16th Parliament · 1st Session
Mr. Speaker (Hon. W. M. Nairn) took the chair at 2.30 p.m., and read prayers.
Battle of the Bismarck Sea.
– by leave-I desire to inform the House that in the communique issued to-day by the Commander-in-Chief of the Allied Forces in the SouthWest Pacific Area, General Douglas Mac Arthur, the following passage nppears : -
The battle of the Bismarck Sea is now decided. We have achieved a victory of such completeness as to assume the proportions of a major disaster to the enemy. His entire force was practically destroyed. His naval component consisted of 22 vessels, comprising twelve transports and ten warships - cruisers or destroyers. They represent a tonnage estimated at approximately 90,000 tons. All aresunk or sinking. His air coverage for this naval force has been decimated and dispersed, 55 of his planes having been shot out of combat and many others damaged. His ground forces, estimated at probably 15,000, destined to attack in New Guinea, have been sunk or killed almost to a man.
The original convoy of fourteen ships was joined during the afternoon by eight other vessels. Our air force in all categories constantly attacked throughout the day and ship after ship was again and again hit with heavy bombs from low altitude. The enemy air coverage became weaker and weaker; his forces more scattered and dispersed; and, finally, his remnants, isolated and bewildered, were gradually annihilated by our successive air Formations aswe sent them into combat.
Our losses were light - one bomber and three lighters shot down and a number of others damaged but returned to base.
Our decisive success cannot fail to have most important results on the enemy’s strategic and tactical plans. His campaign, for the time being at least, is completely dislocated.
Honorable Members. - Hear, hear !
– I am sure that honorable members would like, through the Commander-in-Chief, to express to the gallant forces under his direction our pride in and admiration of this notable achievement. Yesterday, I said that we had reason to believe that whatever had to be done would be well done, having regard to the forces at the disposal of the Commander-in-Chief. On all fronts on which our gallant men have had tasks to do, they have been unsparing in their devotion. They have been wisely led, and I believe that all of their operations have been carefully and capably planned. We do not know how long the war will last, but of this we can be certain: that it will not be lost because of any deficiency in our fighting forces, or in the skill with which they are led. Moreover, I do not believe that there is any other factor which will cause our defeat. Never before, on so many fronts, has our cause given such justification for confidence in the final result.We know that great sacrifices have yet to be made. We realize that many - too many for our pleasure - have already been made; yet in our hearts there is an admixture of pride and admiration which fortifies us. Let me express one final thought which is in my heart, for it is in my heart more than in my mind; I would that the people who are being saved by the exploits of our fighting forces would emulate them by a sobriety of conduct at their work and in their social relationships which would not only increase their capacity to serve the fighting forces, but would, at the same time, minister to greater qualities in the nation as a whole.
Honorable Members. - Hear, hear !
– by leave - Members of the Opposition gratefully and enthusiastically associate themselves with the remarks of the Prime Minister (Mr. Curtin). We join in conveying our congratulations to those who have successfully planned the action which has wrought such havoc on the enemy. We also extendour congratulations and sincere thanks to all who participated in it. The news of the victory is pleasing, not only to all Australians, but also to the people of the United Nations who are our allies. It should arouse a sense of realism in the minds of the people of Australia as to what we are in this fight for. We have achieved a remarkable victory, as the communiqué reveals; but that should not bring about complacency or a relaxation of our efforts totally to annihilate the enemy, because only by his total annihilation can we prevent him from annihilating us. I join with the Prime Minister in extending our thanks to all of those responsible for this latest success. I hope that this major victory by the Allies is the beginning of the end, and that peace and freedom will soon be assured to ourselves and our allies, and indeed to all civilization.
Spitfire FighterSquadrons Punishmentof Sergeant K. M. Gregor.
– by leave - It gives me great pleasure to be able to announce the presence in Australian battle areas of Spitfire fighter squadrons. These squadrons have been in Australia for some time, but their presence has hitherto been kept secret in order to exploit to the maximum the element of surprise. This objective has been realized. On the 2nd March, they took part in the interception of an enemy force over Darwin, when the enemy suffered a decisive defeat, losing six planes out of his total raiding force of fifteen.
The personnel of these squadrons includes members of the Royal Air Force as well as members of the Royal Australian Air Force who have been trained under the Empire Air Training Scheme. They have taken part in many air battles against the Luftwaffe, and have gained for themselves a high reputation. The squadrons have come to Australia as complete units, bringing with them their ground personnel and all equipment.
I am especially glad to be able to make this announcement now, in advance of the departure of the Minister’ for External Aif airs (Dr. Evatt) on his second mission abroad, for the despatch of these squadrons to Australia was the result of a special arrangement made between the British Prime Minister, Mr. Churchill, and the Minister for External Affairs during the latter’s visit to Britain in May, 1942. It was, of course, one of the objects of the mission of the Minister to present the case for increased air strength in this theatre. I have previously paid tribute to the great service rendered to Australia by the right honorable gentleman during his mission, and I am pleased to be able to disclose that this contribution by the United Kingdom to our defence was one of the material results which flowed directly from his journey to Britain.
In doing so, I emphasize that the form of this contribution was determined by Mr. Churchill himself, whose response to the representations of the Minister for External Affairs was immediate and characteristic. Whilst it was recognized on all hands that geographical and strategical considerations dictated that the primary responsibility for the South-West Pacific Area should be that of the United States of America, Mr. Churchill has always made it clear that this has not in any way lessened Britain’s interest in the security of Australia. He personally conceived the idea of despatching these squadrons, which are a material expression of the constant mutual support which binds together the nations of the British Commonwealth.
I have already expressed our thanks to Mr. Churchill and to the British Government for making these squadrons available, hut I take this opportunity of giving public expression to our gratitude for this splendid gesture on the part of the United Kingdom.
As is well known, the Spitfire has a magnificent record in air operations in other theatres of war. The aircraft with which these squadrons are equipped have been specially adapted for tropical conditions, and will undoubtedly still further enhance the reputation of an already famous machine.
Our air forces in this theatre, who have fought so valiantly and with such success against the Japanese, will be inspired and heartened by this new accession of strength, and by the reflection that, just as Australian airmen are fighting with British airmen in the Mother Country, so British airmen are taking their part in the defence of Australian territory against the Japanese.
– I desire to ask the Minister for Air a question in connexion with the appeal of Sergeant-Pilot Gregor. This man has been imprisoned at Emu Plains prison farm, and his appeal was dismissed by the Air Board last week. His mother visited the farm on Saturday in order to obtain his signature to the form of appeal to the Governor-General, but the prison authorities refused to allow the appeal to he transmitted unless a certain routine were followed. Although they had promised to send the appeal to me by Tuesday last I have not yet received it. I understand that the Minister has taken some action in the matter, and I shall be glad if he can give me any information.
– The appeal to the Governor-General has been signed and lodged. .1 inquired into the matter this morning, and learned that the appeal was now with the Controller of Prisons in New South Wales, who has been asked to afford every facility for sending it to the proper authorities so that it may he dealt with as promptly as possible.
– Can the Treasurer say whether it is a fact that members of the Australian Forestry Unit in Great Britain, who have been there since 1940, have suffered severe financial loss because of the adverse exchange rate under which they lose one-fifth of all moneys which they receive from Australia? In view of the fact that these men are rendering a valuable service to the Allies, will the Treasurer have the matter investigated with a view to taking action to remove this anomaly?
– I am not aware of the circumstances, but Ishall have a report prepared, and supply the honorable member with the information later.
– Is the Minister for Health aware that some wards in tuberculosis hospitals have been closed because insufficient nursing staff is available? What action is being taken to meet this serious situation?
– I do not think that any wards in hospitals have been closed because of a scarcity of nurses. Of course, I know that there is a. scarcity. During the week-end I attended a conferenceto discuss the matter, and the Director-General of Health (Dr. Cumpston) has just returned from a conference with the Co-ordination Committee of the Army, at which the same subject was discussed. There is close collaboration between my own department, the Man Power Department, and the Army authorities with a. view to making the most effective distribution of the nurses which we have in Australia. I shall call for a report on the subject of the honorable member’s inquiry, but I know that all those associated with the health of the the people, including the repatriation authorities, are paying special attention to tubercular cases everywhere.
– I fully appreciate the value of the appeal made a few minutes ago by the Prime Minister, in which he emphasized the need for sobriety of conduct in our industrial and social life. Having regard to that appeal, I now ask the Prime Minister whether, since 8,000 striking textile workers have, in defiance of the instructions of their union, refused to return to work, and have also ignored the request of the Government to return, he will take immediate action to end this dislocation of an important war-time industry, and bring these irresponsible individuals to their senses ?
– As legal proceedings are pending it would be improper for me to say more than that the Commonwealth Government is taking steps to have the law enforced in the case referred to by the honorable member in regard to absenteeism.
Australian Diplomatic represen tation.
– Will the Minister for External Affairs consider the exchange of High Commissioners between Australia and the Union of South Africa so that Australia may be adequately represented in the Union?
– The honorable members question touches upon a matter of Government policy. I shall bring his suggestion under the notice of my colleague s.
– Has the Minister for Commerce and Agriculture seen the statement in to-day’s issue of the Sydney Daily Telegraph in which Mr. Digby Morfon, the Sydney dehydration expert, is alleged to have said that tons of vegetables are rotting because of the lack of dehydration plants, and that only four such plants were working - not 30, which according to the Daily Telegraph, the Minister stated were either in operation or under construction ?
Mr.SCULLY. - I have some knowledge of Mr. Digby Morton. The only person who thinks that he is an expert is himself. Therefore, I do not propose to reply further to his comments.
– Has the attention of the Minister forCommerce and Agriculture been drawn to the published statement of the right honorable member for Cowper (Sir Earle Page) regarding the decline of food exports from Australia to Great Britain? Does the Minister think that the statement is a reasonable summary of the position? Is not the decline due to a shortage of shipping rather than to the inability of Australia to supply the food?
– In order to answer the honorable member’s question properly much detailed matter will have to be prepared. I shall obtain the information and give it to the honorable member later.
– Has the Minister for Commerce and Agriculture received a communication from the Stock, Meat and Allied Industries Council asking for action to ensure the speeding up of killing operations at Homebush Abattoirs? In view of the fact that killings have declined by 50,000 to 60,000 sheep a week, does the Minister propose to take any action to ensure that the works are used to their full capacity?
– I did receive a communication, and I have communicated with the acting chairman of the Meat Advisory Committee, who informed me that the matter was being attended to. He said that he had detailed certain officials to make an investigation with a view to expediting killing operations.
– Does not the Minister think that the decline of killings is serious?
– I am not an expert, and I am not able to say what the killings should be.
Goulburnfactory -Sonnerdale Proprietary Limited, Stanmore
– Can the Minister for Munitions say why there has been such long delay in putting into operation the munitions works at Goulburn seeing that the building has been completed for some time, and can he indicate when work is likely to be commenced in earnest there ?
– The honorable member’s question gives me an opportunity to correct some misconceptions regarding certain munitions projects. In these matters we are controlled largely by our ability to secure the requisite tools and gauges for essential production. Those tools and gauges are, in turn, subject to priorities which are determined by the Defence Committee, not the Department of Munitions. The function of the Department of Munitions is to supply as quickly as possible the equipment asked for by the fighting services. That has always been the procedure in regard to these matters. Owing to the shortage of skilled tradesmen to undertake the highly skilled work of making tools and gauges, first consideration must be given to projects with a high order of priority. There will be some delay in bringing into production establishments with lower priorities. Certain projects at Albury, Wagga and Goulburn are not at present of a high order of priority. Moreover, as it is essential to equip one factory fully rather that partially equip a number of factories, the project at Albury is to be given priority over those at Wagga and Goulburn, in that order. Another three months will probably elapse before the munitions factory at Goulburn will be operating at anything like full capacity, but it is expected that a supplementary project there will be in production within a few weeks. The first thousand articles to be made in the second factory are now being approved, and immediately the Army authorities report that they are satisfactory production with be proceeded with. I hope, therefore, that within the next week or two there will be a partial fulfilment of our programme at Goulburn, but it may be a little longer before the necessary tools, particularly gauges, are available to enable our complete programme to be put under way.
– In view of the necessity for economy, can the Minister for Munitions say who is responsible for the design of the annexes that are being built at the expense of the Commonwealth? Can he say whether there is any supervision over the expensive tastes of architects, and has he had an opportunity to view the annexe built for Sonnerdale Proprietary Limited at Stanmore in order to compare it with the buildings erected by that company at its own expense? Moreover, in view of the great need to conserve man-power in the building industry, can he say whether his department has any regard whatever to the expense entailed in the erection of these elaborate buildings, and will he lay0 on the table, of the House the papers in connexion with that annexe?
– The honorable member’s question should more properly have been addressed to the Minister representing the Minister for the Interior, as the Department of the Interior prepares the drawings for annexes and other factories required by the Department of Munitions. I understand that it is expected that the annexe at Stanmore will be taken over by Sonnerdale Proprietary Limited at a price to be agreed upon by that firm and the Commonwealth Government. I am informed also that that firm desired to have a building which would synchronize with the existing buildings.
– It does not. That is the point.
– The Government building is a better one.
– I have not given any instructions in connexion with this matter as it does not come under my control.
– Does not the Department of Munitions give some indication of its requirements to the Department of the Interior?
– My department ascertains the size of the building required, and then the work is passed on to the Department of the Interior. My statement that the firm desired the new building to be similar to existing buildings was based on information supplied to me some time ago. I have not seen the annexe referred to, nor have I seen any plans or drawings of it. I suppose that the papers are with the Department of the Interior. I shall obtain a report and supply the honorable member with an answer, possibly next week.
– Can the Minister for Commerce ‘ and Agriculture inform the House what quantity of wheat has been sold from the No. 5 wheat pool ; what the cost per bushel has been; and when wheat-farmers may expect a further payment from that pool?
– A complete answer to the honorable member’s question would necessitate some investigation. I shall have inquiries made aud endeavour to furnish the information at the next sitting of the House.
Canteens - Ma .labial Troops : Extension of Leave - Surgical Operations on Militiamen.
– When does the Minister for the Army expect to be in a position to furnish the detailed information concerning the operations of the Middle East canteen for which I asked last week? Will he also investigate the lengthy report published in this week’s Smith’s Weekly concerning the same matter and make a statement to the House in regard to it?
– I shall inquire with a. view to ascertaining when the information asked for can be furnished to the honorable member. I have not read the article in Smith’s Weekly, but I shall do so, and if necessary, make a statement thereon.
– In view of the fact that many soldiers on 14 days’ leave have been forced to bed by malaria since their arrival at home in Australia, I ask the Minister for the Army whether it would be possible to extend their leave by the number of days they are confined to bed?
– Leave for troops in Kew Guinea is granted by the CommanderinChief of Land Forces, General Blarney, according to the strategical position. The right honorable member’s suggestion has some merit and it will be considered sympathetically by the CommanderinChief and me.
– I ask the Minister for the Army whether a man who has been called into the Militia and passed as fit but is told that an operation is essential to correct defective eye-sight is responsible for the cost of the operation?
– If the honorable member will substantiate his hypothesis with facts I shall be pleased to give him the information he desires.
– I shall supply the facts.
Delegation to Great Britain
– Recently several soldiers serving with the Australian forces in New Guinea were on leave and, wishing to see their wives and families in New Zealand, applied for seats on the flying boat to New Zealand but, although they are willing to pay their fares, were refused on the ground that the seats were too valuable and had to be held for higher orders of priority. 1 ask the Prime Minister whether, in order that the political convenience of the honorable member for Wimmera (Mr. Wilson) may be met, he has been granted permission to fly to America via. New Zealand instead of accompanying the other’ members of the Commonwealth branch of the Empire Parliamentary Association to England by ship? If so, why has the Government discriminated between the honorable member for Wimmera and soldiers?
– I shall make inquiries about the soldiers who have served in New Guinea and who, having leave, desire to visit their wives and families in New Zealand. That is separate from the matter of the honorable member for Wimmera (Mr. Wilson). The honorable member for Richmond (Mr. Anthony) has put his question in a controversial way, but it does not make me at all unhappy. The honorable member for Wimmera was chosen by the Commonwealth branch of the Empire Parliamentary Association as a member of the delegation which will visit the United Kingdom.
– The honorable member was chosen by the Labour party, not by the association.
– The president of the Association wrote to me as Prime Minister and informed me that an invitation had been received for a delegation from the Com mon weal tb branch of the association to visit the branch in the United Kingdom, and that members had been chosen to make the trip. He asked me to assist in providing travelling facilities. I agreed to do so. I ascertained the wishes of the delegation and found that, with the exception of the honorable member for Wimmera, the delegation would travel by ship. An officer of my department was assigned to assist in completing the necessary travelling arrangements. I was then told by the association that it was not practicable for the honorable member for Wimmera to travel by boat. I asked why. The reply of the honorable member for Wimmera I regarded as reasonable. I, therefore, considered that it was the duty of the Government to assist the branch to give effect to its desire to accept the courteous and gracious invitation to visit the United Kingdom. I have assisted it to comply graciously with that gracious invitation.
– Will the Prime Minister, publicly or privately, disclose to honorable members what prompts him to expend public money to transport the honorable member for Wimmera from here to the United States of America by air? As the safety of the honorable member is uppermost, in the mind of the Government, will it be possible for him to be transported by an American battleship?
– It will cost nothing to send the honorable member for Wimmera from here to the United States of America by air, but a shipping berth would cost money.
– I ask the Prime Minister whether the delegates are the nominees of the respective political parties in this House, whether the honorable member for Wimmera is a. nominee of the Labour party, and whether none of the delegates was elected by the association?
– I assumed that honorable members knew the constitution of the Commonwealth branch of the Empire Parliamentary Association.
– Perhaps they are not members of it.
– I am a member; I am a vice-president. I hope that the relationship between the Commonwealth and United Kingdom branches of the Empire Parliamentary Association will not be the subject of misunderstanding owing to unpleasant discussion in this House. The Commonwealth branch accepted an invitation to send to the United Kingdom a delegation of six. How it made its choice is not my business.
– The association did not make a choice.
– It did make a choice.
Mr.Francis. - The association asked the political parties to nominate delegates.
– The procedure which the association employs in naming the personnel is its business. I most certainly did not nominate any one.
Mr.Francis. -b ut the right honorable gentleman’s partyd id.
-After the six delegates had been chosen,a seventh delegate was sought,, and, as a member of the association, I was given a ballot-paper.
Mr.Francis. - That was the only time that the right honorable gentleman was given a ballot-paper.
- Mr. Speaker, I do not regard it as ray duty to vindicate the actions of the Commonwealth branch of the Empire Parliamentary Association. You are senior to me in the association.
– I ask you, Mr. Speaker, as a president of the Empire Parliamentary Association, what members of this House were given ballotpapers to vote in the selection of an extra member of the delegation?Why were ballot-papers not issued to all honorable members? Were they issued only to members of the executive of the association ?
– As this matter is purely domestic to the Empire Parliamentary Association, I do not propose to discuss it in this House.
Call-up of Carpenters.
– I ask the Minister representing the Minister for the Interior whether the Allied Works Council is calling up carpenters from homes and other buildings now in the course of construction? In view of the severe hardship thus imposed on people and organizations with small capital, will the Minister permit some carpenters to remain to complete these buildings?
– I shall place the honorable member’s question before the Minister for the Interior.
– Has the Minister for Health read a report published in the Sydney Sun of Tuesday last that a mother, after trying frantically for twelve hours to obtain admittance to hospital of her fifteen months’ old baby, had the awful experience of seeing her infant die in the casualty ward of a public hospital? If the Minister has read that report, which sets out the various tribulations suffered by that unfortunate woman in going from hospital to hospital and from doctor to doctor in order to obtain immediate attention for her infant, will he take steps to ensure that sufficient hospital accommodation will be made available in all capital cities for the sick, whether they be children or adults?
– The honorable member knows as well as I do that the hospitals are under State control. When the honorable member for Cook (Mr. Sheehan) asked me last week whether hospital beds were vacant while, at the same time, applicants could not obtain accommodation, I immediately got in touch with the Minister for Health in New South Wales, Mr. Kelly, and offered to co-operate with him to improve the situation. He assured me that there was no scarcity of beds in public hospitals, and that he would inquire into any case provided the names of the applicants concerned were supplied to him. I have not read the report referred to by the honorable member, but I shall do so and draw Mr. Kelly’s attention to it.
– Will the Minister for War Organization of Industry undertake to investigate the hospital situation throughout Australia in order to ensure that where necessary sufficient trained staffs can be transferred from other industries to provide adequate personnel for all hospitals which are obliged to admit patients suffering from infectious and other acute diseases?
– The problem of providing sufficient staffs for hospitals is being adequately attended to by my colleague, the Minister for Health, in conjunction with the Minister for Labour and National Service, and, therefore, it does not concern my department.
College for Revolutionaries
– Has the AttorneyGeneral read the speech made recently by the member for Footscray in the Victorian Parliament in which he said: “ In Melbourne, in this enlightened year of grace, 1943, there has been set up a college for revolutionaries, a class for commissars, run by the Communist party of Victoria “ ? Will the right honorable gentleman ascertain whether that statement is true? Is he aware of the definition of a commissar given by the right honorable member for North Sydney (Mr. Hughes) ? If the statement I have just read is true, will the Attorney-General re-impose the ban upon the Communist party before untold damage is done to the country?
– I have read the speech made by the member forFootscray in the Victorian Parliament from which the honorable member has just quoted. His statement is now being investigated by the Director-General of Security. I understand that the statement has been denied ; but the truth, whatever it be, will be ascertained; and should it be disclosed that the Communist party has infringed the law or departed from the undertaking which it gave recently when the ban upon it was lifted, appropriate action will be taken.
– During the first week of the session, I asked the Prime Minister if he could supply a list of the various boards and committees which have been set up since the outbreak of war. The right honorable gentleman asked me to place that question on the notice-paper, but later it was taken off the notice-paper after he had written to me to say that the information was being prepared.
– I shall expedite the compilation of the information.
SUPPLY (Grievance Day).
Question negatived -
That Mr. Speaker do now leave the chair and the House resolve itself into a Committee of Supply.
Debate resumed from the 3rd March (vide page 1171), on motionby Mr. Chifley -
That the bill be now read a second time,
Upon which Mr.Fadden had moved by way of amendment -
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 -
.- I support the amendment which has been moved by the Leader of the Opposition (Mr. Fadden). This bill embodies taxation proposals which are the heaviest and most far-reaching yet presented to this Parliament. The great bulk of the money is required for financing the war effort. We also find injected into this measure, unusually in my opinion, a proposal that a quite substantial proportion of the revenue to be raised shall be allotted to a fund to be known as the national welfare fund, and be used in part, no doubt on an early occasion but, as to the greater proportion of it, at some indefinite date, for the purpose of providing additional social services. It seems to me that the Leader of the Opposition had some justification for describing the national welfare fund as “windowdressing “. A proposal to raise moneys through the normal processes of adding to the Consolidated Revenue, and to declare that the funds so raised shall at some vague and unspecified date be used for some indefinite, nebulous and unindicated purpose which shall be related to social security, seems to me to warrant the criticism which, is implicit in the description of “window-dressing”. For my part, I accept it that the real intent and purpose of the raising of these funds, whatever the words used may be, and whatever the effect hoped to be secured upon the public mind in relation to this matter may be, is the conduct of the war aims of the Government, and I regret .”that the Government has been compelled, by the policy to which it committed itself while in Opposition, to descend to subterfuge in relation to the object for which these taxation moneys will be employed.
– I presume that the honorable member will not oppose the raising of funds for social services?
– Of course I shall not. No honorable member will do so, but one is compelled to voice criticism of a project, which apparently purposes to raise funds for social services, when in fact the money is to be spent upon the conduct of the war. It is to my mind merely political and financial camouflage to describe it as being raised particularly for social services. It is in my opinion very good that the Government should now, at long last, have come to a realization of its responsibilities, and recognized that taxation for the purpose of conducting the activities of the nation at war must be levied over the whole of the community according to the capacity of the people to pay. It is right that- the Government should at long last have abandoned the declarations made by its respective members on many occasions, that the financial requirements of this nation at war could and should be raised by levying imposts upon only a section of the people. No voice of criticism has been raised on this side of the chamber, or by those who are affected outside, in respect of the tremendously heavy burden of taxation that has been levied upon people enjoying high incomes. It may reasonably be said that upon that subject there has been no protest from this side of the House, and no squealing outside by those who have been affected, but it has been argued by those who now sit in opposition and contested by those who now constitute the supporters of the
Government, that the financial burden should be borne by all according to their capacity to bear it. When the Fadden Government, in October, 1941, brought down its project to impose some levy upon the incomes of those in the lower income range, and to do it substantially for the purpose merely of taking an interest-bearing loan, the most vehement arguments were advanced by those who now comprise the Government party, that it was iniquitous to think of taking anything from those in the lower income range, even for the purpose of conducting the operations of a nation defending its very existence. It seemed to me that the present Prime Minister, and those who supported him, were hard put to it to find sufficient adjectives to condemn the proposals of the Fadden Government in this respect, but I am glad now to notice that the Government, having had experience of the responsibilities of office, has once more been obliged to concede that the principles enunciated by those who now sit on this side of the House were sound and fair, and, in the light of experience and responsibility, irresistible, and that the Government has now come forward with a proposal to make some levy upon the incomes of those in the lower income range.
– The honorable member flatters himself if he thinks that they are right principles.
– We have seen those with whom the honorable member continuously disagrees, but always associates with and supports, disclaim the propriety of certain principles, including the one that every able-bodied man in this country should be trained in time of peace so that he may, if necessary, be fit to fight in time of war, and then, after a quarter of a century abandon that negative policy in the face of necessity and reality. We have seen” them offer the same opposition to the proposal sponsored by this side of the House, that when war came every able-bodied man who could be spared for the purposes of the military forces should not only be trained and equipped, but should also be obliged by law to fight if necessary outside this country. After a quarter of a century of resistance to that principle, the honorable member for Melbourne, and those with whom he is associated, have had to abandon their policy in that respect also. The honorable member, of course, has not abandoned it in words, but merely in actions. He and his friends have had not only to abandon their policy, but also to admit that the principle enunciated by those who sit on this side of the House is right, and to embrace it in the face of responsibility. We’ have heard them oppose the proposition that, when the nation is hard-pressed, it is not improper that men should even be obliged to work where and as directed. There, again, it has taken the responsibility of office to make those who have voiced their opposition, probably more for political purposes than out of a sense of conviction, abandon it, and introduce, as we have seen, the principle of industrial conscription, a term recently coined on the ministerial side of the House, which really means enforced work where directed in the interests of the nation.
– There was no guarantee that all the ships of the Japanese fleet that was sailing against us would be sunk.
– Certainly, there was no guarantee, but there was one thing that made it more probable that the Japanese fleet would be sunk, and that was the voting of funds in this Parliament for defence purposes in time of peace, and the honorable member for Batman was one of those who consistently opposed such measures. The destruction of the Japanese ships was not made possible by measures taken in years gone by as the result of the advocacy of honorable members opposite. The credit for to-day’s good news is due largely to the realistic outlook and action of honorable members on this side of the chamber when in control of the treasury bench in the pre-war y ears and right up to the time that the Labour Government assumed office.
Finally, we find that, retreating trench by trench, the Government has now reached the last trench, and has had to concede that it is proper that taxes should be imposed even on the lower income groups. Naturally, such imposts must be levied fairly and reasonably; there is no dispute about that, and it is really because the Government, never having given adequate consideration to this matter, has now brought forward a hotch-potch proposal, which, upon examination, is found to be crowded with iniquities and injustices, that the Opposition finds itself obliged to ask for the redrafting of the measure. The Prime Minister used brave words in regard to the principle involved in this measure when he spoke, as Leader of the Opposition, in 1941, in support of his censure motion against the Fadden Government. The right honorable gentleman said -
I am now dealing only with what is called equality of sacrifice for the purposes of war. 1 have described war as a physical thing, and I also describe sacrifice as a physical thing. That kind of budget which obliges one family to go without boots and does not oblige another family to go without boots does not impose equality of sacrifice, and, demonstrably, to impose a national contribution on those in receipt of incomes below £300 a year is to cause absolute deprivation of some of the essentials of life.
