House of Representatives
5 May 1936

14th Parliament · 1st Session



Mr. Speaker (Hon. 6. J. Bell) took the chair at 3 p.m., and read prayers.

page 1198

INTERNATIONAL SITUATION

Mr.CURTIN.- Has the Minister representing the Minister for External Affairs a statement to make to the House with respect to the international situation?

Mr CASEY:
Treasurer · CORIO, VICTORIA · UAP

– I have no information that would warrant my making a statement. The position in Abyssinia is substantially as is reported in the press.

page 1198

QUESTION

TRANSPORT WORKERS ACT

Seamen’s Licences

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

– On the 30th April, the Leader of the Opposition (Mr. Curtin) asked the following questions: -

  1. Howmany licences have been issued to seamen under the Transport Workers Act?
  2. How many of those licensedare at present employed ?

I am now in a position to inform the honorable member that, up to the 30th April, 6,977 licences had been issued to seamen, and that, on that date, 2,311 licensed seamen were employed.

Mr CURTIN:
FREMANTLE, WESTERN AUSTRALIA

– In view of the fact that three persons have been licensed under the Transport Workers Act for service on ships for every person who has been given employment since the 30th April, will the Minister representing the Attorney-General take steps to ensure that no further licences arc issued while there are unemployed licensed seamen available?

Mr HUGHES:

– I am not in a position to say whether the facts are in accordance with what the honorable member has said, but I shall have inquiries made. As for the rest of the honorable member’s question, it touches upon a matter of government policy regarding which I am not permitted to speak; nor would I desire to do so if I could.

page 1198

QUESTION

NORTHERN TERRITORY

Employment of Native Prison Labour

Mr MAKIN:
HINDMARSH, SOUTH AUSTRALIA

– Is the Minister for the Interior aware that at Alice Springs native prison labour is being employed in connexion with works upon which should be engaged the services of men who would receive the ordinary rates of wages ? Will the honorable gentleman investigate the matter, with a view to its rectification?

Mr PATERSON:
Minister for the Interior · GIPPSLAND, VICTORIA · CP

– I shall investigate the matter.

page 1198

QUESTION

CANBERRA

Forestry School

Sir LITTLETON GROOM:
DARLING DOWNS, QUEENSLAND

– Can the Minister for the Interior state what is the present position of the Forestry School at ‘Canberra ?

Mr PATERSON:
CP

– The Forestry School is suffering from lack of support, in that it is not being attended by a sufficient number of pupils from the different States. Some years ago the decision was made to establish a central forestry school which would suffice for the training of students from the whole of the Commonwealth, it being recognized that the State universities could not carry the standard of forestry education to the point attainable by a central school, because the number of students offering would not justify a separate course. But so little support has been accorded for some years by Victoria, and is now being accorded by New South Wales, in sending students to the school at Canberra, that the States have been informed of the possibility of the school having to be closed unless a larger number of students is enrolled. They have, however, been advised that if a sufficient number of students present themselves next year the school will be reopened as usual, and that, in any event, reading classes will be provided, which will enable those students who have taken the preliminary course in State universities to obtain the diploma.

page 1198

QUESTION

JAPANESE BUTTER

Mr FRANCIS:
MORETON, QUEENSLAND

– Has the attention of the Acting Minister for Commerce been drawn to the importation into Great Britain of 2,000 cases of butter from Japan, and the press statement that officers attached to Australia House have examined the matter? Has the honorable gentleman received a report with respect to it? If so, what is its nature?

Mr THORBY:
Minister without portfolio assisting the Minister for Commerce · CALARE, NEW SOUTH WALES · CP

– The only information that I have at present is what is published in the press. Further official inquiries are being made.

page 1199

QUESTION

ADJUSTMENT OF FARMERS’ DEBTS

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

-Will the Acting Minister for Commerce state whether the anomaly between the legislation of the Commonwealth and the State of Queensland, which prevented that State from participating in the benefits derivable under the Loan (Farmers’ Debt Adjustment) Act, has been removed? If not, what is the position at the moment?

Mr THORBY:
CP

– This Parliament amended the Loan (Farmers’ Debt Adjustment) Act last session so as to overcome the difficulties of all the States. Queensland is now the only State in which the distribution of relief may not be made, because of the existence of a difference between Commonwealth and State legislation. I have explained the whole matter to the Queensland Minister for Agriculture, and the legal officials of the two authorities have been in close consultation with a view to devising a method whereby the existing difficulty may be removed in the near future.

page 1199

QUESTION

SPEEDING-UP METHODS IN INDUSTRY

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– In view of the fact that the employees ofWaygood-Otis (Australasia) Limited are being worked at a speed that is dangerous to health and efficiency, and that unskilled labour has been introduced into that technical manufacturing undertaking, will the Minister for Repatriation warn the public of Australia, in their own interests, to refrain from using the products of this company?

Mr HUGHES:
UAP

– I am not aware of the facts to which the honorable member has referred, but I shall look into the matter, and take whatever steps are necessary.

page 1199

QUESTION

INFANTILE PARALYSIS

Mr FORDE:
CAPRICORNIA, QUEENSLAND

– Will the Minister for Health inform me whether the report of the Department of Health on the efficacy of Nurse Kenny’s treatment for crippled children is yet available?

Mr HUGHES:
UAP

– It is not, but I shall make inquiries into the matter for the honorable member.

page 1199

QUESTION

AIR MAIL SERVICES

Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA

– Is the Minister for Defence able to inform me when the second tenders for the mail service from Bourke to Adelaide will be called ? If the Government has not decided to call for fresh tenders, will consideration be given toan alternative route from Newcastle Waters through Alice Springs to Adelaide?

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

– This matter has been held up pending a decision in regard to the British air mail proposals, but I shall obtain further information on the subject within a day or two, and will give consideration to the honorable member’s alternative proposal.

page 1199

QUESTION

LEAGUE OF NATIONS

Mr PERKINS:
EDEN-MONARO, NEW SOUTH WALES

– I ask the Prime Minister whether, in view of the failure of the League of Nations to prevent one of its most powerful members from making ruthless and successful war on one of its minor members, the Government will consider the advisableness of withdrawing from the League?

Mr LYONS:
Prime Minister · WILMOT, TASMANIA · UAP

– At this stage, the Government has no intention whatever of withdrawing from the League.

page 1199

QUESTION

JAPANESE SAMPANS IN AUSTRALIAN WATERS

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

– Has the Minister for the Interior received any word from Lieutenant-Colonel Weddell, regarding twenty Japanese pearling luggers, accompanied by a mother ship, said to be operating off Bathurst Island and Gordon Bay? If so, what action, if any, has the Government taken to ascertain whether the report is true?

Mr PATERSON:
CP

– I received a telegram from the Administrator at Darwin to the effect that it had been reported to him that a large number of luggers had been seen in the vicinity mentioned by the honorable member, that on receipt of the information he had sent an aeroplane over the locality to seewhether the report was correct, and that he was subsequently informed that there was nothing to report. Apparently, the report was unfounded.

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

– .Would not the recent landing on Thursday Island of 30 Japanese wrecked on a Japanese lugger indicate that there is some foundation for the reports that Japanese sampans and luggers are operating in Australian waters ?

Mr PATERSON:

– I have no official information in regard to landings at Thursday Island. As Thursday Island forms part of the territory of Queensland, the matter does not come within the ambit of my department.

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

– Will the Minister for the Interior state whether it has been reported to him that Japanese pearling luggers are dropping buoys to mark the presence of pearl beds in northern Australian waters, and that sampans follow the luggers and fish the beds ?

Mr PATERSON:

– I have received no such report.

page 1200

QUESTION

ITALO-ABYSSINIAN DISPUTE

Mr BAKER:
GRIFFITH, QUEENSLAND

– I a3k the Prime Minister whether, in view of the collapse of the Abyssinian defences, the Government will consider the withdrawal of sanctions ? Is any action at all intended to be taken in this matter or is it the intention of the Government to continue, blindly and unreasonably, following the lead of Great Britain?

Mr LYONS:
UAP

– On every occasion on which it lias been necessary to comment on the’ Italo-Abyssinian dispute, the Government ha3 made a. frank statement in the House: As soon as it is necessary to make a further statement - which may be in the next day or two - it will be made.

Mr CURTIN:

– Is the Minister representing the Minister for External Affairs in a position to supply any information in regard to the position in Abyssinia?

Mr CASEY:
UAP

– A cablegram received to-day from the Secretary of State for Dominion Affairs may be of some interest to honorable members. It is as follows : -

Two thousand British subjects and foreigners of twenty-three nationalities are now concentrated in the British Legation, and parties from the Legation yesterday rescued the occupants of the Turkish and United States Legations. The only British casualty so far reported is Dr. Melly, of the British Ambulance, who was wounded when he stopped to pick up a wounded Ethiopian. Latest reports indicate that grave emergencies persist, hut no fears are entertained as regards the immediate safety of British subjects.

French Embassy in Rome yesterday requested the Italian Government to expedite the entry of Italian troops into Addis Ababa in order to ensure the safety of foreigners.

Meanwhile at the request of the Emperor and with the concurrence of the French Government, His Majesty’s Government in the United Kingdom, have sent the H.M.S. Emperor to Jibuti to transport the Emperor and his family thence to Palestine. In doing so it is proposed to make condition that the Emperor should not whilst in Palestine participate in the furtherance of hostilities. It is expected that the Emperor will embark at noon to-day.

page 1200

QUESTION

TRADE WITH JAPAN

Mr MCCLELLAND:
WIMMERA, VICTORIA

– Has the attention of the Prime Minister been drawn to press statements to .the effect that Japan -intends to impose heavy duties on Australian wool and wheat, as retaliatory measures because of the prohibitive duties Australia imposes upon Japanese goods coming into Australia ? Does the Government intend to take any action to avoid this being done ?

Mr LYONS:
UAP

– We have no official information whatever that the Government of J apan intend to take such action.

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

– Will the Minister directing negotiations for trade treaties inform me whether the Government has any officer or correspondent in Japan, whose duty is to give advice’ on trade matters in relation to Japan? If so, has any communication passed between the Government and any such representative, in J apan, to enable the Government to ascertain what truth there is in the reports that Japan intends to take retaliatory measures against Australia in regard to trade matters?

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

– There .is, of course, an Australian Trade Commissioner in Japan, and the Government has been in fairly constant touch with him recently. I am unable to give any definite reply to the latter part of the honorable member’s question.

page 1201

QUESTION

MORETON BAY FORT

Mr FRANCIS:

– I direct the attention of the Minister for Defence to a proposal that was under consideration last year to erect at Cowan Cowan, on Moreton Island in Moreton Bay, a new fort, for which purpose a certain sum was placed on the Estimates last year. Will the honorable gentleman tell me what is being done to construct the fort and will he take steps to expedite the work?

Mr. ARCHDALE PARKHILL.Delay has occurred in the preparation of the tenders for this work in consequence of alternative suggestions that have been made regarding the armaments to be used. I cannot, therefore, give the exact date on which tenders will be invited, but the bulk of the work in connexion with the preparation of the data in connexion with tenders has already been done.

page 1201

QUESTION

ORANGES AND VEGETABLES

Export to New Zealand

Mr JOHN LAWSON:
MACQUARIE, NEW SOUTH WALES · UAP

– Is the Acting Minister for Commerce able to make a statement to the House that will clarify the obscure position in connexion with the endeavours of the Commonwealth Government to prevail upon the Government of New Zealand to lift the embargo at present being imposed upon the importation of Australian fruit and vegetables into the sister dominion ?

Mr THORBY:
CP

– All I can add to the information which I gave honorable members last week, when I explained that each kind of Australian fruit that may be exported to New Zealand was being considered separately, is that on Friday last a cablegram was sent to the Prime Minister of New Zealand urging the Government of New Zealand to intimate definitely whether the Minister for Agriculture of New Zealand would be able to visit Australia in the near future.

page 1201

CANBERRA TIMES REPORT

Personal Explanation

Dr MALONEY:
MELBOURNE, VICTORIA

– I desire to make a personal explanation. I have been criticized very unfairly by the Canberra Times in an article which appeared in that newspaper on the 2nd May. The article read -

When Dr. W. Maloney (Labour) attempted to discuss matters affecting Canberra Com munity Hospital on the adjournment in the House of Representatives yesterday-

I did not mention the word “ hospital “ and had no intention to bring it under notice. It was another matter altogether which I had in mind, but which 1 shall not allude to at present. The article went on to say -

Some weeks ago the Labour .party was informed of the nature of Dr. Maloney s complaints concerning the hospital and a full discussion ensued in the party room-

That is absolutely untrue.

The party decided that as the subject of Dr. Maloney’s complaint was not a matter for the Commonwealth Parliament no action should be taken by the party. It was pointed out that a Hospital Board had been constituted for the control of the hospital and that while the Hospital Board controlled the hospital within the ambit of its duties, the National Parliament should not be called upon to waste its time to further personal differences that have been sought to have been created within the Canberra community.

I never care to go to extremes. I telephoned Mr. Shakespeare, senior, who is an old friend of mine, and was informed that he had gone to .Sydney. I then telephoned Mr. Shakespeare, junior, and told him that the statement was incorrect as I did not mention the word “ hospital.” He said, “ But you were going to do so.” I said, “ That is not true; it was a different matter altogether.” I said that if he would come to the House I would prove that to him, but he said abruptly that he would not correct the report. I said, “ Then you will force me to go to law.” He replied, “ I do not care ; do what you like.’’ I want also to say that I have read the reports of the incident which appeared in the Age, the Argus, and the Melbourne Sun. They were fair and very accurate. I am taking this action because I think many members have suffered in the same way at one time or another, and it may seem wise to the House at some time to provide that men who state deliberate untruths in the daily press should be punished.

page 1201

DEFENCE DEPARTMENT

Wages Claim Against Contractor

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

– Is the Minister for Defence aware that a contractor named C. J. Harrison, of Hunter Street, Sydney, secured a contract for the construction of a powder magazine for the

Defence Department, at Newington, and that the contract for the clearing of the land was subsequently sub-let to another contractor, who has absconded without paying the wages due to the six men engaged on the work? Is the honorable gentleman further aware that the original contractor refuses to honour the obligations of the defaulting sub-contractor to the men employed?

Mr. SPEAKER (Hon. G. J. Bell).Order! The honorable member must ask for information.

Mr ROSEVEAR:

– I am asking the Minister for Defence, in view of the fact that responsibility for the contract rests upon the department under his control, if he is aware that the men who did the work in question have not been paid, and if he will see that the original contractor honours his obligations under the contract?

Mr ARCHDALE PARKHILL:
UAP

-I am under the impression that this question should more properly have been addressed to the Minister for the Interior, as works for the Defence Department are carried out by the department under his control. I am not aware of the matters mentioned by the honorable member, but I am quite prepared to go into them to ascertain the truth of the allegations, and I shall take whatever steps are considered necessary.

page 1202

QUESTION

MEAT EXPORT CONTROL BOARD

Publication of Trade Summaries

Mr FRANCIS:

– The Australian Dairy Produce Board, constituted under the authority of an act passed by this Parliament, issues a monthly publication conveying to honorable members and others information concerning the dairying industry, particularly in relation to overseas trade. Will the Acting Minister for Commerce invite the recently appointed Australian Meat Board to issue a similar publication?

Mr THORBY:
CP

– The recently constituted Australian Meat Board has a statutory obligation to furnish a report to the Minister, and, in addition, I understand, is quite prepared to furnish for the information of those who apply for it, a quarterly or monthly review covering the activities of the meat industry.

page 1202

QUESTION

POSTAL GARAGE AT SOUTH MELBOURNE

Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936

– Can the Minister representing the Postmaster-General inform the House when the enlargement of the Postal Department’s garage at South Melbourne will be begun ?

Mr ARCHDALE PARKHILL:
UAP

– The honorable member has asked this question previously on two occasions, and I am sorry to gather from his question now that the matter has not yet been attended to. I shall approach the PostmasterGeneral and ascertain the cause of the delay?

page 1202

QUESTION

BURNS PHILP & COMPANY PROPRIETARY LIMITED

Construction of Steamers

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– Has the Prime Minister yet had time to make investigations into the proposal of Burns Philp & Company Proprietary Limited, to purchase two steamers at Hong-Kong for use in the trade between Sydney and the Mandated Territory? If not, will the right honorable gentleman expedite the inquiry ;. and, if the facts are as related, will the Government take steps to give the Australian ship-building industry an opportunity to tender for the construction of these ships?

Mr LYONS:
UAP

– I have asked for information to be supplied, and I shall now ask that the matter be expedited so that the information can be made available to the honorable member.

page 1202

QUESTION

PRINTING OF ELECTORAL ROLLS

Mr MAKIN:

– Is it true that preparations are being made for the immediate printing of the Federal electoral rolls in South Australia? In view of the fact that it is not anticipated that the next Federal election will take place for over twelve months, is there any significance in the arrangements now being made for the immediate printing of the rolls?

Mr PATERSON:
CP

– I was not aware of the fact that the Federal electoral rolls are being printed in South Australia. At any rate, if they are. there is no special significance attached to it.

page 1203

QUESTION

EXPORT OF SHEEP

Mr CLARK:
DARLING, NEW SOUTH WALES

– Is the Acting Minister for Commerce aware that a large number of sheep has been exported from this country within recent months, and does the Government propose to take any steps to prevent the continuation of a traffic which must be detrimental to Australia ?

Mr THORBY:
CP

– No pure bred merino sheep are being exported from Australia. Permits have been given for the export of sheep other than pure bred merinos, because it is realized that the importing country could obtain sheep of that kind from places other than Australia if it were not allowed to obtain them from here.

page 1203

QUESTION

JAPANESE IMPORTS

Dr MALONEY:

– I hold in my hand & pair of opera glasses of very fair quality which were sold in Melbourne for1s. I have also here an excellent pencil which is retailed in Melbourne for 3d., and which, I understand, is sold in Japan for 1d. Although both these articles are, I presume, products of Japan, neither bears any mark to indicate the country of origin. Will the Minister for Trade and Customs make inquiries as to why they were allowed to enter the country without being so marked?

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

– The commerce regulations relating to the marking of goods evidently does not apply to the particular articles to which the honorable member refers. I can hardly believe that a pair of opera glasses which are sold at 1s. can be of a very good quality, or that they are likely to enter into competition with Australian or British industries. The same, I think, applies to the pencil, but I shall have inquiries made.

page 1203

QUESTION

BROADCASTING

Second “ A “ Class Stationfor Brisbane

Mr BAKER:

– Is the Minister representing the Postmaster-General aware that representations have been made from Brisbane to the Australian Broadcasting Commission that a second “ A “ class station should be established in that city? In view of the fact that this request has behind it a considerable amount of public support, will the Minister consider it favorably ?

Mr ARCHDALE PARKHILL:
UAP

-I shall be glad to refer the matter to the Postmaster-General.

page 1203

QUESTION

VISIT OF SIR ISAAC ISAACS TO GREAT BRITAIN

Mr JAMES:
HUNTER, NEW SOUTH WALES

– Will the Prime Minister state why the High Commissioner for Australia (Mr. Bruce) was not present to welcome the former Governor-General, Sir Isaac Isaacs, upon his arrival in London last week?

Mr LYONS:
UAP

– I have no information whatever on the subject beyond what I have read in the newspapers.

page 1203

FLOUR TAX ASSESSMENT BILL 1936

Assent reported.

page 1203

PAPERS

The following papers were presented : -

Nauru - Ordinances of 1935 -

No. 1 - Licences Amendment.

No. 2 - Native Co-operative Societies.

No. 3 - Nauru Antiquities.

No. 4 - Criminal Code Amendment.

No. 5 - Laws Repeal and Adopting.

No. 6 - Aliens.

Land Tax Assessment Act - Applications for relief from taxation dealt with during the year 1935.

Public Service Act -

Appointment of R. W. Boswell, N. J. Lake and E. H. Palfreyman, PostmasterGeneral’s Department.

