15th Parliament · 1st Session
Mr. Speaker (Hon. G. J. Bell) took the chair at 3 p.m., and read prayers.
– Will the Treasurer state whether the Loan Council is to meet in Canberra on Friday next, or whether there has been any alteration of what was intended?
– Owing to the uncertainty of the international situation, the Government has agreed that I shall communicate with the Premiers of the States asking that the projected meeting of the Loan Council be deferredfor the time being.
– Has the attention of the Minister for the Interior been directed to the projected formation of a company with English and Canadian capital to mine ore in Middleback Range, South Australia, and to export the iron to England? Has any application been made for permission to export; if so, is such permission to be granted ?
– The reply to every point raised in the honorable member’s question is “ No “.
– by leave. - I had hoped to be ina position by now to make a statement in regard to the European crisis, but unfortunately, I am unable to do so at the moment. The position is still, of course, a delicate one. I hope that., at a later stage to-day, probably at eight o’clock tonight, I- shall be in a position to make the statement. Meanwhile, I assure honorable members that the Government is doing its best to co-operate with Mr. Chamberlain in his efforts to preserve the peace of Europe and of the world. I would add that I appreciate very much the patience displayed by honorable members on both sides of the House in regard to the matter. I know that their conduct in this regard is actuated by the desire to co-operate with those who are endeavouring to maintain the peace of the world.
– The Government may be waiting for instructions ; we are not.
– The attitude displayed by the honorable member for Batman, I shall leave to himself ; I shall not engage in a discussion of that sort. I repeat that I hope that by 8 o’clock this evening, I may be in a position to make a statement to the House.
Mr.CURTIN (Fremantle).- by leave - The Labour party does not consider itself in an exceptional position when it declares that war is abhorrent; absolutely evil; and the germ of everything hateful to man’s sensibilities, his best interests, and his true welfare.
The masses are the chief victims of war. It was for this reason that, last week, we deemed it the course of wisdom to help, as far as possible, the negotiations having for their purpose the settlement of the present European situation. To-day we feel that nothing can be said or done in Australia that will prejudice negotiations or, on the other hand, increase whatever momentum there is towards war. As a democracy, we urge upon the Prime Minister to-day that this Parliament of a free people should no longer delay a full and frank statement of where Australia stands.
Although we are a party which adheres to the pursuit of high ideals, we claim to be realists. We face facts ; and “we make no apology for facing them from the viewpoint of the safety and security of this nation, having primary regard to the welfare and happiness of our own people. This is the simplicity of common sense. Our view, based upon an acute realization of all that has happened to Australia in the last 25 years, is that the wise policy for this dominion is that it should not be embroiled in the disputes of Europe.
Opposition Members. - Hear, hear !
Mr.CURTIN. - I have said before, and I say now, that we have not the power to solve or to appease them; and we should not risk the lives of our own people in an endeavour to achieve what appears to be doubtfully possible.
The wars of Europe are a quagmire, in which we should not allow our resources, our strength, our vitality, to be sunk almost, it may be, to the point of complete disappearance.
The present trouble in Europe is the outcome of the last world war. That war, it now is clear, did not determine the problems of Europe and we are firmly convinced that no decision emerging from conflict, should conflict again occur, will resolve the divergent aims and ambitions of European nationalism. Democracy, I am confident, has learned the futility of endeavouring to settle international grievances by force. I need not describe the price the world has already paid in this connexion.
It is not as though there are not active interests in the world whose ambitions lead to war. There are. The chief menace to peace is the failure of nations to make the welfare of their own people the paramount activity of their, governments.
The condition of this world is such that it is always possible to find an apparently sufficient reason for war; and when this immediate issue has served its purpose, another will be manufactured as time goes on.
Chief among these war-making agencies are the armament makers. So long as these firms are profitable, they are as dangerous to peace as are those sections of the press which serve up war-scares as they are created and, in between, chant the praises of armed force as the only security for nations. The armament firms favour systems which will keep their works busy and their profits soaring. So long as these firms are permitted to carry on private profit-making, there will always be geographical danger-spots in civilization.
I need not emphasize how all this has a distracting effect on the workers and the masses of the people of all nations, diverting them from the problems of poverty and economic well-being to the contemplation of international crises. Intimidated by what is occurring far away, they are weakened in their social aims and in their aspirations.
Labour, therefore, in every country, seeks, and will continue to seek, peace by negotiation in international matters as representing the only sane solution - the only lasting agreement which can free the people from living constantly under the darkening shadow of the sword.
I remind Australia that we have already experienced a colossal waste of the flower of our manhood. We have around us much evidence of the terrible legacy of war. The lives lost ; the maimed and the afflicted; the widows and the orphans; the grievous problems inherited; all of these testify to the awful price which this nation has already paid as the result of war in Europe.
I ask myself, and I ask Australia - what shall we do, having regard to the present situation? Answering this, I say that new vulnerabilities have developed. Our security may he more menaced than it was. I shall not particularize in this connexion other than to say that the Government’s policy itself is a clear call to the nation ; it is indicative of the new dangers to which we are exposed. Our first duty is to Australia. Our position is such that the total of our resources must be available for our own defence. This means, clearly and unequivocally, that whatever else we may do as a dominion of the British Commonwealth of Nations, no men must be sent out of Australia to participate in another war overseas.
This is the positive and calmlyconsidered view of the Australian Labour party. We believe that the best and the most complete contribution we can make, in the present position of the democracies of the world, is to concentrate ourselves on the maintenance of the integrity and the inviolability of this country and the safety of our own people.
– In view of the fact that the conference in Melbourne which was held at the order of Judge Beeby between the representatives of the mine-owners and the ‘Miners Federation has failed, what steps does the Prime Minister himself intend to take in order to bring the parties together to settle the dispute in the coal-mining industry?
– I hesitate to discuss the merits of the dispute that is taking place in the coal-mining industry of Australia to-day, but apparently the failure of the conference was due to a disinclination on the part of the union to recognize the Arbitration Court. I pointed out the other day that the arbitration system is the policy not only of this Government and of this Parliament, but also of the Australian people. The Arbitration Court is the body to which both parties, it seems to me, will have to go to have their grievances and complaints dealt with.
– I lay on the table the report and recommendations of the Tariff Board on the following subject: -
By leave. - In May, 1936, the Government announced that its policy was to establish in Australia the manufacture of engines and chassis of motor vehicles. To that policy the Government still adheres. In December, 1936, the Tariff Board was asked to inquire into and report upon the best means of giving effect to the policy, with consideration given to the general national and economic aspect. The Tariff Board has now reported, as honorable members will see from the document laid on the table, that it cannot at present advise the encouragement or enforcement of the manufacture of the complete motor vehicle in Australia, and that the best approach to this end would be by the method described as “ step by step “ development.
As an important step in this development, the Tariff Board has made a recommendation for the encouragement of the mass manufacture of radiators in Australia with the aid of bounty. The Government accepts the bounty recommendation, and will therefore make provision for the payment of a bounty of 10s. a radiator assembly for the next two years, before the expiration of which term the Tariff Board will be again invited to report upon the establishment of the radiator industry and the best means of securing its continuance on a sound basis.
The Government invites prospective manufacturers of engines and chassis, or parts thereof, to submit their plans and proposals for further development of the industry, together with details of the assistance required, to the Minister for Trade and Customs not later than the 31st March,1939. Consideration will, of course, be given to any proposition for complete manufacture.
Mr.Forde.- What a backdown from the previous policy !
– There is no backdown. If the honorable member reads the board’s report he will understand the case better.
Ordered to be printed.
– by leave - The recent discussions in London between Ministers . representing the British Government, and the Attorney-General (Mr. Menzies), the Minister for Trade and Customs (Mr. White) and myself representing Australia, resulted in conclusions which have already been published in the form of a White Paper by His Majesty’s Government in the United Kingdom. I take this opportunity to refer to the circumstances in which the discussions were undertaken, and to explain the significance of the conclusions reached.
It will be noted that these conclusions have laid special emphasis on Empire development and defence, particularly in their application to Australia. Eor instance,United Kingdom Ministers have recognized -
That, in the interests of both countries, and of the British Empire as a whole, it is desirable for Australia to endeavour to bring about us soon as possible a substantial increase in her population.
That it is impossible to achieve this objective solely or principally by an expansion of Australian primary industries.
That there is, therefore, a necessity to combine with such expansion the sound and progressive development of Australian secondary industries.
Trade arrangements ordinarily must bo looked at from the aspect of their effect on economic activity in the countries concerned, but, as between Empire countries, they take on an added significance because of their influence on Empire development and security. Those overriding considerations dominated this year’s discussions in London, at which Australia’s objectives were, briefly -
First - To assure the maintenance of free entry and of preferential margins for Australian products into the United Kingdom, and, as far as possible, to provide for further expansion of Australia’s share of the British market.
Secondly - To modify and possibly remove the Articles affecting Australia’s tariff treatment of United Kingdom goods, and to provide a basis for the sound expansion of Australia’s secondary industries.
Thirdly - To reach an understanding with the Government of the United Kingdom in regard to mutual help in making trade agreements with foreign countries, and with the object of expanding international trade.
I am happy to say that mutually satisfactory arrangements have been made on all these matters. As the result, the Government is in a position to continue to plan ahead for the development, peopling and defence of Australia.
As honorable members are aware, the foundation of the trade relations between the United Kingdom and Australia was laid by the Australian preferential tariff to the United Kingdom in 1906; and reciprocity began with the trade agreement concluded at the Ottawa Conference in . 1932. These measures have stood the test of time, and the Ottawa Agreement remains as a tribute to the Ministers who formed the Australian delegation at that conference, Mr. S, M. Bruce and Sir H. S. Gullett. This year we were again very fortunate in having the advice and services of Mr. Bruce, whose knowledge of the Ottawa and subsequent negotiations, and sound judgment on all the issues, rendered him a most valuable colleague to the delegation.
The’ original period of the Ottawa Agreement expired in August, 1937. The period of guaranteed free entry into the United Kingdom for eggs, poultry, butter, cheese, and other milk products had expired in August, 1935, although no change had been made by the United Kingdom Government in the conditions affecting the importation of those goods. The conditions affecting the importation of other Australian commodities into the United Kingdom were satisfactory, although questions had arisen from time to time regarding the conditions, of preference enjoyed by some of them.
During the existence of the agreement, difficulties of two kinds had arisen in regard tq the tariff and preferential treatment of goods from the United Kingdom upon entry into Australia. Australian manufacturers had expressed the view that certain articles of the agreement were in danger of operating to the detriment of the development of Australian manufacturing industries. Apart from that, the method of according preferences to goods from the United Kingdom as against foreign goods by means of a formula left the Australian Government somewhat hampered in its efforts to conclude trade treaties with foreign countries
The necessity for a review of the agreement became pressing when the Government of the United Kingdom undertook negotiations for a trade treaty with the United States of America. At the outset of those negotiations, the Government of the United Kingdom came to the conclusion that an agreement with the United States would be facilitated by the co-operation of the dominions. Their request for that co-operation was the final factor necessitating immediate consultation regarding the Ottawa Agreement as a whole.
The Ottawa Conference had resulted in the signing of agreements, consisting of articles and schedules, and the conclusion of other arrangements which were expressed in resolutions dealing with a number of subjects. Two of these subjects were “ promotion of trade within the British Empire “ and “ industrial cooperation.” In regard to the promotion of trade within the British Empire, the Ottawa Conference expressed the hope that, by lowering barriers among themselves, Empire countries would facilitate trade among themselves, and that this would re-act towards an increase of world trade. In regard to industrial co-operation, the Ottawa Conference recognized that industrial production., ‘by which was meant secondary industries, would continue to develop in .the less industrialized parts of the British Empire. These developments involved changes in the economic structure both of the more industrialized and of the less industrialized countries. The Ottawa Conference adopted the view that the object of co-operation must be, not to arrest change, but wisely to direct and facilitate its course. This year’s discussions resulted in changes in emphasis in respect of these two matters. In the circumstances, Ministers concentrated on the elucidation of points at issue, and the enunciation of some fundamental principles, rather than on discussions which would result only in the variation of existing schedules, and the compilation of new ones.