Those are the words of the right honorable gentleman who now proposes to impose a substantial levy upon wage earners in receipt of less than £300 a year; those are the words of the right honorable gentleman who rejected the proposal made by the Fadden Government that a portion of the contribution to national revenue made by individuals in that income group should be in the form of a compulsory loan: those are the words of the right honorable gentleman who. having resisted the taking of some money from these people as interestbearing loans, now seeks to impose substantial levies upon them without any promises or prospect of repayment; those are the words of the right honorable gentleman who now sponsors a measure which provides that there shall be taken from individuals in that income group, by way of weekly instalments, not merely the amount of tax which the law prescribes, but an amount in excess of what the law prescribes, which shall not be repaid. Is there any degree of consistency in the attitude of the Prime Minister to-day and the views expressed by him on the occasion to which I have referred? Obviously there is not. Under this measure taxation will be imposed on incomes right down the scale to £104 a year, and the individual in receipt of that sum will contribute by way of income tax almost as much as the Fadden Government proposed to take from him in the form of a compulsory loan. If consistency matters in politics - apparently it does not - how can the Prime Minister have the temerity to come to Parliament, seventeen months after expressing the definite views which I have quoted, with a measure which not only represents an abandonment of the principles which he so earnestly advocated then, but which also exceeds in severity the proposals which he condemned as harsh and unbearable? I accept the contention of the right honorable gentleman that the. real test is not so much what should be taken away from an income-earner, hut what should be left in his hands ; but judging by this measure, he has completely forgotten that harmonious principle enunciated such a short time ago. That it has been forgotten is shown clearly by the taxation tables set out in this bill, which make it obvious that even in respect of those individuals who supposedly are the special concern of the Labour party, there has been a complete retreat from earlier declarations. We find, for instance, that whereas the Fadden Government proposed that a married wage-earner receiving £150 a year should make a national contribution of £11 2s. a year which, according to the State in which he lived, would include a sum varying from the entire amount down to £4 2s. by way of compulsory loan repayable after the war, under this measure the same wage-earner will pay £10 10s. a year and receive no return at all. How does the right honorable gentleman justify such a change of front?
– Does the honorable member think that the proposal is right or that the proposal is wrong?
– I know what the honorable member for Melbourne (Mr. Calwell) thinks, and I know also how he will vote. I have no doubt that, although he considers that the proposal is wrong, he will support it when a vote is taken. That is a course which I do not propose to follow. The taxpayer with a wife and child, in receipt of an income of £150 per annum, would, under the
Fadden proposals, have made no contribution either by way of post-war credit or tax. The Cm-tin Government proposes to take from him as tax the sum of £3 10s. a year. I remind honorable members that the Labour party pretended to have for this class a special and exclusive responsibility. For such people, wc were led to believe, there was no hope except under the protecting wing of Labour. But seventeen months after the defeat of the Fadden Government, they will be substantially taxed by the Curtin Government.
– The Labour party was their only friend. Now they have lost even the Labour party.
– I do not agree that i he Labour party was their only friend. A taxpayer with a wife and child, with an income of £200 a year, would not have paid tax under the Fadden scheme, but the Curtin Government now proposes to levy on him a tax of £2 14s. per annum. Again, a married man with two children, in- receipt of an income of £250 a year, was exempt from tax and post-war credits under the Fadden proposal; but £2 18s. a year will be extracted from his pay envelope by the party which claimed that its particular mission in life was to protect him; A taxpayer with no dependants and earning £300 a year would, under the Fadden proposal, have borne an impost of £44 Ss. annually, a part of which would have been tax and the remainder post-war credit. In the State where income tax was lowest, the postwar credit would have been £25 10s., and that amount would have represented an accumulating nest-egg. Even in the State with the highest income tax, the post-war credit would have totalled £8 8s. annually. Seventeen months ago, the benevolent Labour party had no thought ii life but to protect these people against the liability of paying tax. The war had then reached a critical stage, and the Fadden Government was concentrating on advancing Australia’s war effort. The issue upon which the Commonwealth Government was defeated was whether that class should make a contribution to the war effort by way of income tax. A married mau with two children, in receipt of £300 a year, would, under the Fadden proposals, have made a national contribution of £11 2s., the post-war credit portion of which would have ranged from £3 8s. to £9 6s. a year, according to the level of income tax in the State in which he resided. To-day, his benefactors will compel him to pay income tax amounting to £17 8s. a year, and he will be allowed no rebate. If, by any chance, he happens to be over-taxed as the result of being thrifty in having a substantial life assurance policy or unfortunate enough to have heavy medical expenses, the excess payments will be retained by the Labour Government as a forced loan. I am opposed to that principle, and the purpose of the amendment submitted by the Leader of the Opposition is to alter it.
The last group to which I shall refer represents considerable numbers of artisans, other than employees of the Allied Works Council, in receipt of £350 per annum. Under the Fadden proposals, a married man with two children would have made a national contribution of £22 4s. per annum. Of that amount, the post-war credit would have varied from £4 6s. in the highest-taxed State to £12 in the lowest-taxed State. But those in this group who are expected to rush to the poll for the purpose of returning the Labour Government to office will now pay tax amounting to £31 6s. per annum. This bill disposes once and for all of the pretence of the Labour party that it is the only political group to which persons in the lower ranges of income can look for protection.. Although the Labour party gained office bypromising them immunity from taxation, the Treasurer has now formulated proposals under which they will make substantial contributions.
When submitting the motion of censure that led to the defeat of the Fadden Government, the then Leader of the Opposition (Mr. Curtin) stated that the thing which really mattered in relation to taxation was not what the Government took from Jones or Brown, but how much essential purchasing power was left to him. That is a fair interpretation of the right honorable gentleman’s statement, and I agree with that view. I shall apply that principle to the present proposals. According to the bill, a married man with two children in receipt of £300 a year will pay only 14s. 6d. a week less than will a single man with no dependants. Never was a principle enunciated with such fair words so promptly abandoned. A single man earning the comfortable income of £350 a year will pay as tax only 17s. a week more than a married man with a wife and two children. It is one thing to enunciate fair principles of taxation, having regard to the residual income left to a man for the purpose of meeting his essential requirements and those of his family; it is another thing to introduce a proposal of this kind which will not bear analysis. For that reason the Leader of the Opposition has moved his far-reaching amendment. The criticisms of this measure go so deep, and are so numerous, that it would be impossible to meet them by means of a normal series of amendments to the clauses at the committee stage. The only practicable procedure is to withdraw the bill and redraft it.
Mr.Calwell. - Does the honorable member favour a ceiling income?
- Mr. J. T. Lang was the apostle of that principle. I refer the honorable member to him.
– As a matter of fact, Mr. Forgan Smith first introduced the idea.
– Within the limits of the criticism that I have made in relation to residual incomes we have a further positively pernicious principle in the retention by the Government of over payments of tax. We must be making history in this Parliament by solemnly debating the merits of a proposal that, having defined certain scales of taxes, the tax-gatherer, according to the views of the Prime Minister and the Treasurer, may refuse to refund payments in excess of the prescribed scales.
– If a trustee did anything of that kind he would be put in gaol.
– I suppose this proposal must be constitutional.
– It is most immoral.
– The right honorable member for North Sydney puts the appropriate word into my mouth. Whether this proposal be legal or illegal, constitutional or unconstitutional, it is certainly not decent. As the right honorable member said, it is immoral. Who are likely to be refused these refunds? They are a selected class of taxpayers. Persons who obtain their income from businesses will not be affected, but will remain clear of all such possibilities. The injustice will fall upon the taxpayers who obtain their incomes from wages or salaries. Who, in this class, is likely to suffer most from this proposal? The taxpayer who is least able to bear it. Here again the single man will be in a better position than the married man with family responsibilities. A single man who earns £350 a year in wages or salary - and thousands of them are earning that amount in these days - will pay his tax and have no further worries; but a married man with a wife and two children who has an income of £350 a year from wages or salary will be in a much less enviable position. The best class of man who assumes family responsibilities endeavours to purchase a home for his family on which he has to pay rates in respect of which a deduction is allowable. Inevitably, he is committed, on occasions, to medical and dental expenses. The most thrifty of such individuals take out substantial life assurance cover for the protection of their families. The aggregation of these liabilities makes it more than likely that they will pay an amount in excess of their proposed concessional deductions, but they will not be able to obtain refunds. I do not know how the Government proposes to defend itself, but I hope that it will not adopt a stubborn attitude and refuse to retreat from the impossible position in which it finds itself through having introduced proposals which will not bear examination. I hope that it will agree to withdraw the bill and redraft it.
It is clear that a single man will pay £75 in taxes out of hia £350 a year, but he will have a residual income of £275 a year. The married nian with a wife and two children will pay £31 in taxes out of his income of £350 a year, which will leave him with a residual income of £319 ; but I do not think it is at all unreasonable to suggest that such a man will incur an aggregate expense of about £40 a year on medical and dental fees, life assurance premiums, rates, and like payments. Consequently, he will have a residual income of only £279 a year, or £4 a year more than a single man on the same income who has no family responsibilities or obligations. In my view such a state of affairs is indefensible. We have always considered it to be admirable for a young man to marry and raise a family, and to make reasonable provision for the family welfare; but these proposals will do more than anything else that I can imagine to deter men from such a course. No form of saving is more advantageous to the individual, more beneficial to the Government and more praiseworthy from the national point of view, than is the obtaining of life assurance cover by married men. Under this form of saving the great proportion of the premiums are immediately made available for investment in war loans by the life assurance companies, and so the money comes into the service of the Government. Such savings are not competitive in relation to man-power, transport or other essential services, and they tend to decrease luxury purchasing power which is to-day so adverse to the war effort. It is a form of saving, that is beyond criticism. It arises from an inspiration in the heart of the individual to be thrifty, to protect his wife and family against his untimely death, and to provide for himself and his wife in their old age. There is no justification for any action which would have an instantly and severely deterrent effect on the taking out of life insurance cover, as the present proposal of the Government certainly would. The Prime Minister said that the Government would make an arrangement whereby, if a taxpayer found himself involved in heavy medical expenses, he would be able to declare his position to the taxation _authorities, and an adjustment of his tax would be made. Surely, if that could be done, it should also be possible for a taxpayer to declare his premium commitments in respect of his life assurance policy and the rates payable on his house property, as well as other allowable deductions, so that he would not, through circumstances beyond his own control, overpay the amount of tax assessed, and then find that the Government had grabbed the extra money and was holding it for some period that had not been previously determined. This measure is full of points that lend themselves to criticism. Surely a part of the income of those who are obliged to make financial contributions towards the cost of conducting the war should be put aside for them. For many of them these are days of financial plenty, which we can scarcely expect to continue indefinitely. We should be serving both the individual and the nation best if an arrangement were made, such as that proposed by the Leader of the Opposition, that a part of the imposts should accumulate in the form of post-war credits. I consider that the acceptance of the amendment submitted by the Leader of the Opposition would be well justified. [Quorum formed.]
.- I support the amendment moved by the Leader of the Opposition (Mr. Fadden), and I draw attention to the enormous sum proposed to be raised under the bill. In addition to the heavy income tax now imposed on the people, it is proposed to raise an additional £40,000,000 by means of increased taxes. The Treasurer (Mr. Chifley) has said that a large portion of this sum is to be used in implementing a national welfare scheme, which he outlined in his recent financial statement, but actually the bulk of the money will be used in the struggle in the Pacific area against Japan. We have been told that the money will be returned to the national welfare fund, after the cessation of hostilities by long-term borrowing. The proposed rates of tax are onerous in respect of all incomes. The tax begins to operate with regard to incomes of £104 per annum, and rises on a steeply graduated scale throughout the whole range. The incomes of many men and women may alter suddenly. During the war, and also during, the post-war period, men and women may find that their relatively large incomes have suddenly ceased, in which case they will be faced with the prospect of having heavy tax-bills to meet. A tax, the imposition of which is deferred for a year, hangs over the head of taxpayers like the sword of Damocles.
Under the Treasurer’s proposal, no provision is made by which taxpayers mav put by money that will be required for the payment of income tax. The proposal submitted by the Opposition is that the tax should be met on the payasyougo principle. I regard that as a payasyouowe system. As tax becomes due from month to month, payment should be made. That principle is now adopted with regard to certain incomes. And by that means the year’s tax would be gathered within the year in which the income is earned. It has been said that that result cannot be obtained in the case of taxpayers with certain kinds of income, particularly that of primary producers. The cry is frequently raised that the income of primary producers is received only once a year; but, as one who earns his living from the laud, and not as one who merely talks about it, I contend that the majority of the primary producers in Australia obtain income more than once a year. The successful primary producers are those who adopt mixed farming, and have diversified sources of income from the land, instead of relying on one cereal crop or one clip of wool annually. Therefore, I cannot see that there would be much difficulty in collecting the tax from such people during the year in which it was earned, as an adjustment could be made at the end of the year. I know that the Treasurer is strongly opposed to the suggestion. I can understand why the Assistant Treasurer (Mr. Lazzarini) should be opposed to it, but I cannot see why the Treasurer himself should be. He is a man of brains and understanding. I think that the Treasurer has probably listened too much to the advice of his technical officers. The tax-gatherer in all countries and in all ages has been unsympathetic toward the interests of the public. He has always put the collection of his taxes first, and he has not been receptive of new ideas. The. Treasurer, in supporting his point of view, quoted from certain speeches made by the right honorable member for North Sydney (Mr. Hughes) when the original income tax bill was before the Parliament in 191.5. However, in order to understand the law, I suggest that we should consult the act itself. The relevant section of the first Commonwealth Income Tax Act, No. 34 of 1915, is section 10, of which sub-section 1 reads as follows : -
Subject to the provisions of tin’s act, income tax shall he levied and paid in and for each financial year upon the taxable income derived directly or indirectly by every taxpayer from sources within Australia during- the period of twelve months ending on the 30th day of rune preceding the financial year in and for which the tux is payable.
Section 2S is in these terms -
The Income Tax Act of 1936 does not alter the position. Under that act, income tax is paid for 1936-37 on income derived during what is called the year of income, and the year of income is defined as the year preceding the year of tax. Thus, tax was paid in 1936-37 on the income derived during that year, but it was calculated on the income derived in the year 1935-36. In the same way, a tax paid in the year 1942-43 is tax oh that. year’s income, though it is calculated on the income of the previous year. The Government would lose nothing if it agreed to make the change suggested; it will be simply giving effect to the law as laid down in the Income Tax Act. This principle is important, not only to large taxpayers, but to every taxpayer in the country. It is not right that taxpayers should have hanging over them a liability to pay tax which is said to be due for the previous year, but which, in fact, is not due. The Government would lose no revenue if it made the change.
Last night, the Leader of the Opposition referred to the concessional deductions in regard to tax rebate, and I desire to point out how grossly unfair is this system of rebates, because some taxpayers will have to pay them while others, even within the same group, will not. and whole groups of incomes will not be affected at all. Theoretically, the taxpayer who makes these payments is entitled to have the money refunded,, but in practice the credit may be carried on from year to year, and the money never refunded at all except to the taxpayer’s estate after his death. The Government should, in the committee stage of the bill, accept an amendment providing for the refund in cash of such credits at the end of each financial year. The argument of the Treasurer that it is desirable to have these funds in the hands of the Commissioner of Taxation in order to make sure that taxpayers shall be able to meet their commitments is most unfair, because the principle is not applied to all taxpayers. Moreover, there is discrimination against the married man -with children as compared with the bachelor.
When the Government is raising such enormous amounts in taxation for expenditure upon the greatest and most expensive war in all history, it should be most careful how the money is expended, and anything in the nature of wasteful expenditure should be avoided. To this end, every item of revenue and expenditure should be clearly indicated as far as considerations of security permit. I believe that the Government should give more information to the House about overseas war expenditure. The financial statement of the Treasurer refers to an amount of £80,000,000 for overseas war expenditure during the next twelve months. We know that many of our troops have returned from overseas during the last twelve months, and that our commitments for maintaining them abroad must be considerably reduced. In addition to this, the amount of help received by Australia under the lend-lease arrangement is steadily increasing as the United States of America swings over from peace to war-time production. To any one outside ministerial circles it seems strange that overseas war expenditure should continually bc increasing when it ought to be decreasing. The Treasurer should explain why that is so.
For some time there have been allegations of wasteful expenditure in connexion with the war effort. The charges of extravagance and waste have been so general and widespread that there must bp some reason for them. I believe that “ where there is smoke, there is fire “. In my opinion money, man-power, and materials are being wasted, but it is difficult for any one outside ministerial circles to give examples and produce watertight evidence in support of any charge of extravagance. However, I shall cite some examples in order to demonstrate the waste which is taking place, and the need for a tightening of the control over Government expenditure. The first case to which I draw attention concerns an undertaking in northern New South Wales.
– I rise to a point of order. Last night I was not permitted to speak along lines which the honorable member is now pursuing, and although I am in accord with his views I submit that there should be no discrimination between members. When I tried to put forward some constructive suggestions I was ruled out of order.
– The honorable member for New England (Mr. Abbott) may proceed.
– I was not in the chamber when the unhappy incident to which the honorable member for Reid (Mr. Morgan) has referred occurred. I submit that as it is proposed to raise large sums of money by means of a tax on incomes, there must be proper control of the expenditure of that money, otherwise more money than is necessary may be extracted from the people. The raising and the expending of the money cannot be separated, and therefore I submit that, when a measure to raise revenue by means of a tax on incomes is before the House, honorable members should be allowed some latitude; they should be able to refer to unnecessary expenditure in order to show that all the money proposed to be raised need not be raised. The case to which I desire to refer occurred in northern New South Wales. The Army authorities established a permanent camp in the locality and decided to install a sewerage system there. The local municipal council offered to connect the camp to its own sewerage system at a cost of £600, but the Army authorities decided to install their own septic tank system. Although it cost about £9,000 the installation was no better than the system already in use in the municipality. In connexion with the munitions programme also there is a colossal waste of public money. I shall cite one instance. A private manufacturer was able to supply bomb fuses to the Department of Munitions at 9s. 6d. a unit, which, over a considerable period, represented a substantial profit, whereas the same type of fuse manufactured in a Government factory cost 14s. 6d., at which price the private firm would have made a profit of 250 per cent., even after paying income tax, which the Government factory did not have to pay. That shows that there is something wrong in that Government factory. Probably it is a matter of poor supervision, because both establishments are working under the same awards.
– I rise to a point of order. In view of the ruling given last night, I ask whether the debate may continue along these lines.
– I have already told the honorable member for New England that he may proceed.
– I move -
That the ruling of the Acting Deputy Speaker - that the honorable member for New England may proceed with argumenton war expenditure -be dissented from.
– I cannot accept the honorable member’s motion of dissent. The ground he has stated, namely, that he was not allowed to refer to war expenditure. That was not my ruling. I said that the honorable member for New England could proceed.
– The point I took was that the honorable member for New England was discussing war expenditure, whereas Mr. Deputy Speaker (Mr. Prowse) last night ruled that I was not in order in discussing war expenditure on this bill. If you, Mr. Acting Deputy Speaker, take a different view from that taken by Mr. Prowse, I should like to know why there is one standard for one honorable member and another standard for another honorable member?
– I told the honorable member for New England that he might proceed with the debate. I ask the honorable member for New England to speak to the amendment. [Quorum formed.]
– Unless there is the closest oversight of expenditure it will be necessary to raise by taxes and loans much more money than would otherwise be necessary. I do not see how one can deal with the raising of revenue without also dealing with expenditure, but, in view of your ruling, Mr. Acting Deputy Speaker, I will not proceed farther on that line of argument. I strongly support the proposals of the Leader of the Opposition for the establishment of a system of postwar credits. Honorable members opposite have sneered and jeered at us for our consistent advocacy of post-war credits ever since the Fadden budget about eighteen months ago, but wage and salary earners, particularly those in the lower grades of income, who will be hit hard by this proposal, would have had a nest-egg for the post-war period if the Fadden scheme had. been put into effect. This Government has set itself entirely against the provision of such a nest-egg for the workers, and is pinning its faith to some national welfare scheme. The difference between the Opposition and the Government can be stated in simple terms. We favour individual effort. The man who works hard should be given a just reward. That is why we demand the institution of postwar credits so that after the war the people may have the means to develop their freedom of individual effort. The Labour party intends that after the war the bureaucratic direction of the individual which may be necessary to the successful prosecution of the war shall continue. The bureaucracy of to-day is regarded by the people as a curse which they will demand to have lifted as early as possible after the war. We will keep on hammering for the establishment of a system of post-war credits because, with all sincerity, we believe that it is essential for the post-war development of Australia and its people.
.- In supporting the amendment of the Leader of the Opposition (Mr. Fadden), I have no need to repeat the reasons given by the right honorable gentleman and the honorable member for Robertson (Mr. Spooner) why the Government should redraft this bill, which contains too many injustices for it to be allowed to be placed on the statute-book in its present form. My particular reason for rising to speak is a telegram from the Leader of the Opposition in the Parliament of Western Australia, Mr. Watts, in the following terms : -
New taxation proposals: We consider same definite breach Government agreement; no new tax this financial year and unfair persons paying war bonds time payment and likely militate against new loans; ask you and your colleagues press alteration these matters.
Mr. Watts who, as a lawyer, knows the meaning of words, is referring to the undertaking given by the Prime Minister (Mr. Curtin) in the following extract from No. 32 of the Digest of Decisions and Announcements: -
Rates for 1942-43 Budget
On the 11th June, 1942, Mr. Curtin said - “ The Government has decided that in respect of the 1942-43 budget to be presented to Parliament in August, there will be no increase in the rate of taxation for individuals or companies beyond those embodied in the uniform taxation legislation recently passed by Parliament. These rates will apply to income received up to 30th June, 1942. In addition, it is not proposed to apply any further indirect taxation in the 1942-43 budget. The Government has made this early announcement so that taxpayers may be able to adjust their commitments.”
The right honorable gentleman’s object in making that statement is clear. Practically every taxpayer understood from it that no fresh taxes would be imposed in respect of the remaining period of the current financial year. Will the Prime Minister deny that? The Government stands convicted of a breach of faith with the taxpayers of Australia. In view of that announcement, the Treasurer is absolutely unjustified in bringing forward proposals to increase taxes to any degree whatever in respect of the remaining three months of the current year. We must also recognize that these proposals will impose considerable hardship on many taxpayers who, as the result of the Prime Minister’s assurance, have committed themselves to the purchase of war bonds on time payment. Any increase of their taxes in the remaining period of the current financial year will upset their calculations. The Prime Minister clearly had that fact in mind when he made that statement. Many taxpayers now consider that they have been misled by the Prime
Minister’s announcement. The bill contains a record number of anomalies. It bristles with inequities. Therefore, it should be withdrawn and redrafted as the Leader of the Opposition has proposed.
.- I regret that no Minister was present in the chamber while the honorable member for Indi (Mr. McEwen) was speaking this afternoon. I know that Ministers are invariably pressed for time; but the measure is so important, and the illustrations given by the honorable member for Indi of its anomalies and inequities were se striking, that the Treasurer should la ve been present to hear his speech.
– The Opposition is only putting up a sham fight.
– The honorable member for Griffith (Mr. Conelan) knows that the Opposition has done and is still doing its utmost, to convince the Government of the absurdity of many provisions in the bill. In fact, we have already convinced some honorable members opposite on that point; but I have no doubt that they will, nevertheless, vote for the measure. If that is democracy it is time we adopted more sensible methods of legislation. The Leader of the Opposition (Mr. Fadden.) has drawn attention to grave anomalies in the bill, and has proposed that it be with-‘ drawn and redrafted. It is not usual for the Opposition in proposing amendments of this kind to indicate specifically how the bill should be improved ; but we have done so on this occasion, and, at the same time, have thrown upon the Government the onus of refusing to adopt the constructive proposals which our leader has put forward. I have no desire to be unkind to any departmental official, but I concur with the criticism of the honorable meinhof for New England (Mr. Abbott) in that respect. Unfortunately, departmental officials are prone to become too specialized with the result that they lose touch with the public. As advisers to governments, they very often recommend methods simply because they are the least troublesome from an administrative point of view; at the same time they ignore the effect of such methods on the public and the nation’s finances. I cannot help thinking that the officials who advised the
Government on this bill have followed that course. We need to infuse new blood into government departments in order to keep them up to date, and in line with the thought and needs of the public. Unfortunately, the Treasurer has not attached to the amendment the importance which it deserves. The bill bristles with errors which violate taxation principles; but the Government is not prepared to withdraw the measure. Only two of its supporters have been prepared even to speak upon the measure, and one of them denounced it. Although the bill goes to the root of our financial and taxation systems, only one honorable member opposite has spoken in support of it. Ministers and their supporters know that the hill will not stand investigation and that the amendments moved by this side are just and proper, but they are determined to reject them and carry the bill. More will be said outside about the bill, which will be explained in detail to the whole of the people. Those things which the honorable member for Indi (Mr. McEwen) told the House this afternoon, will be repeated in every house in the Commonwealth, to the people who will pay the taxes and suffer the injustices. The electors will be informed that we offered to help the Government to rectify those injustices, and that the Government refused our help.
– If the bill is bad, let the honorable member show in detail that the amendment is better.
– The honorable member for Batman (Mr. Brennan) heard the Leader of the Opposition explain the amendment in detail, and has had since last night to read it. I also shall show him that the amendment is better than the bill. It endeavours to remove the injustices to small taxpayers - those who arc in receipt of wages and salaries - and to small private companies as compared with big companies, as well as to place the bill upon a foundation of sound principles. It not only endeavours to secure the withdrawal of a most iniquitous piece of legislation, but it is also constructive in telling the Government how it can raise the revenue it requires and still be fair to taxpayers. The Government is not asked by our amendments to forgo any revenue, oven the £8,000,000 which the Treasurer says can be collected between the 1st April and the 30th June. On the contrary, the amendments show the Government how in. 1943-44 it can increase its revenue as compared with what can be done under the bill.When the nation needs finance for war purposes, and the Government is playing with inflation by using bank credit beyond proper limits, every £1,000,000 that can be put into the Treasury not only helps the war effort but also protects the nation against inflation. Despite this fact, our amendments and criticisms receive very scant consideration from the Treasurer and other members of theGovernment. The Government must not be allowed to remain silent any longer upon the question of the taxpayer’s alleged liability for an additional year’s taxation. The amendment seeks to remove any possible doubt as to what the taxpayer does pay for under this legislation when he meets his taxation assessment. The honorable member for Warringah (Mr. Spender) made the position abundantly clear last night, and there is no need for me to retrace what he said. He made perfectly plain to the House just what is the application of the Income Tax Act as it stands in regard to a taxpayer’s liability for what he owes under the existing rates in the year of luxation, and how he is assessed in relation to the year of income. He proceeded, further, to show how section 217 is so applied that the estate of a taxpayer on his death finds itself charged with taxation for a year longer than could be reasonably justified by a proper interpretation of the act. The Treasurer, unfortunately, treats the subject with no respect at all. If he did not understand theposition, I should go farther in to the matter ; I am convinced that he does understand it but declines to admit what we know does exist under the Income Tax Act to-day. He refuses to tell the House what is the Solicitor-General’s ruling upon the interpretation of the act in regard to the year of tax. I have asked him at question time onseveral occasions about it. I asked him to refer the subject to the Solicitor-General, and later I asked him what the Solicitor-General’s ruling was. He told me to wait until the bill was debated in the House. I have seen the bill introduced and heard the Treasurer’s second-reading speech, and also the speech he made last night on the amendment, but he does not tell the House or the country what advice the Government’s legal advisers gave.
– And quite right, too. It is contrary to practice to disclose the terms of the advice given to the Government by its legal advisers.
