16th Parliament · 1st Session
Mr.Speaker (Hon. W. M. Nairn) took the chair at 10.30 a.m., and read prayers.
– Press reports of the offensive operations of the British Imperial Forces in Cyrenaica are at least two or three days behind the events. Can the Minister for the Army give the latest information concerning this very important and spectacular movement of troops ?
– No information is available beyond that given to the House yesterday.When further messages come to hand their contents will be communicated to honorable members.
– Has the Minister for the Army any information about the progress of thecampaign in Libya and whether Australian troops are engaged therein ?
Mr.FORDE.- I have nothing to add to the reply which was given to the honorable member for Moreton ( Mr. Francis)thatno further cable has been received, and no information; can be given to supplement thatwhich I announced to the Houseyesterday.At this stage, I cannot say what troops are engagedin the campaign.
– I ask the Minister for the Army: Why does Lieutenant Frank Packer, managing director of Australian Consolidated Press, receive so much leave as a member of theAustralian Imperial Force?Did he enlist on a special basis, which does not require him to perform someof the military duties that have to be performed by ordinary members of the Australian Imperial Force? Is he discharging special functions which necessitate his constant attendance at race meetings in Melbourne and Sydney? If not, how is he able to have himself so frequently photographed at such meetings? Will the Minister consider the granting of similar privileges to other members of the Australian Imperial Force?
Mr.FORDE.-The matter of the leave to be granted to officers and men is determined by the commanding officer of the division, and does not come within my purview.A report in connexion with the position held by Lieutenant Packer was obtained by my predecessor, who was advised by the commanding officer that this officer did not receive special consideration, but was given the leave usually granted to officers of his division. I shall have inquiries made, and advise the honorable member of the result.
– A munitions factory in Western Australia will be completed in the new year. Will the Minister for Munitions take immediate action in order to ensure that the employees required for the factory shall he selected from applicants in Western Australia, and that those engaged shall be given an. opportunity to undergo the training necessary for the adequate staffing of such a factory?
– I shall certainly direct that, ‘so. far.’ as is possible, the labour required for ‘the munitions factory in Western Australia shall be obtained in that State. I shall also suggest that whate ver training may be needed by those who are to occupy executive positions shall be undertaken immediately, in orderthat full preparations may be made for the efficient workingof the establishment.
– Can the Minister representing the Minister for Trade and Customs inform the House what amount of dollar exchange was made available recently for the purchase of syndicated comic strips and other syndicated matter from the United States of America? What persons are benefiting as the result of this dollar exchange having been made available?
– I raised this matter, in questions to the Minister concerned, during the regime of the last Government. So far as I can gather, an almost total prohibition was imposed on the importation of comic strips.
– The prohibition was total.
– I believe that the point was raised as to the source of supply of the comic papers in question, and that the fact was established that the necessary dollar exchange was made available by purchasing agencies in Great Britain, those that came to Australia having filtered through from that country. So far as I know, the position has not since altered. In order that the latest information may be furnished, I shall be pleased to bring the matter to the notice of the Minister for Trade and Customs and to furnish a reply to the honorable member later.
– The town of Lis- more, on the north coast of New South Wales, contains about 14,000 inhabitants. At the direction of the Minister for National EmergencyServices in New South. Wales, Mr. Heffron, it had two blackouts. Thefirst blackout was so successful that an aeroplane could not locate the town. At the second blackout, a week or so ago, six residents failed com.- pletely to obscure their lights, and upon being summoned before the court were fined amounts which averaged £9 each. Despite this Mr. Heffron ordered thewhole town to submit to a further blackout test two or three days later. The imposition of this penalty upon the 14,000 inhabitants of the town because of the failure of six residents to observe the directions issued, notwithstanding that these had already been dealt with under State law, may be likened to what is being done in Germany. Has the Minister for Home Security powerto prevent the State Minister for National Emergency Services from improperly exercising functions under National Security Regulations? Mr. LAZZARINI.- I am unable to accept the premise of the honorable gentlemanthat the Minister for National Emergency Services in New South Wales improperly exercised his powers. The organizing of blackouts “is exclusively within the jurisdiction of the State authorities; my department is merely a co-ordinating authority.However, I shall, bring the remarks of the honorable member to the notice of the appropriate Minister in New South Wales.
– In order to overcome the existing bottleneck in the steelindustry, and to exploit the smaller ironore fields in the western part of New South Wales, will the Minister for Supply and Development negotiate with the
British Trade Commissioner in Australia and the High Commissioner for Australia in London, in order to see whether it is possible to bring to this country the plant of thosesmaller steel works in Great Britain which have been closed down under the rationalization plan in force in that Country?
– Whilst Australia’s needs in regard to steel admittedly are great, I am sure that the honorable member appreciates how difficult it would be to obtain the necessary plant and machinery to put his scheme into immediate operation. On . a futureplanning basis, his suggestion has distinct merit. I shall therefore be pleased to’ discuss it with any appropriate authority, particularly those gentlemen whom he has mentioned.
– Following personal representations . to the Minister for Supply and Development concerning the proposed establishment of a power alcohol distillery in New South Wales, I should like to know whether the honorable gentleman has read the paragraph in the press this morning which attributes to him the statement that Sydney may be chosen as the site of the distillery? As country districts urgently need activities of this nature, will he personally attend to the matter with a view to ensuring that the most suitable country centre is chosen for the establishment of the distillery?
– The policy of the Government in relation to war production generally is to effect decentralization. It could not be more forcefully expressed than in relation to the establishment of power alcohol distilleries associated with the wheat industry. I assure the honorable member that the distillery in New South Wales will be established, not in Sydney, but in an appropriate country centre.
– As the advocates of conscription for military service overseas are jeopardizing the success of Australia’s war effort–
– Order ! Comment in a question is not permissible.
– And as the campaign now being waged has a political basis-
– Order ! The whole question has a political basis.
– Will the Prime Minister , take action under National Security Regulations in order to restrain those conscriptionists who are interfering with Australia’s war effort by raising issues which will divide the Australian people?
– The Government will not, by using the National Security Act, interfere with expressions of opinion, except those that give information to the enemy, are prejudicial to the prosecution of the war, or can be regarded as subversive. The public has the right to criticize the Government and to advocate policies. I should say, however, that no issue could be so ill-timed or unwise, and in. the existing situation detrimental to the unity of Australia and the maximum cohesion of its people in the prosecution of the war, than one which, when raised on a previous occasion, had the effect of dividing, and thereby weakening, Australia. As Leader of the Government, I request the people to give the maximum degree of support to the policies that have been advocated by the leaders of all parties in this Parliament in respect of recruitment, for the fighting services. The responsibility for ensuring that all aspects of Australia’s war effort, are effectually conducted, I affirm with great respect, can best be borne by the leaders of parties, who have knowledge of the facts.
– Then it will soon be necessary to get some new party leaders.
Mir. CURTIN. - That is an opinion which the honorable member is quite entitled to hold and state, and I shall not try to prevent him. I shall not in any way try to suppress opinions which are contrary to my own, but, at the same time, I ask the people of Australia to give duc weight to an unfortunate experience in the history of this country during the last war.
– That was 25 years ago.
– Nevertheless, .this country must be guided by the lessons of history. The Government will ask the Australian people to refrain from anything which it considers would weaken the war effort instead of strengthening it. A controversy about conscription at this stage will npt odd one man to the fighting forces of Australia, but will merely give comfort to the enemy.
– Is it not a fact, that the adoption of conscription in the United Kingdom and New Zealand has resulted in an increased war effort in those countries?
– An increased war effort may not be due to any particular policy; it may be entirely due to the momentum of the country’s effort, and its .increasing capacity, as the result of experience, to wage war. The policy that has been applied in Australia has brought about an increasing Avar effort, and Australia was never before so well prepared for -var as it is now.
– Reports have been circulated recently that the Government is considering the sending of a mission to Russia. Is there any truth in those reports, and if so, will the Prime Minister say whether the Government has yet come to a decision ? What would be the object of such a mission?
– The Government has under consideration the relations of Australia with all our allies in the present struggle. No decision has been made in respect of the mission to Russia, and before anything is done I. shall inform the Advisory War Council, and have the proposal discussed by it.
– Is the Minister for Home Security aware that the headquarters of the National Emergency Services in Sydney have been painted a glaring white? Having regard to . the Minister’s interest in the camouflaging of prominent buildings at Port Kembla, will he confer with his colleagues in Sydney with a view to having the head-quarters of the National Emergency Service camouflaged in fine gradations of blue and white?
– The Minister is not forgetting that blue and white are the Labour party’s colours, and they a.re the best political camouflage I know.
– The honorable member is wrong if he believes that blue and white make a good camouflage. He should have an interview with Professor Dakin, who is an expert on these matters.
– Can the Minister for Trade and Customs say how many firms have been declared since the outbreak of war for making excess profits on goods sold to the public? What additional penalty, if any, is imposed on such firms, seeing that they are obviously attempting to exploit the community?
– The honorable member will appreciate that it would be difficult to give such information offhand, and that, in any case, it would be unwise to do so. I shall bring the honorable member’s question under the notice of the Minister for Trade and Customs so that a detailed statement may be prepared covering the period from the outbreak of the war.
– Has the Prime Minister read the statement made by Mr. Alfred Duff Cooper, that he would leave Australia with an impression of unity, an impression of courage, and an impression of endeavour? Will the Prime Minister bring this statement discreetly to the notice of certain non-political administrators who have made exaggerated references to the spirit of Australia, so that the real determination and patriotism of the Australian people may not be misunderstood in other countries?
– I have read the remarks attributed to Mr. Duff Cooper, and I am grateful to him for having aptly stated what I believe to be the position
– When he is bringing the pleasant felicitations of Mr. Duff Cooper under the notice of the authorities concerned, will the Prime Minister also bring under their notice the stringent observations of Sir Thomas Blarney regarding Australia’s war effort, and will he say which of the two gentlemen has, in his opinion, the greater responsibility and which is the more likely to give an honest opinion? Has the Prime Minister noted the statement of Sir Thomas Blarney that a great deal of money and effort is being wasted on air raid precautions in Australia - money and effort that could be more wisely devoted to the manufacture of materials and munitions of war for our men serving overseas ?
– All the opinions that Sir Thomas Blarney has expressed have been noted, and will be brought to the notice of government departments and officials where necessary. Sir Thomas Blarney is as much entitled to. hold opinions on social and other questions as is Mr. Duff Cooper. The views that Sir Thomas Blarney has expressed on the conduct of the war have been put in a most cogent manner before the Advisory War Council and Cabinet. Everything he has said will . be well heeded by the Government.
– Reports have been published that enemy mines have recently been washed up on various parts of the Australian coast. I ask the Minister for the Navy whether it is the opinion of naval authorities that these mines were laidmonths ago, or whether there is any evidence that they were laid more recently? If there is, can the Minister disclose any information on the subject revealed by naval or air reconnaissances?
– The impression is that the mines recently washed up had broken away from the field sown some time ago by an enemy vessel. So far as I know, there has been no recent sowing of mines in Australian waters.
– Has the Minister for the Navy seen in this morning’s SydneyMorning Herald a report that severalenemy raiders, including the battleship Scharnhorst, are at present in Ja panese waters ?
– I have seen the statement, and I have no doubt that all necessary action will be taken to safeguard our shipping lanes and the coast of Australia against possible attack.
– Will the Minister for the Army confer with the Minister for Airwith a view to ensuring that men in the fighting forces, particularly those from Western Australia, who are training in camps in various parts of Australia, may return to their homes at Christmas time?
– The honorable member’s requestwill receive full consideration. Because of transport difficulties it will, no doubt, be found necessary to stagger leave arrangements, particularly for men going to Western Australia, whether they travel at Christmas time or afterwards.
– Will the Minister for the Navy say whether a new agreement has been reached between the Government and the lessees of the Cockatoo Island Dockyard? If not, having regard to the published report that undue profits have been made by the lessees, and that £100,000 will’ probably have to be refunded by them, does the Government not think that the time has arrived for it to resume control of the dockyard?
– A revised agreement has been reached with the company at present leasing the dockyard. This agreement was drawn because of the increased profit, that had accrued to the company from Government orders for the construction and repair of naval vessels since the beginning of the Avar. This had reached a figure which demanded some revision of the original arrangement. The agreement, which has now been effected, considerably modifies the matter of profits, and whilst providing for certain refunds to the Commonwealth, also retains to the Commonwealth the right to take over this property during the war period, if it so desires. The question which the honorable member asked will no doubt receive consideration by Cabinet at a future date, if it is felt that the operation of the present agreement does not afford the satisfaction that the Ministry desires.
– Has the Prime Minister decided when he will be able to make the statement on man-power to which he referred about three weeks ago? When he does so, will he show me how he can wage total war by voluntary means, and how he can contend -
– Order ! This question introduces politics.
– The report on the man-power position will be submitted to the House as soon as the Government is in a position to do so. The honorable member knows that if the job is to be done properly, the survey will be of great magnitude, and will entail considerable difficulty. I do not wish to be placed in a position of dealing only partially with the matter.
– Will the AttorneyGeneral inform me whether any machinery is available for providing legal assistance to workers who are denied compensation by the army authorities, and who are practically told to fight their cases in court?
– I shall examinethe matter and supply to the honorable member a complete answer as soon as possible.
– I ask the Minister representing the Postmaster-General whether the Government has reached a decision to liberalize the payments to non-official postmasters, as the conditions under which they now work are most unjust?
– When a similar question was asked yesterday, I replied that inquiries were being made into the remuneration of non-official postmaster. I hope that as the result of the investigation, the remuneration fixed will be commensurate with the duties that they perform.
– Has the Minister for the Armyreceived a reply to his inquiries regarding the use made by the Italians of Australian prisoners of war? I ask this question because of statements that were made by two Australians who escaped from a prison camp at Benghazi. If the report affirms their statements that their captors compelled them to work long hours, will the honorable gentleman consider theadvisability of making appropriate and effective use of the many prisoners of war in Australia in a manner similar to that employed by the enemy?
– When the matter was brought to my notice, I immediately called for a report, but to date it has not been submitted to me. The treatment which should be meted out to prisoners of war is prescribed in the Hague Convention. It is the policy of Australia and, indeed, of all members of the British Empire, to observe the provisions of that international convention. Regarding the accusations about the treatment of Australian prisoners of war in North Africa, I hope to be able to supply to the honorable member a reply during the day.
– I ask the AttorneyGeneral whether it is a fact that the editor of the Radio Times. Melbourne, is being subjected to a capricioususe of the censorship power by the Deputy State Censor in Victoria. If so, will he investigate the position in order to protect the Radio Times against such misuse of power in future?
– I shall forward the honorable member’s question to the Minister for Information, who is responsible for dealing with this matter, in order to ascertain whether there is any justification for instituting an inquiry.
– Yesterday, the Min ister for the Army indicated that he would bring to the notice of the Army authorities the need for co-operation between the controllers of the internees’ camp at Hay and the local authorities regarding the establishment of a sewerage scheme. Will the Minister impress upon the Army authorities the desirability of extending that principle to other places? In particular, I ask him to consider the position at Singleton in New South Wales, where the Army is about to establish a mechanized unit area. There, the Army will be able to co-operate with the local authorities regarding the use of water, with a cost advantage to the Army and with saving and advantage to the town.
– The reply to the honorable member’s question is “ Yes “.
– Yesterday, the honorable member for Martin (Mr. McCall) asked me to make some inquiries concerning the completeness of a report in Hansard of a speech by the honorable member for Watson (Mr. Falstein), relating to Mr. W. J. Smith. The point was whether the statement had been made that a horse-float for the use of Mr. Smith had been made at Government expense. No reference to “ expense “ appeared in the Hansard report. A check of the shorthand notes shows that there was a reference to expense, but that the words used were “ at his own expense “. The Principal Parliamentary Reporter has submitted to me the following explanation: -
A full transcription of the relevant passage of the reporter’s shorthand note is -
I have in my possession a signed statement by a responsible gentleman that Mr. W. J. Smith,chairman of directors of Australia n Consolidated Industries, took certain technicians off work for the Commonwealth Government - work on which he was being employed bythe Commonwealth on a cost-plus basis - and employed them at his own expense on building a horse-float for his own use.
In transcribing his notes, the reporter omitted the words “ at his own expense” on the reasoning that they were superfluous, i.e. they were implicit in the passage “ employed them on buildinga horse-float for his own use” unless there was a definite statement to the contrary.
In the light of subsequent developments, the inclusion of the omitted words would have made the passage more definite ; but, of course, that could not be foreseen at the time of transcription.
I was also asked whether instructions had been given for the omission of words from the Hansard report. No such instructions were given. The reporter acted on his own discretion, and, in my opinion, he acted quite bona fide.
– Perhaps you, Mr. Speaker, may feel constrained to lay down a rule that the uncorrected report of Hansard, which is issued to an honorable member, should be an accurate report of what he said in the House. Furthermore,I ask you to explain how it conies about that a Hansard reporter decides that a certain statement in an honorable member’s speech is superfluous, because once that principle is admitted a reporter may decide that a whole speech is superfluous.
– At every sitting, the reporters have in their discretion to vary the actual words used by honorable members, and I think that very often such emendations improve a speech. To guard against the possibility of honorable members approaching a reporter to have alterations made in their speeches, I have issued instructions that no alteration of a. substantial or material character shall be madewithout reference to myself. I believe that that rule is observed. But reporters cannot be expected to refer to Mr. Speaker the many small questions of elimination, addition or variation which arise every day. In the instance that is now in question I think that the reporter exercised his best discretion and acted bona fide, though, as subsequent events have shown, it would have been better if the wordshad been included in the passage.
– On a personal explanation, I assure the House that I did not approach the Hansard reporter at any stage to ask him to alter that passage in my speech; nor, indeed, did I alter the proof when it was submitted to me.
– On the 18th November, the honorable member for Hunter (Mr. James) asked me whether I would issue instructions that young miners who were in militia camps or on the way to Darwin for garrison duty should be exempted from service and employed in the mines in order to relieve the shortage of that class of labour in the coal-mining industry.
Advice has now been received that an investigation is now being made into the cases of coal-miners who, at the time of their registration for universal training, were unemployed and were registered as such. Arrangements will be made for their release from military training immediately verification is received, in each individual case, that employment in the mining industry is available to the man concerned. In the meantime, men who are included in drafts to proceed to Darwin will be withdrawn, if there be any likelihood of their being subsequently employed as miners.
