16th Parliament · 1st Session
Mr. Speaker (Hon. W. M. Nairn) took the chair at 3 p.m., and read prayers.
Assent to the following bills re ported : -
Loan Bill 1943.
Customs Tariff Validation Bill 1943.
Customs Tariff (Exchange Adjustment) Validation Bill 1943.
Customs Tariff (Special War Duty) Validation Bill 1943.
Customs Tariff (New Zealand Preference) Validation Bill 1943.
Customs Tariff (Canadian Preference) Validation Bill1943.
Excise Tariff Validation Bill1943.
– It has been brought to my notice that an organization engaged in war work of an important character has received notice of eviction by the purchaser of the factory in which it has been carrying on operations. The purchaser also desires to engage in war work, but as the result of the eviction, the organization will be put to great expense in erecting new premises. The man-power problem will arise, and necessary materials are in short supply. Will the Prime Minister state whether the Government has power to prevent occupants of premises engaged on important war work from being displaced in that way?
– I ask the honorable member to supply me with the names of the persons involved, so that I may have knowledge of the facts; but, broadly speaking, I believe that action could be taken, if necessary, under the contentious regulations dealing with the mobilization of services and property contained in Statutory Rules 1942, No. 77.
– Has the Minister for the Navy read the report in the Sunday Times, Perth, of the 7th February last, in which a question was raised as to the authority under which the Naval Selection Board in Adelaide recently included a political questionnaire, in dealing with applicants for appointment to positions in a branch of the naval service? Is the Minister aware that according to the report referred to, two of the questions submitted to the candidates were, “ What are your views on secession ? “ and “ What do the people of Western Australia think of the Prime Minister? “ If the Minister has not read the article referred to, will he call for a report on the matter?
– My reply to the first two questions is “ No “, but I shall obtain a report on the matter and supply the information desired at the earliest possible moment.
– As the AttorneyGeneral is aware, the National Security Act provides that orders of a legislative character made under regulations must be tabled in the House, so that it may disallow them in the same way as it may disallow regulations; but the practice has arisen of issuing directions, which, as far as I can tell, are indistinguishable from orders. Will the AttorneyGeneral inform the House why such directions are not tabled, particularly as they affect . people’s property and businesses in precisely the same way as orders do?
– The matter raised seems to be important. I shall look into it, and endeavour to furnish a full reply to the honorable member’s question.
– In view of the present war situation, will the Prime Minister consider the despatch of a parliamentary mission, representative of both branches of the legislature, to the battle areas?
– Will the Minister for Repatriation state whether the rate of pension payable to service-men who are declared permanently and totally incapacitated for life is different from that payable to those whose total . incapacity is classified as temporary? If so, and in view of the fact that a man in the latter category might be rendered idle for years, will the Minister have the matter investigated, and make a statement to the House upon it this week?
Mr.FROST. - I shall look into the matter and make a statement regarding it before the conclusion of the sittings this week.
Press Reports of Operations. Mr. GEORGE LAWSON (BrisbaneMinister for Transport). - by leave - On the 12th February, the honorable member for Melbourne (Mr. Carwell) referred in this House to the publication of war news in the Australian press. The Minister for Information (Senator Ashley) has submitted the following comments on the questions raised by the honorable member : -
A study of newspaper files from all capital cities indicates that on an average, over a period, substantial displays have been given to news from the New Guinea front. In addition, almost all newspapers publish in full communiques from Allied Headquarters in the South-West Pacific. They also . publish lengthy despatches and special articles from accredited war correspondents.
It is the practice of the press to feature spot war news, and for some time a great amount of space on edition pages has been devoted to the Russian front. Considerable space has been devoted to the Middle East front; but, despite this, considerable space is given to the New Guinea front. Whenever operations become more extensive in New Guinea, there is an immediatepress reaction and greater space isdevoted, to it.
It is not very often that news of the South-West Pacific is released from Washington. When it is. it concerns naval operations or air cooperationfrom the South-West Pacific command.
In addition, the newspapers havepublished 80 per cent, of the photographs of fighting in the New Guinea area, distributed to then by the Department of Information.
An illustration of the growth, of news in the South- West Pacific Area is the wordage of news cabled from Australia to America. It has increased from 210 words a month early in 1940 to an average of more than 199,000 words over the last eight months.
I doubt whether any good purpose could be served by approaching the newspaper .proprietors, as they could fairly claim that they are publishing a full proportion of South- West Pacific news from time to time. Prominence is often given to the deeds of American troops at Guadalcanal, and over a period of months it could hardly be said that news of activities in this -sphere have not been well covered by the press. All the news of this sector comes from Washington, a; it is outside the South- West Pacific command.
– For a considerable time past, honorable members have been asking questions of the Minister for Air about the delay which has occurred in the promotion of sergeant pilots in the Air Force overseas. I have myself made many representations on the subject, and so Have other honorable members. Is the Minister yet in a position to make a statement on the subject?
– by leave- Some time ago the honorable member for Lilley (Mr. Jolly) raised in this <ch amber the question of promotion to commissioned rank of Australian aircrew personnel serving overseas with the Royal Air Force under the Empire Air Training Scheme agreement. This matter was raised also by other members on both sides of the House. In my reply, I intimated that that question, with many others, was the subject of discussion between Australian and United Kingdom representatives in London, and that as soon as I received any further information in that connexion I would pass it on to honorable members. A cablegram has just been received from the Australian representative in London to the effect that agreement has been reached that such personnel will be eligible for promotion to flight sergeant and warrant officer after six months’ satisfactory service as a sergeant, and flight sergeant respectively; and from pilot officer to flying officer after six months’ satisfactory service;, and from flying officer to flight lieutenant after two years’ satisfactory commissioned service. The agreement further provides that personnel will be eligible at any time for the grant of acting rank in accordance with the establishment of the appointment to which an aircrew member is posted.
As to the commissioning of noncommissioned aircrew personnel, Mr. Bruce advised that, whilst strong representations had been made by the Australian representative for the . commissioning of all aircrew personnel who are recommended and considered suitable according to the standards of the Royal Australian Air Force, agreement had not yet been reached. Discussions with the United Kingdom authorities on this important subject, however, are still proceeding, and the Government will be advised of developments as they occur. I hope that finality in this matter will be reached at an early date, and as soon as any further information of interest comes to hand I shall advise the House. I am hopeful that the negotiations taking place in London in that connexion will result very favorably.
It will be of interest to honorable members to know that during the last three months 853 members of aircrew in the Royal Australian Air Force - pilots, observers, wireless air observers, wireless air gunners, and air gunners - have been promoted from non-commissioned to commissioned rank after operational and unit experience here and overseas. Of that number, approximately 220 were gazetted only during the last week or two. From these figures it will be clear to members that every action is being taken to arrange promotions of aircrew personnel. That policy will continue to be implemented, as far as practicable, consistent with agreements that may be entered into with the United Kingdom and the dominions- which are participants in th” scheme.
– The honorable member for Bendigo (Mr. Rankin) asked last week for the names of the expert committee which selected the sites for country wool storage and appraisement centres. For the information of honorable members, I point out that, consequent upon the decision of the Government to establish country wool storage and appraisement centres, Messrs. H. J. Monckton, chief controlling appraiser for the Central Wool Committee in New South Wales, and W. G. Lumby, director of Shute, Bell, Badgery, Lumby and Company Limited, were asked on behalf of the Government to report on the suitability of country sites in Queensland, Victoria and New South Wales. Messrs. Monckton and Lumby, who are men of high repute and undoubted ability, have been associated with the wool trade for many years. They were, therefore, well fitted to undertake the responsible duties allotted to them. After making a detailed examination of all the factors involved, including the conservation of rolling stock urgently required for defence needs, the storage of unshippable types of wool, areas not regarded as susceptible to enemy action, and other relevant matters, they recommended Dubbo, Moree and Werris Creek in New South Wales, Roma in Queensland, and Portland in Victoria, as new storage and appraisement centres. Subsequently, the recommendations of the committee were examined by the DirectorGeneral of Transport, Sir Harold Clapp, and his deputy, Mr.D. J. Howse, as well as by representatives of the Queensland Railway Department. The reports confirmed in detail the recommendations submitted by Messrs. Monckton and Lumby. The comments of the Director-General of Transport are of particular interest, and indicate the exhaustive nature of the surveys made in each case to test the suitability of the selected sites. Sir Harold Clapp, in his report, said -
So far as the selection of locations for immediate consideration is concerned, the points proposed in New South Wales are ideal. In the case of Dubbo, the State is already bearing a bounty in freight to enable wool appraised in Sydney to be re-transported to the Dubbo district for the carbonizing works, which represents wasted transport when it could be met by wool which flows past Dubbo to the city for appraisement.
In the cases of Werris Creek and Moree, these are ideal points for country appraisement and would be quite acceptable to the transport authorities, with considerable saving in truck mileage.
The question was very fully discussed with the chief traffic manager (Mr. A. G. Denniss), who was in full agreement with the proposal.
From a State aspect, the proposals were discussed with the chairman of the State Development Committee, Professor H. D. Black, and other members - and they are unanimously in favour of the scheme and regard it as the only sound means of giving immediate relief to railway transport, as well as establishing a sound policy for the economic development of country industry.
The matter was fully discussed with the State Premier (Hon. W. J. McKell, M.L.A.), who advised that the proposals would have the full support of his Government, both in respect to the State outlook and the urgent relief necessary to the transport system.
As 1 have indicated, the investigators were as much impressed with the suitability of Roma and Portland as with that of the New South Wales sites. The selection of Portland has since been favorably commented upon by the Premier of Victoria, who, by no stretch of imagination, can be regarded as a supporter of this Government; while the choice of Roma has been enthusiastically endorsed by the North Queensland Country party. The Government is determined to proceed with its plans for decentralizing the wool industry, and is confident in the knowledge that it is in the national interest to do so.
– Can the Prime Minister yet announce the decision of the Government in respect of Easter holidays?
– Not yet.
Food Supplies - Use of Militia
– Is the Minister of the Army aware that many Australian troops are becoming unfit because they have developed stomach ulcers and similar disorders? Will he have an investigation made of the cause of this, and into the quality of the food supplied to ‘members of the forces, including the quality of the bread?
– Reports which I have received indicate that the food supplied to the forces is of a very high quality. It has not been reported to me that an abnormal number of soldiers is suffering from stomach trouble, but I shall have inquiries made and shall furnish a reply
– . Would the Prime Minister be good enough to supply to honorable members copies of the message which the Minister for Information says was sent overseas and was effective in preventing any criticism of the attitude of the Australian Parliament on the Defence (Citizen Military Forces) Bill? Perhaps the right honorable gentleman will regret that it was not published in Australia before that legislation was debated.
– No such message was sent. Government, representatives abroad, whose duty it is to watch Australian publicity, have access in the first place to the short-wave broadcasts which are monitored and circulated; secondly, they are kept informed of current developments in Australia bearing on the war by a weekly newsletter conveyed to them by the fastest route; and, thirdly, decisions of big moment or projected legislation dealing with important war administration are explained to them by cable. All these facilities were made available in relation to the Defence Bill from the time that the question of amending the act was first announced by me last November. Government representatives abroad had no information at their disposal that was not also available to the Australian people. At the same time sufficient information was made available to them to enable them to correct any misrepresentations of the bill or its purposes that might have been cabled from Australia.
” Daily Telegraph “ Report - Views of Commanders.
– Has the Prime Minister any information to give the House to support the report appearing in the Sydney Daily Telegraph of to-day to the effect that surprise was being expressed in political circles that no special meeting of the Advisory War Council had been called to discuss Japanese movements north of Australia, and that there is confusion at Canberra at the latest hints of Japanese restlessness? If the Prime Minister does not possess information to substantiate either of these statements, will he consider adopting a course of action which will make this newspaper realize that it has a responsibility in wartime to see that it maintains at least a degree of accuracy?
– I have not read the report, but I assure the honorable member that there is no confusion in Canberra regarding, activities in New Guinea. On the contrary, there is the most complete confidence on the part of the Government and, I am sure, of the Advisory War Council also, in the steps which the commanders are taking in order to deal, to the maximum of their resources, with any campaign which the enemy may undertake. The reason why there is to be no meeting of the Advisory War Councilthis week is not unrelated to the fact, that members of the council are kept fully informed of what is taking place. They know, broadly, what preparations the commanders have made, and they do not see any occasion to meet.
– Is it proposed to take any action against the newspaper?
– Time and time again I am asked whether there is a political censorship in Australia, and to that question I always answer “ No “. I take it that that expresses the wish of the Parliament. The comment in the Daily Telegraph, whilst grossly inaccurate, does not appear to me, so far as I could gather its import, to be harmful to the security of the country. It is most certainly calculated to affect the public mind in that it tends to create a belief that there is slackness in Canberra regarding the conduct of the war. The report states that no meeting of the Advisory War Council is being held this week, and the suggestion is that the council is somewhat remiss in the performance of its duty. That is entirely false, but it is not a new thing for the Daily Telegraph to be false.
– In recent statements General MacArthur implies that the Japanese may be concentrating against Australia, whilst Admiral Nimitz says that the American Navy may soon be shelling Japan proper and General Chennault says that the Pacific war may end in 1943? In view of these somewhat contradictory statements, can the Prime Minister give the House any explanation of the Pacific position?
Mr.CURTIN.- I think that if the honorable member will consider the matter quietly without relying upon newspaper sources of information, he will see that it would be impossible for me, in reply to a question, to deal with the Pacific situation adequately. Not to deal with it adequately would be to deal with i: in a way which would perhaps leave what I said open to misconstruction. The communiques issued by General MacArthur contain a day-to-day account of the way in which we and the enemy are engaged. I regard the communiques ascompletely accurate. They indicate the state of affairs in the South-West Pacific Area at present.
– Is the Minister for the Army yet able to supply the information for which I asked on the 18th February concerning a statement in the Sydney Daily Telegraph to the effect that his department was responsible for the movement to establish a Supreme War Council?
– I confess that I cannot keep up with all the statements in the newspapers about the establishment of this council or that. 1 told the honorable member when he asked his question that I did not know anything about the matter.
– But there are persistent rumours.
– The fact that the rumours are persistent does not prove that they are well based. I do not know anything officially of the rumours to which the honorable members refers, and I have nothing to add to the statement which I previously made on this subject.
– Has the Prime
Minister seen a small brochure issued by the British Ministry of Information, entitled “ Fifty Facts About Britain’s War Effort “ ? As there seems to be only , one copy of the brochure available, and in view of the light that it throws on Britain’s war effort, will the right honorable gentleman have copies of the brochure prepared and distributed among’ members of the parliaments of Australia ?
– I saw the brochurethis morning. As the right honorable gentleman says, there is, apparently, only onecopy of it in Canberra. I understand that the publication was prepared by the British Ministry of Information for circulation chiefly in the United States of America and Canada. I shall consider the right honorable gentleman’s suggestion.
– Can the Minister representing the Minister for Trade arid Customs say whether it is correct, as reported in the press to-day, that the price of peaches in Australia is to be fixed? If so, can he say whether the Government proposes to take action to fix the prices of other fruit also?
– Action in connexion with peaches had to be taken because some growers who had contracted to supply fruit to canneries in order to maintain supplies for the services were sending their peaches to the metropolitan market and ignoring contracts into which they had entered. It, therefore, became necessary for the Department of Supply and Shipping to instruct the transport authorities not to move peaches from certain areas, thereby forcing growers to deliver their fruit to the canneries in accordance with their contracts. Simultaneously.,I requested the Commonwealth Prices Commissioner to take steps to ensure that a ceiling price was fixed for peaches in the metropolitan market, so that those growers who had access to that market because of the action taken to stop the transport of peaches from other areas, would not be able to extract exorbitant prices from the public. I have not seen any statement in the press relating to this subject.
– In view of the fact that the price of peaches has been fixed, will the Minister for . Supply and Shipping take steps to ensure that the canneries at Kyabram andShepparton shall be compelled to accept peaches from growers who are not shareholders in those canneries? They are at present refusing.
– The information that the honorable member has conveyed to me is quite new. I shall ascertain the facts.
– Last week, I asked the Minister representing the Minister for Trade and Customs several simple questions relating to the conditions upon which, the newspaper Standard was permitted to be published. So far the Minister has not furnished a reply. Will he give an assurance that a reply will be furnished some time this week?
– I am unable to give any such assurance, as nature sometimes takes its toll of Ministers, as it does of private members. Unfortunately, the Minister for Trade and Customs has been confined to hospital, and I. thought that the honorable member for Richmond would not desire that I should press- for an answer to his questions at such a time. As soon as the Minister is capable of dealing, with the matter the information will be supplied to the honorable member.
MAJOR de GROOT.
– Has the Minister for the Army come- to a decision regarding questions raised by me in this House, and by means of correspondence, in connexion with’ a certain major in the Australian Army who previously belonged to the New Guard - a Fascist organization in New South Wales? I now ask whether it is a fact that this major, who has caused a great deal of discontent in the Greta camp, was specially selected by high, military officers to g,o to that camp, where it was alleged, disciplinary measures were required,, and, that as the result the discontent has practically readied the dimensions of a riot? It is said that he has referred to returned soldiers as “ crocks from overseas “ and has said that he will not he ruled by them;alsothat he has refused-
– Order !
– Is it a fact that he has refused representatives of the Australian Comforts Fund permission to organize functions at Greta camp, and also has refused a mother-
-Order! The honorable member should not give information, but should ask his question.
-. - I am not giving information; I am asking for information.
– The honorable member must state, his question.
– I ask whether it is a fact - I am not saying that it is a fact, and I am not giving information, as I am for bidden to do so-
– The honorable member is making a statement in interrogatory form.
– Is it a fact that this officer refused a mother permission to enter a military hospital to visit her son?
– What is his name?
– de Groot.
– I have no evidence that the honorable member’s question is based on fact. Charges made against commanding officers will be- fully investigated in accordance with Army regulations. Under our democratic government, all ranks have the opportunity to appear before a tribunal to answer charges made against them.
– Why does the Minister not sack him?
– No Minister would, be justified on. ex parte evidence in sacking any one. Any charges made against any individual in the Army will be fully investigated by a properly constituted tribunal.
Reference, to Public Works Committee
– Can the Minister for Supply and Shipping tell me whether its terms of reference confine the Public Works Committee to an inquiry whether the Government should adopt the recommendations of the American Mission on shale oil or whether the scope of the inquiry is sufficiently wide to enable the committee to take evidence from people who. propose alternative methods for extracting oil from shale?
– I do not intend to restrict the Public Works Committee’s inquiry to the two projects at Glen Davis and Baerami. The Government intends to develop the extraction of oil from shale at Glen Davis to 9,000,000 or 10,000,000 gallons per annum, but it asks that the committee examine the recommendations of the American mission for the further development of the Glen Davis project to an output of 25,000,000 gallons and for the development of the extraction of oil from shale at Baerami. The committee will exercise its own judgment in deciding what course its inquiry shall take, but I hope that the inquiry will not be prolonged. We are particularly anxious to have it3 report. Information that will help to make the two projects at Glen Davis and Baerami an ultimate success will be welcomed by all members of Parliament.
– What about the alternative methods?
– I am not confining the committee.
– In view of the fact that the cruiser Shropshire, which the British Government has presented to the Commonwealth of Australia to replace the ill-fated Canberra, is not to be renamed Canberra because an American warship, about to be launched, has been given that name, will the Minister for the Navy direct that the Shropshire shall be renamed Melbourne, because this Parliament sat in Melbourne as the first capital of the Australian nation for 27 years and because of the splendid record of service in the last war of H.M.A.S. Melbourne ?
– Regard must be had fcr the desires of the British people, who have so graciously presented the Shropshire to Australia. It is their wish that the vessel shall continue to be identified with the county of ‘Shropshire. All the considerations mentioned by the honorable member for Melbourne have been considered. I see no reason why we should ask the British Government for permission to alter the name of this vessel.
– I ask the Attorney-
General whether the review of the landlord and tenant regulations, promised some time ago, has been made and whether it is intended to amend those regulations ?
– The landlord and tenant regulations which are administered by the Minister for Trade and Customs were reviewed and some amendments were made a little time ago. They are quite distinct from the landlord and tenant regulations as they affect soldiers. The latter regulations are a part of the moratorium regulations. They have also been amended from time to time. I understand that the Minister for Trade and Customs is again reviewing the landlord and tenant, regulations, which he administers, and will soon receive representations from all interests concerned.
– Has the Minister for Labour and National Service yet come to a decision with respect to the South Maitland railway dispute, in which the members of the Federated Engine Drivers and Firemen’s Association were given fourteen days to cease work? This dispute, in respect of which I have not only written to the Minister, but also introduced a deputation to him, threatens to hold up production at mines which produce 8,000,000 tons of coal annually. The men desire that the dispute be referred to a federal tribunal.
– I have discussed this matter with the Attorney-General, and I hope to be able to announce some progress within the next few days.
– I have received from the right honorable member for Cowper (Sir Earle Page) an intimation that he desires to move the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely, “ The immediate need for a single food control in Australia to stimulate food production, to assure ample supplies to the fighting forces and civilian consumers in Australia and Britain, to stabilize prices, to promote industrial peace, to raise morale, and to prevent duplication and confusion in Australia’s war effort”.
.- I move -
That the House do now adjourn.
-Is the motion supported ?
Five honorable members having risen in support of the motion,
– My principal purpose in taking this action is to attack not the Government, but the problem that now confronts Australia in this matter. I acknowledge that much has been done by Australia with regard to food production, particularly as the main basis of what we are doing was laid down by me during the last twenty years. Honorable members opposite may smile; but I remind them that when I was Minister for Commerce I instituted the canning campaign, and initiated systematic experiments with regard to dehydration. I made provision also for a very great increase of cold storage accommodation. Our food problem is complicated by the federal system under which we live, as well as by war problems. I endeavoured to overcome the difficulties arising from the first cause by establishing the Australian Agricultural Council about nine years ago. That body brought together the Commonwealth and the . States in an attempt to establish a unitary policy. In time of war, piecemeal efforts to deal with food production and consumption create anomalies almost as numerous and as difficult as the original problems. I intend to set out the basic principles that should guide us, and to give illustrations of the types of mess we are in. I shall’ then show the effect of this division of control on our production, and compare our results with what has been done in Britain, where there is unified control. Finally, I shall indicate how we should proceed.
Our real difficulty here is that we have no organization to ensure civilian food at reasonable prices and in continuous supply. In Sydney on Christmas Eve we dumped 3,000 bags of beans, and last Monday the Melbourne markets were cleared out of vegetables in ten minutes. The welfare of the workers in war-time is affected by the organization of food supply and distribution as much as by the organization of industrial production and military activity. The abilitv and desire of the people to stand the strain imposed upon them in war-time depend to a great extent on the quantity and kind of food available to them. The chaotic condition of food distribution in the closing years of the last war was one of the principal causes of growing industrial unrest, which finally forced the British Government to establish a wide measure of food control. One reason why Germany surrendered was because its food organization was the first to collapse.
Control of supplies and distribution is more easily applied and more likely to be effective if it is introduced before shortages occur and prices begin to get out of hand. The primary purpose of production is consumption. Both production and consumption can be stimulated under a food control scheme which stabilizes the general price level. Great Britain has found that subsidizing the cost of living keeps consumer prices at a reasonable level. A remunerative price guaranteed by the Treasury stimulates production of- ample supplies. The advantages of stability of general price level are significant - (1)It imparts much greater satisfac tion to the ordinary consumer and therefore builds up morale.
Commonwealth Government’s war effort, even though subsidies have to be paid. The Government is buying half the goods and services, and any subsidies it spends will be for payments at the basis of costs, namely, imports and first production in Australia. If prices were adjusted instead of subsidies being paid, the final cost to the consumer, including the Government, would be very much greater than the original cost of the subsidies.
It is important to do the whole job and not to proceed piecemeal. Later on I shall come to the steps that we should take in Australia. First, I should like to illustrate some of the difficulties that arise at present, because there is no comprehensive system for handling the whole of our problem. There is no central organization to assure ample supplies of civilian food. Last spring, for instance, seed was refused to hundreds of farmers who wanted to grow their own potatoes in the coastal districts of northern New South Wales and southern Queensland, even for half an acre, although such production would have subsequently relieved the pressure on the market. In England great assistance to the solution of the problem of vegetables has been given by production in home allotments.
– Why was the potato seed refused?