– I do not know what the honorable member for Batman considers to be the practice of the House, but there is the Income Tax Act, there is the Government, there are the Government’s legal advisers, and there are the public who pay the tax. If the public are not entitled to be told what the Government’s advisers consider to be the interpretation of the act I shall leave the matter, because such an attitude seems to be thoroughly indefensible. After all the controversy of the past month, one would have expected the Attorney-General to explain the position, but the debate on the second reading has. now proceeded for a considerable time without our hearing anything whatever from him. The Prime Minister spoke last night, but made no pronouncement concerning the position arising from the interpretation of the year of income and the year of tax. He did make some reference to what was said by the right honorable member for North Sydney (Mr. Hughes) in this House 27 years ago in reply to an interjection, and quoted that reply as if it could be the law as it applies to taxpayers to-day. I say that it is not the law. The Income Tax Act is the law, and this bill, if Parliament passes it, will be the law. The Prime Minister evaded the real issue. He would not say whether the Government had been advised that the tax payments made during 1942-43, even though based upon the year of income 1941-42, discharge the taxpayer’s liability for 1942-43. Surely this must be one of the most extraordinary positions that ever confronted this Parliament. What is the need for all this evasion ? Why is not the Government prepared to tell the country the real position? Surely the taxpayer is entitled to be told officially by the Government what his position is in regard to the Income Tax Act. I cannot speak with the authority of a person who is qualified to interpret the law, nor can I speak as a member of the Government. I can only speak as a lay member of the House, but as such I tell the House that I believe the real position to be as follows: -
Surely the subject cannot be left in doubt any longer. I have only stated the position as it appears to me as a lay member. The Government has a highly qualified and distinguished lawyer in its ranks, and other distinguished lawyers amongst its advisers, and it should know well what the real position is. For weeks, it has been asked by honorable members on this side of the chamber to state the real position; but it has refused to do so. Last week the Treasurer said that he regarded “ pay-as-you-go “ taxation - that is what this amendment provides in one direction - as a method of evading payment of what one owes, but it is nothing of the sort. “ Pay-as-you-go “ taxationhas many advantages, some of which I explained in my second-reading speech. I shall not repeat them now, except to point out that in relation to Australian taxation, one of its advantages would be that it would make clear that a. taxpayer could not be called upon to pay a year’s tax that he never owed. That is a matter upon which the law should be definite. It seems, however, that although the general policy of this act is to declare the taxpayer’s liability in the year of tax, the effect of clause 217 may he to impose an additional year’s tax upon him. The Treasurer cannot fairly describe this as the evasion of a just debt. That is the position which these amendments endeavour to clear up. The Treasurer has not explained away the anomalies described by the Leader of the Opposition last night, and neither have any of his supporters tried to do so. There has been ample opportunity for any honorable member opposite to explain how this position has been misrepresented by the Opposition, if, in fact, it has been misrepresented; but there has been no attempt to do so, obviously because the illustrations of the position given by the Leader of the Opposition last night, the honorable member for Indi (Mr. McEwen) to-day, and myself a fortnight ago, are quite correct. Those illustrations were drawn from entirely different quarters, and dealt with different types of anomalies.
– But they do not agree.
– They do agree. Not only will the anomalies grow in volume, but also they will grow in variety in the course of the administration of this legislation. Many more anomalies will be discovered, as the Government will find out to its cost in the next few months. The anomalies to which attention have been drawn will operate to the detriment of individuals in the lower income groups, and they will not be removed by the new scale of taxes that the Treasurer proposes. By reducing the steps between the grades to “nothing more than half a crown “, he may bring the instalments closer to the taxable income, but he will be unable to bridge the gap completely; neither will he be able to remove the anomalies that will arise from the arbitrary application of average deductions for concessional allowances. That cannot be done, and those anomalies will remain. It is argued that the Commissioner of Taxation will hear from the taxpayer who has concessional deductions in excess of the average, and may adjust the instalments accordingly. I contend that the hill will open the flood-gates for thousands of taxpayers to approach the Commissioner for an adjustment of instalments because their concessional deductions exceed the average. Surely there could be no better way of locking up man-power needlessly at a time like this. I have the greatest sympathy for the Commissioner of Taxation, and a high regard for the technical men who are trained in that department, and I consider that they deserve to be engaged on more important work; they should be giving to the nation the benefit of some of their experience by propounding a measure that would be more useful to the Government and to the country than this bill can be. By inviting applications from taxpayers to have their instalments adjusted been use of concessional deductions exceeding the average, these capable men will be engaged upon work that is of no value whatever to the country. Taxpayers whose concessional deductions are below the average will say nothing and will continue to pay the reduced instalments, leaving a balance to be paid at the end of the year. In that way, the Treasurer will not have the use of the extra money until the end of the year. Where the reverse position applies, they will pay the larger instalments based upon the average concessional deductions, and being entitled to a refund at the end of the year, they will receive instead a “ certificate of credit “. How can the Treasurer defend that position? How can he justify the injustices that will fall heavily upon individuals in the lower income groups? Consistently throughout the past seventeen or eighteen months the Opposition has said that wage-earners in the lower income groups should make a greater contribution to the war effort. It may not have been politically wise to urge such action, but’ we have never shirked our duty, because we believe that, not only in the interests of the finances of this country, but also in the interests of our war effort, these extra contributions should be made. What we do not desire to see is the lower income groups suffering anomalies which are not shared bv other groups of taxpayers. This bill is loaded against not only the small taxpayers but also the small companies. Whilst it does not impose one penny of additional tax upon public companies, the measure increases the tax upon the undistributed profits of private companies. Many private companies are more heavily taxed than public companies. The Opposition has asked the Government to rectify that anomaly.
The Treasurer made no adequate defence of the proposal to collect instalments from the 1st April, 1943, three months before the year of tax in respect of which these instalments are imposed. He cannot answer the challenge that the device for the three months ended the 30th June, 1943, has been adopted for the purpose of making it appear that the undertaking given by the Prime Minister last year that taxation upon the incomes of the year ended the 30th June, 1942, would not be increased, has not been repudiated. No matter how the Government seeks to disguise this proposal, the plain truth is that the taxpayer will pay more tax in respect of the year ended June, 1942. In order that taxpayers may be misled into thinking that no increase will be made, the Government seeks to explain that the taxpayer will pay this tax for the three months of this year upon the income of 1942-43. For the first nine months of the year he paid the tax upon the income of the previous year. The taxpayer has to see the subtle difference. He is expected to recognize a distinction between the first nine months and the last three months of the year. When, by great care, skill and diligence he has convinced himself of that difference, he may then say : “ John Curtin has not misled me at all, and I am not paying any more tax in respect of the year ended the 30th June, 1942 “.
The amendment asks the Government to introduce from the 1st July, 1943, a system of “ pay as you go “ upon the income of the current year. As income is earned, the tax will be paid upon it. The Government has declined to adoptthat policy. But it cannot evade its responsibility by asking why the previous Government did not introduce the “ pay as you go “ principle.
– It would be interesting to know why the previous Government did not.
– If the honorable member for Bass had ‘been present in the chamber and if, being present, he were able to understand the position, he would know that I and at least two other honorable members explained that until the introduction of the uniform, income tax, the “ pay-as-you-go “ system was impracticable, because it would be impossible to induce seven governments in Australia simultaneously to adopt the proposal. For the first time in our history, it is now possible for the Government to introduce the “pay-as-you-go” system. Unfortunately, the Labour Government has missed the opportunity to do so.
The amendment also invites the Government to appoint a committee of experts for the purpose of investigating the method by which this same system of taxation may be applied to incomes other than, those derived from wages and salaries. Such a committee should also bc asked to investigate a new system of taxation for the purpose of giving justice to private companies, particularly by comparison with public companies. Before the position which I have described can be thoroughly clarified, all taxpayers in Australia must be placed upon a basis of the year of income regarding their taxation obligations. But this matter concerns not only the convenience of the taxpayer and the efficiency of taxation administration but also the need of the Government to obtain money at n time when it is most important that money shall come very quickly into the Treasury. The Commissioner of Taxation has found too complicated and difficult the machinery for taxing -private companies upon their undistributed profits. In many cases, his assessments are two or three years overdue. The result is that hundreds of thousands of pounds are still in the hands of the taxpayers when the money should be in the Treasury. The bill will increase that difficulty.
The bill also increases the rates of tax to be paid by private companies upon their undistributed profits, and extends until the 30th June, 1943, the increase of rates that will apply to the tax on the undistributed profits of companies for the year 1942-43. Not for some time after the 30th June. 1943, will the Commissioner of Taxation know how to assess the undistributed profits of private companies. In other words, the present difficulties will be multiplied. The bill will make it even more difficult than during the past three years for the Government to bring money into the Treasury. If these companies were put upon a system of “ pay as you go “ and were made to pay instalments regularly during the year of income, there is no reason why the amount of tax should not be estimated and the companies asked to pay into the Treasury at quarterly intervals an amount which might at least approximate their ultimate liability. If that were done the Treasury would have the use of the money, whereas, at present, it must wait for two or three years before it can ascertain the amount of the liability. The system is wrong. For more than twelve months I have asked thu Treasurer to revise the system. So far he has not been able to do so. I realize that the system is not easy to alter and that if one suggests an amendment, one should submit a constructive alternative proposal. But. this bill increases the present difficulties and makes it harder to bring money into the Treasury.
– What is the reaction of the honorable member to the promise of the Prime Minister not to increase taxation during the current financial year?
– I say without hesitation that the Prime Minister implied that taxpayers would carry no additional tax in respect of the year ended the 30th June, 1942, assessments for which are made in 1942-43. After the expiration of nine months of 1942-43, the Treasurer introduced a. new schedule of rates, and the increase applies to the last three months of the year. The taxpayer is told that the increases apply not to the year ended the 30th June, 1942, but to the next year. Taxpayers will not believe that assurance. Why should they believe it? The Government should frankly admit its inability, through force of circumstances, to honour the promise made by the Prime Minister. If the Government pointed out that the increasing demands of the war necessitated an increase of taxation and asked the people to relieve if of its promise, I would admire the Government and give it credit for its candour. But so far from being candid, the Government is trying to mislead the .taxpayer into thinking that he is paying the tax on this year’s income instead of last year’s income.
During my speech on the .motion for the second reading of the bill, I dealt with the position of taxpayers other than those whose income is derived from wages and salaries. This amendment also deals with that position, although it does not make any specific proposal. The amendment recognizes that the problem is complicated and difficult, and it, a,-ks the Government to set up an expert committee to report upon .methods. It oan be done, and it must be done. There are greater difficulties in the way of applying the “ pay a,s you go “ system to businesses, professions and companies, than to salary and wage earners, but nevertheless it can bc done. Moreover, it would make for greater fairness to the taxpayers, and for quicker returns to the Treasury. There are several methods “by which the system could be worked. lt could be done by issuing a tentative assessment on the previous year’s income. On this basis the taxpayer could pay by quarterly instalments and, at the end of the financial year, the actual assessment would be issued, and the taxpayer would pay any balance owing by him, or receive a refund of what he had overpaid. That would involve very little extra work. All the work involved has, in fact, to be done at the present time, -except the collection of the quarterly instalments, and the issuing of the final settlement. This system must be introduced so that all taxpayers, whether wage-earners or large companies, shall pay their tax in the year of income, with uri adjustment at the end of the year. Let there be no more of these credit.?, which, if they were negotiable, would become a .new kind of currency, lt is not right that a company or a trader should be allowed to accumulate for twelve months or more, and to use it for profitmaking, money which actually belongs to the Treasury. The amendment should be accepted by the Government with gratitude. If it be argued that there is some urgency about this measure, and that the revenue is wanted on the 1st April, I reply that the Government, if it withdraws the bill, can introduce a short measure on Tuesday next to extend the 1942-43 rates to cover the last three months of the year. All the other provisions of the bill operate only from the 1st July, so that the Government has plenty of time to do what I have suggested.
-35.] In this bill the Government, for the first time, proposes to collect income tax from those in the lower income groups. That was provided for in the Fadden budget, which was defeated in this House about, eighteen months ago, and the Government has tardily accepted the proposals then put forward. It is a pity that it has delayed so long. In the meantime, a tremendous amount of surplus spending power has been in the hands of the community. If this spending power had been extracted by taxation, it would not have had the effect of increasing prices and creating black markets, which is what, in fact, occurred. In this bill, we are called upon to pay higher taxes. Having regard to the news which the Prime Minister (Mr. Curtin) announced this afternoon of the complete destruction in the Bismarck Sea of an enemy convoy which may have been making for our shores, and which was undoubtedly threatening our security, there are few taxpayers who would begrudge paying whatever the Government demands of them. However what is needed, and what the Opposition is seeking to obtain, is equity in the treatment of taxpayers, and the preservation of their rights under existing legislation. The act at present provides that a taxpayer may claim a deduction in respect of life assurance premiums and medical expenses. Under the Treasurer’s scheme, the concessional deductions of all tax- payers within a certain income group have been calculated, and an average struck. This seems to be about as logical as trying to strike an average of the liability of the public to accident, and saying that, if only 10 per cent, of the people are involved in accidents, it may he assumed that each individual will be involved in one-tenth of an accident, whereas, of course, the person who actually suffers an accident, suffers it to the extent of 100 per cent. Under the Treasurer’s scheme, there is no differentiation between the taxpayer who really needs the concession and the one who does not. The concessional deduction for medical expenses is fixed in the act at £f>0. but I know of many taxpayers who have incurred medical expenses running into several hundreds of pounds. Under the present law, however, the taxpayer is allowed the beggarly concession of £50, irrespective of the amount of his medical bill. Under this measure an average concession is taken over the whole field, and the concession is reduced from £50 to a much lower figure according to the income grade. That is inequitable and illogical. The person who needs the concession is he or she who suffers the misfortune which necessitated the payment of the money in respect of which the concession was made. To suggest that every taxpayer should be placed on an average basis is to do an injustice, and take away from the taxpayer benefits which have been granted under successive income tax acts throughout the years. The bill provides that, if a taxpayer is overcharged, a calculation will be made and the necessary refund given, but I claim that he will never get back the amount by which he has been overcharged. The only prospect of any refund is that stated by the Prime Minister (Mr. Curtin) last night, in reply to an interjection by the honorable member for Warringah (Mr. Spender), who was discussing a case in which the estate of a deceased taxpayer would be entitled to a refund. The Prime Minister said that the principal act would probably bc amended in order to provide for such a refund. The only possible chance a taxpayer has to get- back an amount hp has been overcharged is to die! If a person overpays his butcher or his grocer he receives a, refund, but under this measure the Government merely says t.o the taxpayer : “ We realize that you have had an unfortunate year, and have incurred heavy medical expenses, your wife having had a major operation. We sympathize with you. It is most unfortunate that you have been called upon to pay. more than you should have been charged, but you will not get any money back. We shall give you a credit slip for it, and that is the best we can do.” I am afraid that the Treasurer and the Prime Minister will he adamant in this matter, despite the logic of the arguments advanced by the Leader of the Opposition and the honorable member for Robertson (Mr. Spooner).
Who are the persons involved in cases in which overcharges of income tax are made? It is true that they are only those in the salary and wage earning groups, but the number of individuals in Australia whose incomes do not exceed £400 a year is 2,750,000, the vast majority of whom will be affected by this measure. Those with incomes over £1-00 a year number 300,000. At least from 2,500,000 to 3,000,000 persons, possibly 75 per cent, of the taxpayers, will be affected by this bill. The Government might well agree to accept the amendment submitted by the Opposition, or a similar one.
Much argument has been advanced as to whether there is any tax lag, and whether the income assessment is based on income earned during the preceding year or during the current year. When I was returning to Australia on a troopship many years ago, somebody started an argument, for the sake of a diversion, by asking a conundrum. He said, “ Brothers and sisters I have none, but that man’s father is my father’s son “. One was shown a photograph, and was invited to say what was the relationship of the person who was speaking to the subject of the photograph. The controversy raged for about a week during the passage of the troopship across the Indian Ocean, but we never settled the relationship. It matters little who wins the argument as to whether the tax lag applies to the current year or to the previous year; but the present Government, and any succeeding Government, will have to face the fact that, when the war ends, a vast number of individuals whose incomes are to-day, say, £1,000 a year, will undoubtedly receive a much lower income. An individual who is to-day earning £1,000 a year is required to pay approximately £300 a year of it in income tax, which leaves him £700 to meet his commitments.
When the war ends, or at some time in the future, that individual’s income may drop to £500 a year, but because of our taxing methods, he will be required to pay out of that year’s income a tax of £300 -in respect of the previous year’s income. Consequently, he will have only £200 to meet all his other commitments in that year. Let us bring the problem right home to ourselves. An honorable member of this Parliament who is now receiving £1,000 a year may lose his seat at the next general elections, and, in the following year, he may receive very much less than £1,000 in income; but out of his reduced income he will be required to pay taxes based on an income of £1,000 a year. Instances of that kind can be multiplied almost without end, and I can see no justification for the refusal of the Government to take some steps to remedy the evil, for it undoubtedly is an evil. I was amazed to hear the Prime Minister and the Treasurer say yesterday that even if more be taken from the wage-earning and salaried taxpayers this year tha’r they are liable to pay, the amount will be held by the Government. But that possibility faces only certain sections of the community. If the Government would adopt the Opposition’s proposal in the amendment that has been submitted, the problem could be completely solved by about 1944.
We must face the prospect that incomes in the years immediately after the war may fall considerably. Of course, the post-war years may be brighter, financially, than some of us expect; yet we should look at the subject prudently. I do not ask that we be pessimistic, but we should be prudent. In these days when some people are paying about threequarters of their income in taxes it is surely unnecessary to stress the need to keep an eye closely on the future. Unless that be done, and proper steps taken to prepare for possible eventualities, grave financial problems will face whatever Government may be in office. I am quite certain that unless this Government faces the situation fairly and squarely it will not be in office twelve months hence ; but I contend that the issue should be faced and settled irrespective of the Government in office for the time being.
The Prime Minister made an extraordinary statement last night to the effect, that any excess taxes paid by wageearners and salaried taxpayers would be applied to the national welfare scheme. That was the weakest argument that the Prime Minister has ever advanced. To suggest that we should finance, even in part, an important welfare scheme of such a comprehensive character as that foreshadowed by the Government, on moneys illegally withheld from certain classes of taxpayers, is not only unjust but also most illogical.
– I suppose the honorable member would make a flat rate charge to meet the cost of the welfare scheme?
– I would preserve the dignity of the participators in the scheme by arranging for them to contribute towards the benefits that will be provided. I believe that the people generally would welcome the opportunity to meet their obligations in that way and would feel that they were fulfilling the duties of their citizenship. The welfare scheme of New Zealand is contributory in character, and any welfare scheme that we establish in Australia should also be one of that nature. The beneficiaries should be required to contribute according to their capacity to pay. The scheme propounded by the Government is not based on that principle. It is most deplorable, in my view, that whereas, under the proposals now before us, certain classes of wage-earning and salaried taxpayers may be called upon to contribute towards the scheme almost at once, certain other taxpayers who obtain their incomes on an annual basis will be permitted to escape such contribution.?, although many of them could better afford to contribute than could many wage-earners.
A great deal has been said in the course of this debate about what has been termed the “ lag “ in tax payments. I commend the observations of the Leader of the Opposition and the honorable member for Robertson on this subject. The fact of the matter is that under the existing legislation, taxpayers are now paying taxes on incomes earned eighteen months or two years ago, and eighteen months or two years hence unless some alteration be made in our tax-collecting procedure, they will be quired to pay taxes on the incomes now being earned. The income tax year with which taxpayers are now concerned dates from the 1st July, 1941, to the 80th June, 1942. With a lag like that, difficulties are inevitable. I consider that the Government is under an obligation to do everything possible. to avoid such difficulties by providing that taxpayers of all classes, and not only those on wages and salaries, may pay their taxes substantially in the year of income. Few taxpayers, especially those whose income is received in the form of wages, set aside periodically a sum to meet their taxation commitments a year ahead. It is true that under this bill that will be done for a great number of taxpayers, but there will still remain many who obtain a livelihood from conducting a business, farming, or in ways other than as employees in receipt of wages or salaries. These taxpayers will be placed in a position of hardship because of the application of income tax rates. It is not so much a matter of law as of the rate of the tax. No one quarrels with the demand made by the Government for a contribution towards the success of the nation’s war effort, but we on this side do quarrel with a scheme which completely abrogates in some respects the rights of small taxpayers under existing legislation. Those rights are wiped out to the degree that a taxpayer is called upon to pay more than those acts require him to pay, or loses concessions and deductions which they permitted.
The Government proposes to take from the people a considerable sum of money, which instead of being expended in the purchase of civilian goods will be applied to the production of munitions of war and used for war expenditure generally. We on this side agree to that. We agree that this sum of money must bc extracted from the community, and, indeed, ought to have been taken from the people much earlier. The Fadden Government also proposed to take money from taxpayers; but one-half of the amount so taken was to be returnable to taxpayers in the period following the war, it being held in the meantime as a post-war credit.
Taxpayers would have got the money back, probably with interest added.
– That interjection is a reflection on the good name of theCommonwealth. The Fadden Government’s scheme would have given to thosewho contributed compulsorily by way of loan the same rights as would be enjoyed by those who lent their money voluntarily,, so that when honorable members oppositesay that “ perhaps “ taxpayers would get their money back, they infer that the Commonwealth either would be unable tomeet its obligations, or would not attempt to do so.
– After the war the rate of income tax will probably increase, and then amounts credited to taxpayers will be utilized to meet their tax obligations.
– I should not care to prophesy what will happen after the war, but I repeat that a taxpayer whose money had been taken from him compulsorily would have the same rights as another person whose money was contributed voluntarily. A year or two ago, the Parliament of New Zealand passed: legislation providing for substantial compulsory loans. I do not think that honorable members will suggest that the Government, of that Dominion is likely to* repudiate its obligations, or, indeed, that any Commonwealth government, of whatever party, would do so.
– Are the compulsory loans in New Zealand made in the form of a capital levy?
– They are somewhat in the nature of a capital levy. Each loan is based on the amount of income tax which an individual or company paid in the year that the loan is raised. The taxpayer is required to pay by way of loan SO per cent, of the amount of his tax.
– In New Zealand there is a personal exemption of £200.
– Yes, but the compulsory loan is SO per cent, of the amount of the income tax. I feel sure that if the present Government be in office this time next year, or even when the next budget is introduced, in August, it will be compelled to reconsider its attitude towards post-war credits and compulsory loans, which have proved satisfactory in most of the countries now at war, including some enemy countries. The Treasurer described the post-war credits scheme of the Fadden Government as a discredited race-horse, but before long he may find that he will have to train that horse. I hope that, in that event, he will find a good rider for it. Should the Assistant Treasurer (Mx. Lazzarini) be chosen, he may get the horse as far as the barrier, but after that I fear that something terrible may,happen. I trust that the views that have been advanced by honorable members on this side will receive the sympathetic consideration of the Government. In a matter of such- importance, constructive suggestions made in an earnest desire to assist this country to weather the storm should not be viewed from a party political angle. The control of finance is one of the most difficult problems confronting any government at the present time. If a different government were in office, it would have the same problems to face, and would need all the assistance which those in opposition could render. It is wrong for the Treasurer and supporters of the Government to regard suggestions from this side of the House aa an affront to the Government. We have to raise the necessary finance from the community with the least possible dislocation of economic life, because, if we disturb economic life, cither by permitting prices to rise as the result of excessive purchasing power in the hands of the people or by encouraging the creation of black markets for the same reason, we shall break down the morale of the community and undermine the war effort. Therefore, it is of the greatest importance to keep the finances of the country on a solid base. The Opposition makes its suggestions, which cannot be challenged as party politics, in the hope that the Government will adopt them. As a matter of fact, the Government has adopted, eighteen months late it is true, a part of the proposals contained in the Fadden budget by taxing incomes in the lower ranges at a rate which the Opposition cannot cavil at. I agree that the tax is severe, and that many people will have difficulty in paying it; hut it is an inescapable obligation, and -whatever hardship it may impose upon people could not be compared with the hardship that would be imposed if we relaxed our war efFort and allowed the enemy to wedge his foot in the door.
– I agree with the honorable member for Richmond (Mr. Anthony) that the very nature of an income tax bill provides an opportunity for co-operative suggestions to be made from all sides of the House, and for that reason, I cannot support the amendment of the Leader of the Opposition (Mr. Fadden) directing the withdrawal of the bill in order that it may be redrafted. The honorable member for Richmond struck the right note when he finished his speech, and the Leader of the Opposition would have been wiser if, instead of trying to make political capital out of the measure he had stood by the decision announced by the honorable member for Robertson (Mr. Spooner) that the Opposition would not oppose the second reading df this bill, but desired to have it amended when it, was taken into committee. He would have shown a strong spirit of co-operation in passing unpleasant legislation imposing taxation on incomes in the lower range, which the Opposition has consistently urged. This bill has been introduced because of dire necessity arising from war expenditure that was not budgeted for at the beginning of the financial year. It has not been brought in willingly by the Government, because such legislation is diametrically opposed to its policy. I commend the Treasurer for taking the hard but the straight and proper road, and I believe that the people will back him up with their approval. Paragraph 1 of the amendment I regard as purely political, It is designed to cause dissatisfaction with and complaints against collecting income tax by instalments. The instalment system, has been accepted by the people; it is in operation, and has proved to be most effective. It has the virtue of enabling the salary or wage earner to budget his outgoings with no fear of being called upon, at the end of the financial year, to pay an unknown amount of tax for which he has made no provision. In these days of heavy income tax, distress would be caused in the households of the ordinary wage-earners if they were called upon suddenly to meet the demands of the Taxation Commissioner for which no provision has been made. The Leader of the Opposition was Treasurer in the Ministry which instituted the instalment system. Therefore, I do not accept his argument about the inequity of this method of collecting income tax. Deductable expenditure based on that of the previous year is used as a guide for assessing weekly tax instalments. The Treasurer has explained that provision is made for deductions from weekly instalments to in eat any needs which may arise during the year of tax. The honorable gentleman announced in the House last night that he had acceded to requests made to him by a deputation of employees that he accept a new scale of deductions with gradings of 2s. 6d. That will mean that the variations between weekly deductions will be as small as 3d. Where the actual amount of earnings does not coincide with the scale figure the lower figure will be taken. That will definitely ensure that there shall be no cases of undue hardship because of over-payments. Indeed, there should be no need for overpayments if the taxpayers take advantage of the facilities offered to them to make arrangements with the Taxation Commissioner, if payments do not balance with over-payments of allowable deductions in the previous year. So the remedy is in the hands of the taxpayers. This is the essence of fair dealing. I approve of the bill as it stands with the amended scale announced last night.
Paragraph 2 of the amendment is an argument about which there appears to be great confusion in the minds of honorable members. We have heard a lot in debate about this, and I confess that I cannot end the confusion. It has not been raised to me by persons who will be affected by this tax. It is a sound argument for people approaching the retiring age and whose income is high now, but will be reduced by perhaps 75 per cent, after their retirement. The prospect for those people is formidable with the present high rate of tax. I do not wonder that they are frightened. At the same time, I understand that the Taxation Commissioner has discretion to deal with cases of hardship and I submit that that is probably the best .way in which to deal with them. If! a plan could be evolved without loss to the Treasury it would confer great comfort and benefit upon those people. Generally, however, I agree with the Treasurer’s reply to arguments in favour of the “ pay-as-you-go “ system. I am inclined to think that that system is being supported mainly by persons who have enjoyed a considerable income in the past, notably from company shares, and now because their income from that source is diminishing desire to avoid the payment of tax on their income for the preceding year at the high rates operating to-day. Under that system, however, the payment of considerable sums to the Treasury would be postponed; and that deficiency would Have to be made good in some way, possibly by the issue of more treasury-bills, or by increased borrowing. It is far better to continue with the present system under which the full tax is paid when it falls due. The argument with respect to the legality of section 217, which was put forward last night by the honorable member for Gippsland (Mr. Paterson), was very interesting. He opened up a new aspect; and his arguments appear to be soundly based. However, they would apply only in respect of persons who had paid tax in every year since the inception of Commonwealth income tax in the financial year .1915-16, on income earned in the preceding year. The honorable member claimed that should any person who comes within that class die before the 30th June next he will have paid income tax in respect of 28 years out of income for 27 years. As a matter of fact taxes are collected to-day in respect of the unexpired portion, of the year in which a taxpayer dies; and that procedure, apparently, is in keeping with the law as it now stands. It has never been challenged; and, therefore, I doubt whether it could be successfully challenged now. However, the honorable member for Gippsland appears to. have opened up a field for interesting discussion by the lawyers. I am inclined to think that the law as it stands is on the side of th, Commissioner of Taxation; and it can only be altered by Parliament. I am somewhat suspicious of the proposal of the Leader of the Opposition to treat a portion c-f income tax as a post-war credit. I do not think that any honorable member, as an administrator, would exchange a tax for post-war credits. Surely the primary means of obtaining revenue for war purposes is by increasing taxes as far as possible; and the secondary means is by raising loans. Therefore, there appears to he some motive behind that proposal other than mere kind-heartedness towards the taxpayer. I regard it as a sugar.coated pill, designed to harass the efforts of the Treasurer to build up the proposed national welfare fund, by means of a direct tax, that is, on a contributory basis. The greater proportion of the money to be raised under these proposals will be expended on war purposes. The Treasurer has definitely given us that assurance. Ha has also announced that a national welfare fund will be established immediately, although, for a commencement, it will lie somewhat limited. I sincerely hope that he will persevere with that proposal, and that legislation will soon be passed with the object of ushering in a system, of social security under which want and distress previously arising from unemployment and’ sickness will be banished.