On the subject of promotion of trade within the Empire, there has -been some modification of the attitude adopted at the Ottawa Conference. At that time, the circumstances justified Empire countries in practically confining their attention to the exchange of preferences. World trade was at such a low ebb that the practical problems affecting trade between Empire countries and foreign countries were left for each Empire country to consider for itself, subject to the understanding that no foreign trade arrangements would be made that would conflict in any way with the Empire preferences.
In the years following 1932, the several Empire countries have made trade treaties with foreign countries. All have found that Empire preferences have limited their capacity to make foreign treaties. At the same time, they have recognized that the benefits of preference have much more than offset this disability. Naturally enough, each Empire country has a more acute realization of its own difficulties than of those of the sister countries. The difficulties of the United Kingdom and Australia were very fully and frankly discussed in London this year. As the result, we have jointly declared our continued strong attachment to the principle of preferential trade within the Empire, and have, at the same time, undertaken to co-operate in every practicable way with a view to assisting each other to make trade agreements with foreign countries. This realistic recognition of .the practical needs of each other affords a substantial assurance against the development of irritations and misunderstandings. It does not weaken the preferential system; it strengthens it, by the avoidance of excesses which might ultimately destroy it.
A practical example of Empire cooperation, which preserves the essentials of preference, is to be found in the trade negotiations at present proceeding between the United Kingdom and the United States of America, in which other Empire countries have collaborated. The Australian Government looks forward with hope to their speedy and successful conclusion. As the Prime Minister (Mr. Lyons) has previously stated, the possibility of Australia commencing commercial negotiations with the United States of America ‘ has been discussed informally. Study .by both governments of the problems involved is still proceeding, and the Commonwealth Government hopes that a basis for negotiations will be found at a not very distant date.’ A successful outcome to such negotiations would be followed by efforts to enlarge trade opportunities with other foreign countries.
The future of the primary industries is materially involved in the expansion of foreign trade. This applies particularly to wool and wheat, which cannot benefit by Empire preferences, but foreign trade will be very important in the future, even to those industries which have benefited from preferences. The benefits of the Ottawa Agreement to the meat, dairying, and fruit industries have been great indeed. Having regard, however, to the physical limitations of the market in the United Kingdom, the rights of British agriculture, and the clear necessity for Great Britain to maintain her foreign trade, the future opportunities for expansion can hardly be as great as those of the past. Nevertheless, Australia’s position in the British market has been made secure. The United Kingdom Government has, subject to the abovementioned considerations, recognized that an extended market should, as far as practicable, be afforded in the United Kingdom for dominion products. Of immediate practical importance is the extension to August, 1940, of the assurance of free entry to the commodities referred to in Schedule A of the existing agreement, viz., eggs, poultry, butter, cheese and other milk products, which had expired in August, 1935.
The agreement in regard to orderly marketing of primary products in the United Kingdom is also of significance to Australian primary industries. Since the establishment of the Empire Meat Council and the International Beef Conference, Australia’s meat exports to the United Kingdom have expanded in a steady and orderly fashion, under remunerative price conditions. A material factor in bringing about this result is the co-operation of business organizations in the interests of orderly marketing. The extension of this form of marketing organization to other commodities, in association -with the Australian export control boards, may confidently be expected to bring similar benefits to the i n ti u s tri es concerned .
In addition to the assurance of security in the British market, we have the pro misc of the co-operation of the Government of the United Kingdom in the extension of foreign markets for our primary products. This co-operation will be afforded in a practical fashion as each occasion arises. Increased opportunities are being sought, not only in the United States of America but in other foreign countries as well. This must be a longrange objective, having regard to existing political difficulties in Europe, but in the development of larger markets in Europe lies part of the hope for future expansion of Australian agriculture.
To sum up in regard to primary industries : Australian commodities continue to enjoy free entry into the United Kingdom ; the future holds promise of some moderate further expansion in that market; and provision exists for the extension to other commodities of the system of organized marketing at present applied to meat.
– Just what is meant by the expression “ the future holds promise of some moderate further expansion “ ?
– If the honorable member will study the matter which I have placed before the House he will find that increased opportunities for trade, and an extended market, are assured, as far as is practicable, by the British Government.
– Words, words, words, to cover up the failure of the delegation.
– In the matter of butter alone, we have secured an extension of the preference until 1940 that will be worth millions of pounds. In addition, Australia is assured of the goodwill of the Government of the United Kingdom in efforts to conclude foreign trade treaties, the object being still further to “extend the market for Australian products. The plans of the Government for the export trade in primary products are thus as complete in every aspect as the state of world trade will permit. Moreover, as world trade improves, so will foreign markets for Australian primary products expand. The Government invites honorable members to examine critically the arrangements made in respect of primary products, and my colleagues or myself will comment, in reply, on all constructive points raised in debate.
The misunderstandings which have arisen from time “to time regarding the respective rights of secondary industries in Australia and the United Kingdom, have not concerned broad principles. The ‘ Ottawa Conference had expressed hopes that the course of dominion industrial expansion should .be facilitated, and wisely .directed. The particular agreement between the United Kingdom and. Australia set out more precisely the principles which should govern the competitive . relationship between ‘ British and Australian secondary .industries. Honorable, .members , are well aware of the nature. of the objections which have been raised; in Australia to the relevant articles.,.. The ‘articles and their administration were also criticized from the opposite point of view by the Government of the United Kingdom and. British manufacturers.,. The Australian delegation proposed, to the British Ministers the removal , of. the articles from the Agreement:. .
When it transpired that Ministers in the United Kingdom were unwilling to agree to the unconditional excision of articles 9, 10, 11, 12 and 13. of the Ottawa Agreement, it became necessary to consider whether any of the. friction which has from time to time arisen in connexion with these articles could - be eliminated by some agreement upon interpretation. After much discussion, two points were resolved which will go a long way towards removing what were thought to be undesirable limitations upon Australia’s tariff autonomy.’
In the first place, honorable members will recall that., when article 10 came before the Australian . Tariff Board, -the board took the view that it should not be applied so as merely to equate the costs of production in the United Kingdom and Australia, but that, in spite of the words “such a level as will give United Kingdom producers .full opportunity of reasonable competition “, the Australian tariff should, in fact, be fixed in such n way as to provide a further margin of a genuinely protective kind. The interpretation was challenged by the United Kingdom Government and was, from time to time, strongly criticized by Orated Kingdom manufacturers. It has now been agreed, as honorable members will see in paragraph 9 of the Memorandum of Conclusions,’ that the United Kingdom Ministers are prepared not to press their objection to this interpretation. In the second place, we have encountered, on at least two occasions, acute “controversy in relation to article 11. It has been asserted by United King- dom manufacturers that, wherever under that article a reduced duty has been recommended by the Tariff Board and submitted to the Commonwealth Parliament, that Parliament must either approve of the recommendation or commit a breach of the Ottawa Agreement. Australian Ministers in London contested this view, pointing out that, while the Australian Government was, under the article, bound to invite the Commonwealth Parliament to approve of the recommendation, and was further, no doubt, bound to take every reasonable step towards securing the approval of Parliament, the actual failure of Parliament to approve was not a breach of the agreement. While this matter is still under the technical consideration of the United Kingdom law officers, it will be seen from paragraph 9 pf the Memorandum of Conclusions that the Australian vie’w of the problem has been in substance adopted, since the undertaking referred to in tha.t paragraph is not an absolute undertaking that Parliament shall give effect to the recommendation, but that Australian Ministers shall make every effort to ensure that Tariff Board recommendations under article 11 are made effective.
The agreement reached in regard to the interpretation of articles 10 and 11 will operate until the Commonwealth Government has completed an investigation into the possibility of adopting a system of fixed rates of duty upon United Kingdom goods entering Australia. The decision to undertake this investigation,’ which is referred to in paragraph 7 of the Memorandum of Conclusions, does not mean that the Australian Government is committed in advance to the fixation of duties for a term of years. The simple facts are that, in the course of our discussions with United Kingdom Ministers, it was pointed out that fixed or consolidated rates of duty were a commonplace in international trade agreements, and that the adoption of some such system by Australia would make the contentious articles in the Ottawa Agreement unnecessary. It was pointed out by us that there were obvious difficulties about applying a fixed- duty system to a young and developing country like Australia, and that before we could even begin to consider the fixing of duties in relation to any class of commodities, we would need to have informed our minds as to the possibilities that we ourselves might be engaging in the manufacture of those commodities during the term proposed for the fixation. All that the Memorandum of Conclusions does, therefore, is to commit us to an examination of the position in order to see whether we feel able, on proper advice, to plan our industrial development for a few years at a time in such a way as to render some fixation of duties possible.
The form of the inquiry or inquiries to be made has not yet been settled by the Government, but honorable members will see that what is contemplated is not a review of what we have already done in industrial development, but is an attempt to make an intelligent preview of our development in the future. From an Australian viewpoint this planning of our industrial future should be most valuable, not only because of its intrinsic usefulness, but also because of its probable stimulating effect upon the investment of local and overseas capital in Australia. I do not need to emphasize the great advantages, including the benefits to our overseas funds, which would flow from such a stimulation.
Honorable members will see that, in all respects, the position of Australia, and of Australia’s development of her secondary industries, has been protected. Indeed, it is difficult to see what more Australian Ministers could have secured in relation to this problem, short of the actual cancellation of the articles.
This review of the trade relations of the United Kingdom and Australia was made within a year of the expiry of the five-year period named in the agreement. United Kingdom and Canada had had their review in 1936, and United Kingdom and New Zealand in 1937. In the circumstances, the delay in the Australian review was not in any way harmful, but it is well that the clarifications have been effected. Several doubts have been dispelled, and Australia may proceed with ordered plans for primary and secondary expansion. The rapidity of further primary expansion will depend on the future absorptive capacity of the United Kingdom market, the foreign trade op portunities which occur from time to time, and the growth of the Australian population which will bring with it an expansion of the domestic demand. The expansion of secondary industries will beencouraged by a continuance of the Government’s protectionist policy, assisted by the inquiry to bo directed towards determining the general plan for industrial development. This plan for the concurrent development of primary and secondary industries will be the means of absorbing an increasing population in remunerative employment. This must be the constant objective of Australia, because, besides being an assurance of material welfare, it is our best means of defence and security.
I now lay on the table the following paper : -
Trade Discussions between representatives of His Majesty’s Governments in the United Kingdom and the Commonwealth of Australia - Memorandum of Conclusions, London, 20th July, 1938. and move -
Thatthepaper be printed.
MEMORANDUM OP CONCLUSIONS.
London, 20th July, 1938.
Australia in the United Kingdom -
as the domicile of the largest amount of United Kingdom capital invested in any single overseas country and as a field for future United Kingdom investment.
United Kingdom Ministers recognize -
that there is therefore a necessity to combine with such expansion the sound and progressive development of Australian secondary industries.
the need for new markets for Australian exports, and for foreign trade arrangements.
Signed on behalf of His Majesty’s Government in the United Kingdom :
Signed on behalf of His Majesty’s Government in the Commonwealth of Australia : roberg.menzies. 20thJuly,1938.
Debate (on motion by Mr. Forde), adjourned.
– Following the visit overseas of the Australian trade delegation, are proposals in contemplation to extend the Australian trade representation to other overseas countries?
– Consideration was given to this matter by the Australian trade delegation during its absence abroad. No decision has yet been reached in regard to it.
