16th Parliament · 1st Session
Mr. Speaker (Hon. W.M. Nairn) took the chair at 3 p.m., and read prayers.
– I have to inform the House that the Honorable Walter Nash, Minister for Finance in the Government of the Dominion of New Zealand, is within the precincts of the House. With the concurrence of honorable members, I shall provide him with a seat on the floor of the House beside the Speaker’s chair.
HonorableMembers. - Hear, hear!
Mr. Nash thereupon entered the ber and was seated accordingly. .
Members Stationed at Darwin.
– Will the Minister for the Army take immediate action to rectify the anomaly and injustice under which thosemembers of the Australian Imperial Force stationed at Darwin now suffer, by placing them under the same conditions and allowing them to enjoy the same comforts, rights and privileges as apply to members of the Australian Imperial Force who are serving abroad?
– The members of the Coastal Shipping Control Board are Sir Owen Dixon, Mr. J. F. Murphy, secretary to the Department of Commerce, and Mr. J. T. Webb, chairman of Huddart Parker Limited. In view of the obstruction offered by Huddart Parker Limited to the proposed settlement of a recent dispute on the waterfront, will the Minister for Commerce have this board so reconstituted that Mr. Webb will be replaced by a representative of the workers in the industry?
– My attention has been directed to the matter mentioned bythe honorable member. I intend to have an investigation made at an early date in order to decide what shall be done in respect of this particular board in the future.
– Has the Minister for
Customs reversed the policy of the previous Government., under which it was prescribed that increases of wages agreed upon between employers and employees should not be passed on to the public by means of an increase of prices, unless such wage increases had been approved by a judge or a conciliation commissioner of the Arbitration Court? Was the decision according to which the Prices Commissioner was directed, when fixing prices, to take cognizance of wage agreements which had not been so approved, made against the advice of the Prices Commissioner? Will the effect of that decision be an increase of prices to the Government and the public? What reasons are there for the abandonment of this very necessary protection of the consumer ?
– I am not acquainted with the details of the matter. Discussions have taken place between representatives of employees and manufacturers in the clothing trades, and have reached the stage of talks with representatives of the Contracts Board. I am not aware of what conclusion has been reached, but I shall make inquiries and advise the honorable member of the result.
– Will the Minister for the Army furnish me with any information which is available in respect of the manufacture of the Owen submachine gun?
– The Government has directed that an order be placed for 2,000 guns to Owen’s design, subject to modifications shown to be necessary, and already agreed upon, as the result of recent exhaustive trials. This will enable production to be undertaken immediately.
– Has the Minister for Supply and Development received a report from the committee which inquired into the position of industries in Western Australia? If so, can he state what action he proposes to take?
– This report has been received, and discussion of its recommendations has begun in the Cabinet. A final conclusion has not been reached. When it has, I shall inform the honorable member.
Representation of Workers
– With a view to promoting industrial peace, and facilitating the war effort, will the Minister for Labour and National Service give early consideration to the representation of the workers engaged in all munitions industries on the boards of management of those industries, in order that they may have a direct voice in the control thereof ?
– The suggestion of the honorable member contains a good deal of merit, and will have my early consideration. I shall advise the honorable member of the result as soon as possible.
– Many recent press statements have been to the effect that the Minister for the Army is considering whether or not he will deny to the women of Australia the right to assist in the war effort. Has the honorable gentleman reached a decision? Also, does he propose that women who are now assisting in the war effort shall not be allowed to wear a uniform?
– Not at any time have I said that I would denyto women the right to assist in the war effort; far from it. There has been no change whatever from the policy followed by my predecessor. True, a few leaders of the women’s army have been appointed, and action is now being taken to recruit quite a number of women for that army. Those enrolled will carry out those duties which women usually discharge in civil life. Personal qualification for appointment will be the deciding factor.
– Can the Minister for Commerce state when the wheat-growers may expect to receive a further substantial payment from the No.. 4 pool, and can he give any indication of what will be the first advance on the incoming crop? What is the prospect of completing at an early date payments from previous pools?
– I hope to be able to announce soon that a further substantial payment will be made from No. 4 pool. I have instructed the Wheat Board to inform me regarding the exact amount that can be paid, and also to complete, as soon as possible, payments from the other pools. The advance to be made on the incoming crop is now under consideration, and I expect to make an announcement soon.
– Will the Minister for the Army state whether it is correct that nine members of his party, in a deputation to him recently, requested the abolition of the system of compulsory military training and the substitution for it of a voluntary system for home defence at higher rates of pay? Did the Minister promise to refer the request to the Military Board and to the Advisory War Council ? Do the views expressed by this deputation indicate an impending change of policy in regard to the method of calling up the men for home defence? Has the matter been brought before the Military Board and the Advisory War Council, and if so with what result I
– It is evident that the honorable member has not been told the whole truth regarding the deputation thai waited on me. The matter has not been referred to the Military Board. The suggestions put forward by the deputation as to how conditions of militia men and members of the Australian Imperial Force can be improved will receive sympathetic consideration by the Government.
Production - Marketing
– Will the Minister for Supply state whether there is any truth in the report published in the Sydney Sun yesterday that the Glen Davis shale oil project will be taken over by the Government under the National Security Regulations? If the report is true, will the Minister make a statement to the House explaining the weaknesses in the present method of control, and the extent to which it is expected that production will be increased under the new method of control? Will he, at the same time-, announce to the House the policy of the Government in regart to oil shale development generally, with particular reference to Baerami and other known fields?
– This is a very important question, and I am pleased that the honorable member has raised it. Honorable members will recall that the National Oil Proprietary Company Limited entered into an agreement with the Government in 1937 to extract oil from shale in the Newnes district. It was proposed to produce 10,000,000 gallons of oil per annum. I regret to say that the output from Newnes is most unsatisfactory, though perhaps it would not be wise to state just what , the quantity is. The Government cannot allow the present drift to continue, because additional supplies of fuel are needed in Australia. I have arranged to meet the manager of the Glen Davis project, Sir George Davis, on Monday afternoon, and afterwards a statement will be made on the subject. Honorable members will be interested to learn that the company is about to approach the Government for an additional grant, and this matter will be discussed with the company. The capital used by the company at present is approximately £1,300,000, including a guarantee by the Commonwealth to the bank for an overdraft of £250,000. The company has put into the concern £321,667, the Government of New South Wales £166,000, and the Commonwealth Government £559,000, besides guaranteeing an overdraft of £250,000. Honorable members on both sid«s of the House will agree that the Government has given this project a pretty fair run under existing conditions. I think that they will also agree that it is incumbent on the Government to take some further action, because the present drift cannot be allowed to continue. Difficulty has been experienced in obtaining a satisfactory method of retorting the shale, but I have not time now to go into that matter. Government action will be decided after consultation with not only the representatives of the company, but also representatives of the State government, which is vitally interested. The honorable member also inquired regarding the policy of -the Government in connexion with shale’ oil extraction, with particular reference to the field at Baerami. The Standard Oil Company of Australia has sought permission from the Capital Issues Board to raise £2,500,000 to exploit the Baerami field. The Treasurer previously laid down certain conditions with which the company was not satisfied, and negotiations are again proceeding. In the meantime, the company has asked theCommonwealth Government to obtain equipment from the United States of America under the leaselend arrangement. I am informed that the necessary requisition for that purpose has been lodged with the Customs Department, but there is no guarantee that the goods will be supplied. That is as far as the Government has been able to go so far. The company has made no request to the Government for financial assistance.
– I ask the Minister for Supply and Development whether he will prepare a statement showing the amount of money sunk in the Glen Davis shale oil proposition by previous anti-Labour governments of the Commonwealth and New SouthWales, and the amount of oil that has been recovered on that field, in order to demonstrate just what price per gallon the oil has cost the people of this country, and also to show to the people how the general frenzied financial policy of those governm ents-
– Order ! The honorable gentleman may not embark upon discussion when asking a question.
– And the lack of proper-
– Order !
– I cannot help it, Mr. Speaker, if I tread on the corns of the late Government. This is a part of my question.
– The honorable gentleman must avoid making comment when asking a question..
– Will the Minister prepare such a statement in order to show to what degree the cost of this petrol has been increased as the result of the lack of supervision by the late Government of its investment in this proposition ?
– As I stated earlier, when we reach the stage of determining policy on this subject, it will be incumbent upon the Government to state the facts and the reasons on which it bases its policy. I hope at that time to give the honorable member the information hedesires.
– In view of the need for fuel oil in Australia, will the Minister for Supply and Development allow small producers of shale oil to market their product free from the rationing system, thereby helping to overcome the shortage of fuel for commercial purposes?
– The position is that individuals are able to retort shale oil for their own purposes, but, when the extraction and distribution of the shale oil goes beyond that, it is considered necessary to bring it within the general rationing scheme. The point raised by the honorable member is worthy of consideration, because in some places itmay be possible to extend the plants. I shall be pleased to have the matter investigated in order to ascertain what can be done.
Secret Funds Royal Commission
– On the8th October, I asked the Attorney-General a question in regard to the inquiry by a royal commission into the payments from secret funds, and I received the following reply : -
Above all, I emphasize that it is the desire of the Government-
– Order! The honorable member must ask a question.
