House of Representatives
29 April 1936

14th Parliament · 1st Session



Mr. Speaker (Hon. G. J. Bell) took the chair at 3 p.m., and read prayers.

page 944

DEATH OF MR. EDMUND JOWETT

Mr.LYONS(Wilmot- Prime Minister) [3.1]. - by leave - It is with regret that I inform honorable members of the death on the 14th April of Mr. Edmund Jowett, a former member of the House of Representatives.

Mr. Jowett was elected to litis chamber as member for Grampians at a by-election held on the 27th October, 1917, and held that seat until 1922, when the division was eliminated by a redistribution of seats. Those who were associated with the late gentleman in this House testify to his high personal worth, his ability, and the enthusiasm evinced by him in the discharge of his duties as a member of the Legislature. Afterhisretirement from the Commonwealth Parliament, Mr. J owett continued to identify himself with the public life of this country. He will be remembered for his wide knowledge of the problems confronting the pastoral industry, and for his work in association with organizations concerned in the further development of the Australian wool trade. I invite honorable members to join with me in an expression of sympathy with the members of his family.I move -

That this House expresses its deep regret at the death of Mr. Edmund Jowett, a former member of the House of Representatives, places on record its appreciation of his public service, and tenders its deep sympathy to the members of his family in their bereavement.

Mr CURTIN:
Fremantle

– I second the motion. The late Mr. Jowett was for five years a member of this Parliament. Those who were in the Parliament at that time - I was not - will doubtless have a keener and more intimate realization than I have of his valued public services, but I have learned sufficient of his career to know that he was a high-minded citizen who took a special pride in doing things for the advancement of the nation. Those of my colleagues who were associated with him in this Parliament have expressed to me their high appreciation of his personal qualities, and of the manner in which he comported himself in debate. They have assured me that he was a man of the most kindly disposition and the highest public spirit. I express to his relatives my deep sympathy in their bereavement.

Mr PATERSON:
Minister for the Interior · Gippsland · CP

.- The late Mr. Jowett sat in this House for a number of years as a member of the party to which I belong. I therefore desire to associate that party particularly with what has been said by the Prime Minister (Mr. Lyons) and the Leader of the Opposition (Mr. Curtin).

Question resolved in the affirmative, honorable members standing in their places.

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

That the foregoing resolution be transmitted to the members of the late Mr. Jowett’s family, together with a copy of the speeches delivered thereon.

page 945

DEATH OFKING GEORGE V. AND ACCESSION OF KING EDWARD VIII

Reply to Messagefrom Commonwealth Parliament

Mr SPEAKER (Hon G J Bell:
DARWIN, TASMANIA

– I have to announce that I have received the following communication from His Excellency the Governor-General: -

Government House,

Canberra. 7th April. 1936

Mr. President of the Senate and Mr. Speaker of the House of Representatives.

Gentlemen,

I am commanded to forward the enclosed reply from His Majesty the King to the resolutions which I transmitted from the Senate and the House of Representatives of the Commonwealth. (Sgd.) Gowrie,

Governor-General. “ Buckingham Palace

Members of the Senate and of the House of Representatives of the Commonwealthof Australia,

I desire to express to you, on behalf of Queen Mary, myself, and the other members of the RoyalFamily, the deep appreciation with which we have received your kind message of sympathy on the death of my dear father. I thank you sincerely for your congratulations to me on my Accession to the Throne, and 1 share with you the hope that the years, to come may bring peace and prosperity to us all. (Sgd.) Edward R.I.” 19th March, 1936.

page 945

PAPERS

The following papers were presented : -

Northern Australia Survey Act - Aerial, Geological and Geophysical Survey of Northern Australia - Report of Committee for period ended 31st December. 1935.

Air Navigation Act and Carriage by Air Act - Regulations - Statutory Rules 1936, No. 45.

Arbitration (Public Service) Act - Determination by the Arbitrator, &c. - No. 1 of 1936 - Commonwealth Public Service Clerical Association.

Customs Act - Regulations amended - Statutory Rules 1936, No. 49.

Defence Act - Regulations amended - Statutory Rules 1936, Nos. 43, 44.

Immigration Act - Return for 1935.

Meat Export Control Act - Regulations - Statutory Rules 1936, No. 41.

Naval Defence Act - Regulations amended - Statutory Rules 1936, No. 40.

Navigation Act - Regulations amended - Statutory Rules 1936, Nos. 42, 47.

Post and Telegraph Act - Regulations amended - Statutory Rules 1936, No. 50.

Public Service Act - Appointments -

W. J. Bridgman, K. R. Ingram, N. J. Parkes and A. J. Weatherston, Parliamentary Reporting Staff.

D. T. Curdie and U. Ellis, Department of Commerce.

J. D. L. Hood, Department of External Affairs.

Seat of Government (Administration) Act and Seat of Government Acceptance Act-

Ordinances of 1936 -

No. 9 - Public Baths.

No. 10 - Tobacco.

No. 11 - Apprenticeship.

No. 12 - Industrial Board.

No. 13 - Money Lenders.

Regulations amended, &c., under -

Advisory Council Ordinance.

Education Ordinance.

Meat Ordinance.

Public Baths Ordinance.

Transport Workers Act - Regulations amended - Statutory Rules 1936, No. 53.

Wheat Growers Relief Act - Regulations - Statutory Rules 1936, No. 46.

page 946

QUESTION

DUTIES ON CEMENT

Mr FORDE:
CAPRICORNIA, QUEENSLAND

– Will the Prime Minister place on the table of the House the communications, if any, which have passed between the British Government and the Commonwealth Government on the subject of duties on cement?

Mr LYONS:
Prime Minister · WILMOT, TASMANIA · UAP

– As an ex-Minister, the honorable member knows that it is not usual to table communications of the kind from the British Government to the Australian Government.

Mr FORDE:

– Were there any?

Mr LYONS:

– Yes. The Government will have no hesitation in acquainting the House of the material portion of the correspondence in question.

page 946

QUESTION

NATIONAL INSURANCE

Mr FRANCIS:
MORETON, QUEENSLAND

– Will the Treasurer state whether a definite reply has yet been received to the request made to the British Government to invite Sir William Beveridge to visit Australia as an adviser to the Commonwealth Government on the subject of national insurance? If so, what is the nature of the reply?

Mr CASEY:
Treasurer · CORIO, VICTORIA · UAP

– A reply has been received from the British Government to the general effect that it would have difficulty in finding one individual who has adequate expert knowledge of all branches of national insurance. It has suggested as an alternative that two persons be sent to Australia, each expert in particular branches of the subject. The Commonwealth Government has accepted that suggestion, and is now awaiting the names of the individuals concerned.

page 946

QUESTION

AUSTRALIA AND ITALY

Trade Relations

Mr LAZZARINI:
WERRIWA, NEW SOUTH WALES

– I ask the Minister directing negotiations for trade treaties whether the subject of trade relations between Australia and Italywas discussed at his meeting last Monday with the Italian Consul-General and whether the Consul-General said that the imposition of sanctions would re-act more adversely on Australia than on Italy?

Sir HENRY GULLETT:
Minister without portfolio, directing negotiations for trade treaties · HENTY, VICTORIA · UAP

– The answer to both questions is “ No “.

page 946

QUESTION

BEAM WIRELESS

Mr McCALL:
MARTIN, NEW SOUTH WALES

– During the recess it was reported that the Acting AttorneyGeneral, the Postmaster-General, and the Director of Posts and Telegraphs would meet in Melbourne to consider the making of an agreement between the Government and Amalgamated Wireless (Australasia) Limited, for the Postal Department to take over the beam wireless service now conducted by Amalgamated Wireless of Australasia. Can the Prime Minister inform me of the result of the deliberations?

Mr LYONS:
UAP

– When it is possible for a statement of government policy to be made on this subject, it will be made; but it cannot be made at present.

page 946

QUESTION

SHORTER WORKING WEEK

Mr CURTIN:

– I ask the Prime Minister whether any decision has been reached by the Government regarding the application of a shorter working week to Australian industries? I also wish to know whether the Government intends to give the members of this House an early opportunity to discuss the report on the subject by Sir Frederick Stewart ?

Mr LYONS:
UAP

– I have made a public statement on this subject to which I have nothing to add; but I again express my regret that the representatives of the unions saw fit to decline to co-operate in the investigation that it was intended to hold. The Government was most anxious that an investigation should be made and it endeavoured to constitute the proposed conference so that it would inspire confidence in the whole community. We were very definitely disappointed that the inquiry could not take place because the representatives of the unions declined to take part in the conference.

Mr CURTIN:

– Does the Government intend to take any further action?

Mr LYONS:

– The Government has done its best to have an investigation made, but its proposition was defeated and it has no other proposition at present.

Mr MAKIN:
HINDMARSH, SOUTH AUSTRALIA

– Was that investigation essential ?

Mr LYONS:

– The Government considers that it was.

page 946

QUESTION

AUSTRALIA-CANADA. TRADE TREATY

preferenceondriedfruits.

Mr McBRIDE:
GREY, SOUTH AUSTRALIA

– I ask the Minister directing negotiations for trade treaties, whether, in view of the large amount of dried fruits now entering Canada from California, the Commonwealth Government is taking any action to protect this market for the Australian product?

Sir HENRY GULLETT:
UAP

by leave - Under the original terms of the AustraliaCanada trade treaty, which runs for an indefinite term, subject to six months’ notice by either side, Australian dried fruits had a preference of 3 cents per lb. certain. The Canadian Government agreed, however, to increase this preference to 4 cents, the additional cent to be renewable at Canada’s discretion, from year to year. The 4-cent duty was renewed each year until the 31st March. The Commonwealth Government considered that the trade treaty between Canada and the United States of America, which came into effect on the 1st January this year, had in spirit and understanding detracted in some degree from the value of the Australian preferences. This was a purely ex-parte view in which Canada did not share Representations upon the point were made by the Commonwealth Government to the Government of Canada, with the result that Canada agreed, in a telegram dated February of this year, to place the duty on dried fruits, with the exception of the duty on currants, on a 4!-cent preference basis during the life of the AustraliaCanada treaty.

It is the practice of the Canadian Government to bring down its budget at the. end of March, and the understanding was that the new arrangement as to the permanence of the 4-cent duty would bc confirmed in the budget. Unhappily, however, the Government of Canada has delayed this year’s budget, and it has not yet been introduced, although it is expected to be introduced within the next few days.

As the last year in which we were conditionally enjoying the extra cent per lb. upon dried fruits expired upon the “31st March, Australian dried fruits have during this month been receiving a preference of only 3 cents. The Canadian Government, at the instance of the Australian Trade Commissioner, explored the possibility of bringing the promised 4- cent duty into operation during April. Under the Canadian tariff procedure, however, the Government is not em powered to increase a duty except in connexion with the presentation of the budget, although it may decrease a duty at any time. The Canadian Government found it impracticable to devise a means to continue the duty of 4 cents until the budget was introduced.

During this month, in which the duty has been 3 cents per lb., instead of 4 cents, the Australian Trade Commissioner in Canada has been under instructions to watch the position very closely. In his latest cable to the Government, received yesterday, he expresses confidence that there has not been any considerable increased import of raisins from the United States into Canada during the month of April. Moreover, he has also been in direct communication with the Dried Emits Board, and the board expresses satisfaction with the present position.

page 947

QUESTION

POLITICAL BROADCASTS

Mr GEORGE LAWSON:
BRISBANE, QUEENSLAND · FLP; ALP from 1936

– I ask ibc Minister representing the PostmasterGeneral whether, in view of the facts that the Constitutional Club of Brisbane is now a recognized political institution, and the head-quarters of the United Australia party of Queensland, and that this institution has, during past years, been allowed to make free lunchhour broadcasts from the National Broadcasting Station, 4QG, Brisbane, the Government will now take the necessary action to place the club on the same footing as all other political bodies in regard to broadcasting from national stations?

Mr ARCHDALE PARKHILL:
Minister for Defence · WARRINGAH, NEW SOUTH WALES · UAP

– I shall bring the honorable member’* question under the notice of the PostmasterGeneral. wheat Industry.

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– I ask the Prime Minister whether he will inform me which of the State parliaments have passed the complementary legislation necessary to give effect to the legislation passed by this Parliament some little time ago, providing for a home consumption price for wheat? Has any promise been given that such legislation will be passed in respect of States which, so far, hive not passed it?

Mr LYONS:
UAP

– I shall make an inquiry into this subject, and furnish .the honorable member with a reply.

page 948

QUESTION

AIR-MAIL SERVICES

Sir Donald CAMERON:
LILLEY, QUEENSLAND · UAP

– 1 ask the Minister for .Defence whether, in view of the contradictory statements that have appeared in the press during the last two or three days, concerning the proposed overseas air-mail services, he will make a statement on the subject? I also wish to know whether he has been correctly reported to the effect that a fresh survey of air routes from Darwin is to be made ?

Mr. ARCHDALE PARKHILL.There has been no change in the position since the Prime Minister indicated it some few weeks ago. The matter has been referred to the Commonwealth Ministers who are at present in London, and they have been asked to confer with the British Government with regard to the proposal. Some little delay has taken place in the transmission of papers. Furthermore, because of the intervention of holidays and other matters of importance in Great Britain, no advice has yet been received regarding the necessary conferences which are to take place. I am unable to account for statements that have been made other than to attribute them to newspaper speculation. In regard to the second part of the honorable member’s questions, some months ago when a survey of the route across the Gulf of Carpentaria and Normanton was proposed, a request was made by Imperial Airways Limited to utilize for this purpose the services of the Royal Australian Air Force. This was done, and the report of the commanding officer, Squadron-Leader Hempel, was strongly adverse to the view held by Imperial Airways Limited, that a base suitable for flying boats of the dimensions specified by the company could be established there. This information was communicated lc Imperial Airways Limited, and in view of a report of a different character, made a few years ago by Major Cave-Brown-Cave, it has asked that a further survey be made. Imperial Airways Limited is sending Major Brockley, who, I understand, is the officer in charge of the operations, and who is at present in the East, to make that further survey. The Commonwealth Government has informed the company that it has no objection to the second survey, provided first that a representative of the Commonwealth . takes part in it, and, secondly, that the fact that it has agreed to another survey does not in any way commit it on main issues yet to be considered.

page 948

QUESTION

ORANGES AND VEGETABLES

Export to New Zealand

Mr JOHN LAWSON:
MACQUARIE, NEW SOUTH WALES · UAP

– Is the Prime Minister in a position to indicate to the House what progress, if any, has been made by the Commonwealth Government in its endeavours to prevail upon the Government of New Zealand to lift the embargo that exists on the importation into New Zealand of Australian fruit and vegetables ?

Mr LYONS:
UAP

– The Acting Minister for Commerce is dealing with that matter, but he is absent from the House. I shall obtain the information required by the honorable member.

page 948

QUESTION

FINANCIAL EMERGENCY REDUCTIONS

Mr HOLLOWAY:
MELBOURNE, VICTORIA

– Is there any truth in the report published recently in the press that the Government has been considering the possibility of increasing public service salaries and parliamentary allowances? If there is any truth in that report, does the Government see the justice of giving the same consideration to pensioners as is to be given to other sections of the community affected by the financial emergency cuts?

Mr LYONS:
UAP

– No” consideration has been given to the matter referred to, because the time has not arrived for it to be done. All these matters will be considered when the Government is dealing with proposals for the next budget.

page 948

QUESTION

ITALO-ABYSSINIAN DISPUTE

Sanctions

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– During this short session, will there be supplied to the House a statement showing to what extent members of the League of Nations, which agreed to the imposition of sanctions against Italy, have departed from the straight and narrow path in the application of sanctions?

Mr CASEY:
UAP

– I do not know whether any detailed statement on the lines suggested by the honorable member will be possible; but 1 shall have the matter looked into, and see if a reply can be made.

page 949

QUESTION

SISTER KENNY

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– Has the Department of Health received . any report concerning the methods employed by Sister Kenny in the treatment of crippled children, and does the Minister for Health agree with the attack made on Sister Kenny by Lady Latham at a conference held to deal with questions concerning the welfare of crippled children?

Mr HUGHES:
Minister for Repatriation · NORTH SYDNEY, NEW SOUTH WALES · UAP

– I have not received a report; but I am informed by the medical officer in charge of the committee appointed to consider this matter that it will shortly be available. As soon as it is available, I shall make it known to the honorable gentleman.

page 949

QUESTION

TRADE TREATY WITH BELGIUM

Mr McBRIDE:

– Has there been any progress with the negotiations for a trade treaty between Australia and Belgium?

Sir HENRY GULLETT:
UAP

– We are still waiting for the new instructions to the Acting Consul-General for Belgium in Australia, which were to be sent to him by his own Government.

page 949

ALIEN MIGRATION

Mr.CURTIN. - Has any change been made in the conditions under which aliens are to be admitted to Australia, particularly with reference to the amount of money which they must possess?

Mr PATERSON:
CP

– Yes, the amount of money which they have been required to have has to some extent been reduced.

Mr Curtin:

– Will the Minister make a full statement?

Mr PATERSON:

– If the honorable member will put the question on the notice-paper I shall give him full details in reply.

page 949

QUESTION

APPLE AND PEAR BOUNTY

Mr FROST:
FRANKLIN, TASMANIA

– When will the amount of money voted some time ago by this Parliament, for assistance to apple and pear growers, be distributed?

Mr LYONS:
UAP

– Arrangements have been made for the distribution of the apple and pear bounty through those State organizations which previously carried out this work, and the distribution will begin very soon.

page 949

QUESTION

INTERSTATE COMMISSION

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– Will the Prime Minister state whether the Government has reached a decision on the subject of the reconstitution of the Interstate Commission?

Mr LYONS:
UAP

– The answer is in the negative. The matter will receive the consideration of the Government before next session. Owing to the fact that this commission, if re-appointed, would probably take over the duties now being discharged by the Commonwealth Grants Commission, the term of the appointment of that commission will be further extended for twelve months.

page 949

QUESTION

TECHNICAL EDUCATION

Mr HOLT:
FAWKNER, VICTORIA

– Is the Prime Minister in a position to inform the House of the result of the conference of State Ministers of Education, which recently asked the Commonwealth Government for assistance in regard to technical education?

Mr LYONS:
UAP

– Representatives of the States interviewed the Treasurer and myself regarding this matter, but the Government is not in a position to consider particular proposals of this kind, because it holds the view that this is one of those matters which should be dealt with at a conference of Commonwealth and State Ministers at which the general financial relations of the Commonwealth and the States are considered.

page 949

QUESTION

SUGAR EMBARGO

Mr RIORDAN:
KENNEDY, QUEENSLAND · ALP; FLP from 1931

– Will the Minister for Trade and Customs state the reason for, and the effect of, the amendment of the Customs (Prohibited Imports) Regulations by omitting from the second schedule the item “ Sugar, namely : - Cane sugar and beet sugar “ ?

Mr WHITE:
Minister for Trade and Customs · BALACLAVA, VICTORIA · UAP

– Sugar is still on the embargo list. The amendment to which the honorable member refers was merely an administrative adjustment. Sugar and many other items mentioned in the second schedule to the regulations are now by legislation and not by regulation on the prohibited list.

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

– Does the Minister feel that he was justified in causing to be issued an order-in-council to the effect that the embargo on the importation of sugar had been removed, thus raising false hopes in the hearts of. the housewives of Australia, when he knew all the time that, under the existing agreement, the embargo would continue in force?

Mr WHITE:

– I cannot speak on behalf of the Housewives Association, but I know that no false hopes were raised in the breast of the honorable member for Swan. When the last sugar bill was before the House the honorable member spoke on it more than once, and he was fully aware that, under the terms of the bill, the embargo was to be made a matter of law.

page 950

QUESTION

TOPOGRAPHICAL AND GEODETIC SURVEY OF AUSTRALIA

Beacon and Wireless Direction Stations

Mr BLAIN:
NORTHERN TERRITORY

– In view of the continued representations that have been made in the past by the Institutes of Land Surveyors throughout Australia, urging the necessity for a complete topographical and geodetic survey of the Commonwealth, and in view of the difficulty recently experienced in locating lost airmen in the north of Australia because of the lack of precise maps, will the Minister for Defence request that this urgent work be undertaken, combined with the installation of beacon and wireless direction stations in the Northern Territory ?

Mr ARCHDALE PARKHILL:
UAP

– The survey referred to is proceeding, and a considerable sum of money is provided on the Estimates for the current year. Beacons will be installed as rapidly as possible, but other localities will receive preference over the Northern Territory on the ground that the erection of beacons in those localities is move urgent.

page 950

QUESTION

SURPLUS MILITARY CLOTHING

Mr GEORGE LAWSON:
BRISBANE, QUEENSLAND · FLP; ALP from 1936

– Does the Minister for Defence intend to follow the procedure adopted in past years by distributing all surplus military clothing among the unemployed? If so, will he ascertain the quantity of surplus clothing and blankets, if any, available for distribution, and take the necessary steps to see that they are handed over to the State authorities in ample time for distribution among the unfortunate unemployed of Queensland prior to the winter months?

Mr ARCHDALE PARKHILL:
UAP

– It is, and has, for a considerable time, been the practice of the department to make available to the unemployed all unused or left-off military clothing. These goods are given to the State authorities for distribution. I shall make inquiries and ascertain what quantity is available at the present time, so that it may be distributed among those who need it before the winter months.

page 950

QUESTION

WYNDHAM RAILWAY PROPOSAL

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

– Will the Minister for the Interior inform me whether a Commonwealth survey party is now engaged in de-limiting the boundary between the Northern Territory and Western Australia, and whether on the completion of that work the Minister will consider employing the party in making a preliminary survey of a proposed line of railway for the purpose of transporting stock between the Northern Territory and Wyndham?

Mr PATERSON:
CP

– The answer to the first question is in the affirmative. As to the second portion of the honorable member’s inquiry, I do not think that the Commonwealth Government could very well interpose in regard to a matter which comes entirely within the sphere of action of the Government of Western Australia.

Mr NAIRN:

– Will the Minister for the Interior state whether in the event of such a proposal being received from the Government of Western Australia, he will consider sharing with that government the cost of making a preliminary survey for a railway from Wyndham into the Northern Territory?

Mr PATERSON:

– While I cannot commit the Government, I may state that any proposal put before the Commonwealth by any State government would receive careful consideration.

page 950

QUESTION

HOUSING SCHEME

Mr MULCAHY:
LANG, NEW SOUTH WALES

– Does the Prime Minister propose to give effect to the promise made by his party at the last election to provide funds for a housing scheme for the purpose of abolishing slum areas? That promise was mentioned by the honorable member for Parramatta (Sir Frederick Stewart) in his recent report on the proceedings of the International Labour Conference at Geneva. Was that honorable gentleman correct in saying at the recent meeting of the Housing Council of New South Wales that the Commonwealth Government had promised practical support of this proposal? If so, what form will that practical support take, and when will it be available ?

