister was as well acquainted as I am with the difficulties under which the canneries are carrying on he would be prepared to give them more sympathetic treatment. The honorable member for Franklin suggested that fruit pulp be exempt, as also should berry fruits, which are grown more particularly in Tasmania. I would want to look very closely into the berry-fruit industry, and analyse the position carefully before I would agree to its exemption from the incidence of this tax. When I was in South Africa, I was informed that berry fruit from Tasmania’ was being sent there to be processed by black labour, with sugar which was also produced by black labour.

Mr Scullin:

– I point out, in fairness to the honorable member for Franklin, that the exemption he asked for was in respect of fruit processed in Australia, not in South Africa.

Mr HILL:

– The Prime Minister has said that all exports are exempt. I point out to him that a loss is made on every case of fruit that is sent out of the Commonwealth, and at the present time the same thing applies to all that is sold locally. This imposition that the Government proposes cannot be passed on to the consumers by the canners. The other day the right honorable gentleman said that, to some extent, canned fruits are a luxury. I do not know whether or not they are a luxury in Australia; but in other countries where wages arenot half so high as they are here, that is not the case. Canada and Great Britain take large quantities of our canned fruits at a price.

Mr Scullin:

– I do not think that the honorable member has a right to answer arguments that have not been used in the debate.

Mr HILL:

– I do not wish to be unfair.

Mr Scullin:

– I do not think that the honorable member is fair.

Mr HILL:

– I feel keenly on this matter. I have followed this industry for a number of years, and I realize the position in which the settlers, among whom are many returned soldiers, are placed. Those honorable members opposite who represent primary producing constituencies should stand by the soldier settlers as well as other closer settlers.

Question - That the words “ and canned” proposed to be inserted (Mr. Hill’s amendment) be so inserted - put. The committee divided. (The Chairman- Mr. McGrath.)

AYES: 22

NOES: 31

Majority … 9

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I have a great deal of sympathy for the case that has been made out by the honorable member forFremantle (Mr. Curtin) on behalf of the mining industry. The difficulty is that, if the question of mining machinery must be opened, up, the case for agricultural and other machinery must also be examined. That is a very big item, and, if the whole of it were exempt, the revenue would be considerably affected. I shall look into the matter, and if anything can be done I shall see that appropriate action is taken in another place.

Amendment (by Mr. Scullin) agreed to-

That the words “(illuminating or heating) produced fromcoal “ be omitted from the item “ Gas “ with a view to insert in lieu thereof the words “ commercially known as coal gas “.

Mr FRANCIS:
Moreton

– I move -

That the following item be inserted: - “ Goods sold to hospitals.”

Previously in this debate I pointed out how difficult it is to-day for hospitals to carry on, mainly because of lack of finance, for the provision of which they are dependent upon bequests, grants, and the results of special efforts by philanthropic people. In many cases their funds have to be supplemented by grants direct from the Government. The taxation of their food and general supplies will make it still more difficult for them to operate successfully.

Amendment negatived.

Mr MORGAN:
Darling Downs

– The schedule makes provision for the exemption of raw meat. I move -

That the words “ and potted “ be added to the item “ Meat, raw “.

The amendment aims at providing for the exemption of a foodstuff that is used largely by consumers throughout the Commonwealth. It is a popular food in outback districts, where, in many cases, it is the only meat ration that is obtainable.

I plead particularly for the meats that arc canned by ham and bacon factories, such as camp pie. This matter concerns the producers of pigs, who comprise a wide section of the farming community. They eke out a more or less precarious existence by supplying the bacon and ham factories. A tax of 21/2 per cent, will involve a serious reduction of the price that is paid to them for their pigs. It will give me great pleasure if the Prime Minister can see his way to grant this exemption.

Mr Scullin:

– I regret that I cannot accept the amendment.

Amendment negatived.

Mr GREGORY:
Swan

.Last evening I gave notice of a number of exemptions that I desired to propose in the interests of the mining industry, and I am pleased to hear that the Prime Minister (Mr. Scullin) is prepared to consider some of them. Owing to the low price of metals, this industry is deserving of all the consideration that can be shown to it. If these exemptions are included in the present schedule, the. majority of them will need to be repeated in the schedule to bill No. 5, because many of the articles to which I refer are imported. I urge the Prime Minister to agree to the exemption of flotation reagents, used solely for flotation purposes in’ the treatment of metalliferous ores. These re-agents are employed extensively at the Wiluna minesin Western Australia, and at Broken Hill. Some of them are of Australian manufacture and others are imported. I also ask for the exemption of cyanide, explosives, and copper sulphate used, as a re-agent for notation purposes in mining, or for pickling wheat, or for spraying in orchards. I further request the exemption of spare parts of mining machinery and plant, as well as second-hand mining and agricultural machinery and implements. I have just received a telegram from Western Australia with regard to the. sale of some second-hand machinery, and I am advised by the department that it will be taxable under the bill as it stands.’ I move -

That the following item be inserted: - “ Second-hand mining and agricultural machinery and implements.”

So far as the other matters to which 1 have referred are concerned, I hope that the Prime Minister will consider to what extent he can provide for their exemption.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

. -I shall have to consider the suggestions of the honorable member for Swan (Mr. Gregory). I am afraid that I cannot accept a number of them. I certainly cannot agree to the amendment which he has just submitted.

Amendment negatived.

Mr HAWKER:
Wakefield

– Yesterday I circulated five amendments which I intended to move to the schedule, but up to the present, through being unable to catch your eye, Mr. Chairman, I have not had an opportunity to submit more than one of them.I now move -

That the following item be inserted:- - “Egg pulp.”

The Treasurer was asked a question in regard to egg pulp some days ago, but no answer has yet been given as to whether this article will be subject to the tax. If it were exempted, the revenue would not be affected to a serious extent, because egg pulp is sold only to manufacturers.

Mr Scullin:

– In that case it would be exempted.

Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA · NAT; UAP from 1931

– If there is any doubt on the point, I think it would be wise to include it in the schedule. Egg pulp is made from eggs which do not comply with the export standard as regards size, &c. It is mainly sold to cake-makers and the manufacturers of custard powders.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– No strong argument can be advanced in favour of exempting egg pulp. It appears that it is sold only to manufacturers, and in that case it is unnecessary to include it in the schedule.

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

– AmI to understand that egg pulp is not subject to the tax?

Mr Scullin:

– All raw material which a manufacturer incorporates in articles made for re-sale is exempt. Therefore egg’ pulp would be taxable only if it were sold to a retailer.

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

– I wish to inform the committee that egg pulp is made only from perfectly good eggs, which are too small to comply with the export standard.

Amendment negatived.

Mr PROWSE:
Forrest

.Does the Prime Minister intend to exempt sewing and binder twine?

Mr Scullin:

– I promised the honor- able member for Wimmera (Mr. Stewart) yesterday that I would give that matter consideration.

Mr PROWSE:

– Twine is an important item in farming operations to-day.

Mr GUY:
Bass

.- Before the bill goes to another place, I should be glad if the Prime Minister would consider the desirability of adding muttonbirds to the list of exemptions. About 200 half-caste aborigines are engaged in the work of catching mutton-birds on Cape Barren Island, and the islands of the Furneaux group. This is their principle means of livelihood, and the season lasts only for a few weeks. These persons are more or less in indigent circumstances. When they are not catching mutton-birds they engage in fishing. The amount of tax involved is infinitesmal, and I think that we should show consideration for descendants of the original Australian race.

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

– In accordance with a notice of amendment circulated in my name I move -

That the following item be inserted : - “Oatmeal and rolled oats.”

Oatmeal and rolled oats command a considerable sale throughout Australia, and if they were subject to the tax, their cost to the people would be increased. This is a most important primary industry. Practically all the products of wheat are being exempt from this taxation, yet the products of oats are not being exempted from it. The cultivation of oats is practically similar to the cultivation of wheat, and so is the milling of it. It seems to me, therefore, that the Treasurer should give favorable consideration to my request: We have, in Mount Gambier, in my electorate, two very fine oatmeal mills. Mount Gambier is situated almost equi-distant from

Melbourne and Adelaide - about 300 miles from each metropolis. The climatic conditions of this district enable the farmers there to grow the highest quality of oats for milling. I know that oats can be grown in many parts of Australia, but the south-east of South Australia is peculiarly suitable for the purpose. If honorable members have any doubt on this point, I cordially invite them to visit this district during the recess, and satisfy themselves on the point. If the Government will not grant the exemption that I am asking for, it will bring about a reduction in the quantity of oats produced, and, therefore, a reduction in the number of persons employed in this industry. My request is a just one, and I cannot believe that the Treasurer will refuse to accede to it.

