House of Representatives
31 July 1931

12th Parliament · 1st Session



Mr. Speaker (Hon. NormanMakin) took the chair at 10.30 a.m., and offered prayers.

page 4813

QUESTION

FINANCIAL EMERGENCY ACT

Soldiers’ Pensions

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Has the Prime Minister yet received the report of the committee constituted under section 43 of the Financial Emergency Act ? If so, does he propose to submit the report to the soldiers’ organizations concerned for an expression of their opinion before effect is given to the committee’s recommendation?

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

– I have not yet received the report; until I do I can make no comment on it.

page 4813

QUESTION

BROADCASTING OF POLITICAL SPEECHES

Mr LYONS:
WILMOT, TASMANIA

– Is the Prime Minister able to make his promised statement regarding the reasons for prohibiting the broadcasting of the meeting of the Citizens’ League in Adelaide recently!

Mr SCULLIN:
ALP

– No. Since I made the promise I have hardly been in bed.

page 4813

QUESTION

AUSTRALIAN TRADE WITH CHINA

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Has the Prime Minister seen a newspaper report that because of the discrimination against Chinese goods by the Commonwealth, retaliatory measures against imports from Australia are being taken by the Government of the Chinese Republic? If so, what steps does the ‘ Commonwealth Government propose to take?

Mr SCULLIN:
ALP

– I am not acquainted with the circumstances mentioned by the honorable member, but I shall inquire into them.

page 4813

QUESTION

TELEPHONE DIRECTORIES

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

asked the PostmasterGeneral, upon notice -

  1. What is the cost of printing (a) the yearly, and (b) the half-yearly, telephone directory?
  2. Could a considerable saving be effected by printing at the half-year a supplement containing the new names- instead of the full directory as at present?
Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

  1. The metropolitan telephone directories are published twice yearly, and the country sections once a . year. The approximate cost of printing telephone directories during the year ended the 30th June, 1931, was £49,430.
  2. The substitution of supplementary directories, in place of one of the complete half-yearly issues of the metropolitan directories, would not satisfactorily meet requirements. Approximately60,000 alterations take place between each issue, and the absence of complete up-to-date lists would impair the efficiency of the telephone service and cause much embarrassment. Departmental costs would be increased because of the extent of the ineffective service entailed, and the answering of the many thousands of inquiries would necessitate an expansion of information desk facilities, which are already elaborate and extensive, under the existing basis of two issues of the metropolitan directories per annum.

page 4813

QUESTION

BROADCASTING STATIONS;

Mr PRICE:
BOOTHBY, SOUTH AUSTRALIA

asked the PostmasterGeneral, upon notice -

  1. What are the names and addresses of broadcasting stations within the Commonwealth to which approval has been granted for the issue of Broadcasting Station Licences as “ A “ class stations and “ B “ class stations respectively?
  2. On what dates were these licences issued?
Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

  1. The stations which, prior to theinauguration of the National Broadcasting Service, were licensed as class “ A “ broadcasting stations are now operated by the Postmaster-General’s Department for the National Broadcasting Service.
  2. Licences for the operation of stations by private enterprise (known as class “B” stations) have been issued in accordance with the attached list.

page 4814

QUESTION

SYDNEY POST OFFICE

Mail Handling Appliances - Wireless Apparatus

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

– The honorable member for Reid (Mr. Coleman) has asked a number of questions regarding the installation of mail handling appliances and the provision of wireless apparatus, at the Sydney Post Office. Inquiries are being made and a reply will he furnished to the honorable member as soon as possible.

page 4814

QUESTION

WINE OVERSEAS MARKETING BOARD

Mr PRICE:

asked the Minister for Markets, upon notice -

  1. What are the names of the members of the present Wine Overseas Marketing Board?
  2. For what term have these members been elected ?
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

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

  1. Mr. J. W. Sandford, representing the Commonwealth Government; Messrs D. T. Du Rieu and E. Miller, representing cooperative wineries and distilleries; and the following representatives of proprietary and privately-owned wineries and distilleries in the States mentioned - South Australia, Messrs. H. Kay and L. N. Salter; Victoria, Mr. M. C. MacCallum; Western Australia, Mr. H. K. Johns; New South Wales and Queensland, Mr. H. P. L. Buring.
  2. The Commonwealth Government representative holds office during the pleasure of the Governor-General. The other representatives on the board are elected by the wineries and distilleries and hold office for a period of two years. The term for which the present members were elected expires on 20th June, 1933.

page 4814

QUESTION

PUBLIC SERVICE

Furlough Payments

Mr WHITE:
BALACLAVA, VICTORIA

asked the Treasurer, upon notice -

  1. Is furlough, or cash payments in lien, still payable to retiring Commonwealth public servants?
  2. How many Commonwealth public servants received cash payments in lieu of furlough during the past six months, and what amounts were paid out on this account, and to whom?
  3. What is the authority for making cash payments to Commonwealth public servants who have not taken furlough?
Mr SCULLIN:
ALP

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

  1. Yes.
  2. The information is being obtained.
  3. . Sections 73 and 74 of the Commonwealth Public Service Act.

page 4815

QUESTION

TELEPHONE SERVICE

Earnings and Expenses

Mr PRICE:

asked the PostmasterGeneral, upon notice -

  1. What were the telephone earnings in each State for each of theyears ending 30th June, 1929, 1930, and 1931 ? “
  2. What were the telephone working expenses in each State for the same years?
Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– The information is contained in the following statement: -

page 4815

QUESTION

EDUCATIONAL FACILITIES AT DARWIN AND KATHERINE

Mr WHITE:

asked the Minister for Home Affairs, upon notice -

  1. Are there children of school age, a school and teacher’s residence at Katherine, but no school teacher?
  2. If so, when will a teacher be appointed at Katherine, to enable the education of taxpayers’ children there to be proceeded with?
  3. Is the head of the Education Department at Darwin a magistrate on the police-court bench ?
  4. Has his attendance at court necessitated frequent morning absences from school amounting to as many as three in one week?
  5. Can this officer carry out both duties without additional school assistance?
  6. Are the half-caste boys of Darwin still accommodated in the compound for adult blacks, and at night housed in a wire-netted three-roomed house ?
  7. When is it intended to remove these boys to Pine Creek, where they may have an opportunity to be taught farming?
  8. In the interest of the blacks, will consideration be given to moving them further -out from the compound to the vicinity of Four Mile?
Mr BLAKELEY:
DARLING, NEW SOUTH WALES

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

  1. Yes.
  2. The question of re-opening the school at Katherine is at present receiving consideration. The school buildings are being used for the purposes of a hospital. As funds cannot be provided for the erection of a hospital at Katherine, the question of re-opening the school depends on the necessity for retaining the hospital. The children at Katherine are at present being educated by correspondence under the direction of the Supervisor of Education at Darwin.
  3. Yes.
  4. The attendance of this officer at court must necessitate absences from the school. I am not aware that such absences are as many as three per week.
  5. The Administrator has certified that the appointment of this officer as a special magistrate will have no detrimental effects on his educational duties.
  6. I am obtaining information regarding this question, and will advise the honorable member at a later date.
  7. I approved some months ago of the half- caste boys being removed from Darwin to Pine Creek. Certain structural alterations had to be made to the quarters at Pine Creek before the transfer could be effected. I am inquiring as to the present position.
  8. It is presumed that the honorable member refers to the transfer of aboriginals from the compound to Four Mile. If so, the position is that no funds are available to enable such a transfer to be effected.

page 4816

QUESTION

REDUCTION OF POSTAL SERVICES

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

– On the 29th July the honorable member for Corangamite (Mr. Crouch) addressed to me the follow ing questions,upon notice: -

  1. How many postal services have been reduced or abolished in Victoria outside the metropolitan area during the last two years by the Director? 2, Other than the semi-rural services of

Glenroy and Blackburn, how many postal services in the Melbourne metropolitan area have been reduced or abolished in the same period by the Director?

I am now in a position to inform the honorable member as follows : -

  1. Eleven letter deliveries have been discontinued and one curtailed.
  2. None.

page 4816

QUESTION

FINANCIAL EMERGENCY ACT

Mr SCULLIN:
ALP

– On the 28th July the honorable member for “West Sydney (Mr. Beasley) asked me a question without notice regarding the report of the committee which was appointed under section 41 of the Financial -Emergency Act relating to war pensions. I have not yet received the report of the committee, but I understand that it will be in the hands of the Government in the course of a few days.

page 4816

INCOME TAX BILL, 1931

Bill returned from the Senate with requests.

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

On motion by Mr. Scullin. Senate’s requested amendments made.

Resolution reported; report adopted.

page 4816

QUESTION

BANK INTEREST RATES

Mr SCULLIN:
Prime Minister · Yarra · ALP

by leave - In view of the published statements about the reduction of bank rates of interest, I desire to make known the action taken by the Commonwealth Government in this matter.

On the 13th June, immediately after my return to Canberra from the Premiers Conference, I asked Sir Robert Gibson, as Chairman of the Commonwealth Bank, to call a conference of banks at the earliest possible moment to discuss matters arising out of the conference, including -

  1. How finance necessary for effectively carrying out the plans of the conference could best be arranged.
  2. The support to be given by the banks in connexion with the conversion of their holdings of Commonwealth and State securities and in connexion with the general conversion plan.
  3. Finalizing the question of the reduction of rates of interest on bank and savings bank advances and deposits.
  4. Financial assistance to necessitous wheat-growers, and advances to industries and governments for creating employment.

On the 1st July, Sir Robert Gibson informed me that as a result of the conference the following action had been taken : -

Commonwealth Bank. - Reduction of 1 per cent, in interest on both deposits and advances as from 26th June and 1st July respectively.

Trading Banks. - Reduction of 1 per cent, in respect of deposits as from 26th June. Immediate reduction of 1 per cent, on advance in necessitous cases and gradual reduction generally.

Commonwealth Savings Bank. - Reduction of 1 per cent, in respect of deposits as from 1st July and concurrently reduction of interest on securities held by the bank in respect of municipal and similar loans conditional on no rate being reduced to less than 4 per cent.

State Savings Banks. - Reduction of interest rates by 1 per cent in South Australia and Western Australia. No decision then arrived at by the State Savings Bank of Victoria.

Sir Robert Gibson also advised that the other matters had not then been completed.

Negotiations have since been continued by the Government through the Chairman of the Commonwealth Bank, and the. position in regard to them was summed up in a letter which I wrote to him on the 23rd July. I then said -

In the first place, I must say quite frankly that the Government is much concerned and greatly disappointed in regard to the action of the banks since the Premiers Conference was adjourned.

The banks have, for a considerable time, urged the need for the balancing of budgets, particularly by the reduction of governmental expenditure, and they have given the governments to understand that, on the adoption of a plan to that end, they would do everything in their power not only to assist in the rehabilitation of Government finances, but also to sustain industry and restore employment.

At the Melbourne conference, a plan involving a reduction of governmental expenditure was adopted. As regards this plan, the conference said : - “ The conference has, therefore, adopted a plan which combines all possible remedies in such a way that the burden falls as equally as possible on every one, and no considerable section of the people is left in a privileged position. This sharing of the burden is necessary to make the load more tolerable; it is still more necessary because only on this condition will it be possible to get the combined effort required.

The plan has been adopted by the conference as a whole, each part of which is accepted on the understanding that all the other parts are equally and simultaneously put into operation. It embraces the following measures : -

A reduction of 20 per cent, in all adjustable government expenditure, as compared with the year ending 30th- June, 1930, including all emoluments, wages, salaries and pensions paid by the governments, whether fixed by statute or otherwise, such reduction to be equitably effected;

Conversion of the internal debts of the Governments ‘ on the basis of a 22½ per cent, reduction of interest;

The securing of additional revenue by taxation, both Commonwealth and State ;

A reduction of bank and savings bank rates of interest on deposits and advances ;

Relief in respect of private mortgages.”

The conference also reported that, concurrently with the reduction of interest on bonds, must go a reduction in private interest.

The conference undoubtedly believed that the plan had the full support of bankers, and that the banks would gladly co-operate with the Governments in carrying it out.

One of the basic principles of the plan was that all parts should be simultaneously put into operation, and that the burden should be shared as equally as possible; but whilst the Governments have by legislative action required wage-earners, pensioners, bond-owners and others to accept sacrifices, the banks have not taken all the action which the conference firmly believed would be taken by them simultaneously with the Governments. There is most certainly a growing feeling that the banks are unwilling to accept their shareof the necessary sacrifices. This is undesirable, not only from the point of view of the banks, but also in the national interests.

Reduction of Interest on Advances.

I note the banks say that at no time have they given any undertaking that interest rates would be reduced on any definitely quoted figure, but that a suggested reduction of 1 per cent, has been the subject of discussion at various times, and the banks have accepted this as the object to be achieved as early as possible.

As chairman of the conference, I say definitely that the discussions regarding bank interest were based on the conviction that a reduction of not less than 1 per cent, would be made by the banks in interest rates on deposits and advances, and that if the conference had not believed the banks intended making such reductions, further action would have been taken by the conference.

I quite realize that an immediate reduction of 1 per cent, in the rates for advances would involve some sacrifice on the part of the banks, as although the rates for new deposits have been reduced by 1 per cent., the banks could make no reduction in the rates on deposits then existing. Whilst it is true that the simultaneous reduction of the rates for deposits and advances must involve the banks in some loss, it must be remembered that simultaneous increases in both rates have been made in the past, with resulting gain to the banks.

Though the conference understood that the banks would convert their holdings in the event of a national conversion loan being issued, the banks do not, in the letter now under notice, definitely say that they will convert. What they say is that, at a certain stage, they will announce their intention in regard to converting their holdings.

The support of the banks to the conversion loan is of great importance, as success cannot be expected unless the banks give a definite lead by converting their own holdings and strongly supporting the operation in other directions.

The banks say they will expect the same treatment in respect of their loan securities as is provided in legislation applying to savings bank holdings.

The concession in regard to loan securities held by savings banks was granted because these institutions are instrumentalities of the various Governments and have lent large sums to the Governments on concessional terms. On the other hand, the trading banks’ securities were subscribed for on the same terms as those held by the public, and there are no grounds for granting the banks concessions in this direction which cannot be granted to other institutions or to the general public.