– I am quoting from Hansard.
– That is not permitted.
– That is a restriction which should no longer be imposed. In view of recent developments before the royal commission, and the statement of the judge that probably an extension of the terms of reference would be necessary, does the Attorney-General intend to extend the terms of reference without further delay?
– The relevance of any matter to the terms of the royal commission is a question for the judge ; and if the learned judge requests the Government to extend the terms of the commission, a new situation, as I indicated to honorable members previously, will arise. The Government will leave no part of the inquiry unfinished, hut the honorable member will understand that we cannot discuss here, while the commission is pending, the relevance of any particular matter.
– Will the AttorneyGeneral amend the terms of the commission in order to enable us to have a “ shot “ at the newspapers ?
– That is for the judge, before whom the whole matter is now pending.
– Will the Minister for Supply take immediate action to ensure that adequate supplies of coal will be made available to South Australia for the munitions and other industries, and for the Railways Department?
– The matter of arranging for adequate supplies of coal for South Australia has been seriously considered by the Government. The Premier of South Australia conferred with the Prime Minister in Melbourne, and the Leader of the Opposition in South Australia conferred with the Prime Minister and myself. I have also discussed the position with the Commonwealth Coal Commissioner, Mr. Mighell, in Sydney. In the opinion of the Government, the matter requires urgent and immediate attention, and every possible step is being taken to ensure, that adequate supplies of coal are made available to South Australia.
– Will the Minister for Labour and National Service inform the House of the result of the fervent appeal, which he made on the 17th October, to the seamen to refrain from taking any action that would involve an interruption of the shipping services? Will he also inform the House whether the Government has found it easier to take over the control of certain shipping companies, than exact that measure of co-operation which he asks the seamen to give?
– In the first place, I am unaware of any published appeal by me regarding this matter. The honorable member is probably confusing it with an appeal that was made by the Prime
Minister. Regarding the shipping position, I have to announce to the House that, as a result of the firm and prompt action taken by the Government, no Australian ships are now detained in port. Results alone count in these matters, and in view of the intention of the Government to see that the maximum national effort shall be put forth, its methods to date have proved very satisfactory.
– Does the Minister for Munitions .propose to continue the cost-plus system of payment for the manufacture of munitions?
– The Assistant Treasurer will undertake a thorough investigation of the cost-plus system, and when he submits his report, the whole matter will he reviewed.
– Is the Minister for the Navy aware that men who were serving on the destroyer H.M.A.S. Waterhen, when it was lost in the Mediterranean, and who were granted a period of leave in Australia, were obliged to pay their fares from Melbourne to their home ports ! If the Minister finds that my information is correct, will he at once issue instructions for the men who have been treated in this manner to be reimbursed in full?
– The determination of this matter would doubtless have been the responsibility of my predecessor; but I assure the honorable member that if any disability or injustice has been suffered by these men an adjustment satisfactory to them will be made.
– Will the Minister for the Army take steps to discover what happened to the new bomb-aiming device which was submitted to his predecessor fourteen months ago? The inventor is a returned soldier who served in the last war. He has two sons serving in this war. The Inventions Branch of the Department of the Army did not have the courtesy even to acknowledge the receipt of this device. Will the Minister also make inquiries as to whether the invention can be utilized?
– Immediate inquiries will be made, and a prompt reply will be furnished to the honorable member, who has been most persistent in this matter.
– Will the Minister for Air say whether it is the intention of the Government, as has been published, to abolish the Women’s Australian Auxiliary Air Force? Is it a fact, as has been published, that the enrolment of women for this force has already ceased in Western Australia and Queensland? Did the Minister approve the announcements which have appeared for several days in Australian newspapers to the effect that it has been authoritatively stated that this action is to be taken? Does the Minister approve of such announcements or forecasts of government policy being made by alleged anonymous “ Government spokesmen “, as is the practice in certain foreign countries? If he does not agree with that practice, will he in future repudiate these alleged statements of policy?
– Any announcements in the press that the Government has decided to cease enlisting recruits for the Women’s Australian Auxiliary Air Force are entirely erroneous. No such decision has been reached, but the whole matter of the enlistment of women in the Women’s Australian Auxiliary Air Force is receiving consideration, as also is the amount of money which the previous Government proposed to expend in connexion with this body. When the present Government has examined the information for which I have called, a decision will be made. As to statements in the press that enrolments in the Women’s Australian Auxiliary Air Force had ceased, all I can say is that I am not responsible for them. As I am not aware of what has been published in the press of Western Australia about the matter, I cannot say whether T approve or disapprove of it. Any statements on behalf of the Government regarding the matter will be made either by the Prime Minister or by myself as Minister for Air, and full responsibility will be taken for them.
– I ask the AttorneyGeneral whether it is a fact that two Sydney firms of solicitors, namely, Minter, Simpson and Company, and Allen, Allen and Hemsley, the principals of which are prominent members of the United Australia party, are, respectively, solicitors for the Australian Broadcasting Commission and the Commonwealth Bank? Is the Attorney-General prepared to allow that practice to continue, or will he give instructions that all government establishments and organizations shall use the services of the Commonwealth Crown Solicitor ?
– Of course many governmental instrumentalities in the State of New South Wales have their own solicitors and some of them have special legal officers. As to the Commonwealth, to which the honorable member directs his question, I am not aware of the facts stated by him. I shall look into them and furnish an answer to the honorable member.
– In view of tha deterioration of the international situation in the Pacific and also of the fact that a large proportion of the Australian wool clip is now in brokers’ stores, awaiting appraisement, will the Minister for Commerce take steps to see that before appraisement -that wool is covered by insurance against destructive action by the King’s enemies? It is impossible for individual growers to obtain insurance cover against such risks.
– I regard the question as very ‘serious indeed. I shall try, by some method, which only investigation will enable us to determine, to meet the position to which the honorable member has referred.
– Has the attention of the Minister for Labour and National Service been drawn to a statement in the Sydney and -Melbourne press yesterday by the Under-Secretary of the Department of Labour in New South Wales,
Mr.C. J. Bellemore, that the trainee dilution scheme for teaching youths engineering has been suspended in New South Wales because it has been found impossible to place them in employment after completing their course? Was this action taken with the approval of the Commonwealth Government, and will the Minister take immediate steps to investigate the position?
– My attention has not been drawn to the statement. There has been some lag in the scheme in New South Wales, owing to the inability of industry to absorb trainees. It is the intention of the Government in the near future to hold a conference of the various parties concerned with a view to more suitable arrangements being made to accelerate the rate of absorption. The Commonwealth Government has made no suggestion to anybody at all that the scheme in New South Wales, or anywhere else, be suspended.
When allocating trading quotas to the oil companies, will the Minister for Supply and Development see that the interests of the smaller companies are not subordinated to those of the major companies, particularly in view of the failure of two of these major companies to maintain appropriate stocks in Aus- tralia?
– Quite frankly, I think that that question is based upon a case which the honorable member submitted when he was on this side of the House. Whether he succeeded in his plans is another matter, but I am aware of much that was done. This subject is now under consideration and the purpose is to ensure that, if a quota system be determined upon, an equitable quota shall be given to all, so that the independent distributors shall have their rightful place and receive due recognition of the services that they have rendered to the country.
– In view of the in creased costs of Australian primary producers and of the increased prices of imports, will the Minister for Commerce give consideration to a review of the agreement with the Government of the United Kingdom for the sale of the Australian wool clip with a view to arranging a higher price more in keeping with the reasonable requirements of the wool-growers?
– That matter will come under review by my department at an early date. Under its terms the agreement cannot bereviewed until May next, but before then I hope to be able to announce at least that negotiations with . the British Government will be entered into on the lines indicated in the honorable member’s question.
– Oan the Minister for Supply and Development say whether any steps are being taken to speed up the implementation of the RanneyFairbank report on the development of the Lakes Entrance oil-field?
– I am sorry that I have not had time to go into that report. I am mindful of the urgency of all matters associated with liquid fuel, and I shall take the earliest opportunity to consider the report.
– I ask the Minister for Supply and Development what success has attended his efforts to secure additional oil tankers for Australia? If he has been successful in that direction, when may we expect some relaxation of petrol rationing?
– It would not he prudent to disclose the degree to which supplies of petrol have been built up in Australia at this stage. However, every possible step is being taken to impress upon the Petroleum Board in Great Britain and our representatives in the United States of America the necessity for continuing the supplies ‘arranged with m.y predecessor. The importance of that cannot be overstressed.
– If the Minister desires to go beyond a brief answer to a question, he should ask for leave to make a statement.
- by leave-If the honorable member is asking his question simply with the object of scoring something, I can very easily answer him in a similar strain.
– We want information.
– I have no desire to hold a post-mortem on this subject, because that will not help the country, the Government, or this Parliament. I can only say that we are improving the position, and at the same time we are encouraging in every possible way the use of substitute fuels, because even though our stocks of oil and petrol may be built up to a safe level, no one can tell, particularly in view of events during recent weeks, what developments may occur in this war at any moment. Every step is being taken to maintain supplies, and at the same time to build up stocks to a safe level, and at the proper time the Government will take steps to ease the effect of petrol rationing.