Mr PRICE:
Boothby

.- I support the request of the honorable member for Barker. The oats grown in the district to which he has referred are as fine as can be produced in any part of the world. In view of the serious plight of South Australia, I hope that the Government will exempt from this taxation oats sold for milling purposes. Honorable members seem to regard this request, as something in the nature of a joke. If that is so, I appeal to them to remember that the Scotsmen and their dependants in Australia deserve some consideration.

Amendment negatived.

Mr FRANCIS:
Moreton

. I move -

That the following item be inserted: - “ Parchment paper.”

Large quantities of parchment paper are used in preparing butter for the market. If this exemption is not granted, the cost of marketing butter will undoubtedly be increased, and that will seriously affect the whole dairying industry. Earlier in this discussion I referred to the necessity for doiug everything possible to encourage the production of butter in Australia, with a view of increasing our export trade, and so of reducing our adverse trade balance. Dnless we can export large quantities of butter, the local market will be seriously over-supplied.

Dr EARLE PAGE:
Cowper

– In my opinion, parchment paper is already exempt from the tax, because it is the container in which butter is marketed. It is, of course, manifestly impossible to pack butter in boxes without wrapping it in parchment paper.

Mr Scullin:

– I shall look into this matter to ascertain the exact position.

Mr FRANCIS:
Moreton

– In view of the Prime Minister’s promise in his statement in reply, I asked leave to withdraw my amendment.

Amendmen t - by leave - withdr a w n .

Mr BERNARD CORSER:
Wide Bay

– I move -

That the following item be inserted: - “ Remedies for the destruction of animal and vegetable pests.”

It is highly desirable that sheep and cattle dipping preparations and chemicals For the destruction of orchard pests shall be not subject to additional imposts.

Dr EARLE PAGE:
Cowper

– This is a reasonable request, and if it is acceded to the revenue will not be seriously affected. In certain districts of Queensland it is necessary to dip cattle every three weeks, in order to keep them clean. It might be thought that this exemption is already provided for in clause 20, but in case that is not so, I ask the Treasurer to give the amendment favorable consideration. The preparations to which the honorable member for Wide Bay (Mr. Corser) has referred are indispensable if our stock and orchards are to be maintained in a clean condition.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I sympathize with the object of the mover of the amendment, but I cannot accept his proposal without, further investigation. It mayinvolve the granting of exemptions to preparations which the Government is not willing to exempt. I ask the honorable member to withdraw the amendment on the understanding that if the Government can see its way clear to accept the proposal a similar amendment will be introduced in another place.

Amendment - by leave - withdrawn .

Mr HAWKER:
Wakefield

– I move -

That the following item be inserted : - “ Firewood.”

It has been announced that the Commissioner has declined to exempt firewood from this taxation. Firewood, of course, includes mallee roots. Mallee roots surely arc derived directly from the cultivation nf the land or from timber-getting. If they are not, I do not know what is. I do not think any class in the community has suffered more severely in receut years than the settlers in our mallee districts. In view of the fact that coal, electric current, and gas used for heating, lighting, and power are exempt, it is only reasonable that firewood should also be exempt. In many Mallee districts the clearing of land and the selling of mallee roots are the only means by which the settlers can earn a few shillings with which to huy the ba rest necessaries.

Dr EARLE PAGE:
Cowper

. - It is apparent that the item of firewood has been omitted from the schedule by accident. I am satisfied that a moment’s consideration will convince all honorable members that firewood should be placed in the same category as coal, gas, and electricity. Firewood is not a finished product. In most cases it is a spare product of the land. The Prime Minister (Mr. Scullin) has inserted in the bill a provision to exempt from taxation an individual whose average turnover during the year does not exceed £1,000. In most cases firewood would be trucked to the cities by settlers whose turnover would be considerably less than that.

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

– I hope that the Government will accept the amendment. The work of timber-getting is mostly carried out in the country districts. As the honorable member for Wakefield (Mr. Hawker) has said, many of the farmers in droughtstricken areas have been forced to live on their returns from mallee roots. It, therefore, would be iniquitous to add further to their burdens by applying the sales tax to practically their only source of income.

Mr PATERSON:
Gippsland

– There is an interesting point in connexion with the motion for the exemption from sales tax of firewood, as moved by the honorable member for Wakefield (Mr. Hawker). We have been . told on many occasions that we have to depend, not on the intention of the framers of legislation, but on the interpretation of that legislation. It appears to me that, whatever may have been intended by the Prime Minister (Mr. Scullin), who introduced this legislation, clause 20 is certainly capable of being construed to cover mallee roots. It reads - “goods, being primary products which are derived directly from operations carried on in Australia in the cultivation of land.” Mallee roots are certainly primary products. They are derived directly from, the operation of ploughing carried on in Australia in the cultivation of land. This clause is, therefore, capable of such an interpretation.

Mr Hawker:

– The Commissioner says not.

Mr PATERSON:

– As a layman, I submit that it is arguable that clause 20 could be interpreted literally to cover mallee roots. If thatis so, then the position will arise that mallee roots will be exempt from taxation, while other classes of firewood will be taxable. That would be a ridiculous position, and can best be met by exempting all firewood from tax.

Mr. SCULLIN (Yarra- Prime Minister and Treasurer) (2.4 a.m.]. - The grubbing of mallee roots is a new interpretation of primary industry, and the Leader of the Opposition (Mr. Latham) has facetiously suggested that if mallee roots are primary products, stones are also. The total exemption from taxation of firewood as firewood would be a big item, but I would point out that the smaller settler in the back country who digs out mallee roots and sends a truck load to the city at various times, would be exempt from this taxation under the amendment that has been inserted in the bill, exempting all goods sold exclusively by retail by an individual who manufactures some or all of those goods, and the total value of whose average yearly sales is not, or would not be, in the opinion of the Commissioner, in excess of £1,000. Firewood is production, and production is included in the term, “ manufactures “. If the settler sells firewood to a wholesale merchant who is a registered person, no tax will be imposed until the firewood is resold. If the firewood is sold retail, it will not be subject to tax unless the turnover of the settler is £1,000. I appreciate the point that has been made by the honorable member for Wakefield (Mr. Hawker), but I think that it has been well covered by the ‘ amendment that has already been inserted in the bill.

Amendment negatived.

Mr BERNARD CORSER:
Wide Bay

– I move -

That the following item be inserted: - “ Sawn timber, the product of Australia “

Sawn timber is used in workers’ and other homes, and, therefore, should not be taxed. At present considerable distress exists in the timber districts, . and a sales tax on sawn timber indirectly affects the hauling and cutting of logs, and would inflict a severe hardship upon the timber-workers. Our aim to-day should be to make timber milling in Australia as cheap as possible for the benefit of the community as a whole. If this amendment is not carried, imported timber will be given an advantage which will lead to the decline of the Australian milling industry, and an increase of unemployment.

Mr MORGAN:
Darling Downs

– I do not wish to recapitulate the arguments that I have already advanced on this subject. I rise only to associate myself with the honorable member for Wide Bay (Mr. Corser), and to urge the Prime Minister to give favorable consideration to the amendment.

Dr EARLE PAGE:
Cowper

– I support the amendment because, after all, sawn timber is a raw material for building generally. I understand thai the basic principle of the sales tax is the exemption of raw materials for manufactures. Sawn timber must always be used in a fairly wholesale way. At present the saw-milling industry is in a difficult position, and unable to provide work for many thousands of timber-workers. Half of the mills in Australia have been closed down. The mills in New South Wales were badly hit some three years ago by State legislation, and they have yet scarcely recovered. If the sales tax is applied to timber, thousands of men will be thrown out of employment. As no work would be done, no tax could be collected. In the circumstances, the Government should place sawn timber in the list of exemptions, in conformity with the general scheme of this legislation.

Mr FRANCIS:
Moreton

– I support the amendment. The timber industry is in a precarious position, and the imposition of this tax -will be the last straw that breaks the camel’s back. Sawn timber is undoubtedly raw material, inasmuch as it is largely used in various industries. The general principle underlying the bill is to exempt raw material used in manufactures. I urge the Prime Minister not to impose a further burden on the timber industry. Some measure of tariff protection has already been given to it, but that will be of no avail if offset by the burden of this taxation.

Mr BELL:
Darwin

.- I support the amendment, but I fail to understand why only sawn timber has been specified. Timber generally should be exempted from the sales tax.