Some reference to the desire of the banks for this concession was made during the conference, but the request was not approved. No further representations in this direction were received by the Government from the banks until after the Debt Conversion Bill had been finally passed by both Houses of Parliament. As it is now impossible to alter the terms of the bill without the legislative authority of every Parliament in Australia, I regret it is too late to give further consideration to this request of the banks.

Finance during Rehabilitation Period.

I note that the banks are prepared, in accordance with their ability to do so, to co-operate with the Commonwealth Bank in financing the requirements of the Governments under the plan. The attitude adopted by the banks since the conference does not, however, satisfy me that the banks are fully alive to the need for co-operation by them with the Commonwealth Bank in the provision of funds under the plan.

Loans for Unemployment Relief Works.

The refusal of the banks to assist in underwriting the proposed loan of £6,000,000 for public works is most disappointing to the Government, which is convinced that some relief must be quickly afforded to the large body of unemployed.

In conclusion, I desire to point out that it is essential that a closer understanding be reached between the banks and the Governments in order to ensure the full benefits of the plan of rehabilitation.

It is for this reason that, as advised yesterday, I have proposed to the Premiers that representatives of all the banks should be asked to meet the Commonwealth and State Ministers in conference in Melbourne about 10th August next.

It would, however, greatly assist if, in the meantime, the banks would make a public declaration not only of their support of the conversion loan, but of their intention to reduce rates of interest for advances to the extent of at least 1 per cent., as was contemplated at the conference.

In so advising Sir Robert Gibson, I asked him to be good enough to convey to the banks the views of the Government as expressed above. I should explain that these views were expressed primarily in reply to a letter forwarded by the chairman of the associated banks in Victoria to Sir Robert Gibson. The attitude of the New South Wales banks appears to be somewhat different from that of the Victorian banks. This is particularly so in the case of the Bank of New South Wales, the general manager of which has recently stated fully in the press the action taken by his bank “both in regard to the reduction of interest rates on advances and the conversion of his bank’s loan securities. The Bank of New South Wales is converting the whole of its loan holdings.

I may add that the Victorian banks have since made a public statement regarding their proposed reductions in the rate of interest, and that statement will be the subject of further discussion at the forthcoming conference.

Mr Fenton:

– Has the Prime Minister any official information from the banks ?

Mr SCULLIN:

– There has been a public statement which will be the subject of further discussion, but I have not received an official announcement from the banks. According to the newspaper reports, the Melbourne banks are making a reduction of½ per cent, as from the 1st July last, and a further½ per cent, as from the 1st January next. I may add that the Queensland National Bank has advised the Government that it is converting all its loan holdings. .

Mr Lazzarini:

– After the discussion with the banks will this House have an opportunity of debating this subject?

Mr SCULLIN:

– Unquestionably. We shall possibly have to consider legislation arising out of a further discussion of the whole plan. But it is in the interests of Australia that everything that can be done to give full effect to the plan shall be done by discussion and arrangement.

Mr Beasley:

– That was not done in the case of other reductions.

Mr SCULLIN:

– I was referring to the plan as a whole.

Mr SPEAKER (Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

– Order ! The Prime Minister has made a statement by leave, but that does not give to honorable members the right to cross-examine or question him. Nor could I at this stage permit discussion.

Mr Eldridge:

– Am I permitted to ask why the next Premiers’ Conference is apparently to be held in Melbourne?

Mr SPEAKER:

– The time for asking questions has passed. The honorable member may perhaps obtain the information he desires by speaking on the motion for the adjournment of the House.

page 4818

GOLD BULLION LOAN

Mr SCULLIN:
Prime Minister · Yarra · ALP

by leave - During the last six months statements have, been persistently made in Parliament and in other quarters that a gold bullion loan of £15,000,000 was available to the Commonwealth Government in Loudon. The Government has, in fact, been considerably criticized for what is said to be a refusal to’ accept this large sum on attractive terms, it being asserted that the loan could be quickly arranged through the agency of a small company with head-quarters in Sydney and a representative in London.

For some time, however, the Commonwealth Government has had reason to believe that loan moneys could not be obtained in London by any Australian government on acceptable terms. Our securities have been selling in the London market at very loW prices, the 5 per cent. Commonwealth 1945-1975 bonds having at one stage been sold at just over £61, while the highest price for them in the last few months has been £78 10s. On these prices, the terms for new money, even if it had been available, would have been prohibitive. Moreover, we were unable to renew £5,000,000 of treasury-bills which matured in London in March last, and again in June it was found impractical to renew £5,000,000 of Commonwealth treasury-bills falling due in London.

Despite these adverse conditions, it Las been suggested that 4 per cent. Commonwealth bonds could be sold in London at a price near par in exchange for £15,000,000 of gold. We were, indeed, advised by the Sydney company that the agreement between the Government and the principals ought to be made without regard to current Stock Exchange quotations for existing securities. However, the London representative of the Sydney company at a later stage admitted that the price of issue of the securities must bear some relationship to the present low prices of Commonwealth securities.

It will be appreciated that a loan of £15,000,000 could not be placed in London except by a financial house of high standing and considerable strength. For this reason it was apparent from the outset that the ‘Sydney company could contemplate the issue of this loan only by placing the operation in the hands of a Loudon issuing house of acknowledged strength. “What the company really urged was that it had as principals an issuing house of high standing which waa ready to undertake the loan.

In the ordinary course, the standing of this Sydney company and of its London representative would not have induced the Commonwealth to take any action, but the very definite statements made on the company’s behalf finally led the Government to test the possibilities of raising the £15,000,000 which was said to be available. Accordingly, the financial adviser of the Commonwealth in London was authorized to get into touch with the London representative of the Sydney company.

As a result of the action taken, the Government found that it was proposed to raise £15,000,000 in London through channels in Australia and London involving payment of commission to no less than five different parties, not including the proposed principals in the transaction. The proposal was that Commonwealth bonds should, through these parties, be taken up by a securities house in London. When the name of the house was communicated to the Government, it was ascertained that the securities house had no knowledge of the proposed transaction, nor did it know the representative of the Sydney company.

In view of these facts, the Commonwealth Government decided that it could not proceed further in the matter.

Mr LYONS:
Wilmot

.- by leave - In regard to the negotiations between the Commonwealth and the associated banks, I approve of the action that has been taken by the Government. That we on this side, because of our action yesterday, are striving to prevent this portion of the plan from being carried out, is a statement which is quite unjustified. The leaders of the parties on this side of the House prior to the moving of the amendment relating to the appropriation resolution, conferred with the Prime Minister, and discussed the need for calling the Premiers together for the purpose of completing the plan, particularly in regard to the matters just mentioned, so that we might bring the banks into line with the other sections of the community, it being thought that they, as well as all other sections, must bear their fair share Of the burden. We should do nothing to prevent the banks from being iri a position to give us in the future the assistance that they have given us in the past. With that reservation, everything must be done to bring that section as well as other sections of the community into line. When I saw Sir Robert Gibson in Melbourne, after conferring with the Prime Minister, in connexion with the plan of campaign, he made it clear that the banks had definitely determined to’ convert their holdings, but that they thought that they Would be helping to. make a success of the loan by postponing their announcement until a suitable time.

Mr Beasley:

– Would the Leader of the Opposition agree to forcing the banks by legislation to do the right thing?

Mr LYONS:

– There is no necessity for that. The Prime Minister knows our bona fides in respect to the plan for the rehabilitation of Australia; that we consider it to be essential that the banks shall bear their fair share of the burden placed upon the community. There is no justification for the suggestion that we, on this side, are trying to prevent the operation of the plan. We have done everything within our power, not only recently, but also for a long time past to bring it to fruition.

Mr Scullin:

– The Queensland National Bank has already decided to convert all its holdings.

Mr LYONS:

– -I am glad that the Prime Minister has given the House the details of the mooted gold loan of £15,000,000 which has been spoken of so frequently. We were much in the same position as the Government regarding it. Certain definite statements had been made to us as well as to the Government, and we were not in a position to ascertain whether they were accurate. We are in entire agreement with the Prime Minister about it; undoubtedly the position in respect of that loan is entirely unsatisfactory. In the circumstances the Government would not be justified in entering into further negotiations with the parties concerned.

Mr BEASLEY:
West Sydney

. - by leave - I wish to make a short statement on behalf of a body of those who have already been, affected by this so-called rehabilitation plan. Everybody understood when the plan was first agreed to that it was to affect simultaneously all the persons concerned by it. It is, therefore, remarkable that certain interested parties,.’ the banking institutions, have been able by negotiating and in other ways to postpone the operation of the plan in regard to themselves, although others have had to suffer reductions of various kinds which have been arbitrarily forced upon them. The poor and defenceless pensioners have had to suffer in this respect. No room should have been left for negotiation by the banks. Once the plan was agreed upon the whole plan should have been brought into effect simultaneously, but it has been applied only in regard to pensioners and wageearners and not in regard to banking institutions and other financial interests. No one part of the plan should have been brought into operation until the whole of it could be enforced.

Mr Archdale Parkhill:

– I rise to a point of order. The statement of the honorable member is an attack upon certain interests in this country, and is not cognate to the subjects referred to by the Prime Minister (Mr. Scullin) and the Leader of the Opposition (Mr. Lyons).

Mr SPEAKER (Hon Norman Makin:

– The honorable member for West Sydney (Mr. Beasley), having obtained the permission of the House to make a statement, is entitled to express himself in his own language, but he must confine his remarks to the subjects under discussion, and is not entitled to make a controversial speech to which other honorable members could not be permitted to reply.

Mr BEASLEY:

– I have no desire to transgress the rules of debate, nor to abuse the privilege which honorable members have extended to me. I thought it necessary, however, to refer to the failure of the Government to take steps to ensure the carrying out of the decisions of the Premiers Conference in regard to this plan and its effects upon the banks, and particularly the decision that it should have simultaneous effect. The Prime Minister clearly showed that there has been a failure in this connexion.

Mr Scullin:

– Not at all ; the contrary is the case.

Mr SPEAKER:

– The honorable member for West Sydney has been given permission to make a statement. I ask the Prime Minister not to interrupt.

Mr Scullin:

– The honorable member was not given lea.ve to make a misstatement.

Mr BEASLEY:

– I direct attention to that observation by the Prime Minister. I am not making a mis-statement.

Mr SPEAKER:

– I have already called the Prime Minister to order.

Mr BEASLEY:

– I listened attentively to the statements of the Prime Min- ister and the Leader of the Opposition’, and I say again that both speakers indicated that the banks had failed to do their part. The Government had the grave responsibility of seeing that this plan became operative in a way that would not inflict undue hardship on any one section of the people. I submit that cuts and reductions should not have been imposed upon the poorer people while the way was left open for the banking institutions to carry on negotiations and evade their responsibilities. If the Premiers Conference had made provision for the enforcement of the plan upon the banking institutions, before, or at least at the same time as, it was forced on other sections of the community, there would have been no room for the negotiations referred to by the Prime Minister. As it is, the plan has been enforced upon the most defenceless section of the country in an arbitrary fashion while the big financial interests are to be allowed to have another conference.

page 4821

PAPERS

The following papers were presented : -

Papua - Annual Report for the vear 1929-30.

Defence Act - Royal Military College - Report for year 1930.

Invalid and Old-age Pensions Act - Statement for 1930-31.

New Guinea Act - Ordinance of 1931 - No. 21 - Superannuation (No. 2).

page 4821

INCOME TAX ASSESSMENT BILL

(No. 4).

SecondReading.

Debate resumed from the 28th July (vide page 4478), on motion by Mr. Scullin -

That the bill be now read a second time.

Mr ARCHDALE PARKHILL:
Warringah

– I desire to deal with one or two aspects of this measure. I direct the attention of the Government particularly to a recent decision of the High Court which affects our income tax administration. I appreciate, with other honorable members, the skilful way in which the Taxation Commissioner and his department do their work, and the persistent efforts that they make to obtain revenue; but at the same time I insist that the taxpayers and the general public are entitled to reasonable con sideration. The sympathies of this House should not be entirely with the tax gatherer. Honorable members should endeavour to hold the balance evenly between the taxpayers and the tax gatherer. For a good number of years it has been the practice of the Taxation Commissioner, when a decision of the High Court has been given against him, to request the Government to amend the law with the object of robbing the successful litigants of the full fruits of a victory which they have won in the courts probably at very great expense and trouble. Honorable members must realize that judgments of the High Court are not obtained easily, or inexpensively. Successful litigants arc therefore entitled to the benefits of any victories which they may gain, and it is not fair that the Government should, as soon afterwards as possible, introduce an amendment of the act and give it a retrospective effect with the object of vitiating the verdicts adverse to it.

I direct the attention of honorable members to a letter which appeared in the Sydney Morning Herald on the 28th July, which deals with the case of Douglass v. Taxation Commissioner and from which I quote the following passages : -

The unanimous decision of the court in that case definitely was that the commissioner had misinterpreted the provisions of the, act in regard to the allowance of rebates of tax in the assessments of shareholders in companies where dividends were received by “the shareholders from companies who had paid tax on the profits out of which those dividends were declared. Furthermore, the decision indicated clearly that the commissioner’s interpretation was contrary to justice and equity.

Mr. Justice Dixon in his judgment said: “Justice seems to require that he (the shareholder) should receive an allowance in respect of so much of his taxable income as would not exist but for the inclusion of the dividends in assessable income.”

The object of the legislature was in the words of Mr. Justice Rich in the abovementioned case, “ to avoid double taxation and to make some just allowance of the tax already paid or payable when profits which had borne or were liable to bear tax fell again to be taxed.” And it seems petty and. mean of the Government to refuse to make an allowance in a shareholder’s assessment of the whole of the tax paid by the company on the dividends received by that shareholder.

The provisions of the act affected by the judgment, in the case to which I have just referred, have been in force since 1922, and the Taxation Commisaioner’s interpretation , of them have not been questioned in a legal action until now. The noted accountant and taxation specialist of Sydney, Mr. William Harding, has, however, been contesting the erroneous interpretations corrected by the judgment in the Douglass case for about seven years. It was only after great difficulty that he succeeded in finding a barrister who was prepared to argue the case from his point of view. Several prominent counsel considered that his view was not arguable. When Mr. Harding did succeed in getting his point of view submitted to the court, their Honours unanimously upheld it. Of course, we realize that money paid . by or on behalf of a taxpayer under a mistake at law cannot be legally recovered. But when a protest against excessive assessments of which notice has been given has on appeal been upheld by the court, surely the taxpayer has a right to recover the amount he is entitled to as set out in the judgment. I do not contend that those who have not lodged appeals should have redress; but I certainly think that taxpayers who have commenced legal proceedings, or given notice of objection to their assessment, should be entitled to any relief that the courts may give.