– I do not know. In Australia the seed seems to have been cornered for army contracts. There may have been a way of getting seed for this purpose, but it was unknown to the great mass of the general public and the farmers, and to rae as a public man and a farmer to boot, because I tried to get it and could not find a way. Take as another example milking machines, in which the Minister for Supply and Shipping (Mr. Beasley) gave us a great deal of help in our difficulties. The Government decided to stimulate dairy production and gave a subsidy to this end, actually passing an act which stated that as its main purpose. The Australian Food Council advised the installation of milking machines, and ordered 1,000 each in New South Wales, Queensland and Victoria. There are roughly 60 constituents of these machines. The manufacturers to whom the orders were given found that they could not get priorities for them from the various departments. Although the Food Council assisted them in every way to get their travellers and men to service and install the machines, the Department of War Organization of Industry and the Department of Labour and National Service said that these could not be made available, because they were needed somewhere else. In addition, the Munitions Department would not supply the motors, all of which it said were needed for the Army. Finally in despair these business executives, who had been doing not only civilian work but also a great deal of war work, cameto us to see what could be done. We brought them to the Minister for Supply and Shipping who was, I understand, able to overcome most of the difficulties. We asked him to co-ordinate the conflicting authorities and allot the priorities right through, which he did, but all this took so long that the milking machines will not now be available for three or four months, and by that time the flush of the milking season for which they were needed will be over. Nothing illustrates more clearly the necessity for one definite overseeing authority to whom the farmer, manufacturer or other person concerned can say: “Now, you carry this thing through for me, and, if it is the highest order of priority, make certain that the issue comes to me at the right time “. In another case I found that the Food Council had let in the irrigation areas a large contract for vegetables for the servises. This was done through the Department of Supply and Development. The farmer who accepted the contract needed an extension of his irrigation system to fulfil it, but his machinery-maker could not get his raw material for this extension from the Department of Munitions. Finally the Minister for Supply and Shipping, at my instigation, insisted on the high priority given to the contract being honoured, and this enabled the contract, which was actually made by his department, to be carried out. There must be one Minister who can handle all these things for people who are harassed at every stage of their job, and so enable them to get on with it. They should, be able to say to him, “ There is our problem, you work with respective Ministers who are handling the various sub-departments, and let us get ahead. We are handicapped enough as it is, because so many of our staff are fighting overseas or engaged in munitions work “. There is another instance which I can give of potatoes actually grown to contract, but allowed to rot at the railway station at Grafton because no trucks were available for a week to carry them off. Wc must have a man in control of food who is able to co-ordinate transport as well, because transport is just as important as anything else. He should be able to arrange -transport for food in the same way as he would do it for munitions. I have already mentioned how thousands of bags of beans and other fresh vegetables were dumped on Christmas Eve. A coordinating authority could have insisted on all the dehydrating, canning and cold storage facilities in .Sydney being placed at the disposal of the vegetable suppliers, who in that way would have been able to preserve a great deal of these beautiful fresh vegetables and carry them forward until the flush season had gone, when they would have been very valuable indeed. The decrease of butter production has been due partly to the bad season, but a considerable fall was the result of the drain on the man-power of the farms fifteen months ago, and the failure of the Munitions and Supply departments to permit the installation of laboursaving units. This led to many farms having to be abandoned. My experience throughout Australia shows me that one out of every five or six of the dairy farms which were working three or four years ago is not at present being worked, owing either to lack of labour or to lack of the financial incentive which is essential to enable those on the land to make a profit. The Government has passed an act to stimulate dairy production; yet there is no organization in existence to do this co-ordinating job of work. It is therefore imperative to create one. Great Britain is a food-importing country, and its Government desires to bring in every pound of fat that is possible to be eaten, and wishes every pound of other food that cannot be shipped to be stored for post-war use. It especially desires that Australian agriculture should be maintained 100 per cent, intact. Great Britain has made great progress in agricultural production during the last three and a half years. Australia, which is a great food-producing country, should make certain that it gets the maximum amount of production for Great Britain and the allies and its own people during the war, and that at the end of the war it has an agriculture which is 100 per cent, efficient, and so able, straightaway, to supply post-war demands. Australia should have in reserve for that time of crisis everything that can be preserved, because it will be called on to help to feed millions of starving families in the countries which, are now oppressed. Great Britain has made sure of the ability of its Minister for Food to deal with problems of transport, machinery, and labour. During the last three years it has achieved the greatest production of the engines of war, ships and aeroplanes that the world has ever seen. For a long time it carried on alone its fight with the rest of Europe. It has 3,500,000 men in the fighting forces. In spite of all that it has had to face, it has increased its agricultural production by no less than 50 per cent. When the war started it was 40 per cent, self-sufficient; to-day, as regards food, it is over 60 per cent, self-sufficient. At the same time it has made its people happy and contended by learning and practising the lessons which the last war taught it in respect of food control. By its policy of remunerative prices to the producer and subsidizing the cost of living to ensure that the consumer gets his food at reasonable prices, Great Britain has steadily increased the production and consumption of milk by not less than 300,000,000 gallons of whole milk a year, and its consumption has now reached 5 pints a head a week. This milk is being sold at 2d. a pint, whereas the pre-war price was well over 3d., and the actual cost of producing it to the farmer is nearly 3fd. Despite the fact that Australia is a great butter producing country, we have experienced a decline of butter production and of milk consumption. Milk consumption in Australia to-day is not so great per head as it is in Great Britain. In Great Britain the area under vegetables has increased from 2,500,000 acres to 4,000,000 acres, and the total quantity of vegetables available is now double what it was at the beginning of the war. In this country there has been a. substantial decline in vegetable production with the exception of potatoes, inrespect of which there has been some increase. In Great Britain the price of vegetables has remained at practically the same figure for the last eighteen months. Wages also have been stabilized. In fact the retail price index figures, generally, in Great Britain and Canada have remained stationary, whilst we in Australia have experienced the most extraordinary and grotesque fluctuations in the prices of vegetables and fruit especially. This has occurred largely because of our lack of united political food control.
We have not established a co-ordinated organization. We have not viewed our problem as a whole. Britain has dealt with food production on a unified basis. The Pood Ministry considers food problems in the same way as the ministries in control of the fighting services consider service problems. In Britain food is regarded as being as important as munitions. The quantity of labour needed for food production is determined in the light of the whole problem, and a decision is reached by the proper authority concerning the amount of labour that must be employed. An allocation is made of the number of workers required on the land and the number required in the fighting services. The whole problem of British man-power has been considered in relation to the total need. A Women’s Land Army of 25,000 has been established, and 10,000 troops are made available daily for farm work over practically the whole period of farm operations.
Britain has dealt in the same way with the problem of mechanical appliances for farm work. The number of tractors employed in farming in England has increased from 45,000 at the beginning of the war to 100,000 at present, with the result that British agriculture is now the most highly mechanized in the world. I believe that in Australia we have fewer tractors at work now than we were using at the beginning of the war. This is also probably true of trucks. Our farming community has been engaged in a continuous fight for the right to retain farm implements, and also for the release, for such implements, of the necessary oil and other supplies. Farm machinery and fuel have been on a low priority. I must confess, however, that in this case also, when a reasonable submission has been made to the Minister for Supply and Shipping it has been favorably considered. For example, I made a request to the Minister that petroldriven vehicles should be permitted to bring butter from the Dorrigo into the factories. I pointed out that producer-gas units were absolutely ineffective in the mountainous Dorrigo country. As a consequence, the Minister agreed that timber carriers and other persons engaged in transport services should be allowed to obtain sufficient petrol to render the necessary service, and the use of producergas units was discontinued. But a decision on such a matter should be given as a matter of policy and not of grace, and should be generally applied by the Minister for Food.
Production figures in Great Britain and Australia appear in sharp contrast because the control of production in Great Britain has been organized. British unified control has assured to both producers and consumers reasonable prices. In fact prices in Great Britain have been stabilized, more or less, from the beginning of the war. Although, at first, action to achieve this end was taken in stages, it has since been realized that many difficulties would have been avoided had production, consumption and distribution been placed under unified control immediately on the outbreak of war. In consequence of the present policy of the British Government, the cost of living has been stabilized for the last eighteen months. British policy has resulted in industrial peace and undoubtedly has proved completely beneficial to the national economy, for a substantial improvement has occurred in national nutrition even in beleaguered England. Lord Woolton informed me when I was in England that, as the result of definite Government policy, there would not be anything like the same degree of malnutrition in the women and children of England as was experienced during the last war.
– -There is not the degree of industrial peace in England that there is in Australia’.
– The honorable member may discuss that subject later. My time is too short to turn to it at the moment. The stabilization of wages and living costs in Great Britain has undoubtedly been of immense value to the whole community. The authorities there have learned the value of unified control. It has been realized that if production is to be stimulated sufficient manpower must be made available, and prices must be remunerative to the growers and reasonable to the consumers. The policy of the British Government is in marked contrast to that of the Commonwealth Government. This is illustrated remarkably in connexion with butter production. The bounty provided by the Commonwealth Government is equivalent to only 5/7ths of a penny per lb., although the special committee appointed by the Government to report upon this subject recommended that the price of butter should be increased by 3d. per lb. at the factory. [Extension of time granted.^
The difference in the two countries is due to management and control at the top. It is manifestly impossible for busy Ministers, who have a thousand and one other things to do, to consider all the problems that are related to food production. In Great Britain food was considered to be as important as munitions, and, in consequence, the Ministry of Food has authority over man-power, equipment, transport and policy in relation to food production, just as service Ministers have such authority in relation to the forces. The Minister for Food fights for his needs with the same vigour as the service Ministers fight for their needs. It is recognized in Great Britain that the farmers are doing vital work. Unless fighting men. are adequately fed they cannot continue to fight. National morale and general production can be maintained only if the soldiers and workers are properly fed. It is generally agreed that mental peace is an important weapon for victory. I have been in contact with medical practitioners during the last week or two, and I have been informed d! at the vitamin content of the canteen meals served in Britain is higher than that of the restaurant and cafe meals served in Sydney and Melbourne. In fact canteen meals in Great Britain, notwithstanding that rationing i<= so rigidly applied, have twice the vitamin value of ordinary restaurant meals in Australia. In Great Britain the Ministry of Food carefully works out a food policy for the nation as a whole, including service and civilian personnel. It then assesses the quantity of basie food necessary to meet the needs. Upon this assessment the general agricultural and food importing policy is determined. The food controller fights for priorities in man-power, equipment, shipping, transport, materials and subsidies, in order to secure the production of ample supplies at reasonable prices. Unfortunately our Ministry of Supply functions only in relation to service needs. It. is true that an Australian Food Council has been established, but if rnakes contracts only for vegetables and other food requirements of the forces. The Australian food control machinery is hindered in its working by conflicting priorities, and even when its work is done the real job is only half done, for no attention is paid to civilian needs. The British Ministry fight3 hard for priorities for the whole nation. In my opinion we have the problem out of perspective. We must visualize the situation a? a. whole. The solution of the problem is to be found in following the example of the British Government. For successful food c control we must obtain authority over supplies at their source, and we must also control channels of distribution. Without such control, and without the planned allocation of food supplies, no system of price control or rationing can be successful. Co ‘rol over supplies is the first step in 1 e execution of a satisfactory food poli y, and it necessitates control over methods of distribution. That has been proved beyond question in Great Britain. We should leave the existing channels of distribution intact and use the peace-time trade avenues and personnel. If this be done under a proper directive, the needs of the situation will be met. Such control over demand acts as a check to inflation, but to be complete it must be supplemented by a reduction of purchasing power by means of taxation. The stabilizing of the cost of living index figure is important, because that ultimately determines wage rates. The stability of the index figure can be assured by a proper policy of Government subsidies. We must consider the matters as a whole, because, as was found in Great Britain, if we deal only with certain items such as meat, and leave other foods out of consideration, undesirable results will follow. Without price control of foodstuffs generally, there will be profiteering. Delay in applying control would increase the difficulty of the task. The reason why the Canadian scheme succeeded was that the boldest methods were adopted. An over-all price ceiling was fixed, which was found to be more simple to administer than a partial plan. The difficulty about a partial plan is that the levels of profits in various industries differ, and, under the present economic structure, it is impossible to isolate costs. There is a “ spilling over “ from non-stabilized industries. In Australia wages have, for many years, been adjusted in accordance with the cost of living. The need for a price ceiling in this country is urgent, because in no other country are wages adjusted automatically to such a degree in accordance with the cost of living. The immediate need in Australia is a ministry of food, which has the first and last word to say regarding the production, processing, distribution and consumption of food. I; should have fullpower to implement the policy of price stabilization, so that every section of the community will be ‘ given mental peace. Its actions should be guided by the fact, ; is proved in Great Britain and New Zealand, that, if prices are to be fixed, they should be adjusted on a scale liberal to the pn ucers, in order to ensure ample supplies, and, if coupons are to be given under a rationing arrangement, they should carry an implied promise that the goods will be supplied when the coupons are presented.
– The right honorable member for Cowper (Sir Earle Page) has raised a matter of major importance to Australia and to the United Nations. My purpose is to reply to his arguments, first, by indicating how Australia stood in connexion with this matter fifteen months ago, what steps have been taken by the present Government since that time, and what results have been obtained. Having that information, the House will be able to judge whether the Government has adopted reasonable and proper measures with a view to solving the food problem. When the Government took office no fewer than 57 boards-, commissions, and other authorities under the control of different departments were dealing with the matter. I make that observation because, after all, the Government inherited that situation.
– All were not Commonwealth authorities. The Minister must include State instrumentalities.
– I do. The fact that the right honorable member for Cowper has contrasted the powers of the States against those of the Commonwealth shows how difficult it was to obtain a central authority which could exercise its powers in all parts of the Commonwealth. In Great Britain, the problem of divided control does not arise; but, in Australia, we have to face the realities of the constitutional position, irrespective of what government happens to be in power.
– Does the Minister say that the present Commonwealth powers are limited?
– I shall come to that point. The problem which, faced the Government was to get a central authority that would make prompt decisions in food ‘ matters, give such directions as were necessary to producers, examine and direct all processing methods, deal with food imports, and, generally, bring together the boards required so that necessary directions could be given. The Government therefore decided to establish the Australian Food Council. This was appointed last April, and the charter under which it operates makes it a central focal reservoir of the combined knowledge of all the departments as regards the survey of sources of supply, ambits of productive capacity of seeds and materials, manufacturing and processing resources, &c. The object for which the Department of Supply and Shipping was established was to supply the fighting services, supplies for the civilian population being largely dealt with by the Department of Commerce and Agriculture.
– It was really a matter for the State Departments of Agriculture.
– I intend to deal mainly with those agencies with which the Commonwealth is associated.
– The Department of Commerce and Agriculture has never dealt with manufactured foodstuffs.
– The Government thought it most undesirable that the Department of Supply should be free to go on to the markets to satisfy the needs of the fighting forces without having due regard to the needs of the civilian population. It therefore decided that a production line should be maintained which would meet the needs of both the fighting forces and the civilian population. The Government thought that the best means of approaching the matter was through the Australian Food Council, which would survey the sources of supply, analyse the capacity of the country, and also deal with the supply of seeds, particularly vegetable seeds. The Australian Food Council includes in its membership the Minister for Supply and Shipping as chairman, and the Director-General of Agriculture as deputy chairman. The latter is also chairman of the executive of the Australian Food Council. Among the members of the council are representatives of the fighting forces - the Wavy, the Army, the Air Force and the United States of America Army. The Government thought it necessary that these representatives, who know the needs of the fighting services, should also be made aware of the needs of the civilian population. For the first time, members of the fighting forces were appointed to sit at a conference table to consider not only their own requirements, but those of the country as a whole. We also have on the Food Council representatives of the American Government, so that they might obtain an understanding of what is required, and the extent to which they can helpus. Other members of the council include the chairman of the Nutrition Committee of the Department of Health, the Prices Commissioner, the Director of Rationing, the Director-General of Man Power, and representatives of the Departments of Supply and Shipping, Commerce and Agriculture, and War Organization of Industry, and a representative of the Council for Scientific and Industrial Research.
– What is the total number of members of the committee?
– We do not tie it down to a fixed number, but there are usually twelve to fifteen members at meetings.
– Do representatives of State departments attend meetings?
– The State departments are represented through the Departments of Agriculture. Naturally, they are anxious to safeguard their interests, and they are also able to give a great deal of help. They have information which is not available to the Commonwealth, because we lack the necessary organization, and at a time like this it would be impossible to build up a trained staff to get the information for ourselves. The State Departments of Agriculture have full information regarding soils, rainfall, irrigation, &c, upon which they can base estimates of food production. All this information is co-ordinated through, the Food Council, which thus becomes the central directing authority in connexion with the production of food in Australia. The State departments have co-operated fully with the Commonwealth, and are doing excellent work.
– We can fix production goals, ‘but we cannot achieve them unless something is clone about man-power.
– It is necessary to maintain our fighting forces at their maximum . strength. Of what use would it be to grow food if the enemy were to be allowed to come in and eat it? Our first obligation is to defend the country, and after that the available man-power must be used to produce as much food as possible. It is necessary to preserve a proper balance between our needs, and to this end we must take a general view of the situation. I do not suggest that we have achieved perfection; that would be impossible. What might seem perfect to-day could become imperfect to-morrow because of enemy action, unfavorable seasons, transport difficulties and the like; but it is good to be able to say that no complaints have been received of a shortage of food for the fighting forces in Australia. We all have reason to be proud of that. Adequate food supplies have been available, not only for our own soldiers, but also for those ofour Allies in this area, and the quality of the food has been equal to the best supplied to any other army in the world.
– It would be a grave reflection on us if that were not so.
– No doubt, yet there might easily have been a shortage in spite of our good intentions. It was possible for such a thing to happen, but, thank God, it has not happened. As early as February, 1942, we provided 10,000 tons of processed provisions for General MacArthur’s men who were putting up such a gallant fight in the Philippines. I appreciate what is being done in the United Kingdom, and all credit is due to the British people, but credit is also due to the Australian people for what they have done. To-day, there was laid upon the table of the House a document dealing with reciprocal lend-lease arrangements. It shows that Australia, up to the 31st December last, has supplied to America the following quantities of foods: -
– It looks as if, in connexion with these lend-lease transactions, the benefit is on the American side.
– No, I would not say that, by any means. Rather do I say that we are happy to have been able to do so much. It is a source of pride and satisfaction to all of us that we have been able to give this help ; and I mention the matter now only for the purpose of making it clear that Australia has made a fine effort in the way of producing food for the fighting forces. There have been faults and imperfections. For instance, in isolated instances, no doubt, vegetables were allowed to rot in the Sydney markets over the Christmas holidays, but that has happened many times before, and in this instance it was largely due to lack of transport. Nobody is going hungry in Australia to-day. but a great many people went hungry during the depression years of 1931 and 1932 - and thatwas in peace-time, whereas now we are at war. It is a sad reflection that many a child grew up physically incapacitated because of lack of food at that time.
– That was not because sufficient food was not produced. Those were high production years.
– That is the irony of it. As the right honorable member has said, there was an abundance of food in the land. Nature had been most bountiful ; it had provided all that was needed. It is a sad commentary on our civilization that, with plenty of food available, many people were allowed to go hungry. However, we cannot live in the past, but must face the facts as they exist to-day. The Government has never refused a request from the United Kingdom, India or the Middle East for supplies of foodstuffs to the fighting forces. Before Singapore fell, the whole of Malaya was being fed from Australia. Within the last few days, the Government has accepted the responsibility for feeding to the limit of Australia’s capacity the fighting forces of the United States of America in both the South-West Pacific Area and the South Pacific Area, which include the Solomon Islands, Fiji, New Caledonia and the New Hebrides. Only to-day, I authorized the supply of foodstuffs, known as dried provisions, to the value of £16,000,000 for the forces of our allies in the areas mentioned. That is an indication of what the Government is doing and of the importance that it attaches to the supply of foodstuffs as a part of world war strategy. We have endeavoured to assess our production not on a hit-and-miss basis, but on a scientific basis. ‘Careful analyses are constantly being made of various aspects of the problem. For instance, the supply of seeds of various kinds has to be watched carefully, and the capacity of our canning and processing works must be kept under constant, review. That work is being done by the Australian Food Council, through the Director-General of Foodstuffs and the various committees and organizations which have been set up.
– What executive authority lias the Australian Food Council?
– The honorable member may have put his finger on a weak point in the organization. He knows that organizations which have been in existence for a long time do not readily surrender their rights, although at times it may be desirable that they should do so. All these bodies have under their direction staffs of competent men. [Extension of lime granted.’] My point is that through the Australian Food Council, we have been able to direct these various authorities, thereby offsetting in some” measure any lack of executive power in the council itself.
– The Australian Food Council has more than advisory functions, .although it has not executive power.
– Should a department fall down on its job, we are able to make it realize its responsibilities. Previously, that could not be done; or, at best, it might have taken months. The existence of the council enables any weaknesses which may exist to be revealed-. Before the council was set up, there were no proper statistics, but now we have a complete picture of all essential food requirements. We can tell almost exactly what food is needed for our fighting forces and the civilian population, what the canneries can do, what the production of various foodstuffs is, and generally we are able to assess the position accurately. Of course, we are unable to control seasonal conditions. International developments, too, have had to be taken into account in dealing with this problem. For the first time in Australia’s history, the supply of foodstuffs has had to be undertaken on a technical and scientific basis. Previously, we did not interest ourselves greatly in the dehydration of foods, or in various processes of canning and preserving foods. We were able to get almost anything we wanted in the way of foodstuffs without much difficulty. Since the war, however, the whole situation has changed. In addition to our own population, large numbers of men of the fighting forces of our allies have to be fed. In this matter the Government of the United States of America has helped considerably by supplying technical officers and experts in matters affecting soils, dehydration, canning, and other methods by which food is processed. These various activities are linked with the Australian Food Council, and in that way developments can be watched.
– Unified control Ls still lacking.
– The right honorable gentleman, who has been in public life for a long time, will not underestimate the difficulty of setting aside established organizations, nor will he underrate the the powers still exercised by the States.
– The Commonwealth Government has at its disposal all the powers vested in the States in addition to its own powers.
– The evidence of recent weeks does not convince me of that. The Government is mindful of its obligations to the United Kingdom, and our American ally. Representatives of the British Ministry of Food are in Australia and we are also directly linked with the Government of the United States of America, through the combined Food Board at Washington, because the Government believes that the food problem will have to be controlled on a global basis.
The right honorable member for Cowper referred to the subject of nutrition. That matter is under the control of Dr. Clements’, who is chairman of the Nutrition Committee. The Australian Army, as well as the American authorities, are continually in association with the Australian Pood Council in order to determine the nutrition needs of the armed forces.
– More than advice is needed. Pood must be made available.
– No essential food has been denied to the troops.
– Oranges and eggs have been in short supply.
– There has been some difficulty in north Queensland, chiefly because the greatly increased number of men in that State has led to a shortage of certain foods. That matter, however, was grappled with immediately. Dr. Clements went to Queensland specially to deal with the vitamin value of various foods. It is true that for a time there was a shortage of potatoes, but since then there has been a glut of that commodity. It is better, however, that there should be a glut than a shortage of any essential food.
– That is what I am aiming at. I could not obtain seed potatoes.
– Large quantities of seed were sent to Queensland, and potatoes were grown in that State. Moreover, farmers were guaranteed a price of £10 a ton for them. “When the market price rose to £17 a ton I authorized payment at that rate in order that farmers should have no ground for complaint that the Government had taken advantage of circumstances to deprive them of a fair price for their product. The production of vegetables in Queensland generally has been watched carefully. That there is a shortage of rice is true. The reason is that we have to provide the natives in the islands with the rice that would be normally available to the Australian civilians, and to do that we had to close down on the supply of rice to the civilians. The planned production of 1943 includes 90,000 tons of tomato products.
– Who does this planning - the Department of Supply and Shipping or the Department of Commerce and Agriculture?
– It is done through the Pood Council, in which the Department of Supply and Shipping and the Department of Commerce and Agriculture are linked. We had to bring the two departments together in order to obtain a complete picture of Australia’s needs of foodstuffs. We have had problems in regard to citrus fruits. Honorable members know that the fighting forces need citrus juices. I need not go into details, but the obligation rests upon me to ensure, even at the expense of the civilian population, that such fruit juices as are necessary for the fighting forces shall be supplied. The fighting forces shall be provided with fruit juices even if civilians have to go without. That is the basis of the whole system which is being operated by the Food Council. The right honorable member for Cowper said that he introduced the idea of dehydration; but, until the Food Council was established, the planning of dehydration was not undertaken. Our plans are unique in this regard. I dare to say that no other country, except the United States of America, has pushed so far ahead with the dehydration of food as has Australia.
Australia is supplying the fighting forces in the Pacific and Indian Oceans. The United States of America is doing a great job of work in supplying North Africa and Russia with food. I am prompted to mention that the people of the United States of America have meatless days, and milkless and butterless days, too. If the Australian people suffer no more in this war than they have suffered so far they will be the luckiest people in the world. So far we have been able to keep our people provided with meat, butter and milk, which the people of the United States of America have to do without on certain days in each week. We have reason to be proud of what we have done. The right honorable member for Cowper was able, in support of his case, to cite isolated breakdowns here and there, but I defy any one to achieve the ideal state and to satisfy every need. The Food Council has swept away the multiplicity of boards and commissioners. it has co-ordinated both primary and secondary production. It has demanded and obtained action from responsible departments. It has brought together the two main departments concerned in food, the Department of Supply and Shipping and the Department of Commerce and Agriculture. It has brought the British Food Mission and the American experts to Australia. It has evolved the present technical organization in which the best overseas authorities are combined with our own Australian experts. It has set up a system of production goals, quotas and similar statistical information which enable the Government to determine almost at a moment’s notice the position in regard to any particular item of food. We had our difficulties in doing this job. We were faced with a situation in South Australia where the growers of a particular kind of grape found that they would obtain a better return if they sold their grape? to the wineries. Owing to the fact that the United Kingdom particularly wanted this grape in its dried form, it was necessary for the Commonwealth Government to make regulations to compel the growers to make the grapes available for dehydration. The regulation provides that the growers shall not sell to wineries more than the average of their sales to wineries over the last five years. The remainder must be dehydrated. At question time, the matter of the fixation of the price of peaches was mentioned. We discovered that agents in Sydney were going to the growers of peaches in the Murrumbid gee Irrigation Area and offering them attractive prices. The result was that, regardless of contracts, the growers by-passed the canneries and sent their peaches to the Sydney market, The canneries were left high and dry. We took appropriate action.
– And the Australian consumers were fleeced by the prices they were compelled to pay for peaches.
– Yes. There are all sorts of obstacles which we have to surmount in maintaining production at the required levels. We had the same difficulty about the by-passing of canneries by tomato growers. We had to refuse to allow tomatoes to be sent to the metropolitan area from certain areas either by road or by rail. The fixation of retail prices is the responsibility of the Prices Commissioner. He has the responsibility to ensure that the public shall not be fleeced.
– All countries had those difficulties until they did what I suggest this country ought to do.
– Which countries?
-Canada, Great Britain andNew Zealand, for instance.
– There may be lessons that we can learn from other countries. I shall be happy to learn from any one who can teach me. We have a population of 7,000,000 and a long coastline to defend. We have played a leading part in this war, not only in the defence of our soil, but also in distant operational areas. That coupled with the fact that no one in this country has had to go hungry is something of which to be proud. The organization that we have developed has taken us along the right road.
– What about the future ?
– The future will unfold itself. We have adequately met the situation as it has existed in the last sixteen months. I regard that as evidence that whatever changes are required in the future will be met by us as the need arises. I will not be behind in taking whatever steps may be lvecessary to conserve foodstuffs and to ensure that none shall go hungry. This Government, through the Food Council, arranged what was perhaps the most remarkable movement of cattle in history. Tens of thousands of cattle were moved from the West Kimberleys and the Northern Territory across Australia to the east coast, because we foresaw a shortage of beef for food and hides for leather. Cattle were shipped down the west coast for the same purpose. What has been done is to the credit of the Department of Supply and Shipping and the Department of Commerce and Agriculture.
.- I support the motion. I listened with interest to the Minister for Supply and Shipping (Mr. Beasley) and I have no hesitation in agreeing that the Government has done a great deal in ensuring the maintenance of food supplies to our troops. The issue is not the organization of the distribution of food, but the organization of production of food. The individual farmer does not know what he is required to produce. Thousands of farmers have no contact with the Government or with producers’ organizations, and they have not been told whether they should ‘produce 100 lb. or 1,000 lb. of this product or that. They are left to produce haphazardly according to their inclinations. None is more anxious than the farmer to help the nation to build up supplies of food. The Minister showed that the Australian Food Council was handling the distribution of food, but he failed, to deal with the actual production of food. The complaint of honorable members on this side is that the actual production of food has not been organized on a national basis.
– Definite organizations have been set up for that purpose.
– The Minister for Supply and Shipping did not say one word on that point. The fact is that for want of such organizations the production of food in Australia to-day is chaotic. It is being left entirely to chance. Production has not been coordinated. Consequently, our producers do not know what is expected of them. They must be told clearly of our requirements not, only for our own fighting forces and those of our allies, but also for civilians in this country and in Great Britain. Until production is organized on that basis, the Government cannot deal with this problem effectively.