Debate resumed from the 29th October (vide page 52), on motion by Mr. Chifley -
That the bill be now read a second time.
– The avowed purpose of this bill isto increase revenue, consistent with the budget proposals, by making greater inroads upon the field of war-time company income. With the principle of the measure the Opposition has no quarrel; but we consider that the proposal contained in it will place too heavy a burden upon the public companies. Companies, public and private, constitute a desirable field of investment, and it will generally be appreciated that company formation has contributed to the economic development and well-being of Australia. Outside governments, companies are the biggest employers of labour. Cutting into the dividend-paying capacity of the companies to the degree proposed will have disadvantageous reactions. In short, the Government’s proposal is to obtain an- additional £4,500,000 from public companies ‘by reducing from S per cent, to- 4 per cent.- the ratio of profit to capital which companies may earn before being subjected to .the’ wartime company tax.- Not even the German company tax;- which “.had .a disastrous effect on the financial bases of companies, was so -se vere as the tax-proposed in this measure; ‘ Germany adopted 6 per cent, as the maximum ‘ above, .which .profits would be taxed. ‘ The. future will prove what -an oppressive measure this bill is.
I -ask honorable members to contrast the profit limitation of 4 per cent, proposed in this bill with the’ H per cent, tax-free interest paid on Commonwealth leans. The Government’ must face the fact that it will have- to call upon the generosity, patriotism, and capacity of the Australian investing public, which includes companies, in order to obtain the large sums of money required to fulfil its budgetary obligations before the 30th June next. The recent £100,000,000 cash and conversion loan was acclaimed a success, lt was over-subscribed. What must bo borne in mind,, however, is the fact that of that loan only £30,000.000 of new money was obtained. The balance represented conversions of maturing loans. In order to fulfil its; budget, before, the 30th June next, the Government must bridge the gap of £.137,000.000 between anticipated revenue and expenditure. Already £30,000,000 has been raised, and £107,000,000 remains to be found, exclusive of £20,000,000 for the State.’.- Since the Government has decided to adhere to the voluntary system of raising loans it will have to rely on the Australian public for the money required. Hitherto, public companies have been among the largest subscribers to. Common-wealth loans, but, I submit that, after having paid this tax, as well as all pf ‘the other taxes inflicted upon’ them, neither the companies themselves -nor the shareholders will have the wherewithal to contribute towards future loans to the extent required. The intention of the original war-time’ company tax, which was introduced by the Menzies Government; was to require companies earning high profits as the result of the war to contribute towards the finances of the war. In other words, it was a super-tax, a tax in’ addition to the ordinary company tax, which is a flat-rate tax. The war-time company, tax has no relation to pre-war standards .or conditions. It is simply a tax which requires companies to contribute to the revenues df the Commonwealth any profits earned above a fair .and reasonable margin of profit. The Menzies .Government required companies earning. . more than. 8 per cent, on the shareholder’s funds to make a further contribution to Consolidated Revenue. This . Government, ‘ in its search for revenue, is advancing further into the field, and is proposing to ask the whole of the public companies of Australia to pay, not only the ordinary company tax, at an increased flat rate, but also the wartime company tax on all profits in excess of 4 per cent, on capital. The Government’s expectations as to revenue from that source this year may be realized, because one-third of the year has expired, and the tax will be levied on the profits made in the year ended the 30th June last, but the companies will have to readjust themselves in order to meet this extra infliction next year. By reducing the percentage of profit above which this tax will be’ imposed from ‘ 8 per cent, to 4-per cent., the Government is putting a premium, on inefficiency, waste and extravagance. With all the disadvantages’ attached- to private enterprise and the risk attached to capital, the companies will not persevere. Rather than make this contribution, managements will allot more. of their .time to leisure, and less to work and will increase their internal: and external goodwill.
The effective taxable income of public and private companies in Australia amounts to £98,000,000. I have npt been able to apportion that amount as between public companies and private companies. Private companies are not .affected by this -.tax; there is no room for them to be affected, unless they be asked to contribute from their capital. At any rate, they are afflicted by the ordinary .income tax; so there is no charity in excluding them. Of that £98,000,000 the Commonwealth proposes to take £26,500,000, and the States £15,000,000. An additional £2,000,000 of tax is paid overseas. The war loan contribution is included in the £98,000,000, so that the amount left after deducting £48,000,000 is £50,000,000., Superficially it would appear that the’ companies will pay tax at the rate of approximately 9s. in the £1. The method of taxing companies in Australia is different from that which obtains inGreat Britain, New Zealand, Canada and other British dominions. I need not go into the details of their systems, but the individual shareholder in Australia is required to pay tax upon his dividend without rebate of the amount of tax paid by the company of which he is a shareholder. That rebate was removed as a war measure. The companies themselves pay approximately 9s. in the £1, and the individual shareholders are required to forgo the rebate of the amount of tax paid by the company and have to pay tax at the maximum rate of 16s. 8d. in the £1. So I venture the opinion that the effective rate of tax on companies is11s. or 12s. in the £1. The effect that this measure must have upon the economic welfare of Australia must be self-evident to every discerning person. I could cite numbers of examples of how this proposed new tax will operate, but one will suffice. The following table shows the position of a company with a capital of £500,000 : -
Thesefigures show how this proposed tax will withdraw from companies the incentive to develop and make judicious provision for their continued existence. I could refer to dozens of similar instances. The effect of this proposal should be obvious to the Government. If it intends to implement the basic principle of the policy announced the other day by the Minister for War Organization of Industry (Mr. Dedman), it could do so in no more effective or disastrous way. The infliction of this extra super-tax upon the public companies of Australia will have farreaching and damaging effects upon our whole economic system.Company activity has played a most important part in Australia’s economic history, and it is still capable of doing so. I wish to remove the misconception which exists in the minds of the Government and its supporters about the so-called “ big companies “. There is no such thing as a big company. A company may appear to be big by virtue of the amount of its subscribed capital, but that capital has come from thousands of small shareholders, whose average holdings probably do not exceed £300 or £400. I can produce facts to prove conclusively that these alleged big companies represent nothing more than an aggregation of capital subscribed by people who have confidence in the future of Australia, and who are prepared to contribute to the development of this form of private enterprise by means of their investments. If the Govern ment wishes to do away with this most desirable form of capital aggregation and economic activity, it could choose no more effective means than that proposed in this bill. The Opposition is opposed to the reduction of the exempt profit rate from 8 per cent, to 4 per cent., and I intend to move, at the appropriate time, that the minimum should be 6 per cent. That was the rate of profit allowed in Germany, and surely that country would not be suspected of being generous to companies! All honorable members agree that companies of certain grades of dividend-paying capacity should make an extra contribution to our war effort. But to impose this proposed super-tax upon companies that arc earning only 4 per cent, on their defined capital is to go to a ridiculous extreme, which will drive them into liquidation or seriously reduce their efficiency and energy. The disastrous, effects of such a tax would, continue far into the future. What company would endeavour to continue in operation solely in order to contribute to the revenue of the Commonwealth, when, it could wind up its affairs and devote the resultant capital to the purchase of ‘Commonwealth bonds bearing interest at the rate of 8£ per “cent. - % per cent, less than, this Government considers ought to bc the ‘maximum profit of any public company? The Opposition is definitely opposed to this proposal, arid will fight strenuously for the imposition of a limit of 6 per cent, instead of 4 per cent.
– The Leader of the Opposition (Mr. Fadden) has said. that, the proposed tax is an extra imposition. That is quite true; the very name of the bill indicates ‘that. As the honorable gentleman, has confirmed the principle of the bill, I suggest, without, wishing to be discourteous, that honorable members agree now to the second reading, so that the bill may proceed at once into committee, where we may deal with the amendments which the honorable gentleman has foreshadowed. That is when, the test will bc applied.
– Will the Minister refer the proposed amendments’ to a committee, as was done with the income tax proposals?
– No. The Government intends to continue- with this measure as it stands. I do not dispute the truth of much that the Leader of the Opposition lias said. The Government’s policy in. this matter was laid down by the Treasurer (Mr. Chifley) in his secondreading speech. Therefore, I shall not dilate upon it, and I ask that the second reading bo agreed to so that wc may proceed to consideration of the proposed amendments relating to the fixation of an allowable profit of 6 per cent., and the operation of the rates of tax. The Leader of the Opposition said that there is no such tiling as a big company.
– The Minister will not agree with that. ‘
– I cannot. Everybody knows that there arc big monopolistic companies in Australia. I agree that large numbers of people hold a few shares each in these concerns, but; I say to the honorable gentleman that, no matter how much money he could command, he could not. to-day purchase a controlling interest in the Broken Hill Proprietary Company Limited, any of (lie hanking institutions, the Colonial Sugar Refining Company Limited, or any other big concern. A few shares are made available to the public by these companies so that the purchasers will become interested in their “welfare, and in order that, whenever the Government asks them to contribute to the war effort, they will be able to talk about the rights of the small shareholder - the poor widows who have invested their all ! That, plea on behalf of the widows is as old as the companies themselves. They always make sure that certain interests 3 told a controlling share . of their capital, and this control is never relinquished. Therefore, it is wrong to say that there is no such thing as a. big company, in the sense of big vested interests, merely because a few people have small shareholdings. Wo all know that this war has been forced upon the democracies, and that we are fighting with a paramount objective - the preservation of our democratic institutions, our right to govern ourselves, and our right to free 730 War-line (Company) Tax [“REPRESENTATIVES.] Assessment Bill 19-11. speech. Honorable members opposite have said that the working man has much to lose. He can lose his freedom - a freedom which has often represented the right to go hungry. How much more these big companies have to lose! If bombs fall on this country they might, unfortunately, kill a few working men, and they might destroy some workers’ homes. But if they fall upon any of these big industrial concerns they will destroy them altogether. Therefore, the companies are liable to lose all oftheir great material wealth as well as their liberties and the other things for which we are fighting. Surely, therefore, this tax should be regarded as a reasonable insurance premium against destruction. I shall consider myself to be fortunate if, when the war is ended, I have as much as I had when it began. If these big companies still have their profit-making machinery, intact and ready to continue earning profits for them, they will be fortunate indeed. The Government looks at this matter in that light. This bill is only a war-time measure, and it is not being used as an indirect means of implementing Labour’s economic policy. I refute any suggestion to the contrary. When this Government, is ready to implement its economic policy it will not proceed to do so by any backdoor methods. This bill is designed solely for the purpose of aiding the war effort, and when the war isoveritsprovisions will be discontinued. If it be still the wish of the people that this Government should continue in power, we shall then consider means of implementing our economic policy. I repudiate any suggestion that there is implicit in this measure anything more than the Government has indicated. It is a means of raising revenue so that we may help to achieve victory for the democracies and peace for the world.
.The Leader of. the Opposition . (Mr. Fadden). has made a complete statement of the probable effects of this bill, and I do not wish to elaborate it. The Minister has said that the Opposition “agrees with the bill in principle. That is true, and I remind the Minister that the Opposition, when it occupied the Government benches last year introduced this form of tax. My objection is not to the principle of special war-time taxation of companies, but to the action of the Government in having gone too far this year in that direction. About this time last year a representative committee of honorable members considered the Wartime (Company) Tax Assessment Bill that the Government of the day had introduced and recommended that the tax shouldbegin on profits in excess of 8 per cent.and rise, on a graduated scale, as increased profits were shown. The committee considered that that was a fair vote, having regard to the obligations of companies in respect to the additional flat rate of tax which they had to pay, to other difficulties which confronted the company system in the meeting of liabilities, and to the fact that there was introduced last year a new principle in the removal of the rebate in respect of the taxation of dividends on which companies had already paid tax. In thelight of all these circumstances, I contend that the decision of the Government to accept the recommendation of the committee was fair and reasonable.
– Have conditions not changed in the interim?
– They have. No one expects that in the course of such a war as this is, taxes will be reduced. Rising war costs must impose an additional burden on the community year by year, and everybody will be required in some way or other to share the load. In regard to the war-time profits tax, however, the Government has gone too far. Taking his cue from the Leader of the Opposition (Mr. Fadden), the Minister Assisting the Treasurer (Mr. Lazzarini) has said that the provision of the bill in relation to the starting point of the tax could be considered at the committee stage. I ask, however, that the Government review this point before the bill reaches . that stage, with the object of itself introducing an amendment to provide that the- tax shall begin, not at 4 per cent. as is now proposed, but at 6 per cent., as against 8 per cent. at present. If the 6 per cent. starting point be adopted, the Government will avoid shock conditions on the company system. To drop the starting point from . 8 per cent. to 4 per cent. in one year is too severe. I agree with the
Minister that not any of us can tell what is ahead. It maybe that before the war ends companies and individuals alike will have to pool everything in order to ensure victory. But I ask the Government not to move too quickly in relation to this particular tax, for that would impose extreme hardship upon the industrial structure on which the Government and the country greatly depends. A reduction of the starting point of this tax to 6 per cent. as against the 4 per cent. now proposed would avoid unfortunate reactions.
I am prompted by the remarks of the Minister Assisting the Treasurer to make two or three other observations on the measure, although I do not desire to repeat points made by the Leader of the Opposition. The honorable gentleman stated that this was a wartime measure. I agree with him, but unfortunately the bill does not include a provision to the effect that this taxation will automatically cease to apply six months after the conclusion of the war. Such a provision should have been included in the bill introduced last year. The legislation providing for war-time profits taxation during the last war contained such a provision. I feel confident that I am correct, when I say that similar legislation passed in Great Britain and in other dominions and countries during this war includes a section which provides that such taxes shall automatically cease six months after the conclusion of the war. I raised this point last year, and I know that the previous Government intended to introduce an amendment of that nature, but the step was not taken at the time. I consider that such an amendment should be inserted in this bill. Unless that course be taken specific legislation will be required to repeal the measure after the war. I appeal to the Government to introduce an amendment to cover this point.
The introduction of the bill also serves to bring into relief the need for a far greater measure of uniformity in taxation throughout the Commonwealth. Companies are taxed in varying ways and at varying rates by Commonwealth and State Governments, and that is not a healthy condition calculated to improve and expand the industrial activities upon which the prosperity of the nation so greatly depends. New steps are being taken continually by Commonwealth and State Governments in relation to company taxation and also, for that matter, in relation to the taxation of individuals, and so long as this state of affairs continues, confusion and trouble will be experienced in financial circles. I call to mind the conferences of Commonwealth and State representatives held in the two or three years preceding 1936, and culminating in a conference lipid in this chamber in that year. The object of those conferences was to secure the greatest possible measure of uniformity in taxation by means of mutual agreement, and although complete success was not achieved, a greater measure of uniformity was introduced into taxation procedure in Australia at that time than had ever previously been known. I remember sitting at this table at the final conference in 1936 and listening to the representative of the Commonwealth Government who was in the chair saying, in effect, that now that something approaching uniformity had been achieved, it was to be hoped that all future Commonwealth and State Governments would agree to confer before effecting amendments to their taxation laws.He added that if that were done further troubles would be avoided. I regret that the spirit of the 1936 conference has been forgotten in the last five years. In my view there will be no hope for stability in the finances of industry as they are affected by taxation until further definite steps be taken with the object of arriving, ultimately, at the unification of the taxation systems of the Commonwealth. The introduction of this bill serves to emphasize the need for such action. Although it is proposed that: this tax shall begin when profits reach 4 per cent., I remind honorable gentlemen that the capacity of companies throughout Australia to pay such a tax varies greatly. The capacity of companies in some States is greater than the capacity of companies in other States, and wo ought to do our best to remedy this unsatisfactory state of affairs.
If the Government were to agree to reduce the starting point of the tax to6 per cent. instead of 4 per cent. as is now proposed, approximately £2,250,000 of revenue might be lost, but I do not consider that the whole of that amount would be lost, for the companies would have a greater amount of money to ‘distribute in profits and the Government would reap some benefit from taxes . on the additional income people would derive from that source. Al any companies are carrying heavy financial obligations and are using profits to reduce their liabilities. It must be remembered that the companies arc an integral part of the developmental system of this country, and I urge the Government not to impose harsh and undue burdens upon them by calling upon them to pay a war-time profits tax, which is beyond their capacity at this stage.
.- Like other honorable members of the Opposition I realize that in war-time we all must help to pass most of the legislation now before us. Nevertheless, the proposals of this bill are so severe and dangerous that we have been flooded with protests against, certain of its provisions, nol; only from companies, taxpayers’ associations, and comparatively well-to-do people, but also from small shareholders and people in poorer circumstances. We therefore consider that, an obligation rests upon us - in fact it is our duty - to issuesome warnings and to. seek some amendments of the bill. The conditions which the Government, has laid down are too onerous, and we ask for their modification. The tax should start when profits reach 6 per cent, as against the S per cent, now operating. The Government’s proposal to make tlie starting point 4 per cent, is too severe.
We must remember three things in connexion with this measure. The first is that the proposed starting point of the tax, 4 per cent., is extremely low and will have harsh effects. The Leader of the Opposition (Mr. Fadden) has stated that the corresponding tax in Germany begins at 6 per cent. The Treasurer (Mr. Chifley) has therefore out-Hitlered Hitler in this respect. Secondly, the provision that the tax shall start at 4 per cent, makes no proper allowance for the varying degrees of risk which companies carry. It should be realized that capital will not be attracted to company investment unless some margin is allowed for risk. Then again, many companies have made legal contracts to pay debenture interest at 4 per cent., and many other companies have contracted to pay preference share dividends at 5 per cent., 6 per cent., and even up to 8 per cent. Admittedly provision is made for companies to throw a part of the burden of this taxation on to the preference shareholders, but the companies themselves are obliged to accept the onus to do so. Preference shareholders, like other sections of the community, are facing increases of the cost of living which already amount to 10 per cent. Many of these shareholders bought their shares at a high premium, and, not unnaturally, they may protest against, having to pay part of the tax which is imposed upon companies under the war-time company tax legislation, and litigation may result.