Mr Scullin:

– Any successful litigant obtains’ that relief.

Mr ARCHDALE PARKHILL:

– Those who have incurred expense in setting in motion legal process against the Crown are also entitled to consideration. In order to avoid the possibility of injustice arising out of the proposed amendment to the act, the bill should contain some provision to protect taxpayers whose cases are affected by the verdict in the Douglass test ease. Clause 11 of the bill reads - (1.) The amendment effected by section three of this Act, except that part which is contained in paragraph (2) thereof, shall apply to assessments for the financial year beginning on the first day of July One thousand nine hundred and twenty-three, and all subsequent years :

Provided that the operation of that amendment shall not ‘affect the rights of any person under a judgment obtained by him prior to the commencement of this Act.

That very generous concession graciously permits the man who has spent thousands of pounds and has obtained a favorable verdict to enjoy the benefit of that finding; it provides that Parliament will not despoil him of his just rights. I submit that the successful litigant is entitled to say to the Government, “ Thank you for nothing.”

Mr Scullin:

– The Government could have omitted the proviso and so excluded the successful litigant.

Mr ARCHDALE PARKHILL:

– If Parliament did that, it would be acting unworthily and doing a very grave injustice to citizens of the Commonwealth. The Douglass judgment should apply to all taxpayers who were engaged in similar litigation. I enter my strongest protest against this Parliament passing legislation which gives the Commissioner for Taxation the right to go back eight years and assess the taxpayer’s income on his earnings of 1923- 1924 or any of the ‘ intervening years, when the taxpayer’s circumstances to-day may be entirely different from what they then were. What is the use of a man obtaining a decision from the courts of this country ifthe Crown can persuade Parliament to alter the law to deprive him of the fruits of his legal victory, won in many cases at the cost of thousands of pounds and endless worry and anxiety?

Mr Lewis:

– Why should a person escape taxation on a technical point?

Mr ARCHDALE PARKHILL:

– No technicality is involved. Legislation should not be rushed through Parliament. Honorable members should be given every opportunity to study the effect of bills, and should not be subjected to the rush tactics that were adopted in connexion with sales tax legislation yesterday.

Mr SPEAKER (Hon Norman Makin:

– Order! We are now dealing with an Income Tax Assessment Bill.

Mr ARCHDALE PARKHILL:

– I register my complaint against legislation being hastily dealt with by Parliament. If measures left this House after being adequately deliberated on we should then stand by the subsequent legislation. The interests of the taxpayer and the taxgatherer are as wide apart as the poles. Each has his rights. It is improper for Parliament to make itself a partisan of the tax-gatherer, and to protect him from the mistakes of Parliament and its draftsmen at the expense of the taxpayer, who has won a fair and square fight in the courts of the country.

Mr Eldridge:

– What about the mistakes of the Opposition ?

Mr ARCHDALE PARKHILL:

– I am referring to the Parliament generally. We should all share any blame that may result from hastily-passed legislation. I put it to honorable members, whether they represent what some are pleased to call the “under dog,” and espouse the cause of the worker against that of capitalism, or whether they champion the cause of some other section, that it is not fair to make legislation of this nature retrospective. . Nobody can justify a person being asked in “1931 to pay a certain sum of money on an assessment of income earned eight years ago - at a time when it could have been paid - particularly when the retrospectivity is necessary only by reason of the mistakes of Parliament, or because the Commissioner for Taxation failed to collect the amount when it was due. To rectify the position I shall move that the words “ first day of July One thousand nine hundred and twenty-three “ be omitted with a view to insert in lieu thereof the words “ thirtyfirst day of July One thousand nine hundred and thirty-one”. That will make the legislation apply from the day that it is passed.

Mr LAZZARINI:
Werriwa

– I do not intend to debate the second reading of this bill at length, as that would merely result in tedious repetition. I again record my opinion that this and its associated measures can only make the existing evil worse. It will squeeze a little more out of taxpayers whose resources are already seriously depleted, and who have no opportunity to replenish those resources. Instead of effecting “ budget equilibrium “ it will aggravate the present budgetary depression. This legislation will have its repercussions throughout our economic system; it will cause greater unemployment, and seriously curtail the revenue of the people. If these were normal times I should not object to the Government extending the incidence of its taxation in order that the money collected might be expended on national work of a revenue-producing nature. That would be sound economically.

The impotency of this legislation recalls to my mind the story of a number of people who were marooned on an island, and whose only method of subsistence was to take in one another’s washing. I shall vote against the measure, because it can result only in further economic stagnation and degradation.

My colleagues and I have stated time after time during the past twelve months that we protest against the vicious practice of endeavouring to take from a reservoir something that it really does not contain. I am prepared to stake my political existence on my opinions, which are recorded in Hansard and in the press to confound honorable members who support the Government and the Opposition, now so grotesquely united, when, on some future occasion, they ‘endeavour to concoct stupid and miserable excuses for their actions of recent months. The excuse will be, of course, that the whole situation has changed. The hankers are not equal to the situation now, and neither they nor any one else could be equal to i t under present t conditions. Unless the basis of our economic system is altered, it will be impossible for us to do anything. We are like a man travelling by means of a horse and trap, and expecting to cover a given distance in the same time as a man in a high-powered motor car. The vehicle which we are employing to carry us along the road to economic rehabilitation is hopelessly out of date. This bill represents another instalment of the plan, and, like the previous instalments, it will merely tend to drag the nation down. The Government need exercise no statesmanship over a measure of this kind. There is no subtlety required from a highwayman who holds a pistol to a person’s head and orders him to hand over his money. Until tlie present economic system is altered, there can be no financial and economic rehabilitation, and no economic or social justice for the great mass of the people.

Mr LYONS:
Wilmot

.- I find myself in agreement with a portion of what was said by the honorable member for Werriwa (Mr. Lazzarini). I am fearful of the effect of these increased burdens, and I fear that we shall not obtain so much revenue as the Government hopes. I am fearful,, also, of the effect of these burdens on industry, - and through industry, on the employment of the people, and so on the finances of the nation. I hope that I shall be proved to be a false prophet, and that the expectations of the Government will be realized. I recognize that it is too late to dwell on such fears now. These proposals are before us; they are part of the plan, and we must accept them and do the best with them. I trust that the resources of the nation will be equal to meeting these fresh demands.

I support, in part at least, the proposal of the honorable member for Warringah (Mr. Parkhill)’ that the Government should grant relief to those taxpayers affected by a recent decision of the High Court. I do not think that litigants should be robbed of their victory. The case of only one appellant was actually dealt with by the court, but several other taxpayers had lodged appeals, and it was certain that the same verdict would be given in their cases as in the first. I do not agree that the bill itself should take effect only from the date suggested by the honorable member for Warringah, because that would lay the Government open to claims for refunds from every one who had paid the tax, whether or not he had lodged an appeal. The Government could not, of course, agree to that. All those who actually lodged appeals, however, should be granted relief, and I trust that the Government will consider this matter.

The protest of the honorable member for Warringah against legislation of this kind being rushed through Parliament is worthy of consideration ‘ by the Government. In nearly every taxation bill which comes before the House there is at least one clause designed to correct an error made in previous legislation. Clause 2 of the present bill is designed to prevent a mortgagee from passing on to the mortgagor the special tax on interest. Last year a special section was inserted in the act with this object, and now we find that, after the lapse of only a few months, it is necessary to make still another attempt to give effect to the will of the Parliament. Amending legislation of this kind should be prepared and circulated a considerable time before its presentation in Parliament. It is desirable that opportunities for studying the legislation should be afforded, not only to the members of this chamber and of another place, but also to persons outside the House who will be affected by it. Those outside interests would then be able to offer valuable suggestions, which would be helpful to the officers of the department who have to draft legislation. I recognize the ability of those officers, but in spite of their ability, errors are made, and hardships imposed upon taxpayers. In this particular instance the Government has not had much time, I know. The general plan was agreed upon only at the Premiers Conference, and after that the necessary legislation had to he prepared. Clause 2 of the bill, however, deals with a matter which did not come before the Premiers Conference, and the need for this amendment must have been known to the department long ago.

Mr HUNTER:
Maranoa

.- This bill has nothing to do with the Premiers’ plan, except that part of it which concerns the reduction of the exemption from £300 to £250. A great part of the bill consists of clauses designed to correct anomalies, so that the lengthy speech of the honorable member for Werriwa (Mr. Lazzarini) was not applicable to the general principles of the bill at all. This bill attempts to correct anomalies, not only for the benefit of the department, but also for the benefit of the taxpayers. The condition of the Federal Taxation Act to-day is almost beyond description. I have a copy of it before me now, and seven of its sections - those from 16 to 23 - occupy pages from 14 to 40. One can readily imagine the complexity of the thing. One section alone occupies five pages of the act. lt has come to such a pass that it is the whole-time job of a specialist possessing a fairly accurate legal knowledge to apply the act successfully to specific cases. These complexities have arisen out of the attempts of the Government, not to collect taxation, but to be fair to the taxpayers. If the Government had merely said that a certain tax should be imposed, and had stopped there, the legislation could be very simple; but it has imposed taxation, subject to all sorts of conditions and exceptions, and it is the definition of these which makes the matters so involved. The time has come when we should seriously consider whether there ought not to he only one taxing authority. I do not mean merely the amalgamation of two departments doing the same thing, but. the Constitution should be changed so as to make the Federal Government the only authority to impose and collect income tax. Then, the one taxation act would apply throughout the whole of Australia, and taxpayers would be concerned with that act only. It should then be possible to alter the system, and tax income at the source, thus overcoming 99 per cent, of our present difficulties. This would be a great help to taxpayers, because, having discovered where they stood under the federal act, they would have nothing more to worry about. Recently in Sydney inquiry into the taxation of a company showed that it was possible to save it £900 in federal taxation. In doing so, however, it was found that the company was liable to £1,100 of State taxation more than it had bargained for. It would have been much better if it had been satisfied to pay the federal tax, and say nothing further. Then we have a case like that to which the honorable member for Warringah (Mr. Parkhill) has referred. It dates back to 1923, and the tax was paid under the impression that the departmental decision was correct and final. No matter how much time be given to the study of this kind of legislation, mistakes will occur, and they are usually rectified a3 the result of successive amendments. Only when cases are taken to court, and argued by skilled lawyers, can difficult legal questions he decided. The matter that this bill is chiefly designed to rectify has been settled, and very few persons have lodged appeals against their assessments on the grounds taken in the Douglass case. Most of the anneals made on those grounds have been lodged since the decision in that case.

It is easy to ‘say that time should be allowed for this House to discuss legislation of this nature; but, just as it would be foolish to have an argument in this chamber as to the guilt of a person charged with an offence against the criminal code, so it is hopeless to attempt to settle a point of income tax law by argument in this House.

Mr Maxwell:

– It is necessary first to find the facts.

Mr HUNTER:

– Yes. The majority of members of Parliament are not au fait with the fine points of taxation law. They have to depend, largely, upon the Crown Law Department, and on the officers of the Taxation Department, as well as upon the fairness and honesty of the governments which introduce the measures. We have to rely on the Crown Law Department expressing the intentions of Parliament in the measures brought down, which have to be couched in proper legal language. But mistakes are made, and they are excusable, because, as I have said, only when amendment after amendment has been made are loopholes found. I have no option but to accept the bill. I am not in favour of the amendment foreshadowed by the honorable member for Warringah (Mr. Parkhill) to make the provisions of clause 3 retrospective to last year, because hundreds, and perhaps, thousands of taxpayers would then obtain refunds of tax that they paid, believing it to be a fair charge. In my opinion, none of the appeals which have been lodged since the decision was given in the Douglass case should be allowed, but any appeals made previously, or at the same time, might reasonably he allowed, because taxpayers who have been put to legal expense should be entitled to the benefit, of a favorable decision.

Mr Archdale Parkhill:

– How could provision be made for that in the form of an amendment?

Mr HUNTER:

– There is a taxation officer in this chamber, and he may be able.to suggest a way out of the difficulty.

Question - That the bill- be now read a second time - put. The House divided. (Mr. Speaker - -Hox. Norman Makin.)

AYES: 41

NOES: 5

Majority ‘ .’. . . 36

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 -

Section sixteen of the principal act is amended by adding at the end of paragraph (6) the following sub-paragraph: - “ In determining, for thepurposes of the last two preceding provisoes, the rate or amount of tax paid or payable by a company or a member or shareholder of a company - (1.) the part of the said dividends, bonuses and profits, and of the face value of the said shares, which is included in the taxable income of the member or shareholder, shall be ascertained by ‘deducting from the total sum comprised in the dividends, bonuses and profits, and the face value of the shares, such portion (if any) of the deductions allowable from the income derived by the member or shareholder from property as, in the opinion of the Commissioner, is properly attributable to the said dividends, bonuses and profits; and the face value of the said shares; and

Mr SCULLIN:
Prime Minister · Yarra · ALP

.- I move-

That all the words in paragraph (1.) after the word “ shares “, second occurring, be omitted with a view to insert in lieu thereof -

any part of that total sum which is not included in the assessable income of the member or shareholder, and

such portion (if any) of the deductions allowable from the income derived by the member or shareholder from property as, in the opinion of the Commissioner, is properly attributable to the part of that total sum which is included in the assessable income of the member or shareholder ; and “.

The object of the amendment is to ensure that the deductions that are allowable from income - for children, for instance - shall be deducted also from that portion of the income which is represented by dividends. That has been the past practice of the department, but, owing to the recent judgment in the Douglass case, the whole of the dividends added to income must now be regarded as free of deductions. It would, therefore, be possible to rebate more than the total taxation to which the individual was liable, and that would defeat the intention and practice of companies taxation. For instance, a man may have an income of £400 from dividends and a similar amount from other sources. The deductions to which he is entitled for his children may be £200. The department has always insisted that the £200 shall be deducted from the whole of the income - £100 from the dividend income, and £100 from the other. That is equitable. The judgment in the Douglass case, however, would prevent that from being done. The amendment will allow the deductions to be made pro rata from all the income, irrespective of its source.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 4 agreed to.