Regulations amended - Statutory Rules 1936, No. 55.

page 1203

COMMONWEALTH PUBLIC SERVICE BILL 1936

Motion (by Mr. Hunter) agreed to -

That be have leave to bring ina bill foran act to amend the Commonwealth Public Service Act 1922-1934.

Bill brought up, and read a first time.

page 1203

INCOME TAX ASSESSMENT BILL 1936

In committee (Consideration resumed from the 1st May vide page 1150) :

Clause 79-

The following amounts (in this act called “the concessional deductions”) shall be allowable deductions where the taxpayer is a resident: -

Upon which Mr. Blackburn had moved, by way of amendment -

That after paragraph (b) the following paragraph be inserted: - “(ba) Such sum (not exceeding in any case fifty pounds) as the Commissioner is satisfied has been actually paid by the taxpayer during the year of income to or on “ behalf of any parent, grandparent, brother or sister of the taxpayer or of the spouse of the taxpayer:

Provided that the Commissioner is satisfied that such parent, grandparent, brother or sister is a resident and is wholly maintained by the taxpayer;”.

Question - That the amendment be agreed to - put. The committee divided. (Chairman - Mr. Prowse.)

AYES: 25

NOES: 36

Majority . . . 11

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Mr JAMES:
Hunter

.- I move -

That, after paragraph (b), the following paragraphbe inserted - “ (bb) The sum of £50 in respect of each child residing with the taxpayer who has through no fault of his own been unemployed and has not earned income during the year in respect of which income tax is payable:

Provided that where such child is employed for part of the year or earns an equivalent income for such part of the year the Commissioner shall make such proportionate concessional deduction as is reasonable in the circumstances “.

Many fathers receive an income only slightly in excess of that which is exempt from tax, but they have to support sons and daughters who are unemployed, and no allowance is made for this heavy additional domestic expenditure in the calculation of their taxable income. Under certain State acts, when a taxpayer earns more than the “ permissible “ income, no unemployed member of his family is allowed to benefit under a State relief scheme. In some instances, taxpayers fully maintain three unemployed sons or daughters, but no concession is made on this account in the assessment. I, personally, have had the experience of supporting three sons who were unemployed - fortunately, they are now at work - yet I know fathers with incomes not comparable with mine who have had to maintain three unemployed sons. Under this bill, many concessions are granted to primary producers, who receive exemptions from income tax in respect of practically all capital outlay. This exemption applies to expenditure on fencing wire, ploughing, seeding, grubbing, clearing, boring for water, and draining swamps. If expenditure incurred by taxpayers in fully supporting sons and daughters over the age of sixteen years were an allowable deduction, these parents would frequently be exempt from the payment of income tax. I do not think that any great amount would be involved because there has been a good deal of lessening of hardship in the States in the matter of issuing food relief. In New South Wales, however, hard-and-fast observance of the principle of permissible income debars certain members of families from obtaining food relief or relief work. In arriv ing at the amount of permissible income for a home, the Government takes into consideration, not only the earnings of the father, but also the earnings of such other members of the family as are employed. If the total exceeds a certain limit, unemployed sons or daughters are debarred from obtaining government relief.

Mr Casey:

– I do not quite gather why the honorable member is introducing in this subject an argument regarding permissible income.

Mr JAMES:

– The Government of New South “Wales debars unemployed members of families from obtaining relief if the total earnings of the other members of a family exceed a certain limit. It is a restriction somewhat similar to the restriction with regard to maternity allowance payments in which case, if there is an income of £208 a year, no maternity allowance is paid for the first child. Subsequently, the maternity allowance is payable according to a scale. The permissible income limit in the State of New South “Wales imposes a hardship on families in which there are unemployed members. If the State Government allowed unemployed persons, irrespective of the income of other members of the family, to get relief work or to receive sustenance, what I am now seeking would not be necessary. I am of the opinion that a somewhat similar restriction applies in Victoria, but of that I am not sure.

Mr Brennan:

– In other words, if the family income is taken into consideration in the distribution of food relief, it should also be taken into consideration for federal income tax purposes.

Mr JAMES:

– Yes. I maintain that the amendment is a reasonable one. It does not seek provision at the beginning of the year for unemployed children above the present statutory age limit, but empowers the Commissioner of Taxation at the end of the year to make allowance for the periods during which such dependent sons and daughters are unemployed. Inmy own electorate, I have seen old men going off to work while their sons between 25 and 30 years of age are unemployed. These young men, because their fathers are earning, are not permitted to participate in food relief. It is a grave injustice that the Taxation Commissioner cannot make allowance for the cost of their main tenance as a deduction from federal income tax.

Mr CASEY:
Treasurer · Corio · UAP

– I have every appreciation of the sentiment and motive behind the honorable member’s amendment, but I hasten to say that I do not believe that more than a very small percentage of the people the honorable member has in mind are payers of federal income tax. I would remind him that, in the first place, there is a statutory exemption which makes the first £250 of income not subject to income tax. Furthermore, there is the exemption of £50 for each child of less than sixteen years of age, and, by a new provision contained in this measure, the Commonwealth, for the first time, is introducing an exemption of £50 for the wife of a taxpayer, where she is wholly maintained by the taxpayer. Then there are other concessional deductions up to £50, such as payments to doctors, nurses, and chemists, hospital fees and the like. There is also the exemption of £100, if need be, in respect of superannuation fees, and contributions to friendly societies and the like. These things, in the total, mean that, in the average family, the salary of the breadwinner must amount to at least £350, and possibly £400 or more per annum, before federal income tax is paid. In fact, I think it is the order that the average family in receipt of an income of £400 a year, is entirely exempt from federal income tax. That leads me to say that I believe there are very few families who would come within the terms of the honorable member’s amendment.

Mr Mahoney:

– Then there would be no harm in putting the proposed deduction in the act.

Mr CASEY:

– Exactly ; but the widening of the exemption provisions, as proposed by the honorable member, to include unemployed sons or daughters over the age of sixteen years, would impose on the Commissioner of Taxation a task which would be extremely onerous, and something of which the Taxation Department has had no experience. I say that because the amendment is an attempt to do something that the Royal Commission on Taxation said it is practically impossible to do. On page 106 of the report of the royal commission, dealing with the question of allowances for dependants, the commission, after canvassing all the representations which were made to it for deductions, states -

Lt is not possible, in tiny scheme, to adjust taxation so closely as to take into consideration the purely personal obligations of each taxpayer.

The commission proceeds to recommend the exemptions which the Commonwealth Government has accepted. Thi3 bill is hardly the place, I suggest, to make refinements of the nature suggested by the honorable member. If the honorable member’s case were dealt with, there would remain many other directions in which hardship could be claimed. With all respect to the humane motive that underlies the amendment, the Government could not accept it. As it is, the Government, by inserting the provision for the exemption of £50 for a dependent wife, will lose revenue amounting to from £300,000 to £350,000 a year. The further -concessional deductions that the Government is now making, make it impossible for the Government to accept the amendment.

Mr JAMES:
Hunter

.- I am not at all satisfied with the explanation of the Treasurer (Mr. Casey) that, because a liberal allowance is made for a dependent wife, the Government has done all that it should do. A man is expected to maintain his wife, but in many instances, fathers, from love and humane considerations, are giving unemployed children a home. In many cases, mere boys - we can say that they are boys if they are under 25 years of age - leave home for the purpose of dodging the permissible-income regulations. When they go to other States, they are able to secure track rations. But this practice tends to the breaking up of home life. It is a wonder that crime does not assume much greater proportions. If the taxpayer were given some concession in regard to taxation, the burden now imposed upon him would be somewhat relieved. The hardships of families in which there is unemployment are well known. I ask the Treasurer to reconsider the matter, with a view to granting this just claim.

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

– The committee must appreciate the point raised by the honorable member for Hunter (Mr. James). But he has overlooked the fact that this redress should be given, not by the Commonwealth, but by the State legislature, because it deals with unemployment relief, [f such a proposition were placed before the legislature in New South Wales, it would be hard put to it to find reasons for its rejection, because the State Treasury would be saved the cost of the distribution of unemployment relief. But in the sphere of federal taxation, that is not the case. If the committee were to agree to the proposal of the honorable member for Hunter, the result simply would be to give a bonus to a comparatively small section of the community, and clutter up the taxation law with a provision that would be used in not more than one in every thousand cases while failing to achieve the object aimed at by the honorable member, for the reason that the federal exemption is higher than the State exemption. If the honorable member could induce the State of New South Wales to agree to the granting of this perfectly equitable exemption, he would confer a definite benefit upon the taxpayers of that State.

Mr James:

– Many deputations have waited upon the responsible State Minister with a view to the wiping out of the provision relating to permissible income, but their request has always been refused.

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

– The matter should not be persisted with in this legislature, because the Commonwealth would receive no return, and only a small percentage of taxpayers would be relieved of an obligation for which the State should make the necessary recompense, if it thought fit to do so.

Mr ROSEVEAR:
Dalley

.- I support the amendment. I cannot quite follow the reasoning of the Treasurer (Mr. Casey), when he seeks to show that an income must have substantial proportions before it becomes taxable. It is true that there is a statutory exemption of £250, and concessional exemptions with respect to the maintenance of wives, and medical and other expenditure. But the strange and incongruous feature of this provision is that the Government is prepared to allow an exemption for a child only until it reaches the age of sixteen years.

Mr Casey:

– We must stop somewhere.

Mr.ROSEVEAR. - I admit that.It is to be presumed that the age of sixteen years is fixed because we consider that up to that age, the maintenance of the vast majority of children is the full responsibility of the parents. But in the same section, provision is made for the exemption of medical expenses, and for an exemption up to £20 in the case of expenditure incurred in burial or cremation with respect to children up to the ago of 21 years. The proposal of the honorable member for Hunter is that an exemption shall be allowed in connexion with children up to the age of 21 years, who are unemployed, and a burden on the income of the taxpayer. The Treasurer resists the idea of assisting a parent to keep his unemployed children alive, and yet is prepared to allow an exemption in the case of their burial or cremation ! The honorable member for Hunter has said truly that in New South Wales unemployed children who live with their parents receive no assistance from the State Government in the form of either food or relief work, and consequently are a burden on the taxpayer.If the taxpayer is prepared to accept the obligation of their maintenance, he should be recompensed by the State.

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

– The honorable member is arguing that the Commonwealth, and not the State, should make the recompense.

Mr.ROSEVEAR.- Whether the Commonwealth or the State bleeds the taxpayer, matters as little to him. as whether it is to be boiled or baked matters to a chicken. In one case, the chicken loses its head, and in the other case the taxpayer loses his money. This year there is likely to be a surplus of something like £4,000,000. If the taxation burden is to be lightened, exemption should be granted to parents who remove from the State the responsibility for the maintenance of unemployed citizens who happen to be their children. If the Government is willing to grant relief in connexion with expenditure relating to medical treatment, burial and cremation, the least it can do is to exempt the taxpayer who tries to keep his children alive.

Mr BLACKBURN:
Bourke

.- The original principle under which these concessional deductions with respect to wives and children were allowed, was that, under State laws, the husband and father was liable for their maintenance. It was generally assumed that the liability in the case of children continued up to the age of sixteen years. In its original form, the exemption was not accorded to a wife who was a taxpayer. I believe that I was instrumental in obtaining the extension of the concession in Victoria, so that it benefited, not only a husband taxpayer with respect to his wife, but also a wife taxpayer with respect to her husband. We go some distance beyond the old position of exempting the taxpayer in respect of persons for whose maintenance he is legally liable, in the direction of a recognition of the principle of family income; that is to say, the income is the income, not only of the recipient, but also of all the persons who are maintained out of it. In some circuitous and empirical way, we recognize that principle in these concessional deductions. It is perfectly clear and right, as well as expedient, that the taxpayer who is forced partly by State law, partly by economic circumstances, and partly by natural kindness, to maintain adult children, should receive an allowance in respect of the amount involved. I do not believe that the number of cases would be large, but I do believe that great relief would be given. I cannot see that the administrative difficulties are insuperable. It would be perfectly easy for the Commissioner to satisfy himself as to what children are dependent on their parents. He now has to satisfy himself in regard to a number of small items. Surely, this would not cause him too much concern ! I believe that the granting of the concession would give much meritorious and well-deserved relief to parents of unemployed children.

Question-That the amendment (Mr. James’s) be agreed to - put. The committee divided. (Chairman - Mr. Prowse.)

AYES: 23

NOES: 35

Majority . . . . 12

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

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

.- I move -

That after the word “ practitioner “ paragraph (c) the word “dentist” he inserted.

I intimated lastFriday that I intended to move an amendment of this character. I do not wish to reiterate the arguments that I then advanced in support of my proposal, but I hope that the Treasurer (Mr. Casey) has, during the week-end, given serious consideration to the submissions that I then made. The royal commission, in its third report, dealt with the subject of medical expenses very briefly. It stated -

The deduction should cover sums paid, not exceeding a fixed maximum to a legally qualified medical practitioner, hospital, nurse or chemist in respect of the taxpayer, his wife or children under the age of 21 years.

There is also a footnote which reads as follows : -

We are not prepared to recommend that the concession should be extended to include sums paid to a dentist as this deduction is allowed only by one government.

It will be observed that no argument was advanced against the inclusion of dental expenses as a concessional deduction, except that only one government had hitherto moved with the times and made such an allowance. It cannot be denied in these days that neglected teeth seriously impair the health of many people. I. therefore submit that the Government should encourage people to keep their teeth in proper condition. Dental science, in these days, is increasingly becoming the corollary of medical science. The Treasurer said last Friday, in discussing this subject, that the concessional deduction in respect of medical expenses was not originally intended to cover the expenditure of a few shillings now and again by the taxpayer.

Mr Casey:

– I did not say that.

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

– I understood the honorable gentleman to say that the deduction was not intended to cover a half guinea, a guinea, or a few guineas spent, at odd times, for dental attention.

Mr Casey:

– That was not intended originally.

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

– Dental expenses are no longer a minor consideration to the head of the family. From £10 or £15 a year might easily be spent under this heading. Medical science nowadays recognizes that care of the teeth plays an important part in maintaining the health of the people, and frequently when a patient seeks a diagnosis he is directed to visit a dentist. In the circumstances, I sincerely hope that the Government will accept my amendment.

Mr CASEY:
Treasurer · Corio · UAP

– As I said on Friday afternoon, the original intention of the various governments in allowing a concessional deduction not exceeding £50 for medical expenses was to meet the circumstances, mainly, of the breadwinner of the family who might be called upon, at short notice, to undergo a major operation with consequent hospital expenses, and so be debarred from continuing, for the time being, to provide the family income. The deduction was not intended to cover minor expenses, or treatment of the eyes, teeth, and the like. The acceptance of the honorable member’s amendment would mark a radical departure from the original, and, I think, proper, intention of the existing provision.

A concessional deduction in respect of dental treatment is at present allowable only in New South Wales, and the right is being withdrawn under the bill now before the State Parliament. I point out that one of the objects of the various governments in introducing these” uniform taxation bills in their various parliaments at present is to achieve as large a measure of uniformity aspossible in regard to income taxation procedure. I have not hitherto stressed this point particularly in this debate, but I remind honorable members that the various governments desire to occasion taxpayers as little difficulty as possible in the preparation of their taxation returns. To achieve this end, several governments have voluntarily made variations from their present practice. The Commonwealth Government - I can say this because the drafting of this uniform taxation bill has been largely inspired by our officers - feels itself under some responsibility to the various State governments to maintain the greatest possible measure of uniformity. If numerous alterations of this bill are agreed to in the course of this discussion, the State parliaments will no doubt assume that they also may alter their bills without hesitation. The result would be that by the time all the parliaments had passed their various measures a good deal of the original uniformity would have been lost. That is not to say, of course, that the bill may not be amended in certain respects; I merely emphasize the point so that the value of uniformity may not be lost sight of. It is hoped that in future before any definite action is taken suggested amendments of our income tax law will be discussed, first by the Taxation Commissioners in conference, and subsequently by the Commonwealth and State Premiers and Treasurers in conference. I can give the honorable member for Wentworth (Mr. E. J. Harrison) an assurance that I will bring his proposal for the inclusion of dental expenses within this concessional deduction under the notice of the Premiers and

Treasurers at the first appropriate opportunity, which may be at the conference which is to assemble in about ten days’ time. I should like to keep faith with the State governments in this matter.

I can also give the honorable member a definite assurance that if the State governments, or a majority of them, are agreeable to the extension of this exemption to cover dental expenses, I shall recommend the Commonwealth Government to fall into line with them.

Mr STREET:
Corangamite

.- I am glad that the Treasurer (Mr. Casey) has agreed to submit this proposal to the State Premiers and Treasurers for their consideration and to recommend the Commonwealth Government to fall into line if the majority of the State governments desire such an extension of the clause. As the honorable member for Wentworth (Mr. E. J. Harrison) has said, the teeth have a great deal to do with the health of the community. Medical practitioners in these days recognize this fact to a greater extent than ever before. They know that many of the ills to which the human flesh is heir have their origin in the teeth. For this reason, taxpayers who seek medical advice are often advised to obtain an X-ray of their teeth, consequently incurring dental expense.

Another branch of dental science which has become increasingly important in the last decade is that known as orthodontical dentistry, which has to do with the reshaping of malformed mouths and the straightening of teeth, particularly in children. This is often a costly process to the taxpayer and a lengthy business to the patient. A course of treatment may easily cost from 60 to 100 guineas. This, it will be seen, is no minor expense. Even though it does not prevent the taxpayer from pursuing his normal avocation, it is a serious financial outlay to him. I am aware, as the honorable member for Wentworth has pointed out, that the Royal Commission on Taxation did not recommend the extension of this deduction.

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

– But it gave no reasons to support its attitude except that deductions in respect of dental expenses were allowed by only one government.

Mr STREET:

– That is so. The commission was evidently actuated by its desire to achieve uniformity. In all the circumstances, I sincerely hope that the Treasurer will regard this amendment with more enthusiasm than he did last week. As the honorable gentleman has promised to refer the matter to a Premiers Conference, I am satisfied at the moment.

Mr JENNINGS:
Watson

– I would not have risen to speak but for the fact that I regard the absence of dental fees from the deductions allowed by this clause as an inexplicable omission, and for the fact that the honorable member foi1 Wentworth (Mr. E. J. Harrison) has submitted an amendment to include them among the deductions. It was a. great surprise to me to learn that dental fees were not so included, particularly as a deduction is allowed for medical fees irrespective of what they cover. If a man suffers an injury to his finger, and has it dressed by a chemist, he is permitted under the clause to make n deduction in respect of the cost involved; yet no deduction is allowable for dental fees, although, from the point of medical hygiene, a dental operation is of as much importance as a medical operation. It would be a different matter if dental fees were small, as has been suggested, but that is not so. I, myself, have had a denture mack’ which cost nine guineas, and it was claimed that that charge was light. Treatment and fillings would cost several guineas. The honorable member for Corangamite (Mr. Street) too lias mentioned the important matter of orthodontical treatment in tha science of dentistry, and all honorable members know that in children’s homes to-day, where teeth are regulated, fees for dental treatment of this kind amount to a considerable sum ranging, it has been said, from 20 guineas to 100 guineas. Medical authorities might be cited to show that in the preservation of the health of the people the science of dentistry is just as important as medical science. Dental treatment is invariably part and parcel of medical treatment prescribed by the consulting doctor. Speaking to an authority in Sydney recently, I was’ informed that one-half of the patients in hospitals in Australia would not be there if they had received proper dental attention. Their health and physical condition would have been greatly improved and much natural expense prevented. New South Wales, with other States has always taken a. great lead in dental science; so much so that to-day one of the largest dental hospitals in the world with 150 operating chairs and dental equipment is being erected in that State. Yet, in the interests of uniformity, the provision for the deduction of dental fees in the New South Wales Income Tax Act has been deleted. This is surprising. I believe that on investigation all States would agree to the provision. As the honorable member for Wentworth has stated, medical students and dental students are working side by side to-day in the Australian universities, and they go through a similar curriculum. I think quite a good argument has been put up by honorable members for the inclusion of dental fees among the deductions allowable. Even if the Treasurer (Mr. Casey) does not accept the amendment, 1 hope that he will urge the other States to agree to the acceptance of dental fees as a deduction from assessable income, because it is a most important matter in the interests of public health.