– Has the Government ignored any of the recommendations made to it by the Joint Committee on Rural Industries?
– The Government has implemented the committee’s recommendations with respect to man-power and the supply of spare parts for farming machinery, but it has failed to act on the committee’s recommendations for the co-ordination of production. On that point the committee reported -
One of the outstanding features of the investigations by the Joint Committee on Rural
Industries has been the desire of the primary producer’ to help in the ever-increasing demand for the production of essential foodstuffs and other rural products. Given guidance and leadership, farmers are only too ready to meet demands, but, lacking that guidance and leadership, the sudden changes of demand and the difficulty of making the necessary adjustments have left a sense of frustration in the minds of many men on the land. Specialized industries - wool, wheat, meat, dairying, &c. - are organized on sectional lines, buta national constructive plan to coordinate agriculture and grazing and direct war-time activities of rural industries is wanting.
The committee recommended the appointment of a Commonwealth Director of Primary Production to formulate and direct policy on a national basis. The Government appointed Mr. Bulcock Director-General of Agriculture. I know him personally, and I know that he has been doing an extraordinary amount of work; but I have yet to learn that he has made direct contact with the farmers or indicated to them our requirements on a national basis. He should make direct contact with the producers. To-day, however, the producers are still left to carry on according to their individual judgment. I admit that production has been stepped up substantially, but that has been due entirely to individual, initiative on the part, of the farmers, and to favorable seasons. Production has not been increased on the basis of a co-ordinated national scheme. The primary producers are not represented on the Australian Food Council. That body consists solely of departmental officials. Further, it has not indicated to the farmers the classes of food which are needed most urgently. The first incentive to the farmer to increase production is the guarantee of a reasonable price for his product. Several committees have recommended that the Government should guarantee a reasonable price for butter. The general recommendation was that the price should be increased by almost 4d. per lb., but an increase of only7/8d. was granted. ‘So long as we retain our present multiplicity of boards and committees we cannot avoid duplication and confusion in our primary industries.
The Government should make available immediately to the industry sufficient supplies of spare parts for separator and milking machinery. I have in my hand a letter I received from the Alfa-Laval Separator Proprietary Limited, which states -
For the last four months we have sold on :in average about fifteen farm engines a month to drive milking machines that we supplied, mid we could have doubled this figure if we had been able to supply men who already had milking plants or other farming machinery to drive and were needing engines. .
Not only arc we in the unhappy position of having to daily refuse orders for milking plant on account of having no engines to drive them, hut production is being definitely held up. When a farmer finds that he cannot purchase a milking plant, he has no other alternative but to reduce his herd.
Herds have already been substantially reduced throughout Australia. That is a tragic fact. I know that these engines are required by the fighting services. I urge the Government to release as many men as possible from the services to assist in rural industries. On the recommendation of the Joint Committee on Rural Industries the Government in March last provided a blanket exemption in respect of all rural industries. However, the fact remains that to-day old people are carrying on most of the farms. This makes the need for the supply of engines for farming machines even more imperative. The Minister for Commerce and Agriculture (Mr. Scully) should obtain the release of these machines from the military, at least during the peak periods of production. I repeat that no responsible organization has made direct contact with individual farmers in order to inform them of our national requirements of various classes of products. Production goals should be allotted to each State, and the State governments should be asked to organize production to attain those goals.
– What about climatic cond i ti ons ?
– This year we have had one of the best seasons in our history. Butter production has been colossal, due solely to good seasonal conditions. I again urge the Minister to set up a body to organize and direct the actual production of food. The Australian Food Council is concerned only with the distribution of the food produced. It has nothing whatever to do with actual production. It has done its work well so far as distribution is concerned. The Minister for Supply and Shipping declared that no shortage of any kind of food was being experienced. That is not the case. Whilst I admit that the Government has done much to organize the distribution of food, I again urge it to place production on a national basis.
– The honorable member’s time has expired.
.- I am pleased that the right honorable member for Cowper (Sir Earle Page) has submitted this motion because it gives to us an opportunity to tell not only honorable members opposite but also the people what the Government has done to increase the production of food. The crux of the problem, as I see it, is that the Commonwealth Government has no direct jurisdiction over primary production. That is a prerogative of the States. It is only in war-time, and through regulations, that the Commonwealth can take that power, and even then it can exercise its powers in full only through the willing collaboration of the States. Recently, the Government appealed to the States to hand over several of their powers to the National Parliament, so that it could more effectively fight the war. The States are still talking about it, and we do not know what they will do. As a matter of fact, some of them do not know where they are. For the purpose of articulating and co-ordinating the many and varied and sometimes clashing factors and interests associated with food production, the joint parliamentary committee appointed to inquire into -rural industries as they are affected by the war, of which I have the privilege of being a member, recommended -some time ago that a director-general of agriculture should br; appointed. This was carried out at once, ?o I do not see what we are grumbling about. The trouble when this war broke out on the 3rd September, 1939, was that we were caught quite unprepared, but for two years thereafter the present Opposition, which was then the
Government, did nothing to bring about organization, co-operation and coordination. As a matter of fact, it set about fighting the war on the same lines as the war of 1914-18 was fought - ‘business as usual. Hundreds of thousands of young men volunteered and went across the seas, but Australia carried on practically in the ordinary way. The present war is quite a different proposition from the last one. The enemy is almost literally battering at our gates. “We also have tens of thousands, and I hope before long we shall have hundreds of thousands, of troops from our allies using Australia as a jumping-off place to fight the Japanese and avenge Pearl Harbour. Great Britain has been held up to us as an example in the production, control and distribution of food. 1 agree that it has done wonderfully well, but it has done it simply by appointing committees and giving them great powers. They can tell a farmer to produce certain tilings, and if he does not, they put him off his land. If we did that in Australia, a “ squeal “ would go up to High Heaven that the Labour party was bringing in socialism. We must bring in socialism of that kind to win the war, and later on to win the peace. In Great Britain, the Government has taken to itself many more powers than we have. We have appointed not only a Director-General of Agriculture, but also local committees, and we are doing a great deal already. Some time ago, a commission was appointed to inquire into the important matter of malnutrition, and it reported that a very high percentage of Australians were the victims of malnutrition. Either they did not net sufficient food, or the food they got did not contain the vitamins necessary for full development. That was not in war-time, but in peace-time, when the good old Lyons, Menzies and Fadden Governments ruled the land. There was starvation in the midst of plenty, yet honorable members opposite talk about what this Government has not done. What did their Governments do? In the midst of plenty, when wheat was rotting iu the bags or being eaten by mice and weevils, there were hungry women and children in Australia.
– It is rotting in the paddocks to-day.
– It is indeed, but we are taking measures to use it, and we have a surplus of it, so that we need not worry too much about that. I can point to some of the things that this Government has done. We are told that the dairyman is not getting a fair deal. I am one of the first to admit that he is not; but in all the years that have gone, what has he had from, the parties now in Opposition? In the last 42 years, the Labour party has been in power for only three or four. As a matter of fact, the dairymen and other producers have been in the wilderness for 40 years. When Labour came into office, dairymen had not received a price increase for nine years. United Australia party and composite governments had .been in power during that period. In December, 1941, two months after the Opposition had been defeated in the House, the Prime Minister (Mr. Curtin) announced that he would ask the Prices Commissioner to review the previous refusal to grant an increase of the price of butter. As a result of this, an increase was granted. Feeling that dairymen needed additional assistance, the Government last October introduced the Dairying Industry Assistance Bill, providing for a subsidy of £2,000,000 per annum. This subsidy is now being distributed. I do not believe that sufficient has yet been done. At the present time, inquiries are in progress and representations are being made to the Prices Commissioner to see that the basic wage shall be paid to those engaged in the dairying industry. That must mean that the employer in the industry will get at least the basic wage, plus the cost of production, for his product. This Government also subsidizes the wool industry. The Attorney-General (Dr. Evatt) was sent to Great Britain, and obtained a rise of 15 per cent, in the price of Australian wool under the contract with the British Government. That was a little over 2d. per lb. and brought into this country an additional £9,000,000 per annum.
– The honorable member’s time has expired.
.- I congratulate the right honorable member for Cowper (Sir Earle Page) on having initiated this debate. The speech of the Minister for Supply and Shipping (Mr. Beasley) shows that the Government appreciates the vigilance of the Opposition in the matter. It must be realized, however, that a ministry for food could be successful only by means of a proper co-ordination of the activities of the Minister for the Army (Mr. Forde) and the Minister for Labour and National Service (Mr. Ward) in relation to manpower. We have had a sorry experience in the dairying industry as the result of the present lack of co-ordination. Many dairying districts have been denuded of their man-power and some magnificent herds of dairy cattle, which were formed as the result of generations of expert attention, have been ruined. Dairymen have been forced to dry off their cows and send them to the abattoirs simply because man-power has not been available for milking purposes. This is a serious situation, particularly in view of the urgent need for us to accumulate food reserves in this country.
I indicated by interjection a few minutes ago, also, something of the dire straits in which the wheat industry finds itself. Many crops could not be harvested this season because the Army authorities declined to release qualified men for harvest work. Many farmers in the Army were in camps and training establishments adjacent to their own homes, but they were refused permission to assist in harvesting the neighbouring crops. When soldiers of the rank and file are willing to go out and engage in harvesting work I believe that they should bt- released for the. purpose, unless, of course, they are in key positions. I do not believe that obstacles should be put in the way of rank-and-file soldiers engaging in harvesting work where that is necessary. The harvesting of crops is important national work. We may have a surplus of wheat in Australia at present, but. unfortunately, we have not a surplus of fodder, and the time may not be distant when those responsible for refusing to release men for gathering the fodder crops will be extremely sorry for their lack of vision.
The gathering of the fruit crop has also presented great difficulties. The Women’s Land Army has done excellent work in this regard, but, unfortunately, they are unable to operate everywhere. In some districts heavy crops of beautiful plums have rotted on the trees. Jam may very shortly be frozen, and it is most regrettable that this fruit, which could have been converted into jam, has been allowed to rot. The man-power authorities could easily have released sufficient labour to gather this fruit. In some soldier settlement areas, a similar situation has arisen with the prune crop. This season many growers had their best crop for five years, but, because of the lack of co-operation between the Department of the Army and the Department of Labour and National Service, insufficient labour was available to harvest the fruit.
It is high time that the authorities concerned realized the need for co-ordination in accumulating foodstuffs in this country, particularly as we shall be required, in the future, to provide for all the fighting services in the South-West Pacific Area. The anxiety of honorable members representing rural districts is due to the failure of the man-power authorities to realize the acute shortage of labour in country districts. I can see no reason why the men in the services should not be allowed to render a dual service to their country in this time of emergency. Soldiers could be released for short periods to meet seasonal needs. I said twelve months ago in this House that unless we were careful we would experience a food shortage in Australia. Even to-day it is impossible to obtain a meal in leading hotels in many country towns. Travellers can obtain beds, but they have to get their meals at restaurants. In these circumstances the right honorable member for Cowper has performed a service to the country in submitting this motion.
The people in country districts are maintaining their activities under great difficulties. I fear that a greatly reduced area will be put under crop this year, because farmers are in doubt about the release of sufficient labour for harvesting purposes. The Government should, give its closest attention to this subject. I believe that the Minister for Supply and Shipping and the Minister for Commerce and Agriculture (Mr. Scully) are doing their best to meet the situation, but, unfortunately, they are dependent upon the advice of men who have had very little practical experience in rural industries. If experienced men had been advising Ministers we should have avoided a great deal of the confusion that has occurred in the dairying industry. About twelve months ago some ridiculous suggestions were submitted to the Government in this regard. A recommendation was made that cattle should be evacuated from the coastal areas, and that they should be driven 15 miles a day, and milked each day while on the road. It was said that wagons containing containers for the milk could be sent in the track of the cows and that these vehicles could bring the milk back to the factories. I have never heard such stupid suggestions.
– This Government was not responsible for the plan and did not adopt it.
– It was suggested that the cattle should be driven from the coastal areas over rough mountain roads into the hinterland, but no proposals were made for providing the travelling stock with either fodder or water. I am glad tha.t the plan was not put into operation. Such a scheme would never have been suggested by experienced men. It is essential that the Government shall have qualified and practical officers to advise it on matters of this description. I emphasize the need for a proper coordination of the authorities dealing with food production and distribution. Without such co-ordination it will be impossible for us to provide the essential needs of the fighting services and civilian population, and a serious food shortage will occur in Australia,
– After the able speech made by the Minister for Supply and Shipping (Mr. Beasley) in reply to the views expressed by the right honorable member for Cowper, I intend to confine my remarks to only a few of the points that have been raised. I do this, also, . because I realize that the time available for this discussion is short and other honorable members wish to speak on the subject. The right honorable member for Cowper has done a disservice to thi3 country in raising this subject at this juncture. His remarks are likely to cause unnecessary alarm both at home and overseas. M.ost of the statements that have been made may be justly described as the usual croaking of an opposition which desires to discredit a government, This Government is doing everything possible to meet, the situation. It has established the most comprehensive food planning authority ever known in Australia.
– The speech of the right honorable member for Cowper was purely constructive in character.
– I wish to refer particularly , to some remarks made by the honorable member for Moreton (Mr. Francis), who said that the weakness in the whole of the planning of the Government was in its failure to make direct contact with producers. I give that statement the lie direct. In conformity with a recommendation of the Joint Committee on Rural Industries, of which the honorable member is chairman, . the Government has appointed a Director-General of Agriculture. I take this opportunity to acknowledge that the Joint Committee on Rural Industries has done useful work and made some helpful suggestions to the Government. The Minister for Supply and Shipping outlined the general food position in this country and. said that unity in food control was the policy of the Government, He indicated, clearly a close co-ordination of . the activities of the Department of Supply and Shipping, the Department of Commerce and Agriculture, through the Australian Pood Council. The Director-General of Agriculture is the deputy chairman of the council and also the chairman of the executive, committee of that council. In that way, the control of food in regard to both production and distribution has been unified. Through the DirectorGeneral of Agriculture there is full coordination of the efforts of all the
State Departments of Agriculture. Those departments enter into contracts on behalf of the Commonwealth for the production of essential foodstuffs. Last season, contracts were made in this way for the production of potatoes, the growers being guaranteed a minimum price. Now, in every part of Australia where sufficient inducement is offering, we are erecting vegetabledehydrating plants. More than 30 are under construction, and already many have been completed. Also, contracts are being entered into for the production of vegetables in areas ‘adjacent to the factories. It will not in future be possible for vegetables to go to waste simply because there happens to be a glut. The Director-General of Agriculture has succeeded in establishing an agricultural machinery pool. We have imported from the United States of America the most up-to-date agricultural machinery available, and this is being rented to the farmers on a community basis. Some of the machines are very expensive, and it would not be possible for individual farmers to purchase them. Therefore, the machines are distributed to the various country centres, and are used on a hire basis by the farmers as they need them. Thus, in every direction, food production is being planned in a. way never before attempted in Australia.
Australia is able to meet the food requirements of the United Kingdom so far as production is concerned, the only limiting factor being shipping space. This season,we have increased dairy production in a remarkable manner. The Government of the United Kingdom informed us -that ifwewere able to supply 50,000 tons of butter this year, thatwould meet all requirements. However, we shall be in a position to supply 70,000 tons of butter, to say nothing of cheese, if shipping is available.
– But the Dairy Committee says that there will be a shortage of dairy products.
– It has not said that there will he a shortage. This year,we shall produce, according to the latest estimates, 180,000 tons of butter, which represents a considerable increase on last year’s production. Our only concern is storage space, and a sum of £25,000 has been made available for the erection of extra cool stores in Sydney. Cool-storage space is necessary in order to hold surplus food products until they can be shipped to
Great Britain. In all parts of Australia, butter production during the last few months has reached record proportions. In southern Queensland, production has been very high.
– That is due to the extraordinarily good season.
Mir. SCULLY. - I am not saying to what it is due, but the fact is that production is very high. I am trying to prevent panic among the people, panic which might he induced by this constant croaking about food shortage by members of the Opposition for political purposes.
-The Minister’s time has expired.
.- The Minister for Commerce and Agriculture (Mr. Scully) has taken up an extraordinary attitude in regard to this subject. The . Minister for Supply and Shipping (Mr. Beasley) admitted that the right honorable member forCowper (Sir Earl. Page) had raised a matter of very great importance. The Minister for Commerce and Agriculture is somewhat belated in his fears that we may create a state of alarm among the public. I can assure him that the people are very much concerned already atwhat they regard as the ineffective handling of the general food situation. Every housewife who goes to her grocer knows how difficult it is to get some of her most commonplace requirements. Every one engaged in the bulk handling of foodstuffs knows of the difficultieswhich have been created by the bureaucratic control of supplies. I have no desire to minimize the difficulties which confront the Government. The right honorable member for Cowper did not bring this matter forward in a spirit of carping criticism. He analysed the situation in a capable manner, and offered constructive suggestions. We know the Minister for Supply and Shipping to be a man of great capacity. He has . achieved wonders in some respects in supplying the needs of our troops and those of our allies, but these achievements cannot blind honorable members or the public to the fact that there are grave shortages of certain commodities, and that this is not altogether due to the demands of the fighting services. Problems of distribution ‘and production have been mishandled, not so much by this Minister or that, as by the control bodies which have been set up by the Government. I regret that the Minister for Supply and Shipping, rather than face the issue raised by the right honorable member for Cowper, attempted to make the situation appear as favorable as possible by implying that most of the difficulties with which we are confronted had their origin in the ob ligation which rested upon us to supply foodstuffs to the American troops. In order to inflate the Government’s achievements in meeting their requirements, he gave figures as to the quantities of beef, veal, potatoes and other commodities supplied in pounds weight! I thought at first that the figures related to monetary pounds. Converting his pounds to tons, what, do we find? . In 1939-40. Australia exported 275,000 tons of meat, but last year, we exported only 100,000 tons, and supplied 15,000 tons to the American troops.
– Those figures are wrong.
– If so, the figures of the Minister for Supply and Shipping are incorrect, because I have merely converted the pounds mentioned by him into tons. Every housewife knows that canned fruits are now unobtainable. I understand that five-sixths of the total production is made available to the fighting forces. We do not cavil at the needs of the services, but, when we are told that that is an answer
In the production problem, we reply that at the time when Australia was able to export canned fruits it sent overseas 1.200,000 cases in a year. Of that quantity the Minister has accounted for only 180,000 cases. The subject of primary foodstuffs has been amply covered by previous speakers. Irrespective of the demands of the services or our allies few people anticipated that such commodities as eggs, bacon, canned fruits, potatoes, tomatoes, oranges, lemons and dried fruits would be in short supply, and in effect unobtainable in the quantities required by the great mass of the people.
– It is insufficient for the Government to say that these commodities are being supplied to the fighting services.
– That is so. The figures tendered as indicating the total quantities supplied to the services cannot by any means represent the total peace-time production of those commodities.
We have been told that the Australian Food Council has been established to coordinate the food-producing activities of this country, but, as the Minister pointed out, the chief executive officer of that body is apparently the . Director-General of Agriculture. Much more than agriculture is involved in the production of foodstuffs for the community, as a large proportion of the food consumed by the people in the cities is manufactured. While the Government contends that the needs of the services must be supplied, without recognizing that due regard must be paid to the general supply position and the need-; of the civilian population, the present chaotic and unbalanced condition of affairs will continue. The proposal submitted by the right honorable member for Cowper in favour of the appointment of a kind of dictator of food distribution is a sound and sensible one. We have all admired Great Britain, which has been essentially an importing country, for the manner in which the people of a beIeaguered island have overcome their food difficulties by means of a prudent system of control.
– The honorable member is decrying his own country.
– Not at all. I have as great an admiration a? anybody else for Australians, and I consider that as Great Britain has been able to produce a capable food controller, Australia can and should do likewise.
.- The right, honorable member for Cowper (Sir Earle Page) has compared the food problem of Great Britain with that confronting Australia to-day. Let me quote the following story, written by an eminent authority, on the position in Britain at the outbreak of the war: -
Every day of the year ; in average of 41 British shifts are steaming between Australia and Ceylon, 13 between Singapore and Ceylon, 22 between Singapore and Hong Kong, and 49 between Ceylon and Suez. In the holds of those vessels is contained a good slice of the 50,000 tons of foodstuffs and 120,000 tons of merchandise which must be imported into Great Britain every 24 hours. Those ocean routes are the very life-blood of the British people. “ If our sea communications are cut “, Sir Samuel Hoare has declared, “ we have a supply of raw material that will last our industries for only three months, but that supply would be inure than we should need, for within six. weeks we should be dead by starvation “. Clearly those thousands of sea miles linking Australasia and the Pacific with London river form a British interest vital enough to justify all the fortress guns and bombing squadrons recently shipped east.
I now remind honorable members of the position in Australia at the outbreak of war. At every railway siding throughout this country huge parcels of wheat were being eaten by weevils and rats. The production of apples and pears totalled 11,000,000 bushels, of which the people of Australia were able to consume only 6,000,000 bushels. The then Minister for Commerce dealt with the problem ‘by ordering the destruction of 5,000,000 bushels of that fruit. The conditions appertaining to meat were similar to those with regard to wheat and fruit. Sheepcould be bought in country saleyards at 5d. each. Various primary products were left lying in the paddocks, not because the labour or machinery required to place it in consumption were not available, but because up to that time, when anti-Labour governments had been in power for over twenty years, efficientorganization had not been evolved. For a considerable part of that time, the right honorable member for Cowper had been Minister for Commerce. Is it surprising that the Government and its supporters view with suspicion the proposal now submitted by him? We know that there are some shortcomings in the present organization but the right honorable gentleman has not told the Minister for Commerce and Agriculture anything that’ he did not already know. The motion before the House could have come more appropriately from any other member than the right honorable member for Cowper.
.- I agree with the motion, and am astounded at the attitude which the Minister for Commerce and Agriculture (Mr. Scully) has adopted towards it. I am convinced that it would be of great advantage to have one person in control of the production and supply of foodstuffs, because, despite what the Minister has said, there is still much disorganization in this sphere. Only within the last few weeks, more than 1,000 tons of potatoes was sent from Western Australia to the other States, but because of poor organization they lay at railway sidings for eight or nine days and finally had to be dumped. Growers of vegetables in Western Australia were urged to grow more beans, beetroot, carrots and other vegetables, and arrangements were made for them to be processed at a factory at Gosnells, in that State, which had ample supplies of tinned plate for the purpose and machinery for making the tins. The can factory was in charge of a man who thoroughly understood the process of making and sealing the tins, but he was called up by the Army. After a tremendous fight, he was released by the Army authorities for a month, after which he was called up again. Later he was released for a further short period. Now he is in a camp for the third time, while his canning plant is idle, and the country is going without the vegetables which he could have preserved. Such instances emphasize the urgent, necessity for one man to have complete control of the production and distribution of foodstuffs. I believe that the Minister for Supply and Shipping (Mr. Beasley) is capable of handling the problem. He is the only Minister from whom I can get a prompt and satisfactory reply whenever I make representations in relation to any difficult problem.Un tilsome one person is given complete authority over foodstuffs there will continue to be waste and chaos. Many valuable suggestions have been advanced during the debate, and I hope that they will be heeded.
Debate interrupted under Standing Order 257b.
Motion (by Mr. Curtin, through Mr. Chifley ) agreed to -
That Government business shall take precedence over general business to-morrow.
Debate resumed from the 18th Febru ary (vide page 905), on motion by Mr. Chifley -
That the bill be now reada second time.
.- This bill is another reminder that wars cannot be won by cheers or wishful thinking, and that heavy and burdensome sacrifices must continue to be made by the people of Australia. The burden may be even heavier still before final victory is achieved. Whilst the financial sacrifices are so great that more than one-half of the national income is being devoted to war purposes, they are as nothing compared with the loss of life and suffering of the men of the fighting services, and the sorrow and anguish which war causes to those nearest and dearest to our gallant men. [Quorum formed.] The task of the Treasurer (Mr. Chifley) in this time of crisis is not easy. It requires much detailed consideration of all aspects of the complex problem of distributing equitably the tax burden over all sections of the community. Although no one realizes more than I do the difficulties which confront the Treasurer in submitting a bill of this sort, there are certain aspects of this legislation about which I am not happy. In the first place, it places upon the shoulders of the lower-paid workers a large share of the burden of direct taxation. That taxation has been imposed for two reasons : first, in order that a scheme of social security may be inaugurated and, secondly, in order to help the war effort. The Treasurer told us that from this form of tax it was expected to raise £40,000,000, of which £8,000,000 would be obtained before the end of the present financial year. The Treasurer proposes, for the first time in our experience, that instalments over and above the ‘amount required to discharge each taxpayer’s liability for income tax will be funded; that interest at the rate of 2 per cent, per annum will be paid on that amount, so long as it remains funded; and that the money will be available for the payment of income tax in subsequent years. I should like to know why it has been decided to pay interest at the rate of 2 per cent, per annum. I imagine that that rate has been chosen because it is the rate paid on the deposits placed with the Commonwealth and States savings banks, but as interest at the rate of 3 per cent, is paid on war loans, I am of the opinion that either the rate of interest payable on funded sums under this legislation should be raised to 3 per cent, or the interest payable on war loans should be reduced to 2 per cent. The Treasurer has given us a good argument in favour of lowerinterest rates, and, to that degree, there is some benefit in the legislation. In a statement which accompanied this bill, the Treasurer set out at very great length and with much diligence a comparison between the proposed income tax for 1943-44 and the income tax for 1942-43. Glancing at the comparative table, I find some anomalies. For instance, a married taxpayer with one child, on an income of £300 per annum, will have his tax increased from £13 2s. to £22 18s., an increase of 70 per cent. A taxpayer in the same category with an income of £500 per annum will have his tax increased by only 60 per cent., and one on £1,500 per annum will have his income tax increased by only 25 per cent. It is the same with married taxpayers who have two children. It seems to be regrettable, therefore, that in legislation introduced by a Labour Treasurer we should find that the rate of increase on small incomes is much greater than it is on the higher incomes,
– That is not telling the true story.
– I tell the story as I find it. The honorable gentleman can tell another story if he likes to do so, but nothing can controvert the facts that I have presented.
– How could we increase by 70 per cent, the income tax of a man who is already paying18s. 6d. in the £1 ?
– Why does the Minister suggest that such a man’s income tax is being increased ? The Treasurer said that it was proposed to levy income tax ranging from 6d. to18s. 6d. in the £1. but the fact is that men in the top ranges of income are already paying 18s. 6d. in the £1.
– The ceiling is18s. in the £1.