Clause 5.

Section 23 of the principal act is amended -

Section proposedto be amended - 23.- (1) In calculating the taxable income of a taxpayer the total assessable income . . . shall be taken as a basis and from it there shall be deducted -

    1. gifts of one pound and., upwards . .to public universities . . . or In colleges affiliated there- with,

Clause verbally amended.

Mr HAWKER:
Wakefield

.- I have circulated an amendment to secure to the taxpayer the right to deduct from his income payments in respect of sales tax. I understand from the Commissioner of Taxation that the amendment, made to the Sales Tax Assessment Bill last night, making it mandatory to show sales tax at the foot of each invoice, means that in no case will a taxpayer be required to pay income tax on any payment he has made in respect of sales tax. If that is so, I shall not move my amendment.

Mr SCULLIN:
Prime Minister · Yarra · ALP

, - If the sales tax is a proper charge against expenditure it may be deducted. The sales tax has to be shown on each invoice, and, obviously, if the seller is passing it on he will not pay it; the purchaser will pay the whole amount shown on the invoice, including the tax.

Mr Hawker:

– In view of the Prime Minister’s explanation, I shall not propose my amendment.

Mr SCULLIN:

– I move-

That the following paragraph be inserted after paragraph (a) : - “ (aa) By inserting, in sub-paragraph (ii) of paragraph (h) of sub-section (1), after the words ‘ affiliated therewith the -words ‘ or established by the Commonwealth’; and”.

The purpose of this amendment is to give to the University College of Canberra the same exemption as is enjoyed by other universities.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 6 to 10 agreed to.

Clause 11 (Commencement).

Mr ARCHDALE PARKHILL:
Warringnh

– At the second-reading stage I urged that the benefit of the judgment in the Douglass case should not be restricted to the successful litigants, but should extend to all those who had taken definite steps and expended money to get justice. I do not favour rebates retrospective to 1923 to all and sundry; but neither Douglass nor others who have contested this legislation should be summarily deprived of the benefits of the judgment. I ask that consideration be extended to them. I cannot see at this moment how it could be provided in the bill, but I ask the Prime Minister (Mr. Scullin) to consult with the Commissioner of Taxation regarding the possibility of inserting, in the Senate, a protective proviso to clause 11. That would be an act of bare justice.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– The application of the principle enunciated by the honorable member for Warringah (Mr. Parkhill) depends on circumstances. Sometimes, by agreement with appellant’s, a test case is heard in the > High Court. _The rights of all these appellants are preserved, notwithstanding that legislation may be subsequently introduced to overcome the decisions of the court. On many occasions such relief has been given to taxpayers by administrative act. But the circumstances in the Douglass case are entirely different. With the aid of capable lawyers and taxation specialists, loopholes’ in the law were discovered, and certain persons were thereby enabled to escape legitimate, taxation which Parliament intended that they should pay. The court is not concerned with the intentions of Parliament; it is guided by the language of the law, and by the recent judgment men are escaping taxation which they should pay. We intend to prevent further escapes. Douglass has escaped because he won his case.

Mr Archdale Parkhill:

– Does the right honorable gentleman say that he is evading a just tax?

Mr SCULLIN:

– I do not say that; he has asserted his legal rights, but the action he brought revealed a breach. We are now closing that breach so that others may not get through it.

Clause agreed to.

Title agreed to.

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

Bill - by leave - read a third time.

page 4827

FEDERAL AID ROADS BILL

Second Reading

Mr SCULLIN:
Prime Minis ter · Yarra · ALP

.- I move-

That the bill be now read a second time.

There has been considerable discussion at several conferences between the Commonwealth and States within the last two years regarding the desirability of amending the present roads agreement, which operates for ten years, from the 1st July, 1926. Under it the Commonwealth ‘is obliged to provide £2,000,000 a year, and the States £1,500,000 a year. The States are required to spend the money on construction and reconstruction of approved federal aid roads. These conditions have proved a burden to the States, particularly the contribution which they are required to make; in some instances the contribution has been largely obtained from loan moneys. The restrictions as to classes of roads, and the nature of construction upon which the moneys are to be expended hare also proved unworkable, in most, if not all, of the States. The States accordingly requested relief from their contribution, and also requested greater freedom in the spending of the money. The Commonwealth agreed to that, and the Government is now proposing to amend the agreement accordingly. In order to meet its obligation under the agreement, the Commonwealth imposed a special duty of 2d. a gallon on petrol, which was estimated to realize £1,500,000, and additional duties on . chassis, estimated to realize £500,000. As petrol imports have declined between 40 per cent, and 50 per cent, in the last twelve months, and imports of chassis are now almost negligible, the Commonwealth has found its obligation under the agreement a much more serious burden than was contemplated in 1926. For 1930-31 the receipts from the special duty of 2d. a gallon on petrol realized £1,025,000, and special duties on chassis, £30,000; or a total of £1,055,000.

At a conference in February last between the Commonwealth and the States the following resolution was passed : -

The conference agrees that the Federal Aids Roads agreement he amended to provide that as from the 1st July next, the Commonwealth shall pay to the State a sum equal to 2£d. per gallon on all petrol cleared through the customs for home consumption ; such sum to be apportioned among tlie States on the same basis as the £2,000,000 set out in the agree: ment; all other conditions contained in the roads agreement to be cancelled.

The Premiers undertook to submit the matter to their respective governments.

Mr Maxwell:

– Were not conditions attached ?

Mr SCULLIN:

– There is a condition that the money must be spent on roads. Previously the conditions were onerous. The money may now be used for maintenance as well as for the construction of any roads, whereas previously it had to be expended on specified roads for construction or reconstruction purposes.

At the May conference the States submitted further representations, and the Commonwealth undertook to embody in the amended agreement provision for further payment to the States out of excise collections on petrol refined in Australia.

A formal agreement has been drawn up on the lines indicated, and has been forwarded to the States for completion. Under the new agreement the Commonwealth will pay to the States a sum equal to 2½d. per gallon on imports of petrol, and a further sum equal to lid. per gallon on petrol refined in Australia. The total amount available will be distributed to the States in the same proportion as the £2,000,000 which was to have been provided under the original agreement.

Mr Paterson:

– A proportion of twofifths area and three-fifths population.

Mr SCULLIN:

– Yes ; with a special, concession to Tasmania. Exactly the same basis will be adopted under the new agreement.

The States will be relieved of their contribution, and they will be free to spend the money on any class of work, including maintenance. They will not be called upon to contribute 15s. for every £1 granted by the Commonwealth.

Mr Lazzarini:

– Will the same amount of tax be collected ?

Mr SCULLIN:

– The collections have been reduced by 40 per cent, or 50 per cent.

Mr Lazzarini:

– The rate of tax will remain the same?

Mr SCULLIN:

– Yes. The agreement has been extended “for a further period of six months, namely, to the 31st December, 1936, instead of the 30th June, 1936. This extension is in accordance with an undertaking given by the Commonwealth Government at a conference in December, 1929, when £1,000,000 of moneys which had accumulated in the trust account were made available for the relief of unemployment. The agreement takes effect from the 1st July, 1931. The States will be released from any obligations under the original agreement unfulfilled at the 30th June, 1931, but the Commonwealth will fulfil its obligations in respect of the £2,000,000 up to that date.

Provision has been made in the budget 1931-32 for a payment of £1,400,000 to the States. This is based on the present consumption of petrol, namely -

The purpose of this bill is to authorize the execution of an agreement between the Commonwealth and States to give effect to the proposals indicated.

Debate (on motion by Mr. Paterson) adjourned.

page 4829

SOUTH AUSTRALIA GRANT BILL 1931

Second Reading

Mr SCULLIN:
Prime Minis ter · Yarra · ALP

.- I move-

That the bill be now read a second time.

During recent years the financial position of South Australia has been difficult. For two or three years South Australia suffered from unfavorable seasons. On top of that came the serious fall in the prices of primary products, which affected South Australia in common with “other States. For some years loan expenditure was carried out at a high rate, and the reactions following the heavy reduction have probably affected South Australia to a greater extent than other States.

In 1929, a royal commission investigated the position of South Australia under federation. The commission’s recommendations included a grant of £500,000 a year for two years. Parliament voted a grant of £1,000,000 over threeyears. as under: -

The position of South Australia in 1929-30, however, was much worse than in previous years. At the conference of Commonwealth and State Ministers in August, 1930, all the States were prepared to help South Australia, and a resolution was passed under which they agreed to forgo certain grants from the Commonwealth aggregating £850,000 in order that further assistance might be given to that State. Under the South Australia Grant Act 1930, this amount was paid to that State during 1930-31, making the total assistance from the Commonwealth for that year £1,170,000.

The question of further assistance to South Australia was referred to the Public Accounts Committee for report, because that State had asked for a grant of £1,950,000 a year for an indefinite period.

The report of the committee has been made available to honorable members. The following extract from page 30, dealing’ with the amount of grant, sets out the reasons for the introduction of this bill:-

The committee has examined the position of South Australia from many angles in an endeavour to assess the disabilities arising from federation ; but after exhaustive investigation it feels that, in view of the numerous economic problems involved, and of the absence of reliable figures relating to many important aspects of federal policy, it cannot express in monetary terms the extent of such disabilities. The committee is of opinion, however, after a careful study of the finances of the State, that South Australia has a reasonable claim for a grant of £1,000,000 for 1931-32. This sum would include the amount of £320,000, to which South Australia is entitled under the South Australian Grant Act No. 26 of 1929, Having regard to the fact that the Commonwealth and the other States will bo faced with heavy deficitsat the 30th June next, the committee considers that, in fairness to the taxpayers of Australia as a whole, it is a matter for Parliament to determine whether this amount can be paid. Having regard also to the existing abnormal and constantly changing conditions affecting the finances of the Commonwealth and the States, the committee does not deem it desirable to recommend a grant for any definite period beyond one year. The indications are that the next financial year will be a difficult one for all Treasuries, State and Commonwealth; but the upward trend of prices for our staple exports inspires the hope that by 1932-33 the national income will have recovered to an extent that will bring about an appreciable improvement in the finances of the Commonwealth and the States.

The Government has carefully considered that report. It recognizes the difficulties of South Australiaand its heavy burden of taxation, probably the most severe of all the States; but the Commonwealth and all the other States are themselves faced with serious difficulties.

The authority for granting financial assistance to any one State is contained in section 96 of the Constitution, which reads-

During a period of ten years after the establishment of the Commonwealth, and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

I suggest that this section never contemplated the giving of such a huge grant as £1,950,000, as was requested by South Australia, for an indefinite period, or the continuing of assistance on the scale of last year, namely, £1,170,000. Last year’s grant was of a. special nature, and included £S50,00.0 arranged in cooperation with other States and designed to enable South Australia to balance its budget that year. The difficulties then confronting that State have since become manifest in the accounts of all governments. After considering the matter fully, the Government has decided to recommend to Par=liament that further assistance, making up a total of. £1,000,000, be granted for this year. In making this recommendation the Government puts forward the view that such assistance should be regarded as of a temporary nature, designed to help South Australia towards a re-adjustment of her financial difficulties. The bill now submitted gives effect to this recommendation- It provides for a grant of £680,000 for 19,31-32, which, with’ the grant of £320,000 already approved, will bring the total assistance, to £1,000,000.

Mr HAWKER:
Wakefield

.- I support the bill. I wish to acknowledge the assistance which the South Australian Government has received from this Parliament and also the Parliaments of all the other States of Australia. The Prime Minister (Mr. Scullin) has already referred to the generosity of the representatives of the States at the Premiers Conference last year, in forgoing their share of the special unemployment grant so tha.t South Australia might be enabled to carry on. It is not a pleasant proceeding for the Ministers, the federal members, or the citizens of that State to have to approach the Federal Parliament and the Parliaments of the other States asking for assistance, because of the adverse effect which the Australian . policy has had upon the finances of that State. Of course South Australia is not the- only State that has been forced to seek assistance. Western Australia and Tasmania met with similar difficulties even before South Australia did. To some extent South Australia was already in those difficulties when requests were received from Western Australia and Tasmania for assistance, but those difficulties were disguised . at the time by the good seasons which South Australia was enjoying, and also by- its ambitious policy of loan expenditure. I am not now defending that expenditure, although it is generally agreed inside and outside of South Australia that it was on too ambitious a scale. That expenditure was in relation not only to railways, but also to such things as the river Murray works, and the development of the Mallee lands. The fact that those works were pushed on. at a rate faster than South Australia could afford had a great deal to do with disguising the effect which rising costs were having upon the general solvency of that State.. The position was apparent in Tasmania and Western Australia at an earlier date, and it is now being felt not only by State Governments, but also by the citizens of the smaller States. Although the residents of industrialized areas have felt the depression severely, they have not felt it to the same extent as those engaged in rural industries. Thus the governments of industrial States have enjoyed offsetting advantages which are not available to the primary producers. There are also in the Eastern States some sheltered primary industries. The chief example of a sheltered primary industry is, of course, the sugar industry ; but there are others. It is well known that the losses which have occurred in such industries have not been nearly so great as those which have fallen upon industries the products of which have to. be sold on the markets of the world. South Australia has been particularly adverselyaffected,, because her principal products have to be sold abroad at world parity prices.

It has been acknowledged that compensation is due to South Australia, and other States similarly situated, because of the disabilities which; have overtaken them in consequence of the operation of: federal policy, but the various authorities which have investigated these disabilities, have found it impossible to state? in monetary terms the degree of disability which different States, have suffered. One investigating, body recommended that a permanent commissionshould be established on the lines of the Interstate Commission provided for in the Federal Constitution, with the object ofl making recommendations from time to time in regard to the degree and nature of the compensation which should be granted to necessitous States, with the object of ensuring, as far as possible,, that friendly and stable relations shall he maintained among the different States. I whole-heartedly support that proposal. Unless some such authority is set up, there is always a likelihood of log-rolling, wire-pulling, and the like. Recommendations by a body such as I have referred to would be likely to win more general approval than the recommendations of any other body, and would not carry with them any stigma of mendicancy. If the Commomwealth is to remain a permanent single political entity a satisfactory method of granting compensation to disabled States must be found. The geographical conditions of the Commonwealth are working against a continuance of the federation and the maintenance of Australia as one political entity, and any body which could counteract the growth of such feelings would do excellent work in the interests of the whole nation. We all desire that Australia shall remain an undivided country. This subject is not involved in the provisions. of this bill, but I believe that it will have to be faced before very long in order that such assistance as is now proposed to be given to South Australia may be granted without reservation, and with the assurance of such a body that it is well deserved.