Such a heavy war-time profits tax’ is opposed to all sound principles of economics. The evidence submitted to the Joint Committee on Profits indicated that it would be better and sounder, and also more profitable to the Government, to control prices and to oblige companies to distribute their profits, than to impose an unduly heavy war-time profits tax. If companies by the adoption of efficient methods are able to declare reasonable dividends, the Government will be able to skim much more cream off the financial milk than it will be able to skim by penalizing companies in this drastic way. It would be much fairer to obtain revenue through the normal income tax channels than through this channel. One feels disposed to ask whether, by the adoption of this method, the Government will not lose on the roundabouts what it will make on the swings. It has been stated that an additional £9,250,000 will be obtained from the war-time profits tax in a full financial year under the new conditions, and from the increase of the ordinary company tax. In other words, it is proposed to take 44 per cent, of the income of companies in Commonwealth and State taxes. In addition, the Commonwealth is expecting to collect an additional £6,000,000 in income tax from persons in the higher income groups. It will be found, however, that the Government cannot have it both ways. Having killed the goose that lays the golden eggs it cannot count upon an increase in the production of such eggs. The withdrawal of £43,500,000 from company profits by taxation will leave the companies with only £54,500,000, from which must come dividends and also money needed for the expansion of our war industries, and the reserves that will be so important in the difficult period of reconstruction after the war. The Government is expecting to receive a. good deal more revenue from the income tax, but it must not bc forgotten that if all of the proposals of this budget be agreed to, the unfortunate shareholders of companies will be called upon to pay tax in at least six different ways, namely -
State company tax;
State income tax;
Commonwealth company tax;
Commonwealth war-time profits tax;
Commonwealth income tax; and
This last impost of course will fall only upon individual shareholders in any marked way if the companies in which they are interested are large land-holders. In expressing his appreciation of the response made to the recent loan appeals, the Treasurer acknowledged that strong support had been given to the loan by the large financial institutions, the big commercial companies, and also by large cash subscribers. We all are glad that the Government, has secured £34,000,000 of new money for Avar purposes. I congratulate the Prime Minister, the Treasurer, and also the Leader of the Opposition on the strong appeals they made to the public to subscribe to the loan. Yet, it cannot be overlooked that the Government will still require to raise £103,000,000 by voluntary effort, in the next seven months, in order to bridge the gap that, remains between estimated expenditure and revenue. Taxation of the kind that, Ave are now considering will undoubtedly impair the success of voluntary appeals.
In a recent speech the Minister for War Organization of Industry (Mr. Dedman) indicated, if I understood him aright when he was theorizing about Labour economics, that a number of the new sales tax increases had been deliberately designed to fall upon distributors rather than upon consumers. If that is the case, there is likely to be a further reduction of the incomes of distributing companies. Therefore, the Government estimate of the amount it will receive from company taxation may prove to be too optimistic. It is proposed that more than £3,000,000 shall’ be obtained from the increase of the sales tax. The wartime profits tax may have serious results in that connexion. Experts on taxation have expressed the fear that this tax may cripple industry and prevent any expansion of our Avar effort. I call to mind that Great Britain has already found that a similar tax had such seriously crippling results on the Avar effort that the tax had to be reduced. In Australia, however. the burden of the tax is being increased. This measure provides for probably the heaviest tax of this description in the world. At least, the tax is much heavier than Hitler considered he could impose upon German industry. One of the worst features of the tax will be its adverse effect upon impecunious people whom the Labour party claims to protect.
I do not desire to be unduly critical of the Minister assisting the Treasurer, but, in his remarks to-day he said that we should pass this bill quickly. He then well t on. to speak about the desirability of freedom of speech. He made a heavy attack on small shareholders; yet, last night, when honorable members on this side of the chamber dared to speak in opposition to the Government’s pension proposals, they were strongly condemned. Apparently the rights of pensioners and their, dependants may he debated at tremendous length, but argument in support of the case of small shareholders in companies must be silenced. Our remarks are resented and the Minister assisting the Treasurer thinks it. proper to bowl at us like a hyena. Honorable gentlemen opposite may say what they like in favour of the pensioners, but Ave may not say a word about the plight of small shareholders in companies.
A point I wish to make is that, if the dividends of small shareholders bo cut, in half as the result, of this taxation, such shareholders will suffer far greater hardship than will wealthier shareholders. All of us know of many (poor people who have invested their life’s savings in companies from which they derive an income of a few pounds a week. This taxation will impose very great suffering on that class, with the result that the list of pensioners will be enlarged and the financial burden on the State will be increased. I earnestly commend to the Government the claim of these small shareholders, and ask that they he treated comparably with the basic wage-earner. A former government, whose responsibility I did not share, abolished the principle of the dividend rebate. That occurred before ir became known that companies were to be compelled to .carry such a burden of taxation. In Great, Britain, a company shareholder with a small income can obtain a rebate of tax paid on his behalf. I request the Government to permit those whose total income is less than that of the basic wage-earner - say, below £200 a year - to submit claims for rebate of the tax paid on their behalf by companies. I? it should consider that that would be too costly or too generous, would it at least apply the principle in cases where the income has fallen to, say, £100 a year, or to the figure which would make the taxpayer eligible for a pension, which, with the pension, is £87 2s. a. year? Application of the principle would be a perfectly simple matter. The shareholder would lodge with the Taxation Department a rebate claim, stating his total income and the company dividend he had received. The department would estimate the amount of the rebate, and transmit it to the shareholder. That would be a tiny fraction of what is done under the British system. The Government may say that there would be complications, and that too much work would be thrown on the department. That is absolute rubbish. Before the Joint Committee on Profits, the question was raised of the very difficult and complicated notional distribution of undistributed profits by private companies, and the members of the committee were informed that the Taxation Department had not the slightest difficulty in the matter. If my proposal would increase tax receipts in the slightest degree, the department would not raise the least objection to it. The lot of persons on small fixed incomes threatens to become very serious. The cost of living has risen by 10 per cent., and may rise more steeply and rapidly under the policy of this Government. Persons on small fixed incomes have no protectors, such as the Arbitration Court and federal members, to make representations on their behalf, but they have foes, who are ignorant of the Australian company system. They have struggled, been thrifty, and saved during the whole of their working lives, in order to avoid what is now likely to happen, namely, reliance upon private or public charitable relief. The outlook of the British Government in respect of many of its taxation provisions is much wiser and more generous. For example, a married couple with an income of £500 a year, if one partner is 65 years of age, not only get the ordinary rebate of company tax to which I have referred, but in addition one-sixth of the company investment is free from taxation. The Treasurer (Mr. Chifley) has said that, if it were found, after considering the needs of the war, that any of these measures imposes severe injustice, it would be reviewed. I submit for reconsideration the c’ase of the shareholder with a very small income. I also emphasize that this taxation may cripple companies in the highly important postwar period. Evidence placed before the Joint Committee on Profits indicated that, whatever the present or any other Government might do, in the post-war period we may witness the fall of war prices and experience unavoidable difficulties. Australian ‘ business people are alarmed at the prospect of prices falling after the war. Price control may fail to sustain prices, and thus avoid great difficulties. The crippling of company reserves by undue taxation may prove very dangerous indeed in respect of both monetary requirements for legitimate war-time expenditure and the financial backing that will be needed in the postwar period. If the Government binds itself to further consideration of taxation measures, I hope that it will not overlook depreciation of buildings and plant. Some companies are installing machinery for the production of defence requirements, which will be totally useless for peace-time purposes. They have a claim for depreciation at a more rapid rate than is now allowed. At present, depreciation of war buildings is not allowed unless they are actually a part of the plant. One is sure that the Prime Minister (Mr. Curtin), the Treasurer (Mr.Chifley), and other responsible M inisters, will take a broad and fair view of this matter, and try, first, to preserve the goose for its future golden eggs, and secondly, to iron out some of the anomalies and injustices caused by this legislation. One is not quite so happy regarding the attitude of some other supporters of the Government to the companies affected by this tax. Some people in this country seem to misunderstand the nature and functions of public companies, and fail to realize the huge spread of ownership among hundreds of thousands of shareholders. For instance, the Broken Hill Proprietary Company Limited has 20,000 shareholders. Nor do these people understand that, for the most part, profits and dividends arc comparatively low. Commonwealth statistics show that the 628 public companiesin Australia made an average profit of6.8 per cent. on shareholders’ funds whilst for 1939 they made exactly the same amount, neither more nor less. This shows that all the talk about war profits is rubbish. As a matter of fact, four of the six groat groups of companies had Smaller profits in 1940. There are people in Australia who seem to be identical in their mental attitude with pirates and buccaneers such as Trench and Morgan. They think that the big companies are there to be plundered and wrecked. They say, in effect, “ There is a fine galleon. Let us attack and rob it, and make the passengers and, crew walk the plank, no matter whether they belong to our own nation, or whether they be rich or poor, or whether the cargo be urgently needed by our nation “. We have had to listen to almost continuous attacks on certain companies in Victoria and South Australia. The honorable member for Dalley (Mr. Rosevear) called South Australia a “wowser” State. It would have been better if he had called South Australia a war-conscious State, and if he had admitted that South Australian companies have obtained war orders because factories there are not so subject to stoppages and strikes. We have reason to fear for the future of these companies, in view of the bitter attack of the honorable member for Watson (Mr. Falstein) on the insurance companies, in particular those great repositories of the people’s savings, those co-operative and splendidly managed examples of national thrift.
– I was not referring to co-operative companies, but the proprietary companies with shareholders.
– The honorable member mentioned the Australian Mutual Provident Society, listening to the honorable member’s attack on the insurancecom- panies, I was reminded of the words of Shakespeare -
Asflies to wanton boys, they kill us for their sport.
I recognize that the Government must raise money for war purposes, and that the companies must make their greatest possible contribution, but they should not be asked to make an impossible contribution. Some of the Government’s proposals are so sweeping that, unless they be modified, they may lead to disorganization and socialism. I do not make this statement in any spirit of hostility to the Government. The position in the Pacific is far too serious for us to indulge in party tactics. I appreciate that the Government has had to bring in hastily prepared and partially considered legislation, and I ask Ministers to examine our proposed amendments, and the suggestions I have made for relieving the lot of the poor shareholders who suffer under company taxation. We ask the Government to consider the suggestions in the spirit in which they are offered.
.- I desire to remove a misapprehension under which some honorable members are labouring. The reduction of the standard* of profits from 8 per cent to 4 per cent. does not represent the degree of hardship, as compared with existing provisions, that may appear on the surface. I do notsay that the proposed company tax is not heavy; it is a very heavy tax, which only a war could justify, but we must remember that it is war time, and this is part of our war-time legislation. I listened to what tlie honorable .member for Robertson (Mr. Spooner) had to say in regard to limiting the duration of this legislation. That might be desirable, but it is not necessary, because it is always, within the power of Parliament to repeal any law. Moreover., the existence of an automatic provision of .the kind suggested might embarrass the Government after the war. The period of reconstruction after the war may be just as difficult as the war period itself.
The act passed last year provides that there should be levied a graduated tax, or a flat rate -tax of ls. in the £1, which- ever is the greater, on all profits over £5,000. I have here some figures which show how company incomes up to 8 per cent, of capital will be affected by this proposed . legislation-, as compared with how ‘they would . be affected under . the present act.
A company. with a capital of £150,000, which earns a profit of £9,000, represent- ing 6 per cent, on its capital, will pay £270 in war-time company tax. Under the existing act, -it would pay £279 in super-tax. A company with a capital of £200,000, which earns a profit of £12,000, or 6. per cent, on its capital, would pay £360- in war-time company tax, as against £456 in super-tax under the present legislation.- If the profit amounted to 7 per cent, on capital, this company would pay £720 in war-time company- tax, but only £574 in super-tax. A company with a capital of £300,000, which earned £18.000 profit, representing 6 per cent, on capital, would pay £540 in war-time company tax, as against £809 in super-tax. A company with a capital of £500,000, which earned £40,000 profit, or 8 per cent, on the capital, would pay £3,000 in war-time company tax, as against £2,103 in super-tax. A. company with a capital of £1,000,000, which earned £80,000 profit, c’r 8 per cent, on capital, would pay £6,000 in war-time company tax, as against £4,455 in super-tax; but if this company earned only 7 per cent., or a total profit of £70,000, it would pay only £3,600. in war-time company tax as compared with £3,86S in super-tax. In that case, of course, the existing law will prevail because, when the super-tax exceeds The war-time company tax, the super-tax is collected. On those figures running up to 8 per cent., there is not a great margin ot hardship. Beyond it, the tax becomes iri ore severe; but that is the purpose of the law. The Government does not contend that companies should be taxed out of existence, because that would kill the goose which lays the golden egg;. We agree that excessive taxation will dry up the reservoir, but there is no indication that this bill will do so, although I agree that the impost is heavy. Last year also it was heavy.
When discussing this tax twelve months ago we thought that 8 per cent. was. a reasonable figure at which to begin, but experience has shown that whereas the wa rr time company tax raised £1,000,000, the super tax returned substantially more than that figure. The- super tax- was an alternative proposal, which was designed to meet criticism’ that the war-time company tax did not touch big companies. The Government will not reach big, monopolistic companies on a 6 per cent-.- standard basis because for years they have piled up a considerable capital. Hot all of it is “ watered “ capital,, but some of - it is. I should not be so unfair’ as to “say that the practice of big companies in placing a portion of their substantial profits into reserves and extended capital constitutes “watering”; that occurs only when they write up valuations and issue shares on ‘ them. Many big companies have created a huge capital over many years. Because the capital has been extended, they show comparatively low percentages of profit,although in actual figures the profits- are huge. . On a 6 per cent, or 8 per cent, basis they would escape the tax; on a 4 per cent, basis their profits can be taxed to some degree. That is why the 4 per cent, basis has- been adopted. Another reason is that a higher rate of tax shall be applied to companies making excessive profits. But as I have shown, in cases where companies are making profits of 7 per cent, and 8 per cent, the wartime company tax, as proposed, does not exceed the . flat rate of super tax which was im’posed last year.
. The only Minister who, to date, has replied to the speech of the Leader of the. Opposition (Mr. Fadden) is’ the
Minister assisting the Treasurer (Mr. Lazzarini). The honorable gentleman made an extraordinary statement. He declared that as this measure is, in substance, only an affirmation of the legislation which the previous Government passed, there should be little debate upon it. He also stated: “I do not dispute what the Leader of the Opposition says”.
-I said that I did not dispute much of what the Leader of the Opposition said.
– Because honorable members on this side of the chamber accepted this principle of taxation last year, it does not necessarily follow that the bill is fair and equitable. The degree to which a principle isapplied is the real test, excessive application of it can lead to disaster. The Minister would not suggest that because honorable members have on previous occasions accepted the principle of direct and indirect taxation, imposts should be made so severe as to hound certain companies out of existence. An analysis of the speech of the Leaderof the Opposition reveals that he said some very hard things, not about the principle embodied in the bill, but about the degree of application. He prophesied that the measure, which was the beginning of socialization, would cause many companies to go into liquidation. . Most important of all, he forecast that whilst increased returns may be expected from the tax this year, proceeds from it in succeeding years ‘ will dwindle considerably. I should like to know whether the Minister agrees with those criticisms. The last one is of paramount importance, because if the measure will destroy a source of revenue the Government is acting very foolishly in proceeding with it. Does the Minister pin his faith to the only possible qualification - so remote that it may be dismissed at once - that the war may conclude before the end of the year, in which event the tax will be repealed ?
The right honorable member for Yarra (Mr. Scullin), who admitted that the tax was heavy, said that the profit rate of 8 per cent. which was allowable last year was unreasonably high during a period of war. I suggest that the proposed new rate of 4 per cent. is unreasonably low.
As finance for the prosecution of the war becomes more difficult to obtain, taxes may have to be increased severely, but not to the degree of aiming at companies such a crippling blow as to reduce their efficiency. Four or five years ago I suggested the principle underlying this tax. At that time my idea was to curb many of the companies which made in Australia exorbitant profits that were transferred overseas, admittedly toa friendly foreign nation. The proportion of those profits that found its way into Consolidated Revenue was too low, because some of the profits ranged from82 per cent, to “100 per cent, on the capital. As most of the ordinary shares were held in other countries, a large proportion of the profits went into the pockets of foreign shareholders. My purpose in making the suggestion was to curb such companies from exploiting the Australian people and to stabilize the prices of their products. If they had maintained their high rate of profit, my schemewould have gained for the Treasury a considerable portion of them. It would also have prevented companies from being controlled by a handful ofindividual’s. If profits had been curbed and the directors “decided to expand their operations, they would have been obliged to invite capital from other. persons and in that way, the prosperity of the industry would have been distributed among a number of Australians, instead of being limited to a few. That is ah excellent principle on which to work. The Government should not do anything to curb the formation of companies. At all times it should endeavour to make available to the public many sound avenues for the investment of their surplus funds, in order to keep the national income widely and fairly distributed.
After the outbreak of war, this principle was adopted, because the Government of the day considered that what was permissible under normal peace-time conditions could not be allowed in war-time. The course of procedure was based largely upon the lessons which we learnt from the last war, when exorbitant profits were undoubtedly made. In Great Britain and in Australia many men rose to wealth in a few years as the result of the enormous profits and turnover brought about by war conditions. Therefore, it was only proper that when war broke out in 1939, we should take action to guard against a repetition of such things. But there was this to be said on the credit side that, during the last war, the fact that profits were allowable provided an incentive to rapid and efficient production. One of the big driving forces behind the enormous output of British industries in 1914-1S was the fact that profits were involved in production. After all, we are only human, and we like to chase profits. The success of the munitions drive which Mr. Lloyd George originated in Great Britain waa due to the incentive that profit-making gave to manufacturers to speed up production. Whilst we wish to avoid a repetition of profit-making on that scale in this war, the present tendency is to swing to the other extreme. The Government,. in attempting to curb profits, may hamper efficiency and retard the driving force in industry which is so desirable for the war effort. The honorable member for Boothby (Dr. Price) pointed out that this tendency has already had an effect in Great Britain. War-time taxation, which presses so heavily on companies, has proved to be not a benefit but a disadvantage to the Exchequer. In the circumstances, the Commonwealth Government should be guided by this warning.
The only* objection which the Opposition has to the bill, is that the increase of tax is unreasonably heavy, in view of the fact that so many people, including members of Parliament, have not been called upon to pay additional direct taxation. If the action of the Government retards efficiency and curbs the driving force behind production, in the . war industries, it will do a grave’ disservice to the country. As war expenditure mounts and conditions become more onerous, taxation will have to be imposed, not only upon companies, but also upon many sections of the Australian public. Whether we like it or not we shall have to shoulder the burden. In my opinion, the Government is acting very foolishly in proceeding with the bill. As the Leader of the Opposition said, and the Minister assisting the Treasurer seemed to agree, the proceeds from the tax will increase this year, but the impost will dry up the reservoir in succeeding years. Surely no one expects the war to end this year and that the necessity for. this tax will disappear before Christmas!