– Is that so? Well, my view of the system of income tax is different from that of the Minister assisting the Treasurer (Mr. Lazzarini). If the honorable gentleman is in a mood to offer opinions, I ask him to say why another and a. better system of income tax should not be adopted, a system of imposing such tax as would ensure that no one in the community should have more than £400 per annum in this time of crisis. It would be possible, by levying such an income tax, to raise more than the Treassurer hopes to raise by means of the present proposal;
– That would affect the honorable member.
– I am not concerned with the personal effect. As we have adopted a system of conscription of men for overseas service, I see no reason why the House should baulk at a system of taxation which would amount to conscription of wealth. I also see no reason why we ought to continue in the present crisis a system of income tax which sufficed in peace-time, particularly as the people on lower incomes are now burdened with rising costs of living and a scarcity of commodities. The adjournment motion of the right honorable member for Cowper (Sir Earle Page) was designed to draw the attention of the House to the difficulties people have in obtaining food. I know just how real the problem is in industrial constituencies, but, great as that problem is, the problem of making the best use of the wages the workers receive iseven greater. Consider the price of commodities - oranges at 6d. each and apples at31/2d. each!
– And peaches at1s. each !
– Yes. Those prices mean that the workers on small incomes can purchase very few oranges, apples or pouches. It is proposed under this legislation to go down into . the lower ranges of workers incomes in order to raise the amount of revenue, required. Well, the Treasurer and the Labour Caucus have decided that that is justifiable, although there is a plank in the Labour party’s platform which provides for an exemption much higher than £104 per annum. The plank of the Labour party’s platform dealing with conscription was referred to the federal conference of the Australian Labour party, but not this matter, and, therefore, this bill is in conflict with the conference’s decision.
– The honorable member does not support this bill?
– The proposal to tax incomes of £104 a year has some features which commend it to honorable members opposite. They argue rather jubilantly that boys and girls in receipt of big wages will now be forced to pay something towards the financing of the war effort. However, it must be remembered that many people, now in the evening of their lives, are trying to live on £2 a week which they receive either by way of interest on investments, or as payments under superannuation schemes, or by way of annuities, towards which they contributed when they were in employment. Those people are not able to pay 6d. in the £1 on an income of £2 a week.
– And to-day the purchasing power of the £1 has been practically halved.
– Yes, the value of money is depreciating. I have received many complaints from persons who have retired from governmental and semigovernmental employment, or from offices which operate superannuation schemes, that the amount they receive to-day is altogether insufficient to enable them to live. They argue that as old-age and invalid pensions are now adjusted on a cost of living basis, their remuneration undersuperannuation schemes should be adjusted on that basis also. I agree with the contention. However, they will not be given any relief under this legislation. On the contrary they are to be asked to pay tax at the rate of 6d. in the £1. It will be said that the £104 a year on which the tax is based is net income; but many old people have no deduction to make in respect of contributions to insurance companies or friendly societies,or other payments of that kind. Their actual, income is their net income. Therefore, I hope that in committee the
Treasurer will amend the bill to ensure that no additional hardship shall be placed upon these old people.
Much more can be said in support of the principle of a ceiling income to which I referred earlier. Although the proposal which I have previously enunciated in this respect will not evoke enthusiasm in this chamber or among many people outside, I cannot see anything wrong with it, at least for the duration of the war. When we are demanding that those males who were born between certain years shall be prepared to sacrifice their lives, if necessary, in order that we may live in comfort and safety while the war is on and after it concludes, then those who possess wealth which will not be worth anything to them should the Japanese capture this country, should be prepared to surrender all of their wealth except sufficient to enable them to purchase the bare necessaries. The ceiling income scheme seems to approximate more nearly than any other proposal I have yet heard to the ideal of equality of sacrifice. In the debate on the Loan Bill last week I drew attention to the burden of direct and indirect taxes on persons on low incomes. I am glad that the Leader of the Opposition (Mr. Fadden) has now returned to the chamber because he seemed to doubt my claim that indirect taxes bear very heavily upon persons with small incomes. On that occasion I cited estimates on the authority of a group of Melbourne students of economic affairs who are not on the pay-roll of this or any other Government, and therefore can be accepted as absolutely impartial. They estimated that direct and indirect taxes on an income of £6 under these proposals amounted to £1 15s. a week in the case of a man with no dependants, £1 lis. a week ii: the case of a man with a wife, £1 63. a week in the ease of a man with a wife and one child, and £1 5s. a week in the case of a man with a wife and two children. From those figures it will be seen that a single man will be in a very much better position than a man with a wife and one child, whilst a man with a wife and two children will be only ls. a week better off than a man with a wife and one child. The larger the family, the greater the benefits it should receive in respect of exemption from tax. Under these proposals, however, in conjunction with indirect taxes, a man with a wife and two children does not receive any great benefit. He will be obliged to pay £1 5s. a week out of an income 01 £6 a week, whereas a single man will pay only 10s. more. 1 should like to see the difference between those classes of taxpayers increased to the benefit of the man with the most dependants. I also said in the course of the debate on the Loan Bill that much resentment existed among the public with respect to reports of administrative waste and inefficiency, and that people would pay their taxes much more readily and with less grumbling if they were assured that waste and inefficiency were reduced to a minimum. This would be so particularly if they were convinced that some people were not enjoying big incomes in a time of war, and, many others were not deriving big incomes directly as the result of war expenditure. In the latter connexion. I shall refer to certain recent happenings with respect to Australian Consolidated Industries Limited. As honorable members will remember, that company was given a. monopoly of the manufacture of motor cars by the Menzies Government, and that action was responsible for that Government’s loss of the Corio seat in a. by-election. I have no intention to discuss the lease of a racehorse by the managing director of Australian Consolidated Industries Limited to the then Minister for Trade and Customs, who signed the agreement on behalf of that Government; but it is a fact that the public at that time learned much about Australian Consolidated Industries Limited and the friendships between monopolistic interests and the Menzies Government. A little later Australian Consolidated Industries Limited was declared for profiteering. After the outbreak of the war the managing director of the company was appointed Director of Gun Ammunition Production, in which capacity he served under both the last Government and this Government. He has since resigned. In my view, he should have resigned long before. The honorable member for Watson (Mr. Falstein) brought to the notice of the House certain matters relative to the manufacture of horsefloats by the company, at a time when it was supposed to he engaged on war work.
– Order !
– If you will be a little patient with me, Mr. Speaker, you will realize that, as a lawyer in a case, I am working round to the main point. In fact, I had just reached it when you called me to order. As a result of the disclosures of the gallant, learned and honorable member for Watson, an investigation of the affairs of Australian Consolidated Industries Limited was made by the Joint Committee on War Expenditure. An officer of the committee examined certain records of Australian Consolidated Industries Limited and subsequently the company refunded te the nation an amount of £48,000 of excess profits. 1 submit, therefore, Mr. Speaker, that I am entitled to discuss the subject. The people of Australia would bo very much happier if they could be relieved of the activities of the “ Knock-out Smiths “ and other people who make excess profits which they subsequently have to refund. There is a feeling in the community that all the excess profits that have been made have not yet been refunded, and that, in fact, some will never be refunded, because they will never be discovered. The Parliament owes a debt of gratitude to the honorable member for Watson for having brought the subject under notice, even though it was done in a somewhat oblique fashion. The managing director of Australian Consolidated Industries Limited was doing certain war work for which he was provided with certain labour.
– This discussion of personalities is remote from the provisions of the bill, and is not in order.
– If excess profits are being made by this company-
– The honorable member must not proceed along these lines.
– Am I to take it, Mr. Speaker, that you rule that I shall not be in order in discussing excess war profits under this bill?
-The honorable member may discuss excess war profits, but he may not indulge in a personal attack, based on happenings of some years ago.
– Well, I am beyond that stage, for I have reached the point in my story at which Australian Consolidated Industries Limited was compelled to refund £4S,000 in excess profits.
Sitting suspended from 6.15 to 8 p.m.
– In addition to the other matters to which I have referred that cause discontent in the minds of the people, and make them doubtful of the necessity for increased taxation, is the fact that many individuals in the community evade the payment of taxes. In the annual report of the Commissioner of Taxation, which was tabled in this House recently, were some figures relating to companies which have evaded taxation over a period of years. One of these is Australian Consolidated Industries Limited, which has evaded taxation to the amount of £330,S19. The average worker wonders why there is immunity from prosecution for a company such as that, whilst others on much smaller incomes would be gaoled for lesser offences and be branded a3 “ black marketeers “. If the Government wishes the people to accept the increasing burdens rendered necessary by the impact of war something more drastic than has been done will have to be done with regard to the big companies which flagrantly evade taxation. Not only did Australian Consolidated Industries Limited evade its income taxation to the amount of £330,819, but the managing director, according to press reports, attempted to evade personal responsibility by transferring shares to his children. Those shares, in the opinion of Mr. Justice McTiernan, who heard the action brought against him by the Commonwealth, were really his own property. It seems extraordinary how gently Mr. W. J. Smith has been treated, whilst other people have been subjected to rigorous prosecution, and have incurred heavy penalties for acts which could be called anti-social, and are contrary to this country’s desire that the war should be conducted with earnestness and even enthusiasm by every body, with nobody seeking to evade his just contributions to’ the Treasury.
There are other matters to which I could refer, in order .to indicate that evasions have occurred. Take the directors of the Broken Hill Proprietary Company Limited. In disclosures at an inquiry recently held into the affairs of Australian Iron and Steel Limited at Port Kembla, which is a subsidiary of Broken Hill Proprietary Company Limited, it was admitted that officials of that company, such as managers and directors, had had repairs done to their private cars by defence, workers employed by the company, and that the cost of the repairs had been charged to defence contracts and passed on to the Government. No action was taken against those guilty of that conduct, although, if ever action was justified, it should have been taken against those who would misuse their power at such a time of crisis as this. Such frauds and the failure to punish the perpetrators make the workers restless and undermine public morale. People wonder whether the monopolies are above the law. The. best way to make the workers accept increased taxation is to nationalize all monopolies. They could be nationalized before they become allpowerful, and pave the way for maybe another “sell-out”, or some subversive movement which would tend to overthrow governments.
The Production Bulletin dealing with production in secondary industries during 1940-41 contains some interesting figures regarding the amount which workers receive as wages and salaries out of the total sum representing the value of the output of Australia’s secondary industries. In 1930-31 the wages and salaries received amounted to 21.48 per cent, of the value of output of Australian secondary industries, whilst in 1939-40 the amount paid in wages and salaries amounted to 20.70 per cent, of the value of output. The margin of profit and miscellaneous expenses represented 19.21 per cent, in 1930-31 and 19.30 per cent, in 1939-40, which indicates that the workers are receiving less money from industry than formerly. Therefore, all the talk on the part of honorable members opposite about high salaries and wages is exposed as fallacious. The workers are not getting more money, and therefore they are not ina better position to bear increased taxation, but this bill sets out to make them pay heavier taxes. It is true that £30,000,000 of the £40,000,000 proposed to be raised is to be paid into a Commonwealth welfare fund to finance certain social benefits.
– Not necessarily £30,000,000; probably the amount will be much less.
– I use that figure because it was the figure mentioned by the Treasurer. When we enter the postwar world, and prices drop, the amount raised may well be considerably less than £30,000,000. I object to this proposal to pay such a large sum into a Commonwealth welfare fund, because for the first time in Australia’s history the workers are to be asked to pay for their own social benefits.
Mr.ryan. - Why should they not?
– I have just given one reason, but there is another. ‘ This has never been done before. Invalid and old-age pensions were paid for out of excise and other revenues up to 1914, when the Commonwealth invaded the field of income taxation. After that they were paid for by the people in receipt of the larger incomes.
Mr.Fadden. - They were originally paid for out of general revenue.
– They were paid for out of revenue which was raised at that time by indirect taxation. After 1914. invalid and old-age pensions were paid for from revenue raised by indirect taxation and by means of increased taxes on persons having the larger incomes. The maternity allowance was also paid for without recourse to the system now proposed. A previous government introduced a scheme of child endowment which it financed by means of a pay-roll tax. It did not invade the field of the lower wages in order to raise the funds for that purpose. Therefore, the present proposal of the Treasurer seeks to establish a precedent, as far as the Labour party is concerned. The Lyons Government proposed a. scheme of national insurance which the Labour party fiercely resisted ; but, although legislation was enacted to put that scheme into operation, effect has never been given to it. The
Labour party objected to the scheme of national insurance, because basically it provided that the worker should pay for his own old-age pension. The Labour party does not stand for that. It believes that the workers are entitled, to a . certain basic wage, which is sufficient to enable them to maintain life and have a reasonable standard of comfort.; but, in addition it wants benefits in the way -of social services which are paid for out of the national income. It certainly does not desire that the money should be contributed by workers in receipt of the basic wage or about that amount. It has been said from time to time that the workers should not agitate for an increased basic wage, but should seek improved conditions and ask for greater social benefits because these things have a real cash value. There is something in that argument. I have always hoped that the worker will receive, not only that basic wage, but many other benefits such as health insurance and the old-age and invalid pensions benefits, without the Go- vernment having recourse . to the imposition of a tax on his wages. Under this scheme, however, the basic wage is not sacrosanct, but is to be taxed in order to provide social benefits. I have already shown that the workers were receiving less in 1939-40 in wages and salaries out of the total value of output of secondary industries than in 1930-31. Conversely, those who were managing businesses for profit were, taking an increased sum out of secondary industries in 1939-40 as compared with what they took in 1930-31. I chose the year 1939-40 because it is the last normal year of employment. Therefore, the present proposal is a sugar-coated pill. It says to the worker, “ You can have certain increased social benefits, but you will have to pay a portion of the cost”. A number of other provisions which have not been included in the scheme might have been embodied in it. Of the £40,000,000 proposed to be raised by means of increased taxes, £30,000,000 is for the payment of social benefits and £1 0,000,000 is to be used for war purposes. If honorable gentlemen opposite ever take control of the destinies of this coun try I fear that they wilduse this precedent for . maintaining increased taxation on the lower incomes, and will embody the whole of our social legislation in one scheme, making it all contributory, so that the worker will pay for his own old-age pension and other benefits out of his basic wage - a basic wage which is regarded by the Arbitration Court as only sufficient to enable a man and his dependants to live in reasonable comfort, [Extension of time granted.]
Honorable members opposite have mentioned inflation, and we have been given to understand that an amendment will be moved which has for its object the introduction of a system of post-war credits. The honorable member for Robertson argued in favour of post-war credits, and once more dragged in, like King Charles’ head, the danger of inflation. I remind honorable members that there cannot be inflation in Australia whilst, in the first place, the system of price control continues in operation. In the second place, goods are rationed, so that there cannot be that competition which leads to inflation.
– Some goods are rationed.
– The principle has been adopted, and eventually more and more goods will be rationed. Wages are pegged, prices are fixed, rents are fixed, and taxation, already heavy and steeply graded, will be heavier still when this legislation is passed. Investments are rigidly controlled, and the use of man-power and woman-power is strictly regulated. Therefore, it seems to be absolutely impossible for inflationary tendencies to develop. Members of the Opposition have argued that,because the Government has temporarily drawn upon national credit to the extent of several hundred million pounds, the financial edifice is about to collapse, but they have been saying things like that ever since 1931. They warned us about inflation when Australia was being pushed into deflation. In the very depths of the depression they were still worrying themselves and Australia about inflation. They have always failed to recognize that both deflation and inflation can be cumulative in their ill effects, and can both result in large numbers of persons being thrown out of work.There is nothing to justify the assertion that we have set our feet upon the road which will lead us inevitably to inflation.
I desire now to say something about the cost of government. No one is more anxious than I am that every one should receive what he is entitled to by way of remuneration, but no one is entitled to more than his worth. The cost of government has increased considerably since the war began. In October of last year I
asked in this House the following questions : -
The following answers were supplied to me : -
I am afraid that there has been a good deal of milking of the old government cow going on by people who are not entitled to what they are receiving. There has been a species of competition among the various departments to create jobs. University professors and economists have namedtheir own salaries. I have not the slightest doubt that most of the professors and economists on the government pay-roll are being paid twice the salaries they were getting when employed by the universities, and the public are doing the paying. Most of these economists have a very shrewd idea of how to safeguardtheir own economy - and it is the worker who pays. Last week, I asked a question about the assistance provided in the way of staff to Opposition members of the Advisory War Council. I hesitate to raise this matter, but I feel that I must point out that each typist engaged for this . work is paid as if she were a private secretary - that is, she receives a salary of £493 a year. It is pretty tough that such salaries should be paid while pensioners receiving £2 a week are taxed to pay the cost of government. Salaries of that kind seem to indicate that typists associated with three members of the Advisory War Council, the righthonorable member for Kooyong (Mr. Menzies), the honorable member for Warringah (Mr. Spender), and the hon orable member for Indi (Mr. McEwen), are regarded as being worth as much to the nation as majors in the field, because they are paid almost the same salary that majors receive. When some months ago, I made an inquiry about the payment of ministerial private secretaries, some of whom have few if any qualifications for their positions, I found that they were receiving salaries up to £650 a year, which is equivalent to the salary of a colonel in charge of a battalion in the field. Apparently, it is thought that a ministerial private secretary is as valuable to the nation as a colonel in command of a thousand men. In some instances, private secretaries are being paid half as much as permanent heads of departments. As I have said, I hesitate to raise these matters, but I know that “ rackets “ are being worked all the time in regard to salaries, and that public funds are not being properly safeguarded. During the regime of a previous government, the Advisory War Council spent the whole of one Saturday morning discussing salaries of private secretaries, and when the meeting was finished the decision of the council was communicated to an official of the Public Service Board, who was asked to recommend in accordance with the decision reached. He obligingly complied, and the salaries of private secretaries were increased by £3 a week with a new maximum salary of £650 as I have indicated. Occurrences of that kind do not encourage the workers to accept increased financial burdens. It is the duty of Parliament to endeavour to prevent the cost of government increasing unnecessarily, and we should see that whatever money is raised is spent with reasonable care and caution.
– I congratulate the honorable member for Robertson (Mr. Spooner) on the speech he delivered on this bill. With his expert knowledge of the subject under discussion, he gave the House a clear analysis of the Government’s taxation proposals, as outlined in the measure. Then, to use the words of one Sydney newspaper, he “ tore the tax bill apart “. As the honorable member pointed out, the principal features of the bill involve matters of policy which only the Government itself can determine.
The present Government, having resolutely set its face against sharing the task of administering the affairs of the nation with the other partie0 in this House, must accept the whole of the responsibility for formulating a policy for financing the war. Members of the present Government, when in opposition, rejected my Government’s plan for financing the war. Since the defeat of my Ministry, the Opposition lias persisted in its demand that the present Government should adopt a realistic approach to the problem of war-time finance, but it has refused to take action along the lines we have suggested. Therefore, it is only reasonable that the Government - and the Government alone - should carry out the task of framing a war-time financial plan.
The Opposition fully recognizes that the Government must have all the money it requires for the defence of the Commonwealth and the effective prosecution of the war, in association with our Allies. The latest proposal which the Treasurer (Mr. Chifley) has outlined reveals that the Government has again failed to make a proper approach to this all-important matter of war-time finance.
There is evidence of timidity on the part of the Government in (planning to raise the finance necessary to meet the constantly increasing costs of war.
As I intend, when resuming the debate on the Treasurer’s financial statement, to examine the Government’s financial policy in detail, I do not propose at this juncture to deal with its main principles. It is, however, only fair, because the measures are interlocked, that I should emphasize that the Government’s national welfare scheme is nothing more than political window dressing. The reason underlying this is only too apparent. The Government, for the first time, is making some attempt to obtain some of its finance from those in the lower income groups. That section of the community includes a great many who normally support the Labour party, and it is unworthy of a war-time government to adopt subterfuge to appease those in the lower income groups, and to disguise its real intentions.
This attempt at appeasement has taken the form of a nebulous social services scheme. The Government promises the worker social services which will not come into being until the dim and distant future. By means of this artifice, it hopes to retain the votes of the lower wage earners, who, for the first time, it proposes to tax. Despite some hostility from trade unions, the Treasurer has at last realized the necessity to spread the burden of war-time taxation so that all classes of the community will be called upon to assist in financing the war effort. The principle of spreading the taxation burden over all ranges of income was adopted in the budget which I presented to this House nearly seventeen months ago, and was rejected by the Labour party. At that time, the bulk of taxable income in Australia was earned by those in receipt of incomes of under £400 per annum. Yet, compared with other sections of the community, that class was either relatively lightly taxed or paid no income tax whatsoever. My budget contemplated a combination tax and loan which would embrace the lower ranges of income for the first time, for a threefold purpose - (1) to provide additional revenue for war purposes; (2) to spread the burden of war costs more equitably; and (3) to reduce the danger of intiation. This was termed a national contribution, and the rate of contribution was to rise to 18s. in $ie £1. The present Treasurer has, seventeen months too late, realized the soundness of the proposals which were contemplated by me. He finds that war expenditure has been, and will be, a great deal more than he contemplated; in fact, the amount of finance necessary to wage the war in an efficient manner for the current financial year was under-estimated by £90,000,000.
The gap of £300,000,000 which the Treasurer envisaged in his budget speech last year has increased to £390,000,000. To the degree that the gap is not filled by revenue, the bulk of which is derived from taxation, reliance must be placed upon loans and bank credit. Heavy loan raisings have already been made, and further loans are contemplated in the near future. This measure may mean that a slightly bigger proportion of war expenditure will be paid out of revenue instead of relying upon bank credit, although this improvement will be nullified unless the Treasurer shows more determination with the loan, raisings.
The perils of inflation have been pointed out many times to the Government, and any measure brought before the House which tends to curb the undue use of bank credit is welcomed. Although the theory of taxing all ranges of income according to capacity to pay is sound policy, the methods of implementing the Treasurer’s proposals are clumsy, unscientific and grossly unjust. The introduction of taxation payments by instalments on the 1st January, 1941, by the present Opposition, during my period as Treasurer, has been of great advantage to wage-earners. Instalments were deducted throughout a period of 40 weeks in each year, or until the tax was paid, when a certificate of exemption was granted. Any excess payments of tax were refunded to the taxpayer. The Treasurer now states that “ the Government proposes to spread the deductions over the whole of the 52 weeks of the year, instead of requiring the tax to be met in a period of 40 weeks “. He goes so far as to claim that “the spread of deductions over this longer period will tend to ease the burden “. The Treasurer conveniently overlooks the fact that as well as paying 52 instalments, instead of 40, the taxpayer will be called upon to pay an increased amount each week. Furthermore, any surplus payment of tax will not be refunded to the taxpayer. For the first time in Australian taxation history, income taxation will be compulsorily payable in advance by wage and salary earners only, for the Treasurer states that “ to assist in the payment of tax it is proposed that employees shall build up credits by using .any excess instalment deductions made during the war period “. It is true that “ a certificate of credit will be issued to any taxpayer whose excess instalments are held by the Commissioner of Taxes “. Increased instalments are to operate as from the 1st April, 1943, five or six weeks before a great many taxpayers have discharged their current taxation liability. In other words, whilst taxation will not be increased technically during this financial year, an extra £8,000,000 of revenue will be obtained through greatly increased instalments of taxation compulsorily paid in advance, which, by means of a book entry, are technically applied to taxation payable in a subsequent year. The surplus is to be held by the Commissioner to be applied to the payment of subsequent taxation, and a non-assignable “ certificate of credit “ is given to the unfortunate taxpayer. This certificate will be merely a form of receipt for taxation paid in advance. The taxpayer will never receive any of the money which it represents. It is not even an I O U . This is a clumsy expedient to save the face of the Government because of its unwillingness to recognize its mistake in casting aside the post-war credits plan which I endeavoured to introduce. The present arbitrary proposal, with its non-assignable “certificates of credit”, is poles apart from a scientifically adjusted post-war credit system. It ignores entirely the principle of capacity to pay, because the advance payments of taxation will not be the same for each individual on the same income and with the same family responsibilities. The advance payments will be determined solely by the approximations of the instalment scale.
The instalments payable under this bill are in most instances a little more than the amounts which would have been taken under my budgetary proposals. My plain was to build up’ for the taxpayer a credit representing a certain proportion of his tax, to be retained by the Treasurer during the war, together with interest at the rate of 2 per cent, per annum, and to- be repayable to him after the war, when he would most need it, and when the re-established civil industries would get a much-needed fillip by the- greater amount of money in circulation. Contrast this with the Treasurer’s proposal to give a “ certificate of credit “ - a document which merely acknowledges that certain amounts have been paid in advance to meet taxes which may be due sometime in the post-war period. This unfair discrimination is to be made against employees as a class, and individuals comprised in that class.
The bill provides that any excess installments accumulated by a taxpayer on the 3’lst March will not be retained. That is a. hollow concession, because taxpayers who will have discharged their tax liability after the 1st April in this financial year will receive no refunds and will be compelled to continue their payment of instalments at an increased rate until the end of the financial year, even though no tax is owing by them. At the end of the financial year, instead of obtaining a refund of the excess tax paid, they will get a piece of paper - a “ certificate of credit “. Even to the lay mind, advance payments of tax and the issue of a “certificate of credit” appear, at the very least, to be a dangerous practice to adopt. I submit that the present bill authorizes the Crown to levy and collect a tax before the rate of such tax is. determined and imposed by act of Parliament. It will be the province of a post-war Parliament to determine the amount, of post-war income tax payable, if, indeed, income tax is imposed by such Parliament. ‘ Future liability for payment of tax is conditional on a statute being passed by a subsequent Parliament. This section of the bill is to be condemned, because, first, it mortgages the revenues which should properly be available to a post-war Parliament, and, secondly, because it allows the Crown to have access to revenue from taxation,, the rate, amount and period of operation of which have not been determined by Parliament.
This thing of shreds and patches would not have been adopted by the Government were it not that it is driven by the dangerous consequences of its financial policy to concede that the foundations of my proposals of September, 1941, were financially sound. It is making a pretence of reducing the present inflationary trends and’ increasing revenue, and doing so in a most unfair and discriminatory manner. The only justification advanced by the Treasurer- for this iniquitous advance grabbing of employees’ wages is that with the termination of the war overtime payments will cease, incomes will’ diminish-, and employees will find it necessary to pay taxes based on the greater income of the last year of the war. If the Treasurer’s real motives are, first, an increase of revenue, and, secondly, a. careful regard for the workers, who will find it difficult to paypostwar taxation, he could achieve those results- with much less hardship by combining a post-war credit scheme with a current “ pay-as-you-go “ tax plan.