Mr LYONS:
UAP

– The question raised involves an undertaking given by the Government to co-operate with the State governments in the matter of providing work for the unemployed. This Government has done everything in its power to co-operate with the States in that direction. It has directly provided substantial amounts to subsidize the funds of the States, and it has agreed to provide money for subsidizing the payment of interest on loans raised for the carrying out of works in the various States. In order that the States might have access, as nearly as possible, to the full amount of money available in the loan market from time to time, and in order that thc Commonwealth Government should not encroach upon that field, it has called on the taxpayers of the Commonwealth to “find millions of pounds out of revenue in order that employment may be provided. The subject of housing comes directly under the purview of the States. The Commonwealth can best assist the States by leaving them full access to the loan market, and it has done so in the manner that I have indicated. In that way it has helped the States to meet their obligations. As the result of this action, a.nd of that taken by the State Government, the percentage of unemployment has been reduced very considerably below that which existed when the undertaking referred to by the honorable member was given.

page 951

QUESTION

MINTING OF FARTHINGS

Mr LAZZARINI:

– Will the Prime Minister state whether the Government has given consideration to the suggestion of the Retailers Association that farthings be minted in Australia ? Does he not think that the fact that such a suggestion has been made indicates that the people of Australia have been compelled to accept a lower standard of living?

Mr LYONS:
UAP

– In reply to the first part of the honorable member’s question, I can inform him that the Government has given no consideration to the suggestion. The implication contained in the second part of his question is contradicted by the fact that the standard of living of the Australian people has obviously improved.

page 951

QUESTION

SOIL EROSION

Mr PERKINS:
EDEN-MONARO, NEW SOUTH WALES

– Has the attention of the Prime Minister been drawn to the alarming reports published in the press regarding soil erosion in various States and in the Northern Territory? As this is a matter of national importance, will he cause inquiries to be made regarding the best methods of combating the danger?

Mr LYONS:
UAP

– I shall be very glad to act upon the honorable member’s suggestion.

page 951

QUESTION

WORLD SUGAR CONFERENCE

Mr FORDE:

– Will the Prime Minister state whether the proposed world sugar conference will now be held, and if so, when? Seeing that the Minister for Commerce left Australia ostensibly for the purpose of attending this conference, which has not yet been held, how much longer will that gentleman be absent ?

Mr LYONS:
UAP

– It is not likely that the conference will take place, but that does not dispose of the matter so far as Australian interests are concerned. The Minister for Commerce did primarily leave Australia for the purpose of taking part in the conference, but it was his intention also to deal with many other matters of great importance to primary producers not interested in sugar production. I remind the honorable member for Capricornia (Mr. Forde) that the Premier of Queensland also went to the United Kingdom to represent his State at that conference. I -am confident that both he and the Minister for Commerce will do what they can in the interests of the sugar industry of Queensland.

page 952

QUESTION

WATERSIDE LABOUR

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– Will the Minister representing the Acting AttorneyGeneral explain the effect of the recentlycirculated regulation 11a, made under the Transport Workers’ Act, dealing with conditions governing the picking up of labour on the waterfront? Is the purpose of the regulation to overcome the recent direction of the Arbitration Court in regard to picking-up places?

Mr HUGHES:
UAP

– I am not in a position to furnish the information sought by the honorable member; but I shall lay the matter before my colleague, the Acting Attorney-General, and will let the honorable member have an answer tomorrow.

page 952

QUESTION

DATE OE GENERAL ELECTION

Mr BAKER:
GRIFFITH, QUEENSLAND

– As it is of some interest to honorable members of this Parliament, will the Prime Minister state whether the report in this morning’s Canberra Times is correct, that, if the Government survives the debate on the cement duties., the general Commonwealth elections will take place either late in September, or early in October of next year? If this has beendecided, is he in a position to advise honorable members as to the exact date on which the elections will be held ?

Mr LYONS:
UAP

– I know just as much regarding the exact date of the elections as docs the honorable member, and neither of us knows anything about it. At this stage the matter has not even been considered, as the Government declines to give its attention to such an unpleasant subject.

page 952

QUESTION

WIRELESS EQUIPMENT ON AEROPLA.NES

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– Can the Minister for Defence state whether, in his opinion, it would be cheaper to equip aeroplanes engaged upon exploration work with wireless plant and suitable navigation instruments, than to engage in a costly search of the kind recently conducted in the Northern Territory?

Mr ARCHDALE PARKHILL:
UAP

– As T have already stated publicly, it is the intention of the department that all planes engaged on work of the kind referred to by the honorable member shall in future carry wireless equipment.

page 952

QUESTION

BUILDING NAVAL VESSELS IN AUSTRALIA

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

– Did the Minister for Defence see a statement published on the 15th April by the commander of one of the destroyers of the Australian Navy, to the effect that naval vessels should be built in Australia? In view of this expression of opinion, is the Minister prepared to give an undertaking that in future all vessels required by the Australian Navy will’ be built in this country?

Mr ARCHDALE PARKHILL:
UAP

– I did see the press report referred to, but in view of the fact that the matter of ship construction is the sole concern of the Government, I think that it must be incorrect. On the subject of building naval vessels in Australia, I am not prepared to give any undertaking, but ) will say that, as far as practicable, it is a course which will be pursued by the present Government.

page 952

QUESTION

PACIFIC ISLANDS SHIPPING SERVICE

Mr FRANCIS:

– What results, if any, have been achieved in the negotiations which have been proceeding between the British Government and the Governments of Australia and New Zealand in ah effort to maintain British shipping lines in the Pacific, despite the undue competition offered by the Matson Line? Will the Prime Minister make a statement on the matter?

Mr LYONS:
UAP

– A conference is being held at the present time between representatives of the various governments concerned, but no decision has yet been arrived at. When a decision is reached, and as soon as the Government has any proposal in regard to it, a statement will be made by the Government.

page 952

QUESTION

CONSCRIPTION

Mr HOLLOWAY:

– Is the Minister for Defence in any way responsible for the statement made in London last week that the Australian Government was considering introducing conscription in Australia ?

Mr ARCHDALE PARKHILL:
UAP

– Neither I, nor any member of the Government, is responsible for any statement on that subject. The matter has not even been considered by Cabinet.

page 953

QUESTION

MOVEMENTS OF AUSTRALIAN WARSHIPS

Mr WARD:

– Can the Minister for Defence inform the House as to the reasons why two Australian warships, the Sydney and the Australia, are still in the Mediterranean, and when they are likely to return to Australian waters?

Mr ARCHDALE PARKHILL:
UAP

-I can only repeat an answer previously given that, in the public interest, it is not advisable to describe or report on the movements of warships.

Mr ROSEVEAR:

– In view of the answer which was just given to the honorable member for East Sydney (Mr. Ward)-

Mr. SPEAKER (Hon. G. J. Bell).Order!

Mr ROSEVEAR:

– Has the Minister for Defence read the news item which appeared on the front page of the Sydney Sun of the 16th April, wherein it was stated that the Australia “ is at present at Malta where it arrived on the 3rd April, and the Sydney has been at Alexandria since the 11th April”? Does it not appear remarkable to the Minister that the press is able to broadcast this news, and yet the honorable gentleman in the public interest is either afraid, or not able, to answer questions asked in this House regarding the movements of warships ?

Mr ARCHDALE PARKHILL:

– The answer to both portions of the honorable member’s question is in the negative.

page 953

QUESTION

TENNANT’S CREEK GOLD-FIELD

Provision of Government Battery

Mr JAMES:
HUNTER, NEW SOUTH WALES

– Owing to the delay, the distanceof cartage and the high charges which the gold-miners in the Northern Territory experience in getting their ore crushed by private crushing plants, will the Minister for the Interior consider the request of the miners at Tennant’s Creek for the provision of a government crushing plant, and thereby obviate the proposed camel corps march on Canberra by those men?

Mr PATERSON:
CP

– There is not sufficient ore produced at present to occupy fully the existing plant. I have called for a report from the mining warden at Tennant’s Creek. When that report is received I shall be in a better position to answer the question raised by the honorable member.

page 953

FLOUR TAX ASSESSMENT BILL 1936

Bill returned from the Senate with amendments.

page 953

INCOME TAX ASSESSMENT BILL 1936

Second Reading

Debate resumed from the 5th December, 1935 (vide Hansard, volume 148, page 2728) on motion by Mr. Casey -

That the bill be now read a second time.

Mr CURTIN:
Fremantle

.- This bill is probably the most important of the measures which Parliament has had under consideration, or which has yet to be considered. It is also by its nature inherently difficult and technical, consisting, as introduced, of no less than 267 clauses. It has been made further difficult by a number of government amendments to the bill which have been circulated to-day. It is probably a measure largely for consideration in the committee stage. None the leas, important principles of taxation are affected, not only by the bill in substance, but also in a great number of the clauses. Therefore, to indicate my point of view to some, at least of the major principles of the bill, I ask leave of the House to make a more extensive reference to some of the clauses than is the general practice in a secondreading speech. This course appears to me to be unavoidable having regard to the general character of the measure.

It is perfectly true that, from the time of the Commonwealth’s entry into the field of direct taxation, the public has had difficulty in respect of income tax by reason of the lack of uniformity in the taxes imposed by the Commonwealth and the States. Over many years there have been substantial difficulties in substance as well as in detail, having regard to the fact that one taxpayer has had topay two forms of direct taxation. More than three years ago the Commonwealth Government appointed .a royal commission to investigate this difficulty, and to recommend methods designed to bring about simplification as well as uniformity of the taxes and of the mode of assessment. I need not traverse the work of the royal commission in any extended way, other than to offer my deep appreciation of the exceptional service which its members have rendered to the Parliament. The Treasurer’s acknowledgment of the work done by His Honour Sir David Ferguson and by Mr. E. V. Nixon is such as he no doubt, felt strongly justified in making, and on behalf of the Opposition I feel that 1 can heartily concur in everything that the honorable gentleman said in this connexion.

Broadly stated, the bill reflects the findings of the royal commission. Yet there are departures from, their recommendations which the Government has to justify, and which I consider the second-reading speech of the Treasurer (Mr. Casey) did not adequately explain. During the course of his speech, the honorable gentleman regretted that one State had not seen its way clear to accept the verdict of the royal commission on the vexed question of apportionment between the States of the profits of the business community arising from transactions carried on in more than one State. This may be a matter for regret, as uniformity is greatly to be desired. But the Commonwealth Government itself, in other matters of importance, has failed to accept the verdict of the royal commission. For example, it proposes to permit taxpayers to deduct the cost of certain expenditure in circumstances in which the royal commission, in paragraph 593, regards as capital expenditure, and as not a proper deduction for the purposes of income tax. I agree that no government is bound to accept entirely the recommendations of any royal commission, but the Treasurer is not warranted in criticizing a State for rejecting one finding of the commission when he, apparently, rejects other findings.

The bill is a. comprehensive treatment, of income taxation, aiming at and definitely and substantially achieving uniformity as between Commonwealth and

State legislation. There can be no doubt whatever that apparent anomalies, which still remain, will be less burdensome than was the previous position.

The bill certainly achieves consistency in matters of the same nature, such as exemptions, deductions, items of assessable income, and so on. Although complete uniformity has yet to be achieved, unquestionably a great advance has been made.

As the bill aims at uniformity of taxation, and involves the States, we cannot disregard the quantum of tax yield which it affects. The total taxation yield, Commonwealth and States, in recent years is as follows : -

An interesting point is that, compared with 1930-31, the taxation yield of the States increased in the last financial year by about £600,000, while that of the Commonwealth increased by over £8,300,000, notwithstanding the insistent plea of the Prime Minister (Mr. Lyons) that he is to be commended for the manner in which he has reduced taxes. Commonwealth income tax collections for the years 1931-32, 1932-33, 1933-34, and 1934- 35 were respectively £13,481,982, £10,878,718, £9,314,768, and £8,761,619. Thus, the yield is progressively falling. The percentage of income tax to the total of Commonwealth taxation has moved as follows : -

I submit that, upon examination, it will be found that the greater part of Commonwealth taxation has been definitely regressive, and has weighed with greater severity on the lower than on the higher incomes. In order to make commodity taxes highly productive, indirect taxes have been imposed on articles of general consumption. We cannot evade the reality that a greater proportion of a smaller than of a larger income is expended upon such articles. Professor Pigou, in his Public Finance, quotes Sir D. Barbour as saying that -

The nian who possesses an income of £1,000 a year does not ils a rule drink ten times as much beer or smoke ten times as much tobacco as the man who possesses an income of £100 a year.

I submit that, in Australia, we can well add to the cases of beer and tobacco the taxes on boots, singlets, shirts and the like. Therefore, to equate the regressive incidence of indirect taxation, justice demands that direct taxation be imposed which is progressive in its incidence; that is, that the rate of tax should increase with the amount of income taxed. To that principle I give entire support.

In the first of his four maxims of taxation, Adam Smith declared that -

The subjects of every State ought to contribute towards the support of the Government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the State.

Having regard, to all the forms of taxation this country employs, I suggest that the lower ranges of income have contributed more than their obligation and the higher ranges of income less than their obligation under this maxim. But I also submit that, in deciding the incidence of our tax policy, we must first distinguish the portions of income that have ability to bear taxation from those that have not such ability. Exempted income should have regard to the number of those who depend on it for their maintenance, and progressive graduation should be more continuous and more heavy.

That is the comment which I make upon the declaration of the Treasurer that our income tax system is progressive. It is, but it is not adequately, or sufficiently steeply progressive in the higher ranges of income.

There is much agitation at present to reduce taxation, in order, it is claimed, to assist industry and production. Foi 50 years at least taxation has had to withstand this challenge, and its repetition now is novel neither in argument nor in submission. But I raise here in contrast the issue that, if taxation is capable of reduction to assist production, tha economic conditions of the present time make it far more desirable to assure ourselves that we have not by indirect taxation impaired the elements of consumption. To hamper production may be bad, but to restrict consumption by lessening purchasing power may be, and probably is, infinitely worse. I find it difficult on any economic theory to justify the reduction of direct taxation on large incomes while at the same time imposing or maintaining taxes which lessen the consuming capacity of persons on the lowest incomes. The general principle that direct taxation represents a collection by the nation for expenditure by the nation, and therefore transfers purchasing power from the taxed citizens for ultimate use by the community in another way, can be regarded as sound; it has stood the test of decades, and the Colwin report made it quite plain that direct taxation is much more difficult to pass on than any other form of tax. Therefore, from the viewpoint of equity in taxation, it is clear that direct taxation is far preferable to indirect taxation.

An income tax, properly considered, is a tax upon the margins which the people have available for the upkeep of the State. It is, of course, true that, because a taxpayer suffers a diminution of his income by a tax, and therefore loses some purchasing power, he is inclined to the view that all taxation is a net loss. This is a begging of the situation. In the first place, the citizen’s loss is some one else’s gain. In the second place, this transfer of purchasing power enables the State to exorcise functions, in the absence of which the taxpayer’s income would be precarious and in certain circumstances might not exist.

Sir Hubert Murray, in his contribution to Studies in Australian Affairs, 1928, dealing with Australia’s policy in Papua, explained that, in. justifying a tax on all male natives between certain ages, certain village councillors were selected to explain why this exaction was not without merit. He said -

A government officer explains to the councillors, and they .pass on to the rest the real meaning of the tax. He tells them, for instance, that the tax does not go into the pocket of the tax collector, but that it is used to build hospitals, to equip schools, to provide for medical travelling assistance, and so forth.

Sir Josiah Stamp quotes in his Fundamental Principles of Taxation a statement by Sir Leo Money, who admitted that his taxation was the best expenditure that he made, and that for which he got the most satisfaction. A citizen of an unusual type! And Mr. Sydney Webb, in his preface to Nature and First Principles of Taxation, published in 1914, declared that government expenditure is, in fact, far more wisely done than the average of private expenditure.

It ought not to be necessary to emphasize the important responsibilities and functions which governments in modern times have assumed, and henceforth will have to assume, for the protection and the welfare of the people. It is not sufficient that taxation should be used solely to produce revenue. We must have in mind the further point that the effects of a tax can be much more important than the ascertained or presumed intention of those responsible for its imposition.

In the Memorials nf Alfred Marshall, published in 1925, Alfred Marshall is quoted as having written in 1 917 that -

The State is under obligation to use its powers for promoting such economic and social adjustments as will make for the well-being of ‘the people at large.

This very distinguished economist went on to say -

Tn this connexion, a chief place amongst ita power is held h” its control of the distribu- tions of the burden of taxation.

Mr. De Lisle Burns, dealing with Government and Industry, elaborated this point as follows : -

Principles of adjusting differences by differential taxation can lie used also for remodelling the industrial and economic life of. the nation, mid there is no reason against such remodelling, since economic life as it now 6, is not necessarily good, and is largely Hie effect of the desires of past generations.

I confess that I am profoundly moved by what I believe to be the obligation on the State to adjust existing social differences. I consider that, as matters stand, this can be best accomplished by differential taxation. To the extent that taxation is used for specific social and economic purposes, it appears to me desirable that the tax should be open and unconcealed, and, therefore, should be a direct

Ifr. Curtin. tax, and not an indirect tax which is disguised by being concealed in a transaction or a price. The income tax, for example, proclaims the nature of its burden, while a tax .on a commodity is unquestionably hidden in the price charged.

Comparing direct and indirect taxation, Mr. Hull, in introducing to Congress the Income Tax of the United States of America in 1913, said -

By this method alone could every citizen see and know that taxes are being imposed equitably and according to ability to pay. . The masses of people are now paying most of our tariff taxes, and most of our State and local taxes. . . Those who have been the victims without being able to know thu extent thereof, will welcome the proposed tax.

This Government, I believe, has displayed, and is displaying, undoubted enthusiasm for taxes which are concealed, but are none the less effective and ultimately burdensome, while it has reduced enormously those taxes of which the burden is palpable and obvious, but which in their nature are just and equitable, having regard to ability to pay on the part of those on whom the tax is or should be levied. I make no apology for stating Adam Smith’s second maxim of taxation, which is as follows: -

The tax which each individual is hound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid, ought all to he clear and plain to the contributor and to every other person.

Clarity of expression is of the utmost importance in a taxation measure. The Commonwealth income tax legislation of the past has apparently failed in thisdirection. Year after year this: House has had to pass amendmentsto give expression to the intention of the legislature, by reason of advantage having been taken of some* loophole occasioned by faulty draftsmanship of the original act or some amendment of it. Obscurity has been piled on obscurity, until the present act wasdescribed by a leading official of the Inland Revenue Department in England”, as the greatest horror existing in any taxation legislation in which the Englishlanguage is employed.

The Treasurer is to be congratulated’ upon having emulated the action taken.’. when the party which I lead was in power in 1930, by issuing an explanatory memorandum. Unfortunately, the footnotes in the present explanatory memorandum do not explain the changes made., in the same detail as was done in the 1930 explanatory notes, and the almost complete absence of practical illustrations in the present memorandum is to he deplored.

In interpreting a statute, the courts cannot look to anything that has been said in Parliament or elsewhere ; the intention of the legislature must be expressed in the act itself. Nevertheless, it is of the utmost importance that light should be thrown on any obscure passages in the bill, so that their meaning will be perfectly obvious to this House and to the Commissioner, who has to administer the act exactly as it is intended to operate. The expert advisers of the Government should, in the event of any doubt as to the meaning of the bill being raised in this House during the debate, take immediate steps to clear up that doubt before the bill becomes law. If that is done, then we may hope that Parliament will enjoy some measure of peace, and that -there will not be a repetition of the previous annual crop of taxation amendments.

The chief anomaly which exists in Australian taxation, and which this bill will not alter, arises from the exemption of income from Commonwealth bonds in the assessment of income tax for State purposes. To illustrate how this operates I point out that, under the law as it stands, where two taxpayers have the same income from a business which is not exempt from tax, and each of them has also an income from another source, exempt in one case, but not in the other, there is a wide difference in the tax they pay on that part of their income that comes from the business.

The non-exempt taxpayer, whom I shall call “ A “, with an income of, say, £2,000 from rent and £500 from a business, would pay federal tax on the whole £2,500, at the higher rate which applies to incomes of £2,500. On the £2,000 he would pay £279 3s. 4d., in addition to £87 10s. special property tax. This amounts to over £366, which his neighbour, whom I shall call “ B “, would escape altogether, because his £2,000 is exempt from State taxation, being derived from interest on tax-free bonds.

There remains the £500 of nonexempt income which each of them derived from a. business. “ A “ would pay tax on this in full, for his income would’ be too large to entitle him to any statutory exemption. “ B “, however, would get a statutory exemption of £125, which would reduce his taxable income to £375. Then “A” would pay at the rate of between 15d. and 16d. in the £1, while “ B “ would pay at the rate of a little over 4&d. in the £1. So that, in respect of the same income of £500 from business, “A” would pay £32 18s. 7d., and “ B “ only £7 ls. lid. Income from approximately £650,000,000 of capital, earning in Australia about £23,700,000, is not available to the States for taxation. That is a vast annual income not included in the full incidence of Australian direct taxation. As the holdings per capita in each State of these securities varies, it is clear that,- apart from the anomalies arising from the exemption, as between citizens, inequalities in State finance are also occasioned.

It is a perversion of justice that an income of £1,000 from production, or from personal exertion should be taxed by the Commonwealth and the States while another income of £1,000 should be taxed only by the Commonwealth. But this, I frankly confess, may be unavoidable, because money does not follow the flag. To keep interest on government securities at the lowest point it is probable that this inequity as between the taxation of forms of income must be tolerated.

The broad general obligation of the Commonwealth to raise money by loan at the lowest possible rate of interest, probably makes it desirable, from the point of view of the Government, to give subscribers some assurance that they will not be subjected to an unknown increase of State taxation on investments in Commonwealth securities. By giving this assurance the governments get either a larger subscription or else obtain their money at a slightly lower rate of interest than would otherwise be acceptable to the market. Though this may be quite true, it does not alter the fact that the practice of exempting Commonwealth securities causes a distinct disequilibrium in taxation, and income derived from Commonwealth bonds is on a much more attractive footing in the eye of the taxpayer, than income derived from either property or personal exertion, or from both.

I shall now devote my attention to a more detailed examination of the hill. I regret that only one practical working example is given in the Treasurer’s explanatory memorandum of the manner of

Sealing with the income which a taxpayer derives from a premium on a lease. This is given on page 101 of the memorandum. Unfortunately, even here the illustration does not go far enough, as no example is given to show the effect of clause 86 (1) (lj) (ii), in a case in which the taxable income is less than the sum of the net premiums where there are more than one of such premiums.

Provision is made in clause 86 -virtually to divide the number of years in the term of the lease by two, in order to arrive at the “notional income.” It is claimed in the memorandum that the effect of this is that the taxpayer pays tax at an average rate which gives substantially the same amount of tax - assuming other income is also derived by the taxpayer - as if the premium were spread equally over the term of the lease and the rate appropriate to such equal annual amounts were applied. An example covering, say, four years, should be furnished so that honorable members may be quite satisfied that the proposed method will achieve the object aimed at. I am somewhatdoubtful about it.

Persons in receipt of rents and other non-business forms of income, are to be placed on the same footing as those in receipt of business incomes, and provision is made for a loss to be carried forward into the assessments of subsequent years, irrespective of its nature. Where the taxpayer enjoys an exempt income, the amount of the loss to be carried forward is to be reduced by the amount of the exempt income of the year in which the loss was incurred, and also by the exempt income of the subsequent relevant years.

The explanatory memorandum does not appear to make it clear as to how the law is to operate in the following kind of case. A taxpayer has a steady exempt income of £200 a year. During the year ended the 30th June, 1936, He sustains a loss of £500. “He has no assessable income in 1937. In 1938 his assessable income is £1,000. To what exent can the loss of. £500 incurred in 1936 be set off against the income of 1938? It is quite clear that the allowance must be reduced by the exempt income of 1936 and 1938, but the clause does not make it clear whether the exempt income of 1937 is also to be brought into account.