As the honorable member for Boothby stated, additional provision should be made for the reserves and depreciation of companies that are engaged in the war effort. They have expended a considerable amount of capital on the erection of buildings and in obtaining plant which may be of little value to them in the postwar period. In ‘hat event, the proposals of the Government will be definitely penalizing them. They will be placed at a distinct disadvantage compared with companies which are not engaged in war production. Obviously, that is unjust. In addition, companies which are producing war supplies are operating their plant for 24 hours a day and for seven days a week. Consequently, the depreciation of their machinery is tremendous. For that reason, those companies should be placed in a different category from others which are not working at their peak. In conclusion, I suggest that the basis of 4 per cent, is unreasonably heavy and that the alternative suggested by the Leader of the Opposition is sensible and equitable,
Silting suspended from lB.Ji-5.lo 8.15 p.m.
. - I do not desire to take up the time of the House for any considerable time on this bill, but. I cannot let it pass without again expressing my opposition to the legislative measures of which this tax, with the land tax and the estate duty, are parts, and which are aimed at the richer classes. Measures of this kind are penal legislation against certain classes arid are extremely unfair. This bill will hit that class again, but, incidentally, it will also hit a large group of people who undoubtedly are not rich. The Treasurer (Mr. Chifley) in introducing this bill, almost with pleasure, indicated that the larger companies, a3 well as the more favoured classes 6f individuals, must be prepared to contribute to the point of sacrifice, and he appealed to the companies to accept loyally and uncomplainingly their quota of the national war effort. I have said before, and I say again, that, if contributions to that war effort were distributed over tlie whole of the nation, no one would or could properly complain, but it, is extremely unfair that certain groups, some of which may be rich and others of which may not be rich at all, should be savagely attacked whilst, other groups arc allowed to escape entirely or almost entirely. If that is the Treasurer’s idea of a fair contribution to the war effort, it is not mine, and, although no one would think of comparing the Treasurer to a butterfly, I cannot help thinking of Kipling’s lines -
Thu toad beneath the harrow knows
Exactly where each tooth-point goes;
The butterfly upon thu road.
Preaches contentment to that toad.
I quote that simply to show that it is very easy for anyone, who is not himself paying a fair share of taxation, to say to others, who are paying very heavy taxes, that they should loyally and uncomplainingly accept their part of the war effort. Why should a large company be regarded as an accumulation of rich men? That is very far from being true. Statistics have been obtained of a number of large companies, and they show that the average holding of contributors is perhaps about 300 shares to each individual. The company system has grown tremendously in recent years. Why has it grown? Has it grown because people with a little money want to invest it with the money of those who have large amounts? I do not think so. It has grown because those who control these great companies are men who have been selected owing to their business acumen, judgment and integrity, and because peop’e are prepared to follow their lead! I myself, if I had money to invest in a company, should want to know, not so much the details of the company’s finances, but who were the directors, and whether they were men of good judgment and probity. That is what the general public follows, and that is why those companies become stronger and stronger as time goes on. I emphasize, as the honorable member for Boothby (Dr. Price) and other honorable members have emphasized, that a great many people in a small way, people with a few hundred pounds or even a few thousand pounds, look around to see what they shall do with their money. They make inquiries and learn that such and such a company is a good safe investment, from which they will receive a higher return than that which they would get from gilt-edged securities. They also follow general confidence. Many of the investors in large companies are people in or near to the lowest groups of incomes. Those are the people who, in addition to others, are, under this legislation, to be taxed to an entirely undue and unreasonable extent. It will be grossly unfair if nothing is done on the lines suggested by the honorable member for Boothby to ensure that they shall receive a rebate of their tax if they are not up to the taxable standard. That would be more equitable than to bring them in on the high standard, as if they were people of great wealth. That is absolutely unjustifiable, except on the excuse that, if the big fish are to be caught, some little fish must also be netted. Why should the little fish in one group be caught and the little fish 4in another group escape?
My attention has been called to the relative rights of the ordinary shareholder and tlie preferential shareholder. That was dealt with to some degree in the act of last year, but, of course, the additional imposition this year will make the position much more acute, as between the different shareholders in the same company. As anybody can see quite well, there is bound to be a difficulty between these members if the matter be left as it is at present for the directors to determine. If the number of preferential shareholders be high in relation to the ordinary shareholders - and the’ same will be the case where borrowed capital is used, and the proportion is high - the bulk of the load will fall on the ordinary shareholders. Is it not the intention that shareholders of both classes should equally bear the war tax or are the ordinary shareholders to be singled out for specially heavy taxation ? There is something to be said for both sides on that. The ordinary shareholder will naturally say that a war tax -should be equally borne by shareholders of all kinds, but the preferential shareholder is bound to say, “I lent my money on the basis that I was to get a preferential dividend, a fixed dividend taking precedence over everything else, and that I should have “.
The Government should lay it down definitely as to how profits are to be distributed. The board of directors should not be -placed in the awkward position of having to decide as between one set of shareholders and another set. That is the test. Is this tax intended to hit all shareholders alike, or is it intended that the ordinary shareholder should be penalized, if necessary to the point of receiving no dividend at all, whilst the preferential shareholder is left in a much more favorable position? Section 35 of the 1040 act leaves the decision as to the distribution of profits in the hands of the directors, but I think that that should be resolved more clearly by the Government directing a proper distribution. Needless to say, the present distribution does not give satisfaction to both sides ; it will certainly give less satisfaction in the future. This bill, even more than the other bills, seems to me to be one which will not. succeed in its objective. It adds to the load to be borne by a, few people, and it* will depress unduly a lot of small people. The bill is sufficiently important for the Minister assisting the Treasurer to have replied to the points advanced by the Leader of the Opposition (Mr. Fadden), to answer whom the Minister was presumably put up. The whole of his argument was to the effect that the sooner the bill was taken into committee, the better it would be. I do not think that that is the case. At any rate, the real point which matters in this bill is not so much the detailed work of the committee, but that the general public - not the richer group, because there will be no need to tell them that they arc being hit hard in different ways at the same time, but the small people, whom the Labour party, ordinarily would claim to represent - should be made to understand that they will be treated with gross unfairness by this legislation.
.- I regret, that the Treasurer (Mr. Chifley) cannot see his way clear to refer this bill to a parliamentary committee in the same way- as the principal legislation was referred to a committee last year. A technical and involved measure of this kind cannot be effectively dealt with in general debate. We are forced to take a good .deal for granted as to the amount of revenue and as to those who will be called upon to contribute that revenue. It would have been very helpful to this House, if the Taxation Department had reported to Parliament on the results of the operations- of the principal act. This was an entirely new form of taxation, and the parliamentary committee which formulated the proposals in the first instance considered that the operation of the act should be subjected to a careful review prior to the introduction of the 1943-42 budget. Honorable members agreed at the time that the committee should bc asked to examine the measure again in the light of experience. Unfortunately, the committee has been given no opportunity to do this. The act contains a provision thai, the Commissioner of Taxation shall submit an. annual report on its operations-. ! know that he has not had time yet to prepare his annual report, but, in a matter of this kind, the House should have been furnished with a preliminary report. What business concern would effect any important change of policy without giving .serious attention to its effects ? The only indication of the effect of the tax that we have before us is the budget statement that, in the last financial year, £3,98.9,000 was derived from company taxation under this measure. Of this sum, £2,000,000, or more than one-half, was provided by the super tax of ls. in the £1 imposed under the Income Tax Act. I draw attention to the statement made by the Treasurer in his budget speech, that he would expect the tax, if it remained at the original rate, to produce not more than £1,000,000. I have made inquiries in an endeavour to ascertain the reason for this estimate, when the revenue from the same source last year was £1,9S9,000. I believe that the decrease would be due to the combined effect of the introduction of this tax and the increase of income tax rates generally. This effect should be taken into consideration.. The war-time company tax lias been much less productive than we were led to expect when the original bill was submitted to the House. We were then advised that the estimated revenue was approximately £5,000,000. It is true that, as the result of the recommendations of the committee which investigated the subject, the tax was not applied to private companies. Nevertheless, the actual revenue has been less than one-half of the original estimate. Any suggestion that the balance of the £5,000,000 would have been received if the tax had been applied to private companies would support my contention that the bill, as originally drafted, would have imposed an unfair burden upon the small companies.
I protest emphatically against the paucity of the data supplied to honorable members by the Government; it is not sufficient to enable us to deal satisfactorily with this important measure. I urge the Government to appoint a select committee to consider taxation measures, not only as they are introduced into the House, but also throughout the year, so that honorable members may obtain valuable information regarding their operation. Many honorable members are well qualified to assist the Parliament in this way. It is unfair to us that we should be obliged to give hasty consideration to measures of this kind, but it is more unfair to the taxpayers, who will be called upon to bear the increased burdens. In this bill we are called upon to reduce the rate of profit that is exempt from the war-time company tax from8 per cent. to 4 per cent., but we have no information regarding the probable effect of this proposal. I have made a brief examination of the a (fairs of some of the major companies, and from the information that I have gained I suggest that the Government will not obtain, by means of this tax, the amount of revenue that it has estimated.
– Then what is the honorable gentleman complaining about?
-I am concerned because the small companies, not the larger companies, will have to bear a heavy burden as the result of this imposition. The honorable member is apparently satisfied to rush important measures like this through Parliament without giving proper consideration to their probable effects.
Mr.Conelan. - What has the honorable gentleman clone about the matter?
– It was at my suggestion that the committee was appointed last year to investigate the new war-time proposals. 1 am not concerned so much about the companies with millions of pounds of capital, which are capable of looking after their own interests, as about the smaller companies with only a few hundred thousand pounds of capital. I have in mind particularly the small companies which have not yet had time to build up reserves, and the companies which, in recent years, have suffered severe reverses. According to the proposals of this bill, a company with a capital of £200,000 will be entitled to earn a profit of £8,000 before becoming subject to war-time company tax. A company with a capital of £200,000, which has been in existence for some time and has been able to build up reserves of, say, £200,000, will be able to make £16,000 profit before the tax is applied. The Government’s revenue and the national economy will suffer if we virtually ruin the small companies which have not been operating long enough to have accumulated sufficient reserves to enable them to meet this tax, and also to guard against future financial reverses. I refer particularly to the position of a company which has had to write down its capital owing to losses. A company with an original capital of £200,000, which has had to write off £100,000, will be allowed to make a profit of only 2 per cent. on the actual subscribed capital before it becomes subject to the war-time company tax. In estimating the capital of the company for the purpose of this measure, allowance should be made for capital written off owing to losses. An amendment which has beenmoved to the Income Tax Assessment Bill 1941 is intended to assure, in the case of distribution by a liquidator and the application of income tax to the profits arising from the liquidation, that liability for income tax shall not arise until the capital actually subscribed by shareholders has been replaced. The same principle should be applied in this measure.Companies which have had to write off a considerable amount of their capital are entitled to consideration of this sort. If no concession be granted to them, they will be placed in a very unfavorable position. I refer now to section 35 of the original act,which relates to the right of a company to deduct from the dividends of preference shareholders the amount of the war-time profits tax. The deduction is optional, and it places the directors of companies in a very embarrassing position. As I pointed out when I was dealing with the increased rates of income tax levied on companies, ordinary shareholders will be placed at a great disadvantage as compared with preference shareholders. The preference shareholders receive a set rate of dividend, and they have first claim upon the profits of the company. The company pays all of the heavy income tax for the preference shareholders, and distributes dividends to them before the ordinary shareholders receive anything. Very often, the preference shareholders dominate the policy of a company. The interests of the ordinary shareholders ought to be protected. In askingus to reduce the allowable margin of profit from8 per cent. to 4 per cent., the Government is asking us to take a. step in the dark. We have not sufficient information before us to allow us to decide the effect of this proposal. The Government, will be unwise if it allows taxation measures to be passed without making any attempt to investigate their effect. These measures, particularly those relating to income tax, were not of such great importance to the Commonwealth beforethe war as they are now. In peace-time, the Commonwealth levied about £12,000,000 annually in taxes. Since the outbreak of war, the Commonwealth has increased direct taxation by over 500 per cent. Therefore, it is the duty of this House to give more than passing consideration to taxation proposals. The Minister assisting the Treasurer (Mr. Lazzarini) appealed to us this (morning to pass this bill hastily through She House. I protest against this attitude, and against the lack of information available to us owing to the absence of a report from the Commissioner of Taxation on the operations of the wartime company tax to date.
– I shall not traverse at great length the ground which has been covered effectively by other members of the Opposition who have advanced, with great cogency and conviction, some powerful arguments against the provisions of this bill. We all wel come the statement by the Minister assisting the Treasurer (Mr. Lazzarini) that this bill does not represent an attempt by the Government to introduce, in an underhand way, the traditional economic policy of the Labour party. He saidthat we should remember that this is a war-time measure. We welcome that statement, for I believe that, an analysis of the operations of this legislation will show that it is one of the unsoundest measures in our statute law.
– The original bill was introduced by the Government of which the honorable gentleman was a. member.
– It is true that on account of the desperate urgency of the war situation, and the need to find money for war purposes, the Government of which I was a member introduced the principles underlying this measure; but, we did not apply them in the savage way in which this Government is trying to apply them. The difference in degree in the application of these principles by this Government and in the application by the previous Government is very great. Even though the previousGovernment introduced the original bill it must be admitted that the law does not bear equitably upon the community. All shareholders in companies are not wealthy. I noticed in the press a few days ago a statement by the chairman of a public company to the effect that the average holdings in his company wore between 200 and 300 shares, and that at least half of the shareholders were women. We know that, many elderly women, and many widows, hold shares in companies. The holdings of the widows come to them, in the great majority of instances, through legacies from their husbands. People of the class I have in mind depend largely upon the income they draw from their small holdings in companies. Although, of course, it is not true that all shareholders fall withinthe class that I have mentioned, my statement is true of a. sufficient number of people to give point to my submission, that measures like the one we are now considering may impose . burdens on individuals beyond their capacity to carry. A very serious objection to the operation of this tax under the conditions now proposed is that it will inevitably stifle industrial development, for it will discourage investment in projects which, though promising high profits, are nevertheless likely to be of lasting benefit to the Commonwealth, and are not likely to be promoted except by the prospect of substantial profits. No doubt other honorable members have had painful experiences similar to the one of my own, which’ I shall now relate. I was induced by the promise of good profits to invest £100 in a public company about to be floated to establish a motor car parking station. This was not a flybynight proposition. The company was designed to serve a useful public end. Many other small investors also put money into it. When petrol rationing was applied, and the number of cars on the road became greatly reduced, the prospects of the company entirely disappeared. Any honorable member opposite who desires to glory in participation in a slightly capitalistic organization may buy my 100 fully paid-up £1 shares for1s. a share.
– What rate of profit was offered?
– No dividends have been declared by the company, and no profits are in sight. We hear something, at times, about beginner’s luck. My luck was decidedly out. Investors must have some prospect of obtaining reasonable dividends in order to offset experiences of the kind to which I have referred. Those who float companies must be able to offer the inducement of a return somewhat above the returns available from established companies in order to obtain money to develop their projects. Unless such prospects are in view investors will, naturally, put their money into wellfounded concerns and approved industrial securities. I consider that the operation of the war-time profits tax under the conditions now proposed will definitely hinder ordinary industrial development. This may be desirable to some degree in war-time in order that war industries may be supported, but it cannot be regarded as a satisfactory situation if carried to an extreme.
I support the suggestion of the honorable member for Lilley that a committee of honorable members should be appointed to make a thorough investi gation of the effects of the war-time profits tax legislation, and also to report upon the probable results of the variations now proposed. If such a committee cannot be appointed immediately I trust that it will be appointed in time to make a useful report to the House, before the beginning of the next financial year.
– Igive the honorable gentleman an assurance that the suggestion will receive the most sympathetic consideration. I had. hoped that such a committee would have been established last year. The honorable member is no doubt aware that representatives were actually named by the then Opposition to sit on such a committee. It was subsequently discovered, however, that the activities of the proposed committee were to be restricted to an examination of the sales tax measures of the last Government. I had hoped that it would be empowered to make a general review of the Government’s taxation arrangements.
– I welcome the assurance of the Prime Minister, but on account of the radical alteration being made in the incidence of the war-time profits tax legislation I am sorry that a committee cannot be set up immediately.
I do not need to remind honorable members that companies are to-day shouldering very heavy burdens. The pay-roll tax, a comparatively new imposition, has increased their difficulties and adversely affected their financial affairs. The point raised by the honorable member for Lilley respecting holders of preference and ordinary shares also requires careful consideration. So long as the war-time profits tax remained inoperative in respect of profits below 8 per cent., preference shareholders were not seriously affected, but now that the tax is to apply to profits in excess of 4 per cent. practically every preference shareholder in Australia is likely to feel the effect of it in someway. I realize that under section 35 of the principal act,” company directors are given a permissive authority to pass a part of the tax on to preference shareholders, but I suggest that the practical, if not the legal, difficulties of applying that section are so considerable as to embarrass greatly any directors who wish to take advantage of it. It has been suggested to me that the legal difficulties, possibly accentuated by conditions in the memoranda and articles of association of companies would be so great in certain cases as to make it most unwise for directors to attempt to apply the provisions of section 35. The rights of ordinary shareholders in this matter have also to be considered, for, in many instances, they invested their money in companies which they knew would have to pass through a period of low returns. As they took the risk of failure such shareholders may justly feel aggrieved if when the enterprises in which they invested have developed sufficiently to justify the payment of more substantial dividends, they are to be called upon to make a sacrifice in the interests of preference shareholders who took none of the risks. I invite the Government to consider whether it cannot amend the law in order to limit the hardships that seem likely to occur in these connexions.
. -Even if I desired to discuss this bill at length, it would bo unnecessary for me to do so, because honorable members who have preceded me have explained very convincingly some of the inequities which are obvious in it. I suppose that, in our company law especially, inequities will always be found.