Mr CASEY:
Treasurer · Corio · UAP

– I should like now to mention one or two matters which I omitted :o refer to during my earlier remarks. One is that in very few cases indeed would dental fees amount, at the outside, to more than ten or fifteen guineas a year in any one taxpayer’s return. If this amendment were agreed to, provided the statutory allowance of £50 for medical expenses was not completely claimed in respect of such expenses, the inclusion of dental fees would represent an insignificant reduction of the taxation imposed on any one individual taxpayer. It might reduce the taxable income of an individual taxpayer by Id. in the £3, and I doubt if it would make a difference in any income range of more than from 2s. 6d. to 5s. in the amount of tax levied. My second point is that if this matter were discussed by a meeting of Premiers and Treasurers in the relatively near future, the chance of universal acceptance of the honorable member’s amendment would be greater than it would be by isolated action on the part of the Commonwealth. If, as I imagine, it is the honorable member’s abn to speak in the interests of the average taxpayer, he will render a far greater service to -the taxpayers generally if lie accepts my suggestion, and in so doing he will perform a collective duty to the taxpayers in respect of both Federal and State taxation.

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

– I am prepared to accept the assurance of the Treasurer (Mr. Casey), but I may mention that opposition will be levelled in the Parliament of New South Wales against the withdrawal of this concession in the State income tax legislation. That opposition will be fairly substantial, because, as the honorable member for Watson (Mr. Jennings) has pointed out, Sydney is very much alive to the necessity for giving added attention to dental requirements and dental science generally.

Mr Street:

– All cities are.

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

– I hope that that is so. It augurs well for the eventual acceptance of my amendment. The Treasurer (Mr. Casey) indicated that the small concessions which would be granted in respect of dental treatment would not appreciably affect the amount of tax paid. Honorable members must be aware, however, that quite often medical treatment includes dental treatment, X-ray and the like, and arising out of the X-ray and the extraction of reet.li it may be found that medical treatment is a necessary corollary.

Mr Curtin:

– It is quite often a necessary corrective.

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

– Quite often when a man goes to a medical practitioner for advice, the doctor advises him to have an X-ray and get his teeth extracted. Although his medical fees may amount to £20 or £30, on top of that he may have to pay £15 or £20 for dental treatment, for which he is not allowed to claim a deduction. It is all part of the one course of treatment. I suggest that the Treasurer might well deal with this Aspect of the matter when he is discussing the question at the conference of Premiers and Treasurers.

Mr Casey:

– I shall see to that.

Amendment negatived.

Mr JAMES:
Hunter

.- Subclause d provides that the concessional deductions to be allowed to a taxpayer include payments not exceeding £20 made by the taxpayer for funeral and burial expenses arising out of the death of his wife, or any of his children under the age of 21 years, to the extent to which those expenses are not recouped by any society or association. I suggest that the clause could be made a little more liberal. Quite a number of cases come under notice in which a parent is maintaining a2i invalid child over the age of 21 years, and because the income of the parent is deemed, under the invalid and old-age pensions legislation, to be adequate for the needs of the home, the child is not entitled to an invalid pension. I have brought many such cases under the notice of the Government. I have cited a case in which a parent was maintaining an invalid offspring of 45 years of age, but because the father’s income was above the statutory limit the invalid offspring was not entitled to a pension. There are many epileptics who are not in receipt of pensions for the same reason, and they have not a long lease of life. I suggest that the clause could be widened sufficiently to include payments made in respect of funeral and burial expenses of children maintained by their parents, irrespective of their age. I suggest to the Treasurer (Mr. Casey) that the words “ under the age of 21 years “ be omitted with a view to insert in lieu thereof the words, “who have been unable to maintain themselves “. I do not propose to move an amendment at this stage, but I make this suggestion to the Treasurer for his consideration. Every honorable member knows the extreme hardship under which many parents labour in connexion with the maintenance of their invalid children. This hardship was aggravated by the amendment of the Invalid and Old-age Pensions Act in 1932, which provided that where adequate maintenance was provided by the mother, father, sister or brother of an invalid person, no invalid pension would be payable. Now, in the clause under consideration, we are to inflict a greater hardship upon the parents of invalid children by limiting the allowance in respect of funeral and burial expenses to the children .of taxpayers under the age of 21 years. I ask the Treasurer to give favorable consideration to my request-.

Mr CASEY:
Treasurer · Corio . · UAP

– Largely, what I ventured to say to the honorable member on other occasions, is a reply to the honorable member’s suggestion in this case. If the Commonwealth were in the habit of taxing what might be termed the lower ranges of income, there would be some point in the proposal put forward by the honorable member. But that is not so. The States tax the lower ranges of income, and the Commonwealth, generally speaking, leaves taxpayers on the lower ranges free. For that reason, I think that the refinement which the honorable member suggests is altogether an unnecessary one in federal . taxation. It may have its importance in other places, but in federal taxation it would be largely redundant, and I cannot believe that there would be more than a few cases in the Commonwealth in which it would have any real relevance. If Commonwealth taxpayers were affected at all by the honorable member’s suggestion, it would not be by more than a few shillings per annum. Again, I point to the administrative difficulty which would be experienced in policing the amendment suggested by the honorable member.

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

– What is the statutory exemption for a man, his wife, and three children ?

Mr CASEY:

– It is £250 in the first place, plus £50 for the wife, and £50 for each child under the age of sixteen years. That makes a total of £450, or £9 a week. Further, with friendly society, medical and other deductions, the total amount of these deductions would probably be raised by £20 or £30 a year in the case of the average family.

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

– No taxpayer receiving under £10 a week would be affected?

Mr CASEY:

– That is substantially so.

Mr HOLT:
Fawkner

.-I direct the attention of the committee to the possibility of this clause being used for the purpose of making^ such concessions as may encourage an increased birth-rate in Australia. The Minister for Health (Mr. Hughes) has pointed out that, owing to the excess of emigration over immigration, coupled with a declining birth-rate, which is the lowest in the history of Australia, the position in regard to population in Australia has become very serious. Probably, in the near future, it will be- necessary for governments to take specific action in order to meet the position, and the only effectiveway is to remove some of the economic and social disabilities with which parents and prospective parents are now faced. The seriousness of the position is revealed by recent immigration figures. For the five-year period from 1930 to 1934 inclusive, the excess of emigration over immigration was 20,000, while during the same period the birth-rate steadily declined. In Victoria, in 1931, there were 10,182 marriages, and 30,332 births. In 1934 the number of marriages increased to 13,862, but the number of births was only 27,828. Thus, while in 1931 there were three births to each marriage celebrated in that year, in 1934 there were only two. It will be seen that while the position in regard to marriages is satisfactory, the birth-rate is declining year by year, due largely to the fact that parents are placed under severe economic disabilities in rearing families, or would not be proper under a discussion of this clause to suggest the various measures which might be taken to redress the position generally. This clause could be effectively” employed along with those other measures if specific action becomes necessary. The Commonwealth Parliament has provided in this measure, for the first time, a statutory deduction of £50 in respect of the wife of a taxpayer, but the general statutory exemption remains the same whether the taxpayer be married or single. A royal commission on taxation in Great Britain recommended in 1920 that the statutory exemption for unmarried men should be £150, while that for married men without children should be £250, a recognition of the fact that where the responsibilties are greater the exemption also should be greater. At the present time, the Commonwealth act provides a deduction, of £50 for each child of the taxpayer up. to the age of 16, but, as the honorable member for Hunter (Mr. James) pointed out, unemployed children over 16 years of age continue to be a burden on their parents, though no deduction is allowed in respect of them. Similarly, children attending a university are a heavier financial burden on their parents after the age of 16 years than at any other time in their lives, and it is among the professional class that the drop in the birth-rate is most evident. Action has already been taken in some European countries, as a matter of government policy, to stimulate the birthrate, and should the Commonwealth Government deem it necessary to act in a similar way, it will find in the machinery provided by this clause one method to achieve its purpose.

Mr CURTIN:
Fremantle

.- The subject upon which the honorable member for Fawkner (Mr. Holt) has touched is one of supreme importance to this Parliament, and to Australia generally, but we have to remember that this bill is a measure for the taxing of incomes of a given dimension. I remind honorable members that Parliament could make any number of concessions in regard to the children of taxpayers, and still not give any benefit whatever to the average working-class family in Australia. Those concessions would not diminish the economic difficulties which to-day harass housewives, and which make the rearing of children such a severe strain upon their parents.

Mr Holt:

– I said that my suggestion was one method out of a number for dealing with the problem.

Mr CURTIN:

– Yes, but it is not the best method. In my opinion, both the revenue and the public would be better served if, instead of all these special concessional reductions, the general statutory deduction were increased to £300.

Mr Holt:

– Irrespective of responsibilities ?

Mr CURTIN:

– Yes, as a short cut in the direction of simplicity and substantial justice, I would recommend that. It is only when incomes reach £350 or £400 that families may be said to have any margin to work on, or any opportunity to save, and the deductions provided in this measure take that fact into account. Where a man’s income is not more than £300, and he has a wife and three children to maintain, he is not able to make any provision for paying taxes after putting by what prudence demands to meet such contingencies as sickness, old age, &c. If the honorable member for Fawkner wishes to assist family life in Australia, he should not concern himself primarily with persons whose incomes come within the taxable-income range, but should consider those persons who are not earning enough to be taxed at all.

The Treasurer (Mr. Casey) said that it was desirable that, in taxation matters, there should be uniformity between the States and the Commonwealth, but I point out to him that, even after this measure has been enacted, there will be no uniformity. Many of the States are taxing the lower incomes most severely. The wage tax is collected at the source, and no deductions are allowed for children, medical or hospital expenses. In Western Australia, the financial emergency and hospital taxes are a considerable impost. Although the basic wage is exempt, the margin for skill allowed in industrial awards brings the income of most workers within range of that taxation. In South Australia, the tax at one time was as high as 2s. 3d. in the £1 on the incomes of single men, and the tax was collected at the source, practically no deductions being allowed. In New South Wales, also, the wage tax is levied at the source. To the honorable member for Fawkner, I say that, with the substance of what he has said regarding family life, the Opposition is in agreement, but I suggest to him that it is advisable to give help first to the poor, rather than increase the tax concessions already enjoyed by the rich.

Mr HAWKER:
Wakefield

.- I support the general remarks of the honorable member for Fawkner (Mr. Holt), and deprecate the typical attack by the Leader of the Opposition (Mr. Curtin) upon concessions to that very valuable section of any community, the middle class. Everybody is agreed as to the trials and difficulties of the wageearners who do not pay federal income tax. [Quorum formed.] Sections, such as the more highly skilled artisans, the young professionals and small business people, who would derive some benefit, if the suggestion of the honorable member for Fawkner were adopted, are also deserving of consideration. I suggest to the Leader of the Opposition that he does not put the national interest first in pouringdisparagement upon the honorable member’s highly constructive suggestion. I hope that he and his followers will show more generosity in the future than they have in the past to those who are struggling to educate their families in the more learned professions, and encouraging young people to become skilled artisans, thus helping to expand the trade upon which our national strength and our standards of living depend.

Mr HOLT:
Fawkner

– I thought I had clearly indicated that I was only suggesting one method which the Government might adopt if it decided to deal with the population problem, but I was not overlooking the claims of the less fortunate section of the community, nor the many other measures which might be taken. I disagree entirely with the suggestion of the Leader of the Opposition that the statutory exemption should be raised to £300, and that at the same time all family deductions should be removed. His suggestion would allow the same exemption to a single man as to a man with a wife and four or five children, and would ignore the difference in men’s domestic responsibilities. We might well follow the lead of the British royal commission, which recommended a lower exemption for a bachelor than for a married man. In Great Britain the exemption proposed was £150 for a bachelor, and £250 for a married man. Rather than remove the concession under consideration by providing a common level, we should reduce the exemption allowed to single men, thereby improving the position of the man with greater domestic responsibilities. A bachelor should not enjoy the same statutory exemption as a married man with several children.

Mr MAHONEY:
Denison

– I agree with the Leader of the Opposition (Mr. Curtin) that concessions are proposed for those who are in a position to pay income tax, whilst nothing is done to improve the position of the low-paid section. The honorable member for Fawkner (Mr. Holt) has raised the subject of the increase of the population. His proposal favours the section that seems to know best how to avoid having large families. People with the smallest incomes have to pay a State wage tax of 4d. in the pound ; but the professional classes, to which the honorable member for Wakefield (Mr. Hawker) referred, are in a better position to pay income tax than are the low-paid men. It is interesting to hear members of this Parliament who are bachelors advocating an increase of the population. The responsibilities of parenthood are carried, in the main, by the low-paid sections, who are forced, into a state of semi-starvation by the Government which the honorable member for Fawkner supports.

Clause agreed to.

Clause 80 (Losses of previous years) :

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

– This clause provides for the carrying forward of losses up to a period of four years. It further provides that the loss in any year shall be deemed to be a deficiency, if any, remaining after any exempt income for the year has been taken into account. Provision is also made that losses carried forward shall be first set off against the exempt income of that year. The period of four years may, by proclamation, be reduced to three years. Will the Treasurer (Mr. Casey) explain the purpose of this clause ? It seems to me that strong objection could be taken to the bringing of exempt income into account in ascertaining the losses for the year, first setting off losses carried forward against income derived in the year of ‘assessment. The effect is to destroy the benefit of the exemption granted on certain classes of income. I should say that the desire of the taxpayers generally, and of this committee, is that net exempt income should not be taken into consideration in arriving at net loss. This setting-off of losses means that, indirectly, exempt income is made taxable. That, I think, is not the desire of the Treasurer.

Mr CASEY:
Treasurer · Corio · UAP

– This provision was put into the Commonwealth act in 1928. The disability referred to by the honorable member in respect of the carrying forward of losses comes about as the result of the Government’s conviction that it is not right that a taxpayer should get a double benefit from exempt income. He gets the benefit in the year in which the exempt income arises; but the point taken by the Government, and supported by the royal commission, is that, having had that benefit in the year of income, it would not be proper if he were to be given the further privilege of carrying forward in future years losses arrived at by calculating that income as exempt. Let me give an example. Assume that the income derived by a person in any year comprises exempt income to the amount of £1,000, and the gross proceeds of a business amounting to £30,000. From his assessable income of £30,000, he may be entitled to the following deductions : -

And, in addition, the following concessional deductions under clause 79 -

The excess of allowable deductions over assessable income would thus be £2,700. But, under clause 80, the deduction which would be allowed in the assessment of the taxpayer for the year succeeding the year of loss would be arrived at as follows : -

Of course any number of examples could be cited.

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

– Is the Government not virtually taking from the taxpayer the benefits of exempted income?

Mr CASEY:

– He does not get the benefit of dealing with it as a loss in two years.

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

– It seems to prevent him from dealing with it as a loss in one year because he loses it over the trading period.

Mr CASEY:

– Oh, no; he has his £1,000 income in that year and does not have to pay tax on it. He gets the exempt income and the concessional deductions, and they reduce the taxable income; but the Government does not propose to keep on giving the taxpayer the right to carry forward a loss from one year to the next year, although it will continue giving the exemptions and concessional deductions specified.

Clause agreed to.

Clause 81 - (1.) The following amount (in this act called the “statutory exemption “) shall be an allowable deduction to any person other than a company or a non-residenrt : - (3.) The preceding provisions of this section shall not be applied in calculating the amount of the taxable income subject to special property tax, but, for the purpose of making that calculation, there shall be deducted (where the taxpayer is not a company or non-resident) . . .

Mr CASEY:
Treasurer · Corio · UAP

– I move -

That the words “ or a non-resident “, subclause (1), be omitted.

If this amendment be accepted, I propose to move a further somewhat similar amendment and the two, taken in conjunction with an amendment to clause 25, which has already been made by the committee, will be of benefit to nonresident taxpayers. The purpose of the amendment which I now propose that the committee make is to extend to nonresidents who are potential taxpayers the benefit of the statutory exemption, and the second amendment, which I foreshadow, will extend to those same persons the benefit of the £250 deduction in respect of the special property tax. I shall explain the reason for these two amendments and for the earlier amendment made to clause 25. In recent years, and particularly since the introduction of the special property tax, it has been constantly complained in the City of London that in Australia - no government is particularized - the taxation law acts unfairly towards overseas investors in that these investors are taxed at a rate substantially higher than the rate at which Autralian citizens are taxed. That contention cannot be gainsaid. In not allowing the non-resident taxpayer the statutory exemption, we have in effect subjected him to a higher rate of income tax than is paid by the Australian taxpayer, who is allowed the statutory exemption. The same applies to the special property tax. In an endeavour to correct the position, the Government decided to ask Parliament to make the two proposed amendments in pursuance of the step already taken by the committee regarding clause 25, which relates to debentures domiciled abroad and outside the jurisdiction of the Federal Commissioner of Taxation.

The amendment to clause 25 does not give away very much, because the Commissioner of Taxation could not in any event legally collect the taxes which he is constantly assessing, because the debentures and the taxpayer are outside his jurisdiction. The amendment which I have just moved, and the one which is to follow, however, seek to put the overseas taxpayer on the same basis as the Australian taxpayer in respect of the statutory income tax exemption and the exemption under the special property tax. We do not give to the overseas taxpayer, of course, the benefit of any of the concessional deductions, or of the exemption in respect of land tax and many other like benefits. But the amendments confer benefits which it is within our power to give. By the simple processof these amendments it is possible to remedy the principal grievance which has been voiced in the last twelve months in London, the existence of which has made it impossible for Australian companies to raise further capital or issue debentures in London.

Amendment agreed to.

Further amendment (by Mr. Casey) agreed to -

That the words “or non-resident “, subclause (3) he omitted.

Clause, as amended, agreed to.

Clause 82 agreed to.

Clause 83 (Leases - Definitions.)

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

. -I seek the removal of an injustice in regard to the sale of a leasehold. In Queensland, grazing areas, farms, or selections are often held on leasehold, and, if lessees, after occupying the property for seven years, sell, they are taxable on the amount of purchase money. In New South Wales, lessees occupy holdings under what are called “ convertible-perpetual “ leases. A lessee, therefore, can convert from a convertible-perpetual lease into freehold, and then he can sell the property and not be taxable on the proceeds of the sale. The man who holds leasehold in Queensland is, therefore, at a disadvantage in comparison with the man who owns land on convertible-perpetual lease in New South Wales, and also in comparison with the man who holds freehold land in Victoria. All are landowners, but they own land in different tenures. In Queensland, however, to make sure that a man is a bona fide selector, grazier, or agricultural farmer - - whatever the case may be - after taking up a leasehold, he is required to live on it for seven years. After that he should occupy a position similar to that held by occupiers of land in New South Wales and Victoria, where freehold tenure operates, and have opportunity to dispose of his holdings without being subjected to tax on the sale; but, because landholders in Queensland do’ not have the option to convert into freehold, as they have in New South Wales, their positions are vastly dissimilar to the disadvantage of the Queensland man. This is an injustice which should not be permitted in uniform legislation.

Mr Lane:

– Is this not a State matter?’

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

– If the honorable member had studied the bill as I have he would know that it is a matter not for the States but for this Parliament which is now dealing with a uniform taxation measure. On the general principle of having a uniform taxation law operating throughout Australia, some consideration should be given by the Commonwealth Government to the case of the Queensland lessees.