Mr Casey:

– I shall explain that in committee.

Mr CURTIN:

– Practical working examples showing the operation of clause, 80 would have greatly improved the explanatory memorandum. Another point should be clarified. Under section 26 of the present act, the allowance is confined to a loss incurred in a business. If a taxpayer received a net income from rents of £1,500, and had £100 exempt income, but incurred a loss in his business of £500, should the £100 exempt income be brought into account? Should the taxable income be £1,000 or £1,100? It would appear that, under the present act, the exempt income cannot be brought into account to reduce the deductible loss, and so the taxable income is £1,000.

The ground for this contention is that through the operation of other sections of the Commonwealth Act, the total assessable income derived from the business, and from rents, must be grouped together, and the whole of the deductible expenses of the business, together with those incurred in gaining the rents, must be deducted from such total assessable income, leaving a taxable income of £1,000. In other words, section 26 does not override the other relevant sections of the act.

I am informed, however, that the practice of the Commonwealth department is not uniform in this respect. The Deputy Commissioner of New South Wales would, in the above example, assess on £1,000, and the central office in Melbourne would assess on £1,100. Wha’t would be the position under the provisions of this bill? It would appear from sub-clause (1) of clause 80 that the exempt income cannot be brought into account in compiling as assessment, and that therefore, the taxable income would be £1,000 and not £1,100. Apparently the exempt income can only be brought into account when deductions exceed assessable income and the resultant loss is brought forward as a deduction from the assessments of subsequent years.

Mr Casey:

– Has the Leader of the Opposition considered that a minus quantity cannot be carried forward? However, I shall deal with the point in committee.

Mr CURTIN:

– I direct attention now to procuration fees. Under clause 26, paragraph h, of the bill, the amount of any fee or commission received for procuring .a loan, of money is to be assessable. I should have thought that, under the general provisions of the law, the income derived by a scrivener, whether it was in the process of his whole- time occupation, or in a subsidiary activity, as in the case of modern solicitors and others, would be subject to tax. If there is any doubt on this score it is only right that specific provision should be made to include such fees as assessable income.

Mr Casey:

– The question is whether it is capital or income. We have made it clear that it can be deducted.

Mr CURTIN:

– Under clause 67, the borrower is to receive an allowance of so much of the expenditure incurred in borrowing money used by him for the purpose of producing assessable income as bears, to the whole of that expenditure, the same proportion as that part of the period for which the money was borrowed which, in the year of income, it bears to the whole of that period. In the case of a loan, where there is no fixed date of repayment, or where the period exceeds five years, the period of five years from the date on which the money was borrowed shall be deemed to be the period for which the money was borrowed. The memorandum is silent on the point as to whether this allowance relates to procuration fees paid before this bill becomes law in connexion with advances which will not be repayable until after the commencement of the new act. In such a case, would the taxpayer be entitled to an allowance in respect of the balance of the period - that is, from the commencement of the new act until the loan is repayable - or does the allowance solely refer to expenditure incurred after the bill becomes law? It is presumed that the allowance covers not only procuration fees, but also legal costs and fees in connexion with the preparation and registration of these securities.

In regard to the natural increase of stock, livestock breeders have hitherto had the option to bring in natural increase in the year of birth or to omit it from their returns until sold. Under clauses 28 and 29 of the bill it is proposed to abolish this option. In future taxpayers must include in their closing stock all livestock born during a year of income, which are on hand at the close of that year. The explanatory memorandum states -

The change-over will not involve the primary producers concerned in any increase of income, as any amount included in an assessment in respect of such livestock on hand at the end of the year will be offset by a corresponding number of similar livestock on hand at the .beginning of the year. Provision is made in clause 35 for this class of primary producer to select a value for such natural increase within the limits from which he could have previously made a selection.

By solicitude for this class of taxpayer, I believe a mistake has been made in clause 35. If a working example had been furnished in the memorandum the error would have been obvious to the Government. Take the case of a sheepbreeder, who has, say, a normal flock of 20,000 sheep, comprised principally of station-bred ewes and the necessary complement of rams. He does not bring natural increase to account until the year in which they are sold. His purchases are almost solely rams for replenishing purposes, with, perhaps, a few ration sheep. His sales principally consist of fat wether and surplus ewe lambs, the remaining ewe lambs being retained to replenish his flock of ewes, together with culled and cast-for-age sheep. It will be seen that, in such circumstances, his flocks on the 1st July, 1935, consisted almost exclusively of station-bred sheep - that is, natural increases not brought to account in the year of birth. Under clause 35 he is to receive a “ free “ debit of the value of the natural increase omitted in pursuance of his election which were on hand on the 1st July, 1935 - that is, practically the whole of his stock. Let us assume that he had previously elected to value his sheep at “average cost price,” and that he selects the present maximum rate of 10s. for natural increase. For the purpose of compressing the example, let us assume that his natural increase for 1935-36 totalled 12,000, and that he sold 10,000 of his flock during the year 1936, at, say, 15s. a head. His position under the new proposal would be -

That is what will be the case. If the present act operated the position would be-

Under clause 35, as he would have no opening or closing stock, his gross profit on stock sold would be £7,500 instead of £2,500. In other words, the bill, in its present form, enables the Commonwealth Government to make a present to this class of taxpayer of the amount of tax on £5,000.

Mr Casey:

– I shall reassure the honorable gentleman.

Mr CURTIN:

– From the example 1 have cited, it would appear that this would happen. The practice in the past is not followed by this new procedure, and an example worked out in the form submitted to the House suggests that the amount taxable under the hill would be £2,500, whereas the amount that would have been taxable under the present act, were it to continue, would be £7,500. Under the proposed clause, this tax of £5,000 will be swallowed up, and not collectable by the Commonwealth. It will bc seen that whenever this taxpayer sells any sheep born before the 1st July, 1935, he will be able to deduct from the sale price 10s. a head which has not been included in his assessable income. In the foregoing example, he sold 10,000 station- bred lambs during the year, and, instead of having to bring to account the proceeds which were £7,500, he will, if clause 35 be allowed to stand, be called upon to do so to the extent of. £2,500 only. This absurd gift to one section of the community should not be allowed, and clause 35 should be re-drafted. The obvious way to get over the difficulty is to delete stock on hand as at the 1st July, 1935, from the accounts until they are sold, in the same manner as heretofore. All stock born on and after the 1st July, 1935, would be brought to account in the year of birth as is proposed by the bill. The procedure suggested might involve more bookkeeping difficulties to the taxpayer than the method proposed by clause 35, but would not be more difficult than under the present system. We ought not to be tied to simplicity at the cost of losing justifiable revenue.

A new provision in the law contained in clause 87 is based on a recommendation of the royal commission. The clause seeks to tax the value to the lessor of improvements effected in the future under leases, that is ‘the value to the lessor of the improvements at the expiration of the lease. The explanatory memorandum deals very sketchily with this subject, and a practical illustration of the working of clause 87 should be furnished. It would appear that first of all agreements must be reached between the Commissioner and the taxpayer as to the value to the lessor of the improvements on the expiration of the lease. Then the present value of that agreed sum must be ascertained, and for that purpose a rate of interest is to be prescribed by regulation. The present value is spread over the remaining period of the lease, and the lessor will be taxed each year of the currency of the lease on the annual instalments so ascertained.. This is another illustration of the sacrifices of simplicity for equity. I cannot calculate the present value of a sum of money receivable in, say, eleven years and two months, nor do I think any other honorable gentleman could do so. A practical illustration should be furnished showing how the amount of an assessable annual instalment is arrived at where there is a broken period, as is generally the case.

According to paragraph (a) of subclause (1), it would appear that if im- provements were made during, say, June of 1937, the lossor would be liable for a full years’ instalment for the year 1st July, 1936, to the 30th June, 1937. If therefore the lease terminated on the 30th June, 1946, the lessor would be taxable on ten annual instalments, whereas the improvements would have been in existence for slightly over nine years. There may not be any material differences when the whole period is considered, but the explanatory memorandum throws no light on the point. An example based on the above data, except that the lease expires on, say, the 20th August, 191-7, would bo most helpful to illustrate the working of the clause. I am of opinion that the rate of interest should not be left to the regulations, and that clause 87 should provide for a rate of 4£ per cent. - the rate adopted for land tax purposes. I submit, strongly to the House that in any tax measure we ought not to allow the rate of interest to be a matter for regulation, but should insist that it be expressed in the act, as it is expressed in the Land Tax Act. We should take the Land Tax Act as a guide in this connexion.

Another problem arises in connexion with this subject. If the instalment cannot be satisfactorily determined, clause 87 (1) (b) provides that the value f>f the improvements at the expiration of the lease shall be included in the lessor’s assessable income of the year in which the lease expires. “ Lessor “, by clause S3, when used in relation to any time, means the person at that time entitled to the reversion. How is the clause intended to operate in this class of case? A lessor effects improvements on leased property, say, in 1936. The value thereof at the expiration of the lease cannot be agreed upon, and the assessment of the improvements must stand over until the year when the lease expires. If, in the meanwhile, the lessor sells the freehold of the property, who is responsible for the tax on the improvements - the original lessor, that is the lessor when the improvements were effected, or the transferee, that is the lessor at the time the value of the improvements fall to bc taxed? If the latter, the clause affords an opportunity for grave abuses. A person might quite innocently buy a property including its improvements, and be faced with a heavy bill for. taxation on the improvements for which he has paid full value. I feel certain that it is the intention of the Government that the person who was lessor when the improvements were effected is the person who should bear the tax, but clause S7 by no means makes this clear. The lessee is to continue to receive an allowance in respect of covenanted improvements not subject to tenant rights in respect of such improvements which he has made with the written consent of the lessor. The allowance under the present act runs from the date the improvements were ‘ effected. The commencing date under clause 8S (2) of the bill is that upon which the money was expended. In this regard, are not the provisions of the present act preferable to the new proposals? The taxpayer might make several progress payments for the improvements, which would complicate the calculation. This difficulty could be got over if the Commissioner were prepared to accept an equated date.

Paragraph c of clause 79 permits a deduction not exceeding £50 in the aggregate in respect of payments made to any legally qualified medical practitioner, nurse or chemist, or public or private hospital, in respect of any illness of or operation upon the taxpayer or his wife or any of his children under the age of 21 years, provided the wife or child is a resident.

I understand that there exist in some States various funds whereby, in consideration of periodical payments, such a fund pays to the hospital concerned a limited weekly sum for a limited period should the subscriber be admitted to hospital. Western Australia has a system of this description and so has New South Wales. These are the States where I have personal knowledge of the schemes. I understand that the system is working well, and is proving of some material help to hospitals. Under the clause it would appear that such contributions are notdeductible, as they are not literally paid in respect of any present illness of the taxpayer. That is to say that if a contributor is admitted to hospital the payment to the hospital is made from the fund and cannot be deducted from his income tax return by the subscriberpatient. The clause might be enlarged to provide for the allowance of such contributions.

The present act permits a taxpayer, who is carrying on agricultural or pastoral pursuits in a district subject to the ravages of animal pests, to deduct the cost of wire and wire netting, and of placing it in position on the fence. In other words, the taxpayer is relieved from tax upon the difference between the cost of an ordinary fence and the cost of a vermin-proof fence. The royal commission considered such expenditure to be capital expenditure, and therefore considered that it was not a proper deduction for the purposes of income tax. It recommended, accordingly, that a section similar to section 23 (1a) should not be included in the uniform act. Clause 76 of the bill continues the allowance. The Treasurer, in his second-reading speech, stated that, in the interests of primary producers, the Government had decided against the withdrawal of this and other concessions to this section of the community. I do not propose to oppose the Government’s intention, but it should be understood that the concession operates anomalously. A wealthy grazier may have an income on which he pays Commonwealth income tax to the extent of 4s. in the £1. His poorer neighbour pays 6d. in the £1. Still another is running his property at a loss. AH three have to put wire netting on their fences. It is surely absurd that the first taxpayer, whose income does not warrant any assistance, should receive a present from the Commonwealth of 4s. - and more, having in view the graduated scale of tax - for every £1 spent by him on wire netting, whereas the second one receives trifling assistance, and the most deserving case none at all.

Mr Casey:

– He may carry the loss forward.

Mr CURTIN:

– Yes, but the effect is that these concessions are of greater advantage to the man with a large income, who’ really ought to be able to do without this type of concession, than to the not so fortunately situated farmer. The man with an untaxable income could carry the loss forward, but it is really of no benefit to him. Although I do not intend to oppose the concession, it does not work out except for men who do not require it. It gives little protection to the man with a low taxable income, and is of no value to the man with no taxable income.

Mr Prowse:

– In both cases, expenditure is necessary to earn income.

Mr CURTIN:

– The honorable gentleman has no case at all, from that viewpoint. According to the royal commission it. is capita expenditure, and, therefore, no concession should be given. But from the political side the honorable gentleman has a good case. The farming community of Australia has been able to show that it suffers from great disabilities. It does suffer disabilities, but I see no reason why a large section of that community, including the poor farmers and the moderately well to do farmers, who pay a small tax, should have this concession included in the bill, when, in effect, it will only be of substantial benefit to the wealthy farmer. I am not going to oppose it, because the same political influences which influenced the Government in putting it in the bill justify me in not opposing it.

The present act allows as a deduction from income, the cost of eradicating animal or vegetable pests from land, also the cost of clearing, grassing or draining land. The royal commission considered that the provisions of section 23 (1) q were too wide, and that it saw no reason for allowing a3 a deduction, expenditure which improves the value of the land. Obviously that can only b<;regarded as capital expenditure. The commission recommended accordingly that the allowance be confined to expenditure of an annual or recurring nature. Clause 75 of the bill continues the full concession, and the royal commission’s recommendation has not been adopted. These concessions which have been made to a. section of persons in Australia, including the primary producers, are applicable only to those who have income. The whole of this taxation measure does not benefit a man unless he has a taxable income. The Royal Commission on Taxation which consisted of experts, investigated this matter, but this bill is indicative of the departures made by the Government from the findings of that expert commission. The Treasurer criticized one State for not accepting one recommendation made by the commission.

Mr Casey:

– I did not name the State.

Mr CURTIN:

– I realize that, yet these concessions are not justified by an examination of sound taxation principles. They are objected to by the royal commission, and I point -to them as affording an instance of the extraordinary benefits given to this class of citizen. May we not more advantageously aid those who need help by adopting a. uniform system of taxation than by giving bounties or other direct assistance to those sections of the farming community who do not actually need it?

The Treasurer states that, mainly in the interests of primary producers, the Government has retained the provisions under section 30 of the present act, which entitle taxpayers in a business which, from its nature, requires the retention of some part of the income of each year, to a rebate on 15 per cent, of that income. One of the greatest evils of the Commonwealth act is the low rate of tax imposed on companies. Section 30 was’ originally introduced as an attempt to mitigate the injustice to other taxpayers of a company being able to retain one-third of its profits without attracting tax beyond ls. in the £1. The rebate on 15 per cent, of an individual trader’s income was designed to extend in some measure the advantage of this lower rate to those who had not registered their business as a company. It was soon found, however, that the section operated to the exclusive benefit of livestock breeders, because they alone satisfy the condition imposed, viz., that their business is one which from its nature and character requires for its efficient working the retention in the business of some part of the income of each year. Livestock breeders are required to retain natural increase in their business to replenish their flocks and herds. I do not think it can be shown that any taxpayer, except primary producers, has obtained the concession under section 30 since its true meaning became clear to the Taxation Department. The royal commission recommended that the section be deleted from the Commonwealth Act, but in spite of this it appears in the present bill in clause 161. The royal commission stated -

We arc unable to advance any arguments which justify the allowance of this concession to a limited number of taxpayers. Such taxpayers are placed in a privileged position as compared with individuals and partners who cannot prove the necessity for the retention of some part of their income.

The commission also draws attention to the absurdity of the proposal insofar as it is immaterial how much of the income is so retained. One pound of such income will suffice to secure the rebate, yet the taxpayer receives a rebate on 15 per cent, of his income. The clause as it stands simply amounts to a lower rate being applied to wealthy graziers as compared with other members of the community. The poorer grazier is not concerned, as his rate is less than the company rate of ls. in the £1.

The proposals contained in clauses 38 to 41 are in accordance with the recommendations of the Royal Commission on Taxation, and will achieve uniformity with the States. As pointed out in the explanatory memorandum, the present Commonwealth practice of determining the assessability or otherwise of a nonresident trader or manufacturer is most unsatisfactory, and leads, no doubt, to wholesale evasion. It is a simple matter to arrange for the contract, delivery and payment, or two of these transactions, to take place outside Australia, and thus Commonwealth income tax is escaped. This also places the overseas trader -who has established a branch in Australia in a most disadvantageous position as compared with a competitor who conducts his business by means of a transient agent. A British corporation, which establishes a branch of its business in Australia with a manager and staff, has disadvantages as compared with a British business which merely employs a transient representative.

There may also be constitutional difficulties in regard to this form of tax. I am impelled to raise a doubt regarding clause 41 on constitutional grounds. The bill relates to the imposition, assessment and collection of a tax upon incomes, and it may be invalidated if it seeks to tax that which is not income.* Let us assume that an overseas merchant sends a representative once only to Australia. The representative merely exhibits samples, and quotes prices. The intending purchaser must make direct contact with the overseas principal, that is, the offer and acceptance take place directly between the overseas vendor and the local purchaser, and the representative is in no way a pa’rty to the contract, which is executed abroad. Delivery and payment also take place abroad. Can the law fasten on the single circumstance of the exhibition of the samples and quotation of prices to hold that income has been derived by the non-resident from a source in Australia? The equity of this tax is a matter with which I shall not now con’cern myself, because the whole subject of the taxation of non-residents of Australia is a matter for deep inquiry.

It is not competent for the Parliament to tax a non-resident in respect of income derived from a source outside Australia. Unquestionably, in view of the decision of the High Court in the Munro case, it is competent for a State to tax in the circumstances quoted earlier, but I should like to be certain, in view of the narrower powers of the Commonwealth, that clause 41 is effective in an income tax assessment act. Even if my fears are unwarranted, and if, in fact, some income has been derived in Australia, in the circumstances cited by me, would the courts uphold that the quantum of income sought to bo taxed by clauses 38 and 39 was derived from Australian sources? For example, by clause 39 it is proposed to tax the whole of the profit derived by a person who buys goods abroad and sells them in Australia. The overseas merchant employs ex-Australian capital in purchasing the goods; he carries on his trade abroad, and time, skill, and judgment have to be exercised in buying the goods abroad, and he has to warehouse the goods, engage a representative to come to this country, and exercise time, skill and judgment in entering into contracts and giving delivery abroad. Would the courts hold that, in fact, the whole of the profits were derived from a source in Australia? I am not here concerned with the equity of the tax, for, as far as Great Britain is concerned, there are provisions in both the British and the Commonwealth acts to grant relief from double taxation. I am anxious to know whether sufficient care has been exercised in the drafting oi clauses 38 to 41 to ensure that they will achieve their purpose. Clause 38 states -

Whore goods manufactured out of Australia are imported into and sold in Australia by the manufacturer . . .

It is surely not intended that tax will only fall on the manufacturer when he, himself, imports the goods into Australia. The goods may be sold and delivery given abroad, and in this the manufacturers would not be associated in any way with the act of importing the goods into Australia. In the New Zealand case of Chambers v. Commissioner of Taxes, it was held that it was immaterial whether the duty of importation was imposed upon the vendor or the purchaser, but the wording of section 103 of the New Zealand Act is different from clause 38 of this bill. The former reads -

When any person in New Zealand, on behalf of a principal resident or carrying on business out of New Zealand, is instrumental in procuring the purchase from that principal of goods or merchandise which are in New Zealand or are to be imported into New Zealand.

Clause 38 provides for cases where goods are imported into Australia by the manufacturer. Reassurance on this point is desirable before we can be satisfied that a distinction is not being created where a distinction is not warranted.

The royal commission dealt with the subject of business deductions in paragraph 30 of its report. Paragraph 554 states that the problem is to draft sections relating both to the allowance and disallowance of deductions which will make it clear that the taxpayer is entitled to claim any expenditure properly incurred by him in the production of his income. It was suggested that the taxpayer be allowed deductions of all losses and outgoings incurred in gaining or producing the assessable income, or in carrying on a business for the purpose of gaining or. producing such income, except capital losses and outgoings, or those incurred in relation to exempt income. In this bill the suggestion of the royal commission has not been adopted by reason of the fact _ that the word “ necessarily “ has been imported into clause 51. Adverbs should find no place in a measure of this nature. The best that can be said of them is that they form a happy play- ground for lawyers. It is noticed that this word does not appear in the New South Wales bill, and I suggest that it he deleted from clause 51. If allowed to remain, it will become a fruitful source of contention between the taxpayer and the department. Why should the Commissioner and his staff have the duty cast, upon them of deciding whether a particular item of expenditure has been “ necessarily “ incurred ? The decision m the Gordon case established the principle that money expended, not of necessity, but voluntarily, and to secure an expedient aid to the business operations which produce the assessable income, may yet be expended wholly and exclusively from the production of assessable income, and therefore be allowable as a deduction. The clause adequately protects th<’ revenue by providing that domestic, pr; vate or capital expenditure, or expenditure incurred in producing exempt income, shall not be an allowable deduction. Why go further and introduce an unscientific and ambiguous adverb into the clause? The object, so far as I can judge, is to permit large sections of those engaged in primary industries, particularly graziers, to contribute much less in taxes than would otherwise be the case. Whilst deductions are, apparently, unavoidable, having regard to the present situation, a reconsideration of this bill is desirable. More justification for rejecting the royal commission’s findings than the Minister has yet advanced should be shown.

The royal commission recommended that provision should be made for the registration of tax agents, and that registration should be effected by either the Commonwealth or the States. The explanatory note to clause 166 states that, as it would be more convenient to have the supervision of tax agents undertaken in the States, and as some of the States already provide for registration, and other States propose to make similar provisions, Commonwealth action is unnecessary. The Government of New South Wales has not fallen into line with the other States. It has gone no further than has the Commonwealth, and its bill merely contains the same provisions as clauses 166 and 229 of this measure.

T331

Mr Casey:

– If all the States adopted that attitude, the Government would have to reconsider its action.

Mr CURTIN:
FREMANTLE, WESTERN AUSTRALIA · ALP; FLP from 1934; ALP from 1936

– If the provision recommended by the royal commission were made in this measure, it would be unnecessary for the States to take action in the matter, and the general object would not be defeated by one or more States failing to act. As New South Wales has already failed to take action, the Treasurer might make an addition to the list of amendments already circulated.

It would be of advantage to the Parliament, whatever difficulties this subject may present, to spend adequate time in making certain that the bill will leave this chamber in a form which will at least stand the tests that experience warrants us in assuming it will have to meet. We ought to be satisfied that we have set out clearly exactly what we mean, and that, when a concession is intended, it shall not be used to give relief to those not intended to be covered by the concession. A clause which brings a tax into operation should be couched in definite language. There are certain outstanding principles of income taxation which the Parliament ought to accept, and one is that, as far as possible, particularly when large sums have to be spent upon national defence or upon those forms of social organization which promote internal peace and are a safeguard of the capital already existing in the country, those who draw large incomes from capital should make a substantial contribution to the cost of the services of government, in order to safeguard the property and the capital from which those high incomes are obtained. I make no apology for declaring that a heavy rate of direct taxation on such incomes is an inescapable counterpart of the system of indirect taxation which yields large sums in times of great national difficulty.