Sitting suspended, from 6.15 to 8 p.m.
– At the suspension of the sitting, I was speaking of the Treasurer’s announced intention of bringing down legislation to provide for want and distress due to unemployment. For many years past governments, parties, theorists and reformers of all kinds have advocated that this type of social safeguard against want should be provided, but on one pretext or .another in Australia the question has always been postponed or shelved, so that we have never placed any legislation on those lines on the statute-book. Now, when the Treasurer actually proposes to make provision for the introduction of such a reform by having a fund established in advance of the unknown position that will accrue in the years after the war, the members of the Opposition, in effect, say, “ No, it would be politically better just to grant each taxpayer one half of the added tax as a post-war credit, and, in effect, let him fend for himself”. The effect of that proposal, if accepted, would be to deny to the Treasurer the interestfree funds with which he expects to establish the foundation of his scheme, which in my opinion is a logical and practical approach to this all-important question. Surely honorable members on the Opposition side of the House could adopt a much more unselfish outlook towards this national problem of poverty and want, which we know results in many cases through no fault whatever of the person or family concerned. “We have had definite experience of that in the depression years in Australia. I fully support the Government in this proposal to carry into effect a reform that for many years has been longed for by every right-thinking man and woman in the community. Concerning the question of post-war credits versus taxation in war finance, I have always advocated taxation to the greatest extent that can be levied, consistent with maintaining a standard of living not lower than that of the basic wage earner. I do not wish to see the spectre of malnutrition and poverty stalk over this country, reducing both the mental and physical capacity of the nation to cope with the exigencies of war. I consider that it is quite possible to maintain a good standard of living, and still put our best effort into the war. The proper time to make the greatest possible sacrifice for Avar is during the war. It is not possible even to approach, or anything like approach by means of taxation alone, the financing of the huge expansion of war production and personal effort required; but taxation, to the extent that it is imposed, leaves no scar. It. leaves less of the burden for posterity to bear, whereas for every £1 that Ave borrow we leave £1 that has to bear the interest and be repaid. On the very vital question of the incidence of taxation on private companies, particularly the nightmare of calculations referred to by the honorable member for Lilley (Mr. Jolly) yesterday, when he said that it was almost impossible for the Commissioner of Taxation to work out the amount of tax that a private company should pay on undistributed profits because the Commissioner had to go into actual individual incomes, and by some process of legerdemain arrive at a figure which I know is not very acceptable to the companies concerned, I cannot help recalling that this position arises as a direct result of the introduction of the war-time company tax by the Leader of the Opposition (Mr. Fadden) when Treasurer. Some honorable members were not in favour of that tax, but the. right honorable gentleman fell into the trap of imposing it. The Treasurer who preceded him was too shrewd and far-sighted to do so. He shelved it. He said : “ This thing is too hot, I will not touch it”; but the right honorable member accepted it against the advice of a good many competent authorities, and he cannot in any way avoid accepting the responsibility for the position in which private companies now find themselves.
– The honorable member for Lilley was on the special committee that recommended it.
– The honorable member for Lilley would have cleared the position up if he had had his way. I know what happened in the committee, and that the result was not due to any action of the honorable member. I heartily support the suggestion of the Leader of the Opposition that an expert committee should be appointed to clean up this mess and bring about a more equitable method of taxing private companies.
I should like to hear a better explanation from the Treasurer regarding the handling of over-payments of tax ito which =o many honorable members have referred, and which it is proposed should stand to the credit of taxpayers. It is proposed to pay 2 per cent, interest on the amount so held, although I do not know how it would be calculated on the small sums, and use it towards the payment of the next year’s income tax. If this means that any money standing to the credit of the taxpayer will be taken into account in the same way as allowable deductions are taken into account, and that the rate of weekly payments will be adjusted accordingly, then this matter would automatically clear itself every year. If this is not done, or if some other method of making repayments is not adopted, then the only value that I can see of such credit is that the estate of a deceased taxpayer will benefit after his death, and I do not anticipate that that will bring any great comfort to many taxpayers who are budgeting on a very thin family budget. I suggest to the Treasurer that he should give careful consideration to altering the clause regarding over-payments, which in its present form is very difficult to justify It may be a small matter, and may bring only small relief to the individual taxpayer, but when people are facing the heavy added impost that is to be put on them by this new taxation, I am inclined to think that any small mercies will be very gratefully received. For the Treasurer’s benefit, I may say that I regard this clause as a friction point which should be removed in the interests of the small taxpayer and of the people of Australia generally. There is a difficult period facing Australia. We have heard the Prime Minister, both in this House and outside, state that Australia is to be allotted the role of waging what is termed a holding war. That may mean, if it eventuates in the way proposed, a long period of inactivity, or comparative inactivity, coupled with the necessity of maintaining large forces in a “condition of constant alertness. The civil population by comparison will have to go through a period of high taxes, shortened supplies,- restrictions, discomforts, and disorganization of many of their normal habits. This will require on the part of the leaders of this country a great deal of courage, patience, and wisdom well above the average, if we are to avoid considerable dissatisfaction and discontent. I appeal to honorable members on both sides of the House, as many other honorable members have done in this debate, to pull together and not to be a centre from which disturbing thoughts and sentiments shall issue. This taxation is being im posed for the very good reason, that our war expenditure has exceeded by £100,000,000 the estimate made in September last, but that means that Australia is 23 per cent, ahead of schedule in its war programme for this year, which is no mean achievement. I have looked into some figures of costs, and have irrefutable proof that much of the money is being well and wisely expended. The anticipated reductions of costs which should accrue and have accrued to all wisely administered businesses and undertakings by attaining efficiency, have been achieved. In a list of essential munitions, for which I obtained the comparative figures of a year ago and now, I find that production costs have dropped considerably. In many instances, on large items such as Bren gun carriers, the reduction has been as much as 25 per cent. On all the items which I investigated it was never less than 10 per cent. I consider that Australia in that regard has achieved something worth while. These inquiries regarding the production of munitions were made from both private enterprises and government factories. I consider that the Minister for Munitions (Mr. Makin) would be well advised to make some of that information available to the public, because it would inspire confidence in the people in subscribing to loans, bearing the heavy burden of taxation which is being imposed, and make them willing and even eager to share in the task, whether by personal effort or by lending or giving their money. I intend to support the bill :is presented by the Treasurer, because I consider that it is one more step along the only road by which we can ensure freedom, liberty and opportunity.
– I listened with great interest to the honorable member for Henty (Mr. Coles), as I always do whenever he speaks, because I have in my own mind a metaphorical bet as to which way he is going to run. On this particular occasion I may say that I am once again disappointed. I followed his form very closely in the “ Militia Stakes “. As the House well knows, he ran down the field last May, and on the last occasion ten days ago he ran as one had hoped and expected that he would run, but to-day, judging by his previous form, I fully anticipated that he would support the amendment, which, I understood, was really in accordance with his own views. I am disappointed, and all I can say about the honorable member is that he is very consistent in his inconsistency. He has given his reasons for objecting to the amendment moved by the Leader of the Opposition (Mr. Fadden). I support the amendment for reasons which have been well put by the Leader of the Opposition, the honorable member for Robertson (Mr.
Spooner), and other honorable members on this side of the chamber.
– It would not be for political reasons, would it?
– No, it is for purely objective reasons. I do not propose to recapitulate all the objections put forward by the honorable member for Henty to the amendment, but I think he said that he objected to the second paragraph of the amendment because it might benefit people who had considerable incomes last year, and who might be expected to have smaller incomes this year. Many arguments can be advanced in support of the “ pay-as-you-go “ system, but as they have been adequately discussed by previous speakers, I shall not repeat them. The time has arrived for us to discard the out-of-date system of “ pay as you went “ and adopt the new system of “ pay as you go “, because it is more equitable and will produce more income for the Government. As more money is pumped into circulation by the issue of additional bank credits, more money will inevitably become available as income for the vast majority of the people and, through taxation, to Consolidated Revenue. For that reason, the “ pay as you go “ system, which can easily be introduced, should be adopted by the Treasurer.
The honorable member for Henty, who doubts the wisdom of our advocacy of post-war credits, considers that we should prefer the principle of “ cash before credit “. Our opinion is that postwar credits will provide a certain sum of money for the war effort and will also enable people to accumulate funds that will become available to them after the war, when they will require money. The honorable member suggested that because we advocated the vise of post-war credits instead of taxation, we are suspect on the ground that we desire to sabotage the so-called welfare fund.
– Why does, the honorable member use the term, “ the so-called welfare fund “ ?
– Because it is a “ so-called welfare fund “, as I shall show later. No honorable member is more keen than I am. about social welfare. I look forward eagerly to the time when our social services will be largely extended. When 1 examine the hill, especially in the light of the financial statement of the Treasurer, I wonder what it is all about. The national welfare fund will contribute practically nothing to the social services of the country. Although the honorable member for Henty suggested that the Opposition objects to the fund, the House should not interpret that statement as implying that we desire to sabotage it. Social services should be established on a sound footing at the proper time and with adequate finance.
– Always some other time.
– In this world there is a proper time for everything. The financial statement of the Treasurer contains the following passage: -
The Government proposes to establish a national welfare fund through which provision will be made to finance the full scheme. Commencing from the 1st July next, it is proposed to pay to this fund out of general revenue an annual sum of £30,000,000, or a sum equal to one-fourth of the total collections each year from income tax on individuals, whichever is the lower.
One puzzling feature about this bill is to elicit where the £40,000,000 will be expended. According to the statement of the Treasurer, a certain percentage is likely to be devoted to the war effort, but what that amount will be, I do not know. The fact remains that some extremely inconsistent statements have been made. If we examine the financial statement, we shall see that £2,515,000 will be devoted to specific items, such as maternity allowances, funeral benefits, and invalid and old-age pensions, leaving about 85 per cent, of the proceeds from the additional taxation for other purposes. The only deduction that I can draw is that the remainder of the money will be devoted to war purposes.
Last evening the Treasurer, when replying to charges of pre-election “ window dressing “, declared that the money would be devoted to welfare schemes that would be explained shortly. He instanced an unemployment fund and sickness benefits. The position is perfectly clear. The money raised by this additional taxation will be available either for the war effort or social services. If it is to be expended on the war effort, clearly it will not be available for social services. Obviously, we cannot have our cake and eat it, though some honorable members opposite would like to be in the happy position of being able to do so. If a large sum of money is paid into the social welfare fund, it will either remain there unexpended or be expended on the war effort. If it is expended on the prosecution of the war, all that will remain in the fund will be a few figures on a piece of paper. If the money is to be placed into a trust fund or earmarked for use for social services, the question arises as to whether we are justified at this period of the war, when an enormous financial burden weighs upon us, in diverting money from the war effort to nebulous social services about which we have been given no specific information. The benefits that will be provided may be completely unjustified by our general financial situation.
The Treasurer referred to unemployment and sickness benefits. At present, Australia has no unemployment problem. Nor is it likely to arise while flic war lasts. What particular purpose is to be served in establishing a fund for unemployment unless it is to be keptintact? We are not in a position financially to afford the luxury of putting money into a. fund where it will not be used. No provision is now made ‘by the Commonwealth Government for sickness benefits. Whilst I agree that sickness benefits should be provided at the earliest possible moment, I doubt whether the time is appropriate to establish them now. The people are far better off financially than they have been for many years, and consequently they are in a much better position themselves to meet their own medical expenses without making calls upon Government finances. Therefore, neither of those two funds can he justified at this juncture. From that, it follows as a corollary that there is no immediate necessity to establish funds for the purpose of providing these services in the future. On the other hand, we face an extremely unpleasant position. Whilst the Government proposes to establish these funds, the budgetary deficit is approximately £290,000,000. If the proposed new taxation be devoted entirely to social, benefits, the deficit will have to be financed more and more by central bank credits, and that will increase the danger of inflation. For that reason, the social welfare fund is, to say the least, premature.
I have no doubt that the Treasurer, who is fully acquainted with national financial problems, has discussed this matter, and has probably developed the following argument : “ There will be less resentment to increased taxation if people believe that the money derived from taxing the lower-income groups will be used to provide social benefits. If this money is placed in a fund arid frozen, the purchasing power of the people in a restricted market will be reduced, and therefore the pressure on our prices structure will be, to that degree, decreased. An equal amount of money can then be released in the form of bank credit without affecting the financial stability of the country”. I agree that a corresponding amount of bank credit could be released, but such a policy will not be of advantage to the country.
– The Treasurer requires the money for the war effort, but he has not the courage to say so.
– I agree. Sickness benefits come in a different category. If the rate of payment is settled, the money will be paid to claimants and will return into circulation. That will increase the tendency towards inflation. The Government is not. justified in establishing these funds at present, and its policy, if persisted in, will cause a great deal of harm. To raise money for an ill-defined purpose of social benefits, and place it in Consolidated Revenue, is to create the worst possible basis for establishing social services in future. I cannot understand why the Treasurer should have found it necessary to adopt this round-about method for obtaining the money. I do not know that social services will benefit in the least by it. I feel sure that if the people as a whole were told that this money was required for war purposes, they would be willing to give it freely. Members of the lower income groups, with whom I come in contact constantly, say to me, “ Why not tax us if you want the money? We are prepared to give it if it is required for war purposes”. By adopting this round-about method of raising revenue the Government is doing a great injustice to a large number of its supporters.
I am sorry to see that provision is not made in the Government’s social service proposals for a campaign against venereal disease in view of the alarming manner in which this disease is increasing throughout the community. That is not an uncommon state of affairs in wartime, and other countries throughout the world are having a similar experience. When war comes the incidence of venereal disease increases rapidly, and incalculable harm is done. I do not propose to go into the details of this matter, but under present conditions the fighting services are responsible for their own control measures, while the States are responsible for supervision of the civilian population. It would be a good move if the Commonwealth were to provide financial assistance to the States so that a more active campaign could be conducted. A grant of £50,000 or £100,000 to the States would enable the establishment of clinics or special hospital wards to be undertaken, and I hope that the Government will consider taking that action at au early date.
The second paragraph of the amendment reads -
Many honorable members of this House, and a large proportion of the general public, consider that the Government’s proposal in this regard is unjust. It means, in effect, confiscation, at least temporarily, of all moneys overpaid. Taxpayers will have no chance of getting that money back, their only redress being to have, the excess payments credited against future liabilities. The Opposition’s amendment would mean virtually a return to section 221h of the principal act, which provides that all anomalies that may arise through over-payments can be adjusted by means of cash refunds. 1 strongly urge that the amendment be accepted by the Government, in spite of the rather luke-warm disapproval expressed by the honorable member for Henty.
There are two sides to every budget - revenue and expenditure. The Government is endeavouring, by various ways and means, to meet a deficit of £300,000,000; but there is another aspectof the matter, namely, expenditure which bas been referred to briefly by some honorable members. In this country to-day we are suffering from a plethora of government and semi-governmental instrumentalities. They are being set up in every direction, and it is time that the Government took stock of such organizations with a view to reducing their number and their expenses. We are rapidly becoming a bureaucratic community, and government by law is becoming a thing of the- past. No doubt some of this expansion is legitimate, but I am sure that much of it is noi; necessary, and is being sponsored by theorists who believe that thi-i form of control has come to stay and will not disappear when the war ends. Side by side with this expansion of bureaucratic control there has been a flood of statutory rules. Since the beginning of the war, 820 statutory rules have been issued, containing 2,350 regulations. More than 200 war-time boards and committees have been set up, employing host? of public servants. For instance, the Department of Imports Procurement in Sydney now employs SOO people, and I could cite other similar cases embracing all phases of governmental activity. These bodies should not be permitted to employ large staffs at a time when there is such a heavy demand on man-power. At present 25 per cent, of our man-power ls in the fighting forces; there are. 140,000 munitions workers, whose work, of course, is an integral part of our war effort, and approximately 400,000 men and women in Commonwealth, State or local government employ. What do those figures mean? They mean that we are leaving the fighting services with an everdecreasing number of productive workers to maintain them. To some degree that i? necessary, because we have to meet the demands that our war effort is making upon us, but there is every indication that we are reaching a state of affairs in which our organization for war is incoming more important than the war itself, If the limit of this bureaucratic expansion had been reached, it would be bad enough, but it is apparent that more and more committees and boards are being set up, and the general tendency is for each such organization to surround itself with a, considerable staff. We are spending far more money than we should on the payment of these individuals, and this enormous extravagance has to be borne by the people as a whole. I do not blame the Government entirely for that state of affairs. There are many thing? which I realize are beyond the Government’s control; but there is no doubt that considerable economy could be effected by a careful overhaul of these boards and committees, with a view to reducing their number and curtailing their staffs. I have obtained figures from many sources in relation to these bodies. For instance, 1 have obtained figures relating to the Allied Works Council, which probably has been discussed and criticized more frequently in this chamber than any other organization of this type. I also have army figures showing that in many instances staffs at military camps are far too large for the number of troops being accommodated. The same applies to the Royal Australian Air Force. I hesitate to refer to the Rationing Commission, whilst the honorable member for Henty is looking at me so suspiciously, but I know what goes on there also. I understand that the commission now employs some 5’50 people, including two honorable members of this House, and I am informed that many of these employees are cooling their heels at times because they have nothing to do. They are being sent on jaunts all over the country, and I am told, upon the very good authority of the employees themselves, that in many cases when they arrive at their destination they find that there is nothing for them to do. I know that matters such as these cannot be gone into in detail by the heads of the various organizations; what I suggest is that instructions should be given for a general overhaul, with a view to dispensing with the services of all unnecessary employees, thus affecting a considerable saving. This state of affairs is well known to the public, and the effect on public morale is very bad. When people see money and time being wasted by Government servants they are apt to question the sincerity of the Government’s appeals for increased savings.
– The morale would be much worse if there were no Rationing Commission.
– That may be, but when the Government is constantly asking people to pinch here and there, it should set a better example. That fact is known to every private member, and it is time that it was known to the Government. As the war proceeds we shall need more and more money to meet expenditure. I, therefore, suggest that we should thoroughly overhaul the manner in which public money is being expended. Another point that should be borne in mind in connexion with this demand for extra money is that an examination of statistics will show that price levels are increasing and that a proportion of the money that is now needed is due to an increase of the cost of services and materials. The cost of living index figures shows that the increase has been about 20 per cent,, which may be said to account for about one-fifth of the expenditure provided for in the budget, or about £100,000,000.I do not suggest that, the figure is actually as high as that. It may be in the neighbourhood of £60,000,000. We cannot do anything about that increase now. but we should learn some lessons from what has happened. Two points that I make are, first, that part of our increased expenditure is due to the increase of the cost of living and of services and materials which cannot now be avoided; and, secondly, that as inflation increases the strain on the budget will become greater. The Government is in the nature of a private person. Inflation adversely affects the wage-earner because he is always somewhere behind the crest of the inflationary wave; in fact he is usually in the trough behind the crest. That is true also of the Government. Expenditure has increased since the budget was prepared, and we are always behind actual costs. For this reason I repeat my warning that it is necessary to place our finances on a sound basis and to prevent any growth of inflationary tendencies. I trust, therefore, that the House will accept the amendment. It is framed on sound lines and if the Government adopts it undoubtedly the whole population will benefit.
.- The question before the House is that a bill for an act to amend the Income Tax Assessment Act 1936-1942 shall be read a. second time, to which the Leader of the Opposition (Mr. Fadden) has moved a portentous amendment which is full of words, but, from my point of view, and from the point of view of the people whom I represent, contains very little substance. Prior to the suspension of the sitting I heard an honorable member opposite deplore the fact, or it may have been congratulate himself upon the fact, that few speeches had been made on this measure from the Government side of the House. It was pointed out that one of the two private members behind the Government who had spoken on the measure had criticized it in a very unfriendly manner, and that the other had bestowed upon it that faint praise which is sometimes regarded as an instrument of hearty damnation. It will serve as an explanation of the dearth of speakers on this side of the House if I point out that even among Ministers there cannot be a great deal of enthusiasm for the measure which the Government has felt compelled to submit, to the Parliament. I cannot, however, presume upon any kind of metaphysical analysis of the minds of members of the Ministry. Therefore, I shall speak for myself, and, as far as possible, in pursuance of the pledges that I gave to myelectors when I last declared myself a candidate afresh, and attempted to give somek ind of an account of my stewardship over the years - in my case many years - which have gone before.
The verbose amendment moved by the Leader of the Opposition, and spoken to with great enthusiasm by the honorable member for Robertson (Mr. Spooner) and an imposing phalanx of speakers from the others ide of the House seems to have been acceded by the Opposition in general as a convenient opportunity to make a. little political by-play. It is impossible not to feel that Labour’s embarrassment which, after all, is the nation’s embarrassment, and has arisen out of circumstances over which we have no control, has been accepted in a very special way by the Opposition as an opportunity to play prettily at politics.
I do not pretend to any enthusiasm about the bill, and the only point in it which I feel compelled to discuss is that for the first time in Labour history Labour has been placed in the position of imposing a tax on those receiving such low incomes as £104 a year. I think that the circumstances, menacing as they are, do not justify the imposition of taxation upon incomes so low as that.
– The honorable member has got conscription, 30 why should he balk at this?
– I have expressed my view on the subject that the honorable member for Barker (Mr. Archie Cameron) so irrelevantly interjects about; my views are on record.
– So is the honorable gentleman’s vote.
– It so happened that my view, although, shared by a considerable number of honorable members in this chamber, was not shared by a sufficiently large number to affect the result which was achieved, with such enthusiasm, by the honorable member for Barker and others, but I did not support the bill or vote for it.
If the imposition of taxes on incomes so low as £104 a year can be justified by events, I suggest that such events should have been foreseen earlier by Ministers. If it was inevitable that those who work for a wage less than the basic wage, and less even than a living wage, would bo taxed, it should have been perceived earlier in the course of the war. 3y the exorcise of a fair measure of ordinary intelligence, it should have been appreciated at the beginning of the war that this was likely to be a long war. The Government having aiccepted in principle
Hie methods of raising money by loan and taxation and only to a relatively small degree by the exploration of national credit, which methods were acceptable to our friends of the Opposition when the previous Government was in office, present-day Ministers should have accorded more sympathy with the intentions of the previous Government when it asked the House to accept the principle of the taxation of the low incomes of wage-earners. They should have seen the inevitable earlier. I admit cheerfully on their behalf that much is to be said in favour of a wide diffusion of the burden of taxation which presses on the people to-day; but, even granting that it could not be avoided, seeing it so late as they do, conveys the impression to the people outside this Parliament, and to those who support the Labour party, that Ministers have sat long at the feet of their tutors on the other side of the House, and have learnt at last the lessons which the pedagogues opposite have been imparting to them with such unction for so many years. The creation of that impression is unfortunate, because the case is quite different. The policy of taxing the incomes of the small wage-earners is an outcome of unprecedented conditions and imminent peril of attack by a most dangerous and powerful enemy. At the very moment when honorable gentlemen opposite were toying with politics, and framing paragraphs 1, 2, 3 and 4 of amendments to suit their political views, an armada was sailing towards, and in close proximity to, the shores of Australia in a most menacing manner. Everybody knows that the proposal of the Government, which I must assume was most reluctantly adopted by it, comes at a time of unexampled peril and difficulty for Australia.
I have qualified my remarks in the way I have because I consider that the Government should be reminded of the points that I have made in that regard ; but I am not satisfied that this bill provides for a spread of sacrifice fair enough to justify the imposition of income tax on the small wage of £2 a week. Such a starting point as we have in this measure - a beggarly £2 a week - is less than a living wage, and much less than the basic wage. Therefore, I do not believe that it provides for equality of sacrifice. I see on every hand outstanding evidences of waste and profiteering, and of people making incomes out of this war inordinately greater than those which they would ever hope to make in time of peace. I see the rich getting richer quickly. I have in mind the fact, which nobody ventures to deny, that lying in front of us at the close of this war at the very best - not at the worst, because that is something too dreadful to contemplate - the spectre of want and misery for large numbers of unemployed persons in this country. Already we know only too well how the grim and gaunt figures of misery and want are striding across the face of Europe. We know how the grim visage of starvation is making itself apparent amongst the masses of the people, who cannot obtain even the sustenance necessary to keep body and soul together.
– There are the four freedoms.
– Probably the honorable member implies that those who are starving should all have a basin of the four freedoms. Looking at the whole picture of the war situation at its worst, the position regarding the manufacture of munitions, and the various preparations in all avenues for the waging of war, and considering the conditions of the very rich and the very poor in this country, I find little equalization of sacrifice. I find, with infinite regret - and I am sure that Ministers infinitely regret it - that we shall be grinding the faces of the poor by means of the taxes to be imposed under the very bill now before us.
Honorable members opposite have criticized the measure, but they have not done so because under it the Government proposes to tax persons in receipt of £2 a week. They have not said a word about that. They have not ventured to urge that the minimum should be raised. They might even have consented, with, a little persuasion from a much less able and astute gentleman than the Treasurer, had the Government thought fit to do it, to levy tax on incomes even smaller than £2 a week. Yet amongst all the serried ranks of speakers that have made the Opposition benches ring with their eloquence and refittings, not one of them has ventured to say that incomes of £2 a week are too low to be taxed, although by no stretch of the imagination can that very small sum be regarded as sufficient for the maintenance of one person, much less a person with dependants. Honorable members opposite have criticized the bill in wordy terms. They have condemned the proposals on the ground that the anomalies and injustices inherent in the bill should be rectified. They have referred to arbitrary and unfair discrimination against taxpayers with family responsibilities, the employees as a class and individuals comprised in that class. Those are safe and vague phrases, and they were rightly exposed by the honorable member for Henty (Mr. Coles). In one instance, the criticism of the Opposition was well placed on the ground that under the measure the Treasurer proposes to collect from a certain class of taxpayers tax in excess of the debtowing by them. Honorable members opposite have expressed the view that money which is found to be due to a taxpayer should be restored to him. I agree in that regard, and I am not without hope that the Treasurer will see his way to accept the view that, when money is found to be due, it should be restored to the person, to whom it belongs. In other words, the debt ought to be paid.
– Give -us the old story the honorable member told us on a previous . occasion about an imaginary enemy.
– There is no need to tell honorable members about imaginary enemies, because real enemies are attacking this country at the present moment, and they will never be defeated or repelled by gentlemen who select soft seats and continue to sit in this Parliament. I naturally refer to two conspicuous gentlemen on the Opposition side who happen to be in. uniform but not in the fight; but I do not like to shoot rabbits when they are sitting.
This bill does not refer to, but the Treasurer’s speech included a reference to, another measure upon which I shall only touch, and which other honorable members have referred to, for giving certain additional benefits by way of payments in the event of sickness and unemployment, and other social services in respect of which it must be granted that this Government has, up to the present, done remarkably well. Taxation is being levied on low incomes in anticipation of measures which will give social relief in the case of unemployment and sickness. Those measures, while not mentioned in this bill, are foreshadowed, and are part of the Government’s policy. As I have said, the Government has done very well in that regard. A scheme for the payment of widows’ pensions has been introduced, and invalid and old-age pensions have been increased. The Child Endowment Bill, which was passed during the term of office of a previous government, has been improved. The” present Government has placed on the statutebook an impressive array of social legislation, which is greatly to its credit. It makes the Commonwealth, for the first time, comparable in this respect with the State of New South Wales under the leadership of-
– John Lang.
– I was coming to that in my own halting way. I hesitated only because I feared that his entry into this House might, if the gentleman had his way, be made at the cost of the presence of an honorable member already here.