Should this legislation become law, hundreds of thousands of Australians, mostly workers, will pay instalments based on current income, and they will receive no refunds, although their instalments’ exceed their tax liability. It is beside the point to argue that the 1942 income is merely used as a convenient basis on which to assess the payment of tax, because under the present system we are always one year in arrears with our income tax payments. Take the case of a worker who dies on the 30th June, 1943. Throughout the financial year 1942-43, until the date of his death, instalments of tax have been duly deducted from his wages. These instalments will cover only his tax liability to the end of June, 1942. His estate will be liable for the whole of the taxation which will subsequently be assessed on his earnings during the financial year 194.2-43.
The injustice to taxpayers of being a year behind the year of income should be removed by legislation, providing that the instalments collected as from the 1st July, 1943, would meet the liability for income tax on income earned during the financial year 1943-44. Except for the adjustments mentioned by the honorable member for Robertson, which would be necessary in the case of graziers and others who receive the bulk of their income in a lump sum, such a plan should be as simple to implement as daylight saving.
Mr. Beardsley Ruml, who advocated the “ pay-as-you-go “ plan in the United States of America, makes an interesting comparison. He says -
We need to find and adopt a plan that automatically shifts taxpayers to a current basis. It would have done little good to argue with employers or employees that in order to save power, every one ought to go to work at eight in the -morning, instead of at nine. The same result in power saving was achieved much more simply by moving all the clocks forward an hour, so that we actually go to work at eight, although we nominally still go at nine.
The original Income Tax Act of 1915 applied to the year 1915-16. It has operated for 28 years, and yet, when a taxpayer has paid income tax for i’S years, he still owes for another yea.)-. This measure will penalize widows, public servants and others who retire at a specified age, and those who will lose their employment through sickness, accident or economic circumstances. The comparatively high rates of income tax which can be expected have accentuated the problem, which should be solved by an immediate legislative remedy.
We do not oppose the raising of the extra revenue, indeed, we sympathize with the Treasurer in his predicament; but we do insist that the taxation shall l>e raised in an equitable manner and in strict accordance with the principle of capacity to pay. We are opposed to the inequitable methods by which the Treasurer proposes to raise additional revenue.
The following table illustrating the approximations of the instalment plan shows bow anomalous the Treasurer’s proposals are: -
It is absurd that, because they earn slightly more, great numbers of taxpayers should be left with so much smaller net wages than those who earn only slightly less than them. The only possible way in which such ridiculous anomalies can be corrected is by a system of tax refunds. Yet these the Treasurer proposes to abolish. So much for the anomalies and injustices which have arisen from the unscientific attempt to arrange tax instalments in steps, and by not providing for adjustment through cash refunds for overpaid tax, when assessments are rendered.
There is vet another source of anomalies and injustices in the Treasurer’s proposals. Until now, rebates of taxes have been allowed for expenses incurred in the taxable year, such as medical expenses, superannuation, life assurance, union dues, charitable gifts, rates on nonincome producing property, &c. Obviously, taxpayers’ expenses vary widely for these many different purposes. In the past, these differences have been fully allowed for in assessing their tax liability. Now, however, an average of these heterogeneous commitments is provided for in the instalment scales, and those taxpayers whose actual expenses of this nature exceed the average will be expected to leave the extra rebates, to which they are entitled, with the Treasury in the form of an advance payment of future taxation liabilities - a certificate of credit. A cursory glance at the difference between the total of 52 weekly instalments and taxation due, given in the schedules made available by the Treasurer, shows the unsoundness of the provision for concessional allowances. The averages on which the allowances contained in the instalment scale are based must be the result of a statistician’s nightmare. The following table sets out a statistician’s idea of the average expenditure allowed as a concessional deduction by earners of incomes in the various groups: -
The Treasurer will surely realize that any taxpayer whose concessional allowances are more than the average must be penalized, because he will make overpayments which will not be ‘ refunded, as they would be by us. The taxpayer will receive a certificate of over-payment. Just imagine a man with an income of £1,250 per annum being allowed only £45 for concessional deductions! Why, a mau earning that salary would pay at least £100 a year in insurance premiums. That shows that the whole scheme is out of focus. The scale is unscientific, unreal and inequitable. A married man on £4 1.6s. 2d. a week will pay only 2s. a year, by instalments, less than his tax liability. Surely, in most cases, he should be left with more than 2s. a year to cover his concessional allowances ! On the one hand, a man on £1.1 10s. 9d. with dependent wife and child will have to pay by instalments 12s. a year more than his tax liability. On the other hand, a man on £15 7s. 8d. a week will be expected to pay £20 2s. a year less than his tax liability. In no case, let me repeat, will there be refunds to adjust these absurd anomalies. There is neither rhyme nor rea-on in the fact that a man who has more than the low average allowed for medical and other expenses should have to make a greater advance payment of taxation when another, who has only the average, does not.
The effect on taxpayers who have heavy insurance commitments is likely to be serious. It is possible that many will have to surrender policies, the premiums on which are proving an invaluable source of loan finance, because they are invested by the life assurance companies in the war loans. As the tax concession they obtain is several times less than the total of their premiums, the withholding of the full rebate due to them is likely to have a multiple effect in reducing vital war saving for the war effort. For the benefit of the House,
I have worked out the effects of the proposals in an actual case, of which I know. It is the case of a married man with a wife and one child, who earns £675 a year, that is, just under £13 a week. As the result of the increased rates, he will be called upon to pay £59 12s. extra a year, by instalments. But, in addition to that, he will have to make an advance payment of taxation, representing tax rebates withheld from him-, of £37 16s. 6d. The instalment scale allows him tax rebates on only £34 of concessional allowances, whereas, in fact, he is entitled to rebates on £155 of concessional allowances, arising from heavy medical expenses, assurance, and rates on his cottage. The fact that this man is compelled to pay nearly as much a year through the withholding of his refund, as through the increase of his tax rate, shows the subterfuge in the present proposals. Actually, he will have to pay £97 8s. 6d. extra a year, not the £59 12s shown in the Treasurer’s instalment tables. Admittedly, the bill provides that the Commissioner of Taxation may vary instalment deductions “ for the purpose of meeting the special circumstances of any ease or class “. How the Commissioner is to exercise this proposed discretion is all-important; but that is not stated. Apparently, taxpayers will still have to face the indignity of claiming that they are suffering “ serious hardship “ to obtain what is only rightfully due to them. If, on the other hand, the Commissioner is to exercise his power so as to correct all the individual cases of anomalies aud injustices, he and his staff will be overwhelmed with unnecessary work at a time when the proper utilization of man-power is of the greatest importance. This can be avoided if refunds are paid at the end of the collection period.
The tax proposals are heavily weighted against the family man. The Government has a poor conception of the cost of maintaining a wife and children, or other dependants. Compared with single men earning the same income, married men are left with only the following extra amounts as net wages after paying the proposed taxes. A married man on £6 14s. 7d. a week, or £350 a year, is left with only 8s. Id. a week more than a single man on the same wages, with which to maintain his wife. If he also has a child, he is left with an extra 6s. 2d. a week to maintain the child. A married man on £9 12s. 4d. a week, or £500 a year, is left with 10s. 9d. a week more than a single man on the same salary. If he also has a child he is left with an extra 7s. 9d. a week. A married man on £19 4s. 7d. a week, or £1,000 a year, is left with 13s. 6d. a week more than a single man on the same salary. If lie also has a child he is left with an extra 10s. 4d. a week. A married man on £4 16s. 2d. a week, or £250 a year, is left with only 7s. 4d. a week more that a single man on the same wages, with which to maintain a wife. I.f he has a child he is left with an extra 4s. 3d. a week with which to feed, clothe and educate that child. How this is possible I leave, it to the Treasurer to explain. It is obvious that the schedule is a gross injustice to the family man. It is not unfair to compare the situation of a married man with a. wife and child earning even £9 12s. 4d. a week, or £500 u year, with that of a single person earning £4 16s. 2d. a week, or £250 a year, which is exactly half as much. The latter to-day might not even have reached the age of 2.1. The man on £9 12s. 4d. a week, which to many may seem a large wage, has to provide for a wife and a child. Presumably the concessional, allowances on which rebates for dependants .are calculated bear some relation to the cost of maintaining them, although with the rising cost of living they are conservative estimates. Therefore, from the family man’s income, £500 per annum, which is the equivalent of £9 12s. 4d. a week, we should deduct at least £100 for maintaining his wife and £75 for his child, as well as, say, £75 to cover medical expenses, superannuation, insurance, rates, &c, after paying £89 in taxes. That would leave him a balance of £161, or about £3 2s. a week. The young man earning £250, which is £4 16s. 2d. a week, lias nobody to support but himself, and after paying his tax of £37, will be left with £213, or about £4 2s. a week, mainly for personal expenditure. When it is considered that the man on £500 per annum is bound to be an older man, a person of greater skill and experience, the injustice of their relative positions is apparent. There can be no doubt which of the two will be able and tempted to indulge in non-essential spending. The Government has paid insufficient attention to the relationship between income and family responsibilities. Thereby it creates all manner of anomalies, places a premium on birth control in a country whose most vital need is more population, unfairly discriminates between classes, and neglects a field of taxation which could help a lot to close the yawning gap between government expenditure and revenue.
The bill deals unfairly with private companies, in a manner which is not readily apparent, as compared with public companies. Undistributed profits of private companies bear taxation at the same rate as that payable by shareholders. Private companies will be compelled to pay substantially increased taxation as the income tax paid by shareholders will be increased by this measure. Public companies will be affected only to the degree that shareholders will pay more tax on that portion of their income received as dividends. This applies with equal force to shareholders in private companies. At present, private companies pay considerably more tax than public companies on the same profit, and the bill further accentuates the disability.
When the Income Tax Rates Bill is before the House I shall give comparisons which will show what the taxpayer would have been called upon to pay under my national contribution, scheme, and what, he will be called upon to pay under the present proposals. These figures will demonstrate the hollowness of the protests of Labour members of this Parliament when the national contribution scheme was proposed in October, 1941, and their insincerity while insisting upon safeguarding the interests of the wageearners.
To-day, members of the Labour party, in control of the Government, propose to impose taxes, in many instances, approximating that proposed under the national contributions scheme, upon those for whom their hearts bled when my budgetary proposals were announced. The proposals which the Government has outlined for financing the war fall far short of what one would expect from an administration that has had almost seventeen months in which to evolve a sound financial policy. The Government has been forced to admit that, even taking into consideration the success of the recent Austerity Loan, its adherence to the voluntary principle in the financial field has produced nothing but disappointment. Notwithstanding the mass of controls it has introduced, the Government finds that a great body of the Australian people still indulge in spending in a way which in no way benefits the war effort. In this bill, it has made some attempt to put a brake on spending on non-essential goods. It has invaded the field of the lower wage-earners, but has shown that it lacks the courage to introduce into its financial policy that principle of conscription which, after so many years, it has now introduced into its defence policy.
The Government should not shirk the issue. This is every body’s war and every body must bear his or her reasonable share of the cost of the conflict. The Government has gone a little way along the road towards bringing home to the people of this country a realization that each and every one must make some contribution to the common pool of war-time finance. It has, however, failed to go about it in a way which would leave no cause for complaint. The bill reeks of injustice and bristles with .anomalies which will serve to accentuate still further the present exceedingly complex system of taxation.
I move -
That all the words after “bill” be left out with a view to insert in lieu thereof the following words: - “be withdrawn and re-drafted either by itself or in conjunction with the Income Tax Bill to provide that -
1 ) the anomalies and injustices inherent in the hills be rectified, inter alia, the arbitrary and unfair discrimination against the taxpayer with family responsibilities, employees as a class, and individuals comprised in this class;
as from the 1st July, 1943, all instalments and assessments on income from salaries and wages should be based upon current earnings for the year of tax, which in the first year would bc 1943-44, with an adjustment at” the end of each year of tax. and cash refunds to taxpayers who have paid more by instalments than is legally assessable;
of the total additional tax payable by taxpayers under the bill, as from the 1st July, 1.943, as the result of increased rates of taxation, 50 per cent, should be treated as a post-war credit and refunded to taxpayers on some equitable graduated scale by six equal half-yearly instalments commencing after the termination of the war against Germany, Italy and Japan, and carrying interest at 2 per cent, per annum in the meanwhile; and
the increased rates of tax proposed by the Income Tax bill to operate from the 1st April, 1943, shall for the three months from the 1st April, 1943, to the 30th June, 1943, be applied to all individual taxpayers and levied upon the incomes of 1941-42; the additional amount so payable for the year of tax 1942-43 shall be fully treated as a post-war credit repayable as in paragraph (3) ; and that an expert committee be set up to report upon methods whereby incomes other than wages mid salaries may be taxed in the year of income; and also upon a more equitable method of taxing the. incomes of private companies.”.
– I have been astounded by some of the evidence produced by the Leader of the Opposition (Mr. Fadden) to indicate the unfairness of these proposals in respect of certain classes of wage-earners who, he complained, will be obliged to pay tax at an earlier date than professional men and business men on salaries. As a matter of fact, the ‘ instalment plan of paying tax was introduced by the right honorable gentleman himself, when he was Treasurer. He provided for the collection of tax from wage-earners by instalments payable as early as eight or nine months before taxpayers in the other classes he mentioned were called upon to pay their taxes.
– I do not deny that; I suggested that that should be adjusted.
– If it be so grievous an anomaly that wage-earners are called upon to pay tax before professional or business men, it is most extraordinary that from November, 1940, up to the date the right honorable gentleman relinquished his office as Treasurer, he did nothing about it. He himself introduced that system. Another remarkable fact is that he congratulated the honorable member for Robertson (Mr. Spooner) cn his speech. I remind the House that the honorable member for Robertson was Assistant Treasurer in New South Wales for over three years, and during that time the Government of New South Wales imposed a tax on wages, that is on current income; but there was no talk then about a lag. During the whole of those three years that tax on wages was collected, not after the commencement, but right from the beginning of the year; but, at the same time, professional and business men and farmers paid their taxes on assessments that were issued in the following year.
– That is not the point.
– I shall give the House an opportunity to test the great solicitude of the right honorable member and his colleague for the working class. They both had the opportunity to do something, but they did nothing. They left the position exactly as it was. Honorable gentlemen opposite had very little to say about the pay-as-you-go principle when they were in office. They know what pay-as-you-go means. I believe that the Leader of the Opposition was led into moving this amendment because of a party decision.
– It is my own suggestion.
– If that is so, I ask the right honorable gentleman why he did not put this principle into operation while he was in office? Why have not the Opposition parties put it into operation at some time during the long period their parties were in office? It must he remembered that governments supported by honorable gentlemen opposite have been in office in this country for 23 years out of the last 26 years. If the Opposition parties were sincere in their desire to apply the principle they could have applied it long ago.
– The Treasurer mustknow that the principle could not have been introduced before the uniform tax proposals were enacted.
– And every body knows that there was little possibility of securing a uniform tax system while the governments supported by honorable gentlemen opposite were in power.
– Now that we have the uniform tax scheme operating why not do something about it?
– I am pointing out that honorable gentlemen opposite seem to have’ become suddenly interested in the pay-as-you-go principle.
The Leader of the Opposition raised an important point when he referred to the steps in the instalment plan. I know that he is a busy man, and apparently some one has gone to great trouble to indicate to him that under our present rates of taxation considerable hardship mav result from the application of these steps. Let me remind the House that I was not responsible for fixing the present steps. They were fixed by the Leader of the Opposition himself when he was Treasurer. However, a study of the position in relation to the proposed taxes undoubtedly indicates the need for some consideration of the point he has raised. I have been informed by representatives of trade unions and also of employers that a great deal of complaint has been made about the existing steps. It has been pointed out that workers who receive a small increase of wages have very often found that because of the existence of these steps they have actually received less wages than before the increase was granted to them.
– But there is provision for refunds.
– I am well aware of that, but the fact remains, as the Leader of the Opposition has pointed out, that workers who receive small increases of their wages often suffer penalties until the end of the taxation year, or even well into the new year, until they can obtain refunds under the machinery provided for the purpose. I have looked into the subject, and although I know that in some instances employers have disregarded odd shillings in dealing with this subject, I have come to the conclusion that some readjustment is desirable. It has been decided, as the result of consultations and of subsequent Cabinet decision, that in order to obviate some of the dissatisfaction that occurs at present the gradations shall be in amounts of 2s. 6d.
– Did the honorable member for Henty (Mr. Coles) make that suggestion ?
– I appreciate the honorable member’s interjection, but the honorable member for Henty had nothing to do with it. The subject was discussed with representatives of employers and employees, and it was generally agreed that it would be far more satisfactory, psychologically and otherwise, if the steps were of 2s. 6cl. and not 2s. each. The adoption of the new step will remove a great number of anomalies. In addition, it has been decided that in the case of a nian who may receive, say, £4 ls. 3d. a week, the instalment shall be in accordance with the lower halfcrown step. In each case it has been agreed to take the lower bracket.
– -How does the Treasurer propose to make the concessions on the average basis?
– The Leader of the Opposition called attention to some extraordinary possibilities in the hypothetical cases to which he. referred, and it is perfectly true that some taxpayers, who, on account of sickness or other adverse circumstances, may be placed in grave difficulties.
– But there is the refund ultimately.
– The Government is making arrangements to give the benefit of h. concession over the whole period to taxpayers who encounter hardship through sickness or other adverse circumstances. As the law now stands, a taxpayer may be called upon to pay as much as £100 in medical expenses in the firstfew weeks of the taxation year, and he can get no rebate on such payments until the end of the year.
– But he does get a refund.
– Yes, at some time. The Government is making arrangements by which such taxpayers may apply to the Commissioner for reductions of instalments spread over the whole year. This arrangement will undoubtedly be of considerable benefit to taxpayers who meet serious hardships. The submissions of the Leader of the Opposition on this point were worthy of consideration, but the concessions which I have already indicated should eliminate the possibility of many of the anomalies to which he referred. The change in the steps from 10s. to 2s. Gd. and the granting of the right to a taxpayer to approach the Commissioner in cases of hardship will be appreciated.
– Even allowing for some relief under the suggestions that the Treasurer is now making, there will still be hardship.
– At any rate, under these proposals the taxpayer will not have to wait until after the end of the taxation year in order to obtain relief. He will bc able to apply for a reduction of his instalment immediately his misfortune overtakes him.
– How would a taxpayer at, say, Boulia, fare in applying to the Commissioner for a readjustment?
– I do not imagine that he would meet with any great difficulty if he put his case clearly to the Commissioner.
– We shall need a much reinforced staff in the taxation office to deal with all the applications that will be made.
– When the honorable member for Robertson was speaking on the subject of taxation a few days ago, the honorable member for Gippsland (Mr. Paterson) asked how primary producers could be dealt with, and the honorable member replied, “ Leave it to the Commissioner “.
– It would be easy to do that in relation to primary producers.
– Apparently the honorable member is not. prepared to “leave it to the Commissioner” when others than primary producers are affected. The honorable member for Henty asked him a question on that point, and I understood him to say that an immense volume of work would be involved in dealing in that way with all other cases.
The Government is not able to accept, the amendment.
– I am surprised.
– I think that the right honorable member is not a bit surprised. That much-discredited horse, post-war credits; has been nominated for yet another race. He certainly will not be disqualified for inconsistent running, for he runs fast and often. Let us consider the position of the taxpayer who makes excess payments, keeping in our mind this notable performer, post-war credits. The Leader of the Opposition has complained that under the Government’s plan excess tax payments will be held against taxes payable in the following year. That is perfectly true. But the amendment of the Leader of the Opposition provides that certain proposed postwar credits shall be held by the Govern- * ment for three years after the war. Incidentally, it is interesting to discover that, at last, the Opposition is prepared to name a time when these post-war credits will be repayable. A stated period for repayment appears for the first time in this amendment. The right honorable gentleman appears to be solicitous about the small excess payments that taxpayers may make under the Government’s instalment plan, but he is not at all concerned about the suggestion that post-war credits shall be held for three years after the war. I am quite satisfied that, with the new steps, regular income earners will pay very little excess taxation; but, under the post-war credit system advocated by the Leader of the Opposition, a proportion of the taxpayer’s money would be kept for three years after the war and it would carry only 2 per cent, interest.
– This Government would keep the money altogether.
– That is not so.
– The Treasurer is mixing two points, whether intentionally I do not know. There is a difference between cash credit and post-war credit.
– I am well aware of the difference. Many people who have come into industry in this country may go out of it immediately after the war.
– That is why we need a post-war credit scheme.
– Owing to various circumstances many people find themselves in a much higher income group than formerly. Many married women, for instance, who have not normally been engaged in industry are now receiving fairly high wages. “We also know that, as a rule, people who have more money to spend than usual are helping to force up the prices of commodities, because of the excess spending power in their homes. After the war these people will immediately leave their employment and return to their homes. If the Government does not make some deductions from their income during the year in which the income is received, many of these people will have a substantial tax bill to meet at the conclusion of the war when they have returned to their homes and may have no means of discharging the debt due in tax.
– That is a good argument in favour of the principle of “ payasyougo”.
– I shall refer to that, point later. The tax owing by married women who are now receiving high wages may have to be paid after the war by their husbands or by others responsible for them unless a proposal such as that now submitted in the bill be adopted. Under the present proposal there will be a sufficient sum to the credit of these persons to meet the tax due.
The honorable member for Robertson contends that the principle of “ payasyougo “ should be adopted, but that system might provide an opportunity for the evasion of just dues. The honorable member said that that system was applied in part in the United States of America, and I am willing to examine it. Mr. Beardsley Ruml, chairman of the Federal Reserve Board of New York, was at least honest, when he propounded his plan for “ pay-as-you-go “ taxation. He suggested that the basis of assessment should be altered by skipping one year of income. The effect of this would be to make the year of income used as a basis of taxation coincide with the year in which the tax was paid.
– There is only an assessment made.
– The honorable member for Gippsland, with his .Scotch sense, can see things as they are. Thousands of people have come into industry, and are in receipt of high incomes. Many of these people are from other countries, and some of them are employed in the Department of Munitions. If a person is employed in industry this year up to the 30th June, and does not earn £156, he may receive a certificate of exemption, and during the whole of the next financial year, no matter how much income he may earn, under -the present system, no deduction is made from his wages. That is an important point, and I put the matter seriously to honorable members that many of the persons now coming into industry may not have had taxable incomes for the last twenty years.
– -Is not that an argument in favour of payment of the tax in the current year?
– The matter could be argued from different point3 of view, but under the proposal of the Government we should at least get tax from all of those people who have come into the income tax field during the past year, and enable those who have come in temporarily to have their tax deducted from their incomes, so that they will not have a heavy liability to meet when they drop out of industry.
Some honorable members seem to be under a wrong impression regarding the year of taxation. I draw attention to an extract from Mansard, volume 78, page 5S54. When the right honorable member for North Sydney (Mr. Hughes) introduced the first Income Tax Bill on the 18th August, 1915, the following observations were made : -
Mr. Glynn. Thu honorable member does not propose to take the returns of last year for the calculation of the incomes of this year; lie proposes to tax the income of last year.
– It is impossible for a man to say what hu will earn during a year not yet completed; but we can ask taxpayers to say what they earned during the calendar your which ended on the 3.1st December last, or during the financial year which ended on the 30th June last. We cannot tax the income of the current year during this year.
– In the first assessment notices, it was said that the tax was levied on the income earned during the year ended the 30th June. Every assessment notice has borne a similar notification.
– When the Leader of the Opposition proposed the instalment plan he advanced as one of the advantages the argument that it would bring in an early flow of income and would spread the payment of the tax more evenly over the year. That was one of his main arguments in favour of that proposal, but apparently honorable members opposite are not so sure as to its virtue now.
I shall refer briefly to the systems in operation in other countries. In Canada the tax on the incomes of wage-earners is collected on the instalment plan, and the collection begins four months before the end of the year in respect of which the tax is levied. I mention this fact because reference has been made to the system in operation in the United States of America. In that country the taxation year ends on the 31st December, and the returns have to be lodged in the following March, or three months after the completion of the taxation year. When the taxpayer sends in ‘his return, he must forward with it one-fourth of the total amount due in tax. The amount payable is assessed by himself. I am glad that the honorable member for Robertson mentioned this system, because it seems to have many excellent features. If the taxpayer is unable to estimate the amount of tax due for that year, he may calculate the payment due on the basis of the tax for the previous year. Although no assessment is received by the taxpayer, he must pay one-fourth of the tax quarterly, and by the time he has received his assessment the whole of the amount due must have been paid.
– That is a good idea.
– I shall consider it: In Canada, where the financial year ends on the 31st December, non-wage-earners are required to lodge their returns by the 30th April in the following year, but payment of the tax must commence on the 15th October in the financial year. Although a taxpayer has not to send in his return till the 30th April, 1943, for income earned during the twelve months ended, the 31st December, 1942, he must begin to pay his income tax in the previous October,
– There are private companies in Australia with thousand’s of pounds on deposit, but they cannot pay the money to the Government because they cannot get assessments. If the American system were in operation here, money would be coming into the Treasury.
– I rise to a point of order. Is this a speech or a duet? I have been trying to listen to the Treasurer but you, Mr. .Speaker, seem to be unduly reluctant-
– Order! The honorable member for Melbourne will resume his seat.
– I was remarking that, in Canada, the non-wage-earner must begin to pay his tax before the completion of the income year on which his assessment is based. I understand that great difficulty is experienced in regard to adjustments. One relates to the averaging of the incomes of primary producers, which are averaged over . a number of years, but I shall be quite willing to investigate the system. It seems to me that small business people and other non-wage-earners would have difficulty in paying their income tax many mon ths before it was due. Their income return is not made until January, but they must start paying in October of the taxation year. There may be something in the suggestion of bringing nonwageearners into the scheme, and I do not mind looking into the matter later in order to see how much there is in it.
– The Treasury would make millions a year out of it.
– Some of the honorable member’s friends would squeal pretty loudly if they had to pay up early. There is this difficulty: Some primary producers and some companies have obtained extensions of time already, and it would probably be regarded as a hardship to ask them to make advance payments in October of this year. If
I had brought forward such a proposal I am sure that it would have met with opposition.
If the Leader of the Opposition or the honorable member for Robertson, or any one else, thinks that the Government’s social welfare proposals are nebulous, let him disabuse his mind of that belief at once. Of course, the putting of the proposals into effect depends upon the Government remaining in office, but it is a fact that legislation in connexion with some of the recommendations of the Joint Committee on Social Security is already being drafted.
– But no money will be available until after the war.
– As I said previously -but my words have been grossly misrepresented - legislation in connexion with the unemployment benefit proposals will be brought down as soon as the legal draftsman is able to . prepare it. Legislation in connexion with certain of the other proposals, including the maternity provisions, will be prepared later.
– As part of the Government’s election propaganda.