South Australia is suffering at present, not only from the general disabilities which have fallen upon her in consequence of the operation of federal policy, but also from particular disabilities which have arisen in consequence of the catastrophic fall in world prices of primary products, which has followed so closely upon the long drought from which the State has only recently emerged. It has been said, by interjection by one honorable member, that high land values have contributed to South Australia’s troubles.Undoubtedly high land values have added to the difficulties of individuals; but I do not think they have increased the economic disabilities of the State as such. It must be remembered that although one individual loses through buying land at a high value, and having to sell it later for a lower figure, the money which passes usually remains in the State, and is. used for productive, investment of one sort or another. Figures which have been pub-; lished recently show that the area being put under crop in South Australia this season does no.t show anything like, the same reduction as the area put under crop in the other States. This,I submit, bears out my contention that high land values have not been an important factor in increasing the disabilities of the. State, The very fact that this considerable area is being put under crop in South Australia shows that creditors and debtors have co-operated in making preparations for the coming harvest. If land values, have -been high they have been readjusted rapidly. No doubt some readjustment as between individual creditors and debtors, will have to follow. If this re-adjustment cannot be made by mutual arrangement, some other means will ha.ve to be adopted tobring it about. A Debt Adjustment Act and a Farm Relief Act are in operation in South Australia for the protection of the primary producers from unreasonable creditors. If the protection already afforded in this direction is not sufficient, the State Government will undoubtedly take appropriate action.

I do not intend to speak at any greater length, for it is apparent that honorable members, speaking generally, . are sympathetic with South Australia and other States in a similar position, apd intend to support this bill. I hope that the future of. the Commonwealth will not be endangered by reason of the fact that the Federal Government will not take steps to remove the causes of the inequalities winch have risen as between the different States.

Mr GIBBONS:
Calare

. –I make no protest against the granting to South Australia of the assistance provided in this bill, but the position of that State brings to the forefront a subject of extraordinary national importance with which this Parliament will have to deal in a comprehensive way before very long. In my opinion, the position of South Australia is not due directly to the influence of federal policy. It cannot he expected that the residents of other States of the Commonwealth will continue, without protest, to contribute money to overcome difficulties that have been created by purely domestic inconsistencies in particular localities. But we must recognize and endeavour to overcome certain conditions which, are undoubtedly contributing towards the difficulties in which different States find themselves. The honorable member for Wakefield (Mr. Hawker) expressed the opinion that high land values were not an important contributing cause to the difficulties of South Australia, because the money spent in buying land at high values remains in circulation in the State; but it must he recognized that whenever price levels are too high the purchasing power of the people is reduced. In my opinion, the Government should take steps to investigate the causes of the inflation of land value with the object of removing them. If the value of land is too high to make production from it profitable, it should be reduced, or disastrous results must inevitably follow. This subject is being dealt with by legislation which is at present before the Legislative Assembly of New South Wales. It must be recognized that the selling value of land for Commonwealth, State and municipal purposes must be brought into conformity with its productive value; otherwise inconsistencies and difficulties must occur from time to time, and eventually bring about extraordinary economic disorders, such as New South Wales is at present experiencing. A national investigation should be made into this subject at once.

Mr Archdale Parkhill:

– By an interstate commission ?

Mr GIBBONS:

– Yes. The value of land should be fixed in accordance with its productive value, based upon the returns over a number of years, from the sale internally and externally, of its products. It is only by the adoption of some such method of valuation that permanent stability can be given to our primary producing industries. It is undeniable that there should be a writing down of the present values of land.

Sitting suspended from 12.45 io 2.15 p.m.

Mr GIBBONS:

– Let me take a commercial transaction, the purchase of a property. There are’ two contracting parties, and the purchaser puts down £4,000 as a deposit. He makes arrangements with an institution to finance what is considered to be 50 per cent, of the “value”, which, from the point of view of the financial institution, is productive value. If that leaves an outstanding amount, it is a common practice to advance one-third of the price given, as a second mortgage. But the total amount involved does not represent the real value of the property, and no deliberative body, when considering such, matters, can overlook that fact.

The values of primary products are more or less a speculative matter. They certainly have not been stabilized in this country. It is safe to say that at the present time the values of primary products in Australia are lower than has been the case for at least twenty years. Despite the fact that this Government is endeavouring to adjust its economic position, we are dominated by what is happening in other’ parts of the world. It is reported that a large quantity of wool is going to be dumped on the London market, and that detrimentally affects Australia. The position is particularly disquieting. The nation is endeavouring to maintain values that are not real, and have never been firmly established. I hope that in future, when an investigation is being made into the financial position of our trade, or of a particular State, the phases that I have mentioned will receive consideration.

Mr COLEMAN:
Reid

.- I crave the indulgence of the House to make reference to the Government’s proposed grant to the State of South Australia.

I note with gratification that the Government .has seen fit to accept the conclusions of the Commonwealth Parliamentary Committee on Public Accounts’ which recommends that the grant should be £1,000,000, instead of £1,950,000, this being the amount asked for by South Australia. The committee was unanimous in that recommendation. There is no doubt that South Australia needs this assistance to enable it to carry on essential services, and to meet its statutory and contractual obligations. That State is in a worse position financially than any other State of the Commonwealth.

Mr Lewis:

– That sounds bad.

Mr COLEMAN:

– It is nevertheless true. An examination of the finances of South Australia should satisfy anybody that that State has exceeded the limits of taxation, the incidence of which is more severe there than in any other State in Australia. The severity of its taxation is accentuated by the fact that the income tax paying capacity of its people is relatively low.

Mr Maxwell:

– What does the honorable member mean by the term “income tax paying capacity “ ?

Mr COLEMAN:

– I base it upon a statement by Professor Giblin, who has laid down certain factors which enter into the taxable capacity of a State.

It is regrettable that we should have to discuss an important matter of this nature in the closing stages of a session. The time has long since passed when there should be a complete review of the financial relations of the Commonwealth and the States. An attempt should be made to lay down uniform principles to govern the making of grants. The Government asked the Public Accounts Committee to attempt to lay down such principles by relating the grant to the disabilities of the State which have been caused by federation. The committee found it impossible to do that. lt was found impracticable to assess the effect of federal policy upon a State, or upon the finances of a State as reflected in the condition of the State Treasury.

The Public Accounts Committee recommended that there should he a permanent committee to deal with State grants and kindred matters, or, failing that, the reappointment of the Interstate Commission. Undoubtedly, to deal with these matters, there should be some body which would be divorced entirely from party considerations, which would operate continuously, and would have the assistance of expert advice. The first task of such a body would be to lay down the fundamental principles upon which these grants should be based. From time to time grants have been determined in relation to existing circumstances; but much misleading political propaganda has been directed against the Commonwealth Government regarding the alleged effects of its policy upon the development of particular States. If the hounds of responsibility were clearly set out, so that there could be no misunderstanding to where it began and where it ended, that would make for economic and financial stability.

Another matter to be mentioned in this connexion is the absence of uniformity in the national accounting of the various governments of Australia. The existing method of presenting estimates and budgets makes it impossible for an investigating body to determine satisfactorily, and on a reasonably sound basis, whether a government has been more extravagant than those of other States, or to make any satisfactory comparisons. I again press the suggestion that there should be a conference of Commonwealth and State Treasury officials, with the object of attempting to formulate uniform principles in the presentation of estimates, budget papers and financial statements. Three years ago the New South Wales Government appointed a budget committee which re-adjusted the whole presentation of the Estimates of that State, and drew attention to the necessity for uniformity in such matters among the States. The Accounts Committee found that without such uniformity, it is practically impossible to measure the effects of the financial policies of the various States, without an exhaustive analytical investigation into the -finances of each State, which would be a stupendous task. Only a few weeks ago, at the Premiers Conference in Melbourne, the economic experts complained about the difficulties experienced in examining the finances of the respective States because of the lack of uniformity in the methods adopted. “ The Case for South Australia “ as presented by Professor Melville, on behalf of the State Advisory Committee, showed in striking contrast the surpluses as published from year to year with the surpluses as finally adjusted. For the period from 1906-07 to 1929-30, the surpluses announced annually aggregate £2,655,878. Those figures, of course, were for the mental consumption of the electors. As finally adjusted, the surpluses for that period aggregate only £1,891,987, a substantial discrepancy. The biggest discrepancy, however, is in regard to the aggregate deficits over that period. The aggregate amount of the published deficits was £5,849,527, and the finally-adjusted aggregate amount, £11,768,237.

Mr Maxwell:

– Was it upon the larger amount that the claim for compensation was based?

Mr COLEMAN:

– It is the sum which the Accounts Committee was asked to take into consideration.

Mr Archdale Parkhill:

– Does the honorable member mean to say that the Opposition in the South Australian Parliament never contended that the deficits were higher than the figures published?

Mr COLEMAN:

– We did not feel it incumbent to examine the contemporary political position over those years.

Mr Archdale Parkhill:

– The honorable member is offering an authoritative opinion.

Mr COLEMAN:

– I do so upon the figures presented by the South Australian State Advisory Committee.

Mr Archdale Parkhill:

– On whose authority was the aggregate of £11,768,237 published?

Mr COLEMAN:

– That was a statement appearing in “ The case for South Australia “ issued by the State Advisory Committee of South Australia, which was appointed by the Government. It may be accepted as authoritative, because it forms part of the basis for the Government’s claim for a grant of £1,950,000. Similar practice has been common throughout the States. No State can claim to have been absolutely virtuous in the financial sense. . When governments present their estimates and budgets they always attempt to show the best possible position.

Mr Fenton:

– That is not honest.

Mr COLEMAN:

– The honorable member must admit that that has been the practice. It is a pity that there is not some statutory restraint upon Ministers in these matters.

Mr Maxwell:

– Perhaps the deficit in this case was exaggerated, as it is the basis of the State’s claim for compensation.

Mr COLEMAN:

– That might appear so; but it is customary for governments, in submitting their, budgets to Parliament, by deferring charges, and various other methods, to conceal actual deficits.

Returning to the subject of the necessity for some permanent authority to deal with these grants: The Interstate Commission was abolished because, at that stage of our political advancement, its services were not so seriously needed as they are -at the moment. Consideration should be given to its re-appointment, or to the appointment of a permanent standing committee.

Mr Stewart:

– What does the honorable member mean by a standing committee?

Mr COLEMAN:

– I mean a body of experts outside Parliament. In its report the Public Accounts Committee recommended, in the following terms, the appointment of such a committee:: -

The committee is strongly of opinion that the time has arrived when a permanent body should be appointed to make a continuous study of the financial relations of the Commonwealth and the States. Of recent years the task of investigating the’ finances of three of the States - Western Australia, South Australia, and Tasmania; - has been assigned to different bodies, involving the expenditure of a considerable amount of public money. The reports submitted to Parliament indicate that the investigations, were conducted with efficiency and thoroughness, and that a considerable amount of research was involved in their preparation. With the growing complexity of the finances of the Commonwealth and the States, however, the committee hold the view that the financial relations of the Commonwealth and the States should be the subject of a continuous and intensive study by a permanent body. In fairness to the Commonwealth and the States uniform methods and procedure in relation to financial assistance to the States should be evolved. The essential requirement is that all questions of State grants should be referred to the same body for investigation. Uniformity cannot be achieved in any other way. The committee fully recognize that the principles of determining grants cannot be developed and clarified in a day; but the importance of the matter to the Commonwealth, the States and the taxpayers demands that there should be no further delay in setting up a body capable of evolving definite basic principles under which the claims of any State’ may be measured or assessed from time to time without the necessity for protracted investigation.

Mr Lazzarini:

– Could not Parliament attend to., such matters?

Mr COLEMAN:

– The. honorable member must realize that the examination of a vast mass of technical detail relating to the financial position of the various States is a task which Parliament ought not to be called upon to undertake.

An examination of the finances of South Australia shows that, prior to the war, the position was sound. Since the war, however, the accounts reveal large and. increasing deficits. The seriousness of the position is reflected in the following figures: -

The figures quoted do not exhibit the true result of the State’s financial position, as they include substantial grants from the Commonwealth. Excluding Commonwealth grants, the total deficits of the State for the past five years amounted to £7,411,000, in spite of very heavy taxation. When honorable members realize that this financial burden has to be borne by 580,000 people, who are already taxed with greater severity than the taxpayers of other States, they will, I feel sure, recognize that substantial assistance to South Australia is not only necessary, but imperative.

Taxation in South Australia is more severe than in any of the other States, and the severity of that taxation is accentuated by the fact that the income tax paying capacity of South Australia is relatively low. The following figures clearly illustrate the heavy impost on the taxpayers of South Australia when compared with the burden carried by their more fortunate neighbours in Victoria -

On the basis of taxable capacity, during the five years ended 30th June, 1930,. the excess taxation paid in South Australia was as under: -

This is an average of £1,057,000 per annum - truly a severe impost on a small population. It will be apparent, therefore, that .South. Australia’s unfortunate position cannot be ascribed to failure on the part of the Government to impose heavy taxation.

The real causes of South Australia’s troubles are, in my opinion, to be found in physical configuration and lack of natural resources, notably coal, timber, rivers and rainfall; the operation of federal policy; economic dislocation arising out of the war; over-borrowing; heavy losses on developmental undertakings; continued deficits in the State’s accounts ; unfavorable seasons ; shrinkage in national income due to the fall in prices of primary products; the entry of the Commonwealth into the field of direct taxation, and the general depression.

Unfortunately, South Australia, in common with the other States, has contributed largely to her troubles by excessive borrowings, and the investment of loan moneys in uneconomic public works. During the past five years no less than £11,000,000 has been lost on such undertakings. In. ten years- -1920 to 1930- the public debt increased by £47,000,000, or 93 per cent. In respect of the public debt- now £97,000,000- the annual liabilities for interest and sinking fund have reached staggering proportions, such charges representing no less than 40 per cent., or 8s. in the £1, of the total annual revenue expenditure. It is figures such as these which bring home to us with such tragic force the follies of the past and the necessity for prudence in the future.