Sir Donald CAMERON:
LILLEY, QUEENSLAND · UAP

– I have listened with interest to the Leader of the Opposition (Mr. Curtin), and agree with the view, which I understood him to express, that this bill is one which may best be dealt with in the committee stage. But to one or two of its provisions I propose to refer on the second reading. The Treasurer (Mr. Casey), in introducing the measure, said that a complete new income tax assessment bill constituted something in the nature of a landmark. That is so, and I congratulate the honorable gentleman upon the advance that has been made. He also referred to the genesis of the movement for uniform Commonwealth and State taxation laws. General demand has been made for simplification and standardization of taxation laws, both Federal and State, and the request can be readily understood when we appreciate the fact that the taxpayers, after all, are practically the same individuals, whether we are discussing Federal or State taxation.

The Treasurer has also pointed out that the bill bears the stamp of approval of the members of the royal commission appointed in 1932, and includes many of their recommendations. Those recommendations were most exhaustively examined by the taxation authorities of the various States. I agree with the Treasurer, and with the Leader of the Opposition, that we should appreciate at its proper value the tremendous task undertaken by those responsible for drawing up this measure, and the similar measures that have been, or will be, introduced into the State parliaments. I hope that the results of their great efforts will come up to expectations in that the incidence of taxation will be rendered equitable for all concerned. Some of the amendments included in the bill will be advantageous to the taxpayer, while some will have an opposite effect, particularly upon sections of the primary producers. The advantages which the bill will afford to the taxpayers are few, and are not momentous, mainly due to the fact that already some of the recommendations of the royal commission have been given effect in legislation previously passed through this Parliament. Probably, also, the taxation legislation of the Commonwealth in general was, to start with, the fairest and most equitable of any to which the royal commission had to give consideration. Those provisions in the bill which will be advantageous to taxpayers, and therefore very welcome, may be enumerated as follows: -

  1. . Alimony is not to be taxable income in the hands of the person receiving same.
  2. Losses incurred in earning income have been slightly widened.
  3. Expenses of borrowing are to be allowed over a period of five years, expenses of preparing a lease to be a deduction.
  4. Losses by embezzlement or larceny are to be allowed.
  5. Subscription to associations is allowed to a limited extent.
  6. Allowance for wife of taxpayer of £50 is now provided where wife is dependent.
  7. Medical expenses. - Under the present act a taxpayer with an income of £900 is not entitled to any deduction. The bill proposes a maximum allowance of £50, irrespective of income.
  8. Funeral expenses. - The bill provides for an allowance up to £20, irrespective of income.
  9. Life insurance. - Deduction for premiums has been increased from £50 to £100.
  10. Time for objections and appeals. - This has been extended to 60 days.

The various amendments not so helpful to the taxpayers, particularly to those engaged in primary industries, are as follows : -

  1. The sale of breeding stock on the realization of a business is now deemed to be taxable income.
  2. A purchaser is not entitled when buying sheep in the wool to treat the wool on the sheep’s back as a deduction from the subsequent proceeds of the wool.
  3. The proceeds of wool sold abroad is taxable in Australian currency.
  4. Employees on grazing properties are now to be taxed upon the value of their quarters.
  5. Graziers are not permitted to omit natural increase until sold or otherwise disposed of, and must bring into account each year’s natural increase.
  6. A grazier cannot have a new notice of election changing from cost price to market price, but he has a new election only in regard to the value of natural’ increase.
  7. The minimum values for natural increase to be included as income are to be raised as follows: -

Lambs, 2s. 6d. to 4s.; calves, 10s. to 20s.; foals, 15s. to 20s.

  1. Growing crops, on the disposal of a business, are to be deemed taxable income.
  2. On the death of a taxpayer, taxable income which may result as the devolution by death, is deemed a sale of trading assets.
  3. Wirenetting. -Under the old act the cost of placing wirenetting in position on a fence is allowed, but. under the new bill this parthas, been omitted, either intentionally or by accident.
  4. Losses carried forward. - It is proposed to reduce the number of years from four to three, for which losses may be carried forward.
  5. Averaging provision. - This will only be applied in the future to primary producers.
  6. Board of review. - It is proposed to discontinue the present Board of Review and set up a single judge.

A single judge under the Commonwealth is appointed for life. This procedure will make appeals against assessments an expensive matter, as at present no costs are allowed, and taxpayers may appear in person. It may not be out of place to mention that in the last twelve months ten appeals have been heard before a single judge of the High Court, and in eight instances the single judge referred the matter for consideration by the Full Court. This indicates the cost to which taxpayers are likely to be put by the system of appeal.

I desire now to refer to clauses 83 to 87 of the bill, which deal with taxation on the sale of a lease of land held from the Crown and used for primary production. Under the present act, transfers of Crown leases are taxable, and this bill proposes to continue this taxation. It was hoped that the Treasurer’ would have agreed to exempt from taxable income the proceeds of leases which have been held for seven years or more, and to make a concession in the rate of tax where the leases have been held for less than that period. The amending legislation intends to tax leases irrespective of how long they have been held. It might not be out of place to draw attention to paragraph 747 of the report of the Royal Commission on Taxation, from which it will be seen that the commission was in two minds as to whether or not to recommend the taxation of leases. The paragraph is as follows : - 747. But while what we may call the ordinary and normal transfer seems to he adequately covered by the principles wc have enunciated, there arc no doubt exceptional cases in which the leasehold interest does partake so largely of the character of a capital asset as to justify a question whether the sale price should properly be treated as income. The 09-year lease, more common in the early period of Australian settlement than to-day, is an instance in point. Such a leasehold interest, with an unexpired term of 40 or 50 years still to run, and with a present-day value bearing no relation to that small ground rent reserved, is so like in its nature to freehold, that the mere fact of its ‘sale, being effected by means of an assignment of the lease instead of a conveyance seems a rather inadequate reason for treating it differently for taxation purposes. However, if any serious grievance existed in connexion with leases of this kind, we should probably have hoard more about it in evidence. In the majority of cases, perhaps, a way of escape is provided by facilities for conversion into freehold.

I am not so concerned with the large pastoral leases, but rather with the grazing homestead and grazing farm leases held by men operating in a comparatively small way. It is contended that in Queensland the grazing leases are a form of land tenure. No more freehold can be acquired from the Government - a very definite reply to the commission’s suggestion that perhaps in the majority of cases a way of escape is provided by facilities for conversion into freehold Such facilities do not exist in Queensland. Each lease carries with it a priority right under section 72 of the State Land Act. It is provided by the Land Act that, where a lease has less than seven years to run, the lessee may approach the Lands Department to ascertain whether he will get a priority right or not, and, if so, on what condition, and may surrender the existing lease and obtain a new lease immediately. I maintain that, in Queensland, the taxation of Crown leases is really a capital tax, and should not be imposed. It is felt that it should be treated in the same “way as profits arising from the sale of freehold. The bill deals with taxation of all leases, both freehold and Crown leases. It is provided that, in arriving at the rate of tax upon the transfer of a freehold lease, a concession is made to the freeholder in arriving at the rate of tax upon the amount “received for the premium on the lease. Briefly, the concession is for rate purposes, to calculate the tax only on a sum which is obtained by dividing the lease premium by one-half of the unexpired term of the lease, or the period for which the lease is granted. This concession- is not to be applied to primary producers because the averaging provisions are retained. Therefore, the primary producer will be at a disadvantage where a lease has been transferred, which has a currency of more than ten years. While it may be equitable to allow a concession, in the case of free hold leases, on the unexpired term, this method is not applicable to Crown leases, as the two properties are of an entirely different nature and character. It is contended that any profits made by the transfer of a lease is really profit made by the Crown tenant during the period he has been on the land.

The following table, taken from the annual report of the Queensland Department of Public Lands, gives detailed figures of the occupied areas in the State of Queensland, and the areas unoccupied at the 31st December, 1931 :-

In the opinion of those well able to judge, the taxability of profits on the sale of Crown leaseholds held for primary production, is regarded, certainly in Queensland, as a serious deterrent to the sale of leaseholds. Many persons who have remained on their areas until they have grown old, now desire to sell, but they are tied to their properties for the rest of their lives because the taxation that would be levied upon the proceeds of the sale would be too high.

The Income. Tax Assessment Bill of New South “Wales provides for the taxation of Crown leases, but taxes the leases that have been held for six years prior to the sale only to the extent that lease sinking fund has been allowed in previous assessments. It also provides that the amount of taxable income is to be divided by one-half of the period of years that the property sold has been held for rate purposes. Under the Income Tax Assessment Act, Queensland Crown leases are taxed, but, in the case of a cash sale, the rate of tax is calculated by dividing the profit by the

Sir Donald Cameron. number of years that the lease is held, not exceeding seven. The reason why a period up to seven years was selected was because, originally, it was not intended to tax leases held for more than seven years. The amending Queensland bill follows the bill now before this House in that the lease premiums will be taxed at the rate applicable to a result obtained by dividing the profits by one-half of the unexpired term of the lease. It would appear that in its efforts to bring about taxation legislation, uniform with that of the Commonwealth, the Queensland Government has placed the unfortunate grazing farmer in a worse position than before the amending legislation was introduced.

Mr Casey:

– But his balance-sheet would show a better result.

Mr RIORDAN:
KENNEDY, QUEENSLAND · ALP; FLP from 1931

– That is open to investigation.

Sir Donald CAMERON:
LILLEY, QUEENSLAND · UAP

– It would be a great advantage to the graziers in Queensland if the provisions of the New South Wales ‘aw were enacted in regard to the limitation of the amount of profit to be taxed - not exceeding the deductions allowed under the act in respect of leases - and if a concession were allowed in the rate of tax calculated by dividing the profit by the period that the property has been held. I would strongly urge the Treasurer to remove the disabilities under which many unfortunate people have laboured in the past. Notwithstanding the remarks of the Leader of the Opposition about the very wealthy graziers, to whom he referred repeatedly, I am afraid there are very few of them in Australia, to-day. I am particularly concerned with the small graziers, the plight of whom the honorable member for Kennedy (Mr. Riordan) knows as well as I do, who desire to sell, but whose taxation is so great that the opportunity is never presented to them. I ask the Treasurer if further consideration cannot be given to this particular feature of the bill. I shall reserve my further comments until the bill is in committee.

Mr RIORDAN:
KENNEDY, QUEENSLAND · ALP; FLP from 1931

.- It has always been contended that leasehold property is not comparable to freehold ; but I consider that, if a man takes up a leasehold of a grazing selection in Queensland, and has resided on it for over seven years, lie should not be taxed as proposed in the bill now before the House. In Queensland, prior to the introduction of this uniform legislation, such a man was not taxable as is now proposed. In the north- west and central western portions of that State, very few, if any, of those who hold grazing selections have paid taxes during recent years. Despite the fact that they have been struggling to get out of their financial difficulties following years of drought, a fresh burden is to be placed upon them by the imposition of taxes on the sale of their leases. Now that good rains have been experienced in. that portion of Australia, 50 per cent, or 60 per cent, of the graziers will be forced to sell their leaseholds on the market, because they are overcapitalized as the result of the burden of debt contracted during the drought, in the hope, I have no doubt, of being able to buy them in again at a lower capital cost. But, if they are to be burdened with the imposition of a heavy tax on the sales, after having resided on their properties for over seven years, they will prefer to remain on their holdings with the heavy capital cost involved. I refer particularly to the small grazier, because, in Queensland, an attempt has been made to break up large holdings into areas ranging from 10,000 to 60,000 acres. In some cases even holdings of that size have been found” too small for profitable exploitation, with the result that the leaseholders have struggled along during adverse seasons. As soon as the seasons break in their favour, governments break them by adding to their burdens. It appears that they are to be specially selected in this bill for the imposition of a special tax. I hope that, in its attempt to provide uniform taxation legislation, the Government will not impose such an unjust burden on the sale of leaseholds in Queensland.

Reference was made by the honorable member for Lilley (Sir Donald Cameron) to exemptions in respect of capital expenditure. If a man takes up what is considered a dry block in dingo and vermin infested country, wire-nets the land and makes it vermin-proof, he gives it an added value to the State and the Commonwealth. In some portions of my electorate netting has resulted in an increase of lamb production of from 30 per cent, to 65 per cent. Netting has not only provided employment, but has also increased the value of the. property as a national asset. A deduction of such expenditure for taxation purposes is, in my opinion, quite justifiable, because an increase of flocks will result in increased incomes. Immediately a farmer -increases his income, the Government increases the tax he has to pay. Netting, and the provision of water, should be the responsibility of the Government. Though the selector is saddled with the responsibility of netting and the provision of water, he is not allowed to claim a deduction in respect to the capital expenditure involved. If that land is not developed> it is of no value, and will not return anything to the State, but the farmer improves the carrying capacity of the land by the erection of vermin-proof fences, the sinking of bores, and the subdivision of the property in order to produce on scientific lines. Yet) although the capital expenditure absorbed by such undertakings has created further employment and additional wealth to the State, the leaseholder is not allowed to deduct it for income tax purposes. It is all very well for the theorists to lay down general principles of taxation, but the manner in which those principles work out in practice is the only thing that counts. If we are to adopt a policy of closer settlement in this country, designed to encourage men to go on the land, capital expenditure involved in the erection of rabbit-proof and vermin-proof fences, and in the provision of water supplies,’ should be allowable deductions for income tax purposes. Otherwise there will be a .tendency for people to put their few pounds into government securities, and thus to become loafers and non-producers. . It would be far better if interest rates in this country were kept down to a minimum, and people were encouraged to .go upon the land. At present there is. a large number of unemployed youths, as well as adults, in this country, and only by placing them in employment on the land can their difficulties be solved. The man on the land, whether a lease-holder or one holding the land under some other form of tenure, has to meet not only capital expenditure for improving the land, but other burdens as well. Let us consider the plight of a man who has been successful in drawing a grazing selection by ballot in Queensland. His capital invested in the land may have been the cost of participating in the ballot, £1 ls., and he may have drawn 30,000 acres with a carrying capacity oi 5,000 sheep. At the present price of wool, 5,000 sheep would not return a handsome income. The grazier living outback does not live near the schools, and has frequently to send his children to boarding schools. Up to the age of fourteen years, with the aid of correspondence schools, and by devoting his spare time to the task, he is able to have his children taught; but when the children reach an age at which they require the services of highly-trained teachers, they have to be sent away to expensive boarding schools in the big towns, and at the time when his expenditure in connexion with their education is heaviest the allowable deduction for children ceases. When he has four or five children, the cost of educating them becomes a very heavy drain on his resources. I have seen in the Brisbane Courier-Mail the remarks of the Minister for Repatriation (Mr. Hughes) urging the women of Australia to give consideration to the raising of larger families. But no consideration is given in this bill to the difficulties presented tc the man on the land in connexion with the education of his children. Time and time again, the small grazier is sacrificed by politicians for the benefit of people who derive large incomes in the cities. I hope that the Treasurer (Mr. Casey) will adopt the suggestion of the honorable member for Lilley, who has had wide practical experience of wool-growing in Queensland and can therefore be regarded as authoritative. He and his family have, for many years, been engaged in that industry in my electorate, where they have always been regarded as good employers. His appeal has been made on behalf, not of the large pastoralists, but of those who have taken up leasehold tenure in comparatively small areas. After that form of tenure had been in operation under a Labour Government in Queensland for over fifteen years, the small landholder would not avail himself of an opportunity that was given to him to convert his title to freehold., because hn realized that to borrow money for thi-: purpose at the ruling rate of interest would place him at a disadvantage. Persons engaged in primary production in remote districts suffer from the disadvantage of the absence of social amenities, such as schools and tramway and rail transport, to enjoy which they have to visit the cities at considerable cost. The pastoral areas of Queensland have experienced a period of drought, and additional burdens should not be placed on the lessees by this legislation from which they hoped to obtain some measure of relief.

Mr PROWSE:
Forrest

.- I congratulate the Government upon the introduction of this unifying taxation measure, even though it achieves only partial uniformity in the laws of the Commonwealth and the States. I suppose that in the future, as in the past, taxpayers will be obliged to prepare and lodge two separate returns. It is strange that, enlightened as we are, means cannot be found to relieve the taxpayer of the trouble caused by the differentiating incidence of taxation. If a man’s income can be ascertained definitely and correctly, it should be the same for both State and Federal purposes. At present, the federal assessment is altogether dissimilar from the State assessment.’ This bill represents an attempt to overcome that difficulty, as far as possible. I am afraid, however, that confusion may be caused in other directions. I am always prepared to welcome any attempt to achieve similarity in the taxation laws of the Commonwealth and the States.

I listened carefully to the well-prepared and excellent speech of the Leader of the Opposition, (Mr. Curtin). That honorable gentleman appeared to take exception to the provision for the exemption from taxable income of expenditure incurred in the erection of vermin-proof fencing, and the draining and clearing of land. I would remind him that were it not for the unnatural invasion of the rabbit and other pests, that expenditure would not be necessary. Actually, if it were not incurred, there would be no taxable income from such land; even the taxgatherer would be .unable to derive any revenue from it. Therefore, it is essential in the interests of the country a3 well as of the owner of the land that fencing should he erected to prevent the invasion of that particular pest.

Mr Mahoney:

– What about expenditure by other taxpayers?

Mr PROWSE:

– The honorable member should not object to a little income being derived by the man on the land. If he were to peruse the statistics issued by the Commonwealth Statistician he would find that in 1931 the total taxable income in Australia was £122,000,000, of which the income of pastoralists, agriculturists and those engaged in the mining industry amounted to only £5,300,000 - a very small proportion compared with their value to Australia.

Mr Baker:

– That was because of the numerous exemptions granted to them.

Mr PROWSE:

– There is not much margin for the whittling away of the advantages given to them. Last year the total taxable income was £104,000,000, of which the farmer, the pastoralist, and the mining industry earned £6,000,000, the balance being derived by the bolstered-up city factories and other taxpayers. There must be a recognition of the fact that such taxation makes the landed industries of Australia less attractive. In the interests of the nation we should do all that we can to make them more attractive.

The incidence of taxation in regard to natural increase of livestock is undoubtedly a very vexed question. With the varying values of livestock, severe hardship is at times imposed. The Leader of the Opposition referred to the case of a taxpayer who would be levied on £2,000, compared with £5,000 under another principle of taxation, on a flock of 10,000 sheep, which he keeps for wool purposes only, and not for lamb raising. There should be some method of estimating the depreciation of the value of such stock, allowance being made for a certain degree of maintenance by natural increase. In Western Australia, calves are valued at 30s. a. head for the purpose of federal taxation, and at from 30s. to £4 a head in different districts by the State. The average price realized for such stock during the last two years would not be £1 a head. Such legislation is not, I consider, in the interest either of the citizen or of the

State. The value fixed is fictitious, and the return cannot, by any stretch of the imagination, be regarded as income. Some attempt is made in this measure to remedy the existing anomaly in that connexion. I am glad, also, that the bill makes provision for the carrying forward of losses. As some honorable members know, I have sought for many years a truer system of averaging than has so far been applied. The averaging system now in vogue does not bring us anywhere near to the point of equity. It does not assess on the taxable capacity of the taxpayer.

A person with an assured regular income is treated the most lightly of all tax-, payers, although in a period of five years his taxable income may be equal to that of another person who pays considerably more in tax. I still believe that it is possible to evolve a system for the averaging of taxation, under which every person in Australia with a similar income or taxable capacity would pay precisely the same amount to the revenues of this country. If such a system can be devised, legislative effect should be given to it. I am glad that this bill has been introduced, and I hope that certain amendments to be suggested will receive the sympathetic attention of the Government. I notice that the Treasurer has already found it necessary to give notice of numerous amendments. It would be in the interests of the general public if the difficulties of preparing taxation returns could be removed. The complicated nature of the present form is enough to give ordinary citizens a scare. Taxation is, at all times, unpopular; but no government should take advantage of the ignorance of the people on this subject. I do not suggest that this Government is doing so ; rather do I compliment it upon having introduced this bill. In the first speech that I made in this Parliament I urged that there should be one taxing authority for the whole of Australia. .It should still be possible to make that adjustment of our taxation procedure. The amount of revenue needed by the various governments could be estimated, and a single authority set up to collect it. One return should be all that is required from the taxpayer, and the form of it should be as simple as possible. If we realized the amount of money that the ordinary citizen spends in having his taxation return prepared - and I leave out’ of consideration altogether at the moment the actual .amount of taxation paid - I am sure that we should seriously bend our energies to the task of devising a ‘simpler return.

Mr PRICE:
Boothby

.- I congratulate the Government upon having introduced this bill. It may, however, be said with perfect safety that no taxation measure is popular with the people t- especially with the people who have to pay taxation. The intention of this measure is to simplify and unify our taxation procedure, and to that extent it is meritorious. This is, in fact, a consolidating bill. I trust that it will be the forerunner of many measures of the same kind. I need not discuss at any length the desirableness of taxation simplification. Like the honorable member for Forrest (Mr. Prowse), I have on numerous occasions in this House advocated the introduction of a measure of this description. There is need for the consolidation of many other acts of this Parliament. Our laws should be stated in the simplest possible terms, so that not only the legal mind, but also the mind of the ordinary man, may comprehend their meaning and import. It should not be necessary to employ a solicitor to ascertain the meaning of an act of Parliament.

Mr Mahoney:

– That should only be necessary to find ways and means of dodging the law.

Mr PRICE:

-John Citizen, who, generally speaking, wishes to obey the laws of the country, should be able to ascertain what the laws are by reading the statute-book.

This bill is long overdue, and I therefore hope that it will have a speedy passage through the Parliament. If that is accorded the measure, it may encourage the Government to put in hand the consolidations of other intricate statutes.

Sir Littleton Groom:

– Under the provisions of the Acts Interpretation Act consolidation is steadily proceeding.

Mr PRICE:

– That is so. I am glad that this Parliament devotes more attention to the consolidation of the measures that it passes than do the State Parliaments. It may be said with truth that the Commonwealth Parliament endea vours systematically to consolidate its legislation. That is all in the interests of the citizens in general. A clear statement of the law on any subject must, in my opinion, contribute to a more general obedience of the law.

The introduction of this bill has become urgent in consequence of the complexity of Commonwealth and State taxation measures. Now that the Commonwealth and State Governments have entered so generally into the field of income taxation it has become very difficult for the ordinary citizen to know where he stands. Overlapping has occurred here as in other spheres. Uniformity is, therefore, an urgent need, and the Government is to be congratulated upon its endeavour to effect this reform. Those who have participated in the conferences of Commonwealth and State Treasurers, and Commonwealth and State taxation officials which- have preceded the introduction of this bill deserve, and, I believe, will be accorded, the approbation of the whole community for the measure of agreement which they have reached. Not only the man in the street, hut also the man in the bush is entitled to a clear statement of his responsibilities as a taxpayer. The Royal Commission on Taxation, which has furnished the Government with several illuminating and comprehensive reports on the subject of uniform taxation laws, is also deserving of the cordial and grateful thanks of the people at large. I have read the various reports of the commission with interest and profit. I am sure that the members of the commission will be gratified to think that their labours have resulted in the introduction of this measure and in the preparation of complementary measures which will be submitted to the State Parliaments for their consideration.