I have risen merely to support what has been suggested by the honorable member for Boothby (Dr. Price), argued very well by the honorable member for Wakefield (Mr. Duncan-Hughes), and referred to by the honorable member for Fawkner (Mr. Holt). There is one injustice which could easilybe remedied; it applies to the shareholder of a company whose sole income is the dividend that he derives from his investment. It may be less than one-half of the £200, which is the statutory exemption under the existing income tax law. I am acquainted with persons who have no other income. In one case, the total income last year was 32s. a week and this year it, will probably bo less. Because the dividend is taxed, the income of that person is reduced. Surely simple justice demands that a. person whose income is derived solely from dividends shall be exempt from tax to the same degree as are those who derive their income from personal exertion. A very simple amendment of the law would effect what every honorable member regards as desirable. If a committee were appointed to examine this measure, it would recommend something of that kind, whatever other alterations it might suggest. Exemption up to £200 would do simple justice, because it would be in conformity with the statutory exemption in relation to income derived from other sources. I appeal to the Government to consider the matter in the interests of men and women who have only small incomes. What ever other inequities might be left in the bill, this one at least should be withdrawn from it.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 ‘agreed to.
Clause 4 -
Section twenty of the principal act is amended by omitting the word “ eight “ and inserting in its stead the word” four “. Sectionproposed to be amended: - 20. Subjecttothisact thestatutory percentage shallbe eight percentum.
– I move -
That the word “ four “be omitted, with a view to insert in lieu thereof the word “six”.
The reasons for the amendment are well known to the committee, and I am sure that, in view of the arguments advanced to-day, the Minister Assisting the Treasurer (Mr. Lazzarini) will have no hesitation in accepting it, in the interests of a balanced and safe economy.
– For the reasons which the Treasurer (Mr. Chifley) and I gave at the second-reading stage of the bill, and because there would be loss of revenue which an Opposition member has admitted would amount to £2,000,000–
– Loss of revenue is not a logical reason.
– The honorable gentleman has consistently pointed out how necessary it is to raise revenue for war purposes. The Government has been reluctantly compelled to adopt this very definite means of raising revenue, purely as a war-time measure. It is determined to adhere to the figure mentioned in the bill, in order to obtain from this source the amount which it is expected to provide. Consequently, the raising of the percentage from 4 per cent, to 6 per cent, cannot be considered.
.- The committee is entitled to a better explanation, than has been made by the Minister assisting the Treasurer (Mr. Lazzarini). Only a little time ago, the honorable gentleman agreed, in the first instance, to what the Leader of the Opposition (Mr. Fadden) had said.
– That is not true.
– By interjection, the honorable gentleman expressed agreement with, much of what the Leader of the Opposition had said.
– I often agree with much of what he says; but that does not apply to this matter.
– The Leader of the Opposition made some very severe comments on the bill. One of his statements was that this savage tax would eventually dry up revenue from this source; in the succeeding year, not only would a savage blow be aimed at companies, but also the Commonwealth would be deliberately denied a legitimate source of revenue. That is an argument to which, as yet, I have not heard a reply. The committee ought to be given a wellconsidered explanation. I invite the attention of honorable members to the argument advanced by the right honorable member for Yarra (Mr. Scullin), who placed before the committee figures which showed that in the early stages this proposal will result in. a loss of revenue.
– Oh no; “whichever is the greater “ applies.
– I do not believe that the Minister took any notice of what was said by tlie right honorable member for Yarra. The right honorable gentleman stated that, in respect of profits rising from 6 per cent, to S- per cent, a loss of revenue would occur, but that above that point there would bc a gain to revenue. I charge the Government -with not having given to its taxation proposals the consideration which they warrant. It lias not considered either the immediate or the ultimate effect of such savage legislation, nor has it put forward a logical case in answer to the arguments of the Leader of the Opposition or even of the right honorable member for Yarra - a gentleman whom all hold in high regard. Simply casting aside all arguments, and saying, “ We are going through with the bill ‘ willy-nilly 5 must reflect very seriously on the prestige of the Government.
– I agree with the remarks of the honorable member for Deakin.
– “We thought that the honorable member would have concentrated on war issues.
– That is what I am doing. If the Government were to concentrate on the war issue, even if it did not touch it quite so closely as I should like, it would seek revenue from many other sources before getting clown to a limit of 4 per cent, in this matter. If Ave compare the position of the investor in government securities with that of the man who takes the risk of, not only getting a mere 4 per cent., but also losing his capital in order to obtain an additional -J per cent., Ave shall see that there will shortly be no need for a Capital Issues Advisory Board to regulate the formation of new companies, should there be a. limit of 4 per cent, on the dividends that they can pay. A good deal of the enterprise of this community for many years, and to an increasing degree, has been carried on by companies. Doubtless, the honorable member for Ballarat (Mr. Pollard) knows a little about the cooperative side of company formation, and is quite iri sympathy with it. This hill is designed, not to obtain revenue, but to put. into force certain prejudices which are too prevalent on the other side of the chamber. ‘Certain honorable members seem to think that, the moment a company is formed, some grave act of aggression against the ‘body politic is committed. They assume, as a matter of course, that every shareholder is wealthy, and that every company formed, acts in its own interests and against the interests of the Commonwealth at large. Take, for example, the Broken Hill Proprietary Company Limited, in which I am not financially or politically interested, and which, so far as I know, has no interests in my electorate other than a limestone quarry. Ifit were not for big concerns of that sort, Australia would be to-day in a very bad way for munitions. The backbone, thebrain-power, the driving forceof the munitions production of Australia throughout this war have been providedby the Broken Hill Proprietary Company Limited. Yet, under this legislation, that company is to be limited to a dividendof 4 percent. There is no doubt thatthere are somewealthy personsinits list of shareholders; but many of the shareholders are not wealthy. Many personswhohave not an interest in the company wouldnot mind being even small shareholders . The honorable member for Herbert (Mr. Martens) has made an interjection which I could not catch. Let me come right home to him; If it were not for the operations of some of the bigsugar companies where wouldtheQueensland sugar industry be to-day?I invite the honorable member to rise in his place and say that that industry could have been better developed without the operations of certain companies that’ are connected with it. He cannot return to Queensland and make that statement. This is an occasion on which partyfeeling should not be allowed to intrude. The commercial and industrial interests of Australia are at stake. The invested funds of thousands of persons are involved. There is no worthwhile margin between the man who has invested in gilt-edged securities, and whose investments are backed by the whole of the taxable resources of the Common wealth, and theperson who has taken the risk of not receiving any dividend and of losing the whole of his capital.
-Would that gentleman be correctly described as “ improvident “?
-If this legislation becontinued, there will be an increaseofthenumber of old-age gensioners ; the Governmentcan rest assured of that. Hundreds of persons who to-day areof receiving the pension are dependent for their existence on dividends. The receipt of thosedividends disqualifies them fromapplyingfor an old-age pension. The Government cannot have it both ways. If, bylegislation of this character, citizens are denied the right to earn income, thenincome will have to be found for them under the legislation passed last night. The Government could well afford to refer a bill of this description to a committee of both parties and, if necessary, of both Houses. No sooner was the Government in office than this proposal was produced to Parliament. In all the circumstances, no Treasurer could plead that he had thoroughly considered all of its implications.. The bill contains so many implications . which have not been clearly thought out that it should go for review to acommi ttee of both parties. I . put that forward without any desire to embarrass the Treasurer or the Government. If the bill be passed in its present form, certain sources of re venue will dry up, and certain desirable activities will be curtailed.. Moreover, the bill will not produce those benefits which are expected, either to the revenue or to the community in general.
.- If the Government accepts this amendment, the revenue will be worse off by £2,250,000 a year, but the Treasurer (Mr. Chifley) will still have the receipts from the1s. in the £1 super tax. As a matter of fact, last year the super tax produced more than thewar-time profits tax. We are entitled to know what would be the effect of altering the present base rate of 8 per cent. to 6 per cent. or to 4 per cent., bearing in mind the application of the1s. in the £1 super tax.I again appeal to the Treasurer to grant my request that this technical and involved measure be submitted for examination by an all-party parliamentary committee.
– It is the same principle as was adopted by the honorable member’s own’ Government.
-I submit that the very kernel of the measure has been varied. We should be pursuing a dangerous course in passing legislation of this kind without first obtaining data showing the effect, hot only on - the revenue, but also on the taxpayer.
.- The right honorable member for Yarra (Mr. Scullin) purported to show that, in regard to certain companies andincomes, the effect of reducing the base rate from 8 per cent. to 4 per cent. would be that those companies would actually pay less tax next year than they did this year, whilst in the ease of other companies, comparatively little more tax would be paid. The right honorable member’s argument was sound enough as it applied to companies which make only a low rateof profit. In other words, companies which make little profit pay little in taxes, but the cases cited do not show the general effect of this proposal upon company taxation. Once the rate of profit passes 7 per cent. the return from increased war-time tax begins rapidly to exceed what the return would be from the super tax.
– I said that.
– Most of those companies which are the backbone of Australian industry are making profits considerably greater than8 per cent. on their capital. Indeed, they must do so if they are to provide for taxation and dividends, and establish reserves. If the nation’s war effort were dependent on companies which earnedonly 6, 7 or8 per cent., we should not be able to get very far.
– Even on watered stock ?
-I am referring to real capital. When the base rate is reduced from8 per cent . to 4 per cent., a greatly increased obligation is imposed upon the average company. I should like theright honorable member for Yarra to cite figures to show the increased liability of companies under the war-time company tax, bearing in mind the flat rate tax imposed in anotherCommonwealthmeasure, and also the flat rate tax in force under State legislation in New South Wales. Many companies have very heavy obligations in the shape of overdrafts andmortgages, and they must be met, in addition to the provision of finance for ordinary operations. I believe that the Government is doing wrong in reducing the base rate to 4 per cent. It should have been satisfied, for this year at any rate, to reduce it to 6 per cent., and it could be reviewed later in the light of experience. The right honorable gentleman developed a case to prove that certain large companies would be subject to very little taxation if the base rate were left at8 per cent., because their earnings were not high in relation to capital. He said that, unless the rate was reduced to 4 per cent., they would practically escape the tax. I cannot say whether that is true or not, but’ if it is, the right honorable gentleman is providing a net which, while it may catch some large companies, will at the same time, entangle a great many other companies which should be encouraged. I have observed this tendency in a good deal of recent legislation. In order to get at one man or company, we bring in a measure that does irreparable harm to a. great many others. I agree, however, that companies and individuals must be prepared to pay. This is no time to talk of reducing taxation, or of evading the maximum payment. Let us recollect the revenue that is necessary, but let us do it without creating anomalies. The honorable member for Lilley said that the Government would lose £2,225,000 if, instead of fixing the base rate at 4 per cent., we fixed it at 6 per cent., but, on the other hand, the Treasurer would collect an increased amount from the flat rate of1s. in the £1, and he expressed the opinion that, actually, the revenue would not suffer very much. I have not gone into the figures, but I am inclined to think that he is not far wrong. The very illustrations furnished by- the right honorable member for Yarra support the contention. When the rate of profit does not exceed6 or 7 per cent., the return under either system of taxation is much the same, but when the base rate is reduced below 8 per cent., a greatly increased liability is imposed on many companies whose profits are normal at 12 per cent. or 14 per cent., out of which they must provide for taxation, dividends and reserves. I urge the Government, even at this stage, to reconsider the matter in the light of what has been said.
. -I rise to correct some misunderstandings, which were almost equivalent to misrepresentation. The honorable member for Deakin (Mr. Hutchinson) stated that I admitted that the Government would lose revenue by the adoption of this tax.
-In the early stages.
– That was not correct. Under the present law, the war-time company tax or the super tax of1s. in the £1, whichever be the higher, operates. How, then, can we lose?
– Will the right honorable gentleman repeat the figures that he cited earlier?
– Yes, I shall give an illustration. A company with a capital of £300,000 makes a profit of £18,000, equivalent to 6 per cent.Under this legislation, it would be called upon to pay £540; under the super tax it would pay £809. In that event, the Taxation Department would collect, hot the war-time company tax, but the super tax. The honorable member for Robertson (Mr. Spooner) has a considerable knowledge of last year’s act. because he was a member of the committee which examined the proposals and played a valuable and important part in thediscussions. In my opinion, however, he missed one point when making his speech. Until the figure of 7 per cent, or8 per cent. is reached, the tax imposed on a company does not alter. We derive the revenue from companies which return more than8 per cent. I do not agree with the honorable member for Robertson that 12 per cent. and 14 per cent. is a normal profit.
– Particularly in war time.
– It is abormal and excessive. In normal times, a profit of 8 per cent. is very comfortable; but in war time I regard it as being high.
– We suggest the figure of 6 per cent.
– I remind the honorable member that a company which makes a profit of 6 per cent. will pay no more tax than it did last year. That is the point. But by beginning at 4 per cent., we impose a. higher percentage of tax on the higher ranges of profit.
Mr.Hutchinson. - Could we alter the graduation?
– The honorable member talks continually on the assumption that the company which makes a profit of 4 per cent. or 5 per cent. will be hit hard by the bill. I emphasize that it will not pay one penny more than it did previously. All the illustrations which I have given show that on profits up to 6 per cent., 7 per cent. and in some cases 8 per cent., the tax will not increase.
Under this bill a company whose profit does not exceed 7 per cent. or 8 per cent. will pay no additional tax. But companies with profits exceeding 8 per cent. will pay more than they have paid under the existing legislation.
– Does the right honorable member remember saying that the object was to catch large companies which escaped last year?
– I shall deal with that matter in a. moment. I want the honorable member for Deakin to understand the position. I have not admitted any reduction of tax; I said that there is no increase up to a certain stage. Beyond that figure, there will be an increase. If the amendment be carried, the Government will lose £2,250,000 from the wartime company tax. That leeway will be partly offset by additional revenue from the super tax, but the net loss will total £1,500,000. It is true, as the honorable member for Lilley (Mr. Jolly) stated, that if the figure be not reduced to 4 per cent., the Treasury will obtain increased revenue from the super tax, but will obtain much less from the war-time company tax.
– Will the right honorable gentleman say that, in arriving at the figure of £1,500,000, he has taken into consideration the increase of tax upon individuals who receive dividends?
– No; this deals only with companies.
– If the Government leaves more money with the company, the shareholders will receive higher dividends, and will pay increased income tax.
– I concede that the more we take from the company the less there will be in dividends; but that is not the matter now under discussion. The point which the honorable member was making when I entered the chamber was that we would largely make up the difference by obtaining higher returns from the super tax. Whilst the loss would certainly not be so great as the gross figure, it would amount to £1,500,000.
The figures which I cited in my second-reading speech are interesting and convincing. I shall take another illustration. A company with a capital of £500,000 makes a profit of £40,000, equivalent to a profit of S per cent. Under the war-time company tax, it will pay £3,000; under the super tax, it would have paid last year £2,103. The difference is £S97. Is that an undue increase in war-time, considering the enormous expansion of our war expenditure?
The honorable member for Robertson stated that I said that we made a net to catch two or three big monopolistic companies, but in doing so, we should injure small companies with small profits. That is not the purpose of tlie legislation. I said, in passing, that everybody was disappointed with the result of the tax imposed last year. Only £1,000,000 was collected from the wartime company tax, which was based upon excessive profits. The reason is that we set the standard at too high afigure. I said at the time, and I repeat now, that I do not regard S per cent, as an unreasonable profit in normal times; but in war-time, it is more than a company should receive. Ry making 8 per cent, the starting point, we lost considerable .revenue. We did not impose war-time company tax on profits not exceeding 8 .per cent. We made the starting point so high that before we received tax of ls. in the £1, a company had to earn a profit of 12 per cent. That was not the proper way in which to get the money. The most effective method is to start at 4 per cent. But that does not mean that we shall increase the tax on companies which are making profits between 4 per cent, and 8 per cent. In point of fact, we do not. Last year, the flat rate of ls. in the £1 which was imposed on all companies, after a deduction of £5,000 had been allowed, represented a tax as high as, and in some cases higher than, the tax which we propose to pla.ee on companies with profits up to 7 per cent, and 8 per cent. But we shall not lose revenue thereby, because the higher of the two taxes will operate.
On big companies, the rate is not too low. Even if some small companies be caught in the net, they must show a profit of 8 per cent, and more before the bill will affect them. Last year, those small’ companies were subject to super tax. Even if they made only a very small profit, so long as it exceeded £5,000, they were subject to the tax. Regarding the application of the super tax, the deduction of £5,000 will still apply, so that small companies with a profit exceeding £5,000 will pay no more this year than they paid last year unless their profits exceed S per cent. The only point is that the Government has now fixed a lower standard. When more than a fair rate of profit is reached, higher rates of tax will apply. Incidentally, it is not 6 per cent, on the whole of the profit, but only 6 per cent, on the . amount by which the returns exceeds 4 per cent.; whereas the super tax is 5 per cent, on the whole of the profit exceeding £5,000. In those circumstances, I see no justification for complaint.
Where the aggregation of Federal and State taxes on any company, private or public, exceeds 20s. in the £1, the ceiling rate in all cases will be 18s. in the £1. The Government does not suggest that the tax is light. I agree that it is heavy, but it is required for the purpose of assisting to finance the war. The other taxation to which the honorable member for Robertson referred, increases the flat rate from 2s. to 3s., and that is a substantial rise. I understand that the New South Wales company tax has not. in actual fact, been increased although the rate appears to have risen from 2s. to 2s. 6d. in the £1. That is offset by the repeal of tlie unemployment relief .tax. This legislation, increases the tax on companies that are showing a comparatively high rate of profit.
– Whilst the right honorable member for Yarra (Air. .Scullin) has given an interesting explanation of the proposed war-time company tax. he has not overcome my objection to the fixation of 4 per cent, as the starting point. The essence of the remarks of the right honorable gentleman, expressed in fishing terms, is as follows: “There are a lot of sharks about and we want to catch them. They have three rows of pretty sharp teeth, and, in order to get them, we shall make our net so small as to catch every tommy rough in the sea.” The Opposition cannot accept that contention. My objection to the proposal is that we do not know what will happen next year when the income tax legislation and the company tax are reviewed. Then again, we cannot accept the basis of 4 per cent. as the starting point. The right honorable gentleman showed that under the Government’s proposals, companies will be no worse off, but we must anticipate developments in the future. If the objective is to catch the bigger companies and if, as the right honorable gentleman contended, certain companies will not be interfered with now, the obvious thing to . do is to fix a higher starting point,say, 6 per cent., and alter the incidence as the rate of profit increases. That is the honest and obvious course to take. The argument that we have to take in all of those little fellows in order to get the big fellows is absolutely wrong and cannot be justified. The Opposition should oppose it tooth and nail. If the Government would take the very sincere advice offered to it by the Opposition, it would set up a small committee to go into this measure, and I think that good would come out of it; we should by agreement, get something satisfactory to both sides. Now that the Prime Minister (Mr.Curtin) and the Treasurer (Mr. Chifley) are in the chamber, I repeat the request for the appointment of such a committee so as to clear up something which, to my mind, more than ever since the speech by the right honorable member for Yarra, who, by theway, is the only man on the Government side who has told us anything, is a definite injustice.