Many city residences have been erected on perpetual leaseholds in Queensland. Workers are given 25 years in which to pay for these homes, but they have no option of converting their leaseholds into freeholds. For instance, I might be living on leasehold property whilst the man next door is living on freehold. If I live in my home for seven years and then sell it, I am compelled to pay tax on the proceeds of its sale, whereas if the man next door lives on his freehold property for the Same period and also sells he escapes the taxation to which I, as a leaseholder, am subjected. This is discrimination between two sets of persons.

Mr Casey:

– If the man living on the leasehold property makes a loss on the deal, he can deduct it from his income tax return.

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

– Yes, but that is not the crux of this matter. If the man on the freehold makes a loss, he should also be able to deduct it.

Mr Casey:

– But he does not.

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

– These men should be placed on the same footing, and if the man on the leasehold property makes a loss he should take the same risk as the man on the freehold.

I do not propose to move ah amendment, as, although I was not present for the whole of the Minister’s reply on the second reading to this point when it was raised by the honorable member for Lilley (Sir Donald Cameron), I understand that the Treasurer (Mr. Casey) has undertaken to have an inquiry instituted, probably by the chairman of the Royal Commission on Taxation (Mr. Justice Ferguson), with a view to rectifying the trouble, and putting the leaseholder in the same position as the freeholder. As the Labour party stands for leasehold in preference to the freehold system, I hope that this investigation will be made and that, if it be found that an injustice is operating in any State against leaseholders, it will be set right.

An instance of the discrimination between leaseholders and freeholders is provided in a comparison between Tully, a sugar town in Queensland, and Cairns, another sugar centre. In Tully the land is held on perpetual leasehold, whilst in parts of the Cairns district it is held on freehold title. Let us imagine two storekeepers, one in each centre and both in occupation for seven years. When the man at Cairns sells his property the purchase money is not tax able, but if the man at Tully sells out he is taxed on the purchase money. This is an unfair discrimination between two men, one of whom holds land on the old freehold title, and the other holds land on the new title of leasehold, which, in my opinion, is directed with the intention of destroying the system which largely operates in Queensland and in some districts in New South Wales. I do not know whether it operates to any extent in Victoria. The matter should be investigated so that the legislation may be made uniform, and taxpayers placed on an equal footing.

Clause agreed to.

Clause 84-

The assessable income of a taxpayer shall include, in addition to rent, any premium received by him in the year of income, and any consideration so received for or in connexion with his assent to any grant or assignment of a lease.

Mr HAWKER:
Wakefield

.- I move -

That thu clause be amended by adding the following proviso: -

Provided that where a lease of land from the Crown used for primary production assigned or surrendered was acquired by the taxpayer before the sixth year of income in which the lease is assigned or surrendered the amount of net premium (or if in respect of the transaction there are more net premiums than one - the sum of the net premiums) to be included as assessable income shall not bc greater than the total of the amounts allowed to the taxpayer under this act and the previous nets in respect of the lease.”

I am confident that, if accepted, this will rectify the injustice referred to just now by the honorable member for Kennedy (Mr. Riordan), and by the honorable member for Lilley (Sir Donald Cameron) in his second-reading speech. The revenue would be safeguarded against double deductions - if I may so describe them - and jobbers in leases would not benefit, because they certainly would not hold a lease for six taxation years, which would be practically equivalent to occupation for seven years. That taxpayers in the newer districts of Australia should be subject to income tax upon the increment of capital value when they sell a property which may have been worked by them for many years, while taxpayers in a State like Victoria, or in the older settled districts of some of the other States, should be exempt, because the) hold their property under the older title of freehold, is absolutely unjust. It is not only in Queensland that this injustice occurs. Over perhaps 90 per cent, of Western Australia, practically the whole of the Northern Territory, arid a very big area of New South Wales and South Australia, the tenure is pastoral lease. There are in those regions leases that have been held by one individual or family for very nearly a lifetime. The value of those leases has increased commensurately with the value of industry and property in Australia. I appreciate the force of the desire of the taxation authorities and of the point made by the royal commission, that persons who traffic in leases should not escape taxation any more than those who traffic in land or other assets of that sort. But there is a distinction between hotel and similar leases which are a wellknown subject of dealing and brokerage, and leases held from the Crown for long periods. This is recognized by the taxation law of New South Wales, which provides that a taxpayer who has benefited by the provision which permits him to make a deduction on account of depreciation shall not then escape tax ot. the profit made on the sale of a lease. Evasion of tax will be prevented if the committee accepts my amendment, which is substantially the same as that provision. I urge the Treasurer (Mr. Casey) to agree to it, and thus obviate a real injustice.

Sir Donald CAMERON:
LILLEY, QUEENSLAND · UAP

– Speaking to the motion for the second reading of the bill last week, I referred to the taxation imposed on the profit made from the sale of a Crown leasehold used for grazing purposes. I then expressed the view that this was a most unjust and iniquitous form of taxation, and said that my objection to it would be met if the Treasurer (Mr. Casey) could see his way to embody a provision similar to that contained in clause 94 of the measure which is now before the legislature of New South Wales. The amendment of the honorable member for Wakefield (Mr. Hawker) is practically identical with that provision, and I shall be most gratified if it is accepted. I again impress upon the Treasurer the definite opinion which I share with many other well-qualified per sons, that Crown leaseholds used for grazing purposes should be placed on an absolutely different basis from that of any other Crown leaseholds. I shall cite one ease which has come to my notice recently. A grazing farmer, who had reached the age of 65 years, decided to sell the farm which he had occupied for many years, and live, in future, in the city. Upon inquiry, however, he found that he would have practically nothing left from the proceeds of the sale after he had paid this iniquitous tax. The Treasurer, last week, gave the assurance that he would ask either Sir David Ferguson or another member of the royal commission to give further con.sideration to this matter without delay; but as the amendment covers all that I have endeavoured strongly to contend, I shall support it if the matter goes to a vote.

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

.- The amendment is acceptable to the Opposition. In this matter Queensland is affected to a greater extent than any other State. Any proposal to bring the Federal law into conformity with the State law should not cause a considerable loss of revenue to the Commonwealth. Queensland taxpayers should not be placed at a disadvantage compared with those in other States by reason of the fact that their State is subdividing its lands into leaseholds. The practice in the past has been to agree to the passage of legislation upon an assurance being given of subsequent amendment, should that course be considered desirable as the result of further investigation. In this case the process should be reversed. The injustice should now be removed, and the Treasurer should accept our assurance that, if his promised investigation by a member of the royal commission proves that a greater injustice is being done or a considerable loss of revenue is being caused, we will help him to have the provision removed from the act.

Mr FRANCIS:
Moreton

.- I ask the Treasurer (Mr. Casey) to consider favorably the amendment of the honorable member for Wakefield (Mr. Hawker). This tax is certainly iniquitous, and is working seriously to the detriment of the sale of Crown leaseholds in Queens- land. The advice which I have received from persons in the pastoral industry is that such sales are absolutely stagnant, because an examination of the matter by persons anxious to sell shows that, although young men who wish to take up these leases are prepared to make a reasonable offer for them, a sale would not be profitable to them, because of the extraordinary amount which they would have to pay under this iniquitous tax. An alteration of the law is vitally imperative.

Mr CASEY:
Treasurer · Corio · UAP

– This clause is similar to the provision in the present act. The honorable member for Wakefield (Mr. Hawker), and also the honorable member for Lilley (Sir Donald Cameron), particularly in his second-reading speech, question the fairness of taxing the sale of leaseholds from the Crown. This is an Income Tax Assessment Bill. The Royal Commission on Taxation, and, I think, practically every other authority which has dealt with the subject, have held the view that premiums received from the sale of leaseholds can only, in reality, be regarded as commuted rent. It is always possible to sell a leasehold for something short of its full term. For instance, a leasehold which has fifteen years to run, may be sold for fourteen years, and then revert to the original owner. In that case, the premium received is commuted rent.

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

– That would not apply to Queensland, where, in the case of the sale of a lease, the purchaser becomes the leaseholder after seven years.

Mr CASEY:

– That may be so. There are two ways of looking at this subject. Some honorable members may consider that the proceeds of the sale of a lease should be treated as we treat the proceeds of the sale of a freehold property. The proceeds from the sale of a freehold property are regarded, under our taxation laws, as capital and not income. It may be argued that the sale of a lease is, in fact, not very different from the sale of a freehold property, particularly in some States. They would say that the proceeds should not be treated as assessable to the seller. But if that course were taken the purchaser would not be able to deduct the amount he paid in premium.

A very simple way out of the difficulty would be to treat leaseholds as freeholds; but that has never been suggested to me, nor, I think, to the Government. That coursewould be defensible, for in such a case the proceeds would be taxed in respect of the seller, and the outgoing would not be deductible in respect of the purchaser. But what the honorable member for Wakefield is putting forward is, as I see it, that something less than the cost should be taxed to the seller.

Mr Hawker:

– Yes, the amount written off.

Mr CASEY:

– If that course were adopted, certain other amendments would, of course, be necessary. We should have to deal with the deduction aspect of the subject. If the honorable member for Wakefield is proposing to follow the New South Wales procedure, it will be necessary for him to move other amendments.

Mr Scullin:

– The premium that a. purchaser pays is allowable as a deduction from his income, for it is treated as rent.

Mr Hawker:

– I do not propose that the premium paid should be allowed as a deduction. My idea is to leave the present bill as it stands with regard to depreciation. I do not intend to propose that the premium shall be deducted, but that the existing provisions in regard to depreciation should continue.

Mr CASEY:

– If that is so, the scheme the honorable memberhas in mind departs substantially from that of the New South Wales law.

Mr Scullin:

– The appreciation that is taxed in the case of a sale should not be greater than the amount allowed to the purchaser.

Mr CASEY:

– The position of the purchaser must be considered. Under the New South Wales law the purchaser may claim the full amount spread over a suitable period. The scheme of this bill is equitable, for it has regard to the position of both seller and purchaser.

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

– Why not put them both on the same basis, as in the case of a freehold deal?

Mr CASEY:

– That proposition has never been submitted to me. I should be surprised if the honorable member could get any of the graziers’ organizations to recommend that course. If such a proposition were made, it would be seriously considered, for it would make possible many simplifications of the law that are not possible under the present method of dealing with leaseholds. The taxation of the proceeds of the sale of leaseholds is a most complicated procedure. It is very difficult to act equitably towards both purchaser and seller. The scheme of this bill has been recommended by the Taxation Commission, and endorsed by the Taxation Commissioners, who feel that it will work with reasonable fairness to all taxpayers. The Taxation Commissioner inquired very carefully into this whole subject. I suggest to honorable members that it is nol possible in the course of this discussion to draft a single clause or even a group of clauses that would completely recast these provisions, maintain equity in all respects and avoid serious anomalies. In the circumstances, I appeal to the committee to accept these clauses on my assurance, that the Government. in the event of any inequity becoming manifest, will direct that an impartial general inquiry be made into the whole subject of the taxation of the proceeds of the sale of leaseholds and also the general question of depreciation. It must be borne in mind that conditions throughout Australia vary considerably. The conditions in Queensland have been eloquently described by the honorable member for Lilley. Two different sets of conditions require consideration iii New South Wales, those governing the western leases and those governing other leases. Different conditions again are experienced in Victoria, South Australia and Western Australia. The complication also has to be borne in mind that these provisions affect leases of all kinds, and not merely pastoral leases. I confess that I feel myself completely incompetent to say off-hand in this chamber how any amendment to the scheme outlined in the bill would operate. It would be far better for us to adopt the proposals of the bill, which have been carefully considered, on the undertaking that, if necessary, an impartial investigation will be made as soon as possible after any inequities are discovered. In such circumstances, the Government would be quite prepared to introduce a complete series of amendments to meet the case. I therefore appeal to the honorable member for Wakefield (Mr. Hawker) to withdraw his amendment.

Mr SCULLIN:
Yarra

.- We are now considering some of the mostcomplicated aspects of our scheme of taxation. I have considerable sympathy with the Treasurer (Mr. Casey), but a careful reading of the amendment of the honorable member for Wakefield (Mr. Hawker) suggests to me that he has made a fair proposition, though redrafting may be necessary. Of course other consequential amendments would have to be made if this amendment were accepted. The purchase of a leasehold should really -be treated like the purchase of a freehold. As the law stands to-day, the seller of a leasehold has to pay income tax on the appreciated value of his lease.

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– Which he may have created.

Mr SCULLIN:

– If a man sells a freehold, he does not pay income tax on any accretion in the ,value of it, because it is regarded as an accretion of capital, and we do not tax capital under an income tax measure; but the purchaser of a leasehold gets a deduction from his income of the amount of premium he has paid on the leasehold because it is regarded as commuted rent. He cannot, as the Treasurer has said, have it both ways. I agree with the Treasurer to that extent. If the sale of a leasehold were treated as the sale of a freehold, the purchaser and seller would be on an equity. It is difficult to ascertain the exact intention of the honorable member for Wakefield. I gather that the honorable member does not ask for any more than that the seller of a leasehold shall not have his income assessed in respect of the appreciation in the value of the leasehold to any greater extent than the allowance made to the purchaser as a deduction.

Mr Hawker:

– No. He has already been allowed something.

Mr SCULLIN:

– I take it that the amendment means that if Brown sells a lease the amount he receives for it is not to be treated -as commuted rent. That seems to me to be fair, but an additional amendment would be necessary to deal with the purchaser. Thi3 is a step in the right direction. A man who sells a leasehold which has improved in value largely as the result of his own efforts should not have to pay income tax in respect of the increased value, for the man who makes a profit on the sale of a freehold property does not have to pay income tax on the increasement. Whatever we do, we must take care to meet the position both ways. It isreasonable that a man who holds a lease for ten years for which he has paid £250, and sells it for £500, should not be asked to pay on more than the difference.

Mr Casey:

– That is the situation under this bill, but the amendment goes much further than that.

Mr HOLT:
Fawkner

.- I was very pleased to hear the Treasurer (Mr. Casey) say that an investigation would be made into the whole subject of leaseholds. The problems involved in the taxation of leaseholds are not confined to the pastoral industry. The investigation that has been indicated would be welcomed by very many people. I point out that in the motion picture industry money spent by leaseholders on their theatres is not an allowable deduction by way of depreciation. It does not improve the capital value of the property because of its specialized character.

Mr Casey:

– That is if the improvements are done under covenant.

Mr HOLT:

– Yes, but not if the improvements are not made under covenant. In respect of four theatres in Bourkestreet, Melbourne, however, considerable sums of money were spent on improvement, but not under covenant and therefore deductions were not allowable. When the properties were subsequently sold the theatres themselves were pulled down. In short, such expenditure does not improve the capital value of the premises because a picture theatre is good only for a picture theatre and nothing else. The old properties were all torn down when the leases were sold, and they were replaced by retail establishments. Theatres and picture theatres differ from retail establishments generally in that they are constructed for a special use and are of no value for any other purpose. To illustrate my point, I have received today a letter from Hoyt’s Theatres Limited of Melbourne, in which it is pointed out that in the six years ended the 30th June, 1935, the company made a net profit in the aggregate of £173,313, and yet in that period it paid in direct taxation consisting of Federal land, Federal income and State land and State income taxes, no less than £149,196. The preference shareholders who have supplied nearly £1,000,000 of capital have received only £96,407 in dividends, while in the. same period they have had to forgo’ no less than £268,593. The ordinary shareholders have not received one penny piece. During the same period the business maintained by the capital of those shareholders, collected, on behalf of theCommonwealth and State Governments, entertainments tax amounting to £450,000. In short, the shareholders supplied capital, ordinary and preference, amounting to £2,285,000, and during six years’ operations received only £96,407, while, at the same time, the company paid to governments a total of £599,197. This particular company complains that the difference between the amount of depreciation on its leasehold properties which it has to allow to satisfy its auditors and the amount of depreciation allowed by governments generally for taxation purposes costs it an additional taxation between £7,000 and £10,000 per annum. With these facts before him, the Treasurer will, I am sure, agree that the position of lessees in this particular industry requires special investigation.

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

.- In my opinion a lease is a wasting asset. The person who acquires a lease of land from the Crown effects certain improvements to the property and fulfils the requirements laid down in the land laws. If the lease is for a period of 28 years and he remains on the land for seven years his asset is then a lease which has 21 yearsto run. If he continues on for a further five years the value of his asset is diminished to the extent that he then possesses a lease of only sixteen years’ duration. By that time the value of the lease has wasted considerably. Following the failure of gold-mining in the Gympie district the land was leased to dairyfarmers. So successful has been the establishment of the dairying industry in this district, that in one year the value of the output of cream exceeded the annual value of the gold formerly mined. For the sake of argument let us assume that a dairy-farmer commenced farming operations with an area of 500 acres, but as the result of clearing, fencing and grassing the land and of other aids to production, the living area in the Gympie district during the last twenty years has possibly been reduced from 500 to 250 acres. It is the successful settlement of such areas as the Gympie district that has had a marked effect upon freehold properties in Brisbane, These have increased in value as the result of the efforts, not of the city freeholders, but of the country leaseholders. An efficient dairy-farmer who subdivides, grasses and waters his land is able to carry on much more successfully than the casual farmer who considers it does not matter so long as he has a few cows. A number of people start off with the idea that it is possible to make a. success of the dairying industry without having the necessary knowledge. A leaseholder, by his individual efforts, may improve his property, but he has an asset which year by year wastes away, and yet, when he sells the lease, he is taxable in respect of the proceeds of the sale. On the other hand, a man who bought freehold land in Brisbane at the same time and after holding it for a similar period, sells it, is not taxable. The basis of all taxation should be fairness. All honorable members realize that it is the duty of the Commonwealth Treasurer to safeguard the revenue, but not at the expense of a special class, and in the amendment now before the Chair, we do not ask that the Government should forfeit revenue received from taxation; our object is simply to secure uniformity, which, after all, is the principal object of this bill. In any attempt to . bring about uniformity, however, there must also be equity. All we ask is that those who hold land under leasehold tenure, shall be placed in the same position as those who hold freehold properties. The amendment before the Chair has that objective in view.

Mr Abbott:

– After a certain period.

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

– That is so. Taxpayers who gamble in leasehold should not be granted this concession any more than those who gamble in freehold. That is why we say that a man engaged in grazing pursuits on leasehold property must live on it seven years before he can claim this concession. In Queensland a transfer of leasehold land is not permitted until after the occupant has held the land for seven years unless on medical evidence a man is able to prove that his health will not enable him to carry on. We ask that in respect of income taxation a bona fide selector holding a property under lease shall be placed in the same position as a man who owns freehold land. As I have said, despite what may be done to improve the value of a lease, land held under leasehold tenure is a wasting asset. If, as the Treasurer has said, upon subsequent investigation it is found that this concession is not desired, the act .can easily be amended.

Mr Casey:

– Except that by so amending the act we might destroy uniformity. All the governments of Australia, except the government of New South Wales, have accepted the whole of the proposals contained in this bill. The Government is unable to depart from the accepted plan if it is to keep faith with the other governments.

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

– I understand that a conference of taxation commissioners, Premiers and Treasurers was held to bring about uniformity in taxation. We are seeking to amend not a State law but a Federal law.’ If this is a State matter we are wasting time in dealing with it. We are dealing now with a law which is to have application over the whole of the Commonwealth; the Commonwealth Parliament knows no boundaries. The States should be left to accept responsibility for their own affairs. Ever since I have been a member of Parliament the Opposition has had to accept assurances from the Government. All we ask now is that the Treasurer should accept this amendment and our assurance that if it creates an injustice we will not oppose its subsequent withdrawal or amendment. Honorable members on this side are not in a position to have this bill recommitted for reconsideration at a later date. We make this request on behalf of bona fide leaseholders, not those who purchase leases for speculative purposes. Honorable members on this side do not stand for gambling or profiteering in leaseholds, and therefore we say that a taxpayer must show that he is a bona fide land selector who has held his property for not less than seven years before he can come under the amendment. Silting suspended from 6.15 to 8.15 p.m.