The retrogression of the railway finances is another disturbing factor in the finances of the State. For the year ended 30th June, 1930, the deficit in the railway accounts was £1,680,000, and there is no immediate prospect of improvement in the finances of this great public utility. The time has arrived, in my opinion, when definite steps should be taken to convene a conference of railway experts to investigate and report upon the co-ordination of railway services. Recently a royal commission which inquired into the South Australian railways stated that the annual loss would probably be £1,000,000 a year for an indefinite period. These matters are of such importance that I thought it desirable to bring them under the notice of the House. We must recognize that while federation continues, this Parliament has not only a constitutional, but also a moral responsibility to come to the assistance of those States which need help. It has to be admitted that New South Wales, Victoria,’ and Queensland have benefited as a result of federation, whereas South Australia, Western Australia and Tasmania have not. We should approach the matter of State grants in as generous a spirit as our own circumstances will allow. At the same time, I believe that the Federal Constitution should ‘be re-cast in many important respects, and money should bo spent, not in accordance with restrictions imposed by artificial State boundaries, but in accordance with the actual needs of specific districts.

Mr ARCHDALE PARKHILL:
Warringah

– I do not propose to criticize this proposal adversely, or to oppose it. I realize that it is the practice of all federations to render assistance to states in certain circumstances. I do not believe that the Public Accounts Committee is the body that should investigate matters of this kind. I do not desire to reflect upon the committee, but, in my opinion, the authority which should take these matters, in hand is the Interstate Commission. The commission appointed by the previous Government to investigate the disabilities of South Australia recommended that the Interstate Commis sion should be reconstituted for the purpose of such inquiries.

Mr Lacey:

– Would the honorable member favour the setting up of a permanent commission?

Mr ARCHDALE PARKHILL:

– I would. Conditions are very different now from when the last commission was set up. That commission had very little to do, and lapsed for want of occupation. The honorable member for Reid (Mr. Coleman) referred to the method of keeping accounts, employed by some of the States, and the need for uniformity. The honorable member is counselling perfection. It would be very difficult, I think, to induce the various governments to agree upon a uniform method. When Mr. Stevens became Treasurer of the last New South Wales Government, he took office with a high reputation as an accountant and auditor. He instituted methods which were regarded as entirely suitable, but the present Treasurer has altered them on the ground that they were not satisfactory.

I realize the difficulties which confront South Australia, and I appreciate the valiant fight which its government and people are making to extricate themselves from those difficulties. God knows the Commonwealth Government has no money to give to any one, but I am prepared to support this bill, hoping that the money may he raised somehow. I trust that, when dealing with such matters in future, however, we may have an opportunity of going into them in greater detail than we have now.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 4836

WESTERN AUSTRALIA GRANT BILL 1931

Second Reading

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I move-

That the bill be now read a second time.

In 1927 Parliament approved of a special grant to Western Australia of £300,000 a year for five years from the 1st July, 1926. That grant expired on the 30th June last. The Premier of Western Australia recently asked that the grant be extended, and also be increased to £450,000. The whole question . was referred to the Public Accounts Committee for inquiry under terms of reference, similar to those for South Australia and Tasmania. The Government of Western Australia prepared a case for the Public Accounts Committee, but, owing to the pressure of other business, it was found impossible for the Government of Western Australia and the Commonwealth to present detailed evidence to the Public Accounts Committee in sufficient time to enable the inquiry and report to be completed for the budget. The Commonwealth Government, therefore, proposes that the existing grant of £300,000 shall be continued for the present year. I had an informal conversation with the Premier of Western Australia at the recent Premiers Conference in Melbourne, and the Government agreed that the present grant of £300,000 should be continued for this financial year. The purpose of the bill is to enable Parliament to approve of the grant being made for the year 1931-32; but, before the year closes, the Government proposes that the position of Western Australia shall be fully examined.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 4837

FEDERAL AID ROADS BILL

Second Reading

Debate resumed from page 4829.

Mr PATERSON:
Gippsland

.- Five years ago, the Commonwealth Government made an agreement with the States under which the Commonwealth was to provide £20,000,000 for the construction of roads, that amount to be paid to the States at the rate of £2,000,000 per annum for ten years. Each State was to share in this money on the basis of three fifths population and two-fifths area, and to provide 15s. for each £1 granted by the Commonwealth. Another point in the old agreement was that at least one-eighth of the 15s. in the £1 provided by the States must be found from revenue, the remainder being permitted to be found from loan, for which a substantial sinking fund of 3 per cent, had to be provided.

The old agreement set out that . the Commonwealth should make the position easy for the States with respect to the sinking’ fund by allowing the payments into that fund to be taken from the Commonwealth’s contribution; so that, instead of each £100 from the Commonwealth being spent on construction only, £97 could be so spent, and the other £3 could he spent in providing the necessary sinking fund. This involved the provision of £3,500,000 a year for the construction of roads, of which £1,500,000 a year had to be found by the States, and the balance by the Commonwealth.

Before that agreement was made, the Commonwealth collected duty on petrol at the rate of1d. per gallon, which went into revenue. That was the whole of the petrol tax at that time. When the agreement was entered into, the petrol tax was increased from1d. to 3d. per gallon. The additional tax was intended to yield a substantial part of the £2,000,000 to be provided by the Commonwealth for the States. The extra 2d. per gallon proved to be insufficient, to provide the whole amount, the equivalent of about 2½d. per gallon on the petrol imported at that time being required to furnish £2,000,000. The petrol tax is now 7d. . per gallon, instead of 3d., but the importations of petrol have fallen off to such an extent, and the revenue has decreased in consequence to such a degree, that about 4d. per gallon is required to-day to provide £2,000,000 a year. We have to recognize that the Commonwealth Government cannot afford to-day to provide for the States such a substantional sum as that for road construction ; nor can the States afford to spend, in addition to their ordinary commitments for roads, some 15s. in the £1 on the amount which the Commonwealth provides. Consequently, this bill has been brought down to amend the agreement in such a way as to relieve the States entirely of the necessity to supplement the federal grant, and the Commonwealth, instead of being under the obligation to find £2,000,000 a year, has to provide merely the amount yielded by a tax of 2½d. per gallon on the petrol actually imported, and l½d. per gallon with respect to the petrol refined locally.

Therefore, the amount which the Commonwealth must pay to the States during the currency of the amended agreement will fluctuate in proportion to the quantity of petrol which is imported, or the quantity which is refined in Australia. One can readily understand the desir’e of the States to have the agreement amended , to enable them to share in the money raised on the petrol refined in this country. The tendency appears to be to import increasing quantities of crude oil, and to refine it locally. If we remained on the original basis, and gave the States the money collected on imported petrol only, that would be a diminishing amount, because increasing quantities of petrol are being refined in Australia. Therefore, it is natural that the States should request the Commonwealth to make a portion of the payment by means of the tax on imported petrol, and to take the rest from the excise charged on petrol refined in this country, from imported crude oil.

Mr Maxwell:

– What is the currency of the new agreement?

Mr PATERSON:

– It is for the term of the original agreement, plus six months.

The agreement, as amended, permits the States to spend this money on maintenance as weil as on construction, and it continues the sinking fund arrangement made in the old agreement, so that a 3 per cent, sinking fund has still to be provided on that portion of the money which is applied by the - S tates out of loan for the whole of the ten years. When the agreement expires, the States are to pay 2$ per cent, into the sinking fund until their debt is extinguished. It is Stated in the schedule that, for the purpose of this provision, the sinking fund payments and contributions shall be deemed to accumulate at the rate of 4£ per cent, per annum, compounded. That is more than the earning power of money to-day. The loan conversion arrangements will practically limit the earning power of the Commonwealth money to 4 per cent. ; but the condition that this money shall be deemed to accumulate at 4£ per cent, is common to the general sinking fund agreement.

Mr Gibbons:

– What is the earning power of the money?

Mr PATERSON:

– Up to now, it has been easily over 4£ per cent. All that I am pointing out is that, if the loan conversion is successful, as we1 anticipate it will be, the interestearning power of money will be, not 4$ per cent., but 4 per cent. Therefore, there will be a disparity between the amount of interest that this money is deemed to earn and what it actually yields.

Even had the old agreement been continued, it would have been impossible for the States to make use of this money indefinitely purely for construction purposes, because the time will eventually come when the various States will be sufficiently well supplied with roads that their problem will be2 not one of new construction, but almost entirely one of maintaining the roads that they already have.

Mr Lazzarini:

– That day is a long way off yet.

Mr PATERSON:

– It is in the lessdeveloped States; but it is well within sight in Victoria and Tasmania. To-day the problem in these States is how to maintain existing roads. Therefore, I have no fault to find with that change in the agreement. The Prime Minister remarked this morning that some of the States considered the conditions laid down in the original agreement to be onerous. A good many attempts have been made to ease some of the conditions, and to make the arrangement work as smoothly as possible as between the Commonwealth and the States. To those who contend that the money should have been handed over to the States without conditions being laid down, I would point out that when one authority collects tax, and hands it over to another to spend, the authority making the grant is entitled to impose certain conditions on its gift. No one will dispute the right to do that, even though some may question the wisdom of certain of the conditionsthat were laid down. I recollect that when the federal aid roads legislation was first brought before the House, some honorable members criticized the proposal on the ground that it was unwise for any government to collect taxation and hand it over to another government to spend-

They laid it down as a vital principle that the authority which expended the money should have the responsibility of raising it. Under the old agreement the Commonwealth had some check on the expenditure, for although the money was handed over to the States, the Commonwealth could prescribe the character of the work to which it should be applied. Under the new agreement the States will be given practically a free hand.

Mr Maxwell:

– After all, the sinking fund is a safeguard.

Mr PATERSON:

– I admit that; but we allow the States to spend the money as they will. Therefore, the criticism directed against the old agreement on the ground that the spending authority should be the taxing authority, has even greater force to-day when we are handing over the money to the States unconditionally. However, half the period of the original agreement has expired, and the new arrangement will last for only another five years. Although some of the safeguards contained in the first agreement have been removed, I am prepared to trust the States to expend, the money wisely. The Federal Aid Roads Act has operated to the enormous advantage of the States as a whole. In Gippsland a wonderful improvement in the roads has been observed during the last four or five years. That district has a heavy rainfall, and many roads which were almost impassable for about six months of the year have undergone a complete transformation, and the settlers are able to move about the district at all seasons. I raise no serious objection to the bill, and I hope that the new agreement will operate satisfactorily. At any rate for the remaining five years it is worth while to give a trial to a new system which will leave the expenditure on roads entirely to the discretion of the States. Before the agreement expires we shall he better able to decide whether the original arrangement, or the new one is the wiser.

Mr GIBBONS:
Calare

.- The elaborate road-making that has been undertaken in recent years has not yielded that benefit to the community that was expected. Those who have the responsibility of raising money by taxation for road purposes should also have a voice in the actual placement of the expenditure.

Mr Paterson:

– Surely the honorable member does not suggest that the Commonwealth should prescribe the localities in which the money should be expended?

Mr GIBBONS:

– The money has to be found by the one set of taxpayers, whether it he collected by the Commonwealth or the States. Much of this expenditure has been unwisely placed, and it is desirable that there should be an authority to regulate the expenditure. Most of the road construction in New South “Wales in recent years has been parallel with the railway lines. The federal grant has not assisted to any extent in the making of development roads that would aid industry and act as feeders to the railways, instead of competing with them. In New South Wales the southern, western and Sydney to Newcastle roads compete against the railways, and also against the cheap water carriage. The road policy should be co-ordinated with the railway system, so that an enterprise in which the State has invested hundreds of millions of pounds may retain its legitimate trade and continue solvent.

Mr Maxwell:

– Did not these roads exist before the railways?

Mr GIBBONS:

– No; much money has been expended in extending and improving roads that are parallel to railway lines.

Mr Archdale Parkhill:

– And arterial roads might have been built with this money.

Mr GIBBONS:

– That is the point to which I am coming. And if in future this money is to he spent on maintenance without regard to the necessity for making better roads to serve as feeders to the railway system, the mistakes of the past will be accentuated. Those who are in a position to influence the destination of money provided for road services have not paid proper regard to the need for regulating expenditure in such a way as to ensure an adequate return to the nation. Nothing has been more harmful to the railway system of New South Wales than the extension and elaboration of many of the roads running alongside existing lines. By the competition thus promoted the earning capacity of the railways has been seriously reduced.

Mr ARCHDALE PARKHILL:
Warringah

– I have never been keenly in favour of the Commonwealth providing money for the States to spend on roads. In our halcyon days, when the Commonwealth had plenty of money and did not know what to do with its surpluses, the Parliament decided to grant £2,000,000 annually for ten years to the States for road purposes and a similar amount for home building. But soon after the making of the original roads agreement, it became obvious that had such a contract not been made, and had the £2,000,000 annually which it involved been retained by the Commonwealth, the . deficits of the next few years might have been obviated.

Mr Paterson:

– But without the agreement the petrol tax would not have been imposed.

Mr ARCHDALE PARKHILL:

– It would not have been imposed so soon, but I am certain that it would have formed part of the dragnet taxation of the Commonwealth in the last two or three years. Had that source of income not been tapped so soon, it would not have been necessary for this Parliament to reduce old-age and invalid pensions and lower the income tax exemption from £300 to £250. A considerable extent of the Commonwealth’s financial leeway could have been made up with the proceeds of that tax.

Mr Hill:

– If an extra shilling a gallon had been imposed.

Mr ARCHDALE PARKHILL:

– The tax is already 7d., and it yields approximately £2,000,000. The reduction of oldage and invalid pensions does not save much more than that amount. I have never been in favour of the Commonwealth invading a domain that rightly belongs to the States. The making of roads is a State matter, and I do not think that the present Government would have done wrong if, in formulating the rehabilitation plan, of which this bill is part, it had abrogated the roads agreement and retained the whole of the petrol tax for the use of the Commonwealth. Assuming that such a course would have been legal, and would not have inflicted injustice on the States, it would have enabled the Commonwealth to retire into the federal domain out of which it never should have wandered. We have been told by the Prime Minister that some of the conditions attached to the roads grants were found by the States to be irksome. I do not think the agreement was statesmanlike. There should have been at least some provision against the huge expenditure that has occurred on roads alongside railway lines. The States have built some magnificent roads - one I have in mind cost £1,000,000 - parallel to the railway system.