.- I am gladthat the right honorable member for Yarra (Mr. Scullin) has repeated some of thefigures which he gave in his second-reading speech, because I am reminded to pointtheir unreality. The right honorable gentleman cited a company with a capital of £300,000, earning a profit of £18,000. The shareholders in such a company might not allow it to continue trading for very long. The illustrations given by the right honorable gentleman are. artificial, because a company of the description cited would need to be making a profit of £40,000 or £50,000 a year in order to put by reserves and to pay dividends . The right honorable membershould quote the effect of the flat rate tax.
– The amount of £18,000 is the taxable profit remaining after deducting from the taxable income the Commonwealth income tax of 3s. in the £1. The supertax is calculated on the amount of the taxable income in excess of £5,000.
– The unreal company of the right honorable member for Yarra and the real company of the honorable member for Robertson (Mr. Spooner) are identical.
– No ; there are other taxes, such as the undistributed profits tax and the State income tax. The amount of £18,000 does not represent a normal earning of a company with £300,000 of capital. The figures in respect of revenue from the tax last year do not give the real position. The tax did not come into operation until December, and the staff to administer the tax was not provided until about February or March and assessments were not issued until May or June. A board of referees is still dealing with a number of appeals against assessments, and, in order to discover the amount yielded by the tax last year, one must first ascertain the amount of the assessments issued. That information is not available, but the information in our possession is sufficient to indicate that when the whole of the assessments have been met the revenue will be more like £3,000,000 or £4,000,000 than £1,000,000. Full consideration could not have been given to this matter when 4per cent. on capital was fixed as the profit above which the tax will operate. If the Government would accede to the Opposition’s request for the appointment of a committee this matter could be threshed out over the week-end and a mutually satisf actory formula devised which would enable the clause to be agreed to within ten minutes after its consideration was resumed.
. The Opposition is not in conflict with the Government either on policy or on the necessity to raise the amount of revenue which this measure is. designed to yield. The only Government supporter who has spoken on this clause, the right honorable member for Yarra (Mr. Scullin), has explained that this provision is not aimed at companies whose earnings are as low as 4 per cent. or 5 per cent., but at companies whose profits are in the higher ranges. The Opposition and the Government are united on the need to tax high profits, so the matter at issue is only the way in which that objective is to be obtained. A parliamentary committee could spend the week-end in discussing the virtues of the different methods proposed, and reach an agreement which would be acceptable to all parties. When the Opposition was in power last year it acceded to the request of the then Leader of the Opposition (Mr. Curtin) and his colleagues, for the appointment of a committee on the very legislation which this bill is designed to amend. Surely, now that the right honorable gentleman is Prime Minister, he will do for us what we did for him in order that some method mutually acceptable might be devised.
Question put -
That theamendment (Mr. F adden’s) be agreed to.
The committee divided. (The Chairman - Mr. Prowse.)
Majority . . .. 5
Question resolved in the negative.
Munitions and Manpower - Military Technical Train ing Schools:broadmeadows Site - Public Service of Sir George Pearce -Fishing IndustryPensioners’ Organizations: Alleged Rackets.
Motion (by Mr. Curtis) proposed -
That the House do now adjourn.
– I take this opportunity, which may be one of the last available to me before this sessional period ends, to speak in greater detail than I have done previously about a’ matter which affects the Ministry of Munitions in particular and the administration generally. I refer to the problem of the movement of labour from government munitions factories to private employment.But for the urgent financial measures with which the House has had to deal, we should already have been1 able to give to this problem the close attention which it requires. The Prime Minister (Mr. Curtin) has indicated his intention to have the matter discussed before the House goes into recess, but it may not be possible for the discussion to be as thorough as we should like. Therefore, I refer now to this aspect of the man-power position, acknowledging at the same time that it is only a part of a very: large problem which affects the Commonwealth as a whole. For a considerable time there has been a normal movement of labour between various forms of industry. The Australian worker enjoys almost complete freedom to seek both work which is agreeable to him and the highest wages offered by industry. Domestic reasons also frequently impel a man to change his place of employment.
However, an examination of the available figures, and of the evidence which was given before the Full Arbitration Court at the recent hearing of the war loading application, shows that a trend has developed in respect of the Government’s munitions factories which threatens the production of materials of war in those establishments. I canbest indicate to the House the difficulties involved in. this problem by quoting passages from the transcript ofevidence heard by the Arbitration Court. At page 19 of the transcript, Mr. Mackay secretary ofthe Arms, Explosives and Munition Workers Employees Federation, deals with the matter in these words, referring particularly to female labour -
Priortothewar our girls did not work shift work, and they did not work overtime beyond 9 p.m. in any establishment. Since the war, they are now working two and three shifts,and excessive overtime and I am going to put a witness in thebox, your Honours, toprove thatthe girls are feeling the strain with the men - notonly the girls, but. the femaleemployees. Their healthis suffering through the intense shift work, and the intense strain that they are placed in in thiseffort to give 100 per cent. war production ; and as’ a result of a breakdown in health, or shallI say in some cases to avoid a breakdown in health, thousands of employees are leaving the establishments every month, and I would suggest to your Honours, that these figures shouldbe supplied to you by the department - Whatnumber of employees have left during this past twelve months, from various munitions establishments in Victoria. Theyfind this, that they can leave the munition’s establishments and go into private enterprise outside, either in munitions or otherwise, but mostly otherwise and they can obtain employment at better rates of pay and mostly all day work. Therefore our girls are leaving on that account. The men are leaving and going into the building trades. Most of our people in this industry other than tradesmen,shall I say most of the employees covered by my organization, are unskilled or semi-skilled men,who have been drawn into the industry from every avenue of life, excepting tradesmen; and they are finding better employment with private enterprise outside munitions, and more especiallyin thebuilding trade. We have lost more members to the building trades than to any other industry that I know of because the wagesare higher, although it is casual, and it is all day work; and our men - when I say “our men “ I mean the men who were working - found in acomparison of the wages outside, that our wages are low, ourshift work intense, and our overtime excessive.
O’Mara J. -I have been hearing for months past that everyone was leaving his occupation around Melbourne to go to the munitions factory.
Mr. Mackay. ; Then I suggest that the department supply you with the figures of the employees who have left the various establishments for twelve months past and you will find then that I have given you the correct position.
Then another witness, Mr. McDonald, a charge man at the explosives factory at Maribyrnong, gave evidence to the effect that 130 men out of a total of 400 had left his sectionof the factory within the last three months. He said that the rate of departures had increased during that period. Mr. Yates said that there had been a distinct increase of the rate of departures from the Government factory at Lithgow in October. Mr. McNamara who appeared for the Australasian Society of Engineers, said that in his view, a great percentage of muntions employees would leave Lithgow during the winter becauseof the severity of the climatic conditions there. I refer the House particularly to the evidence given by Mr. Styles, an industrial officer of the Department of Munitions. At page 56, the transcript shows that he tendered a statement showing the number of factory employees at the end of each month from November, 1940, to October, 1941, and the number of departures during each month. For instance, in November, 1940, there were4,750 male employees) and2,088 female employees at the ammunition factory. During that month 125 males and 64 females left. In October of this year, of a total staff of 4,649 males and 2,722 females, 377 males and 148 females left. The transcript then continues -
O’Mara, J. - The turnover of male labour at Footscray seems to be substantial? - Yes, Your Honour, it is higher than elsewhere. At that factory we runmainly the eight-hour shifts. The only place we have a twelve-hour shift in the ammunition factory is at the tool room. We do, of course, work overtime on Saturdays and Sundays with those eighthour shifts.
They work eight-hour shifts, but are they rostered 48 hours eachweek? - They are rostered 48 - six-night shifts, commencing Sunday night and ending Saturday morning; 44 hours day work - 7 a.m. to 3 p.m. Monday to Friday and 7 a.m. to 11 a.m. on Saturday, but they usually on that shift go on till 3 o’clock on Saturday; and then on the afternoon shift days 3 p.m. to 1.1 p.m. five days in the week and they do an additional shift on Saturday afternoon. There are also sections where they work Sunday. ‘ They get about one Sunday in three. At the ordanance factory we have a mixture of twelve-hour and eight-hour shifts. We have process workers working twelve hours. At the explosives factory it is mainly eight-hour shifts; that is six eights. The work works out at about 51 hours, because there is a certain amount of changing and washing and walking time allowed to employees in that establishment. That is in our time. ls the position that where the overtime is low the labour turnover is high? - Yes, I tmi afraid it is.
Mr. Kavanagh. ; What is the position in regard to the two twelve-hour shifts and the th rue eights? Has there been any question with the union as to whether they prefer three eights or two twelves? ; We have had an official request from the Lithgow organization for eight-hour shifts, but I think the union realizes, with the department, that in a country town like that, it is difficult to attract labour to that centre, at any rate in sufficient numbers to enable you to establish a third shift. For that reason we have kept the twelve-hour shifts going.
What is the position so far as the factories dere are concerned? - We have the spectacle oil the ordnance factory employees requesting the department to introduce eight-hour shifts. They had been on twelve-hour shifts for some months, and they advised the management that they were tired out.
What was done when the request was made? - A request was m:,de for eight-hour shifts, lt was changed, and in less than six weeks pi ito a large number of the employees had left, including all those that were on the (lovut.ii.tion.
Was there any reason given for their leaving? - No reason given at all. It is very hard t<> arrive at the reason. Some get better jobs. Others leave because they look for day work or just two shifts, against the three* shifts. Some of them go right out of the industry, lt is very difficult to get a definite statement as to why they leave.
Kelly, J. - Do .1 understand that the picture generally presented by this table is that as compared with, roughly, this time last year the wastage of both males and females has, in percentage, doubled? - Yes, Your Honour. Taking it by_ comparison with the numbers employed, it is a small percentage.
From about 2 1 per cent, to about 5 per cent.? -Yes. I think that is a position which is existing in other establishments outside of the Government establishments, because our department is constantly being requested to assist in regard to pugging labour. They arc leaving all manufacturing firms and in’ consequence our director-general is being pressed to do something. f do not bring these facts to the attention of the House in any party spirit, because, obviously, any criticism which is applicable to this Government is also applicable to the previous Administration. The trend of events is perhaps more clearly indicated by figures which the
Minister for Munitions supplied to me recently in reply to a question which 1 asked. The Minister’s statement showed that departures from Government munitions factories increased from S37 in July, 1941, to 1,273 in October, and that the increase had been progressive over the intervening months. I concede that some of the factors which apply to Government factories do not apply in the same degree elsewhere in industry. For instance, a pronounced, housing shortage affects munitions employment at Maribyrnong and Footscray, and the introduction of eight-hour shifts has, in some cases, resulted in a. movement of labour. Some workers desire to work many hours of overtime in order to increase their wages, and, unquestionably, there has been a tendency to increase rates of wages in private industry as the result of the general prosperity which is now enjoyed by the commercial community. Many of tlie. employees at munitions factories ave not subject to the restrictions which were applied by the previous Government. These restrictions applied to the movements of certain classes of tradesmen and relatively skilled metal workers. They were forbidden to move, even from one munitions factory to another, without, notifying the Department of Labour, and if they wished to move to private employment they had to apply for a permit. We also supplemented those measures by restricting the form of advertisements in the newspapers which sought the services of these categories of workmen. Those provisions operate on a limited scale, and do not touch the great mass of comparatively unskilled workers who take part in the movement of labour which I have mentioned. I raise this matter now because I believe that we are on the eve of a dangerous increase of this movement. In some States, particularly Victoria and South Australia, the reservoir of unemployed man-power has been exhausted, and in future the only labour which will bc available, unless some stringent form of control be applied by the Government, will be that which is already in employment. Therefore, unless we have some effective scheme of regimentation, private industry will compete for labour with the Government factories, and because private industry will be able to pass on to the consumers any extra operating costs caused by high wage-levels, it will be in a more favorable bargaining position. As instances of this trend, I mention two cases which have come to my notice in the last few days. A hosiery factory in Melbourne is offering a bonus of £1 to its girls for each girl whom they can persuade to accept employment at the factory. The firm also pays the girls an extra rate of 10s. a week for training the newcomers who work beside them. I read a statement in last night’s Melbourne Herald to the effect that girls selling men’s socks, ties and handkerchiefs in a certain store in Melbourne will receive £515s. a week from now until Christmas Eve, and that if sufficient shop assistants are not available for the Christmas trade rush, other Melbourne stores also will have to pay this wage. Girls already employed in the men’s sections of certain other stores in Melbourne are being paid rates in excess of those stipulated in the awards. The shortage of labour is so acute that this course has been found to be essential in order to obtain assistance. If private industry can offer such wages and supplement them with bonuses in order to secure labour, a serious shortage of man-power must result in government factories and annexes engaged on war work. I have previously referred in this House to an annexe which was working three shifts in order to speed up war production, but which, because of a movement of labour from its factory to other factories, had to curtail its operations to two shifts, notwithstanding that it was engaged in production urgently required for the manufacture of guns for our own forces. [Extension of time granted.]
I raise this matter not in any partisan spirit, but in order to direct the attention of the Government to what I regard as a most alarming trend in our general labour problem. The tendencies already apparent will probably become accentuated in the next few months. It is, therefore, essential that the Government shall take early action in the matter. It may be found, as it was found in Canada, that a general pegging of wages will be necessary in order to prevent private employers from offering special inducements to attract labour away from war industries ; or it may be found, as it was found in New Zealand, that a general restriction will have to be imposed on the movement of labour. Any such restriction would need to be sufficiently flexible to meet domestic circumstances and to prevent undue hardship, but I believe that it will become imperative for the Government to restrict the movement of labour from place to place. We have applied compulsory principles in respect of the men required for home defence, and it may become equally necessary to apply some form of effective regimentation of labour in respect of the man-power required for the production of munitions. A principle that is suitable for the purpose of home defence should also be suitable for the purpose of providing the requirements to make our defence successful. I urge the Government to give the most careful consideration to this whole subject, in order that the nation may become more effectively organized to prosecute the war to a successful conclusion.
.- I bring to the notice of the Minister for the Army (Mr . Forde) a proposal which has been approved by the Board of Business Administration for the expenditure of about £300,000 in the establishment of military technical training schools adjacent to military camps in various States. I consider that the Board of Business Administration is an excrescence which should be abolished without delay. Its chairman, the Right Honorable Sir George Pearce, has long outlived his usefulness in the political or any other field–
– That is a most unfair statement tomake concerning one of our greatest public men.
– The honorable gentleman is entitled to his opinion, and I am entitled to mine. I do not consider that Sir George Pearce, Mr. Norman Myer, Mr. F. W . Spry, and the other member of the Board of Business Administration, should be permitted to approve of the expenditure of public money in the way they are approving of it.
I object particularly to the proposal that a military technical training school should be established adjacent to the Broadmeadows military camp at a cost of about £70,000, in order to train members of the Australian Military Forces and the Australian Imperial Force. I am indebted to the Minister for the Army for the opportunity to peruse the file on this subject. It reveals that the interested parties in Melbourne, the Board, of Business Administration, the Military Board and Southern Command, have agreed to this proposal which, in my view, has hardly a single redeeming feature. The motor industry, the automotive section of the Melbourne Technical School, and other technical schools, as well as representatives of the interested trade unions, all urge that if such a school is to be established it should be located near the main centre of the automotive industry. They have urged that Fisherman’s Bend, is a particularly suitable place. An area of about 12-J acres of land is available in an ideal location at Fisherman’s Bend, and if a school were established there it would be available not only for present war purposes, but also for subsequent peace needs. If the school be located at Broadmeadows camp it will be practically useless after the war ends, and all of the equipment and buildings which can be removed will have to be removed to some other location. The following amounts have been included in the estimated cost of the proposed school at Broadmeadows : -
Practically the whole of the expenditure on those items will be useless at the conclusion of the war if the military authorities remain adamant and insist on the school being established at Broadmeadows merely because a dispute exists and, unfortunately, persists between the Commonwealth Government and the Government of Victoria concerning what is a fair purchase price for 12-J acres of land at Fisherman’s Bend, or what is a fair rental for that area over a long term.
I urge that consideration be given to the establishment of the proposed school at, say, Geelong, near the works of the Ford Motor Company, and the International Harvester Company, or in some other centre with a large population. Certainly the school should not be established 10 miles away from the centre of Melbourne. The Melbourne Technical School has done most valuable work for the Department of the Army, the Department of Air, and the Department of Munitions, in having made available the whole of its equipment and instructional staff to assist in the training of people for employment in the national war effort. The principal of the school, Mr. Ellis, and his staff, have responded magnificently to the calls made upon them. The buildings of the Melbourne Technical School, unfortunately, are old, and the equipment is, to a considerable degree, obsolete. The Victorian Government, of course, did not contemplate that such a demand would ever be made upon the school as has been made upon it ever since the war began, but the school has made available, to the best of its ability, the whole of its somewhat scanty resources. I have no doubt that similar schools throughout Australia have given to the Commonwealth all the help in their power. In these circumstances, such institutions are entitled, to-day, to expect some reciprocity from the Commonwealth. The automotive section of the Melbourne Technical School considers that if a large amount of money is to be expended in establishing a new technical training school, it should be expended in such circumstances as would make the expenditure of some real value to the country when the war is over. I make a strong appeal to the Government to pay some attention to the representations that have been made to it in this connexion. At one period, the Department of the Army was prepared to co-operate with the automotive section of the school, and also with the other technical colleges, the motor industry and the appropriate trade unions in establishing a technical training school in a place mutually agreed upon, but suddenly the Army authorities withdrew their support for the proposal and obtained the endorsement of the Board of
Business Administration to a new proposal to establish one of these proposed technical training schools near a military camp in each State. We have been discussing to-day whether the Government should call upon companies to contribute certain sums in war profits taxes, and a day or two ago we discussed whether it could properly seek an additional £30,000 of revenue by an increase of sales tax on dentifrices and the like. The Department of the Army seems to consider that it may spendhuge sums of money without giving any attention whatever to the methods thatmust be adopted to find the money. It is not at all concerned about whether means that are unpopular and, possibly, unfair, will have tobe adopted. I urge the Minister for the Army to take careful note of what I am saying in this connexion. I shall make available to him a file of papers that will set out the case from the point of view of those in whose interests I am specially speaking, and 1 hope thathe will do his utmost to prevent the wasteful expenditure that is. contemplated. Unfortunately, it is too late to take action in regard to the technical training school to be established in New South Wales under this scheme, for a building has already been erected at Liverpool, but it is not too late to review the circumstances associated with the proposal to build a school at Broadmeadows. Possibly, also, the proposals in respect of the other States would merit the closest examination. The Government should call a halt in this “squandermania “ of the Army. I protest as strongly as possible against the methods by which approval is obtained for certain expenditure of this nature. There can be no justification for an ill-considered expenditure of this kind. The view of the authorities of the Melbourne Technical School havebeen set out in the following six points: -
I am authorized to say that, if the Army Department would locate its building in a central position, the motor industry and the technical schools would generously co-operate in endowing the school, in order that it might more fully carry out all of its functions. The argument that I have advanced is quite reasonable. I cannot understand why the army authorities have been so obstinate and obtuse in the matter. That would be bad enough ; but when its obstinacy, obtuseness, and persistent refusal to face facts, result in the wasteful expenditure of £70,000, the Minister and the Parliament should take action.