– Following the visit of the Minister for Commerce abroad, have any alterations been made of the terms agreed upon at Ottawa concerning bananas and pineapples?
– On Friday last, in reply to a similar question asked by the honorable member for Wide Bay (Mr. Corser), I stated that preferences in regard to these commodities remain as they have existed for some time. No definite statement can be made in regard to the matter until the Anglo-American Trade Agreement has been concluded.
Administrative Capital Site
– Has the Government finally decided upon the location of the New Guinea capital site? If not, when will the matter be decided, and will the House be given an opportunity to discuss the proposed site at an early date?
– In regard to the first part of the honorable gentleman’s question, the Minister for External Affaire (Mr. Hughes) has indicated that the matter is still under investigation. In reply to the second part of the question, when the Government comes to a decision it will notify the House, but I cannot agree to allow the House to decide what proposed site shall be accepted.
– Is it correct that the Treasurer, and other members of the Government and its supporters, have received large numbers of letters of pro- test against the National Health and Pensions Insurance Act? If that is so. will the honorable gentleman take early steps to have the act reconsidered with n view to its repeal ?
– It is true, in my own personal case, that I have received circulars of protest, and I have taken some little pains to discover the source from which they emanated. I believe that; honorable members opposite have also received copies of the same circulars. Taking into account all these facts, the Government proposes to take no notice whatever of them.
Potatoes and Citrus Fruits
– Is the Minister for Commerce aware that at a conference in 1934 attended by technical experts of the Commonwealth and State Governments andalso of the Government of New Zealand, a unanimous agreement Avas Teached that there was no longer any justification for retaining quarantine embargoes against the entry of potatoes from New Zealand to Australia and of citrus fruits from Australia to New Zealand? If that is true, are we to accept the perpetuation of these embargoes as definite Government policy, or will the Commonwealth Government take the excellent opportunity now available to demonstrate its belief in the desirableness of removing unreasonable restrictions on Empire trade?
– The 1934 conference to which the honorable member has referred agreed that, in future, quarantine restrictions should be imposed only after discussion and agreement between the technical officers of the respective governments. The present embargo on the entry of New Zealand potatoes into Australia is for customs and not health purposes. Australian oranges are being admitted into New Zealand under licence from the government of that dominion in accordance with its marketing plan. The technical officers of New Zealand still maintain, however, that there is danger of introducing the fruit fly into New Zealand in certain seasons of the year if oranges from certain districts of New South Wales are admitted into the dominion.
– Is the Minister for Commerce aware that last year thousands of acres of potatoes in the Ballarat district were not. dug owing to the unpayable price offered for potatoes? Is he also aware that should “corky scab” disease infest the potato districts around Ballarat no potatoes at all could be grown there?
– I do not quite understand the import of the honorable member’s question, but he must be much better informed on the position in Ballarat than I am.
SALES TAX BILLS (Nos. 1 to9) 1938. in committee of Ways and Means:
Consideration resumed from the 21st September (vide page 3C), on motion by Mr. Casey -
.- The Treasurer (Mr. Casey) has agreed that the principal debate on the Government’s sales tax proposals may take place on the motion now before the committee, and rightly so, for although the new rate of tax will not actually come into effect with the passing of this motion, it is the preliminary stage of the legislation relating to the matter. The purpose of the Government is, of course, to increase the rate of tax from 4 per cent. to 5 per cent., which is equivalent to an increase of 25 per cent. If the committee accepts the principle of this motion it must also accept the Treasurer’s proposals. The Labour party is definitely opposed to the increase of the rate of sales tax now proposed and for that reason it will vote against this motion. If we agree to this motion we must logically agree to the bills which the Treasurer will subsequently introduce. The Treasurer is unfair to the committee in bringing forward this proposal at this stageseeing that honorable members have not yet had an opportunity to discuss at length the whole pf the budget proposals of the Government.
We are all well aware that the sales tax was introduced as an emergency measure, during the depression, at a time when the government of the day faced a deficit of approximately £10,000,000. Although the Labour party has a plank on its platform which reads “ Sales tax to be repealed as soon as possible “. I am not so foolish as to say thatwe can completely abolish the sales tax at this moment; but we see no justificationwhatever for an increase of the rate. This tax operates harshly on the working classes of Australia. Since 1931-32 the Commonwealth
Government has collected more than £8,000,000 a year from sales tax The total revenue from this source over this period of six years has been approximately £50,000,000. We have been told that the purpose of this increase is to provide additional revenue to meet defence expenditure. The increased amount that will be collected during the remainder of this financial year over and above the amount that would have been collected had the tax remained at four per cent, will be £1,300,000. The increased revenue anticipated from the higher rate for a full year is £1,900,000. A careful perusal of the budget makes it abundantly clear that the Government could have secured this additional amount, of money from other sources.
– What other sources ?
– I’f the AssistantMinister will give me an opportunity to do so, I shall tell him. We believe that the extra money required could have been secured without placing this additional burden of indirect taxation on the masses of the people. In the first place there was the surplus for 1937-38 of £3,494,000. Of that amount, the Government proposes to set aside £1,000,000 towards defence expenditure for the year 1939-40, and to expend the balance of £2,494,000 this year. If it be necessary to make this expenditure upon defence, why can it not be wholly expended in the present financial year? We have never, as a party, objected to the adequate defence of Australia ; we definitely stand for it ; but we agree with the honorable member for Henty (Sir Henry Gullett) that the rich members of the community, who have the most to defend, should be called upon to meet the lion’s share of this expenditure. I do not consider for one moment that the Government is justified in setting aside £1,000,000 for expenditure twelve months ahead, and simultaneously increasing the burden of taxes on those who are least able to bear it in order to meet the defence expenditure in the coming financial year. The £1,000,000 could easily have been made available for this financial year, and thus have left only £300,000 to be found instead of the additional amount which the Government proposes to collect from the sales tax- £1,300,000 for the remainder of the present financial year and £1,900,000 in a full financial year.
To show how the Government invariably falls back on the workers to bear the brunt of burdens such as these, we need only compare the extra amount which it proposes to collect by way of sales tax and the additional sum that it will collect from the land tax. The accumulated value of remissions of land tax made by this Government since 1932 and up to 1937-38 inclusive is approximately £7,600,000. The total remissions in respect of land and property taxes, insurance, &c, amount to approximately £26,000,000. We know from experience, and from figures published by the Taxation Department, that two-thirds of the land tax is paid by the large city landowners of Australia, and one-third by the very large land-owners in the country. Surely they are the persons who have most to defend in the way of property and who should be expected to pay substantial taxes in order to make possible an adequate defence scheme for Australia ! We know that there is an exemption of £5,000 in respect of unimproved land value, which excludes the struggling primary producers from the ambit of the land tax. It cannot, therefore, be said to be a severe impost upon the struggling farmer who cannot afford to pay it.
The Government intends to extract an additional £1,300,000 from the “ community by way of sales tax, yet proposes to take from the rich land-owners of Australia merely an additional £135,000. The honorable member for Henty, speaking in * this chamber on a memorable occasion on the obligation of the rich to contribute substantially towards the cost of defence said : -
It was for the rich more than for any other class that the war was fought. Because they had so much at stake, the rich should continue to contribute heavily towards the cost of war.
On that occasion the honorable member supported the contention of the Opposition that the defence scheme should be financed out of direct taxes instead of by the raising of loans which increased, not only the capital indebtedness of Australia, hut also its annual interest burden.
– The poor are only expected to give their lives.
– I am reminded that the poor are only expected to give their lives ; they are called upon to make the supreme sacrifice. Surely, therefore, it would not be too much to call upon large city landowners and wealthy land-owners in the country to pay the necessary increases of taxes in order to make it possible for the Government to refrain from increasing the sales tax. In the opinion of the Opposition, the obligation of the wealthy property-owners of the city and the country, and of that section of the people which is in receipt of large incomes, is as great in relation to the cost of defence as it should be in relation to the cost of the last war, and there is no justification for substantial increases of indirect taxes, which fall on the backs of the masses of the people.
Another member of the ministerial party - the honorable member for Wentworth (Mr. Harrison) - has expressed opposition to the raising of loans for defence purposes, and has contended that the money required should be raised by the imposition of taxes, on the ground that the employer and the property-owner usually have most to lose as the result of war and should, therefore, be called upon to contribute in no small measure to, the defence of the country. It. is a pity that Ministers do not share the views of the Opposition and of the honorable members for Henty and Wentworth. The rich financiers, property-owners, and the like, would have us believe that they excel in what they term loyalty to the Empire. Theirso-called loyalty is of a very lukewarm character when it comes to giving practical financial assistance. They raise a storm of protest through the Taxpayers’ Association for further remissions of taxes. They wouldwipe out altogether the federal land tax”, and are in favour of substantial reductions of the taxes on incomes from property and on big incomes generally. What did we find when the last loan of over £10,000,000 was being raised in Australia? It was stated that £4,000,000 of that amount was required for defencepurposes. One would imagine that,out of loyalty and patriotism, the big financial institutions of Australia would have subscribed wholeheartedly to such a loan. This they did not do. Although the loanwas fully subscribed, no thanks was due to them. Definite information has been sought regarding the amount subscribed by the Commonwealth Bank, but the Treasurer (Mr. Casey) has refused to divulge it. It has been said that, had. it not been for the Commonwealth Bank subscribing approximately £5,000,000, the loan would have been a failure. The wealthy land monopoly companies and financial institutions of Australia were not prepared to invest their money in the loan, evidently because at the time they were able to obtain a bigger return from other investments. Some time ago the Leader of the Opposition (Mr. Curtin), speaking on this subject, said -
It seemsamazing that with the Government’s concern for the defence of this nation, its lives and its property, it should not say to the citizens who have most to lose in the event of our being attacked, You should make a greater contribution than your fellow citizens less fortunately circumstanced”.
The CHAIRMAN (Mr. Prowse).The honorable member’s time has expired.
– As apparently no other honorable member wishes to speak at the moment, I shall take the second portion of the time allowed to me. There is no denying the fact thatthe increase of the sales tax Will add to the’ already heavy cost of living of the mass of the people. It will raise costs to the prejudice of business, and lessen the purchasing power of the masses. Since the present Government, has been in power, it has increased enormously the burden of taxes on the people of this country. It speaks of having made certain reductions. I admit that some reductions were made which benefited very largely its wealthy friends. In fact, it has excelled itself as an indirect tax collecting Government, as the following figures willshow: In 1 931-32 the amount collected from indirect taxes totalled £36,800,000, while in 1937-38 the total from this source was £56,400,000, an increase of almost £20,000,000. Per capita, the indirect taxes amounted to £5 12s.10d. in 1931-32, and £8 4s. 4d. in 1937-38. It is true that in its budget proposals the Government has made some increases in respect of income tax. These increases, however, will fall, not only on the large incomes, but also on low incomes received by persons who are less able than others to make the sacrifice. A few years ago Judge Winneke expressed the following view, which is typical of those in receipt of large incomes -
Wo aru told that the people cannot stand any more taxation for defence, but is that true? I en.ii alford to pay a few more pounds. Very few people will admit that. Will anybody else admit it?