Mr.Bernard Corser. - What other classes of timber are there?

Mr BELL:

– Timber used for spars, piles, sleepers, and palings. The splitting of palings and staves for casks and barrels affords considerable employment, and it provides many thousands of pounds in the form of wages for the workers. It is difficult indeed to define timber before and after it reaches the mill. It would be a mistake not to exempt timber generally from the imposition of this tax.

Mr SCULLIN:
Prime Minister and Treasurer · YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

.- ‘The principle of exempting raw materials is maintained in respect of timber. Timber used for- manufacture is not taxed, but timber sold to a builder not for re-sale is taxed. Sawn timber sold for the construction of a house is the finished article, and, therefore, taxable.

Mr Bell:

– And timber used for fencing purposes?

Mr SCULLIN:

– Timber sold to a builder for fencing will be taxed, but timber cut in the bush and sold in the log will be exempt. The exemption of the whole timber business, representing an industry with an enormous turnover, is unthinkable if the tax is to yield any appreciable amount of revenue. The contention of the honorable member for Wide Bay (Mr. Bernard Corser) would be a very effective argument for the protection of Australian industries, but that is provided for by the customs tariff, A sales tax is im posed alike on imported and locally manufactured articles. I do not agree that the incidence of it should be utilized to do what should be done by a protective tariff.

Amendment negatived.

Amendment (by Mr. Scullin) agreed to-

That the following item be inserted - “ Tobacco.”

Mr HAWKER:
Wakefield

’ I move -

That the following item be inserted - “ Salt.”

Every argument that can be advanced in favour of the exemption of foodstuffs of the people or industries, in trouble applies to salt. Some salt is technically mined, being excavated from the ground, whilst other salt is recovered by evaporation. The products of mining are exempt, and it would bean intolerable condition if salt produced by evaporation were subject to tax whilst mined salt was not. - The Technological and Scientific Dictionary says -

The term mining includes those processes by which the useful and precious minerals are explored, extracted and dressed. . . Two classes of minerals are worked, the metallic and non-metallic. . . The most important examples of the latter are coal, slate, gypsum, chalk, limestone, mica, salt, clays and precious stones.

The Oxford Dictionary also agrees that salt is a product of mining.

Mr FRANCIS:
Moreton

– I support the amendment. In addition to the reasons mentioned by the honorable member for Wakefield, I remind the Prime Minister that salt is the raw material of many industries, including butter-making, butchering, and fish-preserving. It is entitled to the exemption which is granted to other raw materials used in manufacturing.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The fact that some salt is mined does not appeal to me as a good reason why salt should be exempt from this tax. So far as it is the raw material of other industries it will be exempt. Some enthusiastic fiscal reformers have written to remind me that in some countries salt taxes are one of the principal sources of revenue. I cannot agree to the amendment.

Amendment negatived.

Mr PRICE:
Boothby

.Many of the unemployed are engaged in rabbitting, and rabbit meat is beginning to take an important place amongst foodstuffs. Will the Prime Minister agree to the exemption of “underground mutton”?

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– Rabbit meat, raw, is exempt under the item, “Meat, raw”.

Mr HAWKER:
Wakefield

– I move -

That the following item he inserted: - “Lard and small goods from bacon factories.”

Bacons and hams are specifically exempted, and it is only logical to exempt small goods produced from the same source.

Mr Scullin:

– It may be logical, but I do not agree that because we have given exemption to bacon and hams we should go the whole hog.

Amendment negatived.

Mr WHITE:
Balaclava

– I move -

That the following item be inserted: - “Wholemeal and meal products, loose or compressed, manufactured in Australia for human consumption.” “Flour, including bran, pollard, and semolina “ are already in the schedule. Semolina is a breakfast food produced from wheat, and if it is to be exempted, other breakfast foods are equally entitled to consideration.

Mr Scullin:

– I regret that I cannot accept the amendment.

Amendment negatived.

Schedule, as amended, agreed to.

Second schedule and title agreed to.

Bill reported with amendments; report - by leave - adopted.

Bill - by leave - read a third time.

Motion (by Mr. Scullin) - by leave - agreed to -

That so much of the Standing Orders be suspended as would prevent all bills dealing with the sales tax from being passed through all stages without delay.

page 5474

SALES TAX ASSESSMENT BILL

(No. 2).

Motion (by Mr. Scullin) agreed to -

That the bill be now read a second time.

In committee:

Clauses 1 to 3 agreed to.

Clause 4 - (3.) For the purposes of this section, the amount for which goods are sold shall not be taken to include any amount in respect of sales tax.

Amendment (by Mr. Scullin) agreed to-

That after the word “ tax “, sub-clause 3, the following words be added “but when the goods are sold in bond, shall be taken to include the amount of any duty of excise to which the goods would be subject upon entry for home consumption “.

Clause, as amended, agreed to.

Clause 5 agreed to.

Clause 6 -

. ‘ sales tax shall not be payable under this act by the person specified in that section upon the sale value of -

goods in so far as they are the subject of a sale to or by the Government of the Commonwealth or a State, or to or by any authority under any such Government.

Amendment (by Mr. Scullin) agreed to-

That the following words be omitted: - “(d) goods insofar as they are the sub ject of a sale to or by the Government of the Commonwealth or a State, or to or by any authority under any such Government.”

Clause, as amended, agreed to.

Clause 7 -

Every person who during any month makes any of the sales specified in sub-section (1.) of section four of this act shall, within seven days after the close of that month, furnish to the Commissioner a return in the prescribed form setting forth the aggregate of the amounts for which the goods were sold during that month, together with the aggregate of all discounts, rebates, deductions or other credits given during that month in respect of those sales, and such other information as is prescribed.

Amendment (by Mr. Scullin) agreed to-

That the word “ seven “ be omitted with a view to insert in lieu thereof the word “ twenty-one “.

Clause, as amended, agreed to.

Clause 8 agreed to.

Clause 9 consequentially amended, and, as amended, agreed to.

Clauses 10 to 12 agreed to.

Schedule consequentially amended and, as amended, agreed to.

Title agreed to.

Bill reported with amendments; report adopted.

Bill read a third time.

page 5475

SALES TAX ASSESSMENT BILL

(No. 3).

Bill read a second time, reported from committee with consequential amendments, and passed through its remaining stages without debate.

page 5475

SALES TAX ASSESSMENT BILL

(No. 4).

Bill read a second time, reported from committee with consequential amendments, and passed through its remaining stages without debate.

page 5475

SALES . TAX ASSESSMENT BILL

(No. 5).

Motion (by Mr. Scullin) agreed to-

That the bill be now read a second time.

In committee:

Clauses 1 to 3 agreed to.

Clause 4 - (1.) For the purposes of this act, the sale value of goods imported into Australia on or after the first day of August, One thousand nine hundred and thirty -

by an unregistered person; or

by a registered person who does not quote his certificate on the customs entry relating to the goods.

Mr D CAMERON:
BRISBANE. QLD · NAT

– I move -

That the following words be added to the clause : - “ Provided- further that no regulations prescribed under section twelve of the Sales Tax Assessment Act (No. 1) as applied to this act shall compel a registered person to quote his certificate so as to prevent his sales tax being assessed under section four (1.) (b) of this act.”

It is maintained that this clause, which fixes the basis upon which retail importers will pay the sales tax, does a grave injustice to wholesale importers, and through them to other retailers, particularly small retail shopkeepers. The amendment is designed to secure to the wholesale importer the right, if he so desires, to have his sales tax assessed under this clause, so as to place him on an equality with the retail importer. Under the bill as it stands, a wholesale merchant will have to pay sales tax on the sale value of his goods. That value comprises the landed cost of the goods in his warehouse, plus a sufficient advance to cover overhead charges, and to leave a margin of profit, if possible. The landed cost of the goods is their f.o.b. value, plus the duty paid upon them, as well as all charges from the factory on the other side of the world to the warehouse on this side, such charges comprising inland freights, dock dues, buying commission, freight, insurance, bank exchange, and landing charges at this end. On the other hand, a retailer who imports goods direct will pay the sales tax only on the value for duty, plus the duty and an advance of 20 per cent. For instance, if a wholesale importer imported goods that had a value for duty purposes of, say, £100, and that were subject to a duty of 50 per cent., the amount on which he would have to pay sales tax, assuming that 50 per cent, was added for expenses from the factory to the warehouse, and a further 25 per cent, to cover working expenses and profit, would be as follows: -

The value of the same goods, in the case of a retailer, would be as follows: -

I remind honorable members that clause 12 of Bill No. 1 provides that a registered person shall quote his certificate in such manner and under such circumstances as are prescribed; and that a registered person shall not quote his certificate except as prescribed. Clause 4 of this bill provides -

  1. For the purposes of this act, the sale value of goods imported into Australia on or before the first day of August, One thousand nine hundred and thirty -

    1. by an unregistered person; or
    2. by a registered person who does not quote his certificate on the customs entry relating to the goods, shall be an amount which exceeds by twenty per centum the sum of the following: -
    1. the duty-paid value of those goods; and
    2. the duty of customs payable in respect of the goods.