– The Government does not intend to ease petrol rationing in the immediate future?
– It is not the intention of the Government to ease the present rationing system until such time as we are certain that our stocks of petrol have reached a safe level and a continuity of supplies can be maintained.
– I ask the Minister for Labour and National Service whether it is a fact that much discontent exists among the miners, resulting in the curtailment of coal production, because of the persistence of the coal-owners in appealing against decisions of the chairmen of Local Reference Boards to the Central Reference Board ? Ls he aware that 90 per cent, of thos© appeals’ have been disallowed by the chairman of the Central Reference Board .owing to the fact that the disputes have been of a local character? In view of the effect of these irritating tactics by the coal-owners., and the desire of every one concerned to stimulate coal production, will he amend the present regulations in order to empower the chairman of the Local Reference Boards to give decisions upon all questions of a local character, such decisions not to be subject to appeal unless they conflict with those of the Central Reference Board, or deal with matters affecting other districts ?
– I believe that a great deal of the unrest in the coal-mining industry is due to the causes mentioned by the honorable member. I am now reviewing machinery for dealing with disputes immediately they arise, and I intend to investigate the position thoroughly. I hope to be able to give an early decision, and to announce the steps which the Government intends to take with a view to improving the existing machinery.
– Having regard to the important financial business with which the House will be asked to deal to-day, I ask honorable members to place the remainder of their questions upon the notice-paper.
Assent to the following bills reported : -
Supply Bill (No. 3) 1941-42. Loan Bill (No. 2) 1941.
Messages reported transmitting Estimates of Revenue and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, &c, for the year ending the 30th June, 1942, in substitution for the Estimates transmitted on the 25th September, 1941, and recommending appropriations accordingly.
Ordered to be printed .and referred to Committee of Supply forthwith.
– Once again it has fallen to the lot of Labour to take over the responsibility of government during a critical and difficult period. On a previous occasion we faced an economic crisis. To-day we are in the throes of the most deadly and devastating war that has ever been waged between nations, and the skies are dark with clouds of evil portent. The Government has a full realization of the responsibility that rests upon it to carry out its duty to the country with determination, and all of the capacity at its command.
Since the Government took office Ministers have not had sufficient time to examine in detail the Estimates of expenditure placed before honorable members by the previous Government. I have, therefore, adopted with some alterations the estimates of my predecessor, but I give to the House the assurance that the closest scrutiny is being made by Ministers in every department, and any unnecessary items of expenditure will be eliminated.
With regard to the estimate of £217,000,000 for war expenditure submitted by the previous Government, the fact has come under notice that some definite commitments exceeding £1,000,000 which will, have to be met this year were overlooked. It is realized that further commitments will be added to the programme during the course of the year. On the other hand, some saving may be possible without reducing efficiency in any way. In the circumstances the estimate of £217,000,000 has been adopted, subject to increases of soldiers’ pay, but the position will be reviewed within the next . three months.
The Estimates of expenditure as submitted by the previous Government fell short of what this Government, regards as a proper provision for pay of members of the Forces and for invalid and old-age pensions. It has been decided to increase active pay and allowances of members of the Forces at a cost of £7,300,000 in a full year, and to make certain additions to deferred pay costing £200,000 per annum. These decisions will supersede the proposals of the previous Government, which were estimated to cost £6,000,000 a year, mainly for deferred pay. I sm sure that the country will not grudge the extra effort required to give this tardy measure of justice to our fighting men. It is proposed also to raise the maximum rate of old-age and invalid pensions to 23s. 6d. a week, and to liberalize the conditions in several respects. Service pensions also will be increased and extended. The total cost will be £2,124,000 per annum. Further details of these changes will be given later.
The Government will proceed as vigorously as physical resources will permit with the provision of housing in those areas where there has been a large increase of population as a result of war production. The work of the Housing Trust, which has already been set up, will be expedited.
The Government has adopted the recommendations of the Commonwealth Grants Commission for special grants to certain States for 1941-42, and the necessary bill will be brought down as early as possible. The proposed grants are: South Australia, £1,150,000; Western Australia, £630,000; and Tasmania, £520,000; or a total of £2.300,000, compared with actual payments last year of £2,050,000.
Although there has not been sufficient time for Ministers to examine the Estimates of expenditure of all departments two reductions have been made. The amount of £283,000 for the Department of Information has been reduced by £80,000. An item of £50,000 for advertising of primary products under the Department of Commerce has been reduced by £35,000.
I may add that it is not proposed to alter the Loan Estimates for civil purposes - Post Office, &c. - amounting to £2,600,000.
The decisions of the Government will result in a net increase of £5,659,000 in the Estimates of expenditure, viz. : -
These alterations will increase the total estimate of war expenditure from £217,000,000 to £221,485,000, of which £162,485,000 will be expended in Australia and £59,000,000 overseas.
These alterations have been embodied in the Estimates which have been laid on the table. In order to avoid expense, the estimates of expenditure and the budget papers will not be reprinted, but additional papers embodying the necessary amendments will be circulated later. A comparison of the revised figures with the Estimates submitted by the previous Government is also given in table No. 1.
The estimates of revenue and expenditure for this year as amended by the foregoing alterations can now be summarized as follows: -
Finance for an additional £160,000,000 will be required this year. On the basis of last year’s borrowing we can count on £66,000,000 of loans for war purposes, after providing £20,000,000 for Loan Council requirements. We have then to find £94,000.000 by increased taxation or increased borrowings over last year’s level. That means that from our productive capacity we must devote £94,000,000 more to war purposes than was the case last year.
Financial policy must fit in with war policy. Labour’s war policy is to expand the war effort to the maximum and to do this by using all unemployed who are physically fit, and diverting labour and resources from civil to war purposes for the balance. At the same time, the essential living standards of the basic wage family can and will be maintained.
The diversion of labour and resources to war production will necessarily reduce the volume of non-essential goods available for civil consumption. On the other hand, the increased volume of employ1 ment will place further spending power in the hands of the people. If this were all spent it would result in increased competition by private interests for the resources necessary for war. This must be avoided or our war effort will falter. Private spending must therefore . be limited to the smaller flow of civil goods that will be available and prices must be rigidly controlled. A rough measure of the limitation that is necessary is the additional £94,000,000 for” war expenditure to which I have referred, and the task before us is to secure this limitation in the most equitable manner. We are, therefore, forced by the demands of war to call upon the people for further sacrifices which can be made, whilst preserving health and efficiency for all.
Notwithstanding any increased production that can be brought about there must be a switch over of a very large amount of production from civil needs to war’s demands. No amount of entries in the Commonwealth Bank’s books can accomplish this. War needs must come from the collective resources of the community.
Credit expansion, however, can be successfully used to finance employment of reserves of man-power to expand production of goods and materials. That is to say that any increase of the money volume must be balanced by a corresponding increase of production. Theextent to which increased production is possible will be determined by the amount of reserve man-power that is available. A thorough survey of that field is now in process. By organization and training many who are now classified as unemployable could be found useful employment and thus materially increase production and at the same time provide for. them selves and their families.
In these circumstances, the Government must provide for additional taxation on those best able to bear it; a national campaign for savings to help the war effort generally; an appeal for th, maximum support to war loans and war savings certificates; and such further controls and measures as may be necessary to secure additional resources for war by diversion from non-essential needs to war needs and to provide for an equitable distribution of the reduced volume of non-essential goods that will be available.
Additional taxation is proposed which will bring in about £29,000,000 in a full year. The yield in the remainder of the current year will be about £22,000,000. I shall give details at a later stage.
With £22,000,000 from increased taxation, we shall require to borrow £72,000,000 more than last year, that is, a total of £158,000,000 for all public purposes, compared with £86,000,000 in 1940-41, and £37,000,000 in the last pre-war year.
This is a formidable demand to make on the people of Australia, but not an impossible one. Earnings are high, and there is a growing realization of the urgency of our needs for war. Already spending is being restrained, and much greater savings are being made than in 1940-41. The growth of savings bank deposits is evidence of this. In the last financial year savings bank deposits increased by £16,000,000, and that was the largest increase in any year on record. But in three months only of the present financial year such deposits have increased by £10,000,000, or at the rate of £40,000,000 in a year. That is a very encouraging sign.
The late Government proposed to take as a compulsory loan a special contribution from incomes in low-taxing States, from income exempt or partially exempt from taxation, and from the lower incomes. My Government relies on willing co-operation from all classes of income-earners to make their full contribution to saving and lending through public loans and war savings certificates. I hope, indeed, for a very great increase of sales of these certificates. Last year they contributed a net £12,000,000 to war expenditure. This year we must endeavour to double that amount.
The Government intends to launch as quickly as possible a national savings campaign, and I earnestly appeal to every citizen of Australia to study very seriously how he or she can reduce their expenditure without undue hardship. It will be a physical impossibility to carry out our defence programme unless private expenditure be reduced sufficiently to release the necessary resources for war.