I make another appeal for a simplification of the taxation return which the taxpayers are obliged to furnish. It can be said with certainty that every taxpayer has a headache at least once a year, when his or her taxation return is being prepared. Surely it should be possible for the taxation authorities to simplify the return !

In general it may be said that this bill has been carefully drafted, and I am glad that we have evidence of such a large measure of agreement between Commonwealth and State authorities on at least one subject. Although it is not competent for us in this debate to discuss the rates of taxation, an urgent need exists for a removal of some of the conflicting measures at present in operation. In the introduction of this’ consolidating bill a step forward has been taken. Other consolidating measures should be introduced to deal with matters in which there should be uniformity between the States and the Commonwealth. The States, for instance, have undertaken to provide for the registration of tax agents. This will obviate the necessity for the Commonwealth to enter the same field of legislation. Further, it is proposed to set up an appellant tribunal of a single judge of Supreme Court standing, to deal with all income tax appeals. This innovation would do away with the present Commonwealth Income Tax Board of Review, as well as with courts in the various States dealing with income tax matters, but I should like the Ministers to explain more fully the proposal for the abolition of that board. The Privy Council judgment, delivered in 1930, said -

If you want to have the assessment reviewed judicially, go to the court. If on the other hand, you want to have it reviewed by business men, go to the board.

Before I shall give a vote for the clause, the Minister should explain it in more lucid terms than he did in his secondreading speech.

In connexion with business deductions. I am glad to see that provision has been made to broaden and simplify the old act, so as to cover all expenses necessarily incurred in carrying on a business. The Government has taken a real step forward by taking into consideration the many disabilities connected with the conduct of business. I can speak feelingly on this matter, having had personal experience.

The question of depreciation is a vexed one, and I am glad to learn that action is to be taken by the Commonwealth and State Commissioners to agree upon a uniform schedule of rates for depreciation. Provision should be made to bring rnachinery and plant values into line,so that the same amount of depreciation may be allowed in Commonwealthand

State assessments. In. the case of family partnerships, this bill provides for another innovation. Under the present act, family partnerships which are formed for the purpose of reducing taxation are voidable. The test applied is forwhat purpose the partnership was. formed. Under this bill, the test to be applied is whether the partnership is in fact a bona fide one. I see no objection to this procedure. It is reasonable, and I propose to give it my support.

In connexion with the question of leases, the Treasurer (Mr. Casey) pointed out that -

A lessor who receives the benefit of improvements being erected on his property under a covenant is in future to be taxed upon the value of such improvements spread over the period of the lease. With the abolition of the averaging provisions to take effect in 1938, the bill provides for a taxpayer in respect of a premium fora lease to be assessed on the basis of what is called a “notional” income. . This is in effect a simpler form of achieving an average rate, having regard to the term of the lease. The effect will be that the premium is dealt with once and for all in the year of receipt, and subsequent assessments will not be affected.

If this provision be carried, it will not take effect until 1938, thus giving time for the change over to the new system. That is a wise provision.

In regard to objections and appeals, the clause is designed to foster harmony with the States, and in regard to time limits, a period of 60 day’s has been suggested. This appears to me to be reasonable. There are always many objections and appeals, and in future all decisions and determinations of the Commissioner will be subject to an appeal to the Income Tax Board of Review. There is, however, no power for the Commissioner to remit penalties, and on this point I should like more information.

In connexion with amendment of assessments, the present three-year limit applies for the purpose of correcting any mistake of fact or error of calculation. This is important. In the case of fraud or evasion, assessment may be re-opened at any time. This is also a very necessary provision.

Clause 102 deals with “income of the deceased, received after death,” I should life? the Treasurer to explain morefully the reason for its inclusion in the bill. It reads-

Where in the year of income, the trustee of the estate of a deceased person receives any amount which is in the nature of corpus in the hands of the trustee, but which would have been assessable income in the hands of the deceased person if it had been received by him during his lifetime, that amount shall be included in the assessable income of that year of the trust estate.

The bill has for its purpose the simplification of taxation legislation. I predict that it will have the reverse effect if this clause is carried. Since the inception of federal income tax legislation, income derived by a deceased person from the last accounting period to date of death was exempted from income tax where his estate was chargeable with federal estate duty. It has been the almost invariable, practice of taxpayers to lodge their income tax returns on a cash basis. This basis was accepted by the Commissioner and assessments were made in accordance with this principle. As a consequence, it will be recognized that income accrued due but not received and expenses incurred but not paid were disregarded in calculating assessable income. Upon the death of a taxpayer, income or expenditure by a trustee referable to a period prior to death is capital, and does not affect the estate income. The most common forms of receipt in point are interest and dividends which the Commissioner has ruled by General Order (No. 1141, volume 1216) are receivable by the trustee, in such circumstances, as capital, and, consequently, are exempt from income tax. This principle has worked satisfactorily for many years, and it has the merit that, except in very isolated cases, both income tax and trust law coincide in the matter of ascertaining trust income. If the proposed clause of the bill dealing with “ income of deceased received after death,” is carried, it will destroy this harmonious relationship by divorcing the statutory income under income tax law from that ascertained in accordance with trustee law, resulting in the merging of capital and income items in trust income tax returns, and involving an analysis of the residual net income to provide for the numerous cases where capital and income are not enjoyed by the same beneficiaries. I take it that the expressed intention of this bill is to simplify the law. Why complicate the position with the innovation contained in clause 102? There should be a clear line of demarcation between income derived by the deceased and income derived by his trustee. Otherwise, no end of confusion is inevitable. If clause 102 has been placed in the bill for the express purpose of additional revenue, I venture the opinion that revenue so derived will not be considerable. On the contrary, the present practice has the merit of simplicity, and is in keeping with the spirit of the bill, and I hope the Government will agree to the deletion of the clause.

It is difficult to understand why the bill singles out trustees, and why a new clause has been inserted into a consolidating bill, especially as it may lead to friction between the States and the Commonwealth.

In clause 35, concessions enjoyed bv live-stock owners under the present act are t’o be preserved. Why should trustees not receive similar consideration ? In order to get a true perspective of the position, I point out this existing anomaly: Live-stock owners in 1923 were given the option of computing livestock profits on a cash basis. Natural increases were not required to be included until sold. As a consequence, taxpayer? who had adopted that basis of assessment would almost invariably have brought into account as income at the 30th June, 1935, no amount as representing the value of live-stock on hand at the 30th June, 1935, odd purchases of rams, &c, being excepted.

Under section 35 of the bill, these taxpayers, assuming they had previously elected to adopt market values, are to be permitted to bring into account as a deduction at the 1st July, 1935, the whole of their flock at that date at the market value thereof. Consequently, assuming a taxpayer with a flock of, say, 30,000 sheep in 1923 valued at fi per head elected to omit increases as described, the revenue would lose tax on £30,000. That pastoralist is to be placed in the same position as a taxpayer who has paid tax on the whole of his increases each year, the former being allowed to start off with a debit in his return of £30,000, which has never previously been brought into account as income.

The Treasurer’s comment, that the same number of sheep would probably be on hand at the 30th June, 1936, is beside the point, for the reason that the pastora- list under the present bill is not allowed to omit future increases and pays tax on all sales, so that the taxpayer who had omitted increases in the past is restored to the position he would have occupied had he paid tax on his increases each year. I have especially referred to clause 35 and the preservation of concessions to live-stock owners which adds substance to the plea for the retention of the present basis of assessment of trust incomes. I support the second reading of the bill, but in committee I shall deal with the measure in greater detail.

Sitting suspended from 6.15 to 8 p.m.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– In common with other honorable members, I recognize the undoubted necessity for uniformity in taxation legislation. Honorable members and business men in general are aware that the vexatious anomalies obtaining under the present taxation laws bear very harshly upon individuals and upon industry. Taxpayers, in the main, find the income tax laws so complex and burdensome that, in addition to being unable to pay the taxes demanded by governments, they have to call in the assistance of experts to advise them regarding their returns and the deductions that are allowable. An industry, particularly if it is carried on in more than one State, is required to furnish a multiplicity of returns, and must engage an expert to see that it does not infringe either Commonwealth or State legislation. Therefore, one must commend the Government, and particularly the Treasurer (Mr. Casey), upon the introduction of this long-overdue measure, which aims at the establishment of simplicity and a measure of uniformity in income tax legislation, based in the main on the recommendations of the Royal Commission on Taxation. From time to time bills are brought before the Parliament, and. because of the shortness of the sessions and the limitation of debate, insufficient time is found for their consideration, with the result that various amendments are subsequently found necessary. Therefore, I appeal to the Treasurer to see that the maximum amount of consideration is given to the representations made.by honorable members and by those associations that have analysed the bill, and have brought their practical knowledge to bear upon it with a view to making it 100 per cent. effective.

Mr Casey:

– This measure has been before the public for five months.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Despite that fact, it is necessary to give full consideration to the suggestions made by bodies whose practical experience of the operation of the income tax laws is valuable.

Mr Casey:

– Seeing that the measure has been before the public for five months, should not the representations of those bodies have been made to the Government earlier than two days ago?

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Yes, but a considerable time has necessarily been spent in bringing the provisions of the bill under the notice of the people, and I suggest that the associations referred to are not wholly responsible for the delay. I am sure that, if the advice offered by them is of value, the Treasurer will give it every consideration, and, in the event of it being too late to adopt that advice during the passage of the measure through this chamber, I trust that it will be acted upon before the bill is passed by the other branch of the legislature. I hope, with other honorable members, that this is hut a forerunner of one complete taxation measure, and a common collecting authority. The bill has been designed to bring about uniformity of income taxation throughout Australia, but we have already heard rumblings from the States, proving that complete uniformity under this measure is impossible. I contend that the only way to get complete uniformity is to have one taxation measure and a single controlling authority.

It has often been asked : How is the taxable capacity of a nation to be determined ? The time of the House might he occupied for many days in discussing it, and one seeks in vain for a complete answer. Should the taxable capacity of the people be determined in accordance with their ability to pay? If so, we find under the acts proposed to be superseded by this bill that the poor are taxed in no uncertain way, for, as all taxation is included in costs of general commodities; both direct and indirect taxes fall most heavily on the man in the street.’ If the taxable capacity is not to be judged in accordance with ability to pay, is it. to be ascertained in accordance with the extent to which it affects production? If this is so we have the anomaly ‘ of excessive taxation crippling industry, and a case can be established for’ an immediate reduction of taxation’.’ I have before me statements made’ on this aspect of the subject by the chairmen of directors of various companies: One .is’ by Sir Hugh Denison, who; in addressing the annual meeting of Associated Newspapers Limited, said - “Among the iniquitous sections of taxation,” Six Hugh continued, “ is the federal property tax,, which took £51,490 merely because, we transferred certain profits from Sun Newspapers, which we own, to Associated Newspapers, which distributes to shareholders -In other words, £10,000 a year has gone for nothing whatever “.

Mr. . John Sanderson, chairman of directors of :the Mercantile Land and Finance Company, speaking in London recently, observed -

Wo,, for. many years, have- been concerned with the burden pf taxation, particularly in Australia, where rates of income and other taxes’ cost- ils £40,800 for the year ended the 30th’ June, 1935. British taxation in the same period was £15,00.0; Argentina, £1,000. Our taxation payments for five years averaged £45,000 a yea.]-, compared with average dividends of £22,400 a year. Australia, overlooked the legitimate claims to consideration of those” engaged ill the industry on which the prosperity -of the Commonwealth’ mainly depends.

At.- - the annual meeting of shareholders -of Dalgety and Company, held- in London early this year, the -.- fact, was disclosed that the taxes paid by that company for the year amounted to £50,000, whilst the profits, after paying the taxes, were £107,500, and the. ordinary dividend - distributed wa3 £75,000. Thus the taxes amounted to almost 50 per. cent, of the net profits, and governments took a sum equal to twothirds of the amount received by the ordinary, shareholders. Reckoning in the preference dividend of £25,000, the capital of the shareholders earns £1 for governments for ..every. £2 it earns for the shareholders. . I suggest that the Government is a very unwelcome shareholder when . it forces upon industry restrictions which prevent its development. The taxable capacity of the people has not been assessed either according to their ability to pay, or in accordance with the test as to whether the taxes unduly affect production. Possibly the solution has been supplied by a certain humourist who has declared that the rich should pay more taxes than they think they do, whilst the poor should think that they pay more than they really do.

The cry for a reduction of taxes is general, and it is justified. It is due to increases of taxes that have been made during recent years. One need only look at the figures supplied by the Statistician’s Department to recall the great increases that have taken place. In 1934. the taxes imposed by the Commonwealth and the States amounted to £95,000,000, which is six times greater than the amount imposed 25 years ago when the total was £16,750000. The Commonwealth Parliament, during the last six years, has increased taxes to the extent of £9,000,006 a year.

Mr Casey:

– Is that direct taxation ?

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

-No, I am referring to general taxation.” The total amount collected in taxes in recent years is as follows: -

1 need not delay the House by pointing out that Australia has emerged from the depression, and that industry should now be given an opportunity to develop oi» the rising market. I deplore the fact that in this measure no provision has been made for a reduction of income taxation. The total Commonwealth and State taxes in 1935 amounted to £14 4s. a head of the population, and when one compares this figure with the taxes collected in Great Britain and France, one is appalled to find that the taxes paid by the people of Australia are almost as great as those contributed by those populous countries that have much greater commitments to meet than has Australia. In 1934, our federal taxes amounted to £8 9s. 6d. n head of the population, as compared with £6 12s. 4d. in Italy, £5 19s. in the United Kingdom, and £8 7s. 10d. in Germany.

Mr Casey:

– The comparison is unfair if it does not include motor taxation for road construction purposes.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– In each case the figures relate to federal taxes. Taxation in Australia should not bc so heavy as to be comparable with thatimposed in older countries that have much heavier commitments than we have. I am sure that the - Minister for Defence (Mr. Parkhill) would be glad if the taxable capacity of Australia were equal to that of a country like Germany, because it would assist materially in providing the large sums required for defence purposes. As honorable members are no doubt aware, approximately £14,000,000 will be collected this year in the form of emergency taxation introduced during the period of the depression. This. is made up of, sales tax £S,250,000, primage £4,000,000, and property tax £1,250,000. The Treasurer reminded us that he had nothing to do with the imposition of indirect taxation. That is true, but I remind him that, of these three emergency taxes to which I have referred, two . are indirect taxes. All governments have these two forms of taxation, direct and indirect, open to them, and both are very dear to the hearts of treasurers. Indirect taxation is sometimes difficult to trace, and for that reason is largely availed of by governments. In this regard it is interesting to draw the attention of honorable members to the statement made many years ago by Gladstone, when he was Chancellor of the Exchequer. He likened the two methods of taxation, direct and indirect, to two attractive sisters as between whom he was impartial. but as Chancellor of the Exchequer it was not only allowable, but was also his duty to pay his addresses to both. I suggest that the Treasurer has been paying so much attention to these two attractive sisters that he is in danger of wearing out his welcome.

I believe that only sufficient taxation should be raised to permit governments to carry on, and there seems little doubt to me that the Commonwealth Government is raising more revenue than it should. During the last four years, the excess of receipts over expenditure has amounted approximately to over £7,000,000. I do not wish to fret the Treasurer unduly, but I cannot refrain from referring to the statement of Mr. Cerutty, the ex-Auditor-General, who, in his last report, placed his finger on a tender spot in regard to the accumulation of £8,000,000 in trust funds. If it is possible to have substantial yearly surpluses, and at the same time amass £S,000,000 in secret reserves, the taxpayer is surely entitled to look for some relief. I am very disappointed that the Treasurer did not foreshadow some such relief when he was introducing this measure. Taxpayers have been assured repeatedly during the depression that they must be prepared to shoulder heavy responsibilities in order to ensure financial stability; but, now that we are rising out of the depression, as is demonstrated by buoyant revenues and accumulated surpluses, the Government should not hesitate to redeem the promises which it has made in regard to the abolition of the land tax and the reduction of taxation generally. The taxpayers are aware of the general economic improvement, and of the surpluses which the Government is piling up year after ‘year. They are aware, also, that the Government, instead of collecting less by way of taxation, is actually collecting ever-increasing amounts. Last year, more revenue was raised by the Commonwealth than ever before, and it appears as if a further record will be created this year. Taxpayers might not object so much if the surpluses were being used for the purpose of extinguishing the accumulated deficit of £17,000,000, but that is not being done.

The bill, in the main, is a good one; but it contains some inequalities and anomalies carried forward from the old act, and others which have been introduced for the first time. Dealing with the appellate tribunal, the Treasurer stated -

The Commonwealth and the States propose to create an appellate tribunal of a single judge of Supreme Court standing to deal with all income tax appeals. This court, when created, will take the place of the present Commonwealth Income Tax Board of Review, as well as courts in the various States dealing with income tax matters.

I do not object to the creation of a court of appeal, but I do not think that the present board of review should be abolished. The board was created to provide the taxpayer with an opportunity to have reviewed by an expert tribunal,. the decisions of the Commissioner for Taxation. It is obvious that there must frequently arise quite honest differences of opinion between the taxpayer and the Commissioner in regard to what income is assessable, and what deductions are allowable. Every taxpayer is not in a position to seek costly legal assistance such as would be necessary if his appeal had to be heard before a Supreme Court judge. The atmosphere of a court of law is not conducive to the ready and inexpensive determination of matters of fact, upon which most appeals are based. The court is all very well fdr deciding points of law, but if it must also be invoked far deciding matters of fact, then the case of most taxpayers would be prejudiced from the start, because they would not be prepared to pay the heavy costs involved, costs which would often amount to more than the sum in dispute. Since the Board of Review was established in 1922 it, has given general satisfaction. In operation, it has been business-like, practical and expeditious, its methods being simple and effective in contrast with the general practice of courts of law. Discussing the operations of the board, Mr. Justice Isaacs, iu the case of the Shell, Oil Company v. The Commonwealth Commissioner of Taxation, stated, as reported in 37 Commonwealth Law. Reports -

A practical means of reconsidering business means without the intricacies, delay and expense of legal proceedings.

Ultimately, that case went to the Privy Council and, as reported in 44 Commonwealth Law Reports, their Lordships laid it. down -

If you want to have the assessment reviewed judicially go to the court. If you want to have it reviewed by business men j;n to the board.

As a matter of fact, the Government of New South Wales is not satisfied with this proposal for the establishment of a court of appeal, and proposes to set up an authority similar to the existing Commonwealth Board of Review. It may be necessary, as the Treasurer has stated, to appoint a final court of appeal, but that court should not take the place of a board of review. The taxpayer should have tha right to say where his appeal shall bc heard. At least 80 per cent, of the case? brought before the Board of Review

Mr. R. ?. Harrixon. since its inception have been dealt with finally by that body, which proves that the taxpayers have, in the main, been satisfied with it.

Clause 25 of the bill provides that assessable income of a resident shall include gross income derived from all sources, and thus applies to income derived from the sale abroad of goods manufactured in Australia. Unfortunately, Australia exports too little of manufactured goods, and nothing should be done to discourage the growth of an export trade of this kind. The development of an export trade in manufactured goods would have the effect of bringing new money into the country, increasing the spending power of the community, and adding to our national security. The penalizing of exporters, as is proposed, should not be tolerated. Perhaps if our export trade in manufactured goods were a well-established one, and a source of considerable income to a great manypeople, there might be some excuse for this provision, but there is no excuse for it at the present time.

Clause 71 aims at allowing as a deduction, losses incurred by taxpayers through embezzlement and larceny. I maintain that the provision is too restricted in its character. It should be widened so as to include defalcation, misappropriation, fraud, theft, and the like. The claus? also proposes to restrict the provision to losses incurred in the year of assessment, but that is not fair. Sometimes embezzlement does not come to light for years, and in that case, the victim should not be penalized because of the delay. It is also provided that the deduction shall bc allowed only in those cases in which the embezzlement has been done by an employee, but that is too narrow. Frequently, agents are employed in the collection of rents, &c, and in the carrying out of land transactions. The provision should he widened so as to cover defalcation by such persons. The object of this clause is to restrict losses as they may apply to assessable incomes. I will again give the Treasurer an example. I consider that the. defalcations of trust moneys by solicitors’ clerks should also be covered. Honorable members from time to time have read of solicitors’ clerks who have been guilty of defalcations of moneys which pass through their hands in the course of their business. The Treasurer should make this clause apply not only to assessable incomes, but also to trust funds and the like.

Clause 79 c makes provision for deductions in respect of medical and funeral expenses, but for some reason the Government has again seen fit to exclude dental expenses. Honorable members are aware that dentistry is becoming increasingly important as medical science advances. Teeth play an important part in causing various diseases, and quite frequently a patient consulting his medical adviser for a blood complaint is instructed to see his dentist, and generally ends up with the loss of most of his teeth. Dentistry is becoming of as much importance from the point of view of medical expenses as actual consultation with a medical man himself, and dentists are becoming increasingly important from the point of view of the charges which they make for their services. It seems to me that, as dentists are working in conjunction with, and taking full advantage of the diagnoses of members of the medical profession, and are making charges in .line with the instructions they receive from the medical men, it is only reasonable that a provision should be inserted in the bill to include the exemption of dental expenses along with medical and funeral expenses.

With other honorable members, I agree that this is a bill which oan best be dealt with in committee, but I appeal to the Treasurer, as I did in my opening remarks, not to endeavour to rush it through. His action when the House met to-day was a fair indication of what may happen if honorable members are prepared to allow him unrestricted liberty. I suggest that the honorable gentleman should give the maximum consideration to the representations made not only by honorable members, but also by representatives of outside bodies desirous of giving practical assistance to the Government.

Mr Beasley:

– Does the honorable member think that this bill will make a certainty of the taxes of the oil companies ?

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– No, I do not think so, but I have no doubt that that will be handled in due course. I commend the Government for the introduction of this measure, and I suggest that honorable members should give due consideration to the clauses of the bill as they come before them, and, where they experience doubt with regard to any of the intricate details presented, that they endeavour to give mature thought to them, and not merely agree to the clauses as printed.

Mr JAMES:
Hunter

.- I desire to say at the outset that this measure does not afford the relief anticipated not only to individuals suffering under the hardship of taxation, but also to industries. Clause 79 of the bill, which makes provision for a deduction of £50 for each child under the age of sixteen, is very unjust in its incidence. I have written to the Treasurer (Mr. Casey) in regard to this matter, and have pointed out that no provision is made for exemption in respect of unemployed children over the age of sixteen who are living in the home of the parent. In the unemployment relief legislation passed by the States, provision is made that if there is a certain specified income into the home the children are debarred from participating in unemployment relief schemes. Therefore, a father with a taxable income who has two or three unemployed children over the age of sixteen years, and has wholly to maintain them, is afforded no relief from taxation. I regret to find that no provision has been inserted in this bill tq extend the exemption to children over the age of sixteen years who are wholly maintained as unemployed. The Treasurer should, give consideration to an amendment which will come from this side of the House, designed to make provision for such children, when the clause in question is before the committee.