-I shall discuss that suggestion later. Some of the other proposals are still the subject of inquiry by a committee of Parliament. They include medical and hospital benefits, and the provision of medicines. Those proposals will be brought before Parliament as soon as those who are inquiring into them are able to complete their work and present their reports. The Government does not propose to defer until after the war legislation designed to give the people some measure of economic security, nor do we propose to go to the people at an election without being able to show them that we have taken some definite steps in the direction of achieving the better order about which there has been so much talk. Honorable members opposite have suggested that the Government’s social service proposals are part of its election campaign. Well, the British Government appointed Sir William Beveridge to report upon proposals for social improvement. This Government appointed the Joint Committee on Social Security to undertake the same bask for Australia.
– I cannot see how this is related to the bill.
– I would not have mentioned it had not the Leader of the Opposition and the honorable member for Robertson said that the Government’s proposals were only so much political window-dressing. It is due to me and the Government that I should say that such a statement is a grave distortion of the facts. Some of the revenue which it is proposed to raise under this taxation measure will be expended on. the provision of certain immediate benefits, of which repatriation is one. I cannot ask the Commonwealth Bank to discount treasury-bills to meet those charges, and I do not think that honorable members expect that I should. Therefore, some of the revenue will be used for this purpose, and some will be used for war purposes. It is clear that the whole amount of £30,000,000 will not be required for social services, either now or in the immediate future. Reference is made in the bill to a fund which is to be established. Some of the revenue which it is proposed to raise will not be expended for some time, but what is not expended on social services will be used to finance the war effort in the same way as would money raised under a system of post-war credits as advocated by the Leader of the Opposition.
– Honorable members will recall that the Treasurer (Mr. Chifley) said that the Government was prepared to submit this bill for consideration by a joint committee of the House, as other taxation bills have been submitted. That has not been done. Instead, the Leader of the Opposition (Mr. Fadden) has moved that the bill be withdrawn and redrafted to conform with what he thinks ought to be done. . Some of the points raised can be considered in the committee stages of the bill. The Treasurer has already indicated what it is proposed to do to remedy anomalies which become apparent as the rate of taxation increases. Those anomalies were inherent in the taxation system from the beginning, but they are brought out more sharply as rates increase. As one method of dealing with the anomalies, it is proposed to substitute gradations of 2s. 6d. for those hitherto applied.
In regard to taxation refunds, the fact is that the taxpayer who accumulates a credit is the owner of that money. The Opposition proposes that it should be repaid to him at once.
– After his assessment has been received.
– Yes, that is what I intended to say. The Government says, for reasons which the Treasurer has stated, that the assessment given to the taxpayer will be based on current conditions. There will come inevitably a time when the earnings of the taxpayer will be substantially less than those upon whichhis previous year’s assessment was based. Thus he will, by his taxation payments, establish a credit which will be available to meet his debt to the nation. Surely it cannot be regarded as a hardship to require citizens who owe a debt to the nation to discharge that debt. Can it be said that money is being withheld from the taxpayers because machinery has been devised to facilitate the payment of taxes when otherwise there would be insuperable difficulties in the way of their meeting their obligations?
– It is discrimination.
– Honorable members may say so, but, as a matter of fact, it is stern realism.
Mr.ArchieCameron. - Then let it apply to every body.
– This is not the first taxation bill which has contained anomalies, nor is it the first in which the case of a particular individual has been made distinct from the category in which he is grouped. Taxation law is largely a matter of development. The records of this Parliament will show that taxation amendment bills’ have been introduced because the courts have held one thing, whereas governments have held that the law was meant to mean something else.
– No provision is made in this bill for the making of refunds in any circumstances. If a man who has overpaid his taxes dies, his estate has no right to recover.
– Surely the honorable member does not suggest that if, when a deceased person’s estate is wound up, the Commissioner of Taxation is holding a credit due to that estate, the money will not be repaid?
– There is no provision for it in the bill.
– But the taxpayer will receive a certificate indicating the amount of the credit.
– But he cannot assign that credit.
– It is assignable in satisfaction of his debt to the Crown. The purpose of making the deductions is to satisfy any existing or probable claim which the Commissioner of Taxation may have against a taxpayer.
– If a taxpayer’s income does not fall for ten years, will the Crown continue to hold surplus payments for all that time?
– That is a matter upon which subsequent parliaments should have something to say. I have no doubt, now that my attention has been drawn to the matter, that if there is any reasonable legal doubt that credits due to a taxpayer are not always his property, less anything due to the Crown, an amendment can be introduced to put the matter right. It should be understood that the purpose of the deductions is to make sure that the obligations of the taxpayer to the Crown can and will be met.
– That ought to apply to all taxpayers.
– That is a matter which can be dealt with in committee. It is said that some of the additional taxes should be set aside for post-war credits and that there should be a refund to the taxpayer. In the matter of post-war credits we have to choose between different fundamental principles. The purpose of a part of this additional taxation is to lay the foundation of a better social order - to make it clear not only to our own people but also to the world at large that the Australian nation is resolved that the disparity between rich and poor, the inequalities of the social order, the lack of capacity to produce a contented virile and healthy population - will be tackled definitely and immediately. We cannot have a repetition of the spectacle of a nation which, when it ought to have been preparing for war, had not money with which to undertake the task because thousands of its people were compulsorily idle since no man would hire them. At that time private enterprise was depressed, and national enterprise nonexistent. At the present time, when the nation is short of many things of value, and would be glad to find an additional labour unit to engage in service for the nation, we look back upon a period when thousands of our people could not find useful employment. The reason was that there was no money; the banks said that they did not ha ve it, and the Government could not get it because the people did not have it. Consequently, there was what economists describe as a diminished wages fund. This country cannot afford a state of affairs in which any considerable section of the people will suffer unemployment in the years ahead. We cannot afford it, not only from the point of view of national morale and physical fitness, but also because our national security would be jeopardized thereby. It is clear that we must have a better health service, and that such service must commence with the very young; it must relate intimately to maternity and to the health of the mother during the period of her expectation. On top of that, infant health must be treated not only from the medical standpoint but also from the standpoint of combatting diseases which, even if they do not cause mortality, lay the foundation of semi-invalidism and reduce the fitness of the people.
– Order! I think that the right, honorable gentleman is discussing social security rather than the taxation proposals of the Government.
– I was making clear a point which constitutes a fundamental difference between the Opposition and the Government. Instead of making a refund to individual taxpayers of part of the tax which is being imposed under this bill the Government proposes to use the proceeds for the purpose of establishing a national fund to promote the welfare of the nation.
– And for any other purpose ?
– Yes, for certain other purposes.
– Then it is not all a matter of national welfare?
– Not all. It is clear that the refunds contemplated by the right honorable gentleman are approximately the same amount as will be used by the Government for the purpose of laying the foundation of a national welfare fund.
– Why not raise’ the money under a compulsory scheme?
– The fairest system is one which is based on the capacity of the citizen to pay in accordance with the general principles of income tax assessment law. It is for those reasons that the Treasurer has said that the Government cannot accept the amendment of the Leader of the Opposition providing for a re-drafting of this measure. The Government feels that, with respect to the tax as a tax, the amount sought from the public is necessary. It thinks, too, that the reduction of the exemption to £104 per annum is right and proper in existing circumstances. The Government believes also that the progressive rate of the tax by gradations of 2s. 6d. is proper, having regard to existing circumstances. The Government is ako of the opinion that there should be no argument about the taxpayer being unfairly treated in respect of the amount of money that is credited to him; it holds that that money is unquestionably the personal property of the taxpayer and can be used by the taxation, authorities only to meet claims that the nation lawfully has against the taxpayer. Any amount in excess of such claims remains the property of the taxpayer.
– “Why not put the money into a trust ‘fund?
– A trust fund is not necessary. Any obligation of the nation will be met out of the Consolidated Revenue fund. The honorable member for Barker (Mr. Archie Cameron) knows the reasons why certain trust funds have been established. This money does not come within the same category.
– I congratulate the Leader of the Opposition (Mr. Fadden) and the honorable member for Robertson (Mr. Spooner) on the very illuminating speeches which they have delivered on the bill before the House. I shall support the amendment of the Leader of the Opposition, because I believe that it contains many constructive proposals which, if adopted, would enable the Government to bring before the Parliament a better bill than that now under consideration.
Perhaps the most striking feature of this income tax assessment bill, to the political observer at any rate, is the decision of the Government to do what it censured and defeated the Fadden Government for proposing to do, namely, to bring into the taxable field the .lower ranges of income which formerly have been exempt from taxation. It is estimated that at least two-thirds of Australia’s national income is in the hands of people whose earnings are under £400 a year. It seems to me that it was inevitable that a huge volume of spending power would be required to provide more than formerly towards the increasing costs of carrying on the war. The present Government has now adopted the same limits of exemption as were proposed by the Leader of the Opposition when he was Treasurer seventeen months ago, and on. which his Government was defeated. I think that it can fairly be said that this is another of many instances in which the present Government reaches an unpopular but inescapable decision a year or eighteen months after those opposed to it have arrived at thai decision.
The next most striking feature of this legislation, in my opinion, is the severity of the tax and the extraordinary anomalies connected with the instalments which have already been alluded to so strikingly by the Leader of the Opposition. Under the new rates, income tax is expected to yield £132,000,000 from 7,000,000 people - an average of about £19 from each man, woman and child. The amount is enormously greater for those who actually will pay the tax. When the present Leader of the Opposition, as Prime Minister and Treasurer seventeen months ago, realized that the taxation exemptions had to be lowered lie tried to soften the blow by providing that a proportion of the money to be extracted from taxpayers would be regarded as a compulsory loan, to be repaid after the war. The present Treasurer (Mr. Chifley) not only takes considerably more than was proposed by his predecessor but he takes it for good.
A third feature, which is, perhaps, the most unusual of all to be met with in the bill, is the proposal to deduct tax instalments during the last three months of this financial year - from the 1st April te the 30th June next. That is a system of payment in advance of next year’s tax and before that year’s tax becomes due. We have heard a lot about an alleged tax lag - which I’ do not believe exists - but here is taxation in advance for one section of the community. I admit that where high wages are ruling the stopping of the practice of taking instalments for three months would release a large volume of spending power at a time when frugal living should be the rule; but the danger of over-spending could be avoided just as effectively and with more justice by treating these advanced exactions as a postwar credit repayable by instalments. That would be fairer than to exact taxation before it is due, and after the tax for the current year has been paid. I support the method referred to by the Leader of the Opposition in the fourth paragraph of his amendment. Indeed, I go further, and urge that half of the increase of the tax after the 1st July next, as proposed in this bill and in the accompanying rates legislation should be a post-war credit. That is to say, I suggest that the whole of the money proposed to be taken in advance from the 1st April next until the end of the financial year should be a post-war credit, and that half of the increase after the 1st July next should also be treated in the same way. Repayments by instalments would be a tremendous help to many workers after the war is over and war activities have ceased and we are in the difficult transition stage between war employment and normal peace employment. That is a stage which will take more bridging than anyth ing we have previously experienced, because of the tremendous scale of dislocation which will take place. Post-war credits repayable by instalments over a period would be a good way to help many people at that time. The proposal to tax wage and salary earners three months in advance of the beginning of the financial year when the tax becomes due is explained by the Treasurer as necessary in order to overcome the difficulty which must arise when war stops and high overtime rates no longer boost earnings, and when our present system of tax assessment on the previous year’s income will cause hardship. There seems to be no good reason why income received in the form of wages and salaries should not pay the current year’s tax from the current year’s income. That is what in fact takes place - the current year’s tax is paid from the current year’s income, although on the basis of last year’s assessment. It is really paid from the current year’s income because of the fact that instalments on the current year’s income are taken in order to pay it. Therefore, the position is overcome very largely with the wage or salary earner, although the amount of tax that he has to pay is determined by the amount of income earned in the previous year.
– A wages tax instead of an income tax?
– No, the tax year and the income year should be the same, instead of the tax year being this year and the income year last year. The Treasurer reminded me of the difficulty that there would be in the case of business men and primary producers, but I think that in their case the assessment year could be brought forward to the tax year and necessary adjustments could be made by way of refunds of overpayments or payment of additional tax as soon as possible after the amount of the income earned was definitely known. I contend that we are paying this year not the tax for last year but for this year, although, for the sake of convenience, the tax is assessed on earnings last year. If the tax year and income year were made one and the same a lot of problems would be solved and injustice removed. Consider the case of a man who earned a . good income last year, but who, through illness or other misfortune, has earned little or no income this year. His tax is assessed on his earnings last year and, when he is called upon to pay a considerable tax and has no income from which to pay it, he must sell his assets or mortgage his home. That could not happen if the income year and the tax year were the same. Some people have the entirely erroneous idea that if the tax year and income year were brought into line the Government would lose income tax revenue for one year. The Taxation “Department would collect income tax every year without interruption. The only change would be of the period chosen for assessment. The honorable member for Robertson (Mr. Spooner) suggested as a means of dealing with business people that, when the change was made, for the first year the income of the previous assessment year should be averaged with the income of the new assessment year. That would eliminate any danger of unscrupulous taxpayers dodging their liability by placing as much of their income as they could into the year proposed to be dropped.
– The Government would lose the tax paid by the estates of deceased persons.
– If we made the assessment year and the tax year the same section 217 of the Income Tax Assessment Act, which deals with the tax levied on the earnings of deceased taxpayers in the year of their death, would become a dead letter. It is a blot on our income tax legislation. I commend the final suggestion of the Leader of the Opposition that a committee of experts should be set up to try to devise ways and means whereby the tax year could be made the assessment year for all payers of income tax.
Reverting to the erroneous impression that to make the income year and tax year the same would involve the Commonwealth Government in the loss of income tax revenue for one year, I direct the attention of the Treasurer to the first Income Tax Act which became law in September, 1915. That act was not retrospective; income taxation began in 1915-16. There was no Commonwealth income tax in 1914-15, although the earnings in 1914-15 were for the sake of convenience, because they were known, used as the basis for the assessment of the tax to be paid in respect of 1915-16. It follows inevitably that the income tax that we pay this financial year is the tax due for this financial year, although it is based on the income earned last financial year. When that tax has been paid by a taxpayer he will have completely satisfied the whole of his liability for income tax up to the end of this financial year. It will be seen therefore that section 217 of the Income Tax Assessment Act that was slipped through this Parliament in 1936 at the suggestion of the Taxation Department is utterly unjust and indefensible. I admit quite frankly that, until I studied the income tax legislation in connexion with this measure, I did not know about that section although I was a member of the Ministry at the time that the act was amended. That section is a complete contradiction of the section of the act which sets out with crystal clearness the liability of taxpayers and which shows that when the taxpayer has paid the tax for the particular year in which the tax is levied he has entirely satisfied the claims of the Taxation Department. Sec tion 10 (1) of the Income Tax Assessment Act 1915 states -
Subject to the provisions of this act, income tax shall be levied and paid in and for each financial year upon the taxable income derived directly and indirectly by every taxpayer from sources within Australia during the period of twelve months ending on the thirtieth day of June preceding the financial year in and for which the tax is payable.
That makes it abundantly clear that our tax liability for any year ends when we have paid the tax levied in that year on the income of the previous year. It is true that that section was amended in 1936, but the amendment does not affect the principle, because “ year of income “ is defined as meaning the financial year next preceding the year of tax, and “ year of tax” means the financial year for which income tax is levied. I repeat that the income tax we pay during this financial year is definitely for this year, although assessed on last year’s earnings, and I hope that the blot on the income tax legislation contained in section 217 of the act will be erased. Of course, if the House agrees to the proposal made by the Leader of the Opposition for making the tax year and the income year the same, section 217 will die from inanition. Should the amendment be not accepted, and the House decides to continue with the old method of the payment of tax based on the earnings in the previous year, section 217 should be deleted from the principal act, because it is nothing more or less than an additional .probate duty. Let us take the case of a taxpayer who commenced to pay Commonwealth income tax in the year in which it was instituted, namely, the financial year 1915-16, that is, 27 years and eight months ago. Let us assume that that man paid his tax in that year and in every year since, and that in May of this year he will have paid his tax for the financial year 1942-43. He will then have paid tax for 28 years in a little less than 28 years. Let us also suppose that he dies before the 30th June next. He will have paid his tax liabilities beyond the date of his death. He will have paid tax in respect of 28 years in less than 28 years, yet section 217 of the principal act provides that out of his estate shall be paid tax in respect of a twenty-ninth year. Thus, .the tax levied under that section is nothing more or less than an additional probate duty. Such an imposition is utterly indefensible. If the House agrees to the amendment moved by the Leader of the Opposition, and the assessment year is brought forward to coincide with the tax year, so that a taxpayer will pay tax on current income, section 217 will automatically become a dead letter. If the House does not agree to that proposal, I shall raise the matter in the committee stage, because I regard section 217 as dishonest and indefensible. Having said so much about a provision for which the present Government cannot he held responsible, and for which I am prepared to accept my share of responsibility, because I was a Minister in the Government that enacted it, I note with pleasure that this bill provides that there shall not be any penalty rate on income from property up to £200. That minimum is rather low, but this provision is better than differentiating between income from personal exertion and income from property to the degree that was the case in the past, because £200 earned from property will buy no more than a similar income from personal exertion. A differential rate in respect of income from property, as compared with income from personal exertion, is not justified until such income from property exceeds the basic wage. I am also pleased to note that under the bill some relief is to be given to the taxpayer who supports an incapacitated child over sixteen years of age. That is a very necessary reform, because many people who have children over that age who are unable to earn a living owing to physical defects do not seek to obtain a pension for them. At the same time, those parents feel that it is not right that the exemption which they formerly enjoyed in respect of the child should be taken away after the child reaches sixteen years. I am glad that that anomaly is to be rectified, and I give the Government full credit for that reform. The bill also provides that 20 per cent, of the profits derived from metalliferous mining shall be free of tax. Will that exemption also apply to profits derived from the production of mineral oil?
– I have not examined that aspect.
– Surely capital invested in the production of oil should be treated on a similar basis, because investments in that field are just as risky as investments in metalliferous mining. In addition, we require oil urgently for war purposes. In conclusion, now that our tax rates have risen to Himalayan heights, I stress the desirability of reforming our income tax system by assessing tax as far as practicable on current income. Many examples have been cited in support of that proposal. The honorable member for Robertson (Mr. Spooner) cited the case of a man who was earning £5,000 a year, and retired on £800. With an income of £800, he will be obliged to pay over £3,500 on account of his income of £5,000 for the previous year. He can pay this tax only by realizing on his assets. Another man who had an income of £800 in the previous year, and now receives an income of £5,000 a year, will be in the happy position of paying tax on only £800. That would be as unjust to the Treasury, for the time being at any rate, as the imposition in the other case is to the taxpayer. The only way by which we can remove such anomalies is by making the tax year and the assessment year the same. It is easy to do so with respect to salaries and wages, and similar incomes, but more difficult with respect to income from business. However, I do not think that the difficulty in regard to the latter class of taxpayer is insuperable. It could be overcome, perhaps, by the taxpayer paying tax on an assessment for the previous year, as is done now, and then, as quickly as possible after the taxpayer ha’s sent in his return for the new financial year, by making an adjustment which would bring him right up to date. I shall have something further to say on that matter in the committee stage.
.- The House should congratulate the Treasurer (Mr. Chifley) and his departmental officers on the masterly way in which they have handled the country’s finances since the Government took office. In view of the unprecedented position confronting them to-day, mainly as a result of the war, they have done a very good job, indeed. The Treasurer has now brought down another record budget. Expenditure for all purposes is estimated to be £652,000,000, of which £540,000,000 will be expended in connexion with the war, and £112,000,000 for other purposes. Those figures give some idea of the problems now confronting the Government. Revenue from income tax and other sources will amount to only £262,000,000, leaving a gap of £390,000,000 to be made good by way of loans and the issue of treasury-bills. I am concerned about the fact that treasury-bills are negotiable. The Government is endeavouring to finance the war without having recourse to credit created by the private banks. That was the policy of previous governments, and, as the result of it, the national debt was increased considerably. I take it that this Government will not farm out those bills to private financial institutions. Therefore, I should like to see that principle embodied in legislation, providing specifically that treasury-bills shall not be negotiable. If that be done, future governments will find it difficult to farm out those bills to financial institutions, and by that means defeat the policy of this Government for the financing of the war. In addition to the issue of treasury-bills, the Government must have recourse to the raising of loans. I have n’o doubt that the people will respond to future loan appeals as generously as they subscribed to the last loan, the success of which indicated clearly their endorsement of the Government’s policy of refusing to rely on the private banks, which were enabled by previous governments to increase their assets by nearly £40,000,000 during the first two years of the war. This Government intends to rely on the patriotism and generosity of the people. The workers responded to the last loan in a wonderful way and I am confident that they will respond equally generously to future loan appeals in spite of the extra taxes that are to be imposed on them. I am not happy about the fact that a tax will now be imposed on incomes down to £2 a week, or £104 a year. I should have liked to see the minimum maintained at £156 a year. At the same time, however, taxpayers on the lower range of incomes are to participate in the benefits to be provided under the Government’s national welfare proposals. In addition, the rate of tax of 6d. in the £1 on the lower incomes is not very drastic. The majority, of our people have sufficient patriotism to realize the difficulties confronting the Government, and, when we consider the sacrifices that are being made by all sections in other countries, we should be thankful if we are fortunate enough to remain alive. When the Russians recaptured .Stalingrad not one building was left standing, whilst the population of Kharkov was reduced from over 1,000,000 to a population of 300,000, and the majority of the buildings in that city were destroyed. We should be thankful if we can be spared the horrors of war on pur own soil, even though we may be obliged to surrender most of our material wealth. I am pleased to know that the Government will shortly bring forward ‘ its national welfare scheme, with the object of providing social security for our people and to carry into effect the war aims of the United Nations, as set out in the Atlantic Charter, to which the Treasurer referred in the following terms : -
The Commonwealth Government, in common with the other Governments of the United Nations, has subscribed to certain principles of national policies which -were expressed in the Atlantic Charter and on which are based our hopes for the better future of the world. One of the aims is the securing for all of improved labour standards, economic advancement and social security.
The Government is convinced that it would be a great mistake to postpone the pursuit of these objectives until after the war. They involve a wide range of activities and much investigation and planning is required.
Certain fundamental preliminary steps have already been taken.
Steps have already been taken to have certain powers referred to the Commonwealth in order that the post-war aims of the Government may be put into operation. A post-war reconstruction department has been established, so that social security may be assured to the people. It is essential that the man in the street shall be protected against unemployment, sickness, disease’ and poverty. For that reason the establishment of the proposed national welfare fund is highly commendable. I am glad, also, that the Government’s policy provides for increases of maternity allowances and pensions.
– Is there any means by which we can insure the people against the return of a Labour Government?
– The people do not desire ainy such insurance. I believe that they will return this Government with a bumper majority at the next general elections. Never again will they be misled by the cry of anti-Labour politicians that money is not available for social benefits. Only a few years before the war an anti-Labour government introduced a scheme for national health and pensions insurance which was estimated to cost about £2,000,000 a year. The necessary legislation was passed, and an expenditure of about £1,000,000 was incurred in assisting societies’ to give effect to the scheme; but, at that point, the financial authorities informed the government that money could not be found to . carry the plan any further. Yet this Government is proposing, in the midst of the war, to provide £30,000,000 a year ultimately for social security, and I believe that its scheme will be put into operation even in the unlikely event of it not being returned to office. The Curtin Government has been able to find time, in the thick of its war administration, to carry out, to some degree at least, the social security policy of the Labour party. I am glad that the Treasurer does not intend to leave this important work until the post-war period. There are some people who consider that that should be done, and they are not all in Australia, as the following newspaper extract indicates : -
London, Feb. 7th. “ Signs are not wanting that privileged, selfish interests are busily preparing to cast the future in the mould of the past,” said the Minister for Aircraft Production. Sir Stafford Cripps, on Saturday.
Certain interests in Great Britain, as well as Australia, are endeavouring to prevent the passage of any social security legislation until after the war. The
Beveridge plan, in particular, is being attacked. This is clearly indicated in a report in a recent issue of the Sydney Morning Herald, which read as follows : -
Four Conservative M.P.’s will ask the Government to defer legislation on the Beveridge social service plan: when the Commons debates the plan at its next session.
The four M.P.’s are Sir Patrick Hannou, Sir Peter Bennett, Sir John Mel lor and Mr. H.R. Sel ley.
They will ask the Government to postpone all legislation committing the Government to expenditure under the plan until the Government’s full proposal on post-war employment and the restoration of export trade are known.
Sir Peter is a director of Imperial Chemical Industries Limited and a former chairman of the Federation of British Industries; Sir Patrick is chairman of Birmingham Small Arms and several other companies.
The Curtin Government intends to proceed with its legislation for social welfare, and, in doing so. it is seeking to implement the promises that had been made by the Allied Nations to members of the fighting services. The Treasurer is wise in not leaving this matter for post-war consideration. If the legislation foreshadowed by the Government is placed on the statute-book now it will no doubt be administered by whatever government may be in office in the future.
There is need also to give attention to the improvement of the health of the nation. The Joint Committee on Social Security has given a lot of attention to this subject, and I agree with its view that action should be taken now to improve national health and fitness. Unless action be taken now, the experiences of the years following the last war may be repeated. In that period, a world-wide pneumonic influenza epidemic resulted in the death of more people than were killed during the war. I am sure that a good deal of the absenteeism in industry, about which we hear a good deal, and about which many statements have been published in the press, is due to the stress and strain to which the workers in war industries are being subjected.
A national health scheme should be introduced by the Government at an early date. I have been supplied wiih figures which indicate that only about £18,000 was expended last year on national fitness, whereas the amount expended in the maintenance of public hospitals was more than £6,000,000. Probably a much larger sum was expended on private hospitals and in private medical attentionby many people in the community. It is deplorable that only £18,000 could be found for preventive treatment in relation to national fitness. A much more substantial amount should be ear-marked for this purpose.
The honorable member for Melbourne (Mr. Calwell) and some other honorable gentlemen have referred to the need to overcome waste and inefficiency, and to avoid unnecessary expenditure, in war industries. I agree with the views that they have expressed. Insufficient attention has been given to this important subject in the past. The Commonwealth Aircraft Corporation Proprietary Limited has established extensive works in my electorate, and the Government is providing substantial funds for the enterprise. Recently, I asked the Minister representing the Minister for Aircraft Production the following questions in relation to that enterprise: -
– The taxes proposed to be levied under this bill will be required to meet, in part, our war expenditure ; for that reason I. submit that I am entitled to refer to the subject.
– I rise to order. I submit that we are considering a taxing measure. This bill deals with the raising of revenue, not with the expending of public moneys. Expenditure can be considered when we are in committee of ways and means.
– The Chair will observe closely the remarks of the honorable member for Reid, and, if necessary, will call him to order.
– I received the following replies to my questions: - 1.(a) To the 30th September, 1942- £922,569; and (b) to the 30th September, 1942- £1,990,737.
– How does the honorable member propose to connect his remarks with the bill?