However successful may be our appeals for voluntary saving, it will still be necessary for the Government to control private expenditure which conflicts with war activities. If people are left to choose their own economies they may continue to demand the very classes of goods the production of which competes directly with the war effort. An obvious example of this is in expenditure on industrial expansion. In these days we require an enormous expansion of factories, plant, and equipment for war purposes. We cannot then allow private interests to use the resources necessary for this expansion to increase their own industrial capacity for civil production. Expenditure on investment must therefore be more strictly controlled. This form of control is first on our list, not only because it is likely to save the type of resources required for war, but also because it takes nothing from the immediate consumption standards of the people.
Production of luxury goods can also bc curtailed considerably without reducing the living standard of basic wage families. Happily, we have abundant supplies of food, so that no one need suffer privation through the lack of any commodities necessary to maintain the bodily health and strength of our people.
I shall now explain in some detail the decision of the Government relating to increases in the Estimates of Expenditure.
Pay of Members of the FORCES
The previous Government proposed to increase the pay of members of the forces at a cost of £6,000,000 per annum. The whole of the increase was to be in the form of deferred pay, with the exception of £360,000 per annum for dependants’ allowances.
Our view was that this did not satisfactorily meet the obligations of the community to members of the fighting forces, and that the increases should have been given as active ‘rather than deferred pay. The Government has given full consideration to the matter, and has decided on a scale of increases involving additional expenditure at the rate of £7,300,000 per annum.
All members of the forces on special force rates of pay, which include the Australian Imperial Force in Australia and overseas, the Royal Australian Air Force war-time forces, and the home defence war-time Military Forces, and members of the Royal Australian Navy sea-going forces, will receive an increase in active pay of1s. a day. Taking the private soldier in the Australian Imperial Force as an illustration, his daily rate of active pay will be increased from 5s. to 6s. which, with 2s. deferred pay, will bring his total pay to 8s. a day apart from dependants’ allowances.
The allowances to wives and children and other dependants of members of the forces also will be increased. The previous ‘Government proposed to grant an allowance of 6d. a day to wives without children. This Government has adopted that proposal, but has extended it to include wives with one or more children. The Government has also decided to increase the dependants’ allowance in respect of the second child by 6d. a day.
The standard allotment which must be made by the member from his pay towards the maintenance of his wifeand family will be increased from 3s. to 3s. 6d. a day.
The effect of the increases in the dependants’ allowances and standard allotment on the income of the families of private soldiers can be seen from the following table: -
In addition, child endowment of 5s. a week is payable for each dependent child after the first. These increases will take effect from the commencement of the next allotment period. The Government will also make certain adjustments to deferred pay at an annual cost of £200,000. These are in addition to the increases in active pay and dependants’ allowances.
Members of the Royal Australian Air Force and Australian Military Force on special force rates of pay serving at operational stations such as Darwin will be credited with deferred pay at the rate of 1s. a day while employed at those stations.
Members of the Royal Australian Air Force who have been stationed in Australia for more than six months and who later embark for service overseas will also be credited, in respect of service in Australia in excess of six months, with deferred pay at a rate which will bring their combined active and deferred pay to the scale payable for overseas service. This adjustment will be made retrospectively.
The total cost of these decisions is £7,500,000 per annum. The cost to be met this financial year for active pay and dependants’ allowances is £4,900,000. As £300,000 was allowed in the previous Government’s budget for dependants’ allowances, a further £4,600,000 is now being provided.
Invalid andold-age Pensions.
The Government proposes to increase invalid and old-age pensions to 23s. a week, quite apart from the 6d. increase which would become payable in January next as a cost of living adjustment. As the payment of two increases within a short interval would duplicate the departmental work, the cost of living increase will be brought forward and invalid and old-age pensions will be increased to 23s. 6d. after the necessary legislation has been passed. The principle of cost of living adjustments will be retained. The annual cost of the combined increase is £1,771,000, and the cost for this financial year is £1,022,000.
There are certain other concessions in connexion with invalid and old-age pensions which the Government proposes to allow, the most important of which are these :
Invalid pensions are at present paid only in the case of persons totally and permanently incapacitated. To meet cases of hardship the Government proposes that a pension shall be paid in any case where the degree of permanent incapacity is assessed at 85 per cent. or more. This concession is estimated to cost £150,000 per annum, and £87,000 for the balance of this year.
The act provides that an invalid pension shall be payable only if the claimant’s relatives do not adequately maintain him. In the past “ adequate maintenance “ has been defined as a family income sufficient to provide £1 10s. a week for each adult member of the family and half that amount for each child under sixteen. The previous Government proposed to liberalize this provision by raising the figure of £1 10s. to £2 10s. The present Government has adopted that proposal. It is estimated that the cost will be £60,000 for a full year, and £35,000 for the balance of this year.
The Government has also decided to extend the benefits of invalid and old-age pensions to certain naturalized British subjects, mainly Syrians and Lebanese, who are disqualified under the present law. The estimated cost of this concession is £20,000 per annum. It will cost this year approximately £12,000.
There are some minor matters brought under notice by the Parliamentary Committee on Social Security, which also will be dealt with in the amending legislation. The total annual cost of the additional concessions to which I have referred is approximately £245,000 per annum, the cost for this year being £143,000.
After allowing for the proposals I have outlined and for the normal increase of the number of pensioners, the estimated expenditure on invalid and old-age pen-‘ sions during the current financial year will be £19,865,000. This represents an increase of £2,499,000, as compared with the actual expenditure last year.
The matter of war pensions in relation to eligibility for old-age pensions will also be investigated with a view to removing any anomalies. The Government also proposes to examine the question of extending the benefits of invalid and old-age pensions to Australian aboriginals other than nomadic aboriginals.
At present service pensions are granted at the rate of 21s. for a single man and, in the case of husband and wife,18s. each. It is proposed to increase service pensions for single men to 23s. 6d. - an increase of 2s. 6d. a week. The aggregate service pensions of a married man and his wife are being increased similarly, but the increase of 5s. will be added to the married man’s rate of 18s., making it 23s., leaving the pension for the wife at 18s., this being the rate payable to a wife under the war pensions scheme. The estimated cost for a full year is £72,000 and for the remainder of this year £38,000.
It is proposed to extend service pensions to ex-soldiers of the Boer War. The estimated cost is £36,000 for a full year, and £21,000 for the balance of this year.
The problem of taxation is becoming one, not of how much can be taken from each income, but of how much must be left. I realize very fully the embarrassment that will be caused to a number of people who have entered into commitments in good faith. But the writing was on the wall in August, 1939, and we have had over two years to prepare for the necessary economies. Consequently, I am proposing a very considerable increase of income tax in respect of the higher incomes. We have to pay some regard to the income taxes imposed by the States. The increase I am proposing will bring Commonwealth and State taxation on the highest incomes almost to 18s. in the £1 in the State where taxes are highest.
I am unwilling, however, to impose additional income taxation on the middle and lower incomes. It is difficult for income tax to discriminate fully between individuals in accordance with their financial responsibilities. A heavy increase of tax on lower incomes and middle incomes would frequently impose serious hardship. I am not doubting that many people on lower incomes are able to make a further contribution to war finance, and it is in fact essential that they should do so. With them, as with every one else, the major effort must be their willing co-operation in a voluntary reduction of consumption and a corresponding increase of lending to the Government. So far as taxation goes, as a means of reducing consumption, I think that for middle and lower incomes it is better to get the reduction by means of taxes on goods and services not really essential, which can be foregone without injury to health or efficiency.
I propose, therefore, increases of taxation which will produce approximately £22,000,000 extra revenue in 1941-42. The details of the taxes proposed are briefly as follow.
For taxable income from personal exertion the rates of tax under the present scale increase progressively up to £1,500. Income in excess of £1,500 pays 10s. in the £1 on the excess. I propose to leave the scale unaltered up to £1,500, and thereafter to continue the present rate of progression up to £2,500. Income in excess of £2,500 will pay 200d. in the £1. Corresponding changes are made in respect of incomes from property, with the excess over £2,000 paying 200d. in the £1.
These rates are not so high as they look, because State taxes are allowed as a deduction in computing taxable income. However, total taxation - Commonwealth and State - will be only just under 18s. in the £1 on the highest incomes in the State in which these incomes are taxed most heavily. The changes made in the tax for different actual incomes can best be appreciated from the tables which will be furnished to honorable members. It is estimated that this increase of the rates of income tax on individual incomes will increase revenue in 1941-42 by £4,500,000, and by £6,000,000 in a full assessment year.
It is also proposed to make a number of changes in the method of assessing taxable income. In circumstances where the wife of a taxpayer has a separate income subject to tax, i.e., over £200, her taxable income will be added to the husband’s taxable income in order to determine the rate of tax to be paid by both husband and wife. This change is expected to produce some additional revenue as well as prevent possible loss of revenue by the division of income between husband and wife in order to evade taxation.
It is proposed to remove the present exemption, so as to provide that dividends received by Australian, residents from companies, the profits of which are derived .wholly or partly from . outside Australia, shall be taxable in the hands of the recipients. I am prepared to set up a small committee to devise a formula to mitigate any hardship that may arise from double taxation.