That is equally true to-day. When we talk about sacrifices being made in the interests of the nation, we should ask those who are more favorably circumstanced to bear the greater proportion. To them it is no real sacrifice, because TheY still have sufficient after paying the higher taxes for defence purposes to live in case and comfort, whereas it is a real struggle for the mass of the working class people to exist on the comparatively small incomes which they receive. The last Commonwealth census disclosed that 2,100,000 wage-earners keep 1,000,000 dependent children under sixteen years of age on an average income of less than £3 u week. The Australian Labour party’s policy is that the tax burden should fall upon the shoulders of the rich and the comparatively well-to-do people of the community, whose shoulders arc broad enough to bear it. ft is particularly desirable that this should be the policy of the country in raising taxes to provide for defence because it is, as some honorable gentlemen opposite have at times admitted, the rich who have the most in property and income to defend in the event of an invasion. Because of that they should willingly contribute more generously to the revenues of the Commonwealth for defence purposes There is no justification at the present time for increasing the sales tax, by which the Government has collected £S,000,000 a year for the last six years. The sales tax has been largely responsible for increasing indirect taxation by £20,000.000. comparing 1931-32 with 1937-3S. ‘For the reasons that I have stated, the Opposition opposes the motion.
– The main argument postulated by the honorable member for Capricornia (Mr. Forde) in opposing the increase of the sales tax from 4 per cent. to 5 per cent, was that the increase would impose an unduly heavy and unfair burden upon, the poorer classes of the community, those people who receive the basic wage or thereabout.
– The honorable member for Capricornia strongly objected to indirect taxation.
– He objected to the way in which the Government was raising the new taxes necessary to meet increased expenditure on defence.
– The Scullin Government introduced the sales tax.
– I do not wish to go into that. [Quorum formed.’] I do not wish to refer at any length to the fact that it was the Government SUp.ported by the honorable member for Capricornia that in the first instance imposed the sales tax. That Government imposed the tax at the rate of 2$ per cent, on a far wider field of goods than it now covers.
– That was at the bottom of the economic depression when conditions were different. It was an emergency tax.
– I concede that, but I do not think that it could bc said that the conditions which confront, the Government to-day do not constitute an emergency. I remind the honorable gentleman that, when the sales tax was introduced by the Scullin administration, the annual expenditure of the Commonwealth Government was about £70,000,000. The Government proposes this year to expend £93,000,000. I do not think that the honorable member for Capricornia or any other honorable member opposite could say in what way this expenditure could be substantially curtailed. About £23.000,000 more of revenue must be raised this year than it was necessary to raise in 1930-31, when a sales tax was imposed on a vastly greater field of goods than it covers to-day. This Government has given substantial and liberal exemptions from time to time. The value of goods upon which the sales tax could be imposed is £550,000,000, which at a rate of 5 per cent.’ would yield £27,500,000. When the tax was first imposed goods to the value of £215,000,000 were exempted and this Government has vacated the field in respect of goods to the value of £135,000,000, which means that on a taxable amount of £550,000,000 the sales tax is only collected on goods to the value of £200,000,000.
– The exemptions are very largely in respect of foodstuffs.
– Yes, and practically nosales tax is imposed on foodstuffs, and “most other goods used by the working man are exempt. Only 20 per cent. of the income of the basic wage earner is expended on goods to which the sales tax is imposed, a very meagre proportion. The tax represents to the average worker about one penny a day at present and when the increased rate becomes operative his contribution to sales tax revenue will be about1¼d. a day. That is not a very heavy burden to impose upon the working man, particularly when one realizes that the increased costs to the worker will at no distant date be reflected in an increase of the basic wage. There is no doubt about that. I remind the Opposition that the richer classes pay their share of the tax just as the poorer classes do, but they pay a higher relative proportion of it. In addition, they will pay practically the whole of the increased income tax, land tax and other increased taxes that this Government proposes to impose. Criticisms levelled against the Government that it is imposing an unduly heavy burden on the workers by increasing the sales tax from 4 per cent. to 5 per cent. cannot be sustained.
– I take this opportunity to protest against an increase not only of the sales tax, but also of any other class of taxation. I consider that other means can be found to raise the money which is necessary to bridge the gap between receipts on the basis of last year and expenditure proposed for this year. It is useless to assert that, in the final analysis, the bulk of taxation, direct or indirect, is not paid by theproducer and the worker. I do not care whether it be an increased excise duty on beer which is paid by the brewer as the agent for the consumer, or an in creased excise duty on tobacco, which is paid by the tobacco companies on behalf of the smokers, or whether it be increased local authority rates, income tax, land tax, sales tax or any other tax; in the final analysis the consumers pay the tax and the bulk of the consumers are the workers and the producers who cannot, in the majority of instances, pass on the tax. That applies with particular emphasis to those producers in the exporting industries whose return is dependent on world conditions. One has only to view the alarming state of the world markets and the abrupt and disastrous fall of commodity prices to recognize that every effort should be exerted to prevent the Australian community, ‘already suffering an excessively onerous tax burden, from being required to pay more taxes. I shall have a good deal to say in support of that contention in the budget debate, but I seize this opportunity to declare that what the Government is doing is not in the best interests of Australian economy. In six years the taxes imposed by the combined governments of Australia have increased by £32,000,000, and in the same period, municipal authorities in Australia have extracted £12,500,000 extra in rates and taxes from the community.. There is a breaking point, a point at which further taxation taxes cannot be wisely extracted from private industry. There is repercussionary disadvantage from unwise extraction of taxes in the shape of increased unemployment and decreased general activities.
In opposing the increase of the sales tax, I express the opinion that the administration of the sales tax warrants an overhaul. The present system imposes great cost upon those who, in the first instance, have to pay the tax, and I believe that an easier method of administration could be evolved with advantage not only to the Government, but also to the people engaged in those industries to which we look for the wherewithal with which to carry on the government of the country. Therefore, I reiterate my protest against this form of taxation, designed to bridge the gap between estimated expenditure and estimated receipts.
– How does the honorable member suggest that the money should be raised?
– I shall make what suggestions I think proper during the debate on the budget.
.- I protest strongly against this proposal. I have all along heen opposed to the principle of a sales tax. It was imposed during a time of economic stress, but the present Government boasts of the prosperity of thu country, and though I do not agree with all it says in that regard, I certainly think it is time that this tax was abolished. It is all verywell for the honorable member for Macquarie (Mr. John Lawson) to talk about the pennies of the workers, but the fact is that it does not matter upon whoma tax is actually imposed. All taxes, in the final analysis, arc paid by the workers and the primary producers, neither of whom can pass them on to anyone else. If extra revenue is necessary for defence purposes, it should be raised from one class and one class only, namely, that section of the community which would be in danger of losing its possessions if Australia were attacked. For them defence expenditure represents merely a premium on an insurance policy. I do not minimize the importance of defence. I would do ray share if we were attacked, but the people most concerned are those who own the country. It is they who are keeping this Government in power, and it is their duty to find revenue for defence purposes. I have repeatedly statedthat the sales tax, and all other forms of indirect taxation, are a cowardly way of raising money. Governments which impose such taxation are merely following the line of least resistance. Those whom this Government represents would object if direct taxation were increased, so the Government, in order to raise revenue, places a tax on the people’s breakfast table, and on the clothes they wear. Each person contributes only a small amount on each article, and he does not realize how heavily he is being taxed in the aggregate. I agree with the honorable member for Darling Downs (Mr. Fadden) that the trading interests do not pay the sales tax, which becomes part of the trading costs. I have been told that an instrument has been perfected which can measure the millionth part of an inch. That is hard to believe, but the traders certainly seem to be able to measure costs to the millionth part of a farthing. All costs are reckoned, added to the price of the article, and then the trader’s profit is reckoned on the total.
– How does the honorable member propose to get at these people ?
– I would get at them by direct taxation.
– But will they not pass that on also?
– The honorable member should know that it is much more difficult to pass on direct taxation than indirect taxation, because income tax is paid only after all business costs and profits have been assessed. We hear much, at the present time, about threats from various quarters against world economic conditions, but indirect taxation of this kind is calculated to depress conditions more than anything else. It is a pernicious system of taxation, and I will certainly vote against it if I get the opportunity.
.- There will be other opportunities to express an opinion on the Government’s financial policy, including the sales tax, but, as the matter comes before us specifically on a motion, the discussion of which has just been initiated by the Deputy Leader of the Opposition (Mr. Forde), and, as I feel strongly that stem measures should be taken against this particular exaction, I am not disposed to allow the motion to pass without protesting against the increase of the sales tax at a time, and in circumstances, when there seemed to be reasonable grounds for hoping that it would be reduced with a view to its ultimate abolition at no distant date. Whenever sales tax is mentioned, occasion is taken to recall that it was instituted for the first time in this Parliament by the Government of which I was a member. That criticism is characteristic of the persons who employ it. As a statement of fact, it is undeniable; as a statement of fact, without explanation or qualification, it is unjust. However, the fact remains that, in the trough of the depression of the kind which we may expect periodically as long as this, or any other country, persists in placing in power governments of the type which afflicts u3 now, the Labour Government, in a valiant attempt to square the ledger, and save the country from consequences for which we were not responsible, did intro* duce the sales tax as an emergency measure. It was introduced, in those terms, and accepted in those terms as a novel expedient to meet extraordinary conditions. It has been repeated and reunacted under entirely different conditions. The Labour Government redressed and cured the conditions which alone justified the imposition of the tax and, in a financial sense, set the ship of state once more on an even keel. Nevertheless, the present Government, which has enjoyed the benefit of the consequent prosperity, has constantly re-enacted this harsh and vexatious measure of taxation. Tlie honorable member for Macquarie (Mr. John Lawson), feeling in the exercise of his new office a new duty to support the Government in. whatever it does, said :
Are these not emergency times ? Is not this an emergency? “ Where on earth is the emergency? In a country like ours, at peace with all the world, with superabundant resources, unthreatened by a single enemy, how can it be said that we are facing an emergency?
– All those conditions existed in 1931.
– Not all of them. Many of them certainly existed in 1931, with this important qualification: that we were, nevertheless, economically in the midst of a most serious depression induced by the previous Government. Now, the economic depression, which alone was the reason for the institution of the sales tax, has passed away, largely as the result of the work which the Labour Government did. The present Government inherited a new and easier set of conditions. In the political sense, it has lived in affluence, yet it has re-enacted every year this vexatious emergency taxation, and this year it proposes to increase it. The excuse advanced is that there is still an emergency. I invite the Government to say what this emergency is. If it means, as the honorable member for Darling Downs (Mr. Fadden) stated, that the emergency refers to the unfortunate necessity to raise revenue for defence purposes, I part company with that honorable gentleman. I do not admit that it is a necessity. I say that it is the result of scare and terror arising out of matters without substance, and I maintain that, on this item alone, insofar as it represents part of the imperialist ambitions of the Government, millions of pounds might be saved, so that the sales tax, which has afflicted the minds of the small traders in every part of Australia, might be removed hy the wave of a hand. I can assure the small traders, as I have assured them in the past, that the reasons for which this taxation was imposed having passed away, it would be the ideal of Labour, if restored to power, to repeal the tax at the earliest moment. There is no hope that it will be repealed by this Government. New terrors, new mounting ambitions, new extravagances, will develop from year to year, and will justify, not only the retention of the tax, as has happened in the past, but also its increase, as is now proposed. The Treasurer (Mr. Casey), when he passed speedily through the chamber a little while ago to favour us with one of those rare visits when he can spare the time from “ scare “ cabinet meetings held to deal with the international situation or ‘other matters which do not concern. the Government, asked : “What about the income tax?” I invite honorable members to compare the relative proportions of the income tax and of the various indirect taxes; the income tax which yielded last year £9,383,000, as compared with the results of indirect taxation amounting to £4S,3S3,000. When Ave realize that the income tax is paid by the more privileged members of the community, while indirect taxation is paid, to an overwhelming extent, by the “workers, Ave realize how vitally they are affected by this proposal to increase the sales tax. We realize at once how this tremendous burden of taxation under which the people are groaning is being borne by the .working classes of Australia. That should not be forgotten. I have been disappointed from time to time, hut hope springs eternal in my breast that at least it will come home to the taxpaying public eventually, to those high financiers who, in the name of the Taxpayers Association, and other bodies, clamour for relief, to resist this Government in its increasing, exactions cm the public. Fresh, exactions are made from day to day in all departments and some reason is always advanced for further and still further exactions. But where does the money go? Does it stop the long procession of working class people calling at our front doors looking for jobs? Does it help the members of the rising generation who have no hope of employment whatsoever, for whom the future consequently holds nothing? Does it offer anything for anybody really deserving in this country. No. It is wasted to further the imperialist ambitions of tin’s thoroughly incompetent Government.