Mr ABBOTT:
Gwydir

.- This matter of taxation on the sale of Grown leaseholds chiefly affects Queensland, though other States are affected in varying degrees. It is of greatest concern to small landholders, of whom there are a great many in Queensland holding leases of 20,000 acres and upwards. On Sunday last a deputation discussed the matter with the Treasurer (Mr. Casey), and I take this opportunity to express my gratitude to him for having given up his time to hear its case. The Treasurer gave the deputation a sympathetic hearing, and the members of the deputation, in their turn, were able to place before the Treasurer some new information on what is admittedly an involved subject. The Treasurer promised that the matter would be referred for further consideration to some authority - perhaps the Royal Commission on Taxation if it could be resuscitated for the purpose - with a view to arriving at a satisfactory solution which would preserve uniformity in taxing methods. Members of the deputation were pleased to receive that assurance, but I cannot help feeling that they would be much more pleased if the Treasurer would agree to the amendment moved by the honorable member for Wakefield (Mr. Hawker). The amendment follows very closely sub-clause (2.) of clause 94 of the Income Tax Assessment Bill, which is now before the Parliament of New South Wales. The provision is as follows : -

Where a lease (other than a lease of premises in respect of which a publican’s licence or an Australian wine licence is for the time being in force) assigned or surrendered was acquired by the taxpayer before the sixth year prior to the year of income in which the lease is assigned or surrendered the amount of net premium (or if in respect of the transaction there are more net premiums than one - the sum of the net premiums) to bc included as assessable income shall not be greater than the total of the amounts of deductions allowed to the taxpayer under this act and the previous acts in respect of the lease.

I suggest to the Treasurer that, if he feels that he cannot at present accept the amendment of the honorable member for Wakefield, he might defer consideration of the clause until a later stage, so that he can go into the matter further. As the act now stands, and as it will continue to be after the passing of this bill, the position of the leaseholder, in Queensland particularly, in unenviable. I know something of the conditions prevailing there, because my electorate borders on Queensland, and I am familiar with many actual cases. Take the case of a man who, 30 years ago, took up a lease of 20,000 acres. Now, when he is old and feels that he can no longer work the property, he sells for 25s. an acre. He is allowed to deduct 5s. an acre for improvements, and is then taxed on the remaining £20,000 as profit earned in the year of sale. He will be fortunate if, after paying Federal and State taxes, and an overdraft, he has £5,000 or £6,000 left to retire on. Even if this amendment were accepted, the revenue would not suffer to any great extent. I have been assured by many prominent stock and station agents in New South Wales and Queensland that, at the present time, owing to the onerous taxation provisions, the sale of Crown leaseholds has practically ceased, except in those cases where it is necessary, upon the death of a lessee, to wind up an estate. Were sales taking place freely, trade and employment would be stimulated, because, when a new man takes over a lease, he generally spends a considerable sum on improvements. We may assume from the speeches of the honorable member for Lilley (‘Sir Donald Cameron), and the honorable member for Kennedy (Mr. Riordan), that Queensland would be satisfied with the amendment of the honorable member for Wakefield; and as it is practically identical with a provision in the New South Wales bill, the States of New South Wales and South Australia are also more or less in line. That leaves Western Australia. Victoria and Tasmania, and of these the subject of leaseholds is of importance only to Western Australia. There may be a few leasehold properties in Western Victoria, but the number is small. I should have been quite satisfied to accept tlie undertaking of the Treasurer that the matter will be reviewed by the Taxation Commission, but, the present amendment having been moved, I shall support it.

Sir LITTLETON GROOM:
Darling Downs

– I do not wish to repeat the arguments advanced by the honorable member for Lilley (Sir Donald Cameron) and the honorable member for Kennedy (Mr. Riordan) on behalf of Queensland interests, and I suggest to the Treasurer (Mr. Casey) that he should consider the suggestion of the honorable member for Gwydir (Mr. Abbott). The Treasurer seemed to think that, if he accepted the amendment, consequential amendments would he necessary in other parts of the bill, and this might interfere with the general purpose of the legislation. I suggest, therefore, that he postpone consideration of the clause at this stage to enable the legal officers to go into the matter, and decide just what alterations the amendment would involve. I appreciate the desire of the Treasurer to get the bill through this House, and through the Senate also, if possible, before Parliament adjourns; but as this is a matter of so much importance to Queensland, and, presumably, to New South Wales and Western Australia also, I think we should be justified in postponing further consideration of it for a little while. It should not be beyond the power of the legal officers to insert a clause in the bill containing the substance of the New South Wales provision.

Mr CASEY:
Treasurer · Corio · UAP

– Perhaps it would clarify the issue if I were to give an example of what would take place upon the sale of a lease under the act as it stands, and under the bill, and of what would take place upon the sale of the same lease under the amendment of the honorable member for Wakefield (Mr. Hawker). I draw the attention of the honorable member for Wakefield to the fact that this provision is not an innovation in Commonwealth legislation. It has been in the act for years. It was first put in the original act in 1916, and continued in force for six or seven years. It was withdrawn from the principal act in order to be placed in a separate measure, in which form it was passed through this House, but was rejected by the Senate. I do not know what the political circumstances were at the time, but the Government of the day accepted the rejection of the measure by the Senate, and it was not until 1930 that it was put back into the act, where it has been ever since. Let us consider a case in which a man buys a lease with twelve years to run. For the sake of simplicity let us say he pays £12,000 for it, and at the end of five years sells it for £30,000. In the meantime he has been allowed remissions of £1,000 a year for those five years. Under the present act, and under the bill now before us, he would pay tax on £30,000, less the amount for which he had not yet been allowed consideration by way of remissions, namely, £7,000, so that he would be taxed on £23,000, which would represent his profit. Under the proposal of the honorable member for Wakefield the man would pay tax only on so much of the £23,000 as had already been permitted to him by deductions over the five years during which he held the lease, that is, £5,000.

Mr Abbott:

– Will the Treasurer consider the case of a man who did not buy his lease and then sell it again, but who took up the lease from the Crown in the first place?

Mr Hawker:

– Such a position would not arise under my amendment, which has a proviso that the land is to be held for six years.

Mr CASEY:

– That is so, but the principle involved has been- correctly stated by me.

Mr Hawker:

– The Treasurer has invented an extreme case.

Mr CASEY:

– The honorable member may substitute other figures. I have given an example which demonstrates the principle. The honorable member for Lilley (Sir Donald Cameron) said that the position in Queensland was different from that in other States, but Queensland leases at least bear some relation to perpetual leases. Under the law of that State, a leaseholder has the option, I understand, within five years of the normal termination of his lease, of terminating it five years before the end of its term, if he agrees to take a further lease of 28 years.

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

– As a measure of drought relief, if a man’s asset has wasted away, and he desires to restock, he may surrender five years of his lease and hold the property for 23 years.

Mr CASEY:

– I was under the impression that some situations arose in which a leaseholder could get an extension of his lease, thus putting the Queensland leases in a rather different position from others throughout Australia. It is not desirable to make special provision in respect of Queensland in this matter. Under the New South Wales Act, provision is made for the taxation of the profits on the sale of freehold property held for less than seven years, and this, of course, marches side by side with the provision of about seven years with regard to the taxation of the proceeds of the sale of leaseholds. I do not imagine that honorable members would like a clause of that kind introduced into Commonwealth legislation.

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

– In Queensland, a perpetual lease is not convertible, whilst in New South Wales it is.

Mr CASEY:

– I believe that to be so. If honorable members refer to paragraphs 745 to 749 of the report of the Royal Commission on Taxation, at pages 126 and 127, they will see the gist of the argument with respect to the commission’s recommendations as to the taxation of the proceeds of sales of leasehold. I can only repeat that I believe that the best way to achieve genuine reform is by a close and unbiassed investigation. This is one of the clauses in regard to which it is highly desirable to obtain uniformity with, at any rate, amajority of the States. At the present time we have uniformity in the proposals made to the various parliaments, except that of New South Wales. The other parliaments are all in agreement on the principles contained in this measure. If we are to obtain uniformity in the interests of as many of the taxpayers as possible, we should have an investigation by unbiassed persons, their recommendations should be submitted to the State governments, and, if any further amendment is recommended, we should try to have it accepted by as many governments as possible, and introduced in the various parliaments.

Mr HAWKER:
Wakefield

.- I sympathize very much with the Treasurer (Mr. Casey) in having to consider a number of amendments in this highly technical measure. I realize what a worry it must be to him, particularly in view of the extreme example which he gave, but which did not come within the literal scope of my amendment. The example mentioned, in which it is assumed that a man buying a lease of twelve years would be able to resell at a profit of 250 per cent. when the lease had only seven more years to run, is one that suggests the discovery of a gold mine or something of that nature on the land concerned, and indicates that a much greater profit would have been made if it had been freehold. In the greater part of Australia, where the system of land tenure is leasehold, the property is frequently held for the best part of the lessee’s lifetime, and is sold only when theowner, worn-out and broken after a life in the bush, finds it necessary to retire. In these cases, the increment should not be treated differently from the profit upon the sale of a freehold, with the one exception that any concession which the taxpayer has received because a leasehold is a wasting asset should be taken into account and taxed. I join the honorable member for Kennedy (Mr. Riordan) in assuring the Treasurer that he will have our assistance in straightening out any anomalies that might arise through acceptance of the amendment. The Treasurer said that the clause, as framed, has the approval of all the State parliaments.

Mr Casey:

– I said, “ With the exception of New South Wales.”

Mr HAWKER:

– So far as I know, it has not been accepted by one of them.

Mr Casey:

– I said that the provision is included in their bills which are designed to achieve uniformity.

Mr HAWKER:

– The Treasurer’s proposal may have the approval of the commissioners of taxes, but not of the parliaments. It will be exceedingly difficult to rectify an injustice once this clause is given effect. It would be much easier to insert my amendment as a safeguard than to amend subsequently a provision which has been concreted in because it is in conformity with the ideas of the commissioners and the treasurers in five out of the six States. Because I think my proposal fair, and in line with the principle of the New South Wales act in regard to leaseholds, I hope the Treasurer will accept it.

Question - That the amendment (Mr. Hawker’s) be agreed to - put. The committee divided. (Chairman - Mr. Prowse.)

AYES: 32

NOES: 19

Majority . . 13

AYES

NOES

Question so resolved in the affirmative.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 85 and 86 agreed to.

Clause 87- (1.) Where improvements, not subject to tenant rights, have been made on leased land by a lessee which he is required to make under the terms of the lease, or which are made with the written consent of the lessor, the following provisions shall apply: - (2.) This section shall not apply where the lessee is required to make the improvements under the terms of a lease entered into before the commencement of this act, or where the improvements are made in pursuance of a consent given before such commencement or in any of the cases specified in sub-section (3.) of the next succeeding section.

Mr HAWKER:
Wakefield

.- I should like the Treasurer (Mr. Casey) to give an explanation as to what provision he or the Commissioner of Taxation intends to make to prevent an injustice of a type which I shall explain. I do not object to the principle that work done in the shape of structural improvements on a lease should be taken into account in forming income, but it is possible that an agreement may be made between a lessee and the lessor for work to be done by the lessee, of which there may be no actual record on the lease document. The lessor may then sell the lease, and it is possible that the purchaser of a reversion of the lease may unknowingly incur liability to tax. The same kind of thing occurs under the land tax. laws, under which a purchaser of land incurs, with the land, liability for any tax which the Commissioner is unable to collect from the vendor. But the Land Tax Assessment Act provides for the purchaser to inquire from the Taxation Department whether all tax has been paid up to the time of purchase. If he receives a written assurance that that is so, he is under no liability to make good any tax deficiency. Similar difficulties may arise, as I am sure the Treasurer can see, in the case of written agreements, which may not be recorded on the lease, and of which the purchaser of the reversion of the lease, the landlord, one might say, is not aware. In certain circumstances, if anything happens to the vendor of the lease, the purchaser is liable to the tax. I shall be glad if the Treasurer will explain to the committee what provision he, or the Commissioner, intends to make to prevent anomalies or injustices of that sort arising.

Mr CASEY:
Treasurer · Corio · UAP

– In the circumstances which the honorable member for Wakefield (Mr. Hawker) presupposes, I should think that, in the first place, if the transaction were an honest one, there would be provision in the lease itself to cover it. In other words, there should be at least a clause in the lease setting out the conditions in respect of improvements. As soon as this bill becomes law, presumably such new provisions as are contained in itwill become fairly widely known. One of the first questions which a prospective purchaser would ask would be as to the situation in respect of improvements. The lessee could not conceal that situation from him, and if he did so, I suspect that the purchaser would have redress in law. This question was considered by the conference of taxation commissioners, and also by the conference of treasurers when the bill was considered in full, and it was decided not to introduce into it any specific obligations on the department in this regard. For one thing, abuses might follow the release of information by the department to other taxpayers. Nevertheless, I should think that if the purchaser were to get the written approval of the seller, there would be nothing to prevent the department giving the information, provided, of course, that there was no covering clause in the lease, and that the purchaser was unable to satisfy himself from the lessor. I do not see that there should be any need for an approach to the department, unless one person distrusted another person. If full disclosures were made between the parties there would be no need to go to the department, except, possibly, to check up figures. I hope that that will satisfy the honorable member.

Amendments (by Mr. Casey) agreed to-

That the words “ Where improvements, not subject to tenant rights, have been made on leased land by a lessee which he is required to make under the terms of the lease, or which are made with the written consent of the lessor, the following provisions shall apply: - “ sub-clause (1) be omitted with a view to insert in lieu thereof the following words : - “ Where improvements, not subject to tenant rights, have been made upon any land by any person as consideration for the grant to him of a lease of that land, or by a lessee of the land who was required to make them under the provisions of the lease, or who made them with the written consent of the lessor, the following provisions shall apply: - “

That after the word “ apply “ sub-clause (2) the following words be inserted: - “ where the agreement under which improvements were made as consideration for the grant of a lease was entered into before the commencement of this Act or

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

Clause 88- (1.) Where a taxpayer has paid any premium, and the lease is a lease of premises or machinery used for the purpose of producing assessable income -

  1. if he was entitled to the lease during the whole of the year of income, or in the case of a premium paid for the surrender of a lease, if he would have been so entitled had the lease been transferred to him and ho had not been entitled to the reversion - the amount ascertained by dividing the amount of the premium by the number of years of the period of the lease unexpired when such payment was made; and
  2. if he was entitled to the lease during part only of the year of income, or in the case of a premium paid for the surrender of a lease, if he would have been so entitled had the lease been transferred to him and. he had not been entitled to the reversion - a proportionate part of the amount so ascertained, shall be an allowable deduction. (2.) Where a taxpayer has expended money in making on leased land used for the purpose of producing assessable income improvements which are not subject to tenant rights, and which he was required to make under the terms of the lease, or which hehas made with the written consent of the lessor given after the commencement of this act -
  3. if he was entitled to the lease during the whole of the year of income - the amount ascertained by dividing the amount of such expenditure, not exceeding the amount which under the terms of the lease he was rerequired to expend, or which he . expended with that consent, by the number of years of the period of the lease unexpired when the money was expended; and
  4. if he was entitled to the lease during part only of the year of income - a proportionate part of the amount so ascertained, shall be an allowable deduction.
Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That sub-clauses (1.) and (2.) be omitted with a view to insert in lieu thereof the following sub-clauses: - “ (1.) Where a taxpayer has paid any premium in respect of land, premises or machinery used for the purpose of producing assessable income, and in the year of income -

heis the lessee of the land, premises or machinery; or

in the case of a premium paid for the surrender of the lease,he would have been the lessee had the lease been transferrd to him and he had not been entitled to the reversion, a proportionate part of the amount of that premium, arrived at by distributing that amount proportionately over the period of the lease unexpired at the date when the premium was paid, shall be an allowable deduction. “ (2.) Where a taxpayer, who in the year of income is a lessee of land used for the purpose of producing assessable incomehas, either before or after the commencement of the lease; incurred expenditure in making improvements not subject to tenant rights on that land, and such improvements -

have, under an agreement entered into after the commencement of this act, been made as consideration for the grant to him of that lease;

are improvements which he was required to make under the provisions of that lease; or

have been made with the written consent of the lessor given after the commencement of this act, a proportionate part of the amount of that expenditure arrived at by distributing that amount proportionately over the period of the lease unexpired at the date when the expenditure was incurred, shall be an allowable deduction. In calculating the deduction under this sub-section, expenditure in excess of the amount,’ if any, specified in the agreement for the lease, or in the lease, or in the lessor’s consent, shall not be taken into account.”

This is a consequential amendment upon the amendments made to clause 87. There is an additional defect in this clause as drafted. It would allow a full year’s sinking fund for a lease held during the whole of the year of income, notwithstanding that the premium may have been paid or the improvements may have been in existence for part only of the year.

Mr.Holt. - Is there any variation under this amendment of the old arrangement covering improvements made under covenant?

Mr CASEY:

– It is an extension.

Mr Holt:

– Not necessarily under covenant ?

Mr CASEY:

– There could be an exchange of letters between the parties.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 89 to 101 agreed to.

Clause 102 (Income of deceased received after death).

Mr CASEY:
Treasurer · Corio · UAP

.- This is a new provision in Commonwealth taxation law, although it is not new in some of the States. In some of the States, I understand, there is a specific provision in the sense of this clause, and in New South Wales, although there is no specific provision to this effect, the law is administered in the sense of this clause, because of a legal interpretation of the act of New South Wales that that sense is inherent in it. The clause sets out to make liable to federal income tax in the hands of trustees of estates of deceased taxpayers income in the form of accounts that were unpaid at the death of those taxpayers or instalments in the nature of income that had not accrued but were owing to them at the date of death. The vast majority of individuals conduct their personal accounts, particularly for taxation purposes, on a cash basis, and during their lifetime make returns of their income on the basis of what they receive, not of what they are owed. If during the life of a taxpayer he cared to make his returns, not on a cash basis, but on the basis of what he had earned, even though he had not received it, this clause would not apply. I confess to ‘ honorable members that this is a contentious provision. Representations upon it have been made to the Government by a number of big trustee companies in Australia which deal with a very large number of estates. In Victoria and South Australia particularly, those representations have been to the general effect that the clause as it stands would introduce very considerable complication into the work of all trustees, whether they be trustee companies with adequate staffs to handle it, or, in greater degree, private individuals who are discharging the task of trustees for deceased persons. There is a difference of opinion as to the likely effect on the revenue. In some quarters it is represented that the probable revenue would not be great, while from other sources the Government is led to believe that it will not be small. It is a clause to which I personally, and the principal departmental officers upon whom I rely for advice, have given a good deal of thought.

Mr Curtin:

– Did the royal commission recommend its inclusion in the bill ?

Mr CASEY:

– No; this is one of the points on which the royal commission did not touch. The bill deals with a number of matters in addition to those with which the royal commission concerned itself. This provision was embodied at the instance of the conference of treasurers, on the advice of the conference of commissioners. It has since been the subject of a good deal of thought, however, and the Government has decided not to persist with it. As a matter of equity, it should be read with clause 222, although the provisions are not interconnected. I ask the committee to negative the clause.

Mr PRICE:
Boothby

.- At the second-reading stage I pleaded with the Government to withdraw this provision, and I am pleased that my overtures have borne fruit.

Clause negatived.

Clauses 103 to 120 agreed to.

Clause 121 verbally amended and, as amended, agreed to.

Clause 122 agreed to.

Clause 123-

Whore a taxpayer derives income from carrying on mining operations in Australia (other than coal-mining) the capital expended by him in necessary plant and development of the mining property from which such income is derived (less the profits derived by him prior to the year of tax) shall be divided by the estimated number of years during which payable mining operations may be expected to continue under normal conditions, and the quotient thus obtained- shall be an allowable deduction.

Mr JAMES:
Hunter

.- I move -

That the words “(other than coal-mining)” be omitted.