The allowance of £50 for dependent children after the first child is to be discontinued, in accordance with the understanding when child endowment was introduced. This will not involve the disallowance of the present deduction in respect of a child who attained the age of sixteen years during the year ended the 30th June, 1941. It is recognized, also, that there is an equitable claim for a deduction in respect of children for whom the endowment is payable for a portion only of the present financial year, and it is proposed to deal equitably with t]]0.Fe cases.
At present, where dividends are paid by companies out of Commonwealth loan interest, which is taxable at concessional rates, those dividends are taxable in the hands of recipients at the same concessional rates. The rate of tax applicable is limited to the rates of tax in operation for 1930-31. It is proposed to remove this concession, by providing that such dividends shall carry the same rates of tax as other income from property. The tax concession will, of course, still apply to companies paying the dividends and to individual holders.
Evasion of tax occurs where trusts or settlements are created for the benefit of children who are minors and unmarried. It is proposed that this evasion shall be frustrated by making the trustee liable for the additional tax that the settlor would have been liable to pay if he had retained the settled property.
In addition, it is proposed to discontinue the practice of allowing as deductions in arriving at taxable income calls paid on shares in mining and afforestation companies.
The profits of a private company are now taxable in full at the graduated individual rates in the hands of either the company or its shareholders. It is proposed to apply this principle to businesses conducted by a partnership or an individual. Under the present law, when a business conducted by a partnership or an individual, by reason of its character, requires the retention in the business of not less than 15 per cent, of the taxable income, then in respect of that 15 per cent, a rebate of the excess of the individual’s rate of tax over the company rate of tax is allowed. It is proposed to abolish this concession.
All of these changes will be discussed more fully, together with a number of other proposed alterations, when I introduce the appropriate legislation to give effect to them.
It is anticipated that the extra revenue on account of all proposed amendments to the Income Tax Assessment Act will be £2,900,000 for the current year and for a full year £3,400,000.
The rate of ordinary company tax was last increased in 1939-40, when it was raised from 13. 8d. to 2s. in the £1. It i3 now proposed to increase the rate to 3s. in the £1.
It is estimated that this increase will yield an additional annual revenue of £4,500,000, almost all of which will be collected in 1941-42.
War-time Company Tax. l.t is proposed to increase the rates of the war-time company tax. The present, scale of rates provides for a commencing rate of 4 per cent., progressing by 4 per cent, steps for every 1 per cent, in excess of the statutory percentage of 8 per cent, on capital employed, until the rate reaches a maximum of 60 per cent, on that portion of the total profits in excess of 22 per cent, on capital employed.
It is proposed that the scale shall be amended to provide for a statutory percentage of 4 per cent, instead of 8 per cent., and that the commencing rate of tax shall be 6 per cent., increasing by steps of 6 per cent, until a maximum rate of 7S per cent, is reached on the taxable profit in excess of 16 per cent, on capital employed.
Under the present scale of war-time company tax, the revenue for a full assessment year would be only £1,000,000.
The increased revenue accruing from the amendments will be £4,000,000 in 1941-42, and £4,-750,000 in a full assessment year.
It is proposed to increase the present rates of estate duty on estates over £20,000. Above that point there will be an increase on a sliding scale until the rates reach a maximum of 28 per cent, at £500,000 instead of 20 per cent, as at present. The increased yield in a full year is estimated at £650,000.
As the new rates will apply only to the estates of persons who die after the commencement of the amending act, and as the proposed increases will affect materially only the larger estates, which usually require some time to complete valuations, no appreciable increase of revenue is expected this year.
It is proposed to impose a gift duty upon gifts of money, or transfers of property for natural love and affection or for which the consideration is inadequate.
The purpose of the gift duty is twofold, namely, to raise revenue and to lessen dispersions of property which are made in order to avoid other forms of taxation, such as estate duty and income tax. As the weight of other forms of taxation has necessarily been made heavy in order to finance the war effort, there is now a much greater incentive than there was formerly to dispersions of property. It is essential that this practice shall be controlled, at least to the extent of seeing that such dispersions cannot be effected without some contribution to revenue being made.
The rates of duty to ‘be imposed will be substantially the same as the rates of estate duty, and the rate applicable to any particular gift will be based upon the aggregate value of all gifts made by the same donor within a period of five years. The new duties will apply to all gifts made on or after to-day, the 29th October. Gifts made before the 29th October, 1941, will be brought to account only for the purpose of assessing the rate on gifts which will come under the act.
It is proposed to allow certain exemptions, such as retiring allowances, pensions and gratuities to employees, also gifts to public charitable, religious and public educational institutions, as well as gifts to patriotic and war funds, including gifts to the Commonwealth or a State for defence purposes.
It is estimated that the increased revenue accruing from this proposal will be £250,000 in 1941-42, and £500,000 in a full assessment year.
In 1910, when the land tax was first introduced, the rate of tax commenced at1d. in the £1 and increased to 6d. in the £1 in respect of taxable balances in excess of £75,000.
In 1914-15 the rate was increased to a maximum of 9d. in the £1 in respect of the excess over £75,000, and in 1918-19 a super tax of 20 per cent. was imposed over the whole range of assessments.
A statutory exemption of £5,000 is allowed in respect of all land tax assessments, except in the case of absentees.
Beginning with the withdrawal of the super tax of 20 per cent. an 1922-23, the rates of land tax were successively reduced. In1938-1939 and 1939-40, the rates were only 50 per cent. of the rates imposed in 1914-15. In 1940-41, the rates were increased again to the 1914-15 rates.
It is now proposed to impose a further increase of 20 per cent. as a super tax. Instead, however, of the 20 per cent. super tax ranging over the whole field of assessments, as in 1918-39, it is proposed that the super tax shall apply only in respect of those assessments in which the taxable balance exceeds an unimproved value of £20,000.
The proposed super tax will produce £500,000 additional revenue in a full assessment year, almost all of which will be collected in the current year.
The Government proposes to obtain extra revenue from sales tax, by a regrouping of the goods in the various taxable categories.
Those goods which are at present exempted will not be affected, because an examination of the schedule of exemptions reveals that they consist, broadly speaking, only of basic necessities of life and aids to primary and secondary production - goods which the Government considers unsuitable for taxation.
The special fields which are at present taxed at 5 per cent. and 15 per cent. will, in future, be taxed (with limited exceptions) at 10 per cent. and 20 per cent., respectively. It is not proposed to alter the general rate of 10 per cent., but certain items of a less essential nature which are at present in the general field will be transferred to the 20 per cent. field.
The opportunity will also be taken to correct a few anomalies by transferring to the exempt list certain goods at present in the 5 per cent. schedule.
It. is estimated that these alterations will increase the revenue from sales tax by £1,900,000 in 1941-42, and £3,300.000 in a full year.
It is proposed to increase charges for postal and telephone services as follows : -
The extra revenue for 1941-42 is estimated at £1,500,000, and for a full year at £2,000,000.
Certain increases ofcustoms and excise are proposed. Details will be given to the committee at a later stage. The proposals will yield additional revenue of £2,350,000 in 1941-42 and £3,500.000 in a full year.
The estimated additional revenue to be obtained in the current year by the
Government’s proposals may now be summarized thus -
Of the additional revenue of £22,400,000 to be obtained this year, £5,750,000 is to be gained by indirect taxation, and £16,650,000 by direct taxation.
With these proposals, the total estimated revenue for 1941-42 will be increased from £163,227,000 to £185,627,000. Details are given in table No. 2.
For convenience I now summarize the key figures of the revenue budget as revised. A comparison with the proposals of the previous Government is also shown -
It is appropriate here to set out briefly how the estimated war expenditure of £221,485,000 for this year will be financed, in comparison with the actual expenditure of £170,238,000 last year-
In addition to the war expenditure which is to be charged to loan £2,600,000 is to be provided for Post Office Works, &c. The estimated total loan expenditure for 1941-42 for civil and war purposes is £141,938,000, compared with actual loan expenditure last year of £105,265,000.
In addition to the budget proposals which I have outlined there are four aspects of the Government’s financial policy to which I wish to refer briefly. These are -
The Government proposes to begin promptly in making effective its policy to give stability to our rural industries. The existing machinery for debt adjustment and for the transfer of farmers from sub-marginal areas will be speeded up. Arrangements have been made to have these matters examined at a meeting of Commonwealth and State Ministers early next month.
An integral part of the Government’s plan for rural reconstruction is the establishment of a Mortgage Bank. Work is already in progress on the necessary legislation. Before finality can be reached it will be necessary to take into account the relations of the new bank with existing State instrumentalities making loans on mortgage. A conference of the Commonwealth Departments concerned, the Commonwealth Bank and the State organizations referred to will he called as soon as possible to examine this and related problems. A bill will be submitted to Parliament early in the new year.
The Government intends to implement immediately certain recommendations of the Royal Commission on the Monetary and Banking System for the purpose of bringing the operations of the trading banks under effective control.
It is intended to issue regulations providing that the business of banking may not be carried on except under licence. State banks which do not operate outside their own State will not come within the regulations.