– I support the protest voiced by the Leader of the Opposition (Mr. Curtin) against the proposed increase of the sales tax. The honorable member for Macquarie (Mr. John Lawson) with figures, the source of which he did not disclose, sought to prove that the basic wage earner will be affected by the proposed increase over a range of only 20 per cent, of his purchasing power. It may be that the honorable member’s contentions are correct - I have no doubt, at any rate, that he advanced them in all good faith - but I do not agree with him, and would point out that he seems to have overlooked the fact that this Government recently imposed an additional tax of ls. 6d. on all basic wage earners.
– That “was not. a tax.
– It is so regarded by the workers. If we accept the view of the honorable member for Darling Downs (Mr. Fadden) that all kinds of taxation eventually fall on the backs of the consumers, it will be seen that the basic wage workers have recently been loaded not only with an additional tax of ls. 6d. but also with the employer’s contribution to national insurance - a total imposition of 3s. on the worker. If we add to that the additional 6d. which it is suggested the increase of the sales tax will cost it will be seen that in effect the purchasing power of basic wage workers will lie lowered by the amount of 3s. 6d. a week. But it is in keeping with the general policy of this Government to endeavour to place as much as possible on the backs of the workers of this country. In view of the large number of workers in his electorate, I am surprised to find the honorable member for Macquarie supporting this latest tax increase; but as the honorable member for Batman (Mr. Brennan) has said, possibly by reason of his recent appointment the honorable member for Macquarie feels impelled to support everything which the Government brings forward. In my opinion, the Government would have acted more fairly in the interests of all concerned if it had undertaken works or set aside a sum to provide employment for a large number- of people who today are out of work, thus increasing the sources of revenue and in that way avoiding the necessity for increasing the sales tax which falls so heavily upon the shoulders of those least able to bear it. As I have said, I have no doubt that the honorable member for Macquarie addressed himself to this matter in -all good faith, but in my opinion his estimate of the’ effect of the increase on the purchasing power of the workers has been understated.
Last week the honorable member for Bourke (Mr. Blackburn) exposed the fallacy, which seems to be so much played upon by the press, that unemployment figures are down considerably. Although there has undoubtedly been a decrease of unemployment, I think that the Government might very well bring forward a public works programme of useful works which would absorb many of the unemployed who, because of their employment, would swell the number of those who are called upon to pay income tax. There are many people in Australia to-day who would be glad to have an opportunity to pay taxes. Legislation’ such as this, however, is designed to thrust back the load on those least able to bear it. Although the recent proposal of the Government to increase the income tax rate by 15 per cent, will involve all taxpayers in Australia, I strongly believe that there should be some differentiation in the incidence of taxation imposed in the circumstances in which we find ourselves at the present time, and I am of opinion that a. great deal of the proposed expenditure of £43,000,000 for defence will be found to leave very little in the way of valuable assets. If the money were judiciously expended, we could ensure that substantial assets would remain after the defence vote had been exhausted. I should like to have heard the honorable member for Darling Downs elaborate his reasons for objecting to the proposed increase of the sales tax. No doubt the honorable member desires to deal with it when he faces a larger audience during his budget speech. I content myself at this stage as a member of the Labour party in protesting against this Government introducing emergency measures of this kind at a time when an emergency no longer exists. I trust that some honorable members sitting behind the Government will also strongly voice their protests against this bill, as the honorable member for Darling Downs has done.
.- Like other honorable members in this House and in the community in general, I am not one who lightly accepts a further burden of taxation. The people of Australia are a very highly taxed community, and good and sufficient reasons must be put forward before they will accept, and this Parliament will accept, further burdens upon them. In an examination of the reasons for the imposition of these additional burdens we may take the papers tabled in two sections. First of all we must examine the means of raising the money and, secondly, we must ascertain whether there is any necessity for raising that money - whether certain expenditure may have been curtailed or not, or whether the time is not ripe for the Government to consider limiting expenditure in certain departments. If we examine the budget papers and omit the Defence Department, Ave find that in nearly every department there has been a huge increase of expenditure. The time has arrived for the people to say “We are quite prepared to make further sacrifices for defence, but we are not prepared to see this constant increase of other departmental expenditure “. I, personally, am prepared to stand behind the Government to the limit in connexion Avith defence expenditure, but the time has come when Ave must examine the other side of the ledger and sec if it is not possible to cut our cloth to suit our measure.
– Bow down to Moloch !
– I entirely disagree with the views held by the honorable member for Batman on this most important subject and I emphatically disagree Avith his statement that the additional defence expenditure to be incurred by the Government is merely in the pursuit of imperial ambitions. I believe, and the majority of the people of Australia believe, that particularly at a time such as the present, adequate defence is one of our most vital needs, and the piling up of material possessions and wealth should bc made subservient to this great need. I can only regret that certain members of this House can hold the views that have been expressed by ‘them. They are inexplicable to me. Though 3 realize that every man is entitled to his own convictions, it is beyond my coinprehension that such views should be expressed in the Australian Parliament, having regard to the present unsettled state of the world.
– The honorable member will know better perhaps when he has been here longer.
– I have been here sufficiently long enough to have my own opinions in regard to these matters.
So far as the question of taxation is concerned, and as to whether the rich should be “ socked “, to use a popular expression, and the sales tax lifted, I would refer the honorable member for Batman to the taxation levied by a former administration of which he was a member. According to the budget-papers in 1931-32 there were 199,381 taxpayers with incomes of £200 and under who paid an average of £2 14s. 3d. a head. According to the budget for 1938-39, there are only 139,189 such persons, and their average tax is £1 7s. 8d. a head. Those figures show the relative tax imposed on those whom honorable members say are least able to’ bear it. I do not question the morals of the imposition of the sales tax when it was first imposed. I have no desire to offer any criticism of the Scullin Government for having had the courage at that particular time to take a very unpopular step. On the contrary I think it reflects a great deal of credit on that Government that it was game enough to do so; but I entirely disagree with the honorable member for Batman that a similar emergency or need does not exist to-day. All in this community, whether we happen to be manufacturers, farmers or wharf labourers, must be prepared to accept our fair share of the financial burden of providing for the defence of this country. Whether the money is levied by a direct tax on companies or by the imposition of an additional small tax on goods and commodities, as the honorable member for Darling Downs has said, it all goes back in the end to the consumers of those goods; and manufacturers, farmers and wharf labourers alike, rich and poor, are
Jill consumers. I listened very carefully to the statement on- the international situation made by the Leader of the Opposition this afternoon, but I do not desire to comment on it very much at this stage except to draw attention to his declaration that those who have most to lose by the war are the masses. I have no desire at this stage to comment very much further on ways and means except to say to the Government that, whilst I support the proposals that have been brought forward and realize that it is necessary to find the money somewhere, I still wish to register my objection to the continuous and mounting expenditure in all departments. The Treasurer should apply the pruning knife to departmental expenditure in order to avoid the necessity for additional taxation. I intend to examine the figures to ascertain which proportion of the additional taxation is actually required for defence expenditure and which proportion is needed to meet additional departmental expenditure over and above that incurred last year. I trust that the Treasurer will give earnest consideration to ways and means of reducing all expenditure that is not vital.
.- I support the protest of the honorable member for Darling Downs (Mr. Fadden), and the honorable member for Richmond (Mr. Anthony), against this increase of taxation. I share, to some extent, the feelings of the Opposition on this occasion. I entirely agree that some special effort is required from the taxpayers at this juncture: In the face of the peril which faces the country, and which has faced it for some time, I do not believe that there will be any shirking of taxation in order to meet the financial requirements of the situation; but this budget provides for a lot more than merely additional defence expenditure. There can be no doubt that at a time like this economies could be effected in non-essential outgoings. I make no complaint about the proposed increase of income tax, heavy though it will be. Such taxation, as the Treasurer (Mr. Casey) pointed out, will be paid out of income. As there will be increased assessments, it is obvious that the taxpayers concerned will be in a better position to pay this year than last year. Income tax is, of course, taken out of the people’s earnings. As the honorable member for Werriwa (Mr. Lazzarini) said, income tax is more difficult to pass on than any other tax.
Sales tax, land tax, and some other imposts that could be mentioned, are not based on sound economics.. It is true that the sales tax is at a low rate, relatively speaking, but it nevertheless increases the cost of production and the cost of keeping people in employment. I know that certain exemptions have been granted from this tax, but the cost of production is nevertheless seriously affected by it. The same applies to the land tax. At a time when production costs are increasing and export prices falling, and when our great wool industry is being subjected to exceptional . competition from substitute materials, the Government has acted in a cavalier way in increasing the class of taxation of which I am now complaining. The present budget, leaving defence out of the count altogether, seems to me almost like an election budget.
– Can the honorable member suggest any alternatives?
– I suggest that some of the proposed increases of expenditure are quite unjustified at, a time of peril such as this is. I notice, for example, that an increased expenditure of £753,000 is proposed in respect of the Postal Department. It is very pleasing, of course, for honorable members to learn that new post offices are to be erected in their constituencies, or that existing buildings are to be renovated, or that telephone facilities are to be improved ; but it seems to me that the
Government has put the electoral requirements of honorable members before the real needs of the .country. Expenditure of the kind that I mention should be kept at a minimum in the circumstances in which we find ourselves. An increased expenditure of £68,000 is proposed in respect of the Australian ‘Capital Territory. Increases are also proposed in respect of the other Commonwealth territories. I do not complain of these in cases where the outlay is fully justified, for Ave must provide for necessary developments; but until the details of the budget are before us we are not in a position to express a definite opinion on this aspect of the subject. Undoubtedly, however. some other items of expenditure could be reviewed. Take, for example, the proposed expenditure of £21,000 in connexion Avith an exposition at San Francisco; £40,000 in connexion Avith an exposition at New York; and £7,000 in respect of other expositions. Some of this expenditure may be justified, but at a time when the costs of industry are being increased in a cold-blooded way every such item of expenditure should be carefully scrutinized.
– Does the honorable member suggest that these items have not been scrutinized?
– I do not. I have no doubt that the proposed additional expenditure in respect of the Postal- Department has been very carefully thought about. My complaint is that the need for expenditure of this description has been given greater weight than it deserves. The Government should have concerned itself more about keeping down the cost of production. Ear be it from me to complain about the wonderful instinct of the Prime Minister (Mr. Lyons) to keep his party favorably before the public. He makes the Leader of the Opposition (Mr. Curtin) look like a greenhorn in this connexion. But this is not the time to give prime consideration to the electoral convenience of honorable’ members. I cannot agree with the statement in the budget to the effect that Parliament will accept this “ defence budget” as a courageous effort to add to our national security. In my opinion we are adding to our national security at the expense of certain sections of the tax payers. Increases of sales tax and land tax undoubtedly add to the cost of production, and these should be accepted very reluctantly by the Parliament. I shall not vote against this proposal. My complaint at this moment is that expenditure has not been sufficiently pruned. I shall take a later opportunity to speak about the extraordinary leniency that has been shown. in the Government’s taxation policy, to certain powerful financial interests in. this country which have made enormous profits in recent years. At the moment I content myself by expressing the hope that the protest of the honorable member for Darling Downs (Mr. Fadden) and the honorable member for Richmond (Mr. Anthony) will be heeded. I hope that something may be done to reduce our expenditure.