– We shall now return to the bill.
– That is a very good suggestion, and one which I would readily adopt, except that I have already said everything that I wanted to say on the bill.
– The honorable member for Batman (Mr. Brennan) spoke On this measure in the manner which characterises his reference to all measures relating to the war effort. He said that he had no enthusiasm whatever for the bill. Of course not. He has no enthusiasm for anything that has to do with the war effort of Australia. The only time I have ever heard him wax enthusiastic, when the words fairly tumbled out of his mouth and his eloquence was in full spate, was when he was saying something anti-British. At such times he has an immense amount of enthusiasm.
– The honorable member is a liar.
– The honorable member for Batman (Mr. Brennan) must withdraw that expression.
– Yes, and I ask the honorable member for Wentworth to withdraw what he said of me. If he does not, I shall repeat what I said.
– The honorable member for Wentworth (Mr. Harrison) was dealing in. personalities, and he should not have done so. He must withdraw the expression to which exception has been taken.
– Mr. Speaker-
– Will the honorable member for Batman indicate what expression he wishes to be withdrawn?
– I want the honorable member for Wentworth to withdraw his statement that I spoke with fervour and enthusiasm regarding anything antiBritish. I characterized that statement as a deliberate lie.
– The honorable member for Wentworth must withdraw the statement complained of.
– I have not finished my observation.
– The honorable member must withdraw the expression.
– I withdraw it. I have, on a previous occasion in this House, quoted from Hansard extracts from a speech by the honorable member for Batman, in which he said that the British Navy was an evil menace.
– I rise to a point of order. Is the honorable member for Wentworth discussing the subject before the Chair?
– I have called the honorable member to order.
– I do not intend to pursue that line of argument any further, because I have substantiated my statement. I have no enthusiasm for this bill, because I believe that it is a “phoney” bill. The honorable member for Batman said that money was being wasted, and he gave instances. I agree with him. Then he spoke of the immense incomes which were being made out of the war, but I cannot agree with him in that. Income tax at the rate of 18s. in the £1 is levied on high incomes, so that, no matter how much a man may earn, he cannot enjoy for himself more than £1,500 a. year. The honorable member for Batman had a good deal to say about those on low incomes, and he spoke with great feeling of people on £2 a week who were called upon to pay tax. I should like him to toll us how many adults in Australia are recei ving only £2 >a week, and are being taxed. There may be a few messenger boys, but that is about all. I have here a list of 50 employees of one firm, none of whom is drawing less than £17 a week, whilst many are drawing between £20 and £30 a week. They are labourers, plumbers, carpenters, &c. lt is true that money is being made out of the war, but it is being made by the workers in essential industries and in munitions factories, and up to the present they have not been taxed by this Government.
– How many hours a week do they work?
– That is a pertinent question. The wages which 1 have mentioned include overtime at the rate of time and -a. half and double time, 1 admit, but there are men fighting in New Guinea who work and fight all around the clock for only 8s. a day.
When the last budget was introduced, the Treasurer (Mr. Chifley) gave an undertaking that the rates would not be increased again this financial year, but he has increased them. The increase will, apply from the 1st April, but the Treasurer, fearing the result of his failure to keep his promise, has arranged that collections at the higher rate shall not begin until the next financial year. He has sought to gild the taxation pill. He broke his word to the House and to the people, and then introduced a new taxation measure with a great fanfare of trumpets on the ground that it was part of a national welfare scheme.
– What is wrong that?
– I shall proceed to show what is wrong with it. In spite of what the Treasurer has said, the fact remains that the extra revenue which it is proposed to raise under this measure is needed for war purposes, but he was not prepared to tell the people that. I agree that it ia necessary to raise the money, but why can’t the Treasurer say so openly? Instead, he seeks to placate those whom he proposes now to tax for the first time, by saying that the taxation proposals are linked up with an improved national welfare scheme. He should have told the people that he proposed to tax them because he needed the money for war purposes, and that they were not going to get much in return for it. I am glad that the Treasurer has at last recognized that every body is financially interested in the war, and that he now proposes to tax the lower incomes. However, in this, as in other matters, the Government is plodding cheerfully along some twelve months behind the programme of the last Government. It has done so in regard to its war policy, and it is now doing the same in regard to its financial and taxation policy. The Government knows that during the last two years the Opposition has consistently advocated the taxing of the lower income groups. Indeed, the Fadden Government was defeated on a proposal to introduce a scheme of postwar credits which embraced the lower income groups but enabled taxpayers to accumulate a “ nest egg “ that would become available to them after the war. Hitherto, the Government has steadfastly refused to tax the lower incomes, but now it has been forced to take the plunge.
– Then why is the honorable member objecting?
– I am merely reminding honorable members opposite that the Government is plodding twelve months behind the United Australia party in all matters pertaining to the war effort.
Another scheme which the Opposition advocated but which the Government rejected is that of compulsory savings. Under this legislation, the Government will institute a scheme of compulsory savings, though it will be called by another name. In other words, the Government is trying to obtain the money by stealth. . The small income groups will henceforth pay their taxes by instalments; but if their payments exceed the amount of the assessment, they will not be entitled to a rebate at the end of the financial year. A worker with an everincreasing income over a period of years will never recover this excess. The Government will retain that money illegally, and I object to the injustice of such a policy.
The Government, if it had given further consideration to this income tax legislation, could well have achieved its objective by two simple methods. All taxation should be based upon the capacity to pay, but, unfortunately, the Government has departed from that recognized principle. The Government has always assumed that taxation should be based upon the capacity of the higher incomes, and not upon the capacity of the incomes below a certain level. According to this bill, the classes which the Government claims to represent will now be called upon to contribute to the prosecution of the war. In my opinion, the Government should be courageous enough to adopt the Opposition’s policy of postwar credits, and retain for each taxpayer a certain sum of money which will be repaid to him after the ‘cessation of hostilities.
As an illustration, I point out that the Army deducts from the pay of every soldier a certain amount of money, which it holds as “deferred pay”. When he is discharged, he receives the amount represented by the accumulation of deferred pay for the purpose of enabling him to re-establish himself in civil life. The money is virtually a “nest egg”. Postwar credits have been designed to establish deferred pay for civilians and for business men. As the result of rationalization and depleted turnovers, small businesses have suffered considerable hardship. After the war, industry must expand for the purpose of absorbing men who are now bearing arms or manufacturing munitions. Postwar credits, or deferred pay, will enable industry to purchase the machinery necessary for a programme of expansion, whilst the deferred pay of soldiers and civilians will enable them to purchase goods. As the demand for commodities increases, more goods will be manufactured and more employment will be created.
Although the Government will, under this measure, levy compulsory loans, r it does not propose to return the money to the taxpayers after the war.
That is the difference between the Labour party and the United Australia party. Honorable members on this side of the chamber realized the necessity for looking after the welfare of the small business man, and evolved a plan for enabling him to re-establish himself after the war. But the Government, which claims to represent the small business man, will exact compulsory loans and will never repay them. Small business men will pay higher taxes than the scale operating in Great Britain, which includes tax and post-war credits. Incidentally, honorable members opposite should not overlook the fact that the British Government recognized the advantages of post-war credits; but the Commonwealth Government proposes to extort every possible penny from the public by way of taxes.
I shall now examine the “payasyougo “ system. The principle has been dealt with thoroughly by previous speakers, but it does not appear to appeal to the Treasurer. I prophesy that although the honorable gentleman is not prepared to give even reasonable consideration to this system, he will eventually be compelled to adopt it. The honorable member for’ Gippsland (Mr. Paterson), who pointed out the illegality of the tax proposals, cited 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. He paid his tax in that year and in every succeeding year, and in May of this year he will have paid his full tax for the financial year 1942-43. He will then have paid tax for 28 years in a little less than 2S years. If 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 29 th year. Such an imposition is utterly indefensible, but the “ pay-as-you-go “ principle will eliminate that hardship.
The present exaggerated scale of wages which workers receive sets a problem for the Government, which cannot be readily solved. Unless a taxpayer is assessed under an instalment plan, a man earning high wages will have difficulty in meeting his assessment when his wages are reduced. For example, a soldier is usually unable to meet out of army pay the assessment on income that he received in civil life prior to his enlistment. The present method of collection bristles with anomalies, but the adoption of the instalment scheme under the “ pay-as-you-go “ plan would abolish them. Nor would the adoption of the plan involve the Treasury in the loss of a large sum of money.
– There would be no loss.
– I have cited an example of the difficulty of collecting from a soldier tax assessed on his civil earnings. The same difficulty is experienced by small business men, whose turnover has been substantially reduced as the result of the Government’s rationalization schemes. He is required to pay from a smaller turnover an amount of tax based upon a substantially larger turnover in the previous year. These conditions are causing a good deal of discontent, but the Government can allay it by adopting the logical method of “pay as you go”. I was challenged by the Minister for Transport (Mr. George Lawson) to show what was wrong with the Government’s national welfare scheme. I shall tell him what is wrong with it. It is part of this “phoney “ bill. I shall refer to some statements of the Treasurer in order to show the confidence trick that is being worked. Referring to the national welfare scheme, he said -
The Government proposes to establish a national welfare fund through which provision will be made to finance the full scheme. Commencing from the 1st July next, it is proposed to pay to this fund out of general revenue an annual sum of £30,000,000, or a sum equal to one-fourth of the total collections each year from income tax on individuals, whichever is the lower.
The sting is .in the words “£30,000,000, or a sum equivalent to one-fourth of the total collections each year from income tax on individuals, whichever is the lower “. The Government’s proposals in connexion with national welfare read well, but I desire to know where the £30,000,000 is to come from. Before T deal with the figures shown in the report of the Commissioner of Taxation
I shall read some further observations by the Treasurer -
Income tax assessed on individuals for Commonwealth purposes was £7,000,000 in 1938-3H, £30,000,000 in 1940-41, £50,000,000 in 1041-42 and the estimate for the current year is about £70,000,000. With the proposals now submitted, the estimate for a full year is £110,000,000.
That sum of £110,000,000 relates to uniform taxation, and includes both Commonwealth and State taxes. The legislation authorizing uniform taxation is to continue for the period of the war and one year after the war has ended, but the Government’s proposals assume that uniform taxation will continue indefinitely. The Treasurer says that £110,000,000 is the estimate for a full vear at present rates of tax. One-fourth of £110,000,000 is £27,500,000, so that even on the estimated figure of £110,000,000 the national welfare scheme would receive only £27,ri00,000, not £30,000,000. Apparently, £2,500,000 means nothing to the Treasurer.
– What is a couple of million pounds between friends ?
– The estimated amount is less than the Government says it proposes to obtain. As I have said, this is a “ phoney “ bill. Let us see what the taxation figures disclose in connexion with the national welfare scheme. I take the Treasurer’s own figures. He mentioned a sum of £30,000,000, onequarter of which, is £7,500,000. That is true Commonwealth taxation. Are we to assume that that amount will be increased to four times what it was in 1941-42 in order to get £30,000,000? The Treasurer also says that £50,000,000 was raised in 1941-42. Let us assume that when the war is over the high level of that year is maintained. When we allow for payments to the States, it will be seen that we are not getting even £50,000,000 from the uniform taxation scheme. But let us forget that the high rates of taxation during recent years are supposed to have been imposed for war purposes; let1 us be generous and say that, the Government will continue to get that amount when the war is over. One-fourth of £50.000,000 is £12,500,000; so again we see that this is a “ phoney “ bill. It is being used as window-dressing for election purposes. It promises something which the Government knows cannot be given to the people. The Government knows that it is endeavouring to trick the people into believing that it has something to give to them. It is not honest in putting a statement like this before the people for their acceptance. Those on this side of the House will not accept it, and it is for that reason that the Leader of the Opposition has moved an amendment. ‘Because I believe that the bill is “phoney”, and has been introduced only to gull the people at the forthcoming general elections, and that there is no possibility of finding the money, I shall support the amendment of the Leader of the Opposition.
.- 1 might as well contribute to the gaiety of nations as any one else, and therefore I shall offer a few comments on the “ phoney “ amendment of the Leader of the Opposition (Mr. Fadden), and the “ phoney “ speech of the honorable member for Wentworth (Mi-. Harrison), in which he expressed “ phoney “ ideas on finance - a speech in which he misread the documents presented to the House by the Treasurer (Mr. Chifley). Because the statement of the Treasurer contained a reference to the amount of income tax assessed on the incomes of individuals for Commonwealth purposes, the honorable member for Wentworth concludes that that is the total amount of money to be raised under the uniform taxation proposals. The honorable member failed to realize that the amount stated there is thi-, amount for Commonwealth purposes only, and that there is approximately another £20,000,000 to be raised for thiStates.
– Not from individuals.
– It is assessed on individuals. Prompted by the honorable member for Barker (Mr. Archie Cameron), who asked, “What is a couple of million pounds between friends? “, I now ask what is £20,000,0^00 between friends? The honorable member for Wentworth was just £20,000,000 out in his calculations, and therefore the rest of his argument can be discounted equally heavily. Several honorable members who have spoken to the amendment of the Leader of the Opposition, includ ing the honorable member for Indi (Mr. McEwen) and the honorable member for Robertson (Mr. Spooner), shed crocodile tears over the fate of the workers of this country, and expressed concern that the working class should be subjected to taxation when they could have a “phoney” scheme of post-war credits under which they might be paid something when the war is over. If ever there was a gold-for-notes trick it is the scheme of post-war credits sponsored by the Opposition. Honorable members opposite have no real concern for the workers, because they represent .in this Parliament the interests of predatory wealth - to use the expressive phrase of the late President Theodore Roosevelt. Honorable members opposite are concerned with taxation only as it affects big interests in the community; they are not concerned directly with taxation as it affects people in the lower ranges of income. The Fadden budget, to which they have referred, was a second edition of the Fadden budget, not the original edition presented to the House. The first Fadden budget had to be withdrawn and recast under pressure from the Labour party.
– That is not true.
– It is true. What actually happened was that when the Labour party opposed the Fadden Government’s 1940 proposals and indicated that it “would vote against them, the debate was adjourned and a meeting of the Advisory War Council was convened. That body, which allegedly was set up to assist in the prosecution of the war, spent a whole morning discussing ways and means to compromise with the. Labour Opposition on the budget proposals.
– That is wholly untrue.
– How did the honorable member know of a secret discussion at a meeting of the Advisory War Council?
– Because the Leader of the Labour party reported to caucus what happened at the meeting.
– What about his oath of secrecy ?
– The then Government had no right to use any oath of secrecy to cover up a matter of that kind. The Advisory War Council was formed to assist in the prosecution of the war, not to formulate schemes to put budget proposals through the Parliament so that the government of the day could remain on the treasury bench.What was done on that occasion was not repeated a second time because the Labour party would not allow it.
– Does the honorable gentleman say that the Labour party connived with the then government on the first occasion?
– I do not say that. On the occasion referred to, the then Prime Minister, Mr. Menzies, invited the Labour members of the Advisory War Council to attend a meeting of that body. Until they arrived at the meeting they did not know why they had been invited to attend it. That was in accordance with the practice of tory politicians. Under the Fadden budget, incomes of above £156 per annum were to be taxed but as a result of representations by the Labour party the exemption was raised to £200 per annum. The wives of soldiers also received an additional1s. a day, which they never would have given but for the pressure exerted on the then government by the Labour party’s representatives.
– There is not an atom of truth in what the honorable member is saying.
– The honorable member for Warringah (Mr. Spender) has a short memory. Every Labour member in this chamber will verify what Ihave said. Honorable members know that after the Fadden budget was introduced a compromise was subsequently announced.
– With whom was the compromise arranged?
– It was arranged by the right honorable gentleman, his then Leader, and other members of the Advisory War Council with representatives of the Labour party.
– Representatives of the Labour party!
– Yes, and that is true. The right honorable gentleman at last agrees. One sometimes discovers intelligence in the most unexpected places. This amendment of the Leader of the Opposition now before the House also concerns itself with private companies. The right honorable gentleman wants a more equitable method of taxing the income of such companies. The only proper way in which to deal with them is to wipe them out. Private companies have all the advantages and none of the disadvantages of public companies.
– Does the honorable member really mean that?
– I certainly do. Why should not profits made by private companies be disclosed? Why should not their balance-sheets be published? Who are their shareholders? What are their activities? The people want to know the answers to those questions, particularly as they are the holding companies that control the commerce and industry of this country.
– In every case?
– Nearly. I am on a tender subject as far as the Opposition is concerned. The Broken Hill Proprietary Company Limited, Australian Consolidated Industries Limited, and a lot of the other big public companies are associated with private companies which act as holding companies. Those holding companies hide their profits, and the country never knows just what swindle has taken place and how much the swindlers have got away with. There are also many small private companies which are in many cases formed by scoundrels who give themselves so many paid-up shares for goodwill and then load the rest of shares on to the unsuspecting public. Consider the McArthur group in New South Wales, which almost captured an Australian insurance company and proposed to rob the policy-holders of the moneys they had subscribed. That group had to be suppressed by special act of the New South Wales Parliament.
– That was a public company.
– The honorable member for Warringah (Mr. Spender) knows that private companies were in the swindle. I would not register any private company. The very fact that the legislation empowering the establishment of private companies was introduced by an anti-Labour government is sufficient to make me suspicious of them. Therefore, I do not share the soft feelings of the Leader of the Opposition for private companies. The right honorable gentleman is more concerned about the income tax paid by the private companies than with the income tax which the Government proposes to levy on parsons who earn as little as £104 a year. They are not the shop boys and shop girls about whom the honorable member for Wentworth talks so glibly. Many old people come into that category.
– Many of them are shareholders in private companies.
– Many of them live on dividends paid on shares in public companies.
– Those shares were bought with their savings, the value of which this Government is diminishing by depreciating the currency.
– If the honorable member for Boothby (Dr. Price) will for a little while longer be as tolerant as he customarily is, he will see that my views on that subject coincide with his.
– If that is so, the honorable member for Boothby has something wrong with him.
– There is not so much wrong with the honorable member for Boothby as there is with the honorable member for Barker (Mr. Archie Cameron). A great many people in this country are trying to live on the £2 a week Which they receive from their investments in public companies and businesses, from annuities purchased from insurance companies, from superannuation schemes of government and semi-government instrumentalities and big industrial and commercial organizations. These unfortunate people, who found it hard enough to live on £2 a week before the war, are finding it increasingly .difficult now when the currency is being heavily depreciated. In addition to having to live on a small fixed income, the purchasing power of which had been greatly diminished by the depreciation of the currency, they are now to be asked to pay income tax. That is not fair. I think that the statutory exemption from income tax should be considerably above £104. As a matter of fact, I think that the Government should do what it did with invalid and old-age pensions, and vary the superannuation of Commonwealth public servants or at least that part paid by the Commonwealth according to fluctuations of the cost of living. That would be a modicum of justice. I did not hear the Leader of the Opposition wax eloquent about the unfortunate people who live on £2 a week, but I did hoar about his desire to set up what he calls a committee of experts to examine the income tax law. I assume that ‘the right honorable gentleman would be the No. 1 member of that expert committee. Alternatively, he may desire the appointment of a group of financial experts. I would not agree to the appointment of such a committee, because financial experts live by the payments which they receive from the big companies. They could not live on what they earn from people who live on £2 a week. The recommendation of such a committee would naturally favour those from whom they earn their living. Being of a suspicious turn of mind, I see no merit in that proposal. In his speech, the honorable member for Indi (Mr. McEwen) said that the defeat of the Japanese in the Bismarck Sea was due to action taken by the Opposition when it occupied the treasury bench. Mr. Speaker, you never heard anything worse than that in all the time you have presided over the deliberations of this chamber.
– I should like, to know what relevance that has to this bill.
– I set your fears at rest, sir, by assuring you that there was nothing in the statement of the honorable member for Indi that was relevant to the bill. I could elaborate this matter by repeating something that was said by Mr. Bruce in 1924, but a nod is as good as a wink, and I will not proceed on those lines. But I have a perfect right to say, because it is germane to the subject of income tax, that invalid and old-age pensions were reduced by this Parliament in 1931. They were subsequently reduced by the Lyons Government, which was composed of honorable gentlemen of the same stamp _as those now in Opposition, from 17s. 6d. to 15s. a week at a time when the Government had a surplus. As a. matter of fact from 1932 to 1937 the Commonwealth Treasury had surpluses amounting to more than £6,000,000.
While the then Government was reducing invalid and old-age pensions from 17s. 6d. to 15s., it was remitting £9,500,000 of land tax to its own wealthy friends, particularly the hig land-holders. I defy the honorable member for Barker to laugh that off. The then Government took from the very poor to give to the very rich. So all the arguments advanced by the Leader of the Opposition and his followers are valueless. It is doubtful whether one can say who are his followers in these days. When he was Treasurer in the Menzies Government, the right honorable member had two stabs at trying to bring down a budget. He survived for a year longer as the result of the concessions he was forced to make in his revised budget. That budget, in both its first and second versions, was not satisfactory to the people of Australia, and, when the Fadden Ministry was defeated about eighteen months ugo its defeat was due, not to the budget that the right honorable gentleman placed before Parliament, but to the fact that the Ministry had fallen to pieces. Had the budget not been the rock on which the then Ministry foundered, it would have encountered some other rocks and been wrecked. Its end was inevitable. If the right honorable gentleman were called upon to-morrow to form a ministry and had to rely on the material now on the Opposition benches, he would be as great a failure in producing a first-class team as would another and more humble cm hi net-maker who tried to make Jacobean furniture out of dog-wood. The task would be beyond his capacity.
– The honorable member speaks as one rejected.
– I would not be associated with any government, national or otherwise, with which the right honorable gentleman was associated. I see a great deal of what happens behind the scenes, particularly in the Opposition parties. The right honorable gentleman’s amendment, is, of course, not submitted seriously. I have no doubt that you, Mr. Speaker, realized that before now. It was moved in the same spirit as that in which the Leader of the Opposition from time to time moved other amendments to legislation brought down by this Government.. No doubt, the leaders of the
Opposition parties outside Parliament will meet in due course, to discuss this matter. A new organization will be formed, and honorable members opposite will be told that they must mend their ways. I notice that the Leader of the Opposition recently opened a conference of a political party of which he is not a member. The members of that organization know as well as the Leader of the Opposition knows that the people of this country will not support any scheme of post-war credits, because such credits cannot be paid for when the war is over.
– Does that apply also to the repayment of loans?
– On previous occasions, I have distinctly expressed my belief as to what will happen with respect to the payment of the interest that is now piling up on our loan indebtedness. If we do not alter our technique for financing the war, and the peace that is to follow, we shall be faced with an awful crash, because with a reduced production we shall not be able to pay even the interest on the loans we raise. Our present interest bill is about £52,000,0000 a year, or £1,000,000 a week. That means that our 7,000,000 people, down to the last-born babe, pay tribute at the rate of £7 each per annum to those who hold the bonds. It will not be long before our national debt reaches £2,000,000,000; but what is that to the honorable member for Wentworth (Mr. Harrison) or to the honorable member for Barker (Mr. Archie Cameron) ?
– Shylock will want his pound of flesh.
– Yes. The policy of borrowing at high rates of interest and taxing the low wage-earners will not bring the millenium that the Leader of the Opposition tries to persuade himself is bound to come.
– Is the honorable member going out to organize the Government’s £100,000,000 loan?
– No ; I shall not go out to organize any loan, because I do not believe in fooling the people by telling them, first, that the loan is a good investment, and, secondly, that by investing in it they will be making sacrifices equal to those which are being made by our soldiers oh the battlefield. We simply mock the sacrifices being made by our soldiers by standing up at street corners and trying to cadge money out of the people by telling them that if they put their money into war loans they will be putting it into a good investment and will he making sacrifices equal to those being made by our fighting men. .It is dishonest to tell the people that they will be guaranteed interest at ;i p:’r cent, on their investments in war loans, and that the Government will repay them.
– All this is foreign to the bill before the chamber. I ask the honorable member to address himself to the measure.
– I shall please myself just what I shall do to assist the Government in its various activities. I shall not. say anything which I do not. believe to be true. I do not believe in any scheme of post-war credits.
– I again ask the honorable member to confine his remarks to the bill.
– The scheme of postwar credits proposed by the Leader of the Opposition is “phoney”. I borrow a term which was emphasized by the honorable member for Wentworth in his foolish attack upon the Government, in which he misquoted the Treasurer. The Treasurer put forward what he and the Government believe to bc the right, policy; and that policy has the support of the majority of the members of the Government caucus. I disagree with it; but I certainly pay tribute to the sincerity and diligence displayed by the Treasurer on all occasions. If I believe that any policy he enunciates to be wrong, I do not, at the same time, subscribe to the view that something ad vanced by the Leader of the Opposition is better. Despite the defects in the Government’s scheme it is far better than that advanced in the amendment moved by the Leader of the Opposition. All the arguments which have been advanced in the last 24 hours in support of the amendment, have been worthless, and would not carry conviction anywhere. Certainly the Opposition’s scheme will not provide honorable members opposite with the pabulum to sustain their hopes of stealing a victory at the next general elect-inns. The worst misfortune that could befall Australia short of defeat by Japan would be the return of honorable members opposite to the Government benches’.
– If any doubts existed in the minds of honorable members on this side as to the foundation on which this bill rests, those doubts were completely dispelled by the speeches made by three honorable members on the Government side of the chamber. The first was that of the honorable member for Bourke (Mr. Blackburn), who is the fountain of sincerity. With that clarity and honesty which always distinguishes him in this chamber he pointed out one or two weaknesses in the bill. Secondly, I refer to the eloquent address delivered to-night by the honorable member for Batman (Mr. Brennan), in which he condemned the measure with faint praise; and, thirdly, to the speech of the honorable member for Melbourne (Mr. Calwell), who in a second innings in this debate, praised the bill with faint damning. The honorable member for Melbourne would be in a very difficult position in this chamber, Mr. Speaker, if you, as chairman of the Standing Orders Committee, secured the adoption of a standing order obliging an honorable member to vote in accordance with his remarks. From past experience, the honorable member would not have a word to say on any matter in this House so long as the present Government remained i.n office.
-wet-t.. - The honorable member would find himself in great difficulty.
– I challenge any honorable member to show that I have ever spoken one way and voted another. On occasions, I have taken a line of action when I could not’ get a seconder. In any case, I do not give a bang whether I can get -a seconder so long as I am convinced that the course I propose is right.
– The honorable member for Bourke also has had that experience.
– Yes ; on one occasion the honorable member for Melbourne seconded a motion moved by. that honorable member, but when a vote was taken he ran away. The winds of the desert could not keep up with him; we could not see his heels for sparks.
– The honorable member became courageous only after he was thrown out of a previous government.
– That is a matter which we can submit to the judgment of honorable members who were members of this House at that time. The honorable member is not one of them.
– I was here to await the honorable member’s exit.