The object of the amendment is to permit a wholesale importer, if he so desires, to come under those provisions.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– So far as I can follow the proposal of the honorable member, I gather that it would permit an importer to import goods without quoting his certificate.

Mr D CAMERON:
BRISBANE. QLD · NAT

– Yes.

Mr SCULLIN:

– In that case, the desire would be to pay the tax upon importation. That would permit a man to import goods without being registered. If an unregistered person did that, and then re-sold the goods, the tax would have to be paid twice, and I am afraid that hardship would be inflicted upon the importer. If the honorable member will take up the matter with the Commissioner I am sure that any hardship such as is suggested by the figures which he has quoted will be rectified. If an amendment be necessary, it can be made in another place. It is not the desire of the Government that the tax shall be paid twice.

Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA · NAT; UAP from 1931

– The objection of the Prime Minister could quite easily be overcome by adding to clause 6 of Bill No. 6 a paragraph in the terms of paragraph d of Bill No. 7. The taxpayer would then be exempt from the payment of tax on goods, in respect of the sale value of which the Commissioner was satisfied that sales tax had already been paid under the provisions of some other act.

Mr Scullin:

– I do not think that that would cover this case.

Mr LATHAM:
Kooyong

– Under Bill -No. 5, when goods are imported, their sale value is an amount which is determined by the addition of 20 per cent, to their duty-paid value and the customs duty that is payable in respect of them. Under Bill No. 6, the sale value of the same imported goods is different; it is the amount for which those goods are sold. Accordingly, there is a distinction between the basis of valuation for taxation purposes in the two measures. There does not appear to be any reason for that in principle; the reason can be only one of convenience and the possibility of administration. In the one case the tax is collected at the point of importation, and in the other case at the point of sale. The object of the amendment of the honorable member for Brisbane . (Mr. D. Cameron) is to allow a person who imports goods to come under the provisions of clause 4 of Bill No. 5, if he so desires, in order that he may be in the same position in relation to the total cost of the goods as the individual who comes under the provisions of Bill No. 6. The honorable member for Wakefield (Mr. Hawker) has pointed out that, if an addition be made to Bill No. 6, similar to the provision which appears in Bill No. 7, it will be easy to avoid the double taxation that has been referred to by the Prime Minister as an objection; that is to say, it will exclude the further payment of tax upon goods in respect of the sale value of which the Commissioner is satisfied that sales tax has already been paid under the provisions of some other act. The effect of the simultaneous operation of the provisions of Bills Nos. 5 and 6, in relation to the sale of goods, will be to produce a differentiation in the tax that is payable. That differentiation arises partly from the necessity of adopting an arbitrary basis of valuation, by the addition of 20 per cent, to a certain sum in order to determine the value of imported goods. That 20 per cent, is evidently designed to bring the value up to something approaching a fair wholesale value. Probably, with certain goods and in some trades, that will be a fair addition to make; but in other cases it may not be. As double taxation can readily be avoided in the manner suggested by the honorable member for Wakefield, I suggest that favorable consideration be given to the suggestion of the honorable member for Brisbane.

Mr ARCHDALE PARKHILL:
Warringah

. - Obviously, there is inconsistency in the application of this clause to importers, and to merchants who sell to retailers. I have received from the Sydney Chamber of Commerce, which is interested in this matter, a telegram in the following terms: -

Although wording very obscure, Sales Tax Bill No. 5 apparently provides that retail importers pay the tax on duty-paid landed price, plus 20 per cent., merchants who sell mainly to retailers who are not direct importers will have to pay sales tax on their selling price, which frequently is necessarily much higher.

That, they claim, will cause a grave injustice to be done to small retailers. The object that the honorable member for Brisbane has in view is to reconcile those differences, and to remedy what will obviously be an injustice to the merchants who sell to retailers, and who ‘have to pay the tax on their selling price. The honorable member for Brisbane seeks a method of placing both classes of traders on the same basis. Although there is some difficulty in determining how that can best be done, I commend the suggestion of the Leader of the Opposition that the proposal submitted by the honorable member for Wakefield be adopted.

Mr WHITE:
Balaclava

.As the bill stands it will operate harshly with respect to traders with a small turnover. Those who are doing best now are chain stores and departmental stores, which buy and sell directly, with the result that most of the wholesale houses are being eliminated. The addition of 20 per . cent, to the landed cost is fair, but it will be seen that if 21/2 per cent, is charged to the wholesaler when he sells to the retailer, he will be taxed more severely than the chain and departmental stores. I suggest that the 20 per cent, should apply in both instances.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The point stressed now is that a retail importer pays duty, adds 20 per cent, to the landed cost, and will pay the sales tax on that value, whereas a registered person who is a wholesale importer pays no duty, and will be charged the tax on the wholesale price to his customers. An injustice would be done only if the whole sale importer who sells to the retailer added more than 20 per cent, to the duty-paid price. But the whole scheme of the bill is to tax the registered person on the sale to the retailer. There may be more than one transaction, but it is the last transaction of the registered person to the retailer that is taxable. If we adopted the suggestion of the honorable member for Wakefield (Mr. Hawker), I do not know how we could police the tax. If the wholesale importer added 10 per cent, for his profit he would pay less tax than the retail importer. The addition of 20 per cent, ought to be adequate.

Mr HAWKER:
Wakefield

– Surely all importers could be put on an equality by being required to pay the tax on the conventional rate laid down for the importer who retails directly to the public. I have heard it suggested that the addition of 20 per cent, to the landed cost of groceries is excessive. Supposing the average is 25 per cent., the retailer who imports all the bulk lines, in which the margin of profit is small, would be at a disadvantage compared with the wholesaler, but in all other lines he would be at an advantage. We have to consider, not only the wholesalers, but also smaller suburban and country shopkeepers who have to obtain their goods through wholesalers. Where a wholesale importer is taxed on whatever sum he finds it necessary, in competition with the retail importer, to add to cover his expenses, he will he at a disadvantage in respect to certain goods and at an advantage with respect to other goods. If both classes of traders were placed on the arbitrary 20 per cent, basis, they would be on a basis of equality. I support the amendment, and, if it does not meet the case, I hope that when the honorable member for Brisbane has conferred with the Commissioner of Taxation, a suitable amendment will be evolved.

Mr D CAMERON:
BRISBANE. QLD · NAT

– Since moving the amendment I have had an opportunity of conferring with the Commissioner of Taxation, as suggested by the Prime Minister, and he admits that the position under the bill is anomalous, and that it will be very difficult to prevent injustice being done. I am willing to accept the assurance of the Prime Minister that, if a satisfactory solution can be arrived at, an amendment will be brought down in another place.

Mr WHITE:
Balaclava

– The Prime Minister has shown clearly that the position is difficult, but the honorable member for Wakefield has pointed out a way in which it may be overcome. Does the Prime Minister realize that this tax will press heavily on the retail suburban shopkeepers, and that the chain stores, which are gradually putting them out of business, will be favoured by this measure ? A suburban hardware store that buys from a wholesale city house pays the wholesale price, plus 21/2 per cent.

Mr Scullin:

– The chain stores have an advantage over the other retailers in any case.

Mr WHITE:

– But this provision increases their advantage. The wholesale houses usually operate on the basis of 331/3 per cent., because their administrative costs are greater than those of the chain stores. The tax will be collected only once, and it should be paid in every instance at the Customs.

Amendment - by leave - withdrawn.

Clause agreed to.

Clause 5 agreed to.

Clause 6 -

Notwithstanding … sales tax shall not be payable upon the sale value of -

goods insofar as they are the subject of importation by the Government of the Commonwealth or a State, or by any authority under any such Government.

Amendment (by Mr. Scullin) agreed to-

That paragraph 6 be omitted.

Clause, as amended, agreed to.

Clauses 7 to 11 agreed to.

Clause 12 consequentially amended and, as amended, agreed to.

Clause 13 agreed to.