– The honorable member for Melbourne (Mr. Calwell) made a remark concerning former Senator Sir George Pearce, who is not here to defend himself. I was in this Parliament with Sir George Pearce for many years, and so far as I am capable of forming an opinion I say deliberately that he is the most underrated of all of our great men. If the parliamentary achievements of any of us should be comparable with those of Sir George Pearce during a parliamentary life of 40 years, we shall have no reason to be dissatisfied with ourselves when we retire from public life. I remind the honorable member for Melbourne of what an old Englishman once said to a young man. It was, “ After all, none of us is infallible, not even the youngest among us “. Because the honorable member has some political difference with Sir George Pearce - we know what it is: Sir George Pearce, properly, I think, broke with his party at a very critical time - he cannot admit the ability and public spirit of the man. I saw Sir George only a few months ago, and am perfectly satisfied that he is still much more capable than most of us of undertaking any task entrusted to him. Apart from this direct objection to such criticism of him in this Parliament, he needs no defence.
– All of those who worked in Cabinet with him thought most highly of him.
– I shall never let him live down what he did to the Labour party.
– For many months, I have been writing to Ministers, and speaking in and out of Parliament, on the subject of man-power. So far, very little has transpired, or been elicited. There are several heads under which information might have been given, if either this or the previous Ministry could have made up its mind to inform us in regard to the quotas required, first for the various branches of the fighting services - from time to time, rough estimates have been given in respect of the military forces but I want the whole of the essential field to be covered: secondly, munitions production; thirdly, rural pursuits; and fourthly, other essential industrial pursuits. Any figures given must of necessity be purely provisional, and be adjusted as the circumstances change; hut at least we could be given an idea of the Government’s general objective in respect of each of those main divisions. By neither this nor the previous Government, so far as I know, has a decision been made as to the extent to which it should grapple with the subject of woman-power. For more than a year we have not had a new list of reserved occupations. Of the present list it has very properly been said that it would have been much better had it contained the names of those not reserved, instead of those who are, because it would have been much shorter.
– The honorable member surely does not suggest that this Government has been responsible for any laxity in that regard?
– HUGHES. - The honorable member applauded me when I attributed a portion of the blame to the last Government, and he wants me to emphasize it. I am prepared to admit that I was disappointed at the failure to obtain more detailed information from the last Government. I wrote to the honorable member for Fawkner (Mr. Holt), as Minister for Labour and National Service, no later than the end of February of this year, in order to ascertain what provision was to be made for rural pursuits in the months that have since elapsed, and particularly during the season which is approaching. I wrote subsequently to the then Prime Minister on the same sub.ject. From both of those gentlemen I received a very courteous reply, but nothing which really decided the matter. It appears to me that the new Government is following the same line, and is fencing from day to day in order that there may not be a real pronouncement in respect of man-power. It is also exhibiting reluctance to issue a new list of reserved occupations.
I wish to deal particularly with the rural side of the matter, because country industries are responsible for the largest proportion of the new money which comes to Australia, and that is one of the chief means by which we are enabled to fight the war. We are on the verge of a new season for wheat and grapes; yet, so far as I can make out, nothing has been done. I received only to-day a letter from the Minister for Labour and National Service (Mr. Ward), to whom I had written on behalf of industries on the Baver Murray, all of which, but particularly the power station and distilleries, need firewood in order that their concerns may continue to operate. I had asked how men could be obtained for the cutting of firewood. I quote the essential portion of the letter that I have received in reply -
I wish to advise that the employment officers in each of the States concerned have been instructed to secure the necessary labour, if possible. I am advised, however, that it is difficult to engage firewood cutters at present as, owing to the strenuous nature of this employment, employees do not go to this work if anything else is offering. Enlistments and employment in munition works have further reduced the number of men previously available for this calling.
We have been pointing out for months what must happen if employees are allowed to select occupations in which high wages are paid ; in other words, if steps be not taken to ensure that the essential industries of this country are carried on. I urge the Government to realize that the wheat season is approaching, and that shortly afterwards we shall be in the grape season. I ask it to make an early pronouncement not only on the questions that I have raised, but also as to the way in which it proposes to ensure that there shall be a pool of labour from which the various industries may draw in order that they may be enabled to carry on. It will not suffice to say that if the wage be high enough the labour required will or may be obtained. The Government will be held responsible if the labour is not forthcoming. The more these industries are prevented, from functioning, the smaller will be the amount of money earned by Australia, and the less equipped shall we be to carry on the fight in which we are engaged. Nothing has been done with a view to ensuring that even a bare minimum of shearers will be trained to shear the sheep that bring the major portion of the new money which, year by year, comes to Australia from overseas. I urge the Government, also, to see that a pool is formed, particularly in respect of grapes and wheat. The fruit-growers, too, need to be considered, because their crops are ripening, and in some places are being gathered. What is being done by the Director of Man-power Priorities? Surely he has the right, if not to make decisions, at all events to recommend to the Minister for Labour and National Service the action that should be taken. He has several assistants in the other States. What are they doing? What is being done by the Central Manpower Committee, which acts as an adviser to the Government? I do not say anything about the Parliamentary Man-power and Resources Survey Committee, because it does not possess executive power. All of those bodies ire treading on one another’s toes, impeding one another, and duplicating each other’s efforts; or there is an authority which is insisting that what others advise shall not get through, because it does not want to come to a decision. The whole of our war effort is being held up, and the country is approaching a state of confusion. As what is wanted is not known, nothing is forthcoming. At the same time, men are being swept out of one industry into another, at the expense of the country and without regard to its needs.
– I listened with considerable interest to the statement of the honorable member for Fawkner (Mr. Holt), and the subsequent observations of the honorable member for Wakefield (Mr. Duncan-Hughes). The subject of man-power demands very earnest consideration. The nature of the observations of the two honorable gentlemen to whom I have referred indicates how vexed is the problem. Their speeches, however, might well have been made three or six months ago. I ask the House to realize that the present Government cannot be held responsible for many of the aspects of the problem of manpower. Evidently, the last Government realized the necessity for a survey of the position, and for that purpose appointed the Man-power and Resources Survey Committee, which has submitted reports disclosing that very important results have accrued from its investigations. Those reports will not lie unheeded in the archives, but will be of value to the Government in assisting it properly to apportion the requirement* of industry as a whole.
The honorable member for Fawkner referred to wastage in Government factories. It is true that where there is concentration of effort, as in defence and munitions projects - in which men and women work long hours, and frequently throughout the week-end, in order to obtain maximum production- ^-fatigue, and possibly inroads on health, are likely to occur, occasioning a much higher degree of wastage than is experienced in peace-time industry. However, I do not. consider that that justifies us in aggravating the evil by refusing them the right to take employment where the demands upon their health will not be so great. These occurrences justify Labour’s constant efforts to reduce standard working hours. In spite of anything that may have been said by the honorable member forFawkner this afternoon, the fact remains that we owe a great debt of gratitude to the many thousands of men and women who have given generously of their labour and strength by working long and late hours in order to supply munitions and equipment to our fighting forces.
– I was not criticizing them.
– Perhaps not, butI take this opportunity to pay them a compliment for what they have done. It is our duty to prevent wastage as far as possible by providing better housing conditions, something which should have been done from the beginning as a part of our war effort, particularly where new industries have been established in new locations. By providing better conditions, we shall remove one of the causes which make workers leave government factories to seek employment elsewhere. I point out, however, that some of the workers who leave one government factory merely transfer to another government factory in a more convenient area. Even many of those who transfer from a government factory to one run by private enterprise are still engaged upon defence work of great importance, so that it is wrong to assume that, in every instance, the services of the persons who leave the government factories are lost so far as the war effort is concerned. Moreover, while some workers are leaving government factories, many others are applying for work in them. In South Australia, there is a long list of workers seeking such employment. I am well aware that heavy demands are being made upon our workers at the present time, and it is our endeavour to reduce those demands insofar as it is possible.We hope to resolve many of the difficulties with which we are now confronted, and make conditions better for the men and women engaged in the war effort who are giving such a wonderful example of devotion to the common cause.
.- Last week I asked the following question of the Minister in charge of Scientific and Industrial Research (Mr. Dedman) : -
The Minister replied as follows: -
I have no very strong feeling on the question of whether the organization should be a branch of the Council for Scientific and Industrial Research or whether it should be a separate department. I merely point out that, in other countries, departments of this kind are attached to research departments, and have done excellent work for the development of the fishing industry. I am concerned, however, to know what the Government proposes to do in connexion with the recommendations of the conference held in Melbourne that an authority should be set up, and what department is going to handle the matter. I am not making any complaint against the present Government in this regard. I realize that Ministers, having taken office only a few weeks ago, have had little opportunity to acquaint themselves with the ramifications of the various departments, the magnitude of which is colossal. My desire is to keep the matter prominently before the Government, so that it will not be forgotten in the welter of other business. The Minister who controls the Council for Scientific and Industrial Research believes that the responsibility should be transferred to the Department of Supply and Development. To date, the Minister for Supply and Development has not expressed a definite opinion regarding the proposal. I should like to know as early as possible what action is contemplated. Docs the Government propose to relegate the ‘Council for ‘Scientific and Industrial Research to obscurity for the duration of the war?
Honorable members are well conversant with my views on the necessity for developing the fishing industry. The Tariff Board has recommended a certain course of action, with which I do not wholly agree, because it appears to create an unfortunate bottleneck. I was greatly impressed with a report in the Sydney Morning Herald of the 18th November upon the tuna fishing industry. It reads -
The possibilities of establishing a valuable tuna fishing industry in Australia were discussed yesterday by Mr. D. W. Bingham, on his arrival by Tasman flying-boat.
Mr. Bingham, who has been studying the fishing industry in the United States of America for the past three months, said that his trip was sponsored by the Fisheries Division of the Commonwealth Research Department. He would report to .the department in a private capacity.
The tuna fishing industry could be established for about £100,000, said Mr. Bingham. One boat, which would cost £30,000, would mean an industry of £315,000 a season. Mr. Bingham suggested that an 80 to 90 feet boat with a 300 horse-power engine would bo the most suitable. “ We will never get anywhere by the present system,” Mr. Bingham said. “Australians are not natural fishermen, and they must be shown.” He added that tlie Slav fisherman, who earned about £1,000 a year in ‘America, would be willing to come to Australia. “ Canneries already established in Australia would be able to handle the canning of the tuna,” said Mr. Bingham. “ There would be a market for the fish in America.
Mr. Bingham is the managing director of D. W. Bingham Proprietary Limited, of Melbourne and Sydney, a firm which specializes in cannery installation.
Those who have interested themselves is the development of the tuna (fishing industry know of the great possibilities. In addition to a ready market locally for this fish, the prospects of an export trade to the United States of America are bright. My purpose in speaking to-day is to direct attention to the report of Mr. Bingham’s opinions, and particularly to his statement that canneries already exist for dealing with tuna. “Whereas he considered that one boat, 80 feet or 90 feet long, would be adequate for the work, I stated in evidence before the Tariff Board that four or five boats would be necessary for the purpose. The boats must be suitably equipped with tackle for catching and handling the fish. In addition, experienced fishermen are required.
The .fishing industry is most important to Tasmania. Its waters are the coldest in. Australia and have the best supply of fish. ‘Considerable development is already taking place. One business firm is actively engaged in operating a factory on Flinders Island, but the Commonwealth Government should provide assistance in order to accelerate ite efforts. There is a big demand for fish, not only locally, hut .also for our fighting forces abroad. Although the matter of manpower may be urged as a reason for deferring a decision, I point out that the demands of the industry in that respect would not be heavy, and, as Mr. Bingham indicated, some foreigners would have to be induced to come here for the purpose of instructing our fishermen in the art.
I urge the Minister in charge of the Council for Scientific and Industrial Research to discuss the subject as soon as practicable with the Minister for Supply and Development, and to emphasize to other Ministers the need for reaching a decision as to who will he responsible for controlling the matter. I shall not be very happy if it is relegated to the background in the present hurly-burly.
– I wish to deal first with a matter raised by the honorable member for Melbourne (Mr. Calwell). The honorable gentleman was rather annoyed because it has been decided to expend more money on the construction of a school for the teaching of motor mechanics for the Army.
– That was not the reason for my annoyance. It was because the money is likely to be expended wrongly in that school premises are to be erected in undesirable localities.
– I do not agree that they are being erected in undesirable localities. “We do not want them to be established at Fisherman’s Bend or Woolloomooloo Bay. As the chief sites for camps in Victoria are in the Seymour locality, to my mind Seymour is the obvious place at which these schools should be established. These institutions will not cease to be of value when the war is over; they will have to be carried on after the war because of the increasing mechanization of the Army. Seven years ago I pointed out the desirability of a change-over from light horse to armoured regiments, but it has taken a long time for honorable members to realize that the establishment of schools for the training of technicians is an important feature of army training. It is most unfortunate that there is a tendency in all directions to-day to “kick” the Army every time it asks for funds. When a few thousand pounds is asked of the Government for the establishment of these schools an objection is immediately raised. Yesterday we passed a bill providing for the payment of an extra £2,000,000 to invalid and old-age pensioners. That was a matter for jubilation ; but as soon as a request is made for the provision of funds for the training of men for overseas service it is questioned by unthinking people. It is time that honorable members began to realize that the Army does not consist entirely of “ nit-wits’ “.
– What about the Board of Business Administration?
– The board is one of the worst bottlenecks in the country. The greatest bottleneck is the Department of Defence Coordination. Next in importance among the bottlenecks is the Advisory War Council. The Board of Business Administration comes next. The elimination of these three bottlenecks by simply wiping them out of existence should enable us to get somewhere.
The other point I wish to raise is in connexion with the subject of man-power which was dealt with by the honorable members for Fawkner (Mr. Holt) and Wakefield (Mr. Duncan-Hughes). If the Minister cares to look at the files he will no doubt find that they contain a copy of the man-power regulations which I drafted when I was a member of a former government but to which effect was not given because they were not approved by Cabinet. It is impossible to build ships or to turn out shells, tanks and other munitions of war to full capacity if every worker is free to accept employment wherever he likes. There can be no solution of the manpower problem until the Government assumes full control of the man-power of this country. I endeavoured to convince the Prime Minister (Mr. Curtin) during question time this morning that it is sheer futility for him and for the Minister for Munitions (Mr. Makin) to talk about a 100 per cent. war effort and to say, at the same time, that it will be achieved on a voluntary basis. The very fact that we have these circuses in Martin-place, Sydney, in front of the Melbourne Town Hall, and in other capital cities, at which dancers and singers lend their help in the appeal for recruits is ample proof that we have not yet achieved a 100 per cent. war effort. Until the Government accepts the principle that, during the war period, every man has to be in the place where he is of most use to his country, we shall not arrive at the solution of the man-power problem. At present employers are permitted to compete against each other for the services of competent workmen. I saw glaring instances of such competition in the naval shipbuilding yards. There were two leakages of labour there, one, to the armed f orces - and I had no power to stop that - and the other to private employers. Highly skilled and irreplaceable men who should have been kept at Cockatoo Island Dockyard, and Garden Island and other important shipbuilding yards in the Commonwealth, were permitted to enlist in infantry battalions and be sent overseas. That is a misuse of man-power. Trained and almost irreplaceable men are permitted of their own free will to go into the fighting forces where their skill is not utilized.
– The honorable member would not allow such men to join the Australian Imperial Force?
– I could not stop them ; but they are of more value to their country in building and repairing ships than in defending Australia on some foreign battlefield. In that way we have lost the services of competent shipwrights and trained engineers who cannot be replaced.
– Very few of them have joined the Australian Imperial Force.
– None of thom should have been permitted to do so. There should be a proper control and marshalling of the available man-power of the country. Certainly until such time as the Government assumes control of the man-power of this country and places every man in the job he is best able to perform, it will be impossible for this country to achieve the maximum production of the materials of war.
– I fully realize the importance of the matter raised by the honorable member for Bass (Mr. Barnard). The honorable member has been a consistent advocate of the development of the fishing industry in Australia, particularly in Tasmania. We all realize the importance of the industry at the present juncture, particularly as our imports of tinned fish have been curtailed. An opportunity exists now to develop this industry which may not occur again. Following upon the report on the fishing industry by the Tariff Board a conference was held under the auspices of the Council for Scientific and Industrial Research which recommended that a developmental authority be set up to encourage the industry. I have, of course, studied that recommendation carefully. I object to the Council for Scientific and Industrial Research being used for the conduct of commercial activities ; I believe that it should confine its activities to research work. I was interested to hear from the honorable member that in other parts of the world the development of the fishing industry has taken place as an adj<unct to a research department established by the Government. I shall he glad to discuss this aspect of the matter further with the honorable member at an early date.
– Is it the view of the chief executive officers of the Council for Scientific and Industrial Research that that body should not undertake commercial activities?