– I submit that as we are considering the raising of revenue to meet war expenditure, I am entitled to discuss the expenditure on this warproduction factory. I was told more than twelve months ago that an agreement was being considered in relation to the Commonwealth Aircraft Corporation Proprietary Limited. It is time finality was reached.
– What has such an agreement to do with this bill?
– An expenditure of approximately £3,000,000 is involved in this factory.
– We are considering, revenue.
– Surely we are entitled, in such a discussion, to refer to what may he regarded as wasteful expenditure.
– I am not going to be shut up if the honorable member proceeds on these lines.
– The Chair will determine whether or not the honorable member for Reid is in order.
– I ask the Chair to direct the honorable member for Barker to cease his interjections.
– The honorable member for Reid may make only passing references to the subject with which he is dealing.
– I am contending that it is high time that an agreement was completed between the Government and the Commonwealth Aircraft Corporation Proprietary Limited to ensure that the public moneys involved in the enterprise shall be properly expended, and not wasted. We should have a department charged with the duty of co-ordinating activities in war industries. Undoubtedly waste and inefficiency is frequent in war industries at present, and this is due to a lack of co-ordination. Our various production departments are apparently operating in watertight compartments, and there should be a co-ordinating authority. Considerable waste is also occurring in some service departments. Recently, I directed the attention of the Minister for Munitions (Mr. Makin) to the activities of a certain enterprise, and pointed out that the employees were dissatisfied with the situation. They felt that they were wasting a good deal of time because orders were not coming in freely from the service departments. In his reply, the Minister said -
I desire to refer-
– Order ! The honorable member may not proceed along those lines. We are considering a taxation measure, not a loan bill. If the honorable member desires to refer to rates of taxes he will be in order.
– If that is the ruling of the Chair, I fear that I shall not be able to carry my case much further. I submit that I should be allowed to discuss not only the raising, but also the expending, of money. In particular, I consider that I should be allowed to follow other honorable members in discussing instances of waste and inefficiency in industry. However, I bow to the ruling of the Chair and will reserve my remarks for another occasion.
– I support the amendment, moved by the Leader of the Opposition (Mr. Fadden) and desire to address myself briefly to certain points specifically mentioned in it. The way in which the Treasurer (Mr. Chifley) has dealt with the “ payasyougo “ proposal advanced by the honorable member for Robertson (Mr. Spooner) amounted to a scant and casual dismissal of a subject that requires deeper consideration than the Treasurer has pretended to give to it. It is not sufficient to dismiss it by saying, “ This is merely an attempt to escape taxation “. I do not agree with those who contend that persons in receipt of the higher incomes should not bear the imposts placed upon them. I have said more than once that in times of war persons in receipt of high incomes must be taxed at high rates. We cannot dispose of the problem to which the honorable member for Robertson has directed attention by merely referring to what was said by the right honorable member for North Sydney (Mr. Hughes) in introducing the first Income Tax Bill in 1915. We should consider the whole picture from the commencement of income taxation to the present time. Nobody can dispute the fact that taxpayers are called upon to pay a large amount of their current income in respect of tax on income earned in the previous year. With the rapidly mounting taxation rates, at what in equity shall take place when the income earning capacity of the taxpayer suddenly ceases. Suppose the taxpayer is stricken with paralysis or some other illness which prevents him from working? If he dies, what is the position with regard to his estate? If a taxpayer happens to die on the first day of the financial year his capacity to earn income ceases, but his estate is obliged to pay income tax in respect of his previous year’s earnings.
Owing to the fact that income tax has been imposed at high rates, I know many people who will be called upon to provide substantial sums by way of income tax when the breadwinner’s earning capacity has ceased. In the great majority of instances the tax-payers I have in mind are not wealthy. Their incomes range from £500 to £700 a year, and in some instances they are even lower than that. The position of people in like circumstances becomes more desperate from month to month.
In September, 1915, the Commonwealth income tax was introduced for the first time, and obviously there had to be a base on which to assess the tax. It was provided that for the financial year commencing on the 1st July, 1915, income tax should be levied, based on the amount of income earned during the preceding twelve months. It cannot be fairly said that what the Government was seeking to do was to impose income tax on past earnings. It was imposing the tax prospectively, but, to enable it to be collected, it. was necessary to have a base, and the base selected was the previous year’s earnings of the’ taxpayer. That system has brought a great deal of distress to many people who, over a number of years, have, on small incomes, provided themselves and their families with a home and have made provision against old age by means of insurance. They have incurred commitments for which I am sure they should be commended, but now they are called upon to pay income tax at high rates. During the lifetime of the breadwinner, he normally can meet the tax out of his earnings, but, in the event of his death, section 217 of the principal act provides that his estate shall be liable in respect of income tax on the previous year’s earnings.
I contend that when, in September, 1915, . the Parliament declared for the first time that income tax should be levied as from the 1st July of that year, and that it should be payable upon earnings during the year ended the 30th June of that year, it was never contemplated that taxation would ever reach the dizzy heights it has at present attained. Accordingly it cannot be contended that on these altered conditions if the taxpayer dies, his estate should be called upon to bear the whole burden of the tax payable in respect of the previous year’s earnings. In my own case my income tax amounts to a substantial part, if not the greater part, of my earnings, and I am paying that out of the present year’s income. At the end of the financial year my total earnings will have been what I have already paid to the Taxation Department, together with the balance which I have been able to retain for myself. If I were to die on the day after the end of the financial year my family would have to provide a substantial sum by way of tax based on what I have already paid by way of tax plus what I have been able to retain for my own private purposes. That is the position of the large number of people throughout this country in the middle range of income. I am not so much concerned about, those who have substantial capital assets, but the great majority of people have no such assetsAll they have is a cottage, which is probably subject to a mortgage, a life assurance policy and some furniture. By reason of section 217 of the act, when the breadwinner dies the family must raise the money necessary to meet the tax due in respect of earnings of the previous year. Many of these people will then become bankrupt and the financial policy adopted by this ‘Government will have achieved that result. It may be that the’ Government has not faced up to the problem.
– Why did not the honorable member deal with the matter when he was Treasurer?
– Two years have elapsed since I have been Treasurer, but the problem has become acute owing to the taxes imposed during the last eighteen months. Take the case of a taxpayer receiving £400 a year. Upon marriage he immediately sets about procuring a home of his own, and he proceeds to pay for it probably over a period of, say, twenty years. Later his income increases to £500 or £600 a year, and owing to the in creased taxes due to the war he is called upon to pay out of his current earnings a large sum of money.
– The Commonwealth has applied the same system as that which has been in operation throughout the world for the last 60 years.
– When a vice becomes apparent we must deal with it. When the income tax rates were not very high it did not much matter whether the tax was based on the earnings of the previous year, but the point becomes material when the stage is reached at which a large proportion of one’s income is required for the payment of the tax. It seems to me that section 217 of the act must be reviewed now.
– If the war came to an early conclusion, there would still be ample time to meet that difficulty, say, in the next budget or in the following budget.
– In the meantime great injustices are being perpetrated. People in my own constituency have come to me complaining of heavy charges which they have been called upon to meet as a result of the operation of that section. They have been forced to mortgage their assets. Taxpayers have been “ paying as they go “, but they have been doing it on the basis of a past year. Because taxation rates are higher now it is important to relate taxation provisions more closely to the ability of the taxpayer to meet his obligations. Every year since 1915 the taxpayer paid as he went, but the tax was based on the previous year’s income. I believe that special attention should be paid to section 217 of the act in order to remove the feat in the minds of many people that if the breadwinner were to die his estate would be unable to meet taxation demands on the previous year’s income. Members of the middle class, like all others, are loyally anxious to discharge their responsibilities in time of war, but their needs are apt to be overlooked. As I previously pointed out, the ordinary man in steady employment is the one who makes arrangements to buy a home, and who takes out insurance in order to make provision for his family. If such a man is stricken down with illness, and his income ceases, he may get into grave financial difficulties because of the commitments into which he has entered. I have previously urged that those who have long standing commitments of this kind should receive special consideration in the way of taxation deductions. I know many men who are having a hard struggle to remain solvent, while others have been driven to the wall. I represent a constituency in which live many people in the middle income groups, as well as many others on the basic wage. Time and time again one hears of men getting into difficulties in their efforts to keep up the payment of premiums on life assurance policies. For many of them it is a losing fight. The Leader of the Opposition made out a good case on behalf pf the married man with heavy financial responsibilities, and the Government should pay heed to his representation. Otherwise, families will be saddled with a heavy burden of debt.
I suggest to the Treasurer for his consideration - though I do not offer this as a firm opinion as to the detail - that the law should be amended to provide that if a taxpayer died when the year of tax is, for example, three months spent, the amount of tax which his estate is called upon to pay should be related to the time during which he was earning in that year. In the case of this example, it would amount to 25 per cent, of the tax otherwise payable. The same principle should apply in the case of a man whose income is suddenly cut off, whether by incapacity or for some other reason.
– The honorable member must be aware that the act provides for the granting of relief in such cases.
– I know, but relief is given only in cases of definite hardship in respect of which it is almost impossible to satisfy the Commissioner upon under existing legislation. I am asking that such an amendment be made as a matter of right. Moreover, if it can be shown that the taxpayer is able to raise the amount of his tax, it is unlikely that the commissioner would listen to a plea of hardship, however just the claim might be.
.- The principal purpose of this measure is to obtain £40,000,000 additional revenue from taxation in a full year. The need to raise this money has been forced on the Treasurer (Mr. Chifley) by the sensational growth of war expenditure. In September last he presented a budget which was an all-time record for the amount of money proposed to be expended. The budget provided for the expenditure of £549,000,000, of which £440,000,000 was for war purposes. A little more than four months after he had almost stunned the Australian people with that budget, he now estimates that expenditure will be increased hy £103,000,000, bringing the revised total to £652,000,000. However, we have still four mouths of the financial year to run, and no one would be surprised to learn that, by the end of the financial year, the 7,000,000 people in Australia were to be called upon to provide £700,000,000. Even if the revised estimate of £652,000,000 is unaltered, it represents an amount of £93 for every man, woman and child in Australia. If we exclude the men in the services, and those directly producing for war needs, as well as the women in the homes and their children, we get some idea of the financial burden which must be borne by the rest of the community. This group must provide goods and services for the civilian community, and also the greater part of the finance for the conduct of the war. 1 mention this because I believe that the community can perform this herculean task, at a time when it is already becoming physically worn, only if the strongest incentives to production and saving are maintained. What are the incentives to production and saving? The knowledge that we are assisting in the war effort is itself a powerful incentive, hut human beings and human nature have not changed much throughout the ages, and one of the strongest incentives is the belief that personal effort will bring some personal gain. That powerful incentive should not be entirely disregarded if a maximum effort is to be obtained. The most powerful incentive to save - and saving must be encouraged if we are to avoid wasteful expenditure and harmful competition for goods and services - is confidence in the country’s financial structure, and the stability of the currency. If these incentives are to be maintained, there must be a belief that the money provided for the Government is being wisely expended, and the person who earns money must continue to believe that part of it at least may be retained by him for his personal benefit. The third requisite for the maintenance of these incentives is that there should be some assurance that the struggle to maintain business organizations under war-time conditions is worthwhile; that the post-war order will leave full play for individual enterprise. In passing, I refer to the experience of the United States of America, a country in which the principle of individual liberty and enterprise has been carried to perhaps greater lengths than in any other country, and yet there has been developed there the highest standard of living and the greatest industrial efficiency seen in any country in the world. Finally, there must be maintained that confidence in the financial stability of the country which will encourage investors to put their money into war loans. They must feel confident that the money which they invest will retain its purchasing power.
I mention these things because we shall not attain our goal of maximum production unless all these elements play their proper part in the framing of government policy. The weakness of the Government’s policy at the present time is that it does not measure up to the tests which I have suggested. In the first place, the Government’s taxation tables are inequitable. It is true that, for the first time, the Government proposes to tax those on the lower incomes where so much excess purchasing power lies. The Government is to be commended upon taking that step, however belatedly, but the taxation tables still perpetuate it in a lessened degree a fault which has all along been present. If we compare the taxation tables ‘ in Australia with those in Great Britain we find that those in the lower income groups in Great Britain are contributing proportionately a good deal more, and those in the middle and higher income groups a good deal less than do the corresponding groups in Australia. The following table sets out the tax payable under the Government’s proposals and that paid on similar incomes in Great Britain:’ - lt will be seen that, whereas in the higher ranges of income the Australian tax is higher, the reverse is true in respect of taxpayers in the lower ranges of income. A taxpayer in Great Britain with an income of £10,000 will have over £3,000 left after he has paid his tax, whereas the Australian taxpayer with a similar income will have less than £2,000 after meeting his tax. A further point which should not be lost sight of is that in Great Britain the collections include a post-war credit, so that the Australian taxpayer in the higher ranges of income is even worse off in comparison. I repeat that, although the present taxation tables do something to remedy the previous inequity, they still do not measure up to what has been found a fair adjustment in other countries, particularly in Great Britain.
The second point which, in my opinion, reveals a weakness is in relation to the tax lag. Here we must not lose sight of the important element of incentive. One of the factors which will counter that element of incentive is the concern which every taxpayer must have as to the uncertainty of the future, owing to the methods adopted by the Government in regard to the collection and payment of taxes. The merit, of the pay-as-you-go scheme is that the taxpayer, knowing his present income, is able to calculate his present liability. He knows that, whatever his financial circumstances may be in the succeeding year, he will at least have discharged his obligation this year for the income which he earns this year. That, I suggest, is a most important factor in the minds of taxpayers. There is scarcely a section of the community which does not believe that its earnings to-day are higher than, they are likely to be in the years immediately after the war. That is not so much because the calling or vocation of individuals will alter, as that there is scarcely a person in Australia who is not working under much greater pressure to-day than he normally does. The average skilled workman is earning overtime to a degree that is not usual in normal year’s. In the years after the war, a skilled workman will probably not work more than ordinary p.e ace- time hours. In other words, whereas he may be in receipt of £12 a week to-day as a result of overtime payments, after the war he may receive only £6 a week. That will be the time when, with his income reduced by one half, he will be called upon to pay a tax based on his higher earnings for the previous twelve months. It does not require much imagination to realize that the average professional man to-day is working under greater pressure than usual because of manpower shortages, and is probably in receipt of an income 50 per cent, greater than under normal conditions. The Treasurer cited the case of the married woman who has come into industry as the result of the war, and does not expect to remain in industry after the war, but will be called upon to pay taxes based on an income earned in a year when she was in receipt of what was for her an abnormally high rate of income. The more we examine the problem the more we must become impressed with the merits, in terms of sound national policy, of remov ing the fear which taxpayers now have because of uncertainty as to their financial position immediately after the war. Even if we were to abandon our claim for one year of tax, the position could easily be met by having a higher rate after the war than otherwise. The Treasury need suffer no financial loss at all, but the effect on the individual would be beneficial because he would know that out of his current earnings he would be able to pay the tax which would discharge his obligations in respect of the year in which the income was earned. That would remove his concern as to the future, and, in respect of deceased estates, it would remove a serious obligation which the estates of deceased persons, especially those who die immediately after the war, will carry. In the last two or three years estate duty has been doubled. In passing, 1 suggest that that is a matter which we ought to consider as soon as the financial circumstances of the Commonwealth permit us to do so. “We have- not only doubled estate duties, but also we are now calling on the estates of deceased persons to carry this heavy obligation when no additional income will be received. The Government would be well advised to accept the constructive criticism which honorable members on this side have offered. When this amendment was put forward the Treasurer said that it was merely a vote-catching proposal, but he justified the amendment when he admitted that he was already taking action to remedy the defects, first, in respect of the scale of weekly deductions, and, secondly, in respect of deductions m relation to concessional allowances.
The third weakness to which I desire to draw attention is the destruction of the incentive which should be present in the community if we are to reach our maximum goal under war-time conditions. I refer to the absence of any post-war credit- scheme which would give to the taxpayer, whether in the higher or lower ranges of income, the knowledge that there will be preserved to him some portion of his earnings, because of the existence of a post-war credit. Let us take the case of a worker whose normal income is £300 a year, but receives considerably more because of overtime earnings. I have taken a normal income of £300 because that roughly represents the wage of a tradesman under normal working conditions. The tax on an income of £300 is £55, which leaves him with £245. Should he, as a result of overtime payments, earn £500, he would pay £137 in taxes and have £363 left. In other words, he would retain approximately £2 of every £4 received by him as overtime. Should his income be £600 a year, he would pay £179 in taxes and retain £421. That is to say, he would retain £3 of every £6 that he earned as overtime. It is not to be wondered at that the Government is not getting the full quantum of work from the overtime which the average man is paid. The same argument can be applied to the greater earnings of professional men and of married women now working in industry; unless some incentive is provided, we shall not get from the community that return, in terms of effort, of which it is capable. The final weakness to which I direct attention is the fact that the incentive to save will be lessened if the people have no confidence that their invested savings will be returned to them, at the expiration of the period of the loan, with purchasing power unimpaired. One of the great weaknesses of the Government’s financial policy is its excessive reliance on treasury-bills. The Prime Minister said that one reason why he was not prepared to adopt the post-war credits scheme was the fact that the repayment of £20,000,000 worth of post-war credits would endanger the national welfare scheme: If the Government could not conveniently find £20,000,000 with which to convert post-war credits into cash, how does it propose to find the £249,000,000 which it will need to fund the treasurybills already issued? Undoubtedly, as time passes, the issue of treasury-bills will be heavily increased. In citing what Canada was doing, the Treasurer, to suit his own purposes, omitted to say that Canada had adopted post-war credits as a part of its method of financing the war. On the subject of confidence in the financial structure generally, and the currency in particular, Lenin is said to have declared that the best way in which to destroy the capitalist system was to debauch the currency. I have been amazed at the light-hearted way in which members of the Government discuss the depreciation of the currency. They adopt an almost flippant attitude towards the issue of treasury-bills. I am led to believe that they are not concerned that the debasement of the currency destroys the purchasing power of the money which people have invested in the loans, because they think that the burden on future generations will thereby be lightened. If the objective of the Government is to destroy the capitalist system by destroying the confidence of the community in the currency, it is having a great deal of success. It is a significant fact that the Fadden national contribution scheme, under which a part of the money contributed to Consolidated Revenue by the people would be repaid after the war, provided for smaller contributions by the people than are provided for in the present scheme under which all the money paid by the taxpayers will go into Consolidated Revenue and stay there. Under the Fadden scheme, a man earning £250 a year would have paid £33 6s. as a national contribution and £16 would have been returned to him after the war; but, under this bill, that man will pay £36 7s. in tax and receives no refund. A man earning £500 a year would have paid £95 2s., of which £23 would have been apost-war credit, as against the £136 14s. which he will have to pay as income tax if this bill becomes law. The man on £1,000 a year would have had a post-war credit of £48 out of the £282 18s. that he would have had to pay, compared with the £255 8s. of tax that the Treasurer proposes shall be levied on him.
– The honorable gentleman’s comparison does not hold good, because the amount of revenue which the Fadden budget proposed to raise from national contributions was only £25,000,000, compared with the £40,000,000 of additional revenue which we intend to raise under this bill.
– We should welcome a post-war credit scheme based on the tables applying in Great Britain, because that would provide a far more equitable distribution of the burden than is contained in the Treasurer’s proposal. My main point is that at all costs the Government must maintain to the full extent the incentive to work and save.Workers will make an extra effort to assist the war effort, but the history of human nature proves that the incentive of personal gain is one of the strongest driving forces in the community. Whatever the dogmatists and doctrinaire theorists may think, the workers want to carry on their way of life, which allows them to exercise freedom and initiative. With regard to the incentive to save, the worker wants to feel that whatever he lends will be returned to him with its purchasing power undiminished. I condemn the Government’s proposals, because they will destroy initiative. I support the amendment of the Leader of the Opposition, because it has many advantages over the bill submitted, and I hope that the House will adopt it.
– I cannot support the amendment of the Leader of the Opposition (Mr. Fadden), because, although it has features which commend themselves to me, it has other features which are objectionable. I do not think that this bill is a just measure, and in committee I shall vote for the amendment or rejection of some of the clauses. The proposal to reduce the statutory exemption from income tax is intolerably unfair. I have contrasted the scheme contained in this bill with the scheme current in Canada, which the Leader of the Opposition in the Canadian House of Commons described as more onerous than the income tax of the United States of America or Great Britain. But, contrasted with the proposals made by this Government, the Canadian income tax, from my point of view, is much faireT. The Government proposes that the statutory exemption, rates shall be reduced from £156 to £104. The Canadian system is explained in the speech of the Minister for Finance and Defence, reported at page 92 of volume 80 of the House of Commons Debates.It appears that the present Canadian scheme is the result of the fusion of two former systems of taxation. There was formerly a national defence tax, as well as a graduated income tax. Both are now fused in the one tax, and there is the normal rate of tax and, in addition, a graduated rate of tax. It is curious to notice that, taking the Canadian dollar at the present rate of 5s. 6d., the statutory exemption for single men is. £181 10s., and for married men £330 - 660 and 1,200 dollars respectively. In addition, married men have further exemptions in respect of children. It is true that Canada has adopted a system of what has been described as post-war credits, but it is also true that, in adopting that system, Canada has not materially increased the contributions from the earners of lower incomes. For instance, a single man earning 700 dollars a year used to pay 35 dollars and received no refund. He now pays 40 dollars and will receive 20 dollars of that back as a post-war credit. A married man on 1,200 dollars used to pay 50 dollars and receive nothing back; but he now pays 50 dollars, of which 25 dollars will be returned to him as a post-war credit. The earners of low incomes are, therefore, paying about what they used to pay, and will get about half of it back. It is important to remember the substantial exemptions given to both married and single men. The rate of tax upon large incomes is very substantial, and very heavy tax is levied upon the profits of companies and the profits of private individuals. A company pays, first, a corporate income tax of18 per cent., a tax of 12 per cent, of its total profits, and also a further impost, because it pays 100 per cent, of its total excess profits, or 10 per cent, of its total profits whichever amount is the greater. Those rates apply not only to companies, but also to private individuals who make profits. Part of the 100 per cent, tax is repaid by way of post-war credit. Companies and private individuals who make profits, instead of paying 75 per cent, of their total excess profits as they did up to 1942, now pay 100 per cent, of their total excess profits and receive 25 per cent, as a post-war credit. Thus the Government has the advantage of the use of that extra money.
In . substance, my objection to the bill is that it brings the exemption level far too low. Even the present level of £156 is too low ; but it is now to be reduced to a level lower than was ever intended or desired by the people, and far lower than has ever been advocated by any political party in this country. The new exemption level is unfair, and represents an intolerable burden on the people which they resent. I am not prepared to support that provision. The honorable member for Melbourne (Mr.Calwell) in response to an inquiry which he made to the economists at the Melbourne University was informed that they estimate that under these proposals, direct and indirect taxes on an income of £6 a week represent 35s. a week in the case of a man with no dependants, 31s. a week for a man with a wife, 26s. a week for a man with a wife and one child, 25s. a week for a man with a wife and two children. Those figures show that the burden of tax on those with small incomes is considerably more than that represented solely by a direct tax. I am opposed to this burden being placed on persons with small incomes. The swing of direct taxation should be checked. I oppose the lowering of the exemption level as proposed under the bill, and I shall support any other honorable member who is prepared to vote against that provision. If it be not defeated, further exemptions should be provided. I have given notice of amendments in that respect which I propose to move in the committee stage. I am also opposed to the provision to enable the Commissioner to refuse to refund overpayments of tax; and I shall also support any other honorable member who is prepared to oppose it. Most of what I desire to say on the bill can be more appropriately stated in the committee stage. Generally, my attitude to the measure is that it is bad and unjust, particularly insofar as it reduces the exemption level.
.The views of honorable members on this side have been excellently stated by the Leader of the Opposition (Mr. Fadden) and the honorable member for Robertson (Mr. Spooner). Our present financial position is serious. The Government recognizes that fact. No amount of social service camouflage will hide it, and hence this taxation. The danger arises from two main sources: first, the amount of money that the Govern ment is pouring out in credit expansion; and, secondly, the declining quantity of goods that are available for civilian consumption. As the result of those two factors, as well as others, prices are rising. I do not need to emphasize that point in relation to this measure. Other honorable members have spoken of the tremendous amount of bank credit that is being utilized, whilst the decrease of civilian commodities is generally recognized. “When an increased amount of money is competing for a decreasing quantity of goods the result under the law of supply and demand is, inevitably, a rise of prices. That is going on. When the previous Government went out of office prices had risen by 9 per cent, on prewar figures, and at that time the £1 was worth about 18s. 2d. To-day, prices have increased by 221/2 per cent., and the £1 is worth only 15s. 6d. That means an additional flat rate tax of about 20 per cent, on the whole of the community. The Government realizes that price control must be assisted, and it has, therefore, brought forward these taxation proposals which are estimated to yield £40,000,000, including a proposal to tax lower incomes. These proposals are vitally necessary. The Government’s loan programme has produced only £83,000,000 which is substantially less than its estimate; and the £60,000,000 war savings certificate campaign which the Treasurer (Mr. Chifley) introduced so optimistically in his budget speech has failed so badly that sales of war savings certificates total only about £11,000,000. Therefore, it is necessary that the purchasing power of two-thirds of the people on lower incomes be reduced. That is the reason for these proposals, although under them the rates of tax are to be lower than the rates applied to corresponding incomes in New Zealand and Great Britain. One sympathizes with the people who will now be brought into the tax field, and wishes one could join advocates of the social credit system in saying that those on lower incomes should be allowed to keep their purchasing power. But we see signs of very great danger. Savings banks deposits at call are increasing; and it is obvious that hoarding is going on. The Government, therefore, believes that it is unwise to risk a position in which any alarm, or uncertainty, might mean the pouring out of great sums of money with the result that price control would be broken and black marketing would develop. The Opposition realizes the difficulties confronting the Government, and it has made practical suggestions in this respect. We suggest, first, changes in the scale of these “ pay-as-you-go “ payments in order to make them more equitable, and also the refund of overpayments of tax. Secondly, we suggest that an inquiry be made by an expert committee into the extension of the “ payasyougo “ system to all taxpayers ; and, thirdly, a lightening of the taxation burden by treating 50 per cent, of the aggregate increase of taxes as post-war credits. It is vitally necessary to adjust anomalies with respect to tax instalments. I am not a mathematician, and I do not pretend to criticize the new taxation scale; but I point out that the mathematical economist, Mr. H. S. Carslaw, very strongly criticizes the taxation scale as laid down in respect of the uniform income tax. He says -
With the Commonwealth the sole taxation authority on income one might expect under present conditions a very severe, but simple and reasonable, graduated tax. That the uniform tax is very severe on high incomes is evident, but that it is simple, and in every feature of its graduation reasonable, is far from clear.