Mr WHITE:
Balaclava

. I move -

That the following new clause be inserted: - 5a. The sales tax imposed by this act shall be deemed to be a duty affecting the goods sold within the meaning of section 152 of the Customs Act 1901-1923.

It appears to me to be very necessary to include this new clause in the bill. Sec tion 152 of the Customs Act reads as follows : -

If, after any agreement is made for the sale or delivery of goods duty paid, any alteration takes place in the duty collected affecting such goods before they are entered for home consumption, then, in the absence of express written provision to the contrary the agreement shall be altered as follows: -

In the event of the alteration being a new or increased duty the seller after payment of the new or increased duty may add the difference caused by the alteration to the agreed price.

In the event of the alteration being the abolition or reduction of duty the purchaser may deduct the difference caused by the alteration from the agreed price.

Any refund or payment of increased duty resulting from the alteration not being finally adopted shall be allowed between the parties as the case may require.

Whenever a new customs schedule is laid on the table, the provisions of section 152 of the Customs Act come into operation. It is permissible to add the extra duty to the price of all goods for the purchase of which contracts were made prior to the tabling of new schedules. This provision, has been tested in our law courts. The Supreme Court of Victoria decided that it was invalid, but that decision was overruled on appeal to the High Court. We have provided in an earlier bill relating to the sales tax that manufacturers who have entered into contracts prior to the prescribed date shall not be subject to sales tax in regard to such goods, so there seems to be no justification whatever for imposing this taxation on imported goods for the purchase of which contracts were made perhaps six months ago. If it is equitable to exempt the manufacturers, it is equally equitable, I submit, to exempt the importers.

Mr. LATHAM (Kooyong) [3.18 a.m.l. - There is, as the honorable member for Balaclava (Mr. White) has stated, a provision in the Customs Act that the new duty shall be recoverable by an importer in respect to all goods purchased by contract prior to the tabling of a new customs schedule. In substance, the duty imposed by this bill is a customs duty, though it is not being imposed by a customs law. I, therefore, support the proposal of the honorable member.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The advice of counsel on this point is similar to the advice given on the other matter. Although it has been held that section 152 of the Customs Act is valid, counsel suggests that there is a doubt as to whether that decision would apply to a measure of this kind. Consequently, I cannot take the risk of ‘inserting the proposed new clause in the bill.

Mr LATHAM:
Kooyong

– I should like to hear a little more about this advice which the Government has received. Section 152 of the Customs Act has been in operation for nearly 30 years. Its validity on being challenged, was upheld unanimously by a Bench of five High Court judges. This is a customs measure in substance, and the tax proposed to be imposed is a tax upon imports. I cannot for the life of me see, therefore, why the provisions of section 152 of the Customs Act should not be applicable in this case. I assure the Treasurer that this section has been put into operation almost every day during the last nine months. There can be no rational objection to the inclusion of this proposed new clause in this bill.

Mr WHITE:
Balaclava

– It has been acknowledged by honorable members on both sides of the committee that the sales tax must be passed on. It will be most difficult for the wholesale merchants to pay it. Only yesterday, I received a telegram from the Hardware Association of Victoria to the effect that “ at the largest meeting that the association has ever held it was agreed that it would be impossible for many firms to pay this taxation.” Nine big hardware firms have gone out of business in Victoria in the last two years. Contracts entered into by importers are usually the subject of very keen tendering, because’ such business carries very small overhead charges. This means, of course, that the profits on it are comparatively low. As the Leader of the Opposition (Mr. Latham) has said, the provisions of section 152 of the Customs Act have been applied hundreds of times recently. I sincerely hope that the Prime Minister (Mr. Scullin) will at least refer this matter back to his legal advisors for further consideration. [Quorum formed.]

Amendment negatived.

Schedule.

Dr EARLE PAGE:
Cowper

– I move -

That the following item he inserted: - “ Agricultural, pasture, vegetable and garden seeds “.

It is highly necessary, if we are to improve our pastures, that seed shall be made available at the lowest possible price. It has been agreed that seed gathered in Australia shall not be subject to sales tax, and there is just as much reason why imported seed shall also be exempt from it. The classes of seed which will be affected are the following:

Pasture. - Cocksfoot, rye grasses (except Wimmera, which is local), tall fescue, tall oatgrass, white clover.

Cropping. - Rape, mangel, kale.

Mr Curtin:

– What amount would be spent annually in the purchase of these seeds ?

Dr EARLE PAGE:

– About £150,000. The departments of agriculture of the various States are doing their utmost to encourage the application of scientific methods to all farming operations. It has been shown that in some cases the carrying capacity of pastures has been increased by nearly 100 per cent, through the use of good seed of the right kind. I believe that the amount of revenue that would be lost by the acceptance of my amendment, between £3,000 and £4,000 per annum, would be more than made up in additional revenue from income taxation if these seeds were included in the list of exemptions. The reason why it is necessary to import these seeds is that the period in which they ripen is unsuitable for the gathering of them in Australia.

Mr BELL:
Darwin

.- I support the amendment. I wish to emphasize the importance of sowing the best and purest agriculture, pasture, vegetable and garden seeds. It is just as important to exempt from the sales tax agricultural seed as it is to exempt the products of those seeds. The Prime Minister has already shown that he is most desirous of encouraging primary production; but unless we sow we cannot reap, and unless we sow good seed we cannot reap good corn and grass. We import a considerable quantity of the seeds that are sown in Australia. The pastoral industry is probably the most important of our primary industries. We import seeds, not only from New Zealand, but also from England, Ireland, Denmark and Poland. I have to admit that the imported seeds are purer and cleaner than our native seeds. I was informed by a seed merchant the other day that 90 per cent, of his business consisted of the sale of imported seeds. I know from my own experience that clover seed, other than subterranean clover, cannot, to any great extent, be produced in Australia.

Mr Scullin:

– For what reason?

Mr BELL:

– Various reasons have been given. Rye grass seeds are certainly produced in Victoria, and, possibly, in the other States, but the greater proportion of this seed is imported from New Zealand, England and Ireland ; as is also cocksfoot, white dutch clover and red clover.

Mr Paterson:

– The Government has already imposed a primage duty on imported seeds.

Mr BELL:

– That applies to many other things as well. We should ensure, as far as possible, the use of the best and purest seeds in Australia. As we are dependent to a great extent upon imported seed, I urge the Prime Minister to give serious consideration to the amendment.

Mr Crouch:

– In view of our financial needs will the right honorable member for Cowper (Dr. Earle Page) add to the list of seeds which he wishes to be exempted, the seed of Abraham?

Mr FRANCIS:
Moreton

– I urge the Prime Minister to agree to the request of the right honorable member for Cowper to include in the exemption list imported as well as Australian seeds. A concerted effort is being made throughout Australia by the State agricultural departments, in conjunction with the Council for Scientific and Industrial Research, to improve our pastures. No industry is playing a bigger part in assisting Australia in this time of financial stress than is the great pastoral industry. I know of many instances in which the planting of pasture seeds has improved the carrying capacity of land. At Kybybolite, in South Australia, the carrying capacity of the land not so long ago was a sheep to three acres, but to-day, because of the pastoral improvements, and the planting of imported seeds, that country is now carrying four sheep to the acre. Results such as that must assist Australia materially. The bulk of the seed planted in Australia is imported, and I urge the Prime Minister not to hinder the improvement of pastures by imposing this tax on imported seeds.

Mr PRICE:
Boothby

.- I know agriculturalists who have had a good deal of experience in connexion with the planting of pasture seeds on station lands, and I am satisfied that the best seed is the native seed. If clover seed is required, and particularly the seed of subterranean clover, any quantity of it can he obtained in South

Australia in and around the Mount Lofty ranges. For pastoral lands the best seed is that of subterranean clover. We should encourage the planting of Australian seed, and there is really no necessity to include imported seeds in the list of exemptions.

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

. - I cannot agree with the honorable member for Boothby that the seed of subterranean clover is the only seed necessary for the pasture lands of Australia. Up to the present, Australia has depended largely upon its own natural grasses, but in the endeavour to improve pastures it has been necessary to import the best seeds from Europe. Anything that is done to prevent the free importation of those seeds must delay the improvement of our pastures. As Australia cannot, depend solely upon wool, we must adopt the methods of New Zealand in respect of dairying and the raising of fat lambs. We find in South Australia that New Zealand seed does remarkably well, and for that reason I urge the Prime Minister to exempt imported seed from this taxation.