Licences will be issued to the existing trading banks, subject to certain conditions which will be set out in the regulations.
The conditions will include provisions that a licensed bank shall -
These powers will be exercised to prevent expansion of credit by trading banks, arising out of the increased funds due to war activities.
For the purpose of assisting war pro duction the Commonwealth has guaranteed, in whole or part overdrafts with trading banks of several private manufacturers. In future all guaranteed financial assistance will be provided by the Commonwealth Bank, and appropriate steps will be taken to safeguard the advances as far as practicable.
With the increasing pressure of war demands upon economic resources, rigid control of prices and the prevention of profiteering will be more important than ever. Since it came into office, the Government has been reviewing the administrative machinery for controlling prices, including the methods of fixing prices on Government orders and their effects upon the level of profits. The increase in war-time company tax will take a very large proportion of high profits earned during the war, while the rigid enforcement of price control and the closer review of prices on Government contracts will reduce the scope for excess profits. The Government will review the whole problem later after it has had an opportunity of observing the results of its administration. Honorable members will scarcely need to be assured by me that the Government is determined, on the one hand, to limit the scope for profiteering as far as practicable, and, on the other hand, to tax excess profits wherever they occur.
The financial proposals which I have placed before the committee set out the Government’s immediate plans to deal with the problem as it now exists. The committee will appreciate that there has not been sufficient time to go thoroughly into every item of the budget. Even more important, the war situation is changing rapidly, and there is every possibility of our war expenditure being increased. It is intended, therefore, to review the budget position as a whole early in the new year, and to bring down a supplementary budget to provide for any additional finance that may be required.
I cannot conclude this financial statement without a word of commendation for the zealous officers, particularly those in the Treasury and Taxation Departments, who have worked so strenuously and with great efficiency in its preparation.
I ask for the co-operation and constructive advice of the whole of the community, and I particularly appeal to the industrial organizations to strain every nerve to keep the wheels of industry moving.
Whatever differences may exist can and should be settled without a moment’s delay in the production of the equipment so necessary to the welfare, safety and success of those, who, to-day, stand in the front line to defend this country from totalitarian aggressors. If we value our way of life, if we wish to preserve the liberty we enjoy, to elect Parliaments, and to criticize our various forms of administration freely, then all our resources must be utilized to the full. If the lights of liberty are to continue to burn, we must tend and defend the flame with all the power at our command. Lip service is not enough ; the things that count are human courage and endeavour.
I move -
That the first item in the Estimates (Revised), under Division No. 1 - The Senate - namely, “ Salaries and Allowances. £8,470,” be agreed to.
The following paper was presented -
The Budget 1941-42 (Revised) - Additional papers presented by the Honorable J. B. Chifley, M.P., for the information of honorable members, in connexion with the Budget of 1941-42 (Revised).
Ordered to be printed.
SALES TAX BILLS (Nos. 1 to 9) 1941.
– I move -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 1) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia by a taxpayer and on or after the thirtieth day of October, One thousand nine hundred and forty-one, sold by him or treated by him as stock for sale by retail or applied to his own use. at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 2) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the thirtieth day ofOctober, One thousand nine hundred and forty-one,by a taxpayer who purchased them from the manufacturer, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 3) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the thirtieth day of October, One thousand nine hundred and forty-one, by a taxpayer not beingeither the manufacturer of those goods or the purchaser of those goods from the manufacturer, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 4) 1930-1940 sales taxbe imposed upon the sale value of goods, manufactured in Australia and sold to a taxpayer who has, on or after the thirtieth day of October, One thousand nine hundred and forty-one, applied those goods to his own use, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 5) 1930-1940 sales tax be imposed upon the sale value of goods, imported into Australia by a taxpayer on or after the thirtieth day of October, One thousand nine hundred and forty-one, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 6) 1930-1940 gales tax be imposed upon the sale value of goods, imported into Australia by a taxpayer and, on or after the thirtieth day of October, One thousand nine hundred and forty-one, sold by him or applied by him to hisown use, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 7) 1930-1940 sales tax toe imposed upon the sale value of goods, imported into Australia and sold on or after the thirtieth day of October, One thousand nine hundred and forty-one, by a taxpayer not being the importer of the goods, at the rate of -
That in lieuof the rate of tax imposed by the Sales Tax Act (No. 8) 1930-1940 sales tax be imposedupon the sale value of goods, imported into Australia and sold to a taxpayer who has, on or after the thirtieth day of October, One thousand nine hundred and forty-one, applied those goods to his own use, at the rate of -
That in lieu of the rate of tax imposed by the Sales Tax Act (No. 9) 1930-1940 sales tax be imposed upon the sale value of goods in Australia, including goods which have gone into use or consumption in Australia, leased by a taxpayer to a lessee on or afterthe thirtieth day of October, One thousand nine hundred and forty-one, at the rate of-
That, for the purposes of the foregoing resolutions, “Sales Tax (Exemptions and Classifications) Act” means the Sales Tax (Exemptions and Classifications) Act 1935- 1940 as proposed to be amended by the Sales Tax (Exemptions and Classifications) Bill 1941.
The only change in rates of sales tax proposed is that the present 15 per cent., which applies to goods of the third schedule to the Sales Tax (Exemptions and Classifications) Act 1935-1940, he increased to 20 per cent. The rate of 5 per cent. for goods which are considered to deserve special consideration will he retained, but the goods to which that concession will apply will be reduced to the bare minimum. It was hoped that it might he possible to do away altogether with the5 per cent. rate, and thus simplify the work of merchants in classifying goods. That, however, has been found impracticable in view of the inclusion in the 5 per cent. schedule of drugs and medicines, and goods for use in schools, upon which the Government is unwilling to increase the rate. However, the retention of these goods in the 5 per cent. schedule will not prevent a large measure of simplification being achieved, because the goods in question are ones which follow a fairly clearly defined course from manufacturer to consumer, and only rarely become intermingled with ordinary goods of commerce. It is proposed, also, to retain the general rate of 10 per cent., but the field to which this rate will apply will be somewhat enlarged by transfers of goods at present bearing the rate of 5 per cent. Particulars of the goods so transferred will be shown in detail in another bill which will be introduced later to-day.
The rate to be applied to goods in the third schedule is to be increased from 15 per cent. to 20 per cent. Honorable members will know that in this field are goods which are estimated to serve the less urgent needs of the community. The list will he added to by transfer from the 10 per cent, schedule of a limited number of similar articles. Full particulars of these goods will be given when the bill amending the Sales Tax (Exemptions and Classifications) Act 1935-1940 is before the committee. The list has been carefully compiled in the light of present necessity.
As is customary when changes in sales tax are suggested, it is proposed that the new rates shall come into operation as from to-morrow. This course is designed to prevent the dislocation of trade which would occur should there be any delay between the date of the announcement of the Government’s intentions and the date when those intentions become effective. There are provisions in the existing law which fully protect vendors of goods who, as from to-morrow, pay tax at the higher rates now proposed. They will be empowered, when the bill becomes law, to recover the additional amount of tax from any customers who have not accepted liability therefor. The new rates will apply to goods imported on and after the 30th October, 1941, as well as to all taxable transactions or operations effected or done on and after that date.
In Committee of Ways and Means:
– I move -
Division A. - Rate of Tax in Respect of Taxable Income Derived from Personal Exertion.
If the taxable income docs not exceed four hundred pounds, the rate of tax for every pound of taxable income be sixteen pence.
If the taxable income exceeds four hundred pounds, but does not exceed two thousand and five hundred pounds, the rate of tax for every pound of taxable income be sixteen pence and one twenty-fifth of a penny increasing uniformly by one twenty-fifth of a penny for every pound by which the taxable income exceeds four hundred and one pounds.
If the taxable income exceeds two thousand and five hundred pounds, the rate of tax for every pound of taxable income up to and including two thousand and five hundred pounds be one hundred pence, and the rate of tax for every pound of taxable income in excess of two thousand and five hundred pounds be two hundred pence.
Division B. - Rate of Tax in Respect of Taxable Income Derived from Property.
If the taxable income does not exceed four hundred pounds, the rate of tax for every pound of taxable income be twenty pence.
If the taxable income exceeds four hundred pounds,but does not exceed twothousand pounds, the rate of tax for every pound of taxable income be twenty pence and onetwentieth of a penny increasing uniformly by one-twentieth of a penny for every pound by which the taxable income exceeds four hundred and one pounds.
If the taxable income exceeds two thousand pounds, the rate of tax for every pound of taxable income up to and including two thousand pounds be one hundred pence, and the rate of tax for every pound of taxable income in excess of two thousand pounds be two hundred pence.
Division C. - Rates of Tax in Respect of Taxable Income Derived Partly 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 toeither section ninety-eight or section ninetynine of the Income Tax Assessment Act 1936- 1940, 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.
Division II. - Rates of Tax Payable by a Company. (a.) Subject to the last preceding division, for every pound of the taxable income of a company the Tate of tax shall be thirty-six pence.