.- I also protest against an increase of the rate of sales tax. I listened carefully to the attempt of the honorable member for Richmond (Mr. Anthony) to draw an analogy between the conditions of to-day and those which existed when the Scullin Government first introduced the sales tax. The situation at that time cannot be compared in any proper way to the circumstances of to-day. The Scullin Government come into office at a time when economic ruin faced the country. The Treasury Avas empty and the new Government faced a deficit of about £10,000,000. It Avas in those circumstances that it introduced this emergency tax. The present Government is not facing a condition of economic emergency to-day, for many of our people are prosperous and some of our biggest financial institutions and commercial undertakings have published balancesheets which show profits varying from about 20 per cent, to 40 per cent, on their recent operations.
– Nearly 100 per cent, was shown in one case.
– At any rate, it cannot be denied that immense profits are being made in big business in these days. In such circumstances, it is entirely unfair to tax the consumers as heavily as the Government is proposing to do. The great majority of the workers of Australia earn , low Wages The honorable member for Macquarie (Mr. John Lawson) said . that the rich pay taxes as well as the poor. Unfortunately, the poor have practically nothing with which to pay taxes. Men on the basic wage, and many other workers who receive very little above that rate, need all their wages to provide food, clothing and shelter for their families, and are not in a position to pay tuxes. It is regrettable that many foodstuffs are still subject .to sales tax. All such commodities should be exempt from this impost. In the prosperous 3’ears through which we have been passing this Government has enjoyed a remarkable succession of surpluses, due, in part, to the incompetence of the Treasurer (Mr. Casey) to estimate the revenue accurately. Surpluses varying from about £6,000,000 to £4,500,000’ last year have been obtained. Honorable members opposite claim that this Government has been the saviour of the country. I entirely disagree with that view. The unfortunate workers have been subject to very heavy indirect taxation throughout the period that this Government has been in office. It has been said in the last year or two that heavy taxation is necessary in order to provide for defence requirements; but the workers have ,to pay for defence, not only with their hard-earned money, but also with their lives. The Leader of the Opposition (Mr. Curtin) has truly said that the worker has to make- the greatest sacrifice. That is why we are striving for peace to-day. Interest is now being paid on the expenditure incurred in prosecuting the last war. Interest should not be paid on money expended in time of war. It should be loaned free of interest. Let the wealthy section, out of the enormous dividends it has drawn from industry, pay a fair proportion of the additional amount required for purposes of defence. The workers should not be asked to pay any sales tax. An additional 1 per cent, will increase the prices of commodities’, and reduce the purchasing power of the community generally. The result must be stagnation. The Government ought to have devised a better policy for the raising of the additional amount needed. With lower prices for primary products, and increased taxes, where shall we end? Aspirants for ministerial honours should weigh carefully their words of praise of this year’s budget, and face the facts correctly. There is justification for criticism of the budget, and it is voiced even by government members. The Government has wasted hundreds of thousands of pounds since I have been a member of this Parliament. The honorable member for’ Wakefield (Mr. Hawker) has spoken of cutting down expenditure on public works. That would not solve our problems. It is necessary to institute public works in order to find employment for those who have carried and are to-day carrying the burden of indirect taxes. I should certainly criticize the Treasurer for building a magnificent mansion, containing fourteen rooms and costing from £8,000 to £10,000, to house himself, his wife and two children. I protest against such works because I do not think that they are necessary. There are other items in the budget involving an enormous expenditure which I intend to criticize at the appropriate time. I realize that the attempt is being made to arouse a state of alarm in order to camouflage the misdeeds of the Government and postpone the day when the people of this country will call for an account of its stewardship and demand reasons for its maladministration. The surplus returned in past years was made possible by overburdening the people with taxes. That applies also to the present proposal. I consider that the best system of taxation has not been adopted. If additional finance is needed to maintain the defences of Australia the Government should draw the necessary credit from the Commonwealth Bank.
– in reply - I find myself under some little disability by reason of the fact that this is a resolution designed to increase the rate of one form of tax. A good, deal of the discussion has revolved round the purposes for which Commonwealth revenue is expended, and it appears that if I were to attempt to reply in any convincing fashion on that subject, I should find myself involved in a budget debate, which I am sure would not be allowed, and for which there will be ample opportunity within a relatively short time. I shall, therefore, confine myself to the question at issue, which is the sales tax and its rate. .
The point made in the first place by the Deputy Leader of the Opposition (Mr.Forde) was in respect of the distribution as between direct and indirect taxes of the new taxes to be raised. I should like to relieve his mind of one doubt that clearly is in it, namely, that we are proposing in this financial year to collect a considerably greater amount by direct methods than was collected in any one of the last five years. The distribution as between direct and indirect taxes in the current financial year’s budget means that more taxes will be collected relatively through direct taxation than has been the case in any one of the last five years.
– That applies only to the additional amount to be raised.
– No; that applies to the whole of the direct and indirect taxes to be raised in this financial year. If similar figures were taken out for the last five years, honorable members would find that what I say is correct. That has not come about by chance.
– That does not mean that the Government is going to get more revenue from direct taxes than from indirect taxes.
– I did not say that. I said that a higher proportion of the total amount collected this year will be collected by way of direct taxes than has been the case in any one of the last five years. I venture to draw the attention of the Leader of the Opposition (Mr. Curtin) as well as the Deputy Leader of the Opposition to a very short table which appears on page sixteen of my budget speech. It is as follows: -
That is a very eloquent table. It sets out, not the rates but the amounts which the Government estimates will be collected this year from the various sources of taxation, direct and indirect. From it one gets the point that in respect of customs and excise there is a drop of about £1,250,000 in collections; that in respect of sales tax the Government expects to collect just over £1,000,000 more in this financial year than in the last financial year; and that in respect of income tax the Government expects to collect nearly £2,750,000 more than in the last financial year.
– Equal to an increase of over 25 per cent.
– Certainly; again, not by chance. Then in respect of land tax, the Government expects to collect £67,000 more, and in respect of estate duties £73,000 more - relatively small amounts. The total brings out the fact that the Government, in seeking this £3,500,000 of additional revenue, has placed by far the greater part of the burden on the direct taxpayers and not on the indirect taxpayers. That is coupled with the fact that the sales tax, as I have said on many occasions in this chamber, hasbeen designed by this Government in order, so far as is humanly possible, to relieve from the burden of the sales tax, the man on the basic wage and there- abouts; in other words, to base the tax on capacity to pay. I think these facts will convince the committee that the Government has made a very real attempt to place on the backs of those who are best able to carry it the burden of as much as possible of the additional taxes it has found itself obliged to exact.
The matter of economy has been raised by the honorable members forWakefield (Mr. Hawker) and Richmond (Mr. Anthony) as well as by other honorablemembers. So far as I am personally concerned, the point is well taken.
– “We do not blame the honorable gentleman.
– I think it is more than probable that in the future the Government may have to give even greater attention to this matter than it has been able to give to it in the past. As I said in concluding my budget speech, the Government has made a courageous attempt to meet heavily increased obligations in respect of defence, national insurance, and the like, and at the same time to carry on to the full those governmental activities which are of benefit to the people of Australia as a whole. It is an attempt to carry on all of the manifold matters with which the Commonwealth Government believes that it is called upon to deal, and at the same time to meet the emergency that the international position has caused.
– Will the Treasurer say why he preferred to get £1,000,000 this year from sales tax rather than to use £1, 000,000 of the surplus which he has put aside for expenditure in financial years after this financial year?
– I am grateful to the honorable gentleman for reminding me of that. ‘ I have crossed swords with the Leader of the Opposition on that point on several occasions. I think that it would be imprudent to look on any one financial year’s budget as the beginning and end of time from the Treasurer’s point of view. One has to look ahead, as I have attempted to do on behalf of the Government for several years past, and, to the best of one’s ability, envisage the position that will bo in the next year. Wo are carrying forward £3,500,000 of excess revenues of last year. It is basic prudence not to use that excess revenue this year. The prospect for the periodahead of us - I do not know what its length will be - is rather one of reduced revenue than otherwise. I venture to say that it was completely right to carry forward at least £1,000,000 towards the problem which will present itself to us next financial year. That problem will not be a light one. If it had been possible so to arrange matters as to carry forward more than £1,000,000 from last year I should have liked to do it. One has to consider the effect of taxation on the activities of the country. In my personal view, the budget as at present framed has the best promise, from many points of view, that an ordinary human being could devise.
Question put -
That the motions be agreed to.
The committee divided. (Chairman - Mr. Prowse.)
Majority . . 4
Question so resolvedin the affirmative.
Standing Orders suspended ; resolutions adopted.
That Mr. Casey and Mr. Thorby do prepare and bring in bills to carry out the foregoing resolutions.
Motion (by Mr. Casey) - by leave - agreed to -
That so much of the Standing Orders be suspended as would prevent the questions in regard to the introduction, first and second readings, committee’s report stage, andthe third readings, being put in one motion covering several or all of the Sales Tax Bills Nos. 1 to9, and the consideration of several or all of such bills together in a Committee of the whole.
Bills, Nos. 1 to 9, brought up by Mr. Casey, and read a first time.
Motion (by Mr. Casey) proposed -
That the bills be now read a second time.
.- For the reasons stated earlier by the Opposition, we intend to oppose the second reading of these bills.
Question put. The House divided. (Mr. Speaker - Hon. G. J. Bell.)
Majority . . . . 6
Question so resolved in the affirmative.
Bills read a second time, and passed through their remaining stages without amendment or debate.
In Committee of Ways and Means:
– I move -
Division A. - Rate of Tax in Respect of Taxable Income Derived from Personal Exertion.
For the purposes of this Division - T = taxable income in pounds.
If the taxable income does not exceed £6,900 the rate of tax for every pound of taxable income shallbe -
If the taxable income exceeds £6,900, the rate of tax for every pound of taxable income up to and including £6,900 shall be
and the rate of tax for every pound of taxable income in excess of £6,900 shall be 79.1775 pence.
Division B. - Rate of Tax in Respect of Taxable Income Derived from Property.
For the purposes of this Division - T= taxable income in pounds.
If the taxable income does not exceed £500, the rate of tax for every pound of taxable income shall be -
If the taxable income exceeds £500 but does not exceed £1,500, the rate of tax for every pound of taxable income shall be -
If the taxable income exceeds £1,500 but does not exceed £3,700, the rate of tax for every poundof taxable income shall be -
If the taxable income exceeds £3,700, the rate of tax for every pound of taxable income up to and including £3,700 shall be -
and the rate of tax for every pound of taxable income in excess of £3,700 shall be 93.15 pence.
DivisionC. -Rates of Tax in Respect of Taxable Income DerivedPartly from Personal Exertion and Partly from Property.
Division D. - Rates of Tax by Reference to an Average Income.
Division E. -Rate of Tax by Reference to a Notional Income.
Division F. - Tax Payable where amount would otherwise be less than Ten shillings.
Notwithstanding anything contained in the last five preceding divisions, where the amount of income tax which a person would, apart from this division, be liable to pay is less than Ten shillings, the income tax payable by that person shall be Ten shillings.
Division G. - Rates of Tax Payable by a Trustee.
For every pound of the taxable income in respect of which a trustee is liable, pursuant to either section ninety-eight or sectionninety- nine of the Income Tax Assessment Act 1936-1937, to be assessed and to pay tax the rate of tax shall be the rate which would be payable under Division A, B. C, D or E as the case requires, if one individual were liable to be assessed and to pay tax on that taxable income.
DivisionH. - Rates of Tax Payable by a Company.
For every pound of interest in respect of which a company is liable, pursuant to sub-section (1.) of section one hundred and twenty-live of the Income Tax Assessment Act 1936-1937 to pay income tax, the rate of tax shallbe 13.8 pence.