Mr Hill:

– Would it not be more correct to say that the railways were built alongside the roads.

Mr Paterson:

– The road was there first.

Mr ARCHDALE PARKHILL:

– No. Surely the honorable member will not contend that the existence of a bush track, prior to the construction of the railway, reserved that route for all time for a road, to the exclusion of a railway?

Mr Brennan:

– The honorable member for Gippsland (Mr. Paterson) means that the ground was there first.

Mr. ARCHDALE PARKHILL.That is in fact more accurate. In many places the Main Roads Board has followed a mistaken policy, by building most expensive roads alongside railways in which an immense sum of public money is already invested. Had the original agreement included a provision that the money granted by the Commonwealth should be spent on arterial roads or on roads which would act as feeders to the railways - assuming the States had not sense enough to take that course - better value would have been obtained for the money.

Mr Maxwell:

– Does the honorable member think that State Governments are likely to repeat past mistakes, in view of their railway experiences in recent years ?

Mr. ARCHDALE PARKHILL.The longer I live the more amazed am I at the absurd things which Governments do. I regret that the Commonwealth Government has not inserted in the amended agreement conditions which would better safeguard the expenditure of the money that is to be raised for the States.

Mr Scullin:

– What does the honorable member suggest?

Mr ARCHDALE PARKHILL:

– I suggest that instead of spending money on roads running parallel to the railways, we should provide more cross-country arterial and feeder roads so as to develop the country and facilitate our transport arrangements.

Mr Scullin:

– The original agreement provided for expenditure mainly on roads running parallel with the railways. The present agreement is more elastic, and permits of expenditure on feeder roads.

Mr ARCHDALE PARKHILL:

– The States are now left more to their own devices. I still think that “it would be advantageous to the Commonwealth, since it is likely in the near future that we may not be able to carry out this arrangement, to reduce the grant to £1,000,000 at the most. Under this agreement the Commonwealth makes a contribution to the States of about £1,400,000 per annum instead of £2,000,000 as hitherto; but I regret that the Government has not seen fit to reduce the grant still further.

Mr LAZZARINI:
Werriwa

.- I understand that this road grant is based on the estimated petrol consumption for twelve months.

Mr Scullin:

– Yes; there is, for road construction purposes, a tax of 2½d a gallon on all petrol consumed.

Mr LAZZARINI:

– Therefore, the shrinkage in the grant is due to the shrinkage in the consumption of petrol. I venture to say that there will be a still greater shrinkage in the consumption of petrol, which will result in the road grant being considerably less in the future. The honorable member for Warringah (Mr. Parkhill) has stated that the Commonwealth, under this agreement, is saving £600,000. I fail to see how he arrives at that conclusion.

Mr Scullin:

– We are making nothing out of this agreement.

Mr LAZZARINI:

– The Government is not entitled to make anything out of it. The proper method of paying for roads is for the States to levy a nominal registration fee, and for money to be obtained for the construction of roads by means of a tax on .petrol. Then those who use the roads would pay for them. At present a man who owns a car and uses it, say, once or twice a week, is contributing more than his fair share towards the construction of roads.

Mr Hill:

– The honorable member would like to put a chain on the farmer, and not let him go outside his own fence.

Mr LAZZARINI:

– Evidently the honorable member does not understand my contention. I venture to say that nine out of ten of the farmers would support it. The money for the construction of roads should be obtained exclusively by means of a tax on petrol.

Mr Paterson:

– We agree with the honorable member.

Mr LAZZARINI:

– In that way most of the money spent on roads would be contributed by the city people who are running cars: The man who wears out the road would pay for its maintenance, on the principle of payment for use. I agree with the honorable member for Warringah that the original agreement which was entered into by the Government which he supported, was useless and unsatisfactory. The Labour party opposed it.

Mr Archdale Parkhill:

– I cannot be said to have supported that agreement, because I was outside Parliament at the time.

Mr LAZZARINI:

– The honorable member helped to keep in power the Government that made that agreement, and his methods were more or le3S questionable.

Mr Archdale Parkhill:

– There is nothing questionable in electioneering.

Mr LAZZARINI:

– The main road from Goulburn to Sydney runs parallel with the railway. The storekeepers and business people who reside along that road have their light merchandise, such as drapery and haberdashery - a class of goods which pays a high rail freight - carted by motor lorry, and their heavy merchandise, such as salt, potatoes, and flour, on which the rail freight is low, and which, because of its bulk cannot be carried by motor lorry, is freighted on the railways. As a result, the railway revenue has decreased considerably. We should expend this money on the construction of feeder roads, to enable the farmer to cart his produce to the railway, and to pick up his domestic and farm requirements there. To-day most of our feeder roads are in a bad state of repair, and vehicles are frequently bogged in them.

Mr Archdale Parkhill:

– The States would be better off with properly constructed feeder roads.

Mr LAZZARINI:

– That is so. They would obtain an increased revenue, and everybody would be better off. This agreement should provide that the money granted to the States should not be expended on arterial roads running parallel to railways. I admit that the agreement does allow the -States to exercise their own discretion, and that, of course, is a step in the right direction, but it would be better for all concerned if the expenditure were confined to crosscountry arterial roads, and feeder roads. A while ago wool-growers in the Monaro district were carting their wool on the Bombala road which runs parallel to the railway, and the Chief Commissioner of Railways of New South Wales informed those growers that if they continued to cart their wool and their merchandise by road the railway service would have to be suspended. We should decide on a policy either of road service or of railway service. If road transport can compete successfully with railways, the railway services, sooner or later, must close down, because we cannot continue to face the enormous losses on our railway, systems. As we are not in a position to build roads, and as the railways are already established, it seems to me that we should adopt a policy of rail service. The reduced consumption of petrol is due to the continued depression which no one seems to be making an effort to lift from this country.

Mr Brennan:

– The honorable member is of great assistance in that direction.

Mr LAZZARINI:

– The honorable member is a member of a government which has shown itself to be utterly incapable of lifting Australia out of its present depression. It is in a state of hopelessness and helplessness. The honorable member for Warringah stated that the longer he lived the more amazed he became at the stupid things that governments did. This is the most stupid government that has ever been in office. If the depression continues, the petrol consumption will fall, and in time there will be little- money available for road con struction. Before long we shall have to alter other agreements, because of the lack of finance. This agreement, in its modified form, will mean less money expended on the roads, and less employment on the roads. Unless the Government does something to relieve unemployment the great mass of the people will be in a state of absolute destitution.

Mr HILL:
Echuca

.- The honorable member for Warringah (Mr. Parkhill) has stated that most of the arterial roads follow the railway lines. I admit that that is true to some extent. The Bruce-Page Government, when deciding on its roads policy, had frequent conferences with the States, and it arrived at the conclusion that it was necessary to construct three classes of roads - arterial roads between the various capital cities, and other arterial roads leading from the capital cities to the interior; crosscountry roads linking up with arterial roads ; and developmental roads for opening up soldier settlement, new settlement, and closer settlement in different localities. These various classes of roads have been put in hand by the State authorities, with the result that, in Victoria at any rate, we have hundreds of miles of road on which it is a pleasure to travel. I do not begrudge the small amount of money that I have had to pay in taxation to build such roads.

Honorable members have had a good deal to say about the building of arterial roads which run parallel to railway lines. It must be remembered that many of these roads were in use long before the railways were built. The railway line from Melbourne to Albury, and from Albury to Sydney, followed the road, doubtless, because the builders of the roads did their best to find the most direct route and the best grades. That is also true of the road from Melbourne to Bendigo and Melbourne to Ballarat, to mention roads with which I am well acquainted. It has been said that it is unfair to allow motors to compete with the railways where the roads and railways are parallel; but I point out that the State Governments have a remedy which they could easily apply. Many heavy lorries and motor trucks in use in the different States carry, almost exclusively, high class goods which are rated as fourth class goods on the railways, and for which the highest freight rates have to be paid. Very few of them carry agricultural produce, firewood, fertilizers and the like, the railway freights on which are low. In my opinion the States could very easily impose a sliding scale registration fee on motor vehicles which carry high grade freight along roads which are equivalent to steel tracks, which have been built at the cost of the general taxpayer. It cannot be denied that our bitumen-faced roads are of the highest class and a credit to our engineers. But it is essential that they should he properly maintained.

When the original Federal Aid Roads Bill was introduced it provided for a fiveyear scheme, and for the preparation of maps by the State authorities, showing the roads on which the money would be spent. The States were also required to prepare a plan showing the roads which they would put in hand in the second five-year period. Is it the intention of the Government to allow that scheme to be abandoned?

Although many miles of first class roads have been built under the federal aid roads scheme, there is apparently no obligation on the States, under this agreement, to maintain the roads in proper order. I have always understood that the fundamental condition of this scheme was that the States were under an obligation to protect the asset which was created by the expenditure of money. I believe that honorable members of all parties demanded, when the original federal aid roads scheme was under discussion, that provision should he made for the compulsory maintenance of roads by the States. It was even suggested at that time that all federal aid roads should be regularly patrolled.

Mr Maxwell:

– The Country Roads Boards are doing excellent work in that regard.

Mr HILL:

– I agree with the honorable member; but at the same time I suggest that a definite obligation should be placed on the States to protect the roads made with money provided under this scheme, and, so far as I can see, no provision is being made for that in this amended agreement. If the States are to be relieved of their obligation to provide 15s. for every fi provided by the Com monwealth for road work, we should be given some definite guarantee that they will at least maintain the federal aid roads already constructed. Thus the maintenance work should be the first charge upon the money provided under this bill. We certainly should not agree to the expenditure of this money on the’ filling of potholes, or work of that kind ; nor should we give any encouragement to the squandering of this money on work of a temporary character. I will summarize my views by saying that I believe that the maintenance of the federal aid roads already constructed should be ensured, and that any balance that may be left in the hands of the States after this work is attended to should he devoted to the construction of the roads provided for in the original plans.

Rather than see this money wasted on unessential and unnecessary work, I would advocate the suspension of the scheme until better times return. In the meantime the tax of 2-Jd. and the excise duty of ltd. on petrol should be lifted from primary producers in respect of the spirit they use for petrol engines, traction engines and motor trucks, with the object of reducing the cost of production. I use hundreds of gallons of petrol on my farm in the course of the year, and so do other farmers. When the original federal aid roads scheme was propounded - and I had quite a lot to do with the matter then - I was under the impression that arrangements would be made for the exemption from this taxation of petrol used in stationary engines and tractors on farms.

Mr Bayley:

– Has the honorable member ever formulated a scheme under which it would be practical to grant such exemption?

Mr HILL:

– I believe that it could be done. I brought the matter before the late Minister for Trade and Customs, Mr. Pratten, and he promised to look into it, but it was shelved from time to time. When I mentioned it to the present Minister for Trade and Customs (Mr. Forde) he asked me to suggest how my proposal could be applied. If I believed that the Government would adopt a reasonable scheme in this regard, I would certainly submit one. I am totally opposed to the expenditure of this money for what practically amounts to political purposes. It should not be used for the filling up of a few potholes here, or the making up of a few chains of road there; or the building of a bridge somewhere else, with the object of placating the political interests in a particular locality. It should be used primarily for the maintenance of the federal aid roads already built, and, secondly, for the construction of roads which formed part of the original scheme.

Mr CUSACK:
Monaro · Eden

.- Honorable members have had a ‘good deal to say about the construction of roads which run parallel to railways; but I direct their attention to a so-called road, which is one of the main arteries of Canberra, which is not parallel to a railway, and which is in the most disgraceful condition imaginable. I refer to the road from Canberra to Yass. Even the aborigines could make a better track than this alleged road, which is one of the most important in the Commonwealth. If the honorable member for Echuca (Mr. Hill) attempted to drive from Canberra to Yass after half an inch of rain had fallen he would probably get stuck in one of the many creeks which cross the road. If he succeeded in getting across one creek, he would probably get bogged in the next. The Canberra-Yass road reminds me of a trap which people sometimes lay for snakes. A piece of wire-‘ netting is used, and an egg is put on either side of it. When the snake comes along it eats one egg and then pushes its head through the wire-netting to get to the other, and so locks itself in the meshes of the netting, and is caught. We all understood that when Canberra became the seat of the Commonwealth Government it would be provided with railway connexion with the main trunk lines. As that has not been done, it is amazing that proper road facilities have not been provided.

I direct the attention of honorable members to the following paragraphs in the amended agreement which we are asked to accept : -

All moneys paid to the State under this agreement or under the principal agreement as varied by this agreement will be expended upon the construction reconstruction maintenance or repair of roads.

The Minister may satisfy himself by such means as he thinks fit as to whether the moneys paid to the State under this agreement or under the principal agreement as varied by this agreement have been expended as provided for in the last preceding clause.

Seeing that the Minister has control of the expenditure of this money, ‘one of his first acts should bc to ensure that a satisfactory road is constructed between’ Canberra and Yass.

Honorable members have commented on the amount of money that motorists have to provide for roads, through their purchases of petrol. I believe that the money made available under the Federal Aid Roads scheme is a most valuable asset, as it is reproductive, and enables the Government to provide work for the unemployed.

I do not agree with the honorable member for Warringah (Mr. Parkhill), who thinks that this is purely a matter for the State Governments. In view of his comments on the Lang plan and the Lang administration, the honorable member is very inconsistent in his attitude. Personally, I believe that the Commonwealth Government should interfere more frequently when there is obviously maladministration, on the part of a State Government. That should have been done in connexion with the ‘Government Savings Bank of New South Wales.

This Government should also see that consumers of petrol are charged a reasonable price for the product. The Government should prevent the American oil cormorants from longer exploiting the community. I understand that, notwithstanding its protest against Soviet Russia, Great Britain encourages the importation of Russian petrol, with the result that motorists in the United Kingdom are saved some 2d. or 4d. a gallon. When Ave remember that the apparently negligible impost of Id. a gallon made by the Commonwealth Government on petrol yielded an aggregate taxation of £1,000,000 a year, Ave can appreciate what an advantage a saving of 3d. or 4d. a gallon on petrol would be to the nation.