I protest against the absence of any provision in this bill for the assistance and encouragement of the coal-mining industry, the needs of which I have continually advocated. Ever since I have been a member of Parliament I have spoken of various methods by which the coal-mining industry in Australia could be rehabilitated, but to no avail. While making no provision for the coal-mining industry, the bill now before the House makes special provision for the gold and metalliferous mining industries, as well as rural industries, by the exemption of capital expenditure upon development and machinery. The bill specifically provides in clause 23 that the gold-mining and other metalliferous mining industries are to be granted special concessions which are denied to the coal-mining industry. The bill in clause 23r further makes provision that iron ore and the proceeds arising from the sale of iron ore if sold outside Australia or mined by the vendor in Australia are exempt from taxation. This exemption will undoubtedly apply to the output of M. A. Brasserts, an English company, which has been granted a lease of the iron ore deposits at Yampi Sound in Western Australia. Some time ago, J asked if there was any truth in the report that the Japanese Government proposed to secure a lease of the iron ore deposits at Yampi Sound. It was of course against the policy of the Commonwealth Government to grant a lease to the Japanese Government, although it was a matter under the jurisdiction of the Government of Western Australia. But the firm of M. A. Brasserts apparently has secured a lease from the Government of Western Australia, and, according to a contract, the contents of which have been published, proposes to supply the whole of its output to the Nippon Government. The exemption provided under clause 23 of this bill will apply to the output of that company. When we consider the precarious position of world peace today, we realize that we do not know who our enemies may be in the near future. Probably some of the iron ore which will come under the exemption provided in this bill may be utilized for the manufacture of munitions of war to be used by an enemy for our own destruction. Yet we find that a company, which has contracted to supply the whole of its output to the Japanese Government, is granted a concession denied to our own coal-mining industry. The Government of the day is prepared to grant an exemption in respect of all iron ore sold overseas.

Mr Garden:

– The exemption has been provided specially for that company.

Mr JAMES:

– If it is good enough to give concessions to such a company, surely it is onlyright and fair that the

Australian coal industry, which at one time gave direct employment to 34,000 persons, and to-day is employing only about 18,000 persons, should be granted the same concession. I know that there are many factors operating against the successful carrying on of the coal industry chiefly because of the fact that coal has been superseded by other means of power development. 1 have continually advocated that something should be done along the lines of what the Imperial Government has done to rehabilitate the coal industry in Great Britain. This Government has never really grappled with the problem; it has continually put off its consideration. I understand that the Treasurer is making provision in the budget for the next financial year for the payment of a bounty as an encouragement to prospectors in the search for oil.

Mr SPEAKER:

– Order !

Mr JAMES:

– The Governmenthas done nothing for the assistance of the coal-mining industry.

Mr SPEAKER:

– Order ! The honorable member is not in order in pursuing his remarks along those lines. He must confine himself to the question before the Chair.

Mr JAMES:

– The coal-owners from time to time have advanced the argument in the courts, tribunals and conferences that because of the high taxation imposed upon the industry they are unable to maintain the standard of wages. To-day they are advancing this same argument, that they cannot compete with overseas countries for the coal trade still existing because of the high taxation which they are called upon to pay. It is up to this Parliament to remove these heavy charges, and so deprive the coalowners of the barrage of arguments which they rightly use that they are subject to higher taxation than that imposed on any other primary industry in Australia. Assistance is being afforded to rural industries by way of taxation exemption upon fencing, clearing, draining, ploughing, and practically every avenue of expenditure. Such assistance is denied to the coal industry. Why? Is not this once flourishing industry, one of Australia’s greatest, practically bleeding to death because of the inaction of this Government? Does the Government propose to let it bleed to death? The time has arrived when it should be placed on the same footing as other industries. Apart from the taxation exemptions already mentioned, bounty after bounty has been given to many rural industries at the dictation of the Country party, -because it holds in its hands the life of the Government.

Mr SPEAKER:

– Order ! The honorable member must deal with the question before the Chair.

Mr JAMES:

– At one time, members of the Country party claimed that they placed principles before their positions. Apparently that is not now the case. I have always advocated the right of the workers to a close scrutiny of the costs of the owners. I recognize, of course, how difficult it is to obtain this information by reason of the clouded system of accountancy practised, and the adoption of other methods for the concealment of trade transactions. My only desire is that the coal industry shall be relieved of some of the burdens which now rest upon it. I may, of course, be accused by some persons of advocating the cause of the employer; but I am not so stupid as to fail to realize that, when an industry flourishes, it absorbs some of those who are unemployed. I say without fear of contradiction that, during the last seven years, the number of unemployed has been greater in my electorate than in any other electorate in Australia, due principally to the failure of this Government, to assist the coal-mining industry. I have mentioned at different times the protective duty imposed by the Government of the United Kingdom, which last year increased the coal production of Great Britain by 3,000,000 tons, because of the application of a process for the extraction of oil fuel from coal. In South Africa, too, instead of the coal industry being taxed, a bounty of 7s. a ton is paid on all bunker coal and export coal. Action along those lines in Australia would only be in keeping with what the Country party has demanded as the price of its support for certain industries which it represents.

Mr SPEAKER:

– Order ! I cannot allow the honorable member to continue along those lines; he must deal with the question before the Chair.

Mr JAMES:

– As other countries are prepared to assist the coal-mining industry to the extent that I have indicated, surely the Commonwealth Government should not continue to exclude that industry from the benefit enjoyed by other industries under the provisions of clause 123, which specifically excludes the coal industry from the taxation exemption given to gold and other metalliferous mining industries. Competition in the coal industry is very keen. The price of coal is to-day cut to the bone, and no further reduction is possible without, an attack being made upon the conditions of the workers. In my electorate, men and women, who once were happy and contented, have lost their homes to financial institutions, and are in many instances living in miserable shacks constructed of bags and kerosene tins. Their children, whose lives should be nothing but sunshine and happiness, experience only stark misery and want. Women have died in hospitals from malnutrition when rendering the greatest service to the nation. Yet the Government is not prepared to assist the coal-mining industry in any way. These people have as much right to demand consideration as have those who live in rural districts. I plead with the Government to do something to assist this industry. So far it has merely criticized it, even to the length of saying that it had cut its own throat. Even if that were true - and I deny that it is - is the Government justified in watching it bleed to death? I assert that it has had to face circumstances over which it had no control. Other means have been found to replace coal as a power-raising unit. The embargo imposed on export coal during the war led countries in the near East to develop their own resources, and to-day they are competitors of Australia with a commodity that is produced under cheap-labour conditions and with governmental assistance. I predict that the last election promise of the Government to do something to rehabilitate the coal industry will be used against it very effectively at the next appeal to the people, and that there will be returned to office a government which will act rather than talk, with the result that the industry will be restored to the position it formerly occupied, and the many thousands of persons who are dependent upon it will again know contentment.

Mr NAIRN:
Perth

.- At present a taxpayer may claim an allowance of £50 with respect to each of his children under sixteen years of age, who is wholly maintained by him. The honorable member for Hunter (Mr. James) suggests that that principle should be extended to embrace unemployed children over this, age of sixteen years who are dependent upon taxpayers. He appears to have overlooked the fact that before federal income tax is payable, a taxpayer must have a taxable income of £250, and that that is the net amount after deductions have been made for doctors’ fees, trade union subscriptions, insurance and other allowances, including an allowance of £50 in tho case of dependent children up to the age of sixteen years, and, if this bill is passed, £50 in respect of the taxpayer’s wife. The man who, after those deductions, has a taxable income of £250, is not so badly off that he should be relieved of the necessity to make some contribution to the revenues of this country. The honorable member was on sounder ground when he referred to the exemption of profits made from the export of iron ore. There is a history attached to the introduction of the provision which exempted those profits from taxation. That amendment was made by the last Labour government, at a time when a very prominent gentleman in Australia was taking a considerable interest in the development of the iron ores of Yampi Sound. Exactly how it slipped into the act without comment, I suggest that honorable members opposite are in a better position to explain than are members of the present Government.

The proposal to substitute the Australian Bankruptcy Court for the Board of Review will be the subject of a good deal of discussion. It may not he conveniently discussed on this measure, because the proposal is not here made. I understand, however, that a suitable opportunity will be provided by a measure that is to be introduced later.

Another controversial matter which the Government is apparently prepared to meet is the proposal in the bill as drafted, to take away from the Board of Review the right to review all penalties imposed by the commissioner. I consider that the power of the commissioner under the act was, not only very wide, but also altogether too arbitrary. It was, I know, so exercised in two cases as to be mainly responsible for the persons fined being forced into bankruptcy. I believe that those persons committed breaches of the law, and so deserved punishment; but the punishment inflicted, upon them was severe. In those cases, the inquiry officers of the Commissioner were really in the position of the prosecutor, and the Commissioner himself was in the position of a judge against whose decision there was no right of review. The Commissioner personally would, I think, be glad to be relieved of some responsibility in this regard. Although that scheme of things does not agree with our general conceptions of justice, fines have been imposed upon delinquent taxpayers to the extent of thousands of pounds. The Government is prepared to meet this position by giving a right of review or appeal in cases where the fine exceeds 10 per cent, of the tax.

Generally speaking, the highest tribute to the work of the Commissioners, Commonwealth and State, is the moderate degree of criticism which has been offered of their work. This bill has been before the public for some months, and has, no doubt, been closely scrutinized by experts and interested people, but only moderate criticism of it has been forthcoming. The Commissioners have done an excellent job in evolving something like order out of the intricate mass of patchwork legislation which has hitherto been applied to taxation affairs.

Mr CASEY:
Treasurer · Corio · UAP

[9.2J. - m reply - The Leader of the Opposition (Mr. Curtin)., in the course of his comprehensive speech this afternoon, dealt with many clauses of the bill in some detail, and I think he will excuse me if I do not go into similar detail at this stage. I desire to read the Hansard report of his speech, in order that I may do justice to the various points to which he referred when we reach the appropriate clauses in committee.

This bill was introduced, and I made my second-reading speech on it, last December. The Government introduced the measure then, and postponed consideration of it until now, so that it might lie in the hands of the public, and be subjected to criticism, for an adequate time before detailed consideration was given to it in the House. The measure is, of course, very long and complicated; but the five months in which it has been before the public should have been adequate to allow full attention to be given to it by all concerned.

I propose to make some reference at this stage to certain general remarks by the Leader of the Opposition and certain other honorable members.

The Leader of the Opposition referred to the action of the Government in not accepting certain recommendations of the Royal Commission on Taxation. It is perfectly true that the Government has not accepted in toto the whole of the recommendations of the commission, but I do not believe that any government has hitherto accepted such a large proportion of the recommendations of any royal commission which has dealt in this way with a subject of such public importance. About 90 per cent, of the recommendations of the commission are being implemented in this bill.

The Leader of the Opposition spoke in broad terms on the philosophic aspects of taxation. I think it may be said that taxation is levied for two quite distinct purposes. The first purpose is to raise funds to meet the proper obligations of government, which include the care of citizens who have fallen by the wayside. This is the outlook of this Government on the subject. Then - and, I think, that this was not very far from the mind of the Leader of the Opposition - the power to tax is recognized in many parts of the world as a means of redistributing the economic wealth of the community. The taxation weapon, if used to the fullest extent by a government which wishes to redistribute wealth, is extraordinarily effective. Many of those who call themselves socialists believe that socialism can be most quickly and practicably applied to a community by the use of the taxation weapon. If this weapon is wielded, as undoubtedly it may be wielded, it certainly can bring about a redistribution of wealth in the community. But it is not the object of the present Government to use this weapon in that way. It wishes to apply taxation only to provide means te meet the proper obligations of government as it sees them, and not to effect a redistribution of wealth.

There is no gainsaying the fact that this is a very complicated measure. In my opinion, it is not possible, in these days of complex community activities, to evolve a simple income tax bill. Honorable members will probably have noticed in the press recently reports to the effect that the Royal Commission on Taxation, which has been sitting in Great Britain for eight or nine years, with the object of clarifying aud simplifying the British income tax law, has already furnished to the British Government two large volumes of 800 pages each on the subjects which it has had under notice. The remarks of the commission on the possibility of simplifying the income tax legislation of Great Britain tell their own tale. Without repeating the substance of anything that I said in my introductory speech, I feel justified in observing that the passage of this bill through this Parliament, and of the relevant complementary measures through the various State parliaments, will achieve in this country a high degree of uniformity in taxation law, practice and administration, thelike of which we have never previously seen.

Reference has been made in the course of this debate to the comparatively large number of clauses that deal with the imposition of income tax on primary producers. It is well known to those who have studied the subject that the income tax laws of various countries very largely reflect its principal industries. That is particularly true of Australia. A substantial proportion of this bill consists of clauses dealing with the taxation of primary producers, but this does not mean that primary producers are being granted concessions which are not due to them. In the taxation of those engaged in primary producing industries, and particularly the pastoral industry, it is very difficult to achieve equity and preserve a reasonable sense of fairness and justice. The object, of the Government, however, has been te serve these ends, and not fo grant undue privileges to any class.

The statement of the Leader of the Opposition that contributions of relatively, poor people to hospitals and hospital funds, so that they may have proper medical attention in time3 of sickness and accident, do not qualify as a deduction in the deductions allowable was quite correct. These contributions usually amount to about 6d. a week.

Mr Curtin:

– They are larger in some cases.

Mr CASEY:

– A contribution of 6d. a week would amount to 26s. a year, j suggest that a concessional deduction on an amount of that description could not total more than about 3d. a year. Actually, the amount involved would noi. be worth the very considerably increased administrative expenses that would be involved in providing the machinery to deal with it. I also direct attention to a point made by the honorable member for Perth (Mr. Nairn), that in the federal sphere we are taxing the relatively higher ranges of income leaving the lower levels of income to the State Governments. T remind honorable members that a citizen must enjoy income of £250 a year before any Commonwealth income tax is imposed upon him. So many deductions, concessional deductions, and statutory exemptions are allowable under the federal law, that a citizen must have an income of several hundred pounds a year before he comes within the range of Commonwealth income taxation.

Several honorable members have referred to the proposed appellate tribunal. I was perhaps responsible for this, for I made some reference to it in my own introductory speech; but this bill makes no reference whatever to the appellate tribunal envisaged by the Govern ment. Actually,, it provides for the continuance of the Income Tax Board of Review. If, and when, the Government makes a final decision in respect of the proposed appeal tribunal, a separate measure will be introduced to deal adequately with the subject. I SUgar.- therefore, that this contentious aspect of our taxation procedure may be left in abeyance for the time being.

The honorable member for Lilley (Sir Donald Cameron) and several other honorable members referred to Commonwealth taxation of the proceeds of the sale of leaseholds taken from the Crown. The Government is proposing to continue the policy of the past of treating as taxable income the proceeds of the sale of leaseholds - that is the difference between the sale price and the cost price - whether from the Crown or individuals. This also is a complicated subject for it involves not only the taxation of the proceeds of the sale of leaseholds in Queensland, where I am aware the position is particularly acute, but also the taxation of the sale of leaseholds in all States. The procedure, of course, varies in the different States. There is also involved the taxation of other forms of leaseholds, among which the leaseholds of hotels are important. I have lately had brought to my attention in particular the condition of affairs in Queensland, and it is almost exactly in the terms in which the honorable member for Lilley has described it. I believe personally that the conditions are imposing some hardship on leaseholders in Queensland, and I wish to do justice to them, but I suggest that it is rather too late in respect ‘of this bill to introduce amendments to deal effectively with the position. Nevertheless, I give the undertaking to the honorable member who has raised the question that, as soon as it is practicable, the Government will set on foot an inquiry. I hope it will he possible to put that inquiry in the hands of Mr. Justice Ferguson, the chairman of the Royal Commission on Taxation, or in the hands of some other person equipped to inquire into the subject of taxing the proceeds of the sale of leaseholds. The Government then, with the results of the inquiry before it, will see what can be done to bring about something more satisfactory than is said to exist at present in Queensland.

There is in the hands of honorable members a comprehensive list of Government amendments to the bill. I make no apology for having circulated it because it is impossible to get a bill of this size in complete shape at the first trial. A supplementary short list of further amendments will be circulated to-morrow.

The honorable member for Wentworth (Mr. E. J. Harrison) to-day referred to my warning that I hoped to obtain the suspension of such Standing Orders as would prevent the bill from being taken by parts or divisions. In that regard I am in the hands of honorable members; I do not press the matter. If it is thought in committee that I am attempting to curtail the rights of honorable members, I shall not proceed with my intention. From the very nature and form of this bill, however, few clauses are self-contained, and my object in giving notice to-day of a motion for the suspension of Standing Orders as they relate to this measure was to give honorable members more appropriate opportunity to discuss the bill in the way in which, if it is to be intelligible, it must be discussed. If honorable members, however, are not willing to follow the course, I shall rely on the Chairman of Committees to give me latitude to describe more clauses than one at a time. In committee this bill can be discussed in great detail, and for that reason I have not replied to many points raised in the second-reading debate. If I had, I should probably have to repeat myself in committee.

I wish to take opportunity before concluding to pursue a slightly unusual course. In my second-reading speech I gave what I hope was proper credit to two distinguished gentlemen who formed the royal commission, and who, I think, have performed distinguished services to this country in doing the work which has made this bill possible. I said also that I was indebted personally to several senior members of the Taxation Branch of the Department of the Treasury for their work in this regard. While I deprecate the naming of any member of the Public Service in this chamber, either in praise or blame, I desire, in the present circumstances, to break the unwritten rule in that respect. I am particularly indebted to Mr. L. S. Jackson, the Deputy Commissioner for Taxation, and Mr. J. A. Neale, an inspector of the department, who was secretary to the royal commission. These two officers, by their single-hearted devotion and enthusiasm have made possible this bill. By mentioning these two gentlemen, I do not want to exclude others who have shared in the work, but in particular I wish to express myheartfelt thanks, and also the thanks, I believe, of this House, to those two officers, whose work has made this uniform taxation measure possible.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1.

Mr CASEY:
Treasurer · Corio · UAP

– I suggest, Mr. Chairman, that it would be advantageous if at this stage 1 described briefly the purpose of the whole of Part I. of the bill.

The CHAIRMAN (Mr. Prowse).Is it the pleasure of the committee that Part I. be discussed as a whole?

Honorable Members. - Hear, hear!

Part I. (Preliminary), clauses 1 to 7.

Mr CASEY:

– Clause 1 of Part I. needs no description. Clause 2 deals with the repeal of the existing act except in connexion with income tax payable in respect of past years.

Clause 3 preserves the existing concessions in the Commonwealth Debt Conversion Act 1931, and in sub-section 2 of section 52b of the Commonwealth Inscribed Stock Act 1911-1932. The sections in the Commonwealth Debt Conversion Act dealing with the liability to Commonwealth income tax are sections 14 and 20. Section 14 of that act provides that interest on securities issued in exchange for tax-free securities shall be free of income tax for the original period of duration of the then existing securities. Section 20 of that act provides that the interest from securities subject to tax shall not be subject to special property tax or to ordinary income tax to a greater extent than that imposed in 1930. Sub-section 2 of section 52b of the ‘Commonwealth Inscribed Stock Act 1911-1932 provides that, if the prospectus so declares, the interest derived from Commonwealth loans issued after the 12th September, 1931, shall be subject to the same concession as is provided under section 20 of the Commonwealth Debt Conversion Act, that is, the interest shall not be taxed to a greater extent than the rates in force in 1930, and shall not be subject to the special property tax.

Clause 4 continues the present application of section 20 of the Debt Conversion Act to Commonwealth treasurybills issued to banks in Australia after the 31st July, 1931, and clause 5 sets out the parts and divisions into which the bill is divided.

As I informed honorable members in my second-reading speech, consistency has been observed in bringing all matters of the same nature, such as exemptions, deductions, items of assessable income, &c, under their respective headings and separate divisions of the bill. A similar arrangement has been followed in the State measures, which are now before the State legislatures.

Definitions are contained in clause 6. Generally speaking, they conform, in substance, with those contained in the present act.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Has the definition of “ primary producers “ been extended to include apiarists, orchardists, and such like occupations?

Mr CASEY:

– I shall have that point looked into. As I was saying, there are some exceptions to the definitions contained in the present act, notably the following : -

Definition of “ Income from personal exertion “ now includes several items of income as the result of the specific inclusion of such items in Division 2 of the bill dealing with income.

Definition of “ Livestock “ now includes working beasts and beasts of burden in the case of primary producers.

Definition of “ Partnership “ has been varied to conform with changes made in Division 5, dealing with partnerships.

Clause 7 of the bill merely repeats the provision in section 5 of the present act, dealing with the application of the bill to the Territories of Papua, Norfolk Island and New Guinea.

Mr NOCK:
Riverina

.- The last paragraph of clause 2 reads -

  1. . no alteration or addition in or to any assessment made under any act . . . shall be made after the expiration of three years from the date when the tax payable on the assessment was originally due and payable, unless the commissioner is of opinion that there has been avoidance of tax, and that the avoidance was due to fraud or evasion.

I ask the Treasurer : what are we to understand from this? Does it mean that no assessment under the old act will be reviewed after three years unless there has been fraud or evasion ? What would be the Treasurer’s “interpretation of “ fraud or evasion “ ? There may have been inadvertent omissions. Are these to be excluded?

Mr Casey:

– “Fraud or evasion” definitely means an attempt to evade by malice aforethought.

Mr NOCK:

– Then there can be no reassessment after the three years on account of omissions by accident or through ignorance?

Mr Casey:

– The question of reopening of assessments and rates of taxpayers is dealt with in greater detail later in the bill. “Fraud and evasion” is a well-known description of a definite attempt to do something by malice aforethought to the detriment of the revenue.

Mr NOCK:

– For the purposes of the clause, then, evasion must be fraudulent and not in error.

Mr Casey:

– There is not a great deal of difference between fraud and evasion.

Mr Lazzarini:

– If a man has not sent in his income tax return, is he guilty of evasion ?

Mr Casey:

– Not always. A man may, through ignorance, not furnish a return.

Mr HAWKER:
Wakefield

.- There are a number of definitions in clause 6 which need a word or two of explanation. For instance, the definition of “ agent “ may not be very greatly altered in substance from the definition in the present act, but it has certainly been extended and tightened up, and it gives the Commissioner of Taxation enormous power to saddle one person with the responsibilities of another person. Some of the provisions for taxing to be reached at a later stage of the bill give room for a great deal of arbitrary action, the exercise of which has helped to lower our financial standing in other countries. Although I confess that no cases have been brought to my notice of unjust exercise of that power in Australia, the power is so wide that it is certainly one that a parliament representing the people of the country should only give to any man, even the Commissioner of Taxation, after full explanation of why it has been conferred. Although the definition does not vary greatly, the Treasurer (Mr. Casey) should, I think, offer some explanation regarding it. The next definition to which I shall refer states that “ Australia “ includes the Territory of Papua. Apparently it does not include Norfolk Island or New Guinea, although under clause 7 the bill specifically applies to those territories, except in regard to incomes derived in them, and that exception applies to Papua as well. I suggest that we should include New Guinea in this definition, so as to make it quite clear that we do not look upon that territory as something which is detachable from Australia, and regarding which other powers could negotiate with the object of taking it away from us.

The question was raised by the honorable member for Wentworth (Mr. E. J. Harrison) as to whether “ primary production “ includes beekeeping, orchard work, and occupations of that sort. I have no doubt that it includes orcharding and the packing of fruit, but I do not know whether bees could be counted as livestock or what provision could be made in regard to their natural increase. For administrative purposes they should perhaps be regarded as livestock. It is difficult to see what advantage there is in saying that “ taxpayer “ means a person deriving income, when, in many cases, that income may not be taxable. The term “ deriving income “ is sometimes used to define a person’s status under other legislation, but it is wrong to give it a more extended definition which may not comply with the facts of the case. Surely a taxpayer is a person who is liable to pay tax, and not a person who has some income which is not taxable. I suggest that the Treasurer should give a more satisfactory reason for this definition than the necessarily perfunctory one supplied in the footnote to the memorandum. I shall not suggest any amendments to these definitions until I have heard what the Treasurer may have to say.