– The honorable member was awaiting the arrival of the Grim Reaper for fifteen years; and now thatheis a member of this chamber he is a little testy because he was kept waiting so long. The Treasurer took some of the sting out of the amendment moved by the Leader of the Opposition when he promptly admitted, with the great dignity which distinguishes him at all times, that he and his departmental officers had, after all, made a mistake with respect to some of the provisions in the bill. When I looked through them, I thought that they must have been drafted by officers of the Department of Commerce and Agriculture. Not very long ago, honorable members were informed in a discussion on pigs that if a pig weighed 150 lb., it was worth 9d. per lb., but if it weighed 149 lb., the price of the carcass dropped to 8d. per lb. The justification for the attack made by the Leader of the Opposition was given in the Treasurer’s reply. He said, in effect, “ I plead guilty to the charge made by the Opposition. This bill isbad. It cannot stand.It must be amended in order to remove the anomalies which the Leader of the Opposition has pointed out.” Judging by the duration of the Government party meeting this morning, I have no doubt that the sandpaper will be applied to one or two other things. I should not be surprised if, at that meeting, the Treasurer’s head was bowed for a while as he listened to the earnest, heart-to-heart views expressed by some of his followers, some of whom follow the Government very closely, and others, perhaps, at a considerable distance, but, nevertheless, somewhere in the comet’s tail. I do not propose to deal with the rates because the Government has removed some anomalies. However, it has not rectified other errors in the bill. This measure indicates that the trend of parliamentary government in Australia is away from the basis on which taxation is founded. The history of taxation goes back a very long way. In respect of Magna Charta, the Bill of Rights and a civil war in the United Kingdom, one of the most important questions at issue was how taxation should be raised. Under this measure, the Government proposes a system which, if carried into law, will be a tribute to gentlemen like Dick Turpin and Robin Hood and other similar characters who operated so successfully in England a long time ago. The British principle of imposing taxes is that they should weigh equally on all taxpayers, and one taxpayer should not be treated differently from another. This measure discriminates between taxpayers. Should it be passed, it will not be a case of the Government saying to a taxpayer, “ Your obligation financially to the Commonwealth of Australia for this year under your income tax assessment is so much “. What the Government will say is, “ We take an average, a rough-and-ready average - more rough than ready, proceeding on a basis of trial and error, trial for the taxpayer and error on the part of the Government - and we simply say that if you are a family man and have greater obligations than a single man, the amount of which you will be short, will be all the greater. The greater the magnitude of your obligations, the greater will be your tax; and we are going to stick to every penny you pay in, whether you owe it or not.” As one man to another, 1 say to the Treasurer that that is the essence of dishonesty. If any firm in this country were to say to its customers who overpaid their debt that it intended to hold the excess payment until the customer made further purchases, it would be hounded out of existence. Such an action would create so great a roar in this chamber that honorable members on this side would not be able to make their voices heard, and the Minister for War Organization of Industry (Mr. Dedman) would be at the head of the pack. While one man may overpay his tax,another may be under-assessed, and therefore may have still a little more to pay. The depreciation of the currency is more than a theory. I agree with the honorable member for Melbourne that it has come to pass. That is due to the policy of this Government. Under such conditions, taxpayers who are compelled to leave money on trust in the Treasury as a credit to meet future taxes - a liability which has not been actually incurred - are going to lose. We are living under conditions where certain commodities are rationed, and prices are gradually rising, despite the Herculean efforts of our professorial friends in deciding that carrots may not be sold in Sydney unless they have the tops on them. They attend to little matters of that sort in the greatest detail. In South Australia last year they decided that carrots could not bc sold in bunches at all. New South Wales, which seems to have some preference of treatment, and it may be entitled to it as the Mother State, has an advantage over us in that regard. If the currency is depreciated still further, an absolutely wicked discrimination will be made between one taxpayer and another. The Government has no more right to say to the income taxpayer, “ If we take out of your income more than we are entitled to, we are going to stick to it “, than to say to the land taxpayer, “If you overpay us, the overpayment is not going to be credited to you next year, but is something which we will have in our possession until it suits us to give it back”. There is only one approach to this problem, and that is that a man pays what is due according to the law, no more and no less. He must render unto Caesar, or in this case, unto Chifley, the things which are Chifley’s, and the Treasurer must not require of him more than the law obliges him to pay.
– No more than his liability?
– That is so. If under this system he contributes less than he should, the Government has the right to collect the balance from him, and should collect it. If he contributes more, it should be refunded to him. There is not a spark of justice in this system at all, and I am surprised that such a proposition should come from a Labour government. What types of people will contribute overpayments and become the creditors of the Treasury? Not those in the big private companies to which the honorable member for Melbourne refers, and not the big land-owners, but those earning salaries and wages, who will contribute according to their family obligations and misfortunes. That is the standard by which they will contribute to the Treasury. The single man will be better off, and the married man worse off. The Government cannot let this proposal stand. It cannot possibly go to the country and say, “ We, a Labour government, who claim to speak for the whole of the working classes, are going to inflict this injustice upon you “. The honorable member for Batman (Mr. Brennan), who makes an interjection which I cannot follow, is one of the Government’s supporters, and is bound to vote the way he is told, lt is not a case of what he thinks or says, but of how he votes. We all know that he votes as he is told to do.
– Does not the honorable member recognize the necessity for party discipline?
– Before there can be party discipline, there must be personal discipline. Much has been said about the so-called lag in income tax. I am not surprised that most of the talk about it comes from New South Wales. If the Government’s proposal becomes effective, the natural and only result will be that, in order to make up the alleged lag, the income taxpayer will pay another year’s income tax. Let me put this case to those who advocate making up the lag: The income tax assessments which were issued recently were based on the income received up to the 30th June, 1942; if we are to have the “payasyougo “ system on the pretence of making up the lag, no tax will be. assessed on the income which will be received up to the 30th June this year; a year will be skipped, and we shall move over into 1943-44, with the 1st July next as the starting point. The Government has evidently overlooked that result. From my point df view the argument about the lag is one of the hollowest ever put up in regard to taxation in this chamber. The land tax is based on a five-yearly assessment, but no one will argue that, because the assessment was made two or three or four years ago, he is being wronged. In the case of the income tax, every primary producer knows perfectly well that he is on a five-year averaging system, hut he will not argue that, as a consequence, an injustice is being done to him. So far as all incomes except those of salary and wage-earners are concerned, we cannot get down to a contributory system by which taxpayers will pay on the year during which the income is earned. Many primary producers get their incomes once a year. The grazier’s wool may be sold at any time from about the end of August to the following February, and in most cases he gets his income in one cheque. What chance is there of assessing him on the “ pay-as-you-go “ principle? He does not know until his wool is sold what his income will be. The same thing applies to the stock-raiser in Queensland, the Northern Territory, and Western Australia, where the fattening season comes at different times of the year. During the remaining months the cattle are almost as poor as a Labour government’s policy. In the season they are fat, and have to be brought to market. The income of the squatter is received only in that short period. We cannot possibly lay down a system by which those people can pay as they go. That is true also of miners, timber-getters and many others. In the case of dairy producers, the flow of milk is greater at some times than at others, and the same applies to the production of eggs. The “ pay-as-you-go “ system can be applied to the salaried man and the wage-earner, but by no stretch of the imagination can it be adapted to the man whose income is derived from other sources.
– The honorable member for Gippsland argued contrariwise.
– The honorable member for Gippsland is older than I am, a man of great intelligence and wide experience, and I always pay great attention to what he says, because he is also one of the most honest men that I have met in politics.
– His honesty is not in question, but how does the honorable member explain the difference of opinion?
– It is a difference of viewpoint. The honorable member for Melbourne is completely at variance with his own Government, on this measure, but he belongs to a party in which there is supposed to be no difference of opinion once the Labour Conference has spoken. If it met next month and decided that, in the interests of Labour, incomes of £52 and under must be taxed, the honorable member would be bound to admit that it was right. There would be the oracle, sitting over the old sulphur springs of Delphi. Honorable members opposite would be given their instructions, and dare not depart from them. Allah would have spoken, and they would be bound to say that Allah was great and merciful.
– The honorable member is somewhat mixed in his references.
– Yes, I unfortunately slipped from Greece to Arabia.
– The honorable member might now return to the bill.
– What I said about what would happen if the Labour Conference decided that incomes of £52 and under mustbe taxed was relevant to the bill. Every one of my friends opposite, from city or from country, or old or young, would have to tell his electors that that policy was right, and would also have to vote for it. The Labour party is approaching the inevitable barrier which must stand in its path when it takes office in time of war. Before the war broke out, in a debate in this chamber on a national register, I told the members of the Labour party that under the stress of war they would meet conditions which would prevent them from standing together, that the terms and conditions which they laid down for labour could not be maintained and that the proposed exemptions which they claimed from taxation could not stand. All those things are now coming to pass. This is the first break. The Labour party is making a very important and serious break on this bill. It is recognizing the necessity of taxing lower incomes in order to finance the war. After all, the monetary question is not one of notes and book entries, but of labour and what labour produces. In a system such as we have to-day, in which the value of money is falling and that of commodities is rising, many things that men and women need are becoming scarce, and it stands to reason that there will be difficulties in regard to taxation. In order to get the finance that the Government needs, and to divert into war industries the volume of labour that it needs, it has to affect all labour. In a scheme of total war, it is not possible successfully to carry out the proposition that a large body of workers and income-earners shall be exempt from contributing to the cost of conducting it. That is just as impossible as if honorable members opposite were to say that no man whose income was under £208 a year should be drafted into the Army. The Government has to go much further yet into these questions. The big issue of the hours of work and conditions of labour is another obstacle which it, will have to overcome before very long. We all know that thu conditions which now obtain in certain industries cannot be maintained for ever. No economy such as that under which we live to-day. producing not for human consumption but for human destruction, can stand an improved social system. It is utterly impossible. A social system conferring benefits upon society depends upon production and upon the diversion of human resources towards the services of society in general. To-day, human resources are being diverted, first, to the production of war material, and, secondly, away from the service of society ii: general into war industries and the armed forces. For the Treasurer to come here and say with all the sincerity that he can muster - and I do not doubt his sincerity for a moment - that, notwithstanding the war and all its devastation pud disruption, we shall establish a much bigger and brighter social order, is ridiculous. One or the other has to go; either we must con eni tra le upon the winning of this war, leaving the provision of this new heaven until the war is over, or we i-i’st nut the millennium first and the war second. That is one of the hurdles that Hip Government has to face, and I am nf raid trip t thi” measure will not enable thu’ hurdle to he crossed. It seems that. although the Government horse is a” right on the flat, it is not much use over hurdles, and there are many high hurdles ahead of it in problems such as this. 1 am not oblivious of where this country is heading, or of the fact that we cannot increase wages and improve working conditions whilst, we are waging a war. The disparity between the hours of labour, rates of pay, and working conditions of the men in industry and the men in our fighting forces is too great to bear description, and if my honorable friends opposite believe that when this conflict is over our troops will be silent on that matter they are backing a worse loser than they have ever backed in their lives. Our fighting men are not oblivious of what is going on in the way of industrial disputes and strikes. It was amazing to hear the Prime Minister (Mr. Curtin) this afternoon telling honorable members of the great victory achieved in the Bismarck Sea, and., at the same time, appealing for a cessation of industrial disputes inside this country. Is it any wonder that, dictators have said that the democratic system does not deserve to survive!
– What has all this to do with the bill?
– It has everything to do with the bill. Without incomes there would be no income tax, and if men go on strike they are not pa ruing an income, and therefore are not contributing their share to the national revenue. In my view, every man should have to pay income tax in accordance with his average daily wage, whether he b on strike or not.
– How could a man make income tax contributions for days on which he did not work.
– He should be at work, and therefore he should have to pay whether he. is at work or not. If a member of our fighting forces i- absent without leave, he is not paid for the period of his absence, and, in addition, ho may have to pay a fine, yet we ha ve the spectacle of 37.000 workers going on strike and no action being taken. However. I do not wish to debate that matter; the honorable member for Dalley (Mr. Rosevear) can think it over during the long hours that we shall be sitting to-night. These are the things that are agitating the minds of the public in Australia. Just because there is no great outcry at present, the Government should not delude itself into the belief that everything is quiet under the calm surface. There are strong currents of public opinion, and deep feelings are being engendered. There is a consciousness that things are not going quite as they should he; there is a consciousness that many things that should be done are not being done; and there is a consciousness, not only in regard to this Government, that there is not quite that authority being exercised at the head of affairs that there should be. It is felt that there is not sufficient determination on the part ol those in power to see that every one pays his “ whack “ and does his bit. Until such a state of affairs is achieved, these under-currents will persist, and under certain conditions they may grow. This bill is destined to give expression and ju stifi cation to the deep feelings to which I am referring. They arenot very nice things to talk about, but they exist, and it is about time that honorable members opposite became conscious of that fact.
Mr.Calwell. - How does the honorable member feel about the amendment?
– I shall support the amendment in the hope of getting something done. However, I am not very optimistic, because the honorable member for Henty has expressed his intention of supporting the Government. He, of course, is part and parcel of this system. Whether he intends to proceed in his participation I do not know; that is a matter between him and his conscience.I have noticed thai; the honorable member for Wimmera (Mr. Wilson) has been receiving quite a lot of attention to-night, and I assume that he proposes to make a speech. I know the honorable member’s electorate fairly well, and I assure him that there are some things in this bill which will not appeal to his electors. Possibly the honorable gentleman, like the honorable member for Henty, is gettinga little bit worried. However, important decisions in regard to this measure will be made at the committee stage, and I trust that whatever may be the vote on this amendment, honorable members will do their job when the bill is in committee and look at these matters in the light of what is just between taxpayers, and, furthermore, what is just between taxpayers and the Government. This measure is not founded upon justice; it is founded upon the old barbarian principle that he who is strong takes what he wants and holds it. That is a bad principle, and it should not be introduced into legislation such as this.
Question put -
That the words proposed to be left out (Mr. Fadden’s amendment) stand part of the question.
The House divided. (Mr. Speaker - Hon. W. M. Nairn.)
Question so resolved in the affirmative.
Question put -
That the bill be now read a second time.
The House divided. (Mr. Speaker- Hon. W. M. Nairn.)
Majority . . . . 3
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 agreed to.
Clause 2 postponed until after consideration of clause 24.
Clauses 3 and 4 agreed to.
Clause 5 -
Section seventeen of the Principal Act is amended by omitting the words “ One hundred and fifty-six pounds “ and inserting in their stead the words “ One hundred “and four pounds “.
– Under theprincipal act all persons in receipt of incomes not. exceeding £156 are exempt from income tax. The Government is now proposing that the exemption shall he reduced to £104. This means, in other words, that, under the existing law, persons earning £3 a week or less are exempt from income tax,but that under the amendment now proposed only persons earning £2 a week or less will be exempt. Last night in my second-reading speech I compared the taxation system of Canada with that of Australia. I pointed out that the Canadian system was regarded as being extremely exacting. Yet, according to a report in this morning’s press, the Government of Canada is proposing to abandon 50 per cent. of certain taxes imposed under the Canadian act. But. despite the fact that taxes in Canada are so heavy, the statutory exemption in that country is more liberal than the existing statutory exemption in this country, and a great deal more liberal than the exemption proposed under this measure. In Canada an unmarried man with an income of 660 Canadian dollars is exempt from taxation. I was advised by the Treasury to-day that the Canadian dollar is worth5s. 6d. Australian. The equivalent of 660 Canadian dollars is £181 10s. Australian. Yet the Government is proposing under this measure that the statutory exemption shall be only £104.
-What is the sterling value of the Canadian dollar?
– I am unable to give the honorable member that information. Under the Canadian law a married taxpayer who is not entitled to claim family deductions is granted an exemption of 1,200 dollars which is equivalent to £330 Australian. These are liberal deductions compared with those proposed in this bill. That is a scheme of taxation which is regarded by the people of Canada as extremely onerous. We see in the press to-day that the Government of Canada is abandoning 50 per cent. of the tax, because it apparently fears that it would be unable to collect it. The burden that would be imposed upon the people under the present clause is far too great. Two courses are open to me. One would be to vote against the clause, in which case I should probably be voting alone, and the other course would be to ask that consideration of the clause be postponed, as an indication to die Government that the committee desires that the exemption of £156 per annum be retained. I move -
That the clause be postponed.
My object is to obtain from the committee an indication that it considers that the present exemption of £156 should be retained.
1 11.17]. - It has been made perfectly clear that three-fourths of the amount of tax proposed to be raised under this . measure is to be used for a specific purpose. Therefore, the proposal cannot bc regarded as an ordinary taxation measure. For that reason the Government is unable to accept the amendment.
.- Will the Treasurer (Mr. Chifley) explain how h tax levied in the terms of this clause can be regarded as a tax levied for a specific purpose? As was said at an earlier stage of the debate, a certain amount of camouflage has been indulged in in associating thi? taxation proposal with the National Welfare Fund. I find nothing in the bill before the committee to indicate that the sum to be raised under it is to be hypothecated for any particular purpose.
– It could not be.
– I am fairly well assured that it is not to be hypothecated for a specific purpose. In being asked to agree to an important taxation measure, the committee is entitled to frankness on the part of the Government, and it is not. frank to say that a substantial proportion of the amount to be raised is to be hypothecated for social welfare purposes when it is clear to every body in the Parliament and outside it, who has considered the matter, that the money will not be employed for .thi? purpose immediately, but. that it will, in fact, become part and parcel of Consolidated Revenue, which, in the total, will fall far short of our war-time necessities. Therefore, it will all be used, backed up by loans and by means of the issue of treasury-bills for war purposes. This is an attempt to mislead the taxpayers into believing that those who, a few months ago, were not to be taxed for the purposes of war, are now to be taxed in order to provide funds that will be used in the sweet by and bye to provide glorified social services.
– This is merely an income tax assessment bill. The rates bill, which imposes the tax, cannot come into operation until the National Welfare Fund becomes law. Therefore, these measures must be considered together.
– That is a most interesting point; but will the AttorneyGeneral (Dr. Evatt) state whether the funds to be collected under the present proposal will be expended in the year in which they are collected for the purpose of social services? If they will not be so expended, will they be placed in a trust fund and hypothecated for social services, or will they merely become .part and parcel of Consolidated Revenue, and be used for war purposes?
– I presume that the honorable member has read the National Welfare Fund Bill, and the resolution of the Committee of Ways and Means?
– That does not explain the matter to me.
– Nor to me.
– Although the honorable member for Rourke (Mr. Blackburn) is a lawyer, he is not satisfied. I see no reason why the Government should be allowed to get away with this camouflage by pretending that it is now invading, for the first time, the field of lower incomes, and that it is doing so exclusively for the purpose of .providing a national welfare scheme. If that be so, it amounts to a denial of the principle enunciated recently by the Prime Minister (Mr. Curtin). When it was suggested that social services should be established on a contributory basis, the Prime Minister dissociated himself from that principle and declared that social welfare services should be established upon the basis of tax contributions according to capacity to pay. 1 am not prepared to support the honorable member for Bourke in his objective, for reasons that I have previously stated in this chamber, nor do I condone the suggestion that the tax to beraised under this bill is being imposed exclusively for the purposes of social welfare.
.- I shall not support the amendment, nor do I intend to repeat what has been said by the honorable member for Indi (Mr. McEwen), but I ask that the honorable member for Bourke (Mr. Blackburn) should receive a frank reply to the question asked by him. He desires that the committee should indicate to the Government that it considers that the present exemption of £156 a year should be retained, but he has been told that that cannot be done, because three-fourths of the additional tax to be raised through the machinery of this bill will be used for the purposes of the National “Welfare Fund. My object in rising is to protest against that answer. Sufficient has been said already to show that there is no connexion between this bill and the National Welfare Fund. For the present, there is not even the slightest bookkeeping connexion, beyond an entry regarding a certain sum of money which will be reimbursed after the war. The plain fact is that the money to be raised under this bill is required for Consolidated Revenue, and will be used for war purposes. After the war the Government hopes, by long-term borrowing, to raise the money required to reimburse the National Welfare Fund. Whether the minimum income for assessment should be £104 or £156 per annum is a matter of Government policy, and on that point I am prepared to support the Government; but the honorable member for Bourke and the public are entitled to a frank statement as to the object of the measure and the purpose for which the money to be raised is to be used.
– I find it difficult to understand what the Treasurer (Mr. Chifley) means by his words; but I can see through this manoeuvre. Obviously the Government has met resistance from its own supporters in proposing to reduce the income tax exemption from £156 to £104, and it has therefore resorted to the thimble-and-pea trick. It says that the money to be raised under the bill is not to be used for the purposes of war, but for the purposes of the National Welfare Fund. Obviously, the money will not be used for the National Welfare Fund for a substantial period. Actually, the money to be raised will be devoted to general revenue purposes. According to the Attorney-General (Dr. Evatt), we should read this bill in conjunction with the National Welfare Fund Bill ; but the only measures which should be read together are the Income Tax Assessment Bill and the Income Tax Bill. The statement that there is to be a specific allocation of a definite portion of the total sum to be raised is an extraordinary one.
– I cannot quite understand the difficulty in which the honorable member for Indi (Mr. McEwen) finds himself. What the Treasurer (Mr. Chifley) has said is correct. This bill does not impose any tax at all. It merely defines the subject-matter of the tax. Until the Income Tax Bill founded on the resolution of the Committee of Ways and Means is passed into law, no tax will be imposed on the subject at all. The, bill founded upon the resolution of the Committee of Ways and Means will not impose the tax until after a date to be fixed by proclamation, not being earlier than the date upon which the act to establish a National Welfare Fund comes into operation. The National Welfare Fund Bill is now at the second-reading stage, and the debate has been adjourned. That measure is most explicit as to the allocation of moneys which are to be collected. Under clause 4 of the National Welfare Fund Bill a trust account, which is to be known as the National Welfare Fund, is to be established. That is a trust account for the purposes of the Audit Act. The most important provisions of the bill are clauses 5 and 6. Clause 5 states -
There shall be paid out of the Consolidated Revenue Fund, which is hereby appropriated accordingly, for thepurposes of the National Welfare Fund, in each financial year (commencing with the financial year commencing on the first day of July, One thousand nine hundred and forty-three) the sum of Thirty million pounds, or a sum equal to one-quarter of the amount received in that financial year as income tax from persons other than companies, whichever is the less.
Clause 6 reads -
Moneys standing to the credit of the National Welfare Fund shall be applied in making such payments as are directed by any law of the Commonwealth to be made, in relation to health services, unemployment or sickness benefits, family allowances, or other welfare or social services.
Of course, the Parliament could, if it wished, destroy the scheme for which the National Welfare Fund Bill will provide, by repudiating the plan. But that is unthinkable. It is correct to say, as the Treasurer said, that under the law to be passed as part of the present taxation plan there is to be an appropriation for the purposes of the National Welfare Fund of the sum of money mentioned in this bill.
– If the sum of money mentioned in the bill be appropriated it will be used directly for war purposes.
– Of course, the money collected will be included in the Consolidated Revenue Fund. That is the law in connexion with all revenues. But it is here proposed that Parliament shall solemnly undertake to devote a part of the fund to purposes of social welfare.
– But it is not mandatory.
– It is mandatory on Parliament in the sense that it is part of a programme to which the Government and Parliament will be pledged.
– Is it intended to use any of this money for war purposes?
– It is intended to use moneysstanding to the credit of the National Welfare Fund for the specific purposes set forth in clause 6 of the National Welfare Fund Bill. This is not a “phoney” provision; it is a genuine plan. The Treasurer has stated the intention of the ‘Government. The National Welfare Fund Bill, which is shortly to be passed, must become law before any tax can be imposed. That is an express condition of the Income Tax Act. The Govern ment cannot do more than that. This amounts, in effect, to a solemn obligation upon Parliament to devote the money for the purposes specified. Therefore, the Treasurer was right in stating that the money was to be appropriated for special purposes.
Mr.Spooner. - Why did the Treasurer tell the House, ashe did in this second- reading speech, that the money for the National Welfare Fund would be borrowed on a long term basis after the war ? If that is what will be done, why say that a fund is being established now?
– I never mentioned longterm borrowing. It is sheer distortion to say that I did.
– As the Treasurer has stated, it is sheer distortion. His statement related only to investing the balances of the fund. But the fund will be recouped.
– It is obvious from what the AttorneyGeneral (Dr. Evatt) has said that the amount of £30,000,000 is to be put into a trust fund for welfare purposes, and is then to be taken out again and used for war purposes. One wonders, then, what is the purpose of creating the trust fund. Is the money to be used now, or within any reasonable time in the future, for welfare purposes, apart from the very small amount mentioned in the Treasurer’s statement? The fact is that it is merely a device to cover the action of the Government in taxing the lower incomes. We on this side of the committee knew that it would be necessary to tax those incomes in order to prevent the evilof increasing prices. Now, when the Government has at last to swallow its words, it is trying to persuade the peoplethat the money which is to be taken in the form of a tax from those on low incomes is not really to be used for war purposes, but for social welfare. I wish to make it plain that I for one am not deceived.
– The honorable member for Robertson (Mr. Spooner) gravely distorted what I said. These are the words which I used in my second-reading speech on this bill -
In the earlier stages the fund will build up some credit balances which willbe used later when the welfare scheme reaches full operation.
These balances will not be allowed to remain idle, but will he invested and provide a useful sourceof temporary finance for war purposes, which will be replaced bypermanent borrowings when the moneys are required later for welfare purposes.
Interest from the investment of any moneys standing to the credit of the National Welfare Fund will be credited to the fund.
I never used tne words “ long term “, and I am surprised that the honorable member for Robertson should say that I did.
.- I was at first amazed at the honorable member for Indi (Mr. McEwen), but upon reflection I can understand his behaviour because, since he was himself associated with what proved to be a “ phoney “ piece of social legislation, he can believe that others are also prepared to associate themselves with measures of that kind. I refer, of course, to the National Health and Pensions Insurance Act which was passed during the term of office of the Government of which he was a member.
– Has the National Health and Pensions Insurance Act anything to do with this bill?
The CHAIRMAN (Mr. Prowse).I shall observe what the honorable member says.
– The purpose of this bill is to provide revenue with which to. finance a scheme of social welfare that will apply to every one, and there is to be no “means” test. That is in marked contrast to the scheme introduced by a previous government of which the honorahle member for Indi was a member. That scheme was so “phoney” that even the Government responsible for. it had not the courage to put it into operation.
– I rise to a point of order. I should like to know whether the honorable member is entitled to discuss a measure which has been already passed by this House.
– The honorable member for Warringah is well aware that it is the practice to allow a passing reference to matters not directly associated with the subject under discussion, but I shall see that the reference is not expanded.
– I was about to point out that this measure does at least provide for the imposition of taxation on an equitable basis, whereas, in a previous measure-
– Order !
– I have not named the previous measure. That other measure imposed taxes on a flat-rate basis, irrespective of earnings. As a matter of fact, it taxed incomes as low as £52 a year, and excluded from taxation the large class of rentiers and professional men. In this measure all are required to pay according to their ability. We may confidently expect that the Government will give effect to its social welfare programme, whereas it can be well understood that the scheme with which the honorable member for Indi was associated-
– I will not permit a discussion of matters which are not before the committee. The question is that clause 5 be postponed, and I cannot allow a general debate upon that.
– I advance as a reason, why the clause should not be postponed the fact that it bears upon its face evidence of the sincerity of the Government, whereas a previous scheme was so “ phoney “ that ‘ even the Government which sponsored it, and placed it on the statute-book, did not put i.t into effect.
– The honorable member has deliberately disregarded my ruling.
– On a point of order, Mr. Chairman, this measure-
The OHAIRMAN. - I have decided that the honorable member will say no more about the measure. He must be seated.
– I appeal to you to permit me to point out why this clause should net be postponed.
– The honorable member continues to be facetious, and I cannot permit it. He must resume his seat.
.- While the Attorney-General (Dr. Evatt) was speaking I asked him to explain why the Treasurer (Mr. Chifley) .intended to raise £30,000,000 after the war by longterm borrowing, when there existed machinery to transfer immediately an amount of £30,000,000 to a trust fund.
– I rise to a point of order. The honorable member for Robertsou (Mr. Spooner) is now talking of machinery for the creation of a trust fund. When you ordered me to sit down I was going, to advance arguments in connexion with a trust fund. You should take similar action against the honorable member for Robertson.
– The honorable member for Robertson is answering a reference made to him by the Treasurer.
– I was trying to find out whether there were to be two amounts of £30,000,000 each or only one, or, as many of us think, no such amount at all. I wish to learn from the Treasurer whether the amount of £30,000,000 referred to in his financial statement is going to be the foundation of a national welfare fund, or whether £30,000,000 borrowed after the war is to be used for that purpose.
– £30,000,000 in every year.
– I asked for an explanation, but the Attorney-General did not properly answer me, because the Treasurer interrupted and said that I was grossly distorting his words. A few minutes ago, the Treasurer repeated his statement that I had grossly distorted what he had said. He denied that he had ever said that £30,000,000 was to he raised by long-term borrowing. The Treasurer read from a paper in his hand for the purpose of showing that he had never said that £30,000,000 was to he raised by long-term borrowing. I have here a copy of the printed financial statement made by the Treasurer to this House. I could hardly believe that the Treasurer would read a statement and miss the words that I said he had used when introducing the bill. This is what the Treasurer said in his financial statement -
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 be replaced by long-term borrowings when the moneys are required later for welfare purposes.
Those are the very words he used, and if he has any doubt on the point let him refer to Hansard. This is what is going to happen: Under another measure the sum of £30,000,000 will be placed to the credit of a trust fund by means of a book entry. That money will be used for war purposes, and, at the end of the war, which may be some considerable time hence, £60,000,000, £90,000,000, or even £120,000,000 may have accumulated in the fund. That is to say there may be a book entry to that effect.