– Yes. I have discussed this problem with the Minister for Supply and Development. There are many phases of it which must be given proper consideration. For instance, the development of the fishing industry is inextricably bound up with such problems as man-power and the supply of fishing boats. Honorable members will readily understand that this matter has to be given very careful consideration. However, I shall discuss it again with my colleague the Minister for Supply and Development, and we shall endeavour to arrive at a decision as to the kind of developmental authority that should be set up and as to whether it should be placed under the supervision of the Council for Scientific and Industrial Research or the Department of Supply and Development. I assure the honorable member that the matter raised by him will receive consideration immediately the Government has the time to give attention to it among the many problems which confront it at present.
– I support the contention of the honorable member for Melbourne (Mr. Calwell) regarding the proposed establishment of military technical training schools. The Minister for the Army (Mr. Forde) intends to hear the arguments advanced on this matter from both sides, and, perhaps, after having done bo, he will be able to come to a decision. The suggestion of the Southern Command and of the Board of Business Administration that a military technical training school should be established at Broadmeadows appears to me to be ridiculous. In my opinion, such a technical training school should be close to big engineering works. One difficulty already experienced at the Broadmeadows camp is the lack of accommodation, and, as a result, men in the Ordnance Department have been requested by the Army to sleep at night at their own homes instead of at the camp. Recently, I had trouble in getting a bus service from the camp to the Broadmeadows station for the transport of the men. The advantages of a site like Fisherman’s Bend for the proposed school over that proposed at Broadmeadows are manifold. Heavy materials for industry are brought up the Yarra river to the various workshops and double handling is avoided. [ understand that it is cheaper to carry material from Newcastle to Fisherman’s Bend than it is to carry the same material from Newcastle to Sydney, or even a few miles out of Newcastle, if the material has to be handled twice. The Armoured Division of the Australian Imperial Force is to be established at Fisherman’s Bend, and equipment for that division will be assembled there. The aircraft factories are at Fisherman’s Bend, and, when the aeronautical engineering laboratory of the university was established, Fisherman’s Bend was chosen for the site, because of the necessity for the laboratory to be in close proximity to the aircraft factories. Is it not as necessary that a military technical training school also should be in close proximity to works where the trainees will be engaged and to the Armoured Division into which many of the trainees will probably be drafted? Another reason why Fisherman’s Bend, or some similar locality, should be selected rather than Broadmeadows is the fact that when peace rules again the school will be used as an ordinary technical training school. It would be useless for such purposes if it were established at Broadmeadows, because few would be willing to travel the long distances involved in reaching it, especially for night classes.
The honorable member for Fawkner (Mr. Holt) is not alone in knowing that difficulties exist in the manufacture of munitions owing to the continued activities of private employers in enticing skilled workers from munitions factories. A year ago, as a member of the Manpower and Resources Survey Committee, [ endeavoured to persuade that committee bo report to the then government that it was necessary that a system of priorities be introduced in order to ensure that raw materials required in the munitions industry would not go to private industry. I suggested a rationing scheme, but the majority of the committee failed to support me. If private employers have not materials with which to carry on they will not have the inducement to entice men from the munitions industry. The only alternative is one which I do not like, and that is the conscription of labour. The friction that would be caused by interference with private industry by the rationing of materials would not be so great as the discord that would be brought about by industrial conscription, hut either one or the other is necessary if we are to do as we all want to do, namely, achieve the greatest possible war effort. Had rationing been instituted a year ago, first gradually, but with increasing intensification, the process would have, been almost imperceptible and would not have caused the dislocation of industry which must result now. I know that what I am saying will be unpopular. Indeed, in my own electorate there are many private employers who would be affected if the Government decided that their copper and brass rods, and steel and iron, and whatever they need would be either not available or available only in reduced quantities. The displaced labour would return to the munitions factories from where the honorable member for Fawkner says that skilled men are now running. There will be no other place for them to go. I can well understand the view of private manufacturers. Their interests lie in the maintenance of their industries, but they must not be allowed to maintain them at the expense of the war effort. I have made a suggestion to the Minister, to which I think he will agree, that a conference should be called immediately of representatives of the branches of industry engaged in this work. For instance, the honorable member for Fawkner read a statement made by the secretary of the Arms and Munitions Workers Union. A large number of females are engaged in this work. One reason for this trouble is the fact that, originally, we tried to work employees on shifts of twelve or fourteen hours a day over a long period. That method was unwise, and I consistently opposed it. Certainly, individual workers may be able to work round the clock, as I myself have done, but only over a short period. That system cannot be continued for any considerable time. Originally, we put the men on shifts of ten, twelve and fourteen hours, but eventually they .became physically and mentally over-tired, with the result that their volume of output and standard of accuracy declined. In addition the men lost vitality, and each day they were less eager for work than they were on the preceding day. According to all of the experts on the matter the only way in which an economic output can be maintained is by employing men on reasonable shifts. That is what the captains of industry strive to do in order to maintain their costs at a uniform rate. They let their men knock off before they become fatigued in order that they will be able to resume duty on the following day as fit and as fresh as they commenced duty on the preceding day. Every one knew that the system of working twelve-hour shifts would break down. Most of us, however, hoped that the war would finish first. I was asked to work out a roster whereby the greatest utilization could be made of certain machines which were scarce. I was asked to show how these machines could be worked for 24 hours. I replied that we should risk the destruction of the machine rather than the health of the men. For instance, if the normal life of a machine be 25 years we could be prepared to work it out in five years. We drew up a roster on that basis and now work those machines for 24 hours a day, seven days a week; and every man engaged on them works eight hours a day, except crib time, which has to be excluded, for six days a week. Each of those men has one day off a week, although not necessarily the same day each week.
– Is one shift of twelve hours worked?
– No. We have added one-seventh of the number of men normally required. That is how we have overcome that problem. However, as I have said, sufficient machines and men were not available in the early stages. In the meantime we have obtained more men and more machines. I believe that if this system were instituted in every munitions factory, whether it be run by the Government or by private enterprise, ve should achieve the ideal. All of the machines in *very factory would be oper ated constantly, seven days a week, but individual operators would work only on eight-hour shifts for six days a week. Thus the work would he done properly, and the men would last much longer than the machines. The trouble to-day is that some of the men do not want to continue to work shifts of twelve hours. They have said, in effect, “No more overtime”. Other men are struggling on in order to earn the overtime. The reason why that system broke down was that men were induced, by private enterprise, to leave government factories. That difficulty will only be overcome by the institution of uniform shifts in all munitions factories, whether they be controlled by the Government or by private enterprise. In that way we shall remove the inducements which are now held out to government employees to transfer to private factories. I believe that there is only one view to take of this problem. We must anticipate that the war will last for at least ten years. With that idea in mind we must build up our output, so that we shall attain our greatest rate of production and greatest volume of reserves of arms and munitions when the “ cease fire “ signal is given. We must not think of the danger of having a surplus left on our hands. Secondly, we must gradually ration the raw materials required for the manufacture of munitions, making exceptions only in proved cases of hardship. All we shall seek to do in such a scheme of rationing will be to secure the greatest possible proportion of available supplies of raw materials for the manufacture of munitions.
– The various matters mentioned by honorable members will be carefully considered by the Government. Some of the items raised have been specifically answered by the Ministers concerned. I should like to reply to the honorable member for Melbourne (Mr. Calwell). I listened with interest to his remarks on the important subject of the establishment of a school at Broadmeadows for the training of motor transport drivers and mechanics in the third military district. The honorable member made rather sweeping accusations against the Army Department and the Board of Business Administration, alleging that the sum of approximately £300,000, which it is proposed to expend throughout Australia, will practically be wasted, and that a sum of £70,000, proposed to he expended on the establishment of the motor school at Broadmeadows, will also be wasted if the school be established in that locality. He contended that it would be far wiser to establish the school at Fisherman’s Bend, in which case, at the conclusion of the war, it could probably be utilized by the State Government in a technical education scheme. The decision to establish the school at Broadmeadows was made by my predecessor. I cannot say at this stage whether I am opposed to that decision. I have an open mind on the matter. At the same time I am anxious that the right thing shall be done, and with a view to obtaining all of the facts, I am prepared to receive a deputation at Victoria Barracks, Melbourne, at 9.15 on Monday morning next. I shallbe glad if the honorable member for Melbourne will then introduce to me representatives of the interests who have made the representations which he has voiced.
– We shall be there.
– Simply because a decision has been made, we should not be bound by it if it can be shown that a wiser course is open to us. However, I remind the honorable member that this matter has been under the consideration of the Military Board and the Board of Business Administration. I have not yet had time to go into the matter carefully. I have in my hand a minute which I have received from Major-General Rowell, Deputy Chief of the General Staff, who is also a member of the Military Board -
It is advised that Fisherman’s Bend was considered as a location for third military district motor transport school and rejected for the following reasons: -
Comparatively high expenditure involved in appropriation of land, or alternatively in rental.
b ) Comparative unsuitability of site for hygienic and disciplinary reasons and as regards area of ground available.
Higher building costs - this area is largely reclaimed.
Unsuitability for use in operations in case of emergency.
It is considered that as the capital value of all motor vehicles in the Army amounts to several millions of pounds, the cost of these schools is more than justified in ensuring efficient instruct ion and training for adequate numbers of personnel to maintain those vehicles. Without efficiently trained personnel, vehicles will have a relatively short life, and without adequate training facilities the numbers and efficiency in personnel cannot be ensured.
Further, it is considered that a school at Broadmeadows, which is an outer suburb of Melbourne, would be just as accessible for post-war trainees as at Fisherman’s Bend.
– Broadmeadows is 10 miles from the city.
– We are not able to tell how far the city of Melbourne will extend in the future. The Victorian Business Administration Committee also considered this matter, and approved of the recommendation of the Military Board on the ground that it was -
An additional argument advanced by the committee in favour of the Broadmeadows site was that, in order to obtain the necessary knowledge in the time available, students of the motor transport school must work or study night and day, and that the site is far enough from the attractions of the city to permit of such concentration. I have an open mind on this subject; I want to do the right thing, and, therefore, I shall be glad to hear the representations in favour of Fishermen’s Bend in Melbourne on Monday morning. Large sums of money are being expended throughout Australia on the training of craftsmen, and if it can be proved to me that a motor transport school at Fishermen’s Bond will be more convenient than one at Broadmeadows, will cost less money, and can afterwards be used by the State Government as a technical school, or for some other purpose, I shall weigh such evidence very carefully. When I have heard the case in favour of Fisherman’s Bend, an immediate decision will be made.
.- During the second-reading debate on the Invalid and Old-age Pensions Bill yesterday, the honorable member for Deakin (Mr. Hutchinson) referred to the possibility of “ rackets “ being carried out by organizations formed in order to collect from pensioners small fortnightly sums which amounted to a substantial fund which in Victoria was estimated by him to amount to £60,000. The honorable gentleman indicated that, in the main, these organizations were associated, directly or indirectly, with funeral directors to ensure the payment of funeral expenses for old-age pensioners.
– The honorable gentleman was absolutely right.
– I did not mention funeral directors. That remark was made in an interjection.
– I accept the responsibility for that interjection.
– The honorable member for Melbourne apparently knows all about “ rackets “. In reply to his accusation, I wish to place on record the contents of an urgent telegram which I have just received from a firm of funeral directors in Brisbane. The telegram reads -
Reference reported pensions debate November twentieth respectfully desire bring before your notice that exploitation of Queensland pensioners and general public by funeral directors was prevented by State friendly societies acts enacted November, 1940. (Signed) Alex. Gow Pty. Ltd.
That communication replies effectively on behalf of Queensland funeral directors to the general and unqualified remarks of the honorable member for Melbourne.
.- The remarks of the honorable member for Moreton (Mr, Francis) impel me to state that such organizations throughout this country have rendered valuable service to the pensioners. They came into existence, when pensions were retrenched, in order to defend the interests of pensioners and recover for them the ground that they had lost. They were non-partisan, and the pensions were restored largely as the result of their work. In addition to this, they have brought pensioners together and taught them to help one another. That was a valuable by-product of the financial depression. It is a pity that provision for the burial of old-age pensioners should have to be made by the present system. The Commonwealth Government ought to make burial insurance for old-age pensioners a supplementary provision of the pensions scheme. Many oldage pensioners are continually worried about making provision for their funerals; they should be put beyond worry by the establishment of a small insurance plan, which could be contributory, because the scheme which they have at present is contributory. The non-partisan organizations which have helped the old-age pensioners do not engage in “ rackets “. They were forced into existence by the fact that oldage pensions were reduced, with the consent of all political parties represented in this chamber, and since then they have served the useful purpose of teaching the pensioners self-reliance and mutual assistance.
Question resolved in the affirmative.
The following paper was presented : -
House adjourned at 5.43 p.m.
The following answers to questions were circulated: -
Wool Scouring in Queensland.
– The answers to the honorable member’s questions are as follows : -
The Government is at present considering the problems associated with woolscouring.
y asked the Minister for Commerce, upon notice -
– I have caused a communication to be sent to the Australian Government Trade Commissioner in New York, requesting him to obtain details.
Clothing Trade Employees: Brick, Tile and PotteryWorkers.
t asked’ the Minister for
Labour and National Service, upon notice -
Mr. Ward. - The answers to the honorable member’s questions are as follows : - 1. (a) The Federal Clothing Trades award was varied by Judge Drake-Brockman on the 11th November. The variation granted a weekly war loading of 5s. for males and 3s. for females, to operate from the 1st January, 1942; (b) the dispute in which the Brick, Pottery and Tile Employees’ Union was concerned in the metropolitan area of Sydney was settled by an agreement reached by a Conciliation Committee under the “ Industrial
Arbitration Act, 1940” of New South Wales. This agreement was settled as an award under that act. As the provisions are rather lengthy, they arc not reproduced here, but a copy will be given to the honorable member.
The Minister for Trade and Customs has supplied the following answer: - Following an application by brick manufacturers in New South Wales, the Commonwealth Prices Commissioner recently increased the price of bricks to offset increased costs arising from higher labour costs. The new price is still lower than that of any other capital city in the Commonwealth. No similar application has been made in respect of the clothing trade or of the tile and pottery industries.
n asked the Prime
Minister, upon notice -
– Professor Copland was appointed Commonwealth Prices Commissioner at the outbreak of the war. Later, he was appointed Economic Consultant to the Prime Minister. By arrangement with the State Government of Victoria his services as chairman of the State Economic Committee were retained in that capacity. With the approval of the Commonwealth Government he was appointed by the State Government to be a Commissioner of the State Savings Bank of Victoria. Professor Copland is a temporary officer of the Commonwealth, carrying out onerous duties for the Government, and it is not reasonable to ask that he should completely sever his connexion with his own State. Professor Copland is on leave from the University of Melbourne. As Commonwealth Prices Commissioner and Economic Consultant to the Prime Minister, ProfessorCopland’s emoluments are £1,800 per annum, plus an allowance of 30s. a day which includes “ living away from home “ allowance and travelling expenses. His emoluments as Commissioner of the State Savings Bank have been reduced at Professor Copland’s own request during the period of his occupancy of the office of Prices Com missioner to one-half of the normal rate which is £500. As chairman of the State Economic Committee he receives the nominal amount of £100 per annum. Having regard to salaries paid to senior officers of the Public Service, Professor Copland’s total emoluments are regarded as proper to his office.
n asked the Minister for External Affairs, upon notice -
– The answers to the honorable member’s questions are as follows : -
y asked the Minister for Commerce, upon notice -
– An announcement concerning the first advance on the 1941-42 wheat crop will be made at an early date.
n asked the Minister for Supply and Development, upon notice -
Will he give early consideration to the request made several months ago by the Bankstown Municipal Council for the release of a diesel caterpillar tractor urgently required by the council and agreed to be purchased by it through Waugh and Josephson?
– This matter concerns the Minister for Munitions, who has furnished the following information: -
Representations have been made to the appropriate authorities and advice has been received that the equipment has been shipped from America. “ Daily Telegraph “film.
e. - Yesterday the honorable member for Darling (Mr. Clark) asked me the following question, without notice: -
Has the attention of the Deputy Prime Minister been drawn to the fact that a film is being shown in Sydney theatres advertising the Daily Telegraph in which Commonwealth Ministers are portrayed being interviewed by Daily Telegraph, pressmen, and in which it is implied that exclusive interviews are given to that newspaper? Was thisfilm made with the full knowledge of the Ministers that it was to be for this purpose, and is the impression correct that exclusive interviews are given to that newspaper?
In reply I inform the honorable member that following inquiries which were in train prior to his question, the management of the Daily Telegraph has agreed to withdraw the motion picture from exhibition. The Prime Minister and the Ministers concerned entirely dissociate themselves from any impression which might be conveyed by the motion picture that exclusive interviews are given to a representative of the Daily Telegraph.
y. - On the 19th November the honorable member for Flinders (Mr. Ryan) asked me, without notice, whether it was a fact that, as reported in the press, the price of second-grade power alcohol in Melbourne had risen from1s.1d. to 5s. a gallon, and whether this spirit should not be brought under the control of the Government, both in regard to the price and the rationing of supplies. I am now in a position to inform the honorable member that this statement apparently refers to small quantities’ of methylated spirits intended for industrial use which may have found their way into use as a motor spirit. The manufacturers, the Colonial Sugar Refining Company Limited, have declined to sell methylated spirits for motor fuel, and have requested the cooperation of retailers to this end, because by producing power alcohol which is controlled as to price and rationing the production of methylated spirits will be sufficient only to meet the needs of industrial users. With the recent excise duty of1s. 6d. a gallon the price of methylated spirits is now about 3s. 9d. a gallon. If it is established that any appreciable quantities of methylated spirit are being used as a motor spirit the Government will consider action either to forbid its use in this way or to fix the price and to bring it within the scope of petrol rationing.
n asked the Minister for
Defence Co-ordination, upon notice -
– The answers to the honorable member’s questions are as follows : -
Navy and Air. - Proposals relating to inventions are dealt with by the officers of the appropriate technical branch.
Army. - The Master-General of the Ordnance is, in general, responsible for all matters relating to inventions andhis staff comprises officers with technical qualifications. There is in each military district a district inventions board, the constitution of which has been laid down as follows: -
One artillery officer serving full time; One engineer officer serving full time; Two persons who may not be officers of the Forces but who possess qualifications equivalent to a university degree in engineering or science.
In addition, it is customary, where necessary, to enlist the help of the technical experts of the Council for Scientific and Industrial Research and of the universities, as well as other appropriate authorities, in connexion with the examination of inventions.
Cite as: Australia, House of Representatives, Debates, 21 November 1941, viewed 22 October 2017, <http://historichansard.net/hofreps/1941/19411121_reps_16_169/>.