If these words remain in the clause, the coal-mining industry will be specifically debarred from enjoying the benefit of a deduction which is allowed to other mining operations with respect to capital expended in necessary plant and development. Every honorable member must admit that the coal-mining industry is faced with very trying circumstances iri competing for the small amount of trade that is now offering. “We know that many factors contributed to the decline of the coal trade, the principal one being the supercession of coal as a power-raising unit. At one time the industry employed approximately 34,000 persons in the Commonwealth; to-day only about 18,000 are employed by it. It has been subjected to a great deal of taxation, and from time to time, in arbitration courts, and at conferences, the owners have advanced this as a reason for their inability to pay certain rates of wages and provide certain conditions of employment. At the present time it is advanced as a principal reason for their inability to compete with other countries in the overseas trade. The industry was once a large exporter, but very little coal is exported from Australia today. Every assistance must be given to enable it to regain the overseas trade which- has been lost. On a previous occasion I mentioned that the Government of South Africa pays a bounty of 7s. 6d. a ton upon all export coal and bunker coal, whereas Australia has done nothing but burden the industry with taxation. Goldmining, other metalliferous mining, and mining for iron ore, have enjoyed the privilege which I now seek to have shared by the coal-mining industry. I am pleased that the Treasurer (Mr. Casey) upon representations from this side - I am not so conceited as to follow the example of an honorable member opposite by claiming individual credit - proposes to withdraw the privilege from a company that is now operating in the iron ore industry. Primary-producing industries are granted exemptions in regard to expenditure upon wire netting, fencing, grubbing, clearing, draining, drilling for water, and practically every other operation with respect to which’ the Country party could make representations. Apart from these exemptions they also receive protective duties and bounties on most of their production consumed in Australia.

If it is fair to grant exemptions of this character to one industry, it should be fair to grant them to another. To deny this consideration to the coal-mining industry is to display unjustifiable partiality. The coal-mining industry is in a deplorable condition to-day. Seven thousand coal-miners in my own electorate are out of employment. If the burden of taxation could be lifted somewhat from the industry, it might be possible for the coal-owners to regain some of their lost overseas trade, and even to compete for the market that is now supplied with fuel oils. I refer particularly, of course, to the fuel required by the oil burning merchant ships. If coal were less costly, these ships might revert to coal fuel. Why should a consideration be extended to gold-mining enterprises that is denied to the coal-mining industry? If the idea is that gold is an exportable commodity, I submit that under more sympathetic treatment the coal-owners could regain some of their lost export trade. At one time, approximately 7,000,000 tons of coal were being exported annually from New South Wales. To-day the export trade does not exceed from 1,500,000 tons to 2,000,000 tons a year. The coal-mining industry has- been heavily encumbered with taxation, and yet at times the Government allows importations of coal into this country free of duty. The coal-owners, as honorable members will not need me to say, are no friends of mine. I am not pleading for them as individuals; I am pleading for the industry. I am interested in the welfare of the mates with whom I worked for years in the coal-mines, and who to-day are in distressed circumstances. Many of these men could at one time have put their hands on £50 or £100 without difficulty, but to-day they have to go cap in hand to some- government authority to beg for the miserable dole. This is objectionable to men anxious and willing to work. I cannot see any justification for denying consideration to the coal industry in respect of the capital expended from time to time on machinery and other plant and development work.

Mr CASEY:
Treasurer · Corio · UAP

– I can well appreciate the reason why the coal-owners have not approached the honorable member for Hunter (Mr James) on this subject. It would be entirely against their interests to be placed under the conditions for which the honorable member is pleading. The object of this provision is to meet the circumstances of mining companies of a speculative character which have a relatively short life. If such companies were placed under ‘the ordinary conditions applicable to depreciation, they would be under a handicap. These provisions are an alternative to the ordinary form of depreciation, and provide for an accelerated depreciation. If during the relatively prosperous years through which the coal-mining industry had passed - which, unfortunately, do not show any sign of recurring - it had been placed under these particular conditions of depreciation, its profits would long ago have overtaken the capital expended on development and plant, and it would now not be entitled to further consideration in respect of depreciation.

Mr Nock:

– That is unless more money had been spent on new plant.

Mr CASEY:

– Very heavy expenditure on new plant would be necessary to entitle the coal-owners to the benefit of these provisions. The companies are very much better off under the ordinary conditions that apply to depreciation. I assure the honorable member for Hunter that there is nothing sinister in the attitude of the Government to the coalmining industry, and, in the circumstances, I suggest that he withdraw his amendment.

Mr JAMES:
Hunter

.- The reply of the Treasurer (Mr. Casey) is quite unsatisfactory to me. Although I had not been approached by any representative of the coal-owners until after I had delivered my second-reading speech on this bill, I have since had representations made to me on this subject which makes it abundantly clear to me that the application of these particular conditions to the industry would be beneficial to it. I wish to be fair to the Treasurer. I realize that he may not apreciate the very heavy expenditure involved in plant and machinery for coal-mining.

Mr Casey:

– Oh, yes, I do. I am a mining engineer by profession.

Mr JAMES:

– Large sums of money have to be spent annually in. timbering coal mines. The fact that the water dealt with in a coal mine is often highly impregnated with minerals is an important consideration. I have known the chemicals in the water underground to be so severe in their action that bearings and pumps have become seriously inefficient in 48 hours. The mechanization of the coal-mining industry is being carried on with remarkable speed. I recognize that a conflict of opinion exists a.s to whether machinery should or should not be kept out of industry, it being clear, of course, that the introduction of machine power must lead to the displacement of man power. Personally, I do not wish the clock of progress to be put back; rather do I desire that the workers should reap the benefits of progress in science and invention by a reduction of working hours. This particular subject is to be discussed before long in this chamber, but honorable members generally know that the mechanization of the industry has resulted in a serious limitation of the amount of employment available. Parliament ought to do its utmost to cope with this situation. Coal- mining is to-day seriously affected also by the low price of coal. When I first entered this Parliament a fight was proceeding concerning a proposed reduction of the price of coal by 2s. a ton from 25s. to 23s. a ton. Coal is now11s. a ton. In all these circumstances I submit that the taxation authorities should give more consideration to the industry than hitherto.

Mr CASEY:
Treasurer · Corio · UAP

– I wish to make it clear to the honorable member for Hunter (Mr. James) that no representations whatever have been made to me by the coalowners or their representatives on the points now ‘ being advanced by him. Persons affected by the provisions of this bill have, speaking generally, not been slow in making submissions to me on the matters that principally concern them. In fact, I have been deluged, for months, by representations and deputations from various sections of the community; but no submissions have been made on this point by the coal-owners. The reason is that they realize that it would be seriously to their disadvantage to be placed under these conditions in respect of depreciation.

Mr Curtin:

– But this is a new provision.

Mr CASEY:

– Oh, no! This provision has been in the act for fifteen or twenty years. There are the two alternatives of ordinary depreciation and this accelerated depreciation.

Mr Curtin:

– According to the footnote, this has been inserted to correct a drafting difficulty. The alternative clause is 124. Previously, provision was made for no depreciation to be allowed in connexion with clause 124, not clause 123.

Mr CASEY:

– The footnote states that the general provisions of the present act regarding the special deductions allowed to mining companies for plant development have not been changed, and that, as these provisions give a special deduction to cover the cost of all new plant and machinery, it is not considered necessary to allow, in addition, a further deduction for depreciation. The footnote further states that the present act contains a drafting defect in excising the depreciation allowance only from plant coming under the second of the alternative clauses. That is a relative detail. In the broad, the department has gone carefully into this matter for some considerable time. That coal-mining is cut out of privileges given to every other type of mining is one of the obvious points that strikes one. No responsible representations whatever have been made to me personally during the course of the last six months, nor have I heard of any. The honorable member for Hunter would not do the coal-mining industry a service by introducing this accelerated depreciation. If it had been introduced 20 or 30 years ago, when the coal-mining industry was in a more flourishing condition, it might have been different.

Mr James:

-The coal-owners would not have required it in more prosperous times.

Mr CASEY:

– The ordinary depreciation allowance provided for now, which varies with the life of the plant, is, I think, of considerably more value to the industry, on all of its plant, than would be the honorable member’s proposal.

Amendment negatived.

Clause agreed to.

Clauses 124 to 136 agreed to.

Clause 137-

Where any business carried on in Australia -

is controlled principally by nonresidents ;

is carried on by a company a majority of the shares in which is held by or on behalf of nonresidents ; or

is carried on by a company which holds or on behalf of which other persons hold a majority of the shares in a non-resident company, and it appears to the Commissioner that the taxable income disclosed in respect of the business is less than the amount of taxable income which might be expected to arise from that business, the person carrying on the business in Australia shall, notwithstanding any other provision of this Act, be liable to pay income tax on a taxable income of such amount of the total receipts (whether cash or credit) of the business as the Commissioner determines.

Amendment (by Mr. Casey) agreed to -

That the words “the taxable income dis.closed in respect of the business is “ be omitted with a view to insert in Heu thereof tlie words “ the business produces either no taxable income or “.

Clause, as amended, agreed to.

Clause 138 agreed to.

Clause 139 (Taxable income).

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

– The proviso at the end of the clause empowers the Commissioner to alter an assessment of a moving picture company if he thinks fit. I think that is a very dangerous provision to incorporate in any act. If Parliament considers that the taxation of companies of this type should be 30 per cent., then no authority should be given to any outside body or person to vary the rate. This Parliament should determine definitely what the rate of the tax shall be.

Mr CASEY:
Treasurer · Corio · UAP

– The proviso to which the honorable member takes exception vests in the Commissioner authority to vary the amount of tax to be collected.

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

– My objection is that we are making the Commissioner, and not this Parliament, the taxing authority. That is quite wrong.

Mr CASEY:

– Businesses of this sort are peculiarly difficult to tax with due regard to the interests of revenue, while at the same time imposing a tax which will not operate unfairly. A rate of 30 per cent, of the gross income is, clearly, a high rate of taxation.

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

– The companies make a high rate of profit.

Mr CASEY:

– Possibly. This provision was inserted in the bill with the full intention to impose a high rate. Companies having been assessed on that basis- will have their own remedies; they can appeal to the Commissioner, and produce for his inspection audited accounts in an endeavour to establish the necessity for the imposition of a lower rate. A comparable- provision was inserted in the present act in 1930, and has worked reasonably satisfactory- Of course there have been considerable difficulties experienced in getting at the real profits derived by these moving picture companies. Practically none of them has accepted without demur the imposition of a tax Qf 30 per cent., and several of them have submitted accounts to the Commissioner to show what their profits were. Many cases are not yet settled, but, in the meantime, the Commissioner is continuing to assess them at the rate of 30 per cent. I think the honorable member can trust the Commissioner not to let any fish slip through his net. I think the honorable member will also agree that if a company can establish to the satisfaction of the Commissioner that its profits are less than 30 per cent, in ordinary fairness he should have discretion to vary the amount of tax levied. In respect of a number of clauses the Commissioner is vested with discretion and I can assure honorable members that no commissioner seeks to have the exercise of his discretion thrust upon him by Parliament. On the contrary, he would rather have the law worded in precise terms. In this particular instance, the Commissioner is not seeking the discretion. After all, 30 per cent, of the gross takings is a high rate of tax, and if the Commissioner can be satisfied by the production of figures - and the present Commonwealth Commissioner is not easy to satisfy in these matters - honorable members can accept my assurance that the revenue will not be endangered.

Clause agreed to.

Clauses 140 and 145 agreed to.

Clause 146 (Deduction of premiums).

Mr NOCK:
Riverina

.- I ask the Treasurer (Mr. Casey) to explain the meaning of the clause. I take it that if a taxpayer shipping from Australia insures the cargo with a British company, he is not allowed to deduct the premium as an expense until the Commissioner has secured from the British company payment of any income tax which has or may be assessed in respect of that premium. Is not this penalizing the exporter?

Mr CASEY:
Treasurer · Corio · UAP

– The provisions of this clause and that preceding it certainly do bear the interpretation which the honorable member has placed upon them. However, they were inserted in the original act and are not new. Persons conducting insurance business overseas were also conducting business in this country in such a manner - I do not say designedly - that the Australian Commissioner could not levy taxation on profits made in respect of that business. Clauses 145 and 146 were introduced into the present act in order to force these persons to establish agencies in Australia. That object has been achieved. Once agencies are established in Australia, the agency clauses of the act enable the Commissioner to collect the proper amount of taxation. It is necessary to keep these particular provisions in the act in order to retain some hold over overseas persons who conduct insurance business in this country.

Clause agreed to.

Clauses 147 to 149 agreed to.

Clause 150 (Average income).

Mr NOCK:
Riverina

.- Has the Government considered the matter of imposing taxation on an average rate instead of on an average income? This proposal was brought before Parliament some years ago. Such a policy would mean that, no matter what section was paying income tax and no matter how varied its income was, the rate it would pay would, in the aggregate, be exactly the same as that imposed in respect of a man in receipt of a regular income. Was the adoption of this method considered by the Government when the bill was framed ?

Mr Casey:

– The point was not considered either by the royal commission or by the various governments.

Clause agreed to.

Clauses 151 to 159 agreed to.

Clause 160 (Rebate to non-resident taxpayer).

Mr NOCK:
Riverina

.- This clause provides for the making of rebates to non-resident taxpayers, the amount of the rebate being fixed as follows : - (1.) Where an amount of income derived from sources in Australia is included in the taxable income of a non-resident taxpayer, and income tax is paid by the taxpayer on that amount of income under the law of the United Kingdom but not under the law of a State, and the Commonwealth rate is greater than one-half of the British rate, the taxpayer shall be entitled to a rebate of tax of the sum obtained by applying to that amount of income a rate which shall be -

  1. where the Commonwealth rate is greater than the British rate -one- half of the British rate; and
  2. where the Commonwealth rate is not greater than the British rate - the excessof the Commonwealth rate over one-half of the British rate.

Will the Treasurer (Mr. Casey) state whether, in such cases, the rebate is to be made at the expense of the Commonwealth or of the State?

Mr CASEY:
Treasurer · Corio · UAP

– The States have not yet agreed, I understand, to bear their share of the loss involved, so that, although we have included this provision in our bill, the only rebate obtainable will be the Commonwealth proportion of what the total rebate would be if the States had agreed to come into the scheme. In the meantime, the Commonwealth awaits with hope the day when the States will bear their share.

Clause agreed to.

Clauses 161 to 165 agreed to.

Clause 166 (Certificate of sources of information).

Mr FORDE:
Oapricornia

.- In my opinion, this clause does not go far enough, and I should like to see included in the bill a provision requiring the registration of tax agents. The Royal Commission on Taxation gave a good deal of consideration to this matter, and recommended that provision should be made for the registration of tax agents, either by the Commonwealth or by 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 provision, 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 the Commonwealth, and its bill contains merely the same provisions as clauses 166 and 229 of the Commonwealth bill. The bill for the 1928 New South Wales Income Tax (Management) Act contained provisions for the registration of tax agents, but they were deleted during the passage of the bill. On this occasion, they have not even been introduced into the bill. Every one will agree that dishonest income tax agents are a menace to the community. Not only do they rob the revenue, but they also cause, in the long Tun, misery to their clients, some of whom are innocent parties in the claws of the tax agent. One trick is for certain tax agents to calculate the tax when preparing the return, and to collect his fee and the tax from the client, who signs a blank return .in order to save a second visit. The agent then prepares a false return disclosing no taxable income, and retains the tax collected from his client. Fortunately, the great majority of tax agents are reputable people, but we should make it more difficult for the unscrupulous. As the Government of New South Wales has failed in its duty in this respect, I urge that a provision be inserted in this bill for the registration of tax agents. The services of the Income Tax Board of Review could be utilized for the purpose of providing the necessary machinery for registration.

Mr CASEY:
Treasurer · Corio · UAP

– The Government has been advised that there is considerable doubt as to whether, constitutionally and legally, we could include in a taxation bill a provision requiring the registration of tax agents. Failing such a provision, it was thought that the next best thing would be to oblige tax agents to sign a certificate stating the source of the information upon which they have drawn in order to make out a taxpayer’s return. This is a new provision, and should go far to ensure that agents shall not act irresponsibly on behalf of ignorant or foolish taxpayers.

Sir LITTLETON GROOM:
Darling Downs

– I direct the attention of the Treasurer (Mr. Casey) to the third recommendation of the royal commission in regard to tax agents, which is to the effect that registration by one State shall be recognized by the governments of other States during the period for which it is effective. It has been brought to my notice that in border districts near the boundary of two States, agents residing in one State are sometimes called upon to prepare a return for taxpayers in an adjoining State. The commission on taxation recommended: (1) that provision he made for the registration of tax agents; (2) that registration be effected either by the Commonwealth, or, alternatively by all the States; and (3) that registration by one government be accepted by all other governments during the period for which it is effective. The Treasurer has pointed out that the Commonwealth bill does not provide for such registration. Can he inform the House whether the States are making provision in their bills to give effect to the third recommendation so that an agent registered in one State will be accepted in another State.

Mr Casey:

– As far as I am aware, all States, except New South Wales, are legislating to require the registration of tax agents, but the other point regarding the mutual recognition of such legislation of the various States is a new one, and I shall go into the matter.

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

– I concur with what has been said by the Deputy Leader of the Opposition (Mr. Forde), and the honorable member for Darling Downs (Sir Littleton Groom). Since this bill has been before us, we have heard a good deal from the Treasurer (Mr. Casey) about the need for uniformity in Commonwealth and State legislation, and here is an opportunity to secure some degree of uniformity. I refer the Treasurer to the third report of the Royal Commission on Taxation which, at page 164, states -

In our opinion registration of tax agents would be in the best interests both of the taxpayer and the departments. It would be an assurance to both that a parson authorized to act on behalf of a taxpayer is reputable and competent. It would prevent exploitation of the taxpayer .by unscrupulous persons, who may, ultimately, involve him in serious trouble, and, perhaps, penalties. It would also enable the departments to deal effectively with such persons. If this recommendation be accepted it will be necessary to decide whether tax agents should be registered under both tlie Commonwealth and a State act. If registration be required under the Commonwealth act, we think the States might accept a registration agent without further inquiry.

If the Treasurer cannot succeed in bringing all States into line, I suggest that he adopt the recommendation of the royal commission to introduce Commonwealth legislation, which would be equally effective, provided the States were agreeable. Perhaps representations from the Commonwealth might induce the Government of New South Wales to insert the necessary provision in its own bill, but, failing that, the Commonwealth itself should take action.

Clause agreed to.

Clauses 167 to 170 agreed to.

Clauses 171 (Amendment of assessments.)

Mr.E. J. HARRISON (Wentworth) [9.43]. - This is a contentious clause. Honorable members will recall the retrospective legislation introduced by this Government, following upon an adverse judicial decision in regard to the collection of sales tax on second-hand goods. The Treasurer (Mr. Casey) should seriously consider inserting in this bill a clause giving the Commissioner of Taxation authority, upon a general court order, to refund tax. As the bill now stands, serious results might arise, where the decision of a court upsets a ruling by the Commissioner under which a taxpayer has been assessed. A further point is that, notwithstanding that the court may decide that the Commissioner’s ruling is illegal, or his interpretation erroneous, taxpayers other than the litigant can obtain no redress. I have already referred to the case dealing with sales tax on second-hand goods, I understand that if an objection is lodged against a ruling by the Commissioner, and subsequently a case is taken to court and decided in favour of one of the appellants, all those who have lodged objections will have refunds made to them; but that is simply offering a premium to expert knowledge, and giving special consideration to those having a close knowledge of this highly technical measure. It is fundamentally wrong that a tax assessed and collected because of an erroneous interpretation of the law should be retained by the Crown. If the Commissioner interprets the law wrongly, every taxpayer affected is entitled to redress. The Treasurer should give adequate consideration to the representations made, and to the strong objection raised in this Parliament on a former occasion.