– The Chair cannot permit too great an extension of that argument, although it recognizes that the remarks of the Treasurer have incited honorable members to reply to them.
– I bow to your ruling Mr. Chairman, and shall not refer to that matter further. I merely repeat that this committee is entitled to a frank and full statement that the £30,000,000 has nothing to do with the National Welfare Fund, but it will be used to finance the war, as, indeed, it ought to be.
Sitting suspended from 11.47 p.m. to 12.17 a.m. (Friday).
Friday, 5 March 1943
– If the remarks of the honorable member for Ballarat (Mr. Pollard) were pertinent to the clause under consideration, the honorable member must be under the impression that a sum of money will be made available to a trust fund in order to finance a national welfare scheme. Even if a sum were made available for that purpose, according to figures supplied by the Treasurer (Mr. Chifley) in his financial statement it would not exceed £27,500,000. Therefore, I say that it will be a camouflaged trust fund in that it will consist of a sum of money which may, or may not, amount fro £30,000,000 a year. Whatever the amount may be, obviously it will be collected for purposes other than those mentioned by the Treasurer. There will be an accumulation of money in a trust fund for use some time in the future. As I said in my second-reading speech, it will be a “ shadow “ account, a “phoney “ account; it will not be what has been claimed for it because the figures mentioned by the Treasurer do not support his claim. The Treasurer’s statement in this connexion is comparable with another statement made by him which caused the honorable member for Robertson (Mr. Spooner) to correct the Minister.
.The bona fides of the proposed fund have been challenged by the honorable member for Wentworth (Mr. Harrison) the honorable member for Robertson (Mr. Spooner) and others. Would the honorable member for Robertson say that a savings bank which had received deposits amounting to, say, £250,000,000 should retain that money in its vaults and not allow it to be invested in reproductive undertakings? The proper course is for the money to be re-invested where it will prove reproductive, and I cannot conceive of a better investment at the present time than a war loan. I deprecate the remarks of honorable members opposite who have challenged the sincerity of the Government and have used such derogatory terms as “ camouflaged “ and “ phoney.” The sincerity of the Government is shown by its action in introducing legislation to -provide for a national welfare scheme for the post-war period. The Treasurer (Mr. Chifley) said that the fund would be replaced by long-term borrowing.
– The Treasurer referred to I ho balances in the fund. He said that instead of being allowed to remain idle the money would be invested.
– That is so. The balances will be invested in ways which will assist in ihe prosecution of the war. The Government is pledged to see that persons entitled to benefits will receive them. The Treasurer did not say that the Government was committed to any particular line of action. Instead of long-term borrowing, other means, such as the adoption of a system of national credit, may be used. Whilst there may be some objection to the use of national credit for purposes of destruction during war-time. I cannot see any valid objection to its use for constructive purposes in times of peace. Since the war began the productivity of many industries has increased. Our achievements during that period show what can be accomplished and are a guarantee that those who are entitled to benefits will get them. Under this bill, the nation is pledged to provide £30,000,000 annually, or one-quarter of the total amount of income tax derived from individuals each year for the National Welfare scheme. The amount in the fund will vary from time to time. The amount to the credit of the fund may at times be considerable, so that in the event of unemployment becoming at all general there will be a fund from which persons out of work can be assisted. I commend the Government for making provision for such a contingency.
Mr. BLACKBURN (Bourke) [12.25 a.m. J. - I can understand the remark of the Attorney-General (Dr. Evatt) that, when dealing with an income tax assessment bill, we must have regard only to the measure before the committee, but I cannot understand his suggestion that we are to assume that another bill which has not yet been passed will be enacted without amendment, and that the bill before the committee must be considered in the light of that assumption. There is uo guarantee that the National Welfare Fund Bill, will ever receive legislative sanction, either in the form in which it was introduced, or in some other form. Even if that legislation be passed in its present form, it does not set aside the whole of the receipts from income taxation for national welfare purposes, but only an amount which may not exceed one-fourth of the total receipts from that source. No provision is made for health or welfare services. The National Welfare Fund Bill provides that money standing to the credit of the fund shall be applied to such purposes as are stipulated by any law of the Commonwealth. That means that the tax may be used to finance either such payments as old-age pensions or some scheme which is not yet in existence. But. we must first pass the Income Tax Assessment Bill aud the Income Tax Bill, and after them the bill to set up a National Welfare Fund. Later other measures authorizing money to be taken out of the fund for welfare purposes may be passed.
– The Income Tax Bill will not be passed until the National Welfare Fund Bill becomes law.
– It does not say so. My point is. that there is no guarantee that the bill to establish a National Welfare Fund will be passed in the form in which it has been introduced, or, indeed, passed at all ; and, therefore, I cannot see how this committee can be bound to consider the bill before it in the light of another bill which may never be passed or, if passed, may emerge in a form different from the form in which it was introduced. I do not believe that the proposed welfare fund has any meaning a*- all except as a means of reconciling Labour members in this Parliament and their supporters outside to a reduction of the statutory exemption for income tax purposes. I believe that the Government has seized on suggestions made by the Joint Committee on Social Security which, however, did not contemplate that theburden associated with the establishment of a national welfare fund would fall on small taxpayers.
– The committee recommended a graduated tax.
– That was for unemployment only. I was a member of that committee, and I know that it recommended that every worker should be taxed on a graduated scale in order to receive certain benefits should he become unemployed.
– How did the committee propose to pay for those benefits?
– Out of a graduated tax which would fall on every one, including wage-earners. The tax would provide a single man with £2 10s. a week, whilst a man with a wife and children might receive more than the basic wage. The scheme was based on a system applied by Great Britain in connexion with evacuees from Hong Kong. I have never supported a proposal that health benefits, maternity allowances, family endowment and the like should be paid for from a tax that will fall upon every body as this tax will, but my main point is that there is no guarantiee that the NationalWelfare Fund Bill, which provides for the establishment of a National Welfare Fund, will ever be passed. I believethat the Government has not prepared even the embryo of a national welfare scheme and that the only reason for the introduction of the National Welfare Fund Bill is the hope that Labour members and Labour electors will be reconciled to the reduction of the statutory exemption to £104.
.The honorable member for Bourke (Mr. Blackburn) has said almost everything that could be said on this matter. He has expressed in very clear terms the thoughts of honorable members on this side of the chamber. He has said, as one very experienced in the Labour party, that he believes that the device of the National
Welfare Fund has been produced by the Government for the purpose of reconciling Labour voters in Labour electorates to the abandonment of Labour’s recently pronounced policy - in fact, the policy upon which Labour seized office - that there should be no tax on the lower groups of income. It is now admitted that, although the National Welfare Fund will be established in time of war and although certain appropriations from ‘Consolidated Revenue will be credited to the fund, it will be a game of “ put and take “. The money will be put. in and taken out immediately. It is clearly admitted by the Treasurer (Mr. Chifley) and the Attorney-General (Dr. Evatt) that money in the National Welfare Fund not required for national welfare purposes will be used for other purposes.
– The money will be invested, keeping the fund always intact.
– Obviously, the money in the fund will be used, as it should be, to carry on the nation’s war effort. There is no intention to introduce social welfare schemes of such dimensions as will absorb the £30,000,000 per annum which will be diverted to the National Welfare Fund. Therefore, it now emerges, after much effort by the Opposition to elucidate the mystery, that the additional income tax to be raised under these proposals will go,not direct to the furthering of the war effort, but into the National Welfare Fund by one door and out of the fund by another door into Consolidated Revenue for the prosecution of the war. No one will be deceived by that device; no one will be persuaded that the national welfare scheme is justification for the Commissioner of Taxation invading the field of lower incomes. This discussion has focussed my attention on the curious methods of finance of this Government. The honorable member for Robertson (Mr. Spooner) reminded us that the Treasurer himself said that balances in the National Welfare Fund should not be allowed to remain idle, but should be used for war purposes, and that they would be replaced later when the need arose by long-term borrowings. The Government has not said what money it proposes to expend on national welfare, but it has announced some of the ‘benefits that it intends to confer on the people. An additional maternity allowance, funeral benefits to pensioners, additional repatriation benefits, allowances to dependent wives of invalid pensioners, and furlough to temporary servants of the Crown are some of them. They will be paid for, I assume, from some of the money which the Government proposes to raise by means of these proposals. I must express my profound disagreement with the proposal that expenditure for purposes of that character shall be met at a later date from loan moneys. Surely; we have come to a sorry pass if that is the intention of the Government. I have never heard of such an extraordinary proposal.
– There is no such proposal.
– And the honorable member knows it !
– I do not. I shall be glad to be corrected if I am wrong. In the words of the Treasurer himself, “ at a later date the National Welfare Fund shall be replenished with borrowed money “.
– That will be because money will have been borrowed from the fund.
– The Government intends at a. time when taxation is at its peak to raise additional money to pay into a fund for national welfare purposes. It is admitted that the money in that fund will be in excess of requirements, and so it is proposed to divert money from that fund to the war effort and later the fund will be replenished by means of borrowed money. That is the most curious system of book-keeping of which I have ever heard.
– There is nothing about replenishing the National WelfareFund with borrowed money.
– The honorable gentleman’s own words clearly state that intention.
– That is not the meaning of the words to which the honorable member refers. If the honorable member reads them carefully he will see that the money is to be used temporarily for war purposes and that, if money is required to meet the needs of the National Welfare Fund, money will be borrowed.
– That is what I am saying.
– But there is nothing about long-term borrowing.
– Money will be paid into the National Welfare Fund and immediately taken out again and expended for war purposes. Later, when money is needed in the National Welfare Fund, money will be borrowed for the fund.
– The income tax collections will be diverted from Consolidated Revenue to the National Welfare Fund, will then be taken out of that fund and used for war purposes, and will be replaced later by borrowed money.
– Yes. This innovation in government finance is the most mysterious and curious that I can imagine. It is well described as an attempt to do something which the people cannot be expected to be capable of understanding. The Government would have done itself more justice had it been perfectly frank, as it was when it abandoned its traditional stand against the conscription of Australian men for military service outside Australia.
The CHAIRMAN (Mr. Prowse).Order! The range of this discussion is quite wide enough without the honorable member for Indi going farther afield.
– I agree. This is just another admission by the Government that it has been on the wrong path. Instead of trying to reach its goal by this devious means, it should have confessed quite openly that the Opposition was right and that the Government had embraced the Opposition’s policy to tax those in the lower groups of income.
– The committee will not be deceived by the bogus bookkeeping method that the Government is employing.
– Order ! I do not regard the word “ bogus “ as parliamentary.
– I substitute the words “unique and extraordinary”.
– The word “ bogus “ is perfectly good English.
– It is too good.
– The Treasurer (Mr. Chifley) and the Attorney-General (Dr. Evatt) have stressed the fact that this proposed tax which brings into the income tax field people with incomes as low as £104 per annum will not operate until the National Welfare Act has been proclaimed. The resolution on which the Income Tax Bill will he based reads -
Now, the committee has no guide to show when that fund will be established or whether the revenue to be collected under this measure will be paid into that fund. The Government has said that it intends to divert £30,000,000 of the £40,000,000 of additional income tax to be collected under these proposals to a fund from which national welfare benefits will be provided. I agree entirely with the honorable member for Bourke (Mr. Blackburn) that the committee has no guarantee that the fund will be established or that, if it be established, the moneys placed in it will be used for national welfare purposes. There is no use in mincing matters. The unvarnished fact is that the Government realizes that it must have more money with which to wage war. Its realization that it must tax those on lower incomes in order to raise that money has come seventeen months too late. The Government still lacks the courage to say direct to the people that circumstances force it to enlarge the field of income tax by taxing lower incomes. It is seeking to save its face now by saying, “ We would not have taxed you for war purposes or ordinary governmental expenditure. We are taxing you now only in order that you may have social security some time in the far-distant future.”
– Is it proposed to bring invalid and old-.age pensions within the scheme which is to be financed by the National Welfare Fund ?
– The Treasurer (Mr. Chifley), in his financial statement on the 11th February, when dealing with the Government’s proposed national welfare scheme, stated -
Some steps have already been taken by the Government in this direction. For instance, the rates of invalid and old-age pensions have been increased and a scheme of widows’ pensions introduced. National welfare, however, covers a much wider field than this.
That statement associates invalid and old-age pensions with the proposed national welfare scheme. At least, it leaves the matter quite open, and, in fact, is somewhat contradictory in relation to the point I raise. The Government proposes to pay to this fund out of Consolidated Revenue an annual sum of £30,000,000, or a sum equal to one-fourth of the total collections each year from income tax on individuals, whichever is the lower. This does not give any real indication of the amount to be paid annually to this fund. I doubt whether the amount will reach the sum of £30,000,000. Therefore, should the Government intend ultimately to bring invalid and old-age pensions and similar benefits within the scheme, it is simply using the scheme as an excuse for imposing a tax on incomes in the lower ranges.
– The benefits to be provided from the fund will be a matter for Parliament to decide.
– It would be wiser to decide, first, the ‘benefits to be provided, and then to establish the fund to finance those benefits.
– We cannot obtain money out of a fund which does not exist.
– Am I correct in saying that this is a nebulous fund, full of ghost-like money, the substance of which has already been expended on the war?
– That is what it appears to be. The Treasurer, in his financial statement, also declared -
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 be replaced by long-term borrowings when the moneys are required later for welfare purposes.
– That seems to me to be perfectly clear.
– To my mind, this scheme is no more than a confidence trick.
– The fund to which it is proposed to pay the sum of £30,000,000 annually has been described in various terms. One honorable member has suggested that the method of bookkeeping involved is sheer legerdemain. In fact, it amounts to crediting an amount in the ledger with one hand, and removing that credit with the other, and pretending it is in the ledger, until the Government finds that it must borrow from the public the amount which it has been juggling in its books. The Government has not stated frankly the purposes for which the fund is to be used. It has merely suggested that the money will be used to finance some scheme, the details of which have not yet been conceived.As the honorable member for Bourke (Mr. Blackburn) pointed out, the Government suggests that the money will be used to provide funeral, maternity and similar benefits. The money may be used to pay for the burial of Australians, but the Government is not prepared to tell the people that, in fact, the revenue to be raised by taxing incomes in the lower range will be used to preserve the lives of Australians by defending this country against the Japanese. Why cannot the Government be frank about the matter? Surely, it is not a sin to ask those on lower incomes to pay a tax as their contribution to the defence of this country. However, simply because the Government some time ago gave an undertaking that it would not tax incomes in the lower ranges, it now says that it does not intend touse this money for defence purposes. It prefers to be a slave to its old shibboleths and inhibitions. It will not admit that it intends to use the revenue to be raised by taxing incomes in the lower ranges to meet war expenditure, but will pay such money to this fund for a purpose which has not yet been conceived. The whole proposal is illusory, and, like the castles in The Tempest, will disappear in the morning sun. The Government should say frankly the purpose for which this money is to be used. I t will win the confidence of the public if it be honest instead of trying to bluff the people that lower incomes are being taxed for a purpose for which none of the money so derived will, in fact, be used.
.- I protest against this proposal, because it constitutes a radical departure from the ordinary methods of public finance. It is proposed to appropriate portion of the revenue from income tax before our full budgetary requirements are known. The Treasurer (Mr. Chifley) stated that under this scheme not only this Parliament, hut successive parliaments, also, will be committed to an annual expenditure of £30,000,000 in order to finance the national welfare scheme. This Parliament has no right to commit its successors in that way. Such a procedure will establish a dangerous precedent, and, undoubtedly, will embarrass, not only this, but also future governments. I am not satisfied with the explanation given by the Treasurer.
Question put -
That the clause be postponed (Mr. Blackburn’s amendment).
The committee divided.
Majority . . . . 42
Question so resolved in the negative.
Clause agreed to.
Clause 6 (Exemptions)
– I have not been able to discover in the bill any provision relating to the taxation of soldiers’ deferred pay. I appreciate that the object of the amendment made in section 23 of the principal not by this clause is to remove the anomalies that, at present exist between the Australian Imperial Force and the Citizen Military Forces, but when a member of the Australian Imperial Force, on returning’ from service overseas, has been back in Australia for three months, a part nf his deferred pay becomes taxable. I submit that no matter when he draws it, or how long the period between his return and his discharge, it should be exempt from taxation, because it is a part of the pay and allowances to which he is entitled. He is penalized the moment he embarks for service overseas by the deduction being made from his pay, as a compulsory loan to the Government. He not only receives no interest on it, but when his pay is made up upon his discharge, or three months after his return, the deferred portion is subject to taxation.
– He does get interest on his deferred pay. The rate varies in the different services.
– I understood from the Treasurer’s speech on the bill that 5 per cent, of deferred pay was subject, to taxation. Members of the Citizen Military Forces who embark for service in any of the Australian territories are allowed to draw the whole of their pay. They are not taxed while they are on service, and no portion of their pay is deferred, but men who enlist in the Australian Imperial Force and go overseas, not only have 3s. 6d. a day deducted as deferred pay, but they are taxed on it, instead of being allowed to receive the whole of their ordinary pay and allowances. There is, therefore, a difference in the treatment of the two branches of our Army. I hope the Treasurer will give this anomaly serious consideration.
– The clause so amends the principal act as to remove the anomalies that resulted from the transfer of soldiers from the Citizen Mili tary Forces to the Australian Imperial Force. The point raised by the honorable member for Parkes (Sir Charles Marr) has not previously been brought under my notice as Treasurer. The provisions relating to it have been in force for many years, but I shall have them re-examined, particularly in the light of what, the honorable member has said.
– Why does the rate of interest on deferred pay vary?
– I understand that in the Army the rate is 3 per cent., but in some of the other services there are other and complicated provisions, resulting in higher rates of interest, which, I understand, ha ve applied for a long time, and were not increased even when ordinary interest rates went up to 5 per cent. I am speaking only from recollection, but I undertake to examine the matter again.
Clause agreed to.
Clauses 7 to 9 agreed to.
Clause 10 (Deduction for members of defence force and merchant seamen).
– The proposed new section allows a special deduction to members of the defence forces, including members of the mercantile marine serving at sea, and it contains the following definition : - “Mariner” means any person employed asa master, officer, seaman, apprentice, or in any other sea-going capacity whatever on board a sea-going ship by the owner or charterer thereof, or employed as a pilot on seagoingships.
I move -
That after the word “ pilot “, thu words “ or radio operator “ be inserted.
It has been ascertained, since the provision was originally drafted, that radio operators and assistant radio operators are employed not by the owner or the charterer of the ship but by wireless companies. They, therefore, do not get the benefit conferred, and the purpose of the amendment is to make them eligible for it.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 11 (Definitions)
.The clause adds a proviso to section 103 of the principal act, to meet the case of a company which is unable, owing to war conditions, to distribute the whole of its distributable income in a given period. A company may conceivably have assets in Great Britain which have been subjected to bombing, or in New Guinea, and may be unable to determine the whole of its distributable income in the stipulated time. I gather that that is why this proviso has been inserted, and that the reference to the “whole of its distributable income “ has a direct connexion with the words in the principal section, but there may be some doubt whether the clause covers the case of a company only part of whose distributable income is affected. The Treasurer (Mr. Chifley) would give a useful piece of guidance to his officers if he made it clear that an extension of time could also be given in that instance.
– The clause is intended to give the Commissioner power to extend the period in which the distribution may be made, on account of circumstances associated with the war. I do not profess to give a legal interpretation of the clause, but 1 assure the honorable member that its intention is to cover a part, as well as the whole, of any distribution that may be made.
Clause agreed to.
Clauses 12 and 13 agreed to.
Clause 14 -
Section one hundred and sixty of the Principal Act is amended -
by inserting after paragraph (a) of sub-section (2.) the following paragraph: - “ (aa) in respect of a daughter of the taxpayer where the taxpayer is a widower or widow and the daughter is wholly engaged in keeping house for the taxpayer and is wholly maintained by the taxpayer an amount -
where the taxable income of the taxpayer does not exceed Two hundred pounds - of One hundred pounds ;
where the taxable income of the taxpayer exceeds Two hundred pounds but does not exceed Three hundred pounds - of One hundred pounds less One pound for every Two pounds by which the income exceeds Two hundred pounds;
where the taxable income of the taxpayer exceeds Three hundred pounds but does not exceed Five hundred pounds - of Fifty pounds leas One pound for every
Four pounds by which the income exceeds Three hundred pounds.
For the purpose of this paragraph the daughter shall be deemed to be wholly maintained by the taxpayer if her separate net income derived from all sources in the year of income does not exceed Fifty pounds and the taxpayer contributes to the maintenance of the daughter and not otherwise:
Provided that if the daughter is wholly engaged in keeping house for the taxpayer during part only of the year of income and is wholly maintained by the taxpayer during thatpart of the year, the amount shallbe such part of what the amount otherwise would be as, in the opinion of the Commissioner, is reasonable in the circumstances; “
– I move -
That, in proposed new paragraph (aa), the word “daughter”, wherever occurring, be left out with a view to insert in lieu thereof the words “ female relative “.
When income tax extends to the lower income groups concessional deductions which previously did not matter very much, become of considerable importance. The effect of my amendment would be to give to a taxpayer a rebate in respect of any female relative who kept house for him, and to whose maintenance he contributed. As the clause stands such a deduction is allowable only in respect of a daughter, whose separate income must not exceed £50.
– The Government is unable to accept the honorable member’s amendment. If it were carried, grave abuses might occur. The term “ female relative “ is a vague one, and might be taken to include fourth, fifth or sixth cousins. The concession is based largely upon sentiment. It was thought that upon the death of his wife, a taxpayer would probably like to have his daughter to keep house for him, and that a concessional deduction in respect of that daughter should be granted, up to an income limit of £500 for the father. Personally I am not keen on such a concession at all, because of the possibility of abuse. For instance, whereas on an income of £250 a year the concession is worth only £17 18s., on an income of £2,000 it is worth more than £44, and a taxpayer in comfortable circumstances who normally could afford to support his daughter at home in idleness if necessary - he might have servants in the house as well - could claim this substantial concession. That would not be in accordance with the spirit of the proposal.
– I point out that the term “ female relative “ is used in section 160 of the principal act. I cannot see that any reasonable distinction can be drawn between a female relative who is looking after the children of a widow or a widower, and a female relative who is keeping house for a widow or a widower. Usually any other female relative would be older than a daughter, and in such a case it would seem more reasonable that a concession should be allowed. However, I can see that the Treasurer (Mr. Chifley) has made up his mind on this matter. I ask that this point be given future consideration because I disagree with the Treasurer’s views. The higher the taxation rebates, and the lower the exemption limit, the more important become the concessional deductions. We should go beyond the ordinary rule of thumb methods in regard to concessional deductions in respect of female relatives who bring up the children of, or keep house for, a widow or widower.
.- I move -
This measure embodies a new principle in arriving at concessional deductions. Clause 14 provides that in respect of a daughter there shall be a concessional deduction -
One pound for every Two pounds by which the income exceedsTwo hundred pounds;
The same provision that exists in section 160 of the principal act in respect of a spouse of a taxpayer, or, where the taxpayer is a widower or a widow, a female relative having care of any of the taxpayer’s children under the age of sixteen years, should apply in respect of a daughter. The principal act provides that the maximum amount in respect of which a rebate of tax may be allowed shall be £100, and that the maximum concessional rebate shall not exceed £45. My amendment seeks to apply those provisions to a daughter who takes the place of a female relative. I cannot see why there should be any differentiation between a daughter and a female relative. This is the only concessional deduction in which the new principle applies.
– As I have stated, the Government’s opinion is that if this concession were granted, many taxpayers in comfortable circumstances would receive the concession in respect of daughters whom they could well afford to keep. In respect of a daughter who keeps house for her father after her mother’s death, there is some sentimental appeal that does not attach to any other female relative, and thatis why the rebate is given, but there should be some limit of income. I am not keen on the amendment, but I shall not oppose it.
Amendment agreed to.
a.m.]. - I move -
That the following paragraph be added to paragraph (c) : - “ (bb) in the case of any unmarried taxpayer whose taxable income in the year of income does not exceed Two hundred and eight pounds, amounts not exceeding Fifty pounds in the aggregate paid by the taxpayer in the year of income for the maintenance of any relative who is resident and who is partly or (except in the case of a mother) wholly maintained by the taxpayer;”.
Section 160 provides for the allowance of tax rebates in respect of a mother if she is wholly maintained by the taxpayer. These rebates are of great importance when taxes are as heavy as they are in these days, and for that reason I consider that, a rebate should be allowable of amounts paid by taxpayers not exceeding £50 for the maintenance of any relative who is partly maintained by the taxpayer, and any relative other than a mother who is wholly maintained by him. I make the exception in the case of the mother because totally dependent mothers are provided for already. I am aware that this proposal will extend ‘ the cope of the exemptions, but it seems to me that unmarried taxpayers who are making contributions towards the maintenance of relatives other than mothers, fathers, sisters and brothers should be entitled to a rebate. For example, two single brothers dr sisters between them may be maintaining a mother, and under the existing arrangements they would not be entitled to a rebate. My proposal is that rebates shall be . allowable for single men and women receiving not more than £208 per annum who are paying for the maintenance of such relatives. In short, I am asking for a rebate in respect of any relative who is partly dependent upon the taxpayer or any relative other than a mother who is wholly dependent upon him. I make the exception in the case of a totally dependent mother because she is covered otherwise.
– I support the amendment of the honorable member for Rourke and ask the Treasurer to give it his favorable consideration. Many taxpayers will come within the category mentioned by the honorable member, and some of them are undoubtedly entitled to the most sympathetic consideration possible. Taxpayers who have relatives dependent upon thom and in respect of whom they incur a direct charge should be given this relief.
Mr. CHIFLEY (Macquarie- Treasurer) [1.33 a.m. J. - The extension of rebates such as those now proposed will be open to the very gravest abuse unless every possible care be taken to draft the law to give exact effect to what is intended. I realize that the honorable member for Bourke (Mr. Blackburn) has submitted his case in the honest belief that it is entitled to favorable consideration. At the moment, however, I am unable t6 follow the implications of the proposal. It is certain, that a substantial amount of revenue is involved. I cannot accept the amendment in its present form; but I give the honorable member an undertaking that I shall have the whole proposal closely examined. This is not a promise that will be forgotten. I should like the honorable gentleman, and also the honorable member for Richmond (Mr. Anthony), to discuss the subject with the officers of the Taxation Department. Iri the circumstances, I suggest that the honorable member for Bourke should not press his proposal.
– On the understanding given by the Treasurer (Mr. Chifley), I shall not press my amendment.
Amendment - by leave - withdrawn.
Mr. CHIFLEY (Macquarie - Treasurer) 1 1.35 a.m.]. - I move -
That the following- words be added at the end of the clause: - “; and (e) by adding at the end thereof the following sub-section: - (4.) Where a taxpayer would, but for this sub-section, be entitled to a rebate based on amounts specified in any two or more of paragraphs (a), (aa), (6) and (6o) of subsection (2.) of” this section in respect of the same person, the taxpayer shall be entitled to a rebate in respect of that person based on one only of those amounts, being an amount which is not less than any other of those amounts.’ “.
Under section 160 (2) a of the principal act, provision is made for the allowance of a tax rebate in respect of a dependent female relative of a widowed person having the care of that person’s children under the age of sixteen years. Under paragraph b of the sub-section provision is also made for an allowance of a tax rebate in respect of the taxpayer’s children under the age of sixteen. The bill extends the concessional allowances to include an allowance for a tax rebate in respect of a dependent daughter keeping house for her widowed father or mother. In a case where the widowed person had dependent children under the age of sixteen years and his daughter had the care of his children and kept house for him, it would be possible for a double allowance to be given in respect of the daughter, first, under section 160 (2) a as a female relative having the care of his children, and, secondly, under the proposed paragraph aa as a daughter wholly engaged in keeping house for him. As a matter of fact, if the daughter were herself under the age of sixteen years, it would be possible for a treble allowance to be made under paragraph a, proposed paragraph aa, and paragraph b of the sub-section. This amendment is designed to prevent a double or treble allowance of a tax rebate in respect of the same person. The allowance will be based on the highest amount applicable under the paragraphs which apply to the particular case.
Amendment agreed to.