The money that is expended on roads has proved very beneficial ; but the whole thing is left in the hands of a board that probably has more power than that possessed by the Government. This bill curtails the scope of the Main Road’s

Board in dealing with the expenditure of that money, which is perhaps desirable. I again urge the Minister in charge of the measure to see that improvements are effected in the Yass-Canberra road. I ask leave to continue my remarks.

Leave granted; debate adjourned.

page 4845

INCOME TAX BILL 1931

Bill returned from the Senate with a message intimating that it had agreed to the bill as amended by the House of Representatives at the request of the Senate.

page 4845

SPECIAL ADJOURNMENT

Motion (by Mr. Scullin) agreed to -

That the House, at its rising, adjourn until

Wednesday next, at 3 p.m.

page 4845

ADJOURNMENT

Appropriation - Recess Adjournment -

Tariff - Rent Reduction: Commonw e a lth-o wned building s–imperial Pensioners -Wine and Spirit Industry - Rural Bank of New South Wales - Trade with China - Sales Tax on Lime.

Mr SCULLIN:
Prime Minister · Yarra · ALP

.- I move-

That the House do now adjourn.

In discussion with the Leaders of the Opposition in the Senate and the House of Representatives, fears were expressed that if the Appropriation Bill were passed, and the Government, therefore, had Supply for the whole of the financial year, it would not proceed this year with the discussion and completion of the tariff in Parliament. In answer to that, I.’ have no hesitation in repeating the undertaking that, when Parliament resumes in four or five weeks after theadjournment, the tariff will be the first legislation introduced into the House of Representatives, with the exception of any emergency legislation necessary to complete the financial rehabilitation plan. The Government is determined to have the tariff completed in this House in time to reach the Senate before the 1st November. Parliament will be kept in session to deal with any requests that come from the Senate and also to watch the ‘budget position, and to deal with any other important legislation that may be necessary. The Government has no desire to interfere with the legislation in the Senate, or to force its measures through with undue haste. It hopes, how ever, that the Appropriation Bill will be passed before next Thursday, to pay the salaries of the public servants which are due on that date. I hope that that will give sufficient time to thoroughly discuss the whole of the items in the Estimates.

The House will resume next Wednesday, awaiting the return of the appropriation and other bills from another place. While waiting for those measures the tariff will be discussed. When the House adjourns next Thursday or Friday, which should give sufficient time to clear up the Government’s emergency legislation, amotion will be submitted for the adjournment of Parliament for five weeks, with the proviso that Mr. Speaker may call Parliament together at an earlier date should any emergency arise. That recess of five weeks will enable the Government to meet the State Premiers and Treasurers at the Loan Council and Premiers Conference, and also to meet in conference the banks and other bodies interested in this legislation. When Parliament resumes, its business will be any legislation that may be required to complete the Government’s plan. We must complete the tariff in this House before the end of October, in order that another place may be given an opportunity to discuss it and send back requests to this House before Parliament again rises prior to Christmas.

Mr LYONS:
Wilmot

.- The statement made by the Prime Minister (Mr. Scullin) must be entirely satisfactory to honorable members on both sides of the House. The right honorable gentleman has given a definite assurance that this House will he kept in session while there is any important business to transact, and that Parliament will be consulted in regard to any emergencies that may arise from time to time. The Prime Minister’s statement goes further, and gives an assurance to members of another place that they will have a reasonable opportunity to deal with the tariff. In the circumstances, I feel sure that the position will be satisfactory to all, and that honorable members in another place will proceed as expeditiously as possible with the consideration of the Government’s business that is now before them.

Mr LACEY:
Grey

.- A few weeks ago the Arbitration Court reduced the wages of Commonwealth railway employees by 10 per cent. Many railwaymen are living in cottages owned by the Commonwealth, and are paying rents based upon the capital cost of the dwellings. Seeing that wages have been reduced, it is only fair that the Government should reduce rents as well. This would be in accordance with the Government’s own declaration that interest should be reduced in common with wages, &c. The rents are based on the capital cost of the cottages, and bear a direct relation to the interest paid for the money with which those cottages were built. Men living in the cottages along the line pay about 12s. a week, while others in Port Augusta pay more.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– Does the honorable member refer to employees on the transcontinental line?

Mr LACEY:

– I am particularly interested in them, although this concession, if granted, might extend a little beyond them. There is a precedent for rent reductions of this kind, because only the other day the Minister for Home Affairs (Mr. Blakeley) agreed to a 20 per cent, reduction of Canberra rents, in harmony with the 20 per cent, reduction of civil servants’’ salaries.

Besides the 10 per cent, reduction of wages suffered by railway men, their wages have also been reduced by 7 per cent, in accordance with the cost of living figures. There will probably be further reductions in the cost of living, and I submit that wages should not be further reduced until the fall in the cost of living has been sufficient to offset the 10 per cent, reduction made by the economy plan. This is opening up a fairly wide field, I know, but, seeing that we have always accepted the principle that there should be no reduction in real wages, but that wages should be regulated in accordance with the cost of living, my request is, I think, a just one. I trust that, if the Minister cannot see his way to grant my request immediately, he will bring it under the attention of the Government for favorable consideration.

Mr JAMES:
Hunter

.- Some time ago I asked the Treasurer (Mr. Theodore) a question regarding the addi tion of exchange to the pensions paid in Australia to Imperial pensioners. I was told that negotiations were afoot, and that when they were completed the payments would be retrospective. Many of my constituents come from the Old Country, and some are in receipt of pensions from the Imperial Government.

Mr Scullin:

– I said the other day that we had completed our negotiations at this end ; that we had cabled to London, and were awaiting advice. I do not know what is the reason for the delay.

Mr JAMES:

– Pensioners are anxious to know whether exchange will be added to their pensions. The Treasurer said that payments would be made from 1st January until March, and that from then on they would be made on a half-yearly basis. These people are very anxious to know why they should have to wait from March until September before another payment is made. They contend that they should be paid fortnightly, with the exchange added.

Mr BAYLEY:
Oxley

.- On the 23rd June, the Minister for Trade and Customs (Mr. Forde) gave a deferred reply to a question asked on the 28th May by the honorable member for East Sydney (Mr. Ward). The question was -

Is it a fact that immediately following the imposition of wine and whisky duties, the employers have made an application for a 10 per cent, reduction in the wages of the employees in the industry?

The applicants for the reduction were the New South Wales Wine Association and the Wine and Spirit Association of New South Wales, the membership of which is, respectively, twelve and nineteen firms. It was argued by counsel that these two associations represented 90 per cent, of the wine and spirit trading firms in New South Wales. The twelve firms of the Wine Association handle practically only Australian-made products; the nineteen firms of the Wine and Spirit Association are interested - in both the imported and the locally-produced article. The award, which has just been altered by a 10 per cent, reduction, was to operate until the 31st December, 1930, but had force until determined or varied on the application of . one of the parties. The Federal Arbitration Court has, in view of the existing depression, granted to a number of industries - among them the United Licensed Victuallers’ Association - a reduction of 10 per cent in wages. Possibly, the majority of those engaged in that industry prefer the locallyproduced article; but the Wine Association also considered it just to apply for a 10 per cent, reduction on the 1928 award, and this came into force on the 25th June, 1931. The point I emphasize is that the honorable member for East Sydney asked whether the Minister for Trade and Customs would take into consideration the fact that these associations applied for a reduction of 10 per cent, in wages immediately following a substantial increase of duties, whereas the latest increases of duty were on the 21st November, 1929 - which mainly affected spirits - and on the 4th April, 1930, largely affecting imported wines, ales and stout. Apparently, the officer of his department who prepared the answer to the question overlooked these facts when framing the Minister’s reply.

Mr GIBBONS:
Calare

.- A tragic position has developed in New South Wales because of the decision come to in regard to the State Rural Bank. In all, 8,500 settlers are affected. They are of two classes. Those who selected land under section 64 of the Closer Settlement Act of New South Wales are to-day in an impossible position. Others, under an act passed in 1908, took up what is known as restricted title land. These are some of our best settlers, and occupy some of the best wheat-growing land in the State. Because of the restrictions imposed by the private banks the majority of these settlers opened accounts with the State rural bank, and in normal circumstances, they would to-day be quite solvent. Indeed, many of them possess assets worth from £6,000 to £7,000. Such assets are, in many cases now held by the Rural Bank as security for advances, andbecause of the position that has developed in New South Wales the securities cannotbe liberated, although representing, in many instances, seven times the amount of the hank’s advances.

Mr Stewart:

– One of these days when the farmer wakes up, there will be a revolt.

Mr GIBBONS:

– Yes. The yeomanry will assert themselves as they have done in other parts of the world. Unless means are devised very quickly for freeing their securities, these settlers will be forced into liquidation, and in the negotiations that are taking place in regard to the Government Savings Bank of New South Wales special consideration should have been extended towards them. I realize the impossible position of those who occupy land under section 64 of the Closer Settlement Act, because of the blunders that have been made and the improper placing of money when the State took up debentures on their behalf; but there are probably 6,000 others whose assets are to-day much in the inaccessible position of Mahomet’s coffin. Being clients of the Rural Bank they have their securities locked up in it, and unavailable to them. Their position is aggravated by the fact that last year the total proceeds of their wool and wheat were placed to the credit of their accounts in the bank on the understanding that they would be able to operate on them during the year to the full amount of the value of the products.

Mr Stewart:

– They have been financed by a weekly payment from that fund.

Mr GIBBONS:

– Quite so. The position of these men has become desperate within the last three weeks; so desperate in some localities that they are asking the sergeant of police to furnish them with small sums of money for the support of their families.

Mr Stewart:

– That is because the. payments from the bank have ceased.

Mr GIBBONS:

– Yes. In one case a man has assets of £7,000 or £8,000 at the present day valuation, and his overdraft is slightly over £1,000, but it is impossible for him to move. No private hanking institution can help men who are not in a position to give a first mortgage, and in any case, the amount of money available to these institutions for lending to depositors is so limited that they have practically ceased to accept new business. No matter is of greater importance to Australia at the present time than that of freeing the securities of these settlers, so that they may continue their operations on the land.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

.- This morning, without notice, I asked the

Prime Minister about China’s boycott of Australian goods in retaliation for our tariff. In an endeavour to develop trade in the East, Australian firms are next year sending a goodwill peace vessel to the East, and about 150 firms have already booked up space on that vessel. If the experience of those who desire to send thousands of tons of flour to Shanghai is any criterion of what is likely to happen in the East, steps should be taken at once to improve the trade atmosphere.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– What is the difficulty?

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Recently a big firm in Australia desired to send 1,000 tons of flour.to Shanghai. It got into touch with the Chamber of Commerce there, but the reply received from that body was that in no circumstances would it touch any Australian goods, or assist to sell them in China, . even to the extent of supplying information, while Australia imposed discriminatory duties on Chinese goods. Without anticipating the tariff debate in this chamber, I suggest to the Minister for Markets that he might well take a hand in this matter. There is more than a threatened boycott of Australian goods ; Chinese traders are refusing to handle them. This is a far more serious action than has been taken by certain Continental countries, which have imposed retaliatory tariffs against Australian products. If the position in the East does not improve, our natural market will be closed against us. It is within our power to remove the conditions to which China objects.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– A good deal may be said in favour of the case presented by the honorable member for Grey (Mr. Lacey) who has discussed with me several times the matters he has raised to-day. He desires to know if concessions similar to those granted to the tenants of government-owned houses in the Federal Capital Territory will be extended to employees of the Commonwealth Railways Department, who occupy government, cottages on the Port Augusta to Kalgoorlie railway. I shall look carefully into the matter, and let the honorable member have an early reply. He also asked, in effect, that any cut in wages which has been made in conformity with the economy plan, in excess of the reduction due to the fall in the cost of living, should be taken into account in the event of the cost of living becoming still lower. That seems to be a reasonable request, for which the honorable member has made a good case, and I think that I may say that it will be acceded to.

The honorable member for Richmond (Mr. R. Green) has raised the subject of proposed flour shipments to the East. I point out that Australia’s trade with the East is growing, and an incident relating to 100 tons of flour cannot be taken’ as an indication of the attitude of Chinese traders to Australia.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– I think that the quantity in question was 1,000 tons, and the Minister should not shut his eyes to the menace to which I have referred.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– I shall inquire into the case mentioned; but I can assure the House that our trade with China is increasing.

Mr Hill:

– Largely due to the cheapness of our wheat.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– The more’ wheat the Chinese take from Australia, the more they will like it.

Mr Stewart:

– But I hope that our farmers are not to be kept poor by growing cheap wheat for the Chinese.

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– Australia has large quantities of wheat this year, and it is comparatively cheap. The Chinese people, like ourselves, are suffering from the general trade depression. They are very glad to have Australian wheat, and they are well satisfied with it.

Mr FENTON:
Maribyrnong

.- I have received a communication with reference to the sales tax on agricultural lime. Generally speaking, the fertilizers used on farms are exempt from this tax, but lime, which is largely employed as a fertilizer, particularly by orchardists,is taxed. I hope that the Prime Minister (Mr. Scullin) will endeavour to include it in the exempt list. Men on the land in all the States would be exceedingly grateful for the concession.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– The Government has pushed on with the negotiations with the British Government regarding the Imperial pensions referred to by the honorable member for Hunter (Mr. James).

We sent a communication to London two or three weeks ago,, and we are now awaiting a reply; there may be good reason for the delay. It is true that these payments will be made retrospective. The first payment received will be for fifteen months, and subsequently the payments will be made every six months. The reason for the six-monthly payments is that a very large amount of work is involved, ‘ and the payment to each individual is relatively small. There would be an appreciable addition to the cost if the payments were made at more frequent intervals. The fact that the first payment will cover a period of fifteen months will compensate for the subsequent delay of six months.

The matter raised by the honorable member for Maribymong (Mr. Fen ton) has been very fully considered. The department has assured me that there is no way in which they can distinguish between agricultural and any other lime; therefore, the exemption of every class of lime would be involved.

Mr Hill:

– They are entirely different.

Mr SCULLIN:

-We have a very effective and efficient department, and the officials say that it would be most difficult to separate sales of lime for agricultural purposes from sales for building or other purposes. However, the matter will again be investigated.

Question resolved in the affirmative.

House adjourned at 4.20 p.m.

Cite as: Australia, House of Representatives, Debates, 31 July 1931, viewed 22 October 2017, <http://historichansard.net/hofreps/1931/19310731_reps_12_131/>.