Mr WHITE:
Balaclava

– The honorable member for Boothby (Mr. Price) has said that certain seeds can be obtained in South Australia, but I find that none of them are subject to the sales tax. I have been informed that certain grass seeds cannot be produced in Australia, and that if our pastoral industry is to improve we must plant the. purer and cleaner seed that is obtainable overseas. For the information of the honorable member for Boothby, let me say that the following seeds are not effectively produced in Australia: -

Perennial ryegrass, cocksfoot, Timothy, crested dogstail, Chewings fescue, creeping bent, colonial bent, white Dutch clover, cow grass, alsike, berseem clover, suckling clover, sweet or Bokhara clover, lotus major or greater birdsfoot trefoil, lotus hispidus, and dwarf Essex rape.

Those seeds need a cool climate, and a dry summer to enable proper pastoral improvement to be effected. Of course, fertilizers are exempt from the sales tax, and it is only right that they should he. The best seed is obtained from matured pastures. Australian pastures are still immature, and nothing should be done which would deprive the primary producers of the seeds that will produce the best grasses. Farmers trade with one another to a small extent in seed and pay no sales tax. It is, therefore, only fair that the tax should not be paid on other sources of supply.

Mr ARCHDALE PARKHILL:
Warringah

. - Locally-grown seeds are already exempt from this tax, but the seeds principally used by primary producers are imported, mainly from New Zealand. The seeds imported from the dominion are valued at approximately £150,000 per annum. Owing to soils and climatic conditions, Australian seeds are limited in respect of varieties and quality. It is essential that the primary producer should be able to get the seed that yields the best results. Vegetable seeds are the raw material from which is produced a portion of the nation’s food supplies. Therefore, a tax on these seeds is a tax on foodstuffs. As the policy of the Government is to exempt foodstuffs and fertilizers, it is reasonable to add imported seeds to the list.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– A good case appears to have been made out for the exemption of seeds, but I am not prepared to adopt the amendment offhand without further investigation as to what it will involve. I have been bombarded with requests for exemptions, and if I had acceded to all of them, I should have surrendered £3,000,000 of revenue. However, the Government hopes that the pro ceeds of the tax will be up to expectations, and that, as the finances of the country improve, the list of exemptions may be extended. I shall look further into the matter of seeds before these bills are disposed of in another place.

Mr White:

– Will the right honorable gentleman look into the legal position in regard to customs mentioned by the Leader of the Opposition?

Mr SCULLIN:

-I have been impressed by the legal arguments of the Leader of the Opposition, but it would be an anomaly to make a provision in this bill that is not made in No. 1.

Mr Latham:

– This bill is really a little customs tariff bill. No. 1 bill does not relate to imports.

Mr SCULLIN:

– But the principle would be the same in both. I shall give the matter further consideration.

Amendment negatived.

Amendment (by Mr.Gregory) agreed to-

That after the words “ Bags and sacks used for “ the words “ fertilizers and for “ be inserted.

Mr BAYLEY:
Oxley

.I move -

That the following item be inserted - “ Vessels “.

In 1912, when the Navigation Bill was before this Parliament, it was ardently supported by the present Treasurer, the then honorable member for Corangamite, first as a means of bettering the conditions of the seamen, and, secondly, as an instrument for building up the Australian mercantile marine. Looking back over the development of the last fifteen or sixteen years, honorable members must recognize that Australia’s mercantile marine, so far from progressing, has actually retrogressed. Fewer vessels are on the Australian register to-day than in 1904.

Mr C RILEY:
COOK, NEW SOUTH WALES · ALP; FLP from 1931

– What about the seven vessels of the Commonwealth Government line of steamers which the Bruce-Page Government sacrificed?

Mr BAYLEY:

– They are still trading between Australian ports and the United Kingdom.

Mr Curtin:

– But when they were owned by the Government they were engaged in the interstate trade.

Mr BAYLEY:

– The proportion of local freight carried by them was infinitesimal. Honorable members may argue that the shipping companies have little need of sympathy. Although the companies may be in a strong financial position, they do not owe it solely to the shipping business. Most of them are large shareholders in valuable coal mines, Pacific plantations, and other profitable commercial undertakings. I again ask the Prime Minister to consider further the desirability of exempting ships. Section 19 pf the Canadian Special “War Revenue Act provides for the exemption, amongst other things, of “ ships licensed to engage in the Canadian coasting trade.” As this legislation is based upon the Canadian act, I am unable to understand why the Treasurer has omitted ships from the list of exemptions. The only reason he mentioned earlier in the day was that new ships are bought only once in a while. Certainly, if the Government insists in taxing new vessels, the intervals between purchases will be much longer, because the companies will not be able to afford to buy ships. They are not making a profit to-day, and, if they are further burdened by this tax, they must either increase freights, which are already too high, or cease trading. In either event, the producers will suffer.

Mr LATHAM:
Kooyong

.A very important question indeed arises out of the proposal of the honorable member for Oxley (Mr. Bayley). The Customs Act lays it down that, speaking generally, goods are imported into the country when they are landed from ships, but the ships which bring the goods here are not themselves regarded as being imported into Australia by the fact that they have entered Australian waters.

Mr Scullin:

– Ships imported into Australia are dutiable.

Mr LATHAM:

– Yes, in some circumstances; but an Orient liner or a P. & 0. liner is not regarded as being imported into Australia when she ties up to the wharf for the purpose of discharging cargo, though the goods she brought are regarded as being imported when they are landed for consumption. In the Customs Tariff there is a special item, No. 424, referring to vessels. This item, which includes all ordinary vessels, leaving out dredges, yachts, &c, is as follows: -

Vessels n.e.i. not exceeding 500 tons gross register trading intra-state or interstate, or otherwise employed in Australian waters for any continuous period of three months - ad. val. 25 per cent., 30 per cent., 35 per cent.

That tariff schedule is now out of date ; I think the tonnage specified in a later schedule is 1,000, but it indicates the basis of taxation. It is evident that ships become dutiable only if they remain in Australian waters for more than three months. The Sales Tax Bill does not say anything about the tax being payable only on ships which remain here for a greater period than three months. On the contrary, it provides for the payment of tax on the sale value of goods imported into Australia by taxpayers. No criterion as to length of stay or character of trade can be used for the purpose of interpreting or applying this sales tax legislation. Therefore, the question arises, when is a ship which comes here imported into Australia? It is a difficult question to answer. From a purely technical or legal point of view it might be regarded as a solution of the problem to say that as soon as a ship comes into Australian waters, it falls within the category of goods imported, but surely that is not suggested. In considering this matter we are faced with two alternatives: As ships are never landed at all, either they must be deemed to be imported as soon as they come, within Australian waters, or ships cannot ever be regarded as being imported at all. I am now referring to large vessels of the ordinary overseas type. Of course it is not intended by this legislation to collect 2i per cent, by way of tax on the value of all ships visiting Australia, and I suggest that the most satisfactory way of solving the problem will be simply to exempt all vessels from the operation of the Sales Tax.

Mr PATERSON:
Gippsland

– I support what has been said by the honorable member for Oxley on this subject. It appears to me that no worse tax could be imagined than a tax upon marine transportation. “We start off. by imposing a duty of 50 per cent, on vessels imported into Australia. Then on top of that we impose a primage duty of 2^ per cent., and now it is proposed to impose a further 2£ per cent, sales tax, so that vessels brought here from Great Britain will have to pay between 50 and 60 per cent, tax before they commence to do the work for which they are designed. This must inevitably have the effect of increasing the overhead costs of the shipping companies, and this, in turn, will be reflected in the cost of transportation. We have been reminded again and again that timber can be brought to Australia from the Baltic at lower freights than are charged to transport timber from Tasmania to the mainland. That situation obtains even under present conditions, yet it is proposed to place still further burdens on the shipping companies. The disadvantages suffered by Australian ship-owners, as compared with overseas shipping companies, will be aggravated by the imposition of this additional taxation. I appeal to the Prime Minister to give consideration to the request for exemption.