The motion submitted to the House is the usual motion which precedes the annual hill for the imposition and collection of income tax. The motion sets out the rates of income tax which it is proposed should be levied in assessments for the current financial year. As honorable members were informed in the budget speech, it is proposed to increase the rate of income tax by 15 per cent. The estimated additional yield of revenue from this increase of the rates is £1,400,000.
The formulas appearing in brackets in divisions A and B of the motion were adopted in 1931 for theAscertainment of the normal income tax rates for the financial year 1931-1932. Those rates remained unaltered until 1933, when the rates on personal exertion income were reduced by 15 per cent. The rates on property income, however, were not then decreased. In 1936, the rates applicable to personal exertion and property income were reduced by 10 per cent. The increased rates now proposed are approximately 12 per cent. lower than the 1931 rates on personal exertion income, and 3.5 per cent, higher than the 1931 normal income tax rates on property income.
Division A of the motion provides for the rate of tax on income from personal exertion. The rate of tax increases’ with any increase of taxable income until a taxable income of £6,900 is reached. On each £1 of taxable income from personal exertion in excess of £6,900 a flat rate of 79.1775d. is charged. To express the formula in simple terms, the rate of tax on £1 of taxable income from personal exertion is approximately 2.64d. There is a progressive increase of this rate until a rate of 40.578d. is. payable upon an income of £6,900.
I have had worked out, as a matter of interest, the incidence of Commonwealth taxation in the form in which it will be when this bill passes into law, on what might be called an average family, consisting of a man, his wife, and two children, allowing him the statutory exemption of £250, together with an allowance of £50 for his wife and £50 for each of his two children, but not taking into account such other allowable deductions as insurance, medical expenses, &c. On a net income of up to £400 from personal exertion, a man would pay nothing. On £450, he would pay less than £1, and a little over £1 if the income were from property. From then on, however, the amount he would pay mounts very rapidly until a man with a net income of £1,000 from personal exertion would pay twelve times as much tax as a man receiving £500 a year, while if the income were from property he would pay nearly twenty times as much. This progressive increase continues until a man receiving a net income of £3,000 a year from personal exertion would pay roughly 100 times as much as the man with £500 a year, while on an income of £3,000 from property he would pay 200 times as much. I am trying to emphasize the fact that our income tax rates are very steeply graduated, and that the property rates are nearly double the personal exertion rates.
Division B applies to income from property. The rates determined by the formulas in this division are progressive as in division A, which deals with personal exertion, but the rate of progression is steeper than in respect of personal exertion income. The rate of tax commences at 3.1d. on £1 of taxable income from property, and increases until the rate of tax on £3,700 taxable income from property is 48.95d. in the £1.
As an illustration of the steep rate of graduation in the property income rate of tax as compared with the personal exertion rate, honorable members may be interested to know that the rate- on £3,700 taxable income from personal exertion is 22.98d., while the rate on £3,700 property income is 48.95d. In respect of each £1 of taxable income from property in excess of £3,700 a flat rate of 93.15d. is payable.
In division C, the rate is prescribed for application in the cases where taxpayers derive income from personal exertion and from property. The rate of tax on the separate amounts of taxable income from personal exertion and property is ascertained as if the total income were derived wholly from personal exertion and property, respectively. The result is that the taxpayer pays tax on his taxable income from personal exertion and property at the rate attributable to his total taxable income.
Division D relates to the averaging provisions of the Assessment Act. Honorable members were informed in the budget speech that, in the present year, the averaging system will apply to primary producers only, and not to all taxpayers. The limitation of the averaging provisions to primary producers conforms with the recommendation of the royal commission on taxation. Honorable members are doubtless quite familiar with the working of the averaging system. The rate of tax on the taxpayer’s taxable income is ascertained by averaging his taxable income over the year of income and the preceding four years. The division prescribes that the rate of tax to be paid by a taxpayer on his taxable income of the year is the rate attributable to the amount of his average income over the five-year period referred to.
The object of division E is to provide an equitable basis for the calculation of the tax payable by a taxpayer who receives a premium upon the grant or assignment of a lease. Under the provisions of the Income Tax Assessment Act lease premiums are taxed, the view taken being that lease premiums are simply commuted rent. The full amount of the premium is, however, taxed as income of the year in which it is received and honorable members will appreciate that on account of the graduation of the rate of tax, the taxpayer would pay a greater amount of tax than he would have paid ifhe bad received the same amount in the form of rent spread over the period of the lease. To minimize the inequity as far as possible the Income Tax Assessment Act provides for the premium to be taxed at the rate that would be payable on a notional income ascertained by dividing the lease premium by one-half of the number of years in the lease term. Any other taxable income which may have been derived by the taxpayer is added to the lease notional income to determine the rate of tax payable on his total taxable income.
DivisionF provides for a minimum tax of 10s. which is considered to be a reasonable minimum amount.
Mr.Curtin. - That is in cases where tax is imposed.
– Yes. Division G prescribes the rate of tax payable by trustees in those cases where under the provisions of the Income Tax Assessment Act the trustee is assessed on the whole or portion of the income of a trust estate.
Division H, which provides for the rate of tax to be paid by companies, needs no explanation.
– What about absentees?
– They are liable to these rates of tax in common with Australian residents; such limited privileges as they enjoy are dealt with in the Income Tax Assessment Act. The rates fixed by this bill are applicable to all taxpayers. The third paragraph of the resolution makes provision to enable the Commissioner to apply the rates of tax as set out in the resolution in those cases where it becomes necessary to make assessments for 1939-40 or 1940-41 before the rates bill for the financial year 1939-40 is passed by Parliament. This is done to empower the Commissioner to levy tax on people who come to this country for a limited period, such as artists and the like, who may leave the country before the new rates resolution is passed by Parliament.
– They are taxed at the rate applicable to the previous year?
– Yes. The provisions of this resolution do not differ from those contained in similar resolutions introduced in recent years other than in respect of the rate of tax.
– I ask the House to discharge the order of the day for the resumption of the debate on this bill, which was introduced during the dying hours of the last sittings of the Parliament. Honorable members, I feel quite sure, have forgotten the purport of the measure, and I think it would be in the interests of all concerned if I were to withdraw it and introduce a new measure containing slight amendments to take its place. If the House agrees to this course, I shall again have an opportunity to describe what the bill sets out to achieve. I, therefore, move -
That order of the day - Sales Tax Exemptions Bill1938, second reading, resumption of debate - be discharged.
Question resolved in the affirmative.
– This measure was also introduced in the last hours of the earlier sittings of the House, but was not passed. I again seek the approval of the House to discharge the order of the day in order that I might be able to introduce a new bill. I, therefore, move -
That order of the day - Supplementary Appropriation Bill 1936-37, further consideration in committee - be discharged.
Question resolved in the affirmative.
Order of the day - Supplementary Appropriation (Works and Buildings) Bill 1936-37, second reading, resumption of debate - read and discharged.
Sitting suspended from 5.59 to 8 p.m.
In Committee of Ways and Means:
.- The purpose of this motion is to authorize the introduction of a bill to impose income tax at a rate 15 per cent. higher than that previously in . force. The Treasurer (Mr. Casey) desires to use this extra revenue, which in this financial year is estimated to yield £1,400,000, to help to bridge a total gap of £3,200,000 in his budget arising from increased governmental expenditure in respect to defence and other matters. An increase of the rate of income tax by 15 per cent. will make our tax revenue the highest on record. I acknowledge that in so far as it can be urged that defence requirements make additional taxes necessary, the Opposition prefers direct taxation, oven at an increased rate, to indirect taxation. Plank No. 7 of the platform of the Labour party prescribes, in relation to taxation and finance, that naval and military expenditure shall be allocated from direct taxation. We agree that the insurance premium for the safety of the country should be borne by the citizens in proportion to their capacity to contribute towards it. The greater the stake a man has in respect of the integrity of the country, the greater should be the premium he should pay. The contributions of people towards defence should vary according as their possessions’ vary in value. But I direct attention to the fact that if income tax at the new rate is approved, we shall not only obtain a tax yield greater than ever before in our history, notwithstanding that that history includes four years of terrible war, but we shall also have superimposed the rax on an already highly taxed people.
During recent years the proceeds of Commonwealth and State taxation have risen to a greater degree than many of us appreciate. In 1932 the total yield of Australian taxation was £86,700,000. That amount has been steadily increased year by year. For example, in 1934, the year immediately prior to general elections, when this Government declared that its policy was the reduction of taxation, the yield of Commonwealth and State taxes was more than £90,000,000. In 1937, the year preceding the last general elections, the yield had risen to more than £.108,300,000. In the last financial year, the yield of Commonwealth and State taxation exceeded £118,750,000. Although, in that financial year, that tremendous sum was levied, by either direct or indirect taxation, for the purpose of public administration, the Commonwealth Government contemplates this year taking an additional £2,500,000, allowing for some reduction of indirect taxes and a contemplated- increased yield from direct taxes. In addition, for half this financial year, we are to take an amount estimated at £11,000,000 for a full year as contributions from employers and employees for the purposes of national insurance. Whilst it may be argued that these are contributions and not a tax, nevertheless they are. something which the people have to pay. I am unable to distinguish between a contribution and a tax when, whichever term is used, the citizens are involved in making a direct payment to the Commonwealth Treasury. The amount to be levied upon the people this financial year will be £132,200,000 even if there be no increase at all of State taxation.
We are told that an additional £2,000,000 is to be expended from revenue this year for the purposes of defence, but it does not appear to me that this, in itself, is the principal requirement of the Treasurer. We are also told that this is a “ patriotic “ or “ defence “ budget, and that an increase of taxation is therefore imperative. But of the total yield of Commonwealth taxation which it is estimated will be received this year by the rate of the increasing sales tax, agreed to earlier to-day, and by increasing the rate of income tax which we are now asked to do, we shall cause a far greater increase of revenue than the Government proposes to expend from revenue for defence purposes. I leave out of account for the moment the contribution which will have to be paid in respect of national insurance legislation, except insofar as the Commonwealth Government itself will be required to contribute.
In the light of what I have said it must be apparent that the capacity of Australia to carry on its industries will be to a great degree impaired by this almost stupendous burden of taxation which will be levied upon the people.
– The Leader of the Opposition should tell that to Mr. Forgan Smith.
– I tell it to the honorable member for Fawkner (Mr. Holt) who is a supporter of the Government. It is of no use for him to direct my attention to the far horizon when I see before me, in this chamber, so many supporters of the Government’s policy.
I direct attention also to the fact that while the Treasurer has said that this proposed increase of income taxation is legitimate, having regard to the manner in which he lias distributed the additional taxation over the various fields of taxation, the proportion of direct to indirect taxation in this fiscal year is very unsatisfactory. The honorable gentleman has said that the Government is increasing the income tax and other direct taxes’ to a greater degree than indirect taxes. That is perfectly true. Of the total amount of extra luxation to be collected this year, a slightly greater proportion will come from direct taxation, hut the honorable gentleman; is making only a very short step in this direction, whereas the circumstances of the case warrant a much more decisive movement, particularly when we have regard to the history of this subject. In 1931-32 the country was facing a very serious financial position which called for the re-adjustment of Commonwealth finances. We are now facing a very serious international position which, the Government says, calls for a readjustment of our taxation. In 1931-32. direct taxation, of which the income tax is a portion, yielded more than £17,000,000. In the last financial year it yielded £12,600,000, a reduction of considerably more than £4,000,000. In, the current financial year, it is estimated that the yield from direct taxation will ,be £15,300,000. We shall, therefore, collect nearly £2,000,000 less in this way this year than we collected in 1931-32. In 1931-32 an amount of £36,S00,000 was collected in indirect taxation. In the last financial year an amount of £56,400,000 was collected in this way. In th.e current financial year it is contemplated that £56,200,000 will be collected. The Treasurer claims that he haS) in some degree, corrected the anomalies in relation to the severity of indirect taxation on the Australian people, bearing in mind the obligation of people who have most at stake to make the largest contribution for the purposes of national security, but even if the proposals now before us be agreed to, an amount of nearly £2,000,000 less will be
L’lO] collected from direct taxation this financial year than was collected in 1931-32, whereas if the remainder of the Government’s financial policy is implemented an amount of £20,000,000 more will be collected from indirect taxation than was collected in 1931-32.