Mr CASEY:
Treasurer · Corio · UAP

– It is provided that for three years after the tax becomes payable, an assessment can be re-opened on the application of either the taxpayer or the department. Between three and six years an assessment can be re-opened by the department where a. full disclosure by the taxpayer has not been made. This is a new test, and, in my opinion, it is much more preferable, particularly from the taxpayer’s point of view, than the present test as to whether proper books of account have been kept. There are two parties interested - the taxpayer and the department. Only one of those parties knows the whole story ; that is, the taxpayer. The department knows only so much of the taxpayer’s business as the taxpayer tells it, and, therefore, the department is in his hands. If he makes a full disclosure, and is assessed on that, his assessment cannot be re-opened by the department after three years.

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

– That often depends on the taxation agent whom he employs.

Mr CASEY:

– If a full and true disclosure were made, I think there would be no reason to doubt that the agent would have to act on the information disclosed to him. I point out to the honorable member for Wentworth (Mr. E. J. Harrison), that it should be remembered that, of the two parties to this matter, the taxpayer is the only one who knows the full story. If he makes a true and complete disclosure, he has nothing to fear, and his case could be re-opened after three years only if there had been a mistake in regard to facts. After six years there is only one test to apply - fraud or evasion.

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

– I was merely suggesting a new clause to take from the Commissioner the right to impose a decision retrospectively upon a taxpayer who may be one of a group against whom a decision has been given by a. general order.

Mr CASEY:

– That is covered by this clause. It prevents a repetition of what occurred in the Sennitt case.

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

– I made a special point in regard to the sales tax collected on second-hand goods.

Mr CASEY:

– This clause prevents an altered interpretation of the law being the cause of the re-opening of a case by the Commissioner. This is very desirable. All sections have been pressing the Government in this regard.

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

– I agree with the Minister in his reference to the Sennitt case, but I point out that the Royal Commission on Taxation, in paragraph 967 of its report, states -

In this connexion we think it right to refer to the strong expression of public feeling evoked by the action of the Commonwealth Commissioner in re-opening the assessments for some years past of companies affected by the decision in the Sennitt case to which we have already referred. . It seems to us, without impugning the right, and perhaps the duty, of the Commissioner to make these retrospective assessments, that there was strong justification for the condemnation of the principle involved in them. When a taxpayer has fully and openly disclosed the facts relating to his income; when upon those facts an assessment has been made, based upon a wellknown and officially declared practice in accordance with the current understanding of the law; when he has accepted that assessment and paid the amount due under it; he does seem to be morally entitled to consider the transaction closed, even although a subsequent judicial decision shows that a mistaken principle of law has been applied to his case. Had the mistake resulted in his paying more in tax than the amount for which under the law he was actually liable, the transaction would have been closed. In the absence of an objection by him within the specified number of days after receiving his assessment, he would have no legal right to have it re-opened and amended.

Does the Minister consider that the recommendations of the commission have been adopted?

Mr Casey:

– I stated a few moments ago that assessments could not be reopened if there had been a full and true disclosure by the taxpayer. An altered interpretation of the law, arising out of a subsequent judicial decision, is not a basis for re-opening a case, whether in favour of or against the department.

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

– But how does that cover the sales tax on secondhand goods? A group of persons stated a case against the Commissioner, and, after it had been decided in their favour, be refused to make a refund to a similar group from whom the tax had been collected illegally. Does this bill give the right to those litigants to recover the amount collected? If they must lodge objections before they get a refund of money proved in a court of law to have been illegally collected, a premium will be placed upon expert knowledge. Those who fully understand the technicalities of the income tax law will be able to get a refund, whilst taxpayers who have failed to lodge objections will be deprived of the same right.

Mr CASEY:
Treasurer · Corio · UAP

– A case at law can arise in respect of a taxation matter, either when a taxpayer takes the Commissioner to the court, or when the Commissioner takes a taxpayer to the court. There may be a judicial decision that involves a broad point of law in favour of either the Commissioner or the taxpayer. In order to avoid a repetition of the Sennitt judgment, which operated in favour of the revenue - the law was different then from that now proposed - the Commissioner had no option but to pursue the course which he took. Suppose the Sennitt judgment had been in favour of the taxpayer. If the Commissioner is to be prevented from imposing retrospective decisions, he should also be stopped from giving taxpayers further retrospective refunds arising out of new interpretations of the law. It cannot be one-way traffic; it must go both ways. In response to many representations made, and having regard to the references in the report of the royal commission to the obvious necessity for some finality in respect of income taxation, the Government has put forward the present proposal, which entails that through no judicial decision, whether in favour of the revenue or of the taxpayer, can assessments be re-opened. Therefore, neither the Sennitt judgment nor its effect, nor the reverse of it obtains. This bill cannot take away the rights of any individual to take the Commissioner to Court to have his own assessment reduced in any particular. That is one of the rights of the individual that no taxation measure can destroy. The Commissioner is not allowed to apply that judicial interpretation or any other to a particular field to taxpayers.

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

– But he is allowed to apply it to others who have lodged objections ?

Mr CASEY:

– The question of objections does not arise except in respect of sales tax.

Clause agreed to.

Clauses 172 to 182 agreed to.

Clause . 183 (Remuneration of members) .

Mr CASEY:
Treasurer · Corio · UAP

– As this clause appropriates revenue it is necessary to have a message from the Governor-General, which is not yet to hand. I, therefore, move -

That the clause be postponed.

Motion agreed to.

Clause postponed.

Clauses 184 and 185 agreed to.

Clause 186 (Objections).

Mr.E. J. HARRISON (Wentworth) [10.4]. - The bill provides that if a taxpayer is dissatisfied with his assessment he must give notice of objection within 60 days, and that all grounds of appeal must be fully stated. This is a most important matter, as, once the taxpayer states his grounds of objection or appeal, he cannot alter or amend them, no matter how incorrect an assessment may be, after the expiration of 60 days. Even a court cannot make an order to the Commissioner to correct the assessment unless the taxpayer has laid the proper grounds for objection. It seems to me that, if a wrong objection happens to be stated in the first place, the taxpayer has no rights whatever provided the period of 60 days has elapsed. I suggest to the Treasurer (Mr, Casey) that, arising out of the many representations that have been made to him in regard to this division, he should give the committee some indication as to whether they have made any impression uponhim.

Mr CASEY:
Treasurer · Corio · UAP

– The existing position is that objections must be made within 42 days of receiving the assessment, and it is within the powers of the Commissioner to extend that period by 30 days. This bill alters that provision by laying down a flat single period of 60 days after receiving the assessment, within which the taxpayer must lodge the appeal or objection. The whole of the provisions with regard to objections and appeals are clearly matters on which it is very desirable to obtain uniformity throughout Australia. At present there is no uniformity, the various States having varying periods, none of which exceeds 60 days, within which the taxpayer must lodge objection. The periods vary, I think, from fourteen days in Victoria to 60 days. The period of 60 days is regarded as being a reasonable one for the lodging of objections. All over the world in all measures of this sort there are periods of about that duration in which taxpayers have to lodge objections. Actually, in Commonwealth experience, the Commissioner has on very rare occasions indeed been asked to exercise his privilege to extend the period of 42 days by a further 30 days. It seems to me to be very fair to give a general period of 60 days instead of 42 days.

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

– The main contention is that the Commissioner, in seeking further information, may extend his period indefinitely, whereas the taxpayer is denied that privilege and is limited to 60 days.

Mr.Rosevear. - The taxpayer has a further period if the assessment is amended.

Mr CASEY:

– That starts it afresh. In regard to the question of grounds of objection having been fully stated, that provision admittedly is designed to prevent the making of general and vague objections to assessments which will allow a man to invoke almost anything under the sun to forward his own interests. If there is to be finality in regard to taxation affairs, coupled with fairness to the department and the taxpayer, it is not unreasonable to ask the taxpayer to comply with that provision. Objections must be specific; they cannot be vague; otherwise the Commissioner would not know what was happening.

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

– The taxpayer cannot be exactly specific. It is possible that he may make a slight error.

Mr CASEY:

– I do not think the Commissioner pins him down to dotting the last “ i “ or crossing the last “ t”, but he must specify in what direction he disagrees with the Commissioner. I do not think that is unreasonable. A man may meet another and say in regard to his taxation affairs, “I am running such and such ; why not have a shot at it “. That is not fair. It is reasonable to ask a taxpayer to comply with the stipulation that he should be precise in his objection.

Clause agreed to.

Clauses 187 to 190 agreed to.

Clause 191 (Grounds of objection and burden of proof),

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

– Paragraph b provides -

The burden of proving that the assessment is excessive shall lie upon the taxpayer.

I suppose that this is perfectly proper, but, at the same time, it is often found that a taxpayer takes the Commissioner to Court and gets a judgment from the lower court. Subsequently, an appeal is lodged by the Commissioner in a higher court and, in the main, because the Commissioner wants to get a ruling on his assessments, the taxpayer is. forced into costly litigation. The provision that the taxpayer shall bear the burden of proving that his assessment is in any way wrong is one that should receive some further consideration. Some consideration should be given to the taxpayer with regard to costs of litigation when the Commissioner, failing in the lower court, takes the case to a higher court.

Mr CASEY:
Treasurer · Corio · UAP

– This point was considered specifically by . the conference of AttorneysGeneral, which considered the legal aspects of this bill, because, to a certain extent at least, although not wholly,’ it is included in the British Income Tax Act. That conference decided that it was better that no specific rule should be laid down in this regard. The honorable member says that the Commissioner may be out after a decision of general application; in other words, that the Commissioner may regard a case as a test case. But I think the taxpayers are -safe in the hands of the court in this regard. At any rate, that was the decision arrived at by the conference of AttorneysGeneral.

It is difficult to define a test case. On the one hand, the Commissioner may lose a case in the lower court and, in the interests of justice and revenue, when he feels that he is right, pursue it to a higher court. On the other hand, the court itself will very readily make itself aware whether a case is a test case, or whether it a case in the ordinary way of business. The honorable member may have in his mind a certain case in Sydney about three years ago, in which a taxpayer was, to use his own words as he used them to me, “ pursued in three courts “, fortunately, not by the Commonwealth Commissioner, but by the State Commissioner. He was fortunate enough to have a decision in his favour on each occasion, but, as he put it to me, he ran the risk of losing, owing to some quirk of law, in either of the second or third courts. In a case where the Commissioner pursues a taxpayer through more than one court on appeal, he thought that the Commissioner should be liable to meet all costs. His case was not a test case - merely an ordinary case. The Commissioner thought that he was right, but it turned out that he was wrong, and the taxpayer got his costs. In support of my contention that this is a matter which might be well left in the hands of the courts, there is the strengthening fact that, when we have the appeal tribunal, it will be well aware that a test case is coming on, and in a test case, the tribunal would properly give the costs against the Commissioner, whatever the result.

Clause agreed to.

Clauses 192 and 193 agreed to.

Clause194-

For the purposes of reviewing such decisions, the board shall have all the powers and functions of the Commissioner in making assessments, determinations and decisions under this act, other than decisions to remit additional tax or any part thereof, and such assessments, determinations and decisions of the board, and its decisions upon review, shall for all purposes (except for the purpose of objections thereto and review thereof and appeals therefrom) be deemed to be assessments, determinations or decisions of the Commissioner.

Amendments (by Mr. Casey) agreed to-

That after the word “shall “, first occuring, the words “ subject to this section “ be inserted.

That the words “ other than decisions to remit additional tax or any part thereof “ be omitted.

Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That the following sub-clause be added: - “ (2.) The board shall not have power to review decisions of the Commissioner relating to the remission of additional tax except decisions relating to the remission of additional tax imposed by section two hundred and twenty-seven of this act where the additional tax payable, after the making by the Commissioner of his decision, exceeds -

in any case to which sub-section (1.) of that section applies - the greater of the following amounts, namely, the sum of One pound or an amount calculated, in respect of the period commencing on the last day allowed for furnishing the return or information and ending on the day upon which the return or information is furnished or the day upon which the assessment is made whichever first happens, at the rate of ten per centum per annum of the tax assessable to the taxpayer; or

in any case to which sub-section (2.) of that section applies - the greater of the following amounts, namely, the sum of One pound or an amount calculated, in respect of the period commencing on the last day allowed for furnishing the return and ending on the day upon which the assessment in respect of the omitted income or excessive deduction is made, at the rate of ten per centum per annum of the difference between the tax properly payable by the taxpayer and the tax that would be payable if it were assessed upon the basis of the return furnished by him.”.

The effect of this proposal is to allow appeals to the Taxation Board of Review in all cases in which the Commissioner has imposed a penalty at the rate of more than 10 per cent. per annum on the amount involved. Many representations have been made with respect to the matter of appeals from penalties imposed by the Commissioner. To have given complete freedom of appeal in the case of all penalties, the vast majority of which are trifling and small, would have cluttered up the work of the Taxation Board of Review, and made impossible the serious discharge of its other work.

Mr NOCK:
Riverina

.- I should like the Treasurer (Mr. Casey) to clarify what appears to be something in the nature of a conflict of two provisions. In clause 194 the power to remit additional tax has been taken from the Board of Review, yet clause 196 provides that the board may either confirm, reduce, increase or vary an assessment.

Mr Casey:

– The amendment to which the committee has agreed deals with the penalty, not the assessment.

Mr NOCK:

– The position now is that the board will have the power to deal with either a penalty or an additional tax which is in excess of 10 per cent. per annum ?

Mr Casey:

– It has had the power to vary an assessment. It will now have the power, which it did not have previously, to amend a penalty greater than a nominal one of 10 per cent. per annum.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 195 to 199 agreed to. [Quorum formed.]

Clauses 200 and 201 agreed to.

Clause 202 (Pending appeal not to delay payment of tax) .

Mr HAWKER:
Wakefield

.- I consider that the Treasurer (Mr. Casey) should give an assurance that cases will not arise similar to a case that was brought to my notice within the last couple of years. A certain taxpayer had in dispute a large amount of tax for which he had been assessed, and the Commissioner, under a power similar to that conferred by this clause, insisted upon his paying the whole of it. Acting upon the advice of his lawyers, he paid a proportion of it. The case dragged on for several years, and eventually the taxpayer won a decision which returned to him the whole of the amount in dispute, including that which he had been compelled to pay. Injustice was done in that the interest which he had paid upon an overdraft to the amount which the Commissioner held, exceeded the total refund of tax. I consider that there should be some provision whereby a refund of tax wrongfully collected over a period would include interest upon the amount.

Mr CASEY:
Treasurer · Corio · UAP

– This provision is made in order to prevent taxpayers from commencing some form of appeal or reference in order that, in effect, they may obtain a longer period in which to pay their tax. I am assured that where the appeal or reference is clearly genuine, the Commissioner usually grants an extension of time until the matter has been decided.

Mr Prowse:

– Surely the department should recognize its obligation to pay interest when it holds the money for such a lengthy period!

Mr CASEY:

– I do not think that the Government ever pays interest in such cases.

Mr HAWKER:
Wakefield

.- I accept the assurance of the Treasurer (Mr. Casey) that where there are clearly grounds for dispute, the Commissioner no longer insists upon the payment of the amount in dispute.

Clause agreed to.

Clauses 203 to 211 agreed to.

Clause 212-

  1. ) Unless and until such certificate has been presented to the office of the owner or charterer, or of the representative of the owner or charterer of the ship, airplane or airship by which that person intends to leave Australia at the port or place at which his passage is to be booked, an authority for that person to travel by that ship, airplane or airship shall not be issued by the owner or charterer or a representative or employee of the owner or charterer.
  2. Any person who, in contravention of this section, issues an authority to any person to travel by the ship, airplane or airship shall be personally liable to pay the amount of tax, if any, which is or may become due and payable by such person, and shall be guilty of an offence.

Amendments (by Mr. Casey) agreed to-

That the words “ airplane or airship “ thrice occurring, be omitted with a view to insert in lieu thereof the words “ or aircraft “.

Clause, as amended, agreed to.

Clause 2.13 consequentially amended, and, as amended, agreed to.

Clauses 214 to 218 agreed to.

Clause 219-

  1. In this section - “ tax “ includes any judgment debt and costs in respect of tax; “ person “ includes company, partnership, the government, and any department of the government of and any public authority (corporate or unincorporate) of the Commonwealth or a State.

Amendments (by Mr. Casey) agreed to-

That after the word “ In “, sub-clause6, the words, “ the foregoing provisions of “ be inserted.

That the words “ the government and any department of the government of “, sub-clause 6, be omitted with a view to insert in lieu thereof the words “ the Commonwealth, a State “.

Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That the following sub-clause be added - “ ( 7 ) Any notice to be given under this sec tion to the Commonwealth or a State may be served upon such person asis prescribed, and any notice so served shall be deemed to have been served upon the Commonwealth or a State, as the case may be.”

This amendment is to correct a defect in the present act as well as in the bill as drafted, that defect being that the wording does not make a particular person responsible for the payment of tax when the government of the Commonwealth or of a State is involved. Moreover, the reference in the clause to the “government and any department of the government “ has been improved upon by the specific reference to the Commonwealth or a State.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 220 and 221 agreed to.

Clause 222 (Sections 218 and 221 not to apply to certain income).

Mr CASEY:
Treasurer · Corio · UAP

– This clause to which I referred when I was speaking on clause 102 extends a privilege now contained in the acts of certain States, the effect of which is that income accruing between the 1st July of any year and the death of the taxpayer within that year is not assessable.

Clause agreed to.

Clauses 223 to 255 agreed to.

Clause 256. (1.) With respect to every person having the receipt control or disposal of money belonging to a non-resident . . .

  1. he shall when required by the Commissioner pay the tax due and payable by the non-resident;
  2. he is hereby authorized and required to retain from time to time out of any money which comes to him on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident;
  3. he is hereby made personally liable for the tax payable by him on behalf of the non-resident to the extent of any amount that he has retained, or should have retained, under the last preceding paragraph; but he shall not be otherwise personally liable for the tax.
Mr HAWKER:
WAKEFIELD, SOUTH AUSTRALIA · NAT; UAP from 1931

.- This is an agency clause, which, in the main, is rightly in the bill. Its object is to prevent the evasion of taxation by overseas taxpayers in cases where it is difficult for the Commissioner to trace income to individuals. The clause empowers the Commissioner to nominate as agents a number of different individuals who handle money on behalf of overseas taxpayers, and requires them to withhold a certain amount of money that they would otherwise be compelled to pay to the overseas taxpayer. I have no objection to the general principle of the clause, but the old act contained a definite provision indemnifying an agent. It proprovided that an agent was “ indemnified for all payments which he makes in pursuance of this act or by requirements of the Commissioner “. Recently the Commissioner has greatly extended the number of assessments issued to overseas taxpayers, and he has invoked this agency provision beyond what the English law allowed. Cases have occurred in which the Commissioner has directed the public officer of a company to withhold out of dividends payable to taxpayers in England a certain amount of money, but the British courts have disallowed that action. Under the old act, the officer of the company who held that money was indemnified and actions were pending against the Government for compensation to the full amount of the indemnity. It appears to be a fairly shabby piece of sleightofhand work to remove the indemnity just at a time when the provision was likely to be effective. I should like the Treasurer (Mr. Casey) to give me an assurance that if this has happened he will take steps to see that agents appointed by the Commissioner have the protection which Parliament intended they should have.

Mr CASEY:
Treasurer · Corio · UAP

– The point raised by the honorable member for Wakefield (Mr. Hawker) was considered by the legal advisers of the various governments, and it was decided that a sub-clause specifically indemnifying the people who made these payments was quite unnecessary, because the act itself was an indemnification in that it directed that certain things should be clone.

Mr HAWKER:
Wakefield

.- The Treasurer’s (Mr. Casey) explanation is quite perfunctory and unsatisfactory, and appears to give grounds for the fear that the provision has been omitted because it might lead to the refunding of a certain amount of tax. I therefore move -

That the following paragraph be added to sub-clause (1.) : - “(d) he is hereby indemnified for all payments which he makes in pursuance of this act or by requirements of the commissioner;”.