Mr BELL:
Darwin

.- I support the proposal of the honorable member for Oxley (Mr. Bayley) to exempt ships from the operation of the sales tax. It is quite obvious that the effect of increasing the cost of ships imported into this country - whether for sale or for use - must result in increasing freight rates. The high cost of transport is one of the greatest disabilities from which manufacturers and primary producers suffer to-day. This tax must have the effect of increasing transportation costs, and this will be reflected in increased prices of commodities to the consumer. On more than one .occasion when pleading for a greater measure of protection for the timber industry I have explained that the freight rates from Tasmania to the mainland are so high that it is necessary to give more protection to industries such as the timber in-, dustry than would otherwise ‘be needed. The honorable member for Gippsland (Mr. Paterson) said that the cost of bringing timber from Tasmania to the mainland States was greater than the cost of conveying it from Baltic ports. That is quite true. As a matter of fact, the freight on timber from the western ports of Tasmania to Adelaide is 9s. 6d., as compared with 3s. 9d. from Baltic ports to Adelaide or Melbourne. Timber freights from Tasmania to Adelaide vary between 5s. and 5s. 6d., as compared with 3s. 9d. from Baltic ports. That is an example of the tremendous disabilities which we in Tasmania suffer. Frequent inquiries have been made as to why Tasmania should need special financial assistance from the Commonwealth. I do not desire to go into that matter now, but it has been always agreed that the high freight rates between Tasmania and the mainland, which is the market for her primary produce, has constituted one of the greatest disabilities from which Tasmania suffers. Therefore, any increase of freights must increase the extent of Tasmania’s disabilities. The same thing applies, of course, to the other States, and especially to Western Aus. tralia. It is chiefly because freight rates have increased that the claim has been put forward for special consideration by Western Australia and some of the other States. The Commonwealth has recognized the strength of the claim, and has granted special assistance. It appears to me to be folly to impose taxation which will have the effect of increasing the disability, and then try to undo the harm by making special grants to the injured States. At the present time, a subsidy is being paid to the shipping company which runs its vessels between Melbourne and Tasmania on what is known as the Strait Service. A new contract has just been entered into between the Government and the company, under which the Government is to pay the company a subsidy of £92,000, the company, on its part, contracting to improve the shipping services. Obviously, taxation of the sort we are now considering will have the effect of increasing the costs of that shipping company, and it is the already high costs which have made it necessary to pay the subsidy. I regard this claim for the exemption of ships as a reasonable one, in the interests of both the producers and the consumers. I know, of course, the objection which the Treasurer will raise. He has answered requests of this kind over and over again. He requires revenue, and consequently, must impose taxation. But we have to look at the other side of the question.

What is the use of collecting taxation with one hand and paying it out by way of subsidies and special grants with the other ?

Mr PROWSE:
Forrest

– I support the inclusion of imported ships in the list of exemptions. I can hardly imagine that the Government gave any thought to the sale of ships when it drew up the schedule. Everything that we buy is becoming so dear that prices are just about getting us down. For a number of years it has been a crime to purchase anything cheaply in Australia. That belief appears to be dying hard in the minds of some people. I assure the Prime Minister that unless Australia produces more plentifully, and lives more cheaply, she will not continue to develop. No country can be regarded as being in a sound position that does not produce plentifully and cheaply. Vet every action of this Parliament has a tendency to place this country in an exclusive and insular position, and to increase the price of everything that she requires. A tax of per cent, on a ship is an excessive toll. No country needs shipping to a greater extent than Australia. This Parliament placed a strangle-hold upon Australian shipping when it passed the Navigation Act, which is far more restrictive than any act of its kind in the world. I trust that, now that the right honorable gentleman realizes the importance of this matter, he will at once make it clear to Australia that ships will be placed in the list of exemptions.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The point that has been raised by the Leader of the Opposition (Mr. Latham) in relation to definitions had not occurred to me, and will require looking into. In the tariff schedules, each item is mentioned and particularly defined. In a sales tax hill, only the items that are exempted are mentioned.

Mr Latham:

– The line will have to be drawn somewhere:

Mr SCULLIN:

– It will have to be drawn in a way similar to that adopted in connexion with the customs tariff. I have gone fully into the question of exempting ships, and have been rather sympathetically inclined towards it. No one knows for what length of time this tax will operate, because we cannot look into the future. I admit that, to impose it on an article which has a life of twenty odd years may cause hardship, and that the tax hits heavily a fairly big thing like a ship. I was rather impressed with that point when it was put to me originally. I realize, however, that an equally strong case - a stronger case in some instances - can. be made out for the exemption of agricultural, mining and factory machinery. If exemption -be granted in the case of ships, on the ground that they are imported only once in a while, and that they have a life of from 20 to 25 years, while the tax may not operate for more than a few years, where is the line to be drawn? I do not like to hit up one company while others escape because they happen to have brought vessels to Australia last year; but there appears to me to be more in the case that has been made out for, say, agricultural machinery. There is nothing in the analogy that was sought to be drawn by the honorable: member for Darwin (Mr. Bell). Let us suppose that a vessel costing £400,000 is brought to Australia. The sales tax: in that case will amount to £10,000.. It is certainly a big sum, but. when added to the capital cost and spread over the life of the vessel, it is only £500 a year. On the Tasmanian service, that vessel would be subsidized to the extent of £15,000 or £20,000 a year. Therefore, the argument that money is obtained by taxation on the one hand and paid out by way of subsidy on the other cannot be sustained. There has been a little too much exaggeration. One would imagine that this tax amounted to 50 percent, instead of 2£ per cent. It will not impose the hardship that is general’ly.believed. I do not want honorable members to think that I have no sympathy - with the cases that they have presented:. If I were to yield to all the requests- that-, have been made, I might as well1 with- draw the bill. We should encourage and i cultivate the agricultural, transport and I mining industries. The list of “ exemp- - tions will be extended wherever possible; but if, at this stage, we were to;,open :the door in the case of ships, machines of all kinds that are used in production and transport would have an equal claim. I am sorry, therefore, that at least for the present I must resist the proposal.

Mr BAYLEY:
Oxley

.- I still believe that ships are in an entirely different category from the machinery to which the Prime Minister has referred, for the reason that the shipping companies are heavily taxed whenever they bring a vessel to Australia. The honorable member for Warringah (Mr. Parkhill) has given as an illustration a vessel that is built in Great Britain at a cost of £50,000. The customs duty on that vessel amounts to 50 per cent.

Mr Scullin:

– Vessels of that typo should be built in Australia.

Mr BAYLEY:

– The right honorable gentleman has had experience lately in connexion with the proposal to build a lighthouse steamer in Australia, and he knows how much greater is the cost of building here than it is in Great Britain. What a company would save in customs duties it would more than lose in the additional cost of having a vessel built in Australia. The 50 per cent, duty, plus the 10 per cent: surcharge that would be imposed upon the vessel, to which the honorable member for Warringah referred, works out at £27,500. Then it would be subject to the primage duty and an additional 10 per cent., which would amount to £1,375. The sales tax works outat £2,325, making a total of £81,200. Those are figures to which the right honorable gentleman should give serious consideration before he comes to a definite conclusion in this matter. He has referred to other machinery. I remind him that practically every industry for which machinery is manufactured in Australia, or brought from overseas, receives protection through the tariff. The shipping services of this country have received no assistance ; and they are to be still further burdened unless the right honorable gentleman softens on this point. He must realise that the burden which is imposed by our tariff, our primage duty, and this sales tax, is more than any industry should be asked to bear. I trust that he will not immediately decide against the request that ships be included in the list of exemptions, but will again consider the matter and fall in with our wishes.

Mr ARCHDALE PARKHILL:
Warringah

– -I do not suppose that anything that we say will secure the exemption of either ships or anything else. It is the height of absurdity to place upon ships a tax that is placed upon a pair of boots. A Government that will impose a duty of 50 per cent, on a vessel that cannot be built here, and is not likely to be constructed here for some years at a price even approaching that for which it could be purchased overseas, is not likely to exempt ships from the sales tax: A lightship could be obtained abroad to replace the Kyogle for about £70,000, and when all the duties have been paid the cost would probably not exceed £75,000. Yet the Government intends to spend £120,000 in building such a vessel in Australia.

Mr C RILEY:
COOK, NEW SOUTH WALES · ALP; FLP from 1931

– Why is the honorable member complaining about it?

Mr ARCHDALE PARKHILL:

– Because I regret that public money is to be wasted in thisway. The Government’s record in regard to the shipping industry is one of callous indifference. A report of the Tariff Board shows that the coastal charges for passengers and freights are fair and reasonable, but the Government’s policy is crippling the industry.

Question - That the item proposed to be inserted (Mr. Bayley’s amendment) be -so inserted - put. The committee divided. (Tempobary Chairman - Mr. Keane.)

AYES: 18

NOES: 30

Majority 12

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Mr CURTIN:
Fremantle

– I move -

That the following item be inserted: - “ Oregon 12 x 6, or its equivalent, for use underground in mines.”