Mr.CURTIN (Fremantle) [9.35].-I direct attention to the fact that in the definition of “ dividend “ no reference is made to the distribution of bonus shares. The definition states that dividend includes any distribution made by a company to its shareholders, and includes “ the paid up value of shares distributed by a company to its shareholders to the extent to which the paid up value represents a capitalization of profits.” Previously, there has been some doubt about the taxation of such shares, and it appears from the change made in the phrasing of the definition that the law has been tightened up. Is it not conceivable, however, for shares to be issued in such a manner that the shareholders may have a nominal transfer made to them, or that the shares may not be issued and that the money may be reinvested in another company, enabling the shareholders to get their dividends?

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– The special property tax is defined as meaning the further income tax, if any, imposed as a percentage of that part of the taxable income of any person which is attributable to income derived by him -

  1. by way of interest, dividends, rents or royalties, whether derived from personal exertion or from property ; and
  2. in the course of carrying on a busi ness, if the income is of such a class that, when it is derived otherwise than in the course of carrying on a business, it is income from property

Was it intended in this definition to include income derived from personal exertion? The definition seems to have been widened to allow of that interpretation. Certain businesses are exempt from the special property tax, whereas others not coming under this definition are included. It seems anomalous that some businesses are exempt and others are roped in under this special definition.

Mr CASEY:
Treasurer · Corio · UAP

– If the honorable member for Wakefield (Mr. Hawker) compares the definition of “ agent “ in this bill with the definition in the existing act, he will find that, in substance, no alteration has been made. Certainly, a slight re-phrasing has occurred. The wording has been slightly clarified, and the definition has been divided into two paragraphs. It is necessary to deal with agents in rather greater detail than before. In various directions, we have had to place more responsibility upon them than in the past. We have had to pin them down more than before, but that does not become clear from this definition.

The definition of “ dividend “ has been slightly reworded. The new definition was introduced in a bill which I brought before this House at the end of 1934 when we dealt with amendments arising from the first report of the Royal Commission on Taxation. These amendments related to public companies, private companies, the inadequate distribution of dividends and the like. A redefinition of “ dividend “ became necessary to make perfectly sure that a bonus issue of shares is treated in most circumstances in the same way as a cash dividend. That redefinition has been made in order to tighten up the law.

The question whether bee-keepers are primary producers has been raised, and I give an assurance that they are not. If the provisions of this bill were to be applied to bee-keepers, and they had to submit returns showing their natural increase, so great a burden would be placed upon them that they would not get an adequate return in production.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– What about orchardists ?

Mr CASEY:

– I think that an oreliardist is a horticulturist.

Reference was made by the honorable member for Wakefield to the definition of “ taxpayer “. I cannot see any great significance in his contention. This definition has been inserted for the sake of brevity. As to the definition of “ Special property tax “, sub-clause r, refers to a business which is, in effect, a property-owning business, and which might, if it were treated as an ordinary business, and the proceeds were treated as personal exertion, result in escaping tax by a deflection of income.

Part I. (Clauses 1 to 7) agreed to.

Clauses 8 to 13 agreed to.

Clause 14 (Report by the Commissioner) :

Mr NAIRN:
Perth

.- This clause provides that the Commissioner shall furnish to the Treasurer annually for presentation to the Parliament a report in which he shall draw attention to any breaches or evasions of the act which have come under his notice. In practice, he publishes reports regarding breaches and evasions as generally understood, but he also publishes lists of judgments obtained against persons who have not paid income tax for which they have been assessed. In most instances, the judgments are in respect of small amounts, often only fi or less, and they have been obtained against persons who are not in . a position to pay. I do not think it is right that such persons should have their names published throughout Australia in the report of the Commissioner for Taxation.

Clause agreed to.

Clauses 15 to 19 agreed to.

Clause 20-

For all the purposes of this act, income wherever derived, any expense wherever incurred, the value of any asset wherever situate, and any amount involved in any calculation, shall bc expressed in terms of . Australian currency, and, for this purpose, the rates of exchange to be used shall be respectively the rates at which exchange could have “ been effected by telegraphic transfer at the dates when the income was derived or the expense was incurred or at which the asset is to be valued or at which the amount is to be ascertained.

Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That the clause be omitted, with a view to insert in lieu thereof the following: - “ 20. For all the purposes of this act, income wherever derived, and any expenses wherever incurred, shall be expressed in terms of Australian currency.”

The amendment has abbreviated the original clause by omitting reference to “ assets “ and to the “ rates of exchange “, and it is believed that in this way the working of the act will be simplified and confusion avoided. Business houses follow special conventions of their own in regard to transfers, some sending money abroad by telegraphic transfer, and others by ordinary bill of exchange. s Some make such exchanges weekly, others monthly, and others every six months.

Mr Holt:

– Has this clause any reference to the Payne case?

Mr CASEY:

– The honorable member reminds me that there isa case now before the PrivyCouncil - the case of Payne v. tks Commissioner of Taxation- - involvingcircumstances with which this clause isspecially designed to deal. There can beno argument in future in regard’ to thetransfer of foreign currency to an Australian residence, as such currency mustbe translated into Australian pounds. Cases have arisen in which taxpayers have attempted to treat pounds sterlingas Australian pounds, but that will notbe allowed.

Mr Holt:

– Will the effect- of theclause be that, if the exchange-is against*

Australia in the case of any particular transfer, the Treasury will lose by the transaction ?

Mr CASEY:

– That is so. In the case of a transfer of Japanese yen to Australia, the person receiving the money here would benefit under the provisions of this clause.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 21 and 22 agreed to.

Clause 23-

The following income shall be exempt from income tax : -

interest on bonds, debentures, stock or other securities of the Commonwealth issued for the purpose of Commonwealth loans where that interest has been declared by the prospectus to be free from Commonwealth income tax.

Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That paragraph (Us) be omitted.

The omission of this clause, and of clause 44 d, which is inter-related to it, has been decided upon because the substance of both clauses is adequately covered by two other clauses in the bill, viz., clause 3, which continues the taxation benefits conferred by the Commonwealth Debt Conversion Act, and the Commonwealth Inscribed Stock Act in respect to Commonwealth loan interest; and clause 45, which continues the taxation benefit conferred by the same two acts upon dividends paid out of Commonwealth loan interest which was previously exempt from the tax.

Mr NOCK:
Riverana

.- Paragraph i of this clause proposes to exempt from income tax the income of a savings bank conducted exclusively for the benefit of depositors. Will the Treasurer (Mr. Casey) state whether, under that clause, the income of the savings banks at present operating in the Commonwealth will be exempt?

Mr Casey:

– Yes, and also the two savings banks operating in Tasmania.

Mr.CURTIN (Fremantle) [9.55].- Paragraph b exempts from taxation remuneration paid by the government of the Commonwealth or of a State to a non-resident for expert advice to that government, or as a member of a royal commission. I cannot see the justice of that. Paragraph a grants exemptionin respect of the incomes of the GovernorGeneral and of State Governors, and of a consular or diplomatic representative, and with that I find no fault; but I can see no reason why persons brought to Australia to advise governments, or to serve on royal commissions, should be granted special exemption from taxation. While they are earning income in this country the same as other officers of the Crown, they should be liable to taxation, both Commonwealth and State, for the period during which they earn income in Australia. Such persons might be in Australia for two or three years earning substantial incomes, and while they are here their lives and property are protected under Australian laws. They should pay their just share of the cost of such protection.

As a former pressman, I also take strong exception to sub-paragraph v of paragraph c, which grants exemption in respect of income derived in the capacity of representative of the press outside Australia, by any person visiting Australia in that capacity, for the purpose of reporting proceedings relating to certain matters specified in the bill. Press representatives who visit Australia for such purposes, and earn income while in this country, should be liable to the payment of income tax in the same way as are residents.

Mr.ROSEVEAR (Dalley) [9.57].- I agree with what the Leader of the Opposition (Mr. Cur tin) has said regarding the provisions of paragraph b and subparagraph v of paragraph c. In the past, the Commonwealth has engaged the services of eminent legal personages, and even members of the judiciary, to advise it upon contemplated legislation, and such persons have been called upon to pay income tax on the money they earned for such services. Now, however, it is proposed that persons brought into this country from abroad to perform like services shall be exempt from the payment of income tax on the money earned while they are in Australia. If it is good enough to tax the income of commissioners in Australia, whether they be legal gentlemen, experts in some particular line, or members of the judiciary, it is good enough to tax the earnings of anybody brought from overseas. These people come here at a fixed rate of remuneration, sub-paragraph ii provides for the exemption of the income derived by any club or association from any part of the British Empire “which it receives as its share of the proceeds of cricket, football or similar matches played in Australia by a team controlled by that club or association visiting Australia and recognized by the authority controlling that class of match in Australia. In short, these cricket or football teams that come here from other parts of the Empire and which on many occasions take a fat bankroll out with them, are exempted from tax. I do not question that; they provide the entertainment and they get paid for it ; but surely it is too much to expect that the exemption should be extended also to some representative of an overseas press agency who accompanies such a team to report on the matches, a job that could be done quite as well by Australian journalists. If an Australian journalist accepts such a job, the payment which he receives for his services is taxable, and I am at a loss to understand why overseas journalists rendering the same service are to be permitted to escape payment of income tax in respect of their earnings in Australia.

Mr Jennings:

– What about our journalists going to England?

Mr Casey:

– They are granted immunity from taxation for six months.

Mr Beasley:

– Why is the exemption not extended to visiting artists?

Mr ROSEVEAR:

– I suggest that no great difficulty would confront an Australian journalist in reporting these matches whether they be test matches or friendly cricket matches. We should not encourage overseas associations to send their own press representatives to Australia by granting exemptions of tax in respect of the earnings of overseas journalists when reporting such matches.

Mr Gregory:

– The Marylebone club usually sends one of its own cricketers.

Mr ROSEVEAR:

– That is not always the case. Frequently journalists from overseas sporting newspapers are sent here. I remind the honorable member that the Australian Cricket Association prevents its active players from accepting such engagements when an Australian team is sent overseas. We know that the overseas association does send sporting representatives who are active players of the sport, but who may not be members of the team. I am concerned chiefly because we have journalists in Australia just as capable of reporting the proceedings of these matches as any journalist imported from overseas. If we can encourage the employment of Australian journalists on jobs of this kind, we should do so, but we are not going the right way about it by allowing visiting teams to bring journalists from overseas and granting them exemption from taxation. For that reason, I think, particularly in cases like this, where the persons concerned are not connected with any consular service but are purely attached to visting teams as a reporting medium, they should not be placed on a better basis than that enjoyed by Australian journalists doing the same job.

Mr GARDEN:
Cook

.- Clause 23 r provides for the exemption of the proceeds arising from the sale for use outside Australia of iron ore quarried or mined by the vendor in Australia. Australian companies such as that operating at Iron Knob are taxed on the ore they mine, yet an English company which has been granted sole rights to the Yampi Sound iron ore deposits and which has contracted to sell the whole of its output to the Japanese Government is given an exemption from taxation in respect of its total output which is to be exported. Surely it is not fair that the output of this company should be free of income tax, while at the same time the output of raw materials by Australian companies for use in Australia is taxed. Paragraph r should be deleted.

Mr GREGORY:
Swan

.- In reply to the honorable member for Cook (Mr. Garden) I may say that the iron ore deposits at Yampi Sound have been taken over by the English firm of M. A. Brasserts and Company. What that company proposes to do, whether it sells its ore to Japan or exports it to England

Mr Garden:

– The whole of its output is to go to Japan this year.

Mr GREGORY:

– The fact remains that a British firm. M. A. Brasserts and Company, has purchased a lease from a

Western Australian syndicate and has provided a large sum of money for the purpose of developing the deposits. I have been to Yampi Sound and I am aware of the difficulties which confront any attempt to develop the iron ore deposits. If any profit arises out of the operations at Yampi Sound, it will go to the English company which controls the property, and any action which will induce the peopling of the north is worth consideration. I am fully- aware of the whole of the facts surrounding this venture. M. A. Brasserts and Company have provided a large sum of money, and the Government of Western Australia has chartered a vessel to take a large number of workmen to Yampi Sound. I feel sure that if any profit arises from the venture that profit will go to an English, and not a Japanese, company.

Mr Rosevear:

– Does the honorable member think it fair to tax ore produced for use in Australia and to exempt ores produced for use outside Australia?

Mr GREGORY:

– If any profits are made they will be made by the English company which owns the property. Under the Western Australian act, the company is obliged to employ white workmen in its operations.

In regard to press agents accompanying overseas cricket or football teams, I may say that they are in Australia only for a short time, probably only for a few months. To ask them to pay income tax for a short period would create an enormous amount of friction. Instead of feeling that they had been treated in a friendly manner in Australia, if these journalists are called upon to pay income tax in respect of their earnings over the short period during which they are engaged here, a certain amount of animosity will be created. I was on the Board of Control of the Australian Cricket Association for many years, and it was my experience that in most instances some old cricketer was appointed as representative of that association. I say that, in connexion with the representatives of the Marylebone Club appointed to report matches for the English press, it would be unwise if we expected them to pay income tax during the short time they are here.

Mi-. CASEY (Corio – Treasurer) two points raised with respect to the taxation of individuals coming to this country for short periods. Exception has been taken to these being given exemption for the periods of their stay in Australia. Taking the objections in order, the Leader of the Opposition (Mr. Curtin) has taken exception to the granting of exemption in respect of the remuneration paid by the Government of the Commonwealth or of a State to nonresidents of Australia who have been brought here for the benefit of their expert advice as members of royal commissions. These individuals, who, from time to time, are invited to Australia by one or other of the governments, are usually British public servants who have been invited to Australia, because we wish to take advantage of their expert knowledge of .some particular subject. We may or may not pay them for their advice. They are usually paid by the British Government, and I think the least we can do is to remove from them the threat that during their stay they may become liable for taxation in some unknown amount. The other matter dealt with was the subject of the taxation of people who are temporarily in this country. Personally, I believe that before long we shall have to make a fairly radical change in our methods and policy in this regard. The Government is examining means by which it can alleviate the taxation imposed in respect of individuals from, overseas. Take the case of a man who is engaged in business overseas, and is in receipt of a salary of, say, £2,000 a year. He comes to Australia to establish a branch of his firm here or to look over a. branch that is already existing here. He is taxed on the salary paid by his principals in England. If he is here for two months, we tax him on the basis of one-sixth of the annual amount which he receives in England, although he is not actually earning one penny in Australia.

Mr Beasley:

– He has the protection of this country, and the advantage of all of its services for which we have to pay.

Mr CASEY:

– Other countries do not take the same view with respect to the taxation of visitors as we have. In Great Britain, though very little escapes the net cast by the Inland Revenue

Department, a visitor is allowed a stay of six months without becoming liable to the payment of taxes. The Commonwealth Government in conjunction with the State governments is endeavouring to devise some more liberal method of dealing with the taxation of visitors from overseas. Our policy in the past has tended to stop people from coming to Australia, because the story of the taxation disabilities which they are likely to encounter in Australia is well known. In the last few months I have heard from at least 50 people the complaint that when a man comes to this country he is assessed very often, say, £5 by the Commonwealth, £3 by one State, and 30s. by another, and so on, and has to make out assessments in each State in which he travels.

Mr Holt:

– Is not the case of the tourist met by the exemption for which provision is made in paragraph t%

Mr CASEY:

– Not if he visits Australia on any matter remotely concerned with his business. If he is merely an ordinary tourist, and does not earn any money in Australia, well and good; but if he combines health with business, spending a portion of his stay here in a tour of the country, and the balance of the time in looking after the affairs of his branch, he is liable to be taxed.

Mr Beasley:

– He acts as adviser to the branch of the business in Australia, and in all probability derives some portion of his British income from the activities of that branch.

Mr CASEY:

– That is not generally the case. It is my personal opinion - it has yet to become the opinion of the Government - that we shall gain very much more by adopting a less stringent and catchpenny attitude in the future than we have adopted in the past.

I ask the Leader of the Opposition (Mr. Curtin) to consider the fact that, having asked experts to come from overseas to advise us, we cannot impose on them what is to them an unknown measure of taxation.

Mr Rosevear:

– They come on their own terms.

Mr CASEY:

– Not necessarily. This provision has been embodied in the law for some considerable time. So, also, has the provision in sub-paragraph v. of paragraph c, which relates to press repre sentatives from abroad. In view of what 1 have said concerning the inadvisability of placing unnecessary deterrents, bars, and stringent conditions upon persons who come to this country, I hope that honorable members will accept’ that subparagraph, which, after all, is not of great importance. I cannot say whether in this or the other case there is provision for reciprocity with other dominions and other parts of the Empire.

I admit that for some few months the immunity from taxation of exported iron ore under paragraph r has given me a good deal of cause for thought. It is a small item, which has been rather obscurely tucked away in a very large measure. I have asked myself and the officers of the department, as I have now been asked, the reason for its enactment. A check back of Hansard had to be made, with the result that we found that it had been interposed in the period of office of the Scullin Government, in 1930, for reasons which I cannot attempt to guess. I am at present having investigations made with a view to obtaining a little further information about the matter. If honorable members will be good enough to allow it to pass through this chamber, I undertake that, should the Government find no better reasons for its retention than have so far been disclosed, it will be removed in the Senate.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Honorable members should be given something more definite than the assurance of the Treasurer .(Mr. Casey) that the matter will be looked into. If this provision is to be retained, why should it be limited to iron ore? Wool, fruit, wheat, dairy produce and other commodities are exported. Why should it not apply to them? We have exempted income derived from the mining of gold and copper, which I contend is necessary. The paragraph should be omitted.

Mr Nock:

– Is income derived outside Australia by a resident of Australia taxable in Australia?

Mr CASEY:
Treasurer · Corio · UAP

– An Australian resident is taxable on income arising in England if it is not taxed in England. If taxed hi England it is exempt in Australia.

Mr Beasley:

– That provides only for continuity of taxation in the case of that individual. It is not double taxation.

Mr CASEY:

– There is no double taxation in that case.

Mr Beasley:

– But the honorable gentleman led us to believe that tax was imposed in Australia as well as in England.

Mr CASEY:

– I fear that we are talking at cross purposes. I referred to an English salaried individual who visits Australia for a short period. If he does business in Australia, Ave tax him on the portion of the English salary he is deemed to have earned in this country.

Mr Beasley:

– But the British Government does not tax him on. thai amount.

Mr CASEY:

– Oh, yes, it does.

Mr Curtin:

– On the portion of his salary which he earns in Australia?

Mr CASEY:

– Certainly. An English resident is taxed on his income whereve: arising. When subjected to double tax, he receives from the British Government a remission of 2s. in the £1 - roughly, onehalf of the English tax.

Mr Curtin:

– The Commonwealth does not tax on income wherever arising. Therefore it ought to tax on income arising in Australia.

Mr CASEY:

– Certainly, if that course is agreed to. It is being followed now. The point is, whether on balance it is good policy to continue to do so. My contention is that Australia will gain a great deal more by being a little less catchpenny in respect of the taxation of visitors to Australia. Our tourist balance is very heavily against us. The amount spent annually in Australia by persons who visit this country is on the average from one-third to one-quarter of the amount which Australians spend abroad.

Mr CURTIN:
Fremantle

.- The honorable gentleman has made out a disingenuous case, but it is somewhat destitute of reality. The British Government taxes the income of the British citizen wherever it arises. Therefore, he says, persons who come to Australia from Great Britain ought not to be subject to the incidence of our tax. We point out to him that if they come here for health reasons and earn no income, they are not taxable. His reply is: “Very good.” We then give examples of persons who come to Australia entirely in order to engage in the securing of income of some description, as expert advisers to the Government of the Commonwealth, or of a State. I submit that they ought to be subject to the same taxes which a resident of Australia has to pay. Pressmen who come to Australia solely for the purpose of carrying on their professional activities and earning money thereby, compete with idle pressmen in Australia. I see no earthly reason why pressmen who sit alongside them reporting a test cricket match or some other game, should be subject to a tax which they are not asked to pay. That appears to me to be distinctly - inequitable, in that the available income is furnished out of the earnings of Australian people and is made possible by the expenditure of Australian people in Australia.

Mr Casey:

– But they are paid abroad.

Mr CURTIN:

– They could not be paid abroad for this service if the Australian public did not patronize these games. The inconsistencies in this clause are ridiculous. For example, it provides for exemption from income tax- of income derived in the capacity of the representative of an association or club established in any country for the control of any outdoor athletic sport or game in that country by any person visiting Australia in that capacity for the purpose of engaging in contests in Australia in that sport or game. That means that a prominent English cricketer who plays cricket in Australia is exempt from Australian taxation; whereas a famous English billiardist who earned money in Australia would have to pay tax on the amount that he so earned. I offer no objection so long as the Treasurer smooths out the inconsistencies of these exemptions. I say, first, that it is wrong to exempt a man who visits Australia purely for the purpose of increasing his income from professional services or business activities. If the income is wholly derived in Great Britain, it is not taxable in Australia. I merely ask that these persons shall be subject to Australian taxation on that portion of their incomes which is actually earned in Australia. The British Governm’ent taxes them on the income which they earn in Australia, but we are not game to do so. Great Britain considers that the total income of its citizens is available for tax purposes in that country. I regard that as a sound principle. Some Australians who have made large fortunes in this country have invested their surplus funds not in Australia, but in consolidated stock of the Government of New Zealand. They have thus escaped State taxation, and, indeed, Commonwealth taxation. Yet they have had to be furnished with all the amenities of society in this country, and with every available means for the protection of their lives and whatever property they may have here. “We ought at least to stand up to square principles in respect of income tax. It must be quite clear that money earned in Australia ought to be subject to Australian taxation. The Treasurer always supports the theory that we should follow the lead of Great Britain - that ancient, and wise country which has had such a remarkable experience in statesmanship and in the art of government. I ask him:Why does he depart from the British practice in regard to taxation?

Mr Casey:

– To adopt it would mean the granting of six months’ exemption to every person who visits Australia.

Mr CURTIN:

– Then grant six months’ exemption, to everybody. I could understand that. But here is a series of exemptions which are anomalous in their incidence, and have no consistent principle. Considering that the six months’ exemption allowed to visitors to Great Britain is only the other side of the fact that the whole of the incomes of British residents, regardless of where they are earned, are taxable by the British Government, I put it to the honorable gentleman that either he has to tax all income earned in Australia in the way that I suggest it should be taxed, or, if he grants an exemption of six months to persons visiting Australia, he has to tax all Australians on the total of their income irrespective of where it arises. He can have the choice of either of those two alternatives, but not a mixture of both.

Amendment agreed to.