When we look at the situation on a per capita basis we find a much more unsatisfactory state of affairs. The amount collected per head of the population from direct taxation in 1931-32 was £2 32s. 6d., whereas if the Government’s proposals for this financial year are agreed to,, the corresponding figure for this year will be £2 4s. 3d., or a reduction of 8s. 3d. per capita. Yet the Treasurer says that we are facing a situation which demands the utmost preparation by the country in order to ensure its safety! Apparently the Government does not propose that this preparation shall cause people in the receipt of incomes in the present year to make even as large a contribution by direct taxation this year for the safety of the nation as the people were required to make in 1931-32. But when we look at the comparison in respect of what the Treasurer will get from indirect taxes, we find that in J.9’31-32 the then Treasurer collected £8 5s. 4d. a head and in the current year the present Treasurer expects to get £10 6s. 7d. a head.
– There were tariff prohibitions in 1931-32.
– Of course, there were. The suggestion that that policy should be adopted came from the Commonwealth Bank Board, and it was made in the interests of Australian solvency. Too long has it been assumed that that policy was a mere political device of honorable gentlemen who sit behind me. It had even greater economic justification than has the present position for budgeting of this type!
The Treasurer has stated that the average family of a man, wife and two children will contribute very little to the Commonwealth Government under the incidence of this tax because of the exemption and deductions set out in the Income Tax Assessment Act. A man with a wife and two children would need to have an income of £400 a year before he would be subject to tax at all, assuming that the other provisions in respect of concessions were not made to function.
The CHAIRMAN. (Mr. Prowse).The honorable gentleman’s time has expired, but he may continue for a further fifteen minutes if no other honorable member rises.
– I thank honorable members individually for not rising. The fact is, that while it is true that the Australian citizen with an income of a little less than £S a week, if he is a married man with children, is not subject to federal income tax, within recent years he has been heavily subject to State direct taxation, with the result that, taking into account all forms of direct taxation, any penetration by the Commonwealth Treasurer into the lower ranges of income not only would prove an intolerable burden to the average citizen, but also would not yield anything in the total result to the Treasurer. I very much question if there be any resources open to the honorable gentleman other than to increase the rate of tax on the higher ranges of income, rather than to contemplate any change in respect of the exemptions. There is very little merit in his repeated declaration that, in respect of either direct or indirect taxation, he has taken specially into account the position of the basie wage-earner. This afternoon he said that the sales tax does not apply to the basic wage-earner. I point out that the basic wage-earner spends a larger proportion of his total income on foodstuffs than does a man on the higher ranges of income. It is also true that, for the most part, foodstuffs are exempt from the incidence of the sales tax, and, as the rich man spends on food as much as the poor man, to the extent of his expenditure on food he also is exempt from the incidence of the sales tax equally with the poor man. When we come to a contemplation of the argument in respect of direct taxation, we find that, while it is perfectly true that, the federal income tax does not reach the man who is getting less than . £8 a week, none the less the incidence of State taxation - because it is collected at the source and is heavy on the lower ranges of income - leaves the man of moderate means without any capacity to pay an increased amount of tax. The sooner we realize that, the better. Coming more closely to the motion, I find that income tax as distinct from the more generic term direct taxation, in the year 1921-22 - I select that year because it was long prior to the depression- yielded £16,800,000. I then jump ten years to 1931-32, and find that in that year it yielded £13,400,000. It then fell fast year to £9,400,000; and in the present year it is contemplated to yield £12,100,000. Here is an extraordinary thing - that in this year of evil portent for the safety and security of the nation the Government proposes to collect by means of income tax £1,300,000 less than was collected in 1931-32, and £4,750,000 less than was collected in 1921-22.
– That was the depression before the last.
– The year 1921-22 was a period following immediately upon the close of the war, when it must have been obvious that those whose property had been saved as the result of the war ought to make very substantial contributions to the nation in order to meet the costs which the nation had incurred so as to ensure the safety of their property.
– And the profiteer who made money out of the war.
– There may be that consideration also. I point out to the Treasurer that since’ the accession to office of the Government of which he is a member, the wealthy interests of Australia have been steadily relieved not only of the obligation to pay directly to the costs of the last war, but also of an obligation to make provision to save their own property in the event of another war. To me it is staggering that in this year we should talk about sacrifices while those married men who are in receipt of more than £8 a week will be asked to contribute over £1,000,000 less than they contributed in 1931-32 and £4,750,000 less than they contributed in 1921-22. I put it to the honorable gentleman and to the country that the capacity of Australia to bear direct taxation, having regard to the advance of secondary industries, the increase of the population, and the development of the capital resources of the nation, ought to be greater in 1938-39 than it was 16 or 17 years ago.
– Has not the honorable gentleman told us that the States have invaded the field of higher incomes?
– They have invaded the lower ranges very heavily, and have hit the poor section of the community; but this Government, which has the supreme responsibility for defence, has devised other methods.
Let me indicate how it has become more or less inevitable that this Government now has to obtain more money. I find, amazingly enough, that according to the budget papers the Treasurer will receive less from the note issue this year than he received last year, or in the previous year, or in the year before that. Therefore, as he is to make less profit out of the note issue, he has to impose heavier taxes in order to make up for that loss. He is to receive £650,000 in the current year, whereas last year he received £840,000. Why is there this reduction of £190,000? The Treasurer says it is because the ‘redemption from the proceeds of the recent London loan of sterling Commonwealth Treasury bills held by the Notes Fund has reduced the interest income of the fund. He raises a loan, which has to be paid for by posterity at a higher rate of interest than the interest upon Treasury bills, retires the Treasury bills, makes less profit on the note issue, and incurs an increased annual liability for the Commonwealth Government. That is high finance, in a period of acute financial difficulty! I instance that remarkable transaction as being indicative of the general financial muddling of the Treasurer, which hitherto has been masked by constantly rising revenues, which unexpectedly came to him because receipts from Customs were always larger than he thought they would be. This afternoon, for the first time in his history as Treasurer, he welcomed expression of the opinion that economy should be practised. This Government of repeated and costly ministerial delegations now discovers that we ought not to waste our resources.
I have but to say that if it should be argued that the contributions to national insurance are not levies which the people have to pay, the Taxpayers’ Association of Australia holds an opposite view, for in a comment on the Treasurer’s budget it directs attention to the increased tax bill of £3,200,000, and says “ But to this must be added the contributions . . . for national insurance “. I agree. I think it is inevitable that, whatever term be used, when money is taken out of my pocket, it absolutely goes out of my pocket and results in reality in a diminution of my personal resources for my own personal requirements, and must obviously be regarded as cither a tax or the equivalent of a tax for the purpose of maintaining the services of government.
– Has not the honorable gentleman overlooked the contributions to the Superannuation Fund by Commonwealth public servants?
Mr.CURTIN. - The honorable gentleman has an amazing facility for making out a case in favour of anything. No doubt he will support this tax. Having said that, I, too, will support it. I have said that we believe that the increase of income tax is a proper way in which the wealthy people of Australia and those who are in receipt of large incomes should contribute proportionally towards the safety of the nation. My objection is that in the past the Treasurer has let them down too lightly, having regard to the requirements of the Commonwealth; he has preferred to tax regardless of ability to pay, by levying the people with highchargesin an indirect way and getting credit from the wealthy interests because he has reduced the contributions which directly they must make. He is no longer able to continue that course, which doubtless Fortunatus would have preferred. I remind him that in the year ahead he will probably be faced with even more acute difficulties than he has hitherto experienced. It is my prayer that no such problem will come to him as came as a legacy from his predecessors to my very distinguished predecessor (Mr. Scull in).
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Casey and Mr. Menzies do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Casey, and passed through all stages without amendment or debate.
Motion (by Mr. Casey) agreed to -
That the House at its rising adjourn until 11.30 a.m. to-morrow.
The following papers were presented : -
Agricultural Council - Statement dealing witli the Eighth Meeting of the Australian Agricultural Council, hold at Perth, 8th- 9th September, 1938, together with Resolutions agreed to.
Tariff Board - Report - Motor Vehicles.
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1938 -
No. 18 - Australian Postal Electricians’ Union.
No. 19 - Amalgamated Postal Workers’ Union of Australia.
No. 20 - Amalgamated Postal Workers’ Union of Australia; and Australian Workers’ Union.
Commonwealth Conciliation and Arbitration Act - Regulations amended - Statutory Rules 1938, No.88.
Commonwealth Public Service Act - Appointments - Department - Health - J. B. Mathieson. Treasury - W. C. Balmford.
Customs Act - Regulations amended Statutory Rules 1938, No. 86.
Taxation - Twentieth Report of the Commissioner, years 1930-37: Land Tax, Income Tax, Estate Duty; 1937-38: Sales Tax.
House adjourned at 8.33 p.m.
The following answers to questions were circulated: -
n asked the Treasurer, upon notice -
– The answers’ to the honorable member’s questions are as follows : -
The estimated revenue has been reduced for three reasons -
Commonwealth treasury-bills held by the Notes Fund has reduced the interest income of the fund.
n asked theMinister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follows : -
In addition to the above, £262,166 was paid as assistance to primary producers by way of artificial manure subsidy.
n asked the Prime Minister, upon notice -
– The information is being obtained, and will be furnished at as early a date as possible.
Ministerial Visits Overseas.
Mr.Watkins asked the Prime Minis ter, upon notice - 1.What Ministers or members of the Government have made official trips overseas since the 13th March, 1936?
s. - The information is being obtained, and will ‘be furnished at as earlyadateaspossible.
Mr.Beasley asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows: -
r asked the Minister for the
Interior, upon notice -
Mr.McEwen. - A reply is being prepared.
Subsidies for Air Lines.
Mr.Thorby. - On the 21st September, the honorablemember for Parkes (Sir Charles Marr) asked certain questions regarding a company known as Airlines of Australia.
I have made further inquiries, andfind that this company commenced operations between Sydney and Brisbane in 1931, following the failure of Kingsford -Smith andUlm’s earlier venture. This service has been operated since without any governmental subsidy (other than payment for carriage of mails at standard rates) and the company gradually extended its activities northwards as far as Cairns. The company operating these services on an unsubsidized basis, the Commonwealth Government has no control over the fares charged, but inquiries made indicate that the company has recently increased its fares, and not reduced them, as stated by the honorable member. My department has no definite information as to the shareholders of Airlines of Australia, but I am informed that the Peninsula and Oriental Company has only an indirect interest in the company, and that a small one. The Government has made no decision to grant a subsidy to Airlines of Australia or to any other of the numerous unsubsidized air line companies now operating, but it has instructed that a general survey of the existing air transport system should be undertaken An interdepartmental committee has been appointed for this purpose, and is proceeding with the survey. When its recommendations- are received, the Government will be in a position to deal further with the matter.
Export of Iron Ore.
y. - On the 23rd September, the honorablemember for Swan (Mr. Gregory) asked me a question concerning regulation 86, dealing with the exportation of iron ore from Australia. I am now in a position to inform the honorable memberthat I have been advised that this regulation will be tabled in the House to-day.
Cite as: Australia, House of Representatives, Debates, 27 September 1938, viewed 22 October 2017, <http://historichansard.net/hofreps/1938/19380927_reps_15_157/>.