My object is to assist the mining industry. Oregon, 12 inches x 6 inches, or its equivalent, as used underground in mines, is already free of customs duty, and it is reasonable to suggest the exemption of this specification of Oregon from the sales tax. In certain parts of the Commonwealth this timber is largely used for mining purposes. The hazards of the industry are sufficiently great, and the costs are already sufficiently high, to justify the Government in agreeing to the exemption of this class of timber. Oregon is specially valuable in safeguarding the lives of miners.

Mr PROWSE:
Forrest

.I support the amendment for the reasons advanced by the honorable member for Fremantle. Oregon is the safest timber for use in mines, and it is easily handled and placed in position. I hope that the Prime Minister will not hesitate to accept the amendment, because the lives of miners are safeguarded by the use of this timber.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– I have already undertaken to consider the claims for the exemption of goods used in the mining industry. I should like to make some concession to the ‘ industry. I realize that Oregon is specially suitable for use in mines, and for that reason it has been granted exemption under the tariff. I must consider whether we can distinguish between oregon for mining purposes and hardwood used in mines. If both classes of timber were exempted, a large reduction would be brought about in the amount of tax receivable from this source. We have already exempted fuel for mining purposes. I shall examine the proposal of the honorable member before this measure is submitted in another place with the object of seeing whether I can accept it.

Amendment negatived.

Mr PROWSE:
Forrest

.- I move -

That the following item be inserted. “ Boxes, cases and crates and wood shooks for the manufacture of boxes, cases and crates used in the marketing of primary products.”

I believe it is the intention of the Government to exempt boxes, cases and crates; but I should like the matter to be put beyond all doubt.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The object of the honorable member has already been attained. This matter was dealt with in the first bill.

Mr Prowse:

– On that assurance I ask leave to withdraw my amendment.

Amendment - by leave - withdrawn..

Schedule, as amended, agreed to.

Title agreed to.

Bill reported with amendments; reportadopted.

Bill read a third time.

page 5486

SALES TAX ASSESSMENT BILLS

(Nos. 6 to8).

Bills passed through their remaining stages with consequential amendments and without debate.

page 5486

SALES TAX ASSESSMENT BILL

(No. 9).

Motion (by Mr. Scullin) proposed -

That the bill be now read a second time.

Mr LATHAM:
Kooyong

– An important matter in relation to shipping is involved in this bill. The object of the measure is to impose a tax uponthe”salevalueofgoodsin Australia dealt with by lease.” An. ordinary form of charter-party or hiring of a ship constitutes a leasing of the vessel. In this connexion the- Laws of England, vol. 25, at- page 84, reads -

A contract by charter-party (a) is a contract by which an entire ship or some principal part thereof is let to a merchant, who is called the charterer, for the conveyance of goods on a determined voyage to one or more places (c), or until the expiration of a specified period (d). Such a contract may operate as a demise of the ship itself, to -which the services of the master and crew may or may not be superadded, or it may confer on the charterer nothing more than the right to have his goods conveyed by . a particular ship, and, as a subsidiary thereto, to have the use of the ship and the services of the master and crew ‘(e).

The leading work - on this subject, Scrutton on Charter-parties and Bills of Lading, 12th edition, states at page 4 -

A charter may operate as a demise or lease of theship itself, to which the services of the master and crew may or may not be superadded.

I doubt whether it is intended to apply the provisions of this hill to charterparties or agreements of that kind.

Mr Scullin:

– The bill is intended to apply mainly to hire-purchase agreements in respect of machines on which royalties are paid.

Mr LATHAM:

– That is what I understood; but it actually applies to all “goods in Australia dealt with by lease.” As’ it stands it would probably apply to charterparties. . Some charter-parties operate by way of demise;but. there is. some times a very fine distinction between a. charterparty by way of lease arid other charterparties. . . The provisions of the bill would be applicable only to charter-parties which- operate by way of lease, and not to charter-parties which operate otherwise. What little substantial distinction there is between them is a legal distinction which has legal effects with reference to the control , of the ship, &c., but that distinction is of no real importance for the purpose of this system of. taxation. Further, I would . point out that the hill would operate only where a . registered person let the ship by way of charter-party, and not where another person let the ship out on, hire. In the case of ships, it. might . happen that . a particular shipowner would be registered because he was a wholesale merchant in certain lines.

If he, being a registered, person, let the ship by a charter-party by way of demise, thesales tax would be payable. If another shipowner. owning a similar ship, but not being a wholesaler or manufacturer, and a registered person, entered into exactly the same contract with his ship no tax would be payable. Obviously it is not intended that such a distinction should exist, and the bill as it at present , stands proposes most remarkable and unjust differentiation and discrimination. I doubt whether it was contemplated when the bill was drawn that it should apply to a charter-party. In its’ terms it would apply even to charters . of foreign vessels which happen to be entered into in Australia. Surely it is not proposed to apply the sales tax to such charters. A vessel may be chartered here for a wheat cargo. It is not intended that the sales tax shall apply in thatcase, ‘ but the terms of the bill appear, to include even that transaction. I suggest that the simplest thing to do in this case, which is distinct from other points which have been argued in respect of ships, is to include ‘ in clause 6 the heading of “vessels”. That, I think, would meet the situation.

Mr SCULLIN:
Prime Minister and Treasurer · Yarra · ALP

– The honorable member is quite right. It is not intended that the bill should apply to a charterparty, and,- of course, it applies only to. a registered person, such as a manufacturer or wholesale merchant. I shall, make a note of the honorable member’s point, and ascertain if it is implied in thebill. Probably by including the word “ vessels “ after “films” the position would be met.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 5 agreed to.

Clause 6 -

Notwithstanding anything contained in the last preceding section, sales tax shall not be payable under this act upon the sale value of -

films;

goods in so far as they are the subject of a lease to or by the Government of the Commonwealth or a State, or to or by any authority under such Government, or

such goods as are specified ‘ by. proclamation.

Amendment (by Mr.Scullin) agreed to -

That paragraphb be omitted.

Amendment (by Mr. Scullin) agreed to -

That the following new paragraph be inserted: -

ships engaged in, or suitable for ocean navigation.

Clause, as amended, agreed to.

Clause1 consequentially amended and, as amended, agreed to.

Clauses 8 to 12 agreed to.

Title agreed to.

Bill reported with amendments; report adopted.

Bill reada third time.

page 5488

INCOME TAX ASSESSMENT BILL

Bill- returned from the Senate with amendments.

page 5488

SALES TAX BILLS

(Nos. 1 to 9).

In Committee of Ways and Means:

Motions (by Mr. Scullin) agreed to -

That sales tax be imposed at the rate of two and one-half per centum upon the sale value of goods manufactured in Australia by a taxpayer, and sold by him or applied to his own use.

That sales tax be imposed at - the rate of two and one-half per centum upon the sale value of goods manufactured in Australia and sold by a taxpayer who purchased them from the manufacturer.

That sales tax be imposed at the rate of two and one-half per centum upon the sale value of goods manufactured in Australia and sold bya taxpayer; not being either the manufacturer of those goods or a purchaser of - those goods from the manufacturer.

That sales tax. be imposed at the rate of two and one-half per centum upon the sale value of goods manufactured in Australia and sold to a taxpayer who has applied’ those goods to his own use.

That sales tax he imposed at the rate of two and one-half per centum upon the sale value of goods imported into Australia by a taxpayer.

That sales tax be imposed at the rate of two and one-half per centum upon the sale value of goods imported into Australia and sold by a taxpayer who imported those goods.

That sales tax be imposed at the rate of two and one-half per centum upon the sale value ofgoods imported into Australia and sold by a taxpayer not being the importer of those goods.

That sales tax be imposed at therate of two and one-half per centum upon the sale value of goods imported into Australia which are sold to a taxpayer and applied to his own use.

That sales tax be imposed at the rate of two and one-half per centum upon the sals value of goods in Australia, leased by a taxpayer.

Resolutions reported and adopted.

Ordered–

That Mr. Scullin and Mr. Fen ton do prepare and bring in bills to carry out the foregoing resolutions.

Bills brought up by Mr. SCULLIN and passed through all stages without amendment or debate.

page 5488

ACTS INTERPRETATION BILL

(No. 1.)

Order of the day discharged ; bill withdrawn.

page 5488

HOUR OF MEETING

Motion (by Mr. Scullin) agreed to -

That the House at its rising adjourn until to-day at 2.30 p.m.

House adjourned at 5.17 a.m. (Thursday).

Cite as: Australia, House of Representatives, Debates, 6 August 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300806_reps_12_126/>.