For every pound of interest in respect of which a company is liable, pursuant to subsection ( 1. ) of section one hundred and twentyfive of the Income Tax Assessment Act 1936-1940, to pay income tax, the rate of tax shall be thirty-six pence.
Provided that this paragraph shall not apply to the assessment of a company as a trustee.
The Government proposes additional income tax on individuals which will give £9,400,000 additional revenue in a full year, and £7,400,000 in the current year. The increase in the rates of tax with which I om now concerned will give £6,000,000 increase in revenue in a full year, and £4,500,000 in the current year. The rest of the increase is due to changes in the method of assessing taxable income and will be dealt “with when I introduce amendments to the Income Tax Assessment Act.
The increase of rates proposed will affect only taxable incomes over £1,500 from personal exertion, and over £1,200 from property. Up to this point, the rates of tax proposed are exactly the same as at present. For personal exertion income, the present scale provides that the rate of tax per £1 of taxable income increases by l/25th of Id. for every additional £1 of income over £400 up to £1,500, on which the rate of tax is 5s. in the £1. All income in excess of £1,500 pays 10s. in the £1. It is now proposed to continue the progression by l/25th of a penny for every additional £1 from £1,500 up to £2,500, on which the rate of tax -will be 8s. 4d. in the £1. All income in excess of £2,500 will pay 16s. 8d. in the £1.
Similar changes are made for property incomes. The progression, which for property is l/20th of Id. per £1, will be continued beyond its old stopping point of £1,200 up to £2,000 on which the rate of tax will be 8s. 4d. in the £1. Taxable income from property in excess of £2,000 will pay 16s. 8d. in the £1.
The effect of these changes can he seen in the tables furnished to honorable members. For incomes of £2,000 from personal exertion the increase of tax is small. For incomes of £3,000, the increase averages about 20 per cent., with some small variation -between States. At £5,000, the average increase becomes about 40 per cent., and at £10,000 about 55 per cent. This percentage addition to the present tax continues to increase up to ft limit of 66 per cent, at the very highest incomes.
The difference between States is due, of course, to the allowance of State taxes paid as a deduction from income. The percentage increases now proposed do not vary much from State to State. The absolute differences of the existing tax, and still more of the proposed tax, are, however, very considerable at high incomes. An income of £5,000 will pay federal tax of £2,673 in one State and only £2,077 in another, a difference of nearly £600. The higher federal tax is paid in the State “with the lowest State taxation, and vice verna. The effect of this is to make total Federal and State taxation much more nearly equal than they would otherwise be in different States. In peace-time the merits of this arrangement are controversial, and I do not wish to commit myself to a general judgment on the question. In war-time,, the value of it is beyond doubt. All surplus spending power must be mobilized for war finance. High incomes particularly must contribute to their full strength. Those who live in the more lightly-taxed States must be content to give up, for the period of the war, a good deal of their advantage relative to the possessors of similar incomes in the more highly-taxed States.
The comparative equalization of total taxation of the higher incomes produced by this arrangement can be seen from the table of Federal and State income taxes combined, which has been circulated to honorable members. At £1,000, total taxation in the highest taxing State is 20 per cent, greater than in the lowest taxing State. At £3,000, the excess is only about 3 per cent., and though it fluctuates at still higher incomes - owing to the irregularity of State taxation scales - it remains less than 6 per cent. It is consideration of State taxes now imposed which has, for the present, limited the proposed federal scale. The limit of 18s. in the £1 has been taken for combined Federal and State .taxes. Combined tax in the highest taxing State will be about 16s. in the £1 for an income of £10,000 with a limit of 18s. for the highest income.
As the rates of tax payable by individuals are not being otherwise altered, I do not propose to occupy the time of the committee in a detailed explanation of the various divisions of the resolution. The tables circulated to honorable members give a sufficiently clear indication of the incidence of the tax on the various grades of incomes. As I announced in my budget speech, the rate of ordinary company income tax is being increased from 2s. to 3s. It is considered that this increase is justified by the demands of war-time finance. The additional revenue due to this increase is estimated at £4,500,000. I commend the resolution for the favorable consideration of honorable members.
In Committee of Ways and Means:
– I move -
That, in respect of all assessments for the financial year beginning on the first day of July, One thousand nine hundred and forty-one and all subsequent years, in lieu of the rate of tax imposed by sub-section (1.) of section 5 of the War-time (Company) Tax Act 1940 - where the excess of the taxable profit over the percentage standard is not more than One per centum of the capital employed - the rate of tax be Six percentum ; and *where* theexcess is more than One per centum of the capital employed - the rate of tax in respect of the excess referred to in the first column of the following table be - on so much of that excess as is equal to the percentage of the capital employed specified in thesecond column of that table - the rates specifiedin the third column of that table ; and on the remainder of that excess - the rates specified in the fourth column of that table : -
The resolution submitted for the consideration of honorable members is designed to give effect to the Government’s proposal to obtain from public companies a greater contribution to the war effort, by increasing the rates of war-time (company) tax. In order that honorable members may readily appreciate the proposed alterations inthe rates of tax, I shall explain as briefly as possible the present scale of rates. There is a percentage standard of8 per cent. of the capital employed, below which profits are exempt from tax. The rate of tax commences at 4 per cent. of the first 1 per cent. of the capital employed by which the taxable profit of a company exceeds the percentage standard. It increases by 4 per cent. steps for each additional 1 per cent. of the capital employed by which the taxable profit exceeds the percentage standard, until the maximum rate of 60 per cent. is reached. The maximum rate applies when the taxable profit is more than 22 per cent. of the capital employed. The three variations being made in the act are, first, increasing the commencing rate from 4 per cent. to 6 per cent.; secondly, increasing the steps also from 4 per cent. to 6 per cent. ; thirdly, increasing the maximum rate from 60 per cent. to 78 per cent.
Under the proposed new scale, the first 1 per cent, of capital employed represented by the excess will be assessed at 6 per cent., the second at 12 per cent., the third at 18 per cent., and so on, until a maximum rate of78 per cent. is reached. It is proposed, in an amendment to he introduced in respect of the assessment act, to reduce the statutory percentage by which the percentage standard is calculated, from8 per cent. of the capital employed, to 4 per cent., so that the maximum rate will he reached at the stage where the taxable profit exceeds . 16 per cent. of the capital employed, as against 22 per cent. formerly. The fourth column of the table contained in the resolution will indicate to honorable members how the rates progress according to the percentage which the excess of the taxable profit over the percentage standard, bears to the capital employed. Where the excess of the taxable profit over the percentage standard is greater than 1 per cent. of the capital employed, the rates of tax upon all percentages specified in the second column have been expressed in the form of an average. This is the rate which appears in the third column. For example, where the excess is more than 2 per cent. of the capital employed, but is less than 3 per cent. the average rate for the first 2 per cent. is shown as nine in the third column. This represents the average of 6 per cent. which applies to the first 1 per cent. and 12 per cent. which applies to the second. It is not practicable to set out the scale of rates in any other form, without a great deal of repetition.
The alterations in these rates admittedly mean a larger yield from the war-time company tax. The additional yield for a full assessment year is estimated at £4,750,000. The additional amount estimated to be collected during the current financial year is set down at £4,000,000, i.e., a total collection of £5,000,000, as contrasted with the £1,000,000 only to be collected by the previous Government. No one can reasonably object to the principles embodied in this act of taxing high profits. They have been acclaimed by taxation experts even in other countries as equitable and were examined by a taxation parliamentary committee from both sides of this House last year. Its soundness is considered to be a great improvement on the provisions of the War-time Profits Tax Assessment Act that was in operation during the last war. The larger companies, as well as the more favoured class of individuals, must be prepared to contribute to the point of sacrifice in carrying on this titanic war struggle, and I appeal to all those companies affected to accept loyally and uncomplainingly their quota of the national contribution to the war effort.
In Committee of Ways and Means:
. - I move -
That, in addition to theland tax payable under the Land Tax Act 1910-1940, there shall be payable in respect of land, the taxable value of which is in excess of £20,000, a super tux equal to -
That the super tax shall apply to all assessments for the financial year beginning on the 1st day of July, 1941, and for each financial year thereafter.
This resolution implements the’ Government’s proposal to impose a super tax of 20 per cent. in those cases where the taxable unimproved value of the owner’s land is in excess of £20,000. As a deduction of £5,000 is allowed in arriving at the taxable value, except in the case of an absentee, a land-owner will need to own land of an unimproved value of £25.000 before he becomes liable to pay the super tax. The additional revenue to be obtained from the new tax is estimated at £500,000. In moving this resolution, I remind honorable members that between 1927-28 and 1940-41, the taxpayers liable to pay land tax received very liberal treatment from governments by way of successive percentage reductions of the rates of the tax.