Mr STREET:
Corangamite

– I notice that income derived from the working of a mine for the purpose of obtaining gold, or gold and copper, with a certain qualification, is exempt from taxation; also, the proceeds arising from the sale for use outside Australia of iron ore, quarried or mined by the vendor in Australia. If that principle were followed to its logical conclusion, the proceeds arising from the sale of other products exported should also be exempt, as the honorable member forWentworth (Mr. E. J. Harrison) has suggested. I am sure that the honorable member for Hunter (Mr. James) would like to see coal included in the exemptions. As the Treasurer has given paragraph r his blessing, he will, I am sure, be pleased to accept an extension of the principle. In all the circumstances, I move -

That the following new paragraph be added : - “ (u) the proceeds arising from the sale for use outside Australia of any mineral or primary product quarried, mined, grown or produced by the vendor.”

I think that is a logical proposition.

Mr BEASLEY:
West Sydney

– I am not quite satisfied that the Treasurer (Mr. Casey) has established the point he set out to emphasise in regard to tourists. He said that tourists should be encouraged.

Mr Casey:

– I said that they should not be discouraged.

Mr BEASLEY:

– Tourists are not subject to income tax in Australia unless they earn income here.

Mr Casey:

– Under the existing law it is necessary to interrogate them to ascertain whether they earn income here or not.

Mr BEASLEY:

– I take it that the intention is to deal mainly with people who are brought to Australia for certain purposes, and are not subject to taxation in their own country while they are here, unless they are receiving their usual salaries. It may happen, however, that persons brought to Australia for particular purposes are still drawing their salaries in their own land. Take the case of the individuals who may be brought to Australia to advise this Government in regard to national insurance. They may draw their salaries in Great Britain ; but I have no doubt that while they are in Australia they will be generously treated,financially, by this Government.

Mr Archdale Parkhill:

– If such people draw their ordinary salaries while in Australia, the Commonwealth Government would no doubt reimburse the British Government.

Mr BEASLEY:

– My claim is that individuals who draw salary in Australia while visiting here should be obliged to pay taxation in respect of it, if they do not pay such taxation to their own governments. I also have in mind certain people brought to Australia from time to time to give advice to industrial and other business undertakings. An individual was brought to Australia not long ago to advise a certain company on ways and means of getting more work out of its employees. Such persons ought to pay taxes on the income they derive while in Australia. Paragraph b refers to “ the remuneration paid by the Government “ to a non-resident, but persons may be brought to Australia by private organizations to give advice on matters relating to the development of Australia.

Mr Casey:

– In the last three years I have not had to exercise my present power in regard to this provision.

Mr BEASLEY:

– That may be due to the efficiency of the Treasury officers. My last point has relation to certain visitors connected with the film business, who, in the last few months, have complained about the taxation levied upon th em while in Australia.What will be their position under this provision?

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– The committee is prepared to pass paragraph r in its present form. If, subsequently, the Government finds that it is unacceptable, I understand that it will seek its removal when the bill is before the Senate. So far as my knowledge of the Federal Parliament goes, the Government is not in a position to guarantee this. If the Senate takes the same view as this committee would take by default in this instance, a great injustice will be done in respect of the taxation of iron ore. This is an important matter in my State. The Broken Hill Proprietary Companyquarries ore for its own use in Newcastle and also for export. How would it be possible to differentiate between the profit made on ore used locally and the profit made on ore exported? The export trade from Wyalla is of considerable dimensions.

Mr Nock:

– It amounts to millions of tons.

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

– The business is highly developed, and it has been in existence for some years. This committee is in possession of the facts, and should be in a position to say whether or not the exemption should be made. We should either exempt the lot or none at all. Exemptions of the nature indicated in paragraph r are unnecessary and invidious, and should not be tolerated. If the Senate does not agree with the view of this committee that chamber can request to have the provision re-inserted.

Amendment - by leave - withdrawn.

Mr CASEY:
Treasurer · Corio · UAP

– I accept the suggestion of the honorable member for Barker, and move -

That paragraph (r) be omitted.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 24 agreed to.

Progress reported.

page 995

ADJOURNMENT

Olympic Team Selections

Motion (by Mr. Archdale Parkhill) proposed -

That the House do now adjourn.

Mr WARD:
East Sydney

.- I take this opportunity to bring under the notice of the Government the necessity for taking action to prevent Australia, which is renowned for its achievements in the field of athletics and sport, from being placed in a ridiculous position as the result of the absurd manoeuvring to obtain the selection of particular candidates to represent Australia at the Olympic Games, to the exclusion of others.’ The Commonwealth Government has recognized the importance of Australia being represented at these games by providing the sum of £2,000 to assist in defraying the expenses of an Australian team. This assistance, though welcome, is small compared with what is done by governments of other countries which give liberal financial aid to ensure the attendance of large teams. This Government, having recognized a degree of responsibility, should now exercise some supervision over the expenditure of the money voted, and see that Australia is represented by the best possible team of athletes available. The Olympic selection committee is not altogether responsible for the position that has arisen.

In order that honorable members may understand where I believe the responsibility lies for what is nothing short of a scandal, I point out that the Olympic selection committee can deal only with the nominations submitted to it. Nominations are submitted by the various affiliated athletic and sporting bodies The Central Olympic Executive is an international body, which recognizes only one authority in any branch of sport. The Men’s Athletic Union, being older than the women’s organization, is recognized officially, so that the women’s organization is without recognition. There is, however, an arrangement between the more recently formed women’s union and the men’s union, whereby it is provided that if the women’s union wants to nominate any woman athlete who is up to Olympic standard, it must submit her name to the general secretary of the Men’s Athletic Union - in this case, Mr. Weir, the Victorian representative. From the women’s section there were two nominations - Miss Doris Carter, the high jumper, and Miss Clarice Kennedy, a hurdler and runner from New South Wales. According to Mr. Weir’s statement, when the nominations were submitted by the women’s union they were dealt with by the executive of the men’s union, consisting of five members, Messrs. Heathwood, Hodgson, Weir, Langford and Fenner. The New South Wales members, Messrs. Heathwood and Hodgson, have said that nominations were not submitted to them, but were dealt with by Mr. Weir alone. That gentleman took it upon himself to eliminate the name of Miss Clarice Kennedy - an action which he was not authorized to take, because the women have a separate organization - and also the names of at least six prominent athletes who are definitely up to Olympic standard. I assure honorable members that there has been no agitation by either members of Parliament or the press, as has been stated, to demand the inclusion of any athlete not worthy to represent Australia at the Olympic Games. The Olympic selection committee carried a resolution that only twelve persons bo selected to represent Australia. Honorable members know that there are in Aus- tralia more than that number of athletes up to Olympic standard. The only reason for confining the number to twelve originally was lack of finance. The selectors were in order in confining the original selection to twelve, but they overstepped the mark when they carried a resolution that under no consideration should additions be made to that number. It is true that they selected four emergencies, whose names were placed in sealed envelopes which were to be opened only if one or more of the selected representatives were unable to proceed abroad. The team was to be limited to twelve in any case. One of the excluded athletes was Miss Claire Dennis, who, at the last Olympic Games, won a title for Australia and achieved an Olympic record. Another was Pearce, the Australian sculler. Miss Claire Dennis is showing wonderful form, for she has recently improved on her previous achievements. The action of this coterie of officials, who took on themselves to say that Australia should be represented at the contest by only twelve athletes, meant that Miss Claire Dennis, despite her wonderful record and present good form, was to have no opportunity to defend her title. Another case was that of Basil Dickinson, a jumper from New South Wales. He and Metcalfe are probably the two best athletes in the world in their own particular spheres. The agitation which arose in certain quarters against the limitation of the team to twelve members so aroused the Olympic Federation that it submitted two questions for consideration by the component bodies. First, it asked whether the previous motion regarding no additions to the team was to he rescinded, and if so, whether the executive committee should be given a discretionary power to make whatever additions it thought necessary. As the voting on the first question was five for and five against, the chairman of the executive, Mr. James Taylor, exercised his casting vote in favour of the motion. The second question was negatived by seven votes to three. Although the executive decided on the casting vote of the chairman to reopen nominations, it was denied the right to add names to the team. The Olympic selectors were asked to make the decision, but they refused to do so. The Olympic Federation was, therefore, compelled to act unconstitutionally in order that nine additional athletes might go abroad. Mi&> Clarice Kennedy is still excluded from the team. Those who urge the Government to see that Australia is adequately, represented at the Olympic Games, do not ask it to vote one penny of additional expenditure. Neither do they ask any of the constituent bodies to the Olympic Federation to provide funds, for, in thecase of Miss Clarice Kennedy, money in excess of the amount required to send her abroad has already been guaranteed. All that is necessary is that the Olympic Federation shall take action, as it has done on two previous occasions, to have her name added to the team. Miss Kennedy could go abroad at her own expense and be at Berlin when the contests take place; but if her name were not added to the team, she would be unable to participate in the events. The same thing previously applied to Bill Kendall, the champion swimmer, who has already gone abroad with his father. There is need for the Commonwealth Government to take action to see that this injustice to one, whom I believe will prove a world champion, is removed. Miss Kennedy’s success is not a flash in the pan in the athletic world, but she has been prominent for a number of years. She cannot be expected to retain her present form until 194)0, and if she is prevented from, accompanying the team on this occasion, she may be denied indefinitely an opportunity to realize her ambition.

Mr Lane:

– What can the Government do in the matter?

Mr WARD:

– It provides £2,000 towards the cost of sending the team abroad, and it accepts some responsibility regarding the representation of Australia at the Olympic Games. If the Government indicates to the officials who are responsible for the present position that it considers their selection methods unsatisfactory, and that steps should be taken to make certain additions to the team, the desired result might be obtained. Miss Kennedy, I believe, is the only girl up to the Olympic standard who has been excluded. We notice that ‘Mr. Weir, the general secretary of the Australian Ama- teur Athletic Union, has already resighed from that position. I understand that he has not resigned as an Olympic selector, but Mr. Wakeling has resigned as a selector.

At the annual meeting of the Women’s Athletic Union, a motion was carried unanimously protesting against the action taken by Mr. Weir, the general secretary of the Men’s Athletic Union, and calling on the Olympic Federation even at this late hour, to take . the steps necessary to place Miss Kennedy in the team. Representations have been made in every possible quarter, but, unfortunately, these efforts have so far been only partially successful. The nominations have been re-opened, and the membership of the team has been increased from 12 to 24. The number was 25, but one of the boxers. has declined to accept the opportunity to go abroad. (Leave to continue given.)

One of the athletic selectors - Mr. Maxwell, I think - stated in the press that it was wrong in principle to permit any athlete to buy his way into the team. I agree that it would be wrong to allow anybody to buy his or her way into any team, but Miss Kennedy is entitled to inclusion because of her performances this season. In the New South Wales State championships, in the 90-yards low hurdles, she won her heat by ten yards in 12 and 4/10ths seconds, and. established record time in the final in which she won by five yards in 12 and 3/10ths seconds. At the Australian championships, she won by two and a half yards in 12 and 4/10ths seconds, and, at the Australian national games, she established a national record over SO metres in 12 and 2/10ths seconds, winning by five yards. In the Australian 90-yards hurdles, which is two and a half yards in excess of SO metres, Miss Kennedy won by two and a half yards in 12 and 3/10ths seconds. Seeing that she finished within fourfifths of a second of the world’s record and ran two and a half yards further than the Olympic distance, it is only reasonable to expect, that, if given an opportunity to compete on the specially prepared track of an Olympic contest, she would probably establish a world’s record that might stand for many years. The Olympic selectors and the officials of her own organization speak in the most glowing terms of her personal character, and, as there is no question as to her remarkable performances, we are anxious to know why her nomination has not been accepted. It is not merely a case of rectifying an injustice this year, but the Government is urged to take such steps as will prevent a repetition in 1940 of the scandal attached to the selection of the team this year. It has been stated in the press that it costs £200 to send an athletic member to the Olympic Games. As a basis for discussion by the Olympic Federation, the actual cost was accepted as £175. If the Government provides half of the amount of £200 for every athlete who is officially selected to compete overseas, it should inquire as to what has become of the other £25. I appeal to the Ministry to do what it can, even at this late hour, to see that Australia is represented by the biggest and most representative team ever sent abroad, including every athlete in Australia who is up to the Olympic standard. The Government could intimate to the officials that it will no longer vote public money to cover the expenses of these teams unless it is assured that the best possible representatives are sent.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

, - Although it may be considered that the honorable member for East Sydney (Mr. Ward) has been bitter in his criticism, his remarks are not nearly so bitter as those levelled against the selectors by every sporting editor of note in New South Wales. It was due to public opinion, as expressed by those gentlemen, and also the general opinion of sporting bodies, that the Olympic selection committee was forced to add to the team originally selected, which, I may say, consisted, in the main, of persons not up to the required standard. I support the honorable member in his protest. I have had some experience overseas, and am aware of the qualifications required by those who compete at Olympia. When the selection committee refuses to include in the team those generally accepted in the athletic world as worthy to represent Australia, some action should be taken by those contributing to the funds needed to defray the expenses of the team. As the Commonwealth Government has given £2,000 towards the cost, it should insist upon having a representative on the selection committee from one of the athletic unions.

Mr Lane:

– Is it not now too late to take action in the matter?

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– No. If it is impossible for the Government at this juncture to take action to rectify developments which will reflect to the discredit of Australia at the Olympic Games, then it should fortify itself against similar occurrences in the future. It was only because of the public outcry that Miss Kitty Mackay and Miss Clare Dennis were eventually chosen. The original selection of Miss Clarice Kennedy, whose running record is within four-fifths of a second of world figures, and whose character is beyond reproach, was prevented because of a “ cock-and-bull “ story that her nomination had not been received as prescribed by the rules. If she is not eventually chosen to go to the games to be held in Berlin, then Australia’s reputation from an athletic point of view will suffer seriously. I suggest that the Cabinet, when it makes a grant of this nature to the Olympic Federation, should insist that the concensus of opinion among athletic bodies should be taken into consideration in the making of these selections. Furthermore, if any future grants are made by this Government for the purpose of sending teams to Olympic Games overseas, the full facts of the selection of Australia’s representatives should he secured. I suggest that the only way the Government can do this is to have its own representative on the selection committee, preferably the ordinary representative of some athletic union on the controlling body.

Mr JENNINGS:
Watson

.–I support the remarks made by the honorable members for East Sydney (Mr. Ward) and Wentworth. (Mr. E. J. Harrison). In view of the atmosphere which has surrounded the selection of Australia’s team of athletes to compete at the Olympic Games at Berlin this year, I feel sure the Government will give serious consideration to the matters raised.

Mr GARDEN:
Cook

.- The Government should inquire into this matter. Mr.- Eve, the secretary of the Olympic Federation, has stated that he did not receive the nomination of Miss Clarice Kennedy, whilst it has been stated that Mr. “Weir, an official of the Athletic Association of Victoria, did not forward the nominations which he received. Every one interested in athletics knows that among the records held by the selected representatives Miss Kennedy’s record is second in importance to those established by Metcalfe. She should have been the second choice in the team originally chosen to participate in the. Olympic Games. Another athlete overlooked in this selection was Basil Dickenson. I hope the Minister will make inquiries in order to see that Miss Kennedy is given a fair deal.

Mr HAWKER:
;Wakefield

– I suggest that this subject is’ scarcely one that should he raised in the national Parliament. It appears to be purely a “New South Wales or Sydney grievance.

Mr Forde:

– It is of Australia-wide interest.

Mr HAWKER:

– If it decides to investigate this matter, I hope that the Government will make its inquiries through the channels controlling athletics in the Commonwealth. We have good organizations controlling sport in Australia, and this Parliament would be taking a gray risk if it interfered in the differences which arise between individuals or between athletic organizations. The Government acted rightly in making a grant through the accredited organization to assist in sending a” team of athletes to Berlin, as our athletes are our best international advertisement. This Parliament, however,* will be only looking for trouble in the future if it intervenes in a dispute between athletic organizations.

Mr CURTIN:
Fremantle

.- Normally, it would be quite unnecessary for this Parliament to discuss a matter of this description, and, as a general rule, I should be very loath to interfere with the manner in which any sporting organization discharged its functions in regard to the selection of a team to represent Australia abroad. But we cannot blind our eyes to the fact that the controlling body in connexion with Australia’s representation at the Olympic Games in Berlin this -year has already displayed a considerable degree of incompetence and uncertainty. Furthermore, this Parliament is responsible for ensuring that the best possible use i3 made of the fund which the Government has placed at the disposal of this body, having regard to the impose for which the money was subscribed. The representation of Australia at the Olympic Games is of the utmost importance. These games are to be contested this year in Berlin. If this Parliament, having agreed that the Government shall provide £2,000 to ensure the proper representation of Australia, has reason lo believe that the representation is unsatisfactory from the viewpoint of competence or justice, the Government is justified in rectifying whatever mistakes have been made. If it is not too late, steps should be taken to ensure that Australia is properly represented. If better representatives than those selected could be chosen, the Commonwealth grant of £2,000 is not being utilized in accordance with the expectations of this Parliament. I am not in a position to say which athletes would best represent Australia.

Mr Archdale Parkhill:

– Nor can this Parliament do so.

Mr CURTIN:

– That may be so. I believe, however, that the Minister has reason to know that the disquiet in the matter is not without justification. I point to the fact that the recent additions to the team originally selected, which to some extent modified the discontent of the informed public, were only made possible because of the widespread protests voiced against the original selection, and also because public-spirited organizations and dissatisfied citizens have saddled themselves with the responsibility of making substantial contributions towards the additional cost. Miss De Lacy, of Western Australia, would not have been able to make the trip because she was not included in the original selection, but as her selection has now been conditionally approved a Perth newspaper has undertaken to provide the necessary £200 to send her abroad, and has inaugurated a public fund which will be used in meeting her travelling and wardrobe expenses. Probably the athletic bodies controlling this selection have made mistakes because of internal jealousies and personal prejudices which should not be allowed to play any part in matters of this description. Generally, sufficient has been said to justify a Commonwealth Minister in making personal inquiries, at least, into this matter. I have been informed of the representations which the honorable member for East Sydney (Mr. Ward) made in the House earlier. Certain information was given to me in Sydney last week, and I shall regret very much if the Government, which is responsible for seeing that its £2,000 is not wasted, does not take into account the representations which members have made.

Mr ARCHDALE PARKHILL:
Minister for Defence · Warringah · UAP

. - in reply - I suggest that this subject is not one in regard to which the National Parliament should take the part which honorablemembers have invited it to take. It has been the practice for some years past for the Commonwealth Government to make a contribution for the purpose of sending teams to the Olympic Games. The present Government decided to contribute £2,000 for the purpose, provided that a similar amount was raised by the sporting bodies themselves. At other times larger sums have been contributed by the Government, the amount being as much as £5,000 on one occasion. In every instance, however, the selection of athletes to represent Australia has been left to the persons who are regarded as best qualified for the work, and they are not the members of the Commonwealth Parliament. I do not agree that the team as finally selected is one that will bring discredit upon the Commonwealth. I admit, of course, that it is possible for differences of opinion to arise among the representatives of organized sport, as well as among representatives of other sections of the community. If arrangements on this occasion have not been carried out with all the smoothness desirable, and if the outstanding merits of some athletes have been overlooked, it is to be regretted ; but that does not signify that the same thing must necessarily occur upon future occasions. The correction of such faults should be the work not of the Commonwealth Parliament, but of the leaders of organized sport, and of the public opinion which supports organized sport.

Mr E J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– Does not the Minister think that it is incumbent upon the Government, which provides the money, to see that the selection of a team is carried out fairly and competently?

Mr ARCHDALE PARKHILL:

– No, I do not. In my opinion, the Government does what the public expects of it when it leaves the representatives of organized amateur sport to make the selection. I do not think that the presence of one Commonwealth delegate on the selection committee would make an appreciable difference, and there is no way in which any member of the Government can acquaint himself with all the details necessary to make a proper decision in a case of this kind. My sympathy goes out to Miss Clarice Kennedy for not having been selected. She is, to the knowledge of members of this House, an athlete of outstanding performance, and it is to be regretted that she will not be a member of the team that is to represent Australia.

Mr Curtin:

– Will the Minister inquire whether it is a fact that her nomination was accepted by one member of the selection committee, and regarded as not having been received by another member, and that that was the reason for her non-selection?

Mr ARCHDALE PARKHILL:

– I do not think that it is the duty of the Commonwealth Government to make any such inquiries as the Leader of the Opposition suggests. This House should rely on the fairness, and justice and sporting instinct of those responsible to see that the right thing is done. I’ invite honorable members to imagine what sort of selection would be made if this House were entrusted with the task.’ While I am sympathetic with the representations of honorable members, and believe that the ventilation of this subject will have its advantages, I am of opinion that it is certainly not a matter in which the Government should take such active steps as have been suggested.

Mr Beasley:

– Will the Minister convey to the selectors what is obviously the opinion of this House on the matter ?

Mr ARCHDALE PARKHILL:

– I must decline to take any official action of that kind, either personally or on behalf of the Government, nor do I think that Parliament itself should take any such step. I have no doubt that what has been aid inthis Parliament on the subject will be read by those concerned, and, in that way, no doubt, the object desired by honorable members may be achieved ; but the Government must decline to intervene officially.

Question resolved in the affirmative.

House adjourned at 11.30 p.m.

page 1001

ANSWERS TO QUESTIONS

The following answersto questions were circulated: - italo-Abyssinian Dispute: Sanctions

Mr ARCHIE CAMERON:
BARKER, SOUTH AUSTRALIA · CP; LP from 1944; LCL from 1951; LP from 1954

n asked the Minister for Trade and Customs, upon notice -

Whether he can supply a statement showing how Australian exports and imports have been affected by the operation of the Sanctions Act against Italy?

Mr White:
UAP

– The following statement shows the value of Australian imports from and exports to Italy for the first four months subsequent to the imposition of sanctions against Italy, as compared with the figures for the similar period of 1934-35 : -

It will be noticed that there was no falling off in the value of imports for the first two months followingthe imposition of sanctions. This is due to the fact that the Sanctions (Prohibited Imports) Regulations were not applied to contracts for which payment in full had been made prior to the 19th October, 1935, or to goods which were en route from Italy to Australia prior to the 18th November, 1935. With regard to the decreased figures for February and March, 1936, it is explained that Italian goods are still being permitted importation from Great Britain and other countries imposing sanctions, provided satisfactory evidence is produced that such goods were supplied from stocks which had been imported into those countries prior to the 18th November, 1935.

Royal Commission on Wheat Industry

Mr Beasley:

y asked the Prime Minister, upon notice -

Will he supply details of the expenditure incurred by the Royal Commission on the Wheat, Flour and Bread Industries?

Mr Lyons:
UAP

– The answer to the honorable member’s question is as follows: -

Standardization of Railway Gauges

Mr Drakeford:
MARIBYRNONG, VICTORIA

d asked the Prime Minister, upon notice -

  1. In view of the public statements which have been reported in the press recently, indicating that the Victorian Government, certain public bodies, and Labour and Country party conferences; are favorable to the standardization of railway gauges, have any steps been taken by the Commonwealth Government to have the matter brought forward and dealt with at the next Premiers Conference?
  2. If this has not yet been done, will the Government, in view of the policy outlined by the Prime Minister in the 1934 election campaign, take steps to have the matter brought forward and dealt with?
Mr Lyons:
UAP

– The answer to the honorable member’s question is as follows : - 1 and 2. The matter will be listed for discussion at the next Premiers Conference.

Cite as: Australia, House of Representatives, Debates, 29 April 1936, viewed 22 October 2017, <http://historichansard.net/hofreps/1936/19360429_reps_14_150/>.