He went on to say that next year we might hope for a simpler and more reasonable scale. This Government has not provided a more reasonable and simpler scale.
Common justice demands the repayment of surplus instalments. There is no earthly reason why the Government should penalize members of the community who over-pay their tax in advance. Many of them have obligations such as life assurance premiums, and they rely on the repayment of surplus tax instalments to meet them. The Government’s proposal to retain surplus instalments is causing widespread discontentMany people have already complained to me in that respect. Great advantages may be gained from an examination of the “ pay-as-you-go “ system by an expert committee. Such a system will enable the Government to collect its tax sooner, and consequently to reduce the purchasing power of the community more quickly. That is a vital point. Further, the Government will get the benefit of high taxation rates at a time of high national income; and when the nation’s income falls, it will not be creditor for huge sums of uncollected tax which, possibly, will never be paid. Further, taxpayers will know where they stand, and will not carry a huge burden of tax debt should incomes fall. The Opposition’s third proposal is that’ 50 per cent, of the aggregate new taxes for AprilJune, 1943, and 50 per cent, of the aggregate of the new taxes from the 1st July, be treated as post-war credits to be repaid in six instalments during the three years following the conclusion of the war. I do not propose to go into all the arguments concerning the old horse of Dost-war credits which is galloping again; but I should like to stress several points. First, the advantage of the scheme proposed by the Opposition is that we should owe this money to ourselves. There will be no question of Australia mortgaging its future to overseas creditors. Secondly, the scheme will have a tremendous psychological effect. Apparently, the Government fails to realize that aspect. People quite rightly consider that money paid in taxes is lost, but they do not regard as lost money which is lent and for which we propose that they be paid interest at the rate of 2 per cent. Honorable members are able to ascertain the views of the public on these matters from those who speak to them in the streets. Many have come up to me and expressed the hope that the Government would on this occasion introduce a system of post-war credits, and would not take all this money permanently and at once. It is possible for the Government, if it adopts the Opposition’s suggestion, to graduate the scale of taxes and loans so that those on lower incomes may pay tax and post-war credits on the scale set out in the Fadden budget, and along the lines being followed in Great Britain. If that were done persons on incomes in lower and middle ranges would have first call on the national capital and income after the war. In Great Britain, Baron Keynes proposes that the post-war credit shall be repaid by means of a capital levy after the war. That could be adopted here, but whatever the method, the point is that under this scheme the lower incomes would pay less and have the first call on the national income and capital after the war. It could be regarded, quite rightly, as it is regarded in Britain, as being a transfer of wealth after the war from the people with the higher incomes, if any are left, or with capital, if any be left, to the people with lower incomes. That is why it always seems so extraordinary to me that the Government should oppose postwar credits. Post-war credits are, in a sense, a socializing scheme. The only reason I can possibly imagine why the Government is acting in this way is that it opposed post-war credits originally as n means of seizing power and it considers it must maintain its opposition. If the Government accepted the post-war credits plan it could also adopt the Fadden suggestion and make such credits available immediately in cases of sickness, unemployment or marriage, as is done in Great Britain.
Having made these general remarks I wish to refer to one or two particular considerations which arise in connexion with the bill, and which have not yet been touched upon in detail in the debate. I support the suggestion that a committee of experts be appointed to examine the very difficult problem of private company taxation. Public companies are taxed at a flat rate of 6s. in the £1 on profits, plus war-time company tax. Private companies are taxed 6s. in the £1 on profits, but do not pay the war profits tax, although they have to pay a special tax on undistributed profits at the shareholder’s rate. Consequently if the shareholders in a company be people with small incomes the undistributed profits will be taxed at their low rate, and if they be people with large incomes, the undistributed profits will be taxed at the high rate. In many companies owned by three or four people who used to be wealthy this means that undistributed profits will be taxed at the new rate of up to 18s. 6d. in the £1. That is only an increase of Gd. People with small incomes, among the middle income shareholders, will now have, to pay new rates of ls., ls. 6d. and 2s. in the £1 and will carry those rates to the taxation of the undistributed profits of the companies in which they are shareholders. This is grossly unfair. It is even more grossly unfair in view of the fact that no extra tax is being imposed on the profits of public companies. The proposal is so outrageous, in fact, that it is doubtful, whether the point was appreciated when these proposals were being prepared. The whole position in regard to private company taxation is extremely difficult. The subject was reported upon twice by the Joint Committee on Profits. The first report, which was presented in October, 1941, stated-
It will be observed that private companies ure exempt from the operations of the Wartime (Company) Tax. We think this exemption is justifiable at the present time, having regard to the other imposts which apply to private companies, and we gather that it was for the purpose of avoiding an unjust impost upon private companies as compared with public companies that they were exempted from the act. There is evidence before us to suggest that, at least in some cases, the total tax imposed upon private companies is considerably in excess of that which operates in the case of a public company. But while it is possible to point to anomalous cases, we think, looked at as a whole, that the taxation upon private companies is fairly comparable with that applicable to public companies. It is not possible to make an exact comparison, but the figures placed before us indicate that the burdens upon the private. and the public company do not differ so greatly from each other as figures in relation to isolated cases may suggest.
In view of the fact that the taxation of private companies will be considerably higher under these proposals whereas the taxation of public companies will remain unaltered, the anomalies will be accentuated. The second report on the subject by the Joint Committee on Profits wasmade in if arch, 1942, after the committeehad taken a great deal of additional evidence. Although the committee came toan indefinite conclusion it stated in its report -
There are, we have little doubt, anomalouscases in which by reason of recent increases in tax the burden on some private companies may at the moment be extremely heavy but such’ anomalies are inseparable from war-time conditions.
There is no doubt that many such anomalies exist. The joint committeehoard much complicated evidence from company representatives and also from officials of tlie Taxation Department and also examined various suggestions with the object of insuring a greater measure of justice to private companies, hut it did not consider any of them practical. 1 was not present at the meetings on these occasions, as the Broadcasting Committee of which Senator ‘Gibson was chairman, was preparing its report at the time, but I have since read the evidence and reports and. I thoroughly agree with the view that the Subject is extremely complicated and should be examined by accountants. For that reason I strongly support the proposal in the amendment that it should be referred to a committee of experts.
The extraordinary incidence of the taxation on private companies was amusingly shown by a hypothetical case submitted to the Joint Committee on Profits by the Commissioner of Taxation. The committee asked the Commissioner to submit a case and he prepared one in which the profits of a hypothetical private company were shared by three persons, each of whom received a salary of £1,000 a. year. The company made a profit of £55,300, over six years, in varying amounts. The distribution of the whole of its profits to the three partners, after the payment of normal company tax and shareholders tax, would have given them £5,204 between them, for the six years, or £289 a year each.
– They would, get even less under the new rates.
– That is so, because linder the new rates, the tax on undistributed profits has been bumped up. That the Commissioner of Taxation was able to submit such a case is clear support for the contention that these high rates will kill initiative and hard work, with the result that .taxation will dry up at its source. I remind honorable members that it was found to be necessary in Great Britain to reduce the confiscatory rates of war tax and excess profits tax on companies. Confiscatory rates of tax on undistributed profits are thoroughly bad. They produce a tendency to cause companies to push out as much of the profits as .possible to shareholders, rather than to lay up reserves for depreciation, repairs, future taxation, future expansion and difficulties after the war. Quite a num ber of representatives of private companies urged the Joint Committee on Profits to recommend to the Government that it should allow some part of undistributed profits to remain untaxed. The representatives said: “Take some part of our undistributed profits away from us, and hold it for us so that it may be made available to meet the difficulties of the post-war reconstruction period.” It was put to us that if the Government would relieve the companies of taxation in respect of part of their undistributed profits, such profits could be regarded as post-war credits repayable for the purpose of helping the companies to reestablish themselves after the war. There is no doubt that private companies have been hit very hard. They have to pay. first, a flat rate of 6s. in the £1 on their profits; secondly, land tax as companies: and, thirdly, a tax of up to 18s. 6d. in the £1 on undistributed profits. If the proprietor in a private company is lucky enough to get a dividend under such conditions, he pays another tax upon it at the personal rate. He also pays land tax on his own land as well as on his proportion of the company’s land. He loses tlie advantage of the remissions of taxation on dividends which formerly were allowable by Commonwealth and State taxing authorities. I therefore strongly urge the Government to appoint an expert committee to examine this subject.
I congratulate the Government on the proposal in the bill to reduce the rates of tax on property income under £200 to the lower rate chargeable on personal exertion. In this connexion, I support the favorable comments made by the honorable member for Gippsland (Mr. Paterson). In my view, this new concession will tend to meet the problem to which I have referred on previous occasions in this House, of the plight of small income-earners who have invested their savings in companies. As I have pointed out, an increase of company taxation and a decrease of many dividends hits small shareholders and small income-earners very hard and it will probably cause them, ultimately, to become applicants for pensions. These individuals have no redress in respect of increased taxation. They have put their life savings into companies and they receive no consideration in the way of costofliving increases, as do pensioners and basic wage-earners. They have to meet their expenses from a dwindling income due to a fall in company dividends and the depreciation in the value of the £1. I am quite certain that unless these persons are afforded some relief, they will he compelled to apply for pensions.
I wish now to raise several points in my capacity as a private member, and not as a member of the Opposition parties. The first has relation to bearer bonds. It has been suggested to me by people competent to speak on the subject that a considerable leakage of taxation occurs in respect of Commonwealth bearer bonds because, under the present system, the rate of tax depends entirely upon the honesty of the bond-holders. I understand that, about 1930, it was discovered that a serious leakage was occurring and that many people were brought to book when such bonds had to be converted at a lower rate of interest than previously operated. The people who held these bonds had to convert them so their owners were discovered. It has been suggested to me that this subject also should be examined by a committee of experts. The Taxpayers Association has examined ways of helping the Government to track the holders of bearer bonds. It has been suggested that the problem should be dealt with by the levying of a flat rate of tax on such bonds.
Another point to which I desire to refer is the proposal to impose a tax on 5 per cent, of the deferred pay of members of the fighting services. This proposal is causing much indignation and many of us have received strongly worded circulars on the subject. People generally consider it to be scandalous that husbands, brothers, sons and friends who are offering their lives in the service of their country should be taxed upon what is regarded as a compulsory saving. The amount of money involved is not great and there is a feeling that service personnel should not he subjected to such miserable treatment. It seems to me to be foolish for the Treasurer, who has himself admitted that the amount involved is small, to arouse so much hostility over it.
– It is also very unfair.
– There is another unrecognized section in the community which suffers severely at present from income taxation. I refer to those who have given up good living standards in order to enter the combatant services at much reduced rates of remuneration. These people carry the burden of the taxation based on their previous year’s income. That is due to the tax lag which the Opposition desires to abolish. Many of them have taken up life assurance at fairly high figures, and they cannot possibly meet their liabilities in that regard out of their service pay. I understand that a moratorium is granted to them, but the payments due will come out of the assurance money or the bonuses. Therefore, I urge the Government to give serious consideration to the position of those who have enlisted in the fighting services.
Some time ago I raised the subject of deductions from taxable income on account of payments incurred in educating children, but the Treasurer said that I had raised the matter too late to enable the Government to consider it. Therefore, I ask the Government to examine the matter in connexion with this bill. If the war continues for a considerable period, the matter of educational deductions will become important. The tremendous increase of direct and indirect taxes throws a great strain on those who have to educate children. The Commonwealth Government has already come into the field of State education in war time by providing bursaries in the universities for students of parents with slight financial resources. The Government of Great Britain has already recognized that it may have to take up the matter of secondary education, because many of the British public schools are in financial difficulty. In Australia, despite our secondary system of State education, the private schools are of great importance. In South Australia they carry one-fifth of the educational burden, and the proportion may be even larger in other States. It seems to me that the Commonwealth Government may have to consider the problem which these schools present, as has been found necessary in Britain.
Two cases have been brought to my notice which the Government should consider with regard to the increased taxation to be imposed. One is that of parents who have to maintain children at secondary schools at the ages at which they could leave school and earn income. It would be of no use to give bursaries in universities to students if they were called upon to leave school at the secondary school age. The other case is that of country parents who cannot afford to give a secondary education to their children because it involves sending them to boarding schools or putting them into city lodgings. It is therefore necessary for the Government to consider the granting of deductions from assessable income in respect of money expended on the education of children.
The Opposition has made some helpful suggestions to the Government. It asks first that overpayments of instalments of tax shall be returned to the taxpayers. It also asks that certain of the new increases of taxation shall be made post-war credits returnable during the three years after the close of hostilities. The third suggestion of the Opposition is that an expert committee should consider the application of “ pay-as-you-go “ methods to all taxpayers, in addition to wage and salary earners. Finally the Opposition urges that the proposed committee should review the present taxation of private companies. . I trust that the Treasurer will consider also my own suggestions as a private member. I urge that the Government should tax Commonwealth war bonds at the source. This matter could be considered by the proposed expert committee. Secondly, I ask that the Government examine the position regarding the taxation of the deferred pay of members of the fighting services and the taxation of civilians who have enlisted in the services. Finally I urge the Government to consider the effects of income taxation on secondary education.
– I understand that the Prime Minister (Mr. Curtin) was once editor of the Australian journal known as The Worker. It is an extraordinary publication in many ways and has a remarkable illustration of the Australian working man on its cover. The worker is depicted as a rather angular and muscular person with a head somewhat between that of a man and an animal. The brow could only be described as low and some people might say that the Australian working man has been represented as a mere clod. Often when the Labour party advises an appeal to the public, and a big national effort is made, the Australian working man is judged as he is typified on the cover of The Worker. Something of that kind has been done in presenting this bill. It is not a transparent measure. There is a good deal of camouflage about it. The Government seems to say : “ We have got to tax people in the lower income group, but we shall camouflage our action with a national welfare scheme. We shall do what we have to do in a very clever way, because we shall say to the Australian worker You know we are going to do this, but there is something in it for you’”. On investigation, the worker will find’ that there is very little in this proposal for him. On close scrutiny of the matter, as we have realized by the admirable speech of the Leader of the Opposition (Mr. Fadden), the more we dissect the bill the more curious and numerous are the anomalies inherent in it. For some time members of the Opposition have been asserting that the time must come when people in the lower income groups must be taxed, but no great satisfaction has been derived by the Opposition from such a declaration. No one desires to obtain money for the war effort from the people in the lower income group if it is possible to get it from the higher incomes, but figures presented to the House from time to time leave no means of escape from such a policy. There has been delay on the part of the Government in coming to the inevitable conclusion thatthe lower income group must be taxed.. The exigencies of war made it apparent that with a reduced quantity of goods available for consumption, with greater purchasing power due to bank inflation and with pegged prices, there was every indication from what we have witnessed in the last nine or ten months of increased inflation. Considering the expansion of credit that has taken place, one must be alarmed at the enormous amount of bank credit that has been created in the last fifteen months. When the Leader of the Opposition left office, the treasurybills on issue amounted to a mere £1,750,000. Up to June, 1942, the issue had increased to £71,250,000. In fifteen months, treasury-bills have been issued to the amount of £213,000,000, and the position to-day is that the Commonwealth and States combined have treasury-bills to the total amount of £260,000,000.
– That is asking for trouble.
– Yes. If this policy be pursued the people on the lower incomes will suffer, because the experience of other countries shows that the wageearners are the first to feel the effects of inflation. No doubt the Treasurer (Mr. Chifley), and every other member of the Government, agreed that it was necessary to tax people in the lower ranges of income, but they have not placed before the people a graduated scale providing for post-war credits. They wrapped the pill in a sugar coating, and said to the lower-paid sections, “ We shall set aside £30,000,000 a year for certain social services “, but, on investigating the measure, we find that only about £4,250,000 is to be used for any form of social service, the remainder being devoted to war finance. I quote the following interesting remarks by the Treasurer in the financial statement delivered by him on. the 11th February last:- in its early stages the fund will build up some credit balances which will be used later when the welfare scheme reaches full operation. For instance in the first year a substantial credit may accrue. These balances will not be allowed to remain idle, but will be invested and will thus provide a useful source of temporary finance for war purposes which will he replaced by long-term borrowings when the moneys are required later for welfare purposes.
The Leader of the Opposition directed attention to this important point: the change-over from 40 instalments to 52 does not provide relief for the wage-earner because the rate of taxation is being increased. The wage-earner is not a clod ; when something hits his pocket he is intelligent enough. He will see the hollowness of the proposed welfare scheme under which he must pay 52 times in the year instead of 40 times and pay more each time. The Government has adopted the strange principle that the wage-earning class alone is to be denied any refund when too much taxation has been paid. This does not affect me because I am a primary producer. It does not affect members of the business community, but it will affect the wageearner. There is even a legal doubt whether a man’s executors will have a claim on such over-payment after he dies. It is evident that these points have not been properly considered by the Government.
If we cite a few examples we shall see how the Government’s proposals work out. A single taxpayer earning £2 2s. 6d. a week will pay £1 6s. a year tax. Another taxpayer who earns only one penny a week more will pay double as much tax, or £2 12s. a year. Because he earns one penny a week more, he will actually receive 5d. a week less. Let us now consider the case of a married man, and it should be noted that in nearly every instance it is the married man who must pay the piper. A married man receiving £4 16s. 2d. a week will pay 2s. a weekless than his tax liability. Surely he should be left with more than 2s. a week to cover his concessional allowance. A. man receiving £11 10s. 9d. a week, and who has a dependent wife and child, will pay11s. a week more than his tax liability, while a man on £15 17s.8d. a week will pay £22 2s. a year-less than his tax liability. In no instance will there be any adjustments or refund. We should also consider the case of a man who has taken out life assurance, and most honorable, members will agree that it is wise to do so. At the present time, it is especially important that the practice should be encouraged. In the last war loan, £83,000,000 was subscribed apart from conversions, and of this amount £59,000,000 was subscribed by those in the higher income groups. It is safe to say that a great part of that money was subscribed by the great mutual life assurance companies. Therefore, it is important that these companies should be kept in a sound financial condition. But how do the Government’s taxation proposals affect those who have heavy life assurance commitments? A married man, with a wife and one child, who earns £667 a year, -will be called upon to pay an extra £59 12s. under these taxation proposals, and in addition he will have to make an advance payment, representing tax rebates withheld from him, amounting to £37 16s. 6d. This is due to the adoption by the Government of a mistaken principle of trying to average the concessional deductions on certain incomes, and fixing the rates on that basis. We know that it is impossible to arrive at an equitable arrangement in that way. Few people have the same fixed commitments in the way of life assurance, friendly society payments, trade union dues, and so on. When that method of taxation is applied, some people will pay too much, and no provision is made for refunds. And it is always the wage-earners who suffer. The Leader of the Opposition pointed this out with great clarity, and so shocked the Treasurer and the Prime Minister that we were treated to the unique spectacle of seeing them rise one after the other in an effort to justify the Government’s policy. The Treasurer, as if solving the problem, said, “Well, we recognize that the scale which we proposed was a mistake. We shall introduce another one. We shall step up the gradations by 2s. 6d.”. As if that solves the problem ! Of course, it does nothing of the kind, because it does not remove the essential unsoundness of the scheme. It is no wonder that the Leader of the Opposition asked the Treasurer across the table whether he had obtained the idea from the honorable member for Henty (Mr. Coles). Seeing that the Government’s proposals are so unsound, and are aimed directly at the wage-earning classes, surely the House will agree to the amendment moved by the Leader of the Opposition.
The incidence of taxation on private companies is most unfair. I am not referring to big companies with a capital of thousands of pounds, but to small private companies in which there are only a few shareholders. In my electorate there are many such companies consisting of two persons, who are really working a partnership. While a public company pays at the rate of 6s. in the £1, and a flat rate levied on undistributed profits, a private company on its undistributed profits may be taxed at a rate as high as 18s. 6d. in the £1, because the personal exertion rate operates in its case. Thousands of persons throughout Australia are suffering hardship because of this provision, and I hope that before long relief will be afforded them.
To-night, the Prime Minister made it clear that he was himself not sure of the legal position in regard to some of the points raised by honorable members of the Opposition. It is evident, therefore, that the bill did not receive the close attention it deserved before being .submitted to the House. I trust that the amendment of the Leader of the Opposition will be agreed to, and that the bill will be withdrawn. It is true that, under a system of post-war credits, the money might not be repaid for one, two or three years, but at any rate the taxpayer would know that within a certain definite time ‘he would receive payment. The scheme would be of infinite value during the post-war years. In the speech in which he dissected this bill and revealed its many imperfections the Leader of the Opposition rendered valuable service not only to this Parliament but also to the nation as a whole.
Debate (on motion by Mr. McEwen) adjourned.
Motion (by Mr. Chifley) proposed -
That the House do now adjourn.
– I take this opportunity to refer to a matter to which reference was made last Thursday. I then said that the late Sir Ernest Riddle had said in London that the policy of the Commonwealth Bank had been altered by the Commonwealth Bank Board and by an amendment of the act which established the bank. When I said that’ I could not remember his exact words the right honorable member for Cowper (Sir Earle Page) interjected “ Of course not; they do not exist “. The report of an address to the Fellows of the Royal Empire Society, in London, in October, 1932, reads -
Although the Commonwealth Bank continued to conduct general business, that side of its activities was not .pushed. The trading banks had been advised that, if they lodged their reserves with the Commonwealth Bank, they would not be used in competition with the private banks for ordinary business, and that promise, said Mr. Riddle, had been faithfully observed. Moreover, the Commonwealth Bank’s policy was not to take advance business from private banks, even with its own money. When a customer of a . private bank asked the Commonwealth Bank for accommodation, the Commonwealth Bank undertook to investigate his position, and if satisfied that he was entitled to the accommodation, the private banks were and are notified and informed by the Commonwealth Bank that, if they were prepared to do the business, the Commonwealth Bank would withdraw from the negotiations. If not, the Commonwealth Bank would make the advances. In nearly every case, said Mr. Riddle, the private banks made the advances.
That report bears out ray statement that the Commonwealth Bank was established by Mr. King O’Malley and the late Mr. Andrew Fisher to do ordinary banking business, and that the . policy of the bank was altered from what was originally intended.
Question resolved in the affirmative.
The following papers were presented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1943 - No. 8 - Arms, Explosives and Munition Workers’ Federation of Australia and Australasian Society of Engineers.
No. 9 - Commonwealth Public Service Clerical Association.
Lands Acquisition Act - Land acquired for Commonwealth purposes -
Bathurst. New South Wales.
Lend-Lease - Report on Administration to the 31st December, 1942.
National Security Act -
National Security (Aliens Control) Regulations - Orders -
National Security (Emergency Control)
Regulations - Order - Military powers during emergency.
National Security (Emergency Supplies) Regulations - Rules - Queensland.
National Security (General) Regulations - Orders -
Prohibiting work on land (3).
Registration of small vessels.
Taking possession of land, &c. (156).
Use of land.
Orders by State Premiers - New South
Wales(2), Queensland (3), Victoria (3).
National Security (Mobilization of Electricity Supply) Regulations - Order - Control of electricity.
National Security (Prisoners of War) Regulations - Orders -
Japanese prisoners of war correspondence.
Prisoners of war camp (3).
Prisoners of war (Japanese officers’ pay).
National Security (Supplementary) Regulations - Orders by State Premier - Queensland (2).
National Security (War Damage to Property) Regulations - War Damage Commission - Report for period 23rd February, 1942, to 31st December, 1942.
Regulations - Statutory Rules 1943, Nos. 30, 31, 35, 37, 38, 39, 40.
Naval Defence Act - Regulations - Statutory Rules 1943, Nos. 33, 34.
Women’s Employment Act - Regulations - Statutory Rules 1943, No. 41.
House adjournedat 1.3 a.m. (Thursday).
The following answers to questions were circulated: -
Timber Freights and Rates.
y. - On Friday, the 26th February, the honorable member for Lilley (Mr. Jolly) asked me the following question, upon notice -
The answers to the honorable member’s questions are as follows: -
2 and 3. The total of claims received for the period to the 31st December, 1942, is £7 , 53 1,940. Claims totalling £2,666 have been paid, whilst claims of £230 have been assessed and recorded for payment at a later date.
Australian Army: Deferred Pay.
n. - On the 29th January, the honorable member for Griffith (Mr. Conelan) asked the following question, without notice : -
A number of young men have been sent into the fighting zone with less than six months’ training. Deferred pay becomes operative after a man has served for a period of six months. Will the Prime Minister seriously consider the giving of deferred pay to men who have been in the fighting zone for three months, instead of their having to wait for six months?
The answer to the honorable member’s question is as follows : -
At the present time deferred . pay is credited after six months’ service or on embarkation for service overseas. It has now been decided that deferred pay will be credited to all members of the forces as from the date of embarkation for service outside Australia, and that this decision should be applied retrospectively to the 7th December, 1941. This will mean that all members who have served in, the external territories since the 7th December, 1941, will be credited with deferred pay for the period of that service, irrespective of whether or not they had completed six months’ service on embarkation.
Commonwealth Bond Stores: Razor Blades.
y. - On the 24th February, the honorable members for Parramatta (Sir Frederick Stewart) and Robertson (Mr. Spooner) asked for information concerning remarks made by Judge Markell at the Sydney Quarter Sessions on the case of the theft of razor blades from Commonwealth stores. I have had inquiries made and the facts are as follows . -
Insofar as the question asked by the honorable member for Robertson is concerned, I wish to state that the razor blades were imported primarily for service requirements. Over all, there has been no excess, but in one particular brand there is an excess quantity due to the fact that this blade fits a. razor of a particular design only. It was rather fortunate that this excess quantity was available, as acute shortages developed within the United States Army, and the Commonwealth Government was able to make immediate supplies available.
The reason for placing the razor blades into Commonwealth-owned Store was not that ascribed by the honorable member. All the razor blades were taken into store in order to enable certain distribution decisions and arrangements to be made.
Insofar as the importation of excess quantities of other goods is concerned, it is freely admitted that careful estimating and requisitioning are not without their difficulties. War-time requirements are so diverse and change so rapidly that shortages and excesses are inevitable. Practically all the deficiencies in requisitioning, however, relate to underestimation and not over-estimation. There have been very few excess importations under lend-lease. The procedures now established, which provide for careful examination by the lend-lease mission, should ensure that very few, if any, approved requisitions should contain quantities in excess of essential war-time requirements.
n asked the Treasurer, upon notice -
Mr.Chifley. - Inquiries are being made, and a reply will be furnished to the honorable member as soon as possible.
Press Comment on Australian Censorship.
asked the Prime Minister, upon notice. -
n. - The answers to the honorable member’s questions are as follows : -
Cite as: Australia, House of Representatives, Debates, 3 March 1943, viewed 22 October 2017, <http://historichansard.net/hofreps/1943/19430303_reps_16_173/>.