The remissions commenced in 1927-28 when the basic 19.14-15 rates of tax were reduced by 10 per cent. This reduction continued until 1932-33. In that year, a further reduction of 331/3 per cent. was made, thereby increasing the total reduction to 40 per cent. on the rates operating prior to 1927-28. In the following year, a reduction of 50 per cent. was substituted for the331/3 per cent. granted the previous year, so that the tax payable for 1933-34 was only 45 per cent. of the basic rate of 1914-15. This reduced rate was continued for five years until 1938-39, when the rates, were increased by 11.1 per cent., bringing the rate up to exactly onehalf of that which was in operation in 1914-15. This rate was applied also for 1939-40. Last year, the previous Government in its search for further revenue decided to restore the basic rates of 1914-15, and increased the rates by 100 per cent. The story since 1927-28 has, until the last two or three years, been one of reduction and still further reduction, and honorable members will be interested to learn that the actual money benefit which accrued to the federal land taxpayers of Australia as the result of these remissions was over £13,000,000.
I remind honorable members that 75 per cent. of the land tax revenue is paid in respect of city lands and 25 per cent. only in respect of country lands, so that the benefit of these remissions has been enjoyed mainly by wealthy companies and individuals. If there be one section of the community which has most to gain by victory in this war, it is the landowners of Australia, and the Government considers that they should be called upon to make some additional contribution towards the achievement of that victory. It, has accordingly been decided that a super tax of 20 per cent. should be paid in all cases where the taxable unimproved value of the land exceeds £20,000. The rates which were in operation last year were also in operation prior to 1918, when they were increased by 20 per cent. over the whole field, without any exemption such as that now proposed. These increased rates were in operation until 1921-22.
The provision that the 20 per cent. super tax shall apply only in those cases where the taxpayer’s holding is in excess of a taxable value of £20,000 means, first, that approximately 70 per cent. of the unimproved value of country lands will not be called upon to bear this additional impost and, secondly, that the burden will fall on the shoulders of those best able to bear it. It is proposed to graduate the incidence of the super tax and to prevent any anomaly by providing that it shall not exceed 1 per cent, of the taxable value of the land in excess of £20,000. Under this method, the full 20 per cent. of the super tax will not be payable until the taxable value reaches approximately £25,000.
In Committee of Ways and Means:
.- I move-
That, in lieu of the rates of estate duty imposed by the Estate Duty Act 1914-1940, the rates of estate duty in respect of the estates of all persons dying on or after the date of the commencement of the act passed to give effect to this resolution be -
where the value for duty of the estate does not exceed Ten thousand pounds - Three pounds per centum.
where the value for duty of the estate exceeds Ten thousand pounds but does not exceed Twenty thousand pounds - Three pounds per centum increasing by Three one-hundredths of one pound per centum for every complete One hundred pounds by which that value exceeds Ten thousand pounds.
where the value for duty of the estate exceeds Twenty thousand pounds but does not exceed One hundred and twenty thousand pounds - Six pounds per centum increasing by Two one-hundred the of one pound ger centum for every complete One undred pounds by which the value exceeds Twenty thousand pounds.
where the value for duty of the estate exceeds One hundred and twenty thousand pounds but is less than Five hundred thousand pounds - Twenty six pounds per centum increasing by One two-hundredths of one pound per centum for eveTy complete One thousand pounds by which the value exceeds One hundred and twenty thousand pounds.
where the value for duty of the estate is Five hundred thousand pounds or more - Twenty seven pounds eighteen shillings per centum.
The rates of estate duty in force prior to May, 1940, were adjusted and increased by the former Government. They ranged from 1 per cent. on £1,001 to 15 per cent. on estates in excess of a value of £71,000. These rates, however, were reduced by one-third thereof in respect of estates passing to the widow, children or grandchildren of the deceased. The result of this provision was that the greater part of the dutiable value of estates was assessable at a rate which reached a maximum of only 10 per cent. In May, 1940, the rates were increased so as to commence at 3 per cent., which applies to all estates up to a value of £10,000. Thereafter, the rate progresses steadily until the maximum of 20 per cent. is reached, when the value of the estate amounts to £500,000. The Government is of opinion that further revenue can be obtained from this source without undue hardship. It is not intended, however, to increase the rates applicable to estates in the lower ranges, but it has been decided to apply a steeper rate of progression in the rate of duty on estates in the higher ranges. Commencing with estates in excess of £20,000 in value, the proposed rate reaches a maximum of 27.9 per cent. when the estate is of a value of £500,000 or more.
The rate of progression in estates of £20,000 up to £100,000 in value, where the rate is 18 per cent. in the present act, is 3-200ths of £1 per cent. for each £100 by which the value exceeds £20,000. The proposal in the resolution makes the rate of increase 2-100ths of £1 per cent. for each £100 of value until the estate reaches a value of £120,000, where the rate will be 26 per cent. Thereafter the rate of increase is l-200ths of £l per cent. for each £1,000 until the maximum of 27.9 per cent. is reached at £500,000.
I am circulating to honorable members a schedule showing the present and proposed rates of duty on estates in various grades from £1,000 to £1,000,000, compared with the death duty in the highest State and the British estate and succession duties on estates of similar values. This schedule will clearly show the effect of the Government’s proposals. It will be seen that the increase does not commence to have effect until the estate exceeds £20,000 in value, and the increases of rates are not substantial until the estate exceeds £100,000 in value. Although according to the scale of rates, an estate of £100,000 in value is subject to duty at the rate of 22 per cent., such estate does not, in fact, have to bear that rate of duty, because the Commonwealth levies duty not upon the full £100,000, but only upon the balance remaining after the deduction of State death duty. In the case of the highest State, this reduces the taxable balance from £100,000 to slightly more than £73,000, and the rate of tax upon that amount is 16.6 per cent.
The total increase of revenue by applying these increased rates is estimated at approximately £650,000 for a full year, but owing to the fact that it is not possible to issue the estate duty assessments in respect of these large estates until many months after the date of death of the deceased, and as the increases will only apply to the estates of persons who die after the commencement of the act, no appreciable revenue is expected to be receivedin the current financial year. The benefit of. the increase should, however, be felt substantially in the financial year 1942-43.
In Committee of Ways and Means:
Mr.CHIFLEY (Macquarie- Treasurer) [5.0]. - I move -
That gift duty be levied and paid in respect of every gift made on or after the date of the commencement of the act passed to give effect to this resolution -
by a person (not being a body corporate) who is domiciled in Australia, or by a body corporate which is incorporated under the law of any State or Territory which is part of the Commonwealth - of any property wherever situated; or
by any other person - of any property which is situated in Australia at the time when the gift is made.
That the rates of gift duty be -
Where the value of all gifts does not exceed Five hundred pounds - nil.
Where the value of all gifts exceeds
Five hundred pounds but does not exceed Ten thousand pounds - Three pounds per centum of the value of the gift.
Ten thousand pounds but does not exceed Twenty thousand pounds - Three pounds per centum of the value of the gift increasing by Three one-hundredths of One pound per centum for every complete One hundred pounds by which the value of all gifts exceeds Ten thousand pounds.
This resolution is being introduced to impose rates of duty upon gifts. The Gift Duty Assessment Act, the bill for which will be introduced in this House later in the day, will, in due course, be incorporated and read as one with the Gift Duty Act when passed. The rates of duty will commence at 3 per cent., and will reach a maximum of approximately 27 per cent, when the aggregate value of the gifts made within a five-year period reaches £500,000. It is necessary to remember that although the rates under this resolution are to follow the same scale as for estate duty purposes, the actual amount of duty imposed upon any particular gift will generally he less than the duty that would have been imposed upon the same amount of property if it had formed part of the estate’ of the donor subject to estate duty. This position arises from the fact that the rate of gift duty is ascertained by reference only to the aggregate value of all gifts made by the donor within a period of five years, and not with regard to the aggregate value of the whole of the assets of the donor on which the rate for estate duty purposes is based.
The double purpose of the assessment bill is thus implemented, i.e., the purposes of revenue production and revenue protection. If the rate of tax were made to depend upon the aggregate value of the whole of the deceased’s assets, it would probably so seriously deter the making of gifts as to produce little or no revenue under this resolution. Also, it would be exceedingly costly to administer an act fixing the rate with regard to the aggregate value of the donor’s assets every time he made a gift subject to duty. The rate on all gifts up to an aggregate value of £10,000 is 3 per cent. Thereafter it increases by 3-100ths of £1 per cent. for each £100 by which the value exceeds £10,000, until a rate of 6 per cent. is reached at £20,000. Thereafter it increases by 2-100ths of £1 per cent. for every £100 by which the value exceeds £20,000, until a value of £120,000 is reached, where the rate is 26 per cent. Thereafter the rate increases by l-200ths of £1 per cent. for every £1,000 by which the value exceeds £.120,000 until the aggregate value is £500,000 where the maximum rate of 27.9 per cent. is reached.
No differentiation in the rates is made as between gifts passing to relatives or strangers.If the aggregate value of the gifts made by a donor within the statutory period of five years is £1,000, the gift duty payable will amount to £30. The rates and amounts of duty payable on gifts of various amounts are as follows : -
The revenue which, it is estimated, will be derived from this source for a full year is, as I have already informed the committee, £500,000, but for the balance of the current year it will not amount to more than about £250,000.
Cite as: Australia, House of Representatives, Debates, 29 October 1941, viewed 22 October 2017, <http://historichansard.net/hofreps/1941/19411029_reps_16_169/>.