That provision is identical with the provision of the present act. There is all the difference in the world between protecting an agent from being sued under the law of Australia, and indemnifying him against action under the law of the country where the payment is to be made. It is obvious that the clause, as drafted, does not fully cover the requirements of the case. Pinpricking efforts of this kind to get revenue from people who are not legally taxpayers of Australia, by belting some intermediary, get Australia a bad name in other countries far out of proportion to the value of the little revenue that may be thus obtained. No one knows this better than the Treasurer himself, and I therefore regret that he should be the instrument to remove the little safeguard which the agents have under the present law.

Mr CASEY:
Treasurer · Corio · UAP

– The honorable member for Wakefield (Mr. Hawker) is very free with his epithets. I did not give other than a courteous reply to his comment, and, to have my reply described as offhand, or whatever epithet the honorable member used, is objectionable, and I very much resent it.

Mr Hawker:

– I regret that my remarks should have given that impression.

Mr CASEY:

– I have been assured by both the officers of the Taxation Department, and those of the Attorney-General’s Department, that agents are fully protected under the general law, and that there is no specific necessity for a clause indemnifying them; otherwise, such clauses would have to appear in many other places in this bill.

Mr Nock:

– They do appear in some places.

Mr CASEY:

– I have been assured that agents are protected in this regard by reason of the fact that they are directed to do certain things. A man cannot be protected more than that. The indemnification is inherent in the bill. I give the honorable member an assurance that, if on further consideration of the subject at greater leisure, it appears that any additional protection is necessary, steps will be taken to cause an amendment to be moved when the bill is before another place.

Mr HAWKER:
Wakefield

.- I accept the Treasurer’s assurance, and ask leave to withdraw my amendment.

Amendment - by leave - withdrawn.

Clause agreed to.

Clause 257 agreed to.

Clause 258 (Payment of tax by banker).

Mr CASEY:
Treasurer · Corio · UAP

.- I move-

That the clause be omitted with a view to insert in lieu thereof the following clause: - “ 258. Where any income of any person out of Australia is paid into the account of that person with a banker, the Commissioner may, by notice in writing to the banker, appoint him to be tlie person’s agent in respect of tlie money so paid so long as the banker is indebted in respect thereof, and thereupon the banker shall accordingly be that person’s agent.”.

The equivalent section of the present act was couched in very much more onerous terms. This is a limitation of the obligation imposed upon bankers in cases in which they are specifically advised by the Commissioner, and when they have moneys of overseas persons under their control. At the same time it makes it easier for the Commissioner to control those funds.

Amendment agreed to.

Clause, as amended, agreed to.

Clauses 259 to 265 agreed to.

Clauses 266 (Release of taxpayers in cases of hardship).

Mr McEWEN:
Echuca

– A provision similar to that now before the Chair is incorporated in the Land Tax Act, and is known as the “hardship section.” Under it a board of review is constituted. For that reason, I think, it is impossible really to consider this Board of Review as relating singly either to land tax or income tax, and I take this opportunity to draw the attention of the Treasurer (Mr. Casey) once again to the circumstances in which cases come before this Board of Review and to the extreme delay experienced by some appellants in having their cases dealt with. Speaking in this chamber some months ago, I referred to one case where no less than four years and six weeks elapsed from the time the taxpayer first lodged his appeal to the time when a decision, an adverse one, was given by the board. I asked a question of the Prime Minister some months ago as to how the Government wished the Board of Review to regard appeals made under this clause, and as to whether it was the desire of the Government that the deciding factor should be the circumstances of the taxpayer at the time the appeal was hoard, or at the time the tax became assessable. In reply, I was informed that the circumstances at both periods, and during the intervening period, would be the deciding factor in any decision made by the Board of Appeal. Since that time various cases have come under my notice - I have taken the trouble to ascertain that they are authentic - in which the taxpayer, by realizing upon his assets during the period which elapsed between the date of assessment and the date on which the case was dealt with by the board, has been able to realize a sufficient sum to place him in a position to meet the tax assessed, and the board has come to a decision indicating that it has not regarded him as eligible for the benefits proposed to be conferred by this clause. I shall be glad if the Treasurer will indicate, if he can do so, that it is the desire of the Government that this provision shall be interpreted liberally, or, shall we say, sympathetically, by the board, and in such a manner that real hardship will be obviated. I draw the attention of the Treasurer to one or two cases, without wishing to mention the names of the taxpayers concerned, to illustrate the point I wish to make. A pastoralist has provided me with figures prepared by his accountant, which show that during the depression period, over a term of five years, he lost no less than £56,000. During that period he was assessed to pay tax amounting to £2,279. He appealed to the Board of Review, but his appeal was disallowed. On those ‘figures I do not think any person can regard that decision as indicating sympathetic treatment by the board in that case. I further desire to draw the attention of the Treasurer to the exceedingly bad effect of the incidence of taxation upon some of our pastoralists, and old-established pastoral companies, as the result of the exceedingly heavy taxation levied upon them. I have had brought to my notice the case of one of the oldest and best-known pastoral companies breeding merino stud sheep in Australia. This company has furnished figures which indicate that, during the eight years from 1928 to 1935 inclusive, it has been assessed for land tax amounting to- £101,483, and other taxes, £30,323, the whole being either direct land tax or income tax levied on income derived entirely from land. During that period, and as the result of that taxation, this company has suffered a loss exceeding £70,000. Had that company, using the whole of its capital, its experience, and its resources, been taxed during the last eight years by various governments to the extent of £61,806, it would have been using the whole of its capital, its experience, and its land and livestock merely for the purpose of balancing its ledger. But the tax was not £61,806. It was £131,806, which caused the company to lose £70,000. This is not a recital of hardship confined to one company. On the contrary, it is widespread among the pastoral companies of Australia, and I think the Treasurer knows from his own personal knowledge, of the serious repercussions on the whole of the pastoral industry of such excessive taxation. To affect our pastoral industry adversely, is naturally to affect adversely the whole of the financial structure of Australia. I ask the Treasurer once again to see that there is no delay in the hearing of appeals which come before the Board of Review, and I should very much like to hear him say that the Government desires the board to deal sympathetically with appeals.

Mr Curtin:

– Does the honorable member consider it right that the Government should indicate the kind of decision it expects the board to give in such cases?

Mr McEWEN:

– Yes ; the Government should indicate to the Appeal Board something which it is not practicable to indicate in the wording of a section of an act of Parliament - that it wishes to give real effect to the wording of this clause. If the Treasurer so desires, I am prepared to supply the names of the taxpayers concerned in the cases which I have mentioned. The taxpayers concerned claim that the hardship section has not been interpreted in a fair manner, and I am endeavouring to point out that they are justified in their contention. There has been what I regard as ample cause for a suspicion which exists in the minds of some taxpayers, that the extreme and unnecessary delay that they have experienced in having cases dealt with by the board, savours of tactics on the part of the Commissioner to delay a decision in the hope that the circumstances of the taxpayer will alter, and eventually he will be able to meet the assessment which, at an earlier period, he was not in a position to do. “When, as I have said, one taxpayer had to wait over four years for a decision to be arrived at by the Board of Appeal, after satisfying the various requirements of the Taxation Commissioner month after month, I think he and others similarly treated, arc justified in believing that it is the intention of the Commissioner to delay a decision in the hope that the financial circumstances of the taxpayer will improve in the interval, and that he will not then be eligible for the benefits conferred upon him by this clause. As I realize that it would be exceedingly difficult to put into words anything more definite than what is contained in the clause now before us, I do not intend to propose an amendment ; but I am using this opportunity, once again, to draw the attention of the Government to the delay associated with appeals and, in certain case3, to the failure of the board to give the relief deserved. I ask the Treasurer to indicate that it is the wish of the Government that the Board of Review should function in such a manner as to give real relief in the circumstances indicated in the clause.

Mr CASEY:
Treasurer · “Corio · UAP

– The honorable member for Echuca (Mr. McEwen) was, I take it, referring principally to land tax. In the Land Tax Act there is the celebrated section 66 which has some relation in form and substance to clause 266 of this bill, but section 66 of the Land Tax Act is necessarily a much more difficult section to administer in respect of hardship cases than will be the relevant clause of this measure.

Mr McEwen:

– Land tax is a contributing factor in relation to appeals under this clause.

Mr CASEY:

– Various governments have made attempts to put section 66 of the Land Tax Act into a more workable form, until now we have the section in its present form. If the honorable member knows of any delays in connexion with income tax cases, I should be glad if he would let me know. I am certain that in no cases does the Commissioner enforce delays in regard to hearings by the Hardship Board. During the depression, the work of the board was so greatly increased that, about three years ago, there was considerable congestion, but extra officers were released for the work, and the delays were caught up within a few months. I remind the honorable member that every case must be taken on its merits. Some of the cases mentioned by him may represent a great degree of hardship, while others may represent no hardship at all. I do not think that it would be right for the Government to give any instruction to the board to the effect that the provision should be interpreted liberally or otherwise.

Mr McEwen:

– The Prime Minister (Mr. Lyons) has given an assurance to deputations on various occasions that the hardship section would be administered sympathetically.

Mr CASEY:

– Knowing the members of the board as I do, I am confident that they will do what is fair by the taxpayers and by the public. We must bear in mind the wording of the section, which provides that relief shall be given if the board is satisfied that the collection of the tax will entail serious hardship. I am afraid I cannot give the honorable member any such definite assurance as he seems to require.

Clause agreed to.

Clause 267 agreed to.

Progress reported.

House adjourned at 11.7 p.m.

page 1244

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

Broadcast of Parliamentary Proceedings

Mr Baker:

r asked the Minister representing the Postmaster-General, upon notice- -

  1. In view of present-day conditions causing an increased interest to be taken in parliamentary proceedings, and the success of the recent experiments of broadcasting the debates in the New Zealand Parliament, will the Government live favorable consideration to the broadcasting of proceedings of this National Parliament ?
  2. If necessary will the Government establish at Canberra an “ A “ class station of sufficient power and wave-length for this purpose ?
Mr Archdale Parkhill:
UAP

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

  1. It is not considered desirable to broadcast parliamentary debates.
  2. Even if it should be decided, at some future date, to broadcast parliamentary debates, a station at Canberra would not meet the requirements, but, in order that the people of Australia should be able to receive the transmissions, practically the whole of the stations of the national network would have to be inter-connected on such occasions.

Overseas Telegraph News

Mr Beasley:

y asked the Minister representing the Postmaster-General, upon notice -

  1. Has his attention been directed to the following statement in the Brisbane Telegraph of 27th April by the Queensland Minister for Health and Home Affairs, Mr. Hanlon: “Only one side of the story of European developments during the past twelve months has been given to the people of Australia by the cable service supplying the Australian newspapers. My chief complaint is the lack of information from Britain. I understand that there is only one cable service from Britain to Australia now, the various companies having amalgamated. It is quite possible for that company to provide us with only the news which its directors may think is best for us. It was quite obvious that those people interested in newspapers were not desirous of giving the. same attention to the public welfare as they were to the annual dividend from their investment.” ?
  2. Does the Postmaster-General concur with the views expressed by Mr. Hanlon?
  3. Are any steps contemplated by the Government, such as the establishment by the Australian Broadcasting Commission of its own cable service, to provide the Australian people with fairer and more comprehensive cable news than that provided by the cable: combine ?
Mr Archdale Parkhill:
UAP

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

  1. Not previously.
  2. It is known that the bulk of overseas telegraph news is now received by an association representing an amalgamation of the previous news organizations, presumably with the object of effecting economies.
  3. Negotiations are at present proceeding between the Australian Broadcasting Commission and the press, and it is not possible to say at this juncture what arrangements may be made.

Australia-England Air Service . AllBritish Route.

Mr Nairn:

n asked the Prime Minister, upon notice -

  1. Has the Government received a suggestion that an all-British air route should be established between Australia and England by way of Cocos, Seychelles, and Africa?
  2. Will this proposal be considered in conjunction with other schemes for air service?
Mr Lyons:
UAP

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

  1. Yes, by Mr. C. L. K. Foot, of Western Australia.
  2. The proposal has been examined and the conclusion arrived at that the route suggested (via Cocos, Seychelles and Africa) is not worthy of serious consideration in comparison with the routeof the existing AustraliaEngland air mail connexion.

Conscription in Austria.

Mr Rosevear:

r asked the Prime Minister, upon notice -

  1. In view of his reply on the 30th April to the question by the honorable member for Dalley to the effect that the Government had not protested and did not intend to protest against the rc-armament of Austria by conscription, does this attitude imply that the Government endorses the action of Austria in re-arming in defiance of peace treaties?
  2. Is it a fact that this action on Austria’s part will result in the re-arming of the whole of the Balkan States on a conscription basis, thereby creating a further menace to world peace ?
  3. In view of this possibility is the Government prepared to reconsider its attitude on the matter?
Mr Lyons:
UAP

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

  1. Following on the breach of Part V. of the Treaty of Versailles by Germany in regard to the introduction of compulsory military training on the16th March, 1935, the Council of the League of Nations passed a resolution on the 17th April, 1935, declaring that the unilateral breach of treaties constituted a violation of international law, and that the action of the German Government introduced a disturbing element into the international situation. Australia’s representative on the Council voted for this resolution, with the principle of which the Commonwealth Government is wholly in accord.

The attention of the honorable member might, however, be drawn to the fact that the bill passed by the Austrian Federal Diet on the 1st April introduced “ universal ser vice for public purposes “. The Austrian Government draws a distinction between this measure and universal military service, and claims that the measure is not contrary to the terms of the Treaty of St. Germain, but is a purely domestic matter. The question of a protest as to Austria’s action would be one more appropriate for consideration by the Council of the League of Nations than by an individual State member.

  1. The action taken by Austria will presumably not affect the position as to military service in the Balkan countries of Greece, Roumania, Yugo-Slavia, Turkey and Albania, as conscription has been in force in these countries for years. The Treaty of Neuilly limits the military forces of the remaining Balkan country, Bulgaria, to 20,000, and the Commonwealth Government has no knowledge which would lead it to believe that Bulgaria will not continue to honour its obligations under this treaty.
  2. See answer to 2.

War Service Homes

Mr Makin:

n asked the Minister in charge of War Service Homes, upon notice -

  1. How many applications to the courts have been made since the 1st January, 1935, by the War Service Homes Commissioner in each State for the recovery of possession of property ?
  2. How many of such proceedings have been withdrawn.
Mr Thorby:
CP

– The information desired is being obtained.

Production of Oil in Australia.

Mr Lyons:
UAP

s. - On the 30th April, the honorable member for the Northern Territory (Mr. Blain) asked me the following question without notice: -

Will the Prime Minister inform me whether the Government has any officer available to advise it in regard to the production of power alcohol and the latest plants available for that purpose? If so, does the scientific world vouch for the qualifications of the officer concerned?

I now desire to inform the honorable member that the Commonwealth fuel adviser, Mr. L. J. Rogers, expressed the view that altogether the power alcohol industry appeared to warrant less favorable consideration than the distillation of shale and the hydrogenation of coal, from the view-point both of economy and national policy.

I would add that Mr. Rogers holds the university degrees of Master of Science and Bachelor of Engineering. He is an Australian who was selected to proceed abroad, for experience, to the British Fuel Research Station at Greenwich for a period offive years. He has a wide knowledge of fuel problems, including those relating to power alcohol, by reason of experience gained in Great Britain, on the Continent, and in the United States of America.

On the 30th April, the honorable member for Wakefield (Mr. Hawker) asked me whether, in connexion with the question of oil production in Australia, the possibilities of the production of power alcohol had been examined by the Government.

I now desire to inform him that the Commonwealth fuel adviser, Mr. L. J. Rogers, who was consulted in regard to this matter, expressed the view that altogether the power alcohol industry appeared to warrant less favorable consideration than the distillation of shale and the hydrogenation of coal, from the view-point both of economy and national policy.

Alien Immigration.

Mr Paterson:
CP

n.- On the 29th April, the honorable member forFremantle (Mr. Cur tin) asked a question, without notice, as to whether any change had 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. I now wish to inform the honorable member that, owing to the improved economic conditions prevailing in Australia, the question of modifying’ the restrictions on alien immigration has recently been reconsidered, and the position is now as follows: - All aliens who wish to enter Australia for permanent residence are still required to obtain landing permits. The classes in respect of whom applications for such permits will, in ordinary circumstances, be- favorably considered are as follow : -

  1. Dependent relatives of persons already settled in Australia, subject to satisfactory guarantees for maintenance. (Note. - The term ‘‘dependent relatives “ includes wives, minor children, adult single daughters and sisters, parents and fiancees.)
  2. Aliens outside the category of dependent relatives who - (i) Are nominated by persons in Australia guaranteeing to the satisfaction of the Minister that the nominees will not be allowed to become a charge upon the State ; (ii) will engage in trades and occupations in which there is opportunity for their absorption without detriment to Australian workers, and’ (iii) are in possession of £50 (Australian) landing money.
  3. Aliens without guarantors in Australia who will engage in trades and occupations in which there is opportunity for their absorption without detriment to Australian workers, provided also that they are in possession of £200 (Australian) landing money.

Commonwealth Railway Employees

Mr Paterson:
CP

n. - On the 30th April, the honorable member for Hindmarsh (Mr. Makin) asked the following questions, upon notice: -

  1. How many grades of officers and workers are employed in the Commonwealth railway services, and what are the various grades?
  2. How many are employed in each grade?

The information desired by the honorable member is contained in the following statement : -

Commonwealth Railways.

Grades of Officers and Employees and

Numbers Employed in each Grade. - Heads of branches, superintendents, workshopforemen, engineers,&c., 20; draftsman, 6; roadmaster, 8; clerk, 99; stationmaster, 31; typist, telephonist, 7; blacksmith, 8; boilermaker, 42; canvas worker, 1; car builder, 18; carpenter, 16; caretaker, 4; chef (dining car), 5; chargeman, 1; checker (goods), 4; crane driver, 2; conductor (sleeping car), 8; cook (maintenance gangs), 15; copper smith, 2; driller, 1: electrician, 3; engine cleaner, 49; engine driver, 34 ;examiner, 12, fettler,504; fireman (loco. ), 32;fitter,53; foreman baker, 3; foundry furnaceman, 1; fuelman, 5; gauger, 81; guard, 13; helper (trades),67; horse driver,3; kitchenman, 2; lifter, 3; labourer,94; lineman, district, 8; machinist (metal), 7; machinist (wood), 2; metaller, 1; motor driver, 2; moulder, 2; packer and trimmer, 1; painter, 9; pantryman, 2; patternmaker, 1; plumber,9; porter,operating, 7; porter, 81; pumper,15;running shed foreman, 6 ;shunter, 4 ; spray painter, 1 ; stationary engine driver, 3; storeman, 20; storeman, leading, 6; stores assistant (female), 3; striker, 6; trimmer (carriage), 2; turner, 11; waiter, 7; washer-out, 1; watchman, 2 ; welders, 4 ; wharf-foreman, 1 ; wireman, 3; youth helper, porter, &c., 24. Number of grades,68. Grand -total,1,508

Mr Lyons:
UAP

s.- On the 1st May, the honorable member for Hunter (Mr. James), asked, without notice, a question pertaining tothe minimum revenue requirements inrespectof public telephones, more particularly thosein residential localities and recreationresorts. I am now in a position to. furnish the honorable member with the following answer to his inquiries : -

Whilst the department is anxious to establish public telephones to afford the maximum amount of public convenience, it is not able to disregard the somewhatheavy cost entailed in installation and maintenance,together with the revenuewhich maybe anticipated. Although the benefitsto be derived from the use of a telephone in the special cases mentionedby the honorablemember are fully appreciated, it would be quite impracticable for the department to install public telephones for the purposeof meeting emergencies and to disregard the financial aspect of pursuing such a policy.

Cite as: Australia, House of Representatives, Debates, 5 May 1936, viewed 22 October 2017, <http://historichansard.net/hofreps/1936/19360505_reps_14_150/>.