Clause further verbally amended, and, as amended, agreed to.
Clauses 15 to 17 agreed to.
Clause18 postponed until after consideration of clause 24.
Section two hundred and twenty-one c of the principal act is amended - (a)by omitting from sub-section (1.) tihe word “ Three “ and inserting in its stead the word “Two”;
by inserting after sub-section (1.) the following sub-section : - “ (1a.) For the purposes of this section, where an employee receives from an employer salary or wages in respect of a period of time in excess of one week, an amount of salary or wages, ascertained by dividing the salary or wages by the number of complete weeks in the period, shall be deemed to have been received in respect of each complete week in that period.”; and
by inserting in sub-section (2.), after the word “ for “, the words “ , or deemed tohave been received in respect of,”.
– I move -
That paragraph (b) be left out.
Section 221c of the principal act enacts that where an employee is entitled to receive from an employer in respect of any week or part thereof salary or wages in excess of £3, the employer shall, at the time of making payment of the salary or wages, make deductions therefrom at such rates as are prescribed. I take it that this is the only opportunity that will be given to the committee to consider the schedule of instalments that has been presented, and I desire now to bring to the notice of honorable members the anomalies that it contains. Under section 221c of the principal act, power is given to the Commissioner to prescribe regulations as to schedules, and, by virtue of that; schedule B comes before the committee as part of the Treasurer’s proposals. Members of the committee will remember that in my second-reading speech I referred to anomalies and injustices in these proposals. The Treasurer said that, in order to remove the anomalies, he intended to alter the grades or steps by submitting a new schedule providing for tax instalments to be paid in steps of 2s. 6d. ; but he is sadly mistaken if he considers that the adoption of the new scale of deductions would remove the anomalies. He cited the case of a person in receipt of a wage of £41s. 3d. a week, who would pay instalments in accordance with the lower halfcrown step.
– He would pay on £4.
– His income is between £4 and £4 2s. 6d., and the same anomaly would apply to a man in receipt of £41s. 4d. a week. I cannot go precisely into the matter at this juncture, because I am not armed with the new scale of instalments, but I am certain that anomalies will occur to the same degree as was pointed out by me when the matter was previously under discussion in this chamber. Does the Treasurer mean that there will be an instalment step between the salaries of £4 and £4 2s. 6d. a week, and that a taxpayer falling midway in that step will pay only the instalment appropriate to income falling within the preceding step of from £3 17s. 6d. to £4 a week? If he does, presumably the taxpayer earning £4 3s. 9d. a week will pay the instalment appropriate to income falling between £4 and £4 2s. 6d. a week. The line of demarcation is placed in the middle of each instalment step, but there will still be the same margin of half-a-crown between instalments. In that case, the same anomalies as those cited by me will occur, because a person earning £41s. 4d. a week will be left with a smaller net income in the year than a person earning 1d. a. week less. The Treasurer may not intend that. He may intend that a taxpayer who earns from £4 to £4 2s. 6d. a week shall pay the instalment applicable to the immediately preceding range of income. In that case, a person in receipt of £4 2s. 6d. a week would pay the instalment appropriate to an income of from £3 17s. 6d. to £4 a week. A person in receipt of £4 2s. 7d. a week would then pay an instalment appropriate to an income of from £4 to £4 2s. 6d. a week.
Whichever way we look at the matter, an anomaly definitely arises. Certainly the anomaly will not be present to the same degree as in the table in scheduleB, hut the matter cannot be wisely adjusted by changing the steps by the method which the Treasurer promised would be the basis of the new scale. I desire the committee to appreciate the system adopted in ascertaining the amount of the instalments. First, it must be understood that there is no relation, as far as assessable income is concerned, between the instalment and the assessed tax. For instance, instalments are collected in the current year, say, from the 1st July, 1942, onwards, but the instalments are collected on income earned in the previous year ended on the 30th June, 1942. Therefore the instalments which have to be paid, and which date from the 1st July, 1942, onwards, relate to the taxable income earned for the year ended the 30th June, 1942. A good deal of guesswork has to be indulged in. I submit that no tinkering at the instalment scale will make the proposal scientific, because there is no correlation of the taxable income and the earning capacity in the year in which the tax has to be paid. Take the case of a man without dependants whose income is £150 a year or £2 17s.8d. a week. His tax amounts to £10 5s. per annum, but under the scale now before us his instalments amount to £7 8s. per annum and have to be paid from his current wages. Obviously, when his assessment falls due at the end of the coming year, he will owe £2 7s. The average taxpayer should not be deceived into believing that his instalments will cover his assessed liability to the Crown.
In order to determine the instalments, a grade scheme has been worked out which allows for certain concessional deductions, recognizing that the wages and earnings of the previous year are not all liable to tax, because of the deductions, which include superannuation payments, life assurance premiums, medical expenses, union fees, friendly society levies, and so on. In order to determine the amount of the instalment, the statisticians take their experience of the past and strike an average; but obviously there is no such thing as an average condition. Unless every taxpayer happens to be in an average position he would at least either owe something to the Government or the Government would owe something to him. Under the scheme before us, if after paying his instalments, he owed something to the Government, he must pay that amount when he receives his assessment. If, on the other hand, his instalments have been greater than the tax ascertained in accordance with the provisions of the act, the Government does not refund to him the over-payment, but gives to him a certificate of credit. The point I desire to emphasize is that the Treasurer has not removed the anomalies to the degree necessary for a scientific adjustment by altering the steps to 2s. 6d. as against 10s.
– We have improved the scale.
– Yes; but not to the satisfaction of the Opposition. It is necessary to refund amounts that have been overpaid and to collect amounts due to the Government as a result of under-payment. The only way to remove the anomaly is to retain the refund scheme. The insertion of the proposed new sub-section would produce a most unfortunate effect. An employee receiving a wage of £10 a week would pay instalments of £211s. a week under the scale which has been circulated. These deductions would amount in twelve months to £132 12s. On the other hand, an employee who receives a salary of £520 a year, or £10 a week, and is paid monthly, would receive £43 6s.8d.a month. Under the Government’s proposal he would be deemed to have received £10 16s.8d. in respect of each of the four weeks in the month. The deduction from each of these amounts would be £31s., so that his contribution for the year would be £1468s. I suggest that the Treasurer withdraw the clause for further consideration.
– I support the submission of the Leader of the Opposition (Mr. Fadden), and I suggest that the provision be re-drawn so as to remove the anomaly indicated by the figures which have been cited.
– I regret that, because of the amount of work involved in working out the scale of deductions, it has not been possible to place before the committee the new scale indicating the half-crown gradations. In all cases the bottom range will be the figure from which the deductions are taken. I understand that my amendment, which has been circulated among honorable members, covers the point raised by the Leader of the Opposition (Mr. Fadden) and the honorable member for Lilley (Mr. Jolly).
– Until we have the new scale before us it is very hard to say whether or not it covers the point.
– The taxation officers are of the opinion that it does. The adoption of the clause would bring about the result that wages paid for a period of one month would be subjected to heavier instalment deductions than those made from wages paid weekly at the same rate. An employee who is paid a wage of £10 weekly would suffer a deduction of £211s. a week under the scale which has been circulated to honorable members. He would thus accumulate, in. twelve months, deductions of 52 times £211s., or £132 12s. An employee receiving £520 per annum, that is, £10 a week, and who is paid monthly would receive £43 6s. 8d. a month. Under the clause he would be deemed to have received £10 16s. 8d. in respect of each of the four weeks in the month.. The deduction made from each of those amounts would be £31s. He would thus accumulate, in twelve months, deductions of 48 times £31s., or £1468s. Because the days in each of the twelve months vary in number, it is not possible to amend the clause so that the same deductions will be taken from a given rate of wages, whether the wages be paid weekly, monthly or at longer intervals. The amendment now proposed will, however, reduce the anomalies to a minimum, and will result in a slightly smaller deduction being taken from wages paid monthly than from wages at the same rate, paid weekly. I ask the committee to accept the Government’s amendment, and I am prepared to have it examined by any one whom the Leader of the Opposition nominates, with a view to discovering and removing possible anomalies. Then, if a further amendment is required, it can be made when the bill is before the Senate. I was at first quite confident that the amendment covered the objection raised by the Leader of the Opposition, but his doubt on the point shakes my own confidence. Therefore, I give the undertaking which I have stated.
– I appreciate what the Treasurer has said. I withdraw my amendment, and am prepared to accept that of the Treasurer.
Amendment - by leave - withdrawn.
Amendment (by Mr. Chifley) agreed to-
That proposed new sub-section (1a)be left out with a view to insert in lieu thereof the following new sub-section : - “(1a.) For the purposes of this section, where an employee receives from an employer salary or wages in respect of a period of time in excess of one week, the employee shall be deemed tobe entitled to receive in respect of each week or part of a week in that period an a mount of salary or wages ascertained by dividing the salary or wages bythe number of days in the period and multiplying the resultant amount -
in the case of each week - by seven; and
in the case of a part of a week - by the number of days in the part of a week.”.
Clause, as amended, agreed to.
Clause 20 agreed to.
Clause 21 (Application of tax stamps).
– I urge the committee to negative the clause which provides for the method of payment of tax, and for the making of adjustments in respect of instalment payments. This practice has been followed since the 1st January, 1941. It, was obvious from the beginning that it was not possible to devise a scale of instalments that would exactly meet the taxpayer’s liability when the instalments related to a year of tax other than the one in which the instalments were being paid. The point was covered by section 221h of the principal act, which provided that if, by the end of the year, a taxpayer had paid more than the amount of his tax, the amount by which he had overpaid was to be refunded to him. But under the present bill there is no provision for a refund. That is totally unacceptable to the Opposition, and I am sure that it will be unacceptable to the taxpayers. Refunds are properly due to those taxpayers whose concessional deductions amount to more than the average for their income group, and there is no reason why the Government, should hold this money, and merely issue a credit certificate for it. The Treasurer said that if the concessional deductions fixed for the purpose of arriving at the amount of the instalments were in fact exceeded in the case of any taxpayer, that person could go to the Commissioner of Taxation and have his instalments expeditiously reduced. That, however, does not. affect the principle involved, nor is it a practicable method of adjustment, because the assessable income does not derive from the year in which the tax is paid. For instance, a taxpayer might have no medical expenses in 1942, the year of assessable income, but in the following year his medical expenses might greatly exceed the average for his income group. The fact that the instalment is reduced does not alleviate his position because the instalment has relation to the previous year’s income. The incurring of exceptionally heavy medical expenses in one year has no relation to a man’s taxable income in a previous year. If his instalments are reduced on account of heavy concessional expenses in excess of those taken into account when ascertaining his instalment rate, it may be found at the end of the year that the taxpayer will have to pay the difference to the Treasury. As the taxable liability is in respect of one year, and his reduced instalment is in respect of another year, he may have to make up the difference, in which event there is no alleviation of the position at all. It is a specious argument to say that it is a matter of adjustment. For these reasons the Opposition is adamant that the refund system must remain. It will strenuously oppose the clause which takes away the right to a refund.
– I support the remarks of the Leader of the Opposition (Mr. Fadden). Under section 221h 2 of the principal act there is provision forrefunds to persons who have paid taxes in excess of their assessment, but as from the 1st April next the position will be entirely different should the Government’s proposals be accepted. It is true that where the excess payment is less than £1 the amount will be refunded, as will also excess payments made up to the 31st March next; but after that I doubt whether the taxpayer has any right to a refund which is enforceable at law. Should a man who had been in employment pay an amounta excess of his assessment he may ask for a refund, but the Commissioner may say that it is reasonable to assume that he will continue in his employment, and therefore retain the excess payment. In that event what right has the taxpayer to recover the excess payment in view of the discretion vested in the Commissioner by proposed sub-section 2 c of section 221h? It is true that he will be given a certificate of credit, but he can do nothing with it.
– He can frame it.
– I cannot see that the taxpayer has any remedy in such circumstances, and I cannot understand a Labour government introducing such a provision. The existing provision for repayment of excess payments should be retained. Under sub-section 4 of the proposed new section 221ha a person shall not sell or otherwise dispose of, or purchase or otherwise acquire, a certificate of credit without theconsent of the Commissioner. I do not think that there would be many buyers of such certificates. It should be made clear that a taxpayer may recover excess payments if he so wishes.
– The attempt in this bill to take from a taxpayer his right to concessional deductions is a negation of provisions in previous income tax acts, under which a taxpayer is entitled to deductions in respect of expenses incurred on account of the illness of himself or any member of his family, or in making provision for their future in the form of insurance. The concessional deduction in respect of insurance premiums is limited to £100, whilst the maximum deduction for medical expenses has been fixed at £50. Many taxpayers are so unfortunate that they are justified in claiming the maximum deduction for medical expenses. The individual who is most in need of this concession is the man who ha3 had to incur heavy medical expenses because of illness in his family; yet he will be robbed under this bill. In addition to the heavy demand on his purse to meet medical and other expenses, he is to be deprived of the right to the concessional deductions authorized by other legislation. The Treasurer may say that he is building up credit for himself in the future. That may be so, but there is no provision in the bill to meet the case of a taxpayer who ceases to be liable for income tax. A person who has earned a taxable income in one year may not have a taxable income in subsequent years, but the bill does not provide for a refund to him of any excess payment made in previous years. All that he is entitled to is a worthless certificate.
– Provision should be made to meet the case of a girl who drops out of industry.
– That is so. A girl may leave work in a munitions factory and return to her home, and never again become a direct taxpayer, yet the bill does not permit of the refund to her of any excess tax that she has paid. A certificate of credit which is not negotiable is for all practical purposes valueless. If the Treasurer is sincere when he says that the purpose of the alteration is to build up a fund on which a taxpayer may draw in succeeding years to pay his income tax, he should agree to the insertion of a provision authorizing refunds to persons who clearly will have no liability to the Commissioner in succeeding years. If, for the purpose of argument, we admit that it is wise for a taxpayer to build up a reserve fund, that does not mean that we agree to a taxpayer being denied the right to a refund when he no longer is liable to pay any income tax at all. The objectionable nature of the provision is emphasized when we reflect that the person most in need of concessional deductions is the man who has the misfortune to have illness in his family. A major operation, a serious illness, or death may cost a great deal more than £50, yet that is the maximum concessional deduction allowed. The clause ought to be redrafted.
.-I agree with what has been said by the Leader of the Opposition (Mr. Fadden). Even the Treasurer (Mr. Chifley) admits that the instalment plan will create certain anomalies, in that some taxpayers will be called upon to pay instalments which represent payments in excess of the amount which rightly should be paid. Objection has been taken to the “ payasyougo “ plan, but this bill goes farther, for it authorizes the payment of taxes in advance. We should’ ensure that a taxpayer who has paid an excess amount should be entitled to a refund. What will be the position of a taxpayer whose status changes during the year? Will the instalments of a single man be immediately adjusted if he marries?
– What about a man who marries a widow with seven children? That has happened. Those are important questions, particularly in view of the Government’s intention to retain overpayments of tax. We have had no definite statement from the Ministry as to what it. intends to do with the accumulated over-payments. Will a taxpayer whose accumulations of over-payments exceed probable liability for future tax receive a refund ? The retention of overpayments will penalize the salary and wage earners as against people who pay their tax in a lump sum a long time after the year in which they earn their income. I protest against the whole procedure as unjust.
– I also protest against this method of tax collection. It is most inequitable, because it discriminates between those whose tax is paid by instalments and those who pay their tax in a lump sum when they receive their assessments. Each year the Commissioner of Taxation will issue certificates of credit to those taxpayers who make over payments, hut the accumulated over payment will be retained. Of what use will a certificate of credit be to a taxpayer? He cannot do anything with it, for clause 22 (4) provides -
Except in accordance with the provisions of this division or with tile consent of the Commissioner, a person shall not sell or otherwise dispose of, or purchase or otherwise acquire, a certificate of credit.
A certificate of credit will be of about as much use to a taxpayer as a tombstone is to a dead man. There is no equity in a system which discriminates between two classes of taxpayer, and the Treasurer should revert to the old system, under which cash refunds of over payments are made to taxpayers. I know the argument of the Treasurer that the retention of over payments will ensure that the Government shall not lose money when taxpayers who have been earning big incomes suddenly find themselves in reduced circumstances. The quality of mercy would not be strained even if the Treasurer did lose a few pounds in that way. That would be preferable to the inequities and injustices of this obnoxious proposal.
– I join with my colleagues in protesting against this most extraordinary departure from the established principles of income tax. I regret that the Treasurer has not seen fit to explain why the Ministry has decided to apply a pernicious policy which is unequalled anywhere in the world. Under it all that a taxpayer will receive in return for over payments of tax will he a piece of paper certifying (hat lie has over payments to his credit. Heaven only knows when he will be reimbursed. It is regrettable that the discussion of this most important clause should be going on at 2.40 a.m. when many honorable members whose influence with the Treasurer might have softened his heart have taken refuge in sleep. In his second-reading speech, the honorable member for Henty (Mr. Coles) said that he hoped that this clause would be deleted but the honorable member is absent, probably in bed, and the Treasurer should agree to postpone the clause until the honorable member can have the opportunity to express himself about this indefensible departure from established income tax practice. I do not seem to have made any impression on the Treasurer.
– I shall have to do my own best to persuade the Treasurer.
– The honorable member is playing a straight bat, but he is not making any runs.
– If we do not score any runs to-night, we shall do so sooner or later. Make no mistake about that. J. should hate to be a Labour member trying to justify to the electors the fact that they have been deprived of their right to recover over payments of tax, especially as the new policy is directed only against those earning wages and salaries.
– The Government of which the honorable gentleman was a member instituted the tax instalment system.
– There is no argument about the virtues of paying taxes by instalments. Our protest is against theintention to deny the hitherto unassailable right of taxpayers to a refund of over payments. This proposal not only discriminates against those who, beingwage or salary earners, pay their income tax by instalments, but also against those who have to meet heavy medical expenses,, in respect of which they have not obtained an adjustment of their contributions.. We were first given that information last night when the Prime Minister (Mr.. Curtin) pointed out that a taxpayer who proved to the Commissioner that during the year he had incurred medical expenses could secure an adjustment of his weekly or monthly contributions. The matter, however, requires further explanation, because the taxpayer who obtains a reduction of .his contributions for the reason that he has incurred medical expenses in the current financial year does not discharge in full the tax assessed on his income in the previous year, and, therefore, at the end of the current financial year he will not have paid in full the tax assessed on his income for the previous year. A piece of paper- will be given to the taxpayer who overpays his tax; but I have yet to learn that any taxpayer can give to the Government a piece of paper if he has underpaid his tax in respect of the previous year. Therefore, at the end of the current financial year, a taxpayer who obtains a reduction of his contributions because he incurs medical expenses will be served with a demand to make good the amount by which he has failed to pay the full tax on his income in the previous year. I ask the Treasurer to clear up that point. Reverting to the main principle which the Opposition challenges under this clause, let us take the case of taxpayer who, because of thrift, incurs expenditure in excess of the average concessional allowance. A man with an income of £1,000 a year is allowed a concessional expenditure of £39, and, in respect of premiums on life assurance policies, a deduction up to £100. Many nien avail themselves fully of that privilege, not only because they are thrifty, but also because they wish to safeguard their families as far as possible by taking out the maximum life assurance which they can afford. For the same reason, most men with an income of £200 a year will expend in premiums on life assurance policies an amount greater than the concessional allowance of £5 prescribed in respect of such income. The taxpayer will inevitably be involved in an overpayment of tax if he is a wage-earner, but a taxpayer who derives his income from a business will not. That distinction cannot be justified. The taxpayer who is a wage-earner will inevitably overpay his tax, and his overpayment will be retained by the Government, which will give to him a certificate of credit. The overpayment is to be refunded after the expiration of some period which is not specified. Apart from these inequities, such a method violates an important principle. It should not be tolerated by this Parliament. The Opposition protests against it. I urge the Government not to pursue that method which cannot be justified by any precedent, or by any necessity confronting the Government, because the total amount of money involved is not substantial. Further, it cannot be justified on the ground that it will facilitate bookkeeping because, as the Prime Minister has pointed out, scores of thousands of taxpayers may, at any time during the year, notify the Commissioner that they have incurred medical expenses and thereby obtain an adjustment of their contributions.
The CHAIRMAN (Mr. Prowse).The honorable member’s time has expired.
– I support the amendment which has been moved by the Leader of the Opposition (Mr. Fadden). It is most regrettable that honorable members opposite are not taking any interest whatever in this measure. Evidently, they are prepared to vote in support of the Government without expressing their views. In fact, they do not dare to express their views, because of the implications in the bill, and, because, personally, they do not agree with the bill as a whole. Even the honorable member for Henty (Mr. Coles) .has gone so far as to say that he does not like this procedure. He hinted to the Government that no harm would be done if it abandoned this provision. The honorable member does not usually declare himself so strongly, and as he has gone so far on this occasion the Government should take some notice of him. I draw attention to the complete misunderstanding which exists, even at this stage, concerning the effect of this clause. In the light of explanations that have been made in the meantime, I believe that even the Prime Minister (Mr. Curtin), judging by his statement last night, does not. understand the implications of the issue of certificates of credit. In reply to an interjection by me, he admitted that the certificates might last for ten years. In the case of a taxpayer whose income remained at approximately the same figure, over-payments would not be refunded, and could not be applied towards the reduction of payments in any year. I asked the Prime Minister what would happen if the taxpayer’s income remained constant for ten years, and he replied that (hat would have to be determined by some future Parliament. That means that new legislation would have to be parsed in order to determine what would happen with respect to the certificates of credit in such a case as I have just mentioned. However, the honorable member for Henty is of a different opinion. He said that the certificates of credit would wash out each year, that is to say, the balance carried forward from 1943 would be absorbed by the tax liability in the following year when a new certificate would be issued. Is that the case, or will the certificates go on snowballing? Will the taxpayer obtain a new certificate each successive year, or will certificates accumulate? Or, will the certificate of credit become submerged in the tax liability in the year following that in which it was issued ? Will a certificate be issued at the beginning of each year, and another be discharged at the end of the year? The whole proposal is ambiguous. It represents a new kind of Government borrowing. The certificates of credit represent a new form of Government currency, but are not negotiable. The Government now proposes to use the Commissioner of Taxation for entirely new purposes. He is to become a credit commissar. He will issue the certificates of credit, and where the amount of any excess payment is greater than the amount of tax which, in the opinion of the Commissioner will be payable in the first financial year commencing after the date upon which stamps are produced, he will determine the amount by which it .is greater and issue a credit certificate accordingly to the taxpayer. The credit certificate will not be negotiable, although it will be held by the taxpayer, and be one of his assets. The Commissioner will control it. This is an entirely new use for the Commissioner of Taxation. He is now to become something more than the tax collector. In the course of a few years under this system he will become the controller of a new form of credit which he will issue and control on behalf of the Government. The value of these certificates may run into many millions of pounds within a few years; and they are to be issued to the unfortunates in the community. This afternoon, I illustrated that there may be three classes of taxpayers. The first is the taxpayer whose concessional deductions are greater than the average. He will be permitted to apply to the Commissioner for an adjustment of his instalments in order to ensure that he will not be making over-payments. Scores of thousands of taxpayers will make such applications. The second class is the unfortunate taxpayer who will not make such an application because he will not know and will not be told that he can do so. Many taxpayers, however, will incur heavy medical expenditure and pay an amount in life assurance premiums equal to the total deduction allowed in respect of such payments. However, many may not know that they are entitled to apply for an adjustment of their instalments. Consequently they may carry on until the end of the year paying larger instalments, and then will be entitled to credit certificates. Another taxpayer next door or in the next town, who is informed that he can have his instalments adjusted, will by the end of the year have paid approximately his correct amount of tax. That is an intolerable position. The proposal is the most extraordinarily cumbersome that has ever emanated from the mind of bureaucracy. I cannot imagine, how the Government has fallen for it. I am sure that the Treasurer did not originate it, and is not personally responsible for it, although he is answerable for it in the sense that he has approved of it and allowed it to be introduced into this legislation. It is bureaucracy par excellence, and cannot last. The extraordinary feature of the whole business is that the bill which, reeking with trouble, injustice and anomalies, will operate with great unfairness against the wage-earners of the community, is passing through the committee without the slightest interest being taken in it by Government supporters, most of whom are absent. One of them said to me, “ I come into the chamber for five minutes, and go out for half an hour because I cannot stay and listen to it “. But if the amendment goes to a vote, they will come into the chamber and vote against it. They cannot stay and listen to the debate, because they are appalled at the injustice of the bill, but they will come into the chamber and vote for it. The situation is the most amazing that has ever confronted this country.
Mv. Chifley. - They have only to come in once to hear the same speeches three or four times.
– It is a good thing if they do. It would be a wonderful advantage to the country if the same speeches were to be made 30 or 40 times, because the more often they are repeated the more likely they are to be effective. However, we can do no more than place the facts on record, not only in this Parliament but also in every home in the Commonwealth. This piece of unsound, legislation is full of extraordinary anomalies, and its effect upon the individual will be placed on record everywhere.
– Does the honorable member know of any instance where repayment has been refused?
– Evidently the honorable member has not read the bill or heard the debate. The bill provides in plain words that if a man has overpaid his tax liability by instalments, instead of getting a tax refund at the end of the year he will be given a credit certificate.
– In how many cases will that happen?
– In the aggregate the amount retained by the Government will reach millions of pounds. The taxpayers who pay by instalments now are entitled to refunds of huge sums, running into millions of pounds at the end of each year. Not long ago the Taxation Department in Sydney was nearly besieged by people sitting on the stairs waiting for refunds, because a rumour had emanated from some department that the Government intended to stop the refund of overpayments in 1943. The first unofficial announcements intimated that the Government intended to close down on refunds in March of this year, with the result that thousands of people clogged the staircases of the department for fear that they might fail to get their refunds in this year. It was almost like a run on the Government .Savings Bank. There are hundreds of thousands of persons who have overpaid, and soon the credit certificates will amount to millions of pounds. All these provisions are being passed by the committee while honorable members sleep on the benches, or stay outside because they cannot bear to come in and listen to the debate. However, whether they stay here and listen or not, the full story will be told to the people, not according to the bare interpretation of the bill as we have it to-day, but in the light of the facts, and illustrated by specific instances proving that the bill is unnecessarily involved, and: unfair. The Government is pushing it through because it is afraid to say that it agrees to accept the principle of compulsory borrowing. This is compulsory borrowing of the worst kind.
– Then what is the honorable member complaining of?
– If we introduced compulsory borrowing, we should call it compulsory borrowing, and issue a proper certificate, or’ a proper form of credit recognition to the taxpayer. But this is borrowing by stealth, taking advantage of the man who does not know, or whose instalments are overpaid because of circumstances which he cannot control. The Government is sneaking the system through in the hope that the taxpayer may not recognize it as compulsory borrowing. “We can do no more than place the position before the committee. I do not mind if we do repeat our arguments. That will be all to the good, because it will place on record the fact that we have stated the position often and clearly.
– As I said last night, I shall vote against the cla.use. After a further examination of it, I find that it is not quite so complicated as it appeared at first sight, but none of my objections to it has been weakened. The position, as I understand it, will be this: The person who receives an assessment will attend at the office of the Commissioner of Taxation and produce his tax stamps. If no tax is payable, and his tax stamps are in excess of the amount for which he is liable, the amount will be refunded to him. That will be the case where he has been employed for part only of the year, so that at the end of the year no tax is assessable against him. He will attend the Commissioner’s office in March, 1944, to square up for 1943, and will produce his tax stamps. The ‘Commissioner .will then say to him : “ Taking into account your concessional rebates and so forth, you have overpaid; you are now working, and I assume that you are going to continue working; I calculate what I think will be your tax, I will give you a credit for so much, and give you the difference in cash “. He then receives a certificate of credit, which has the same value to him as tax stamps. Next year he attends with that certificate of credit and his tax stamps. There is no difference between the certificate and his tax stamp book, because the Commissioner in 1945 will treat them both as being tax stamps. The Commissioner will look at his tax stamp book and his certificate of credit and say: “Taking those two together, you have overpaid your tax. I will give you a new certificate of credit for 1945 “. The taxpayer, as I understand the position, does not keep on gathering certificates of credit, but simply gets a new one each year. In that way the Income Tax Department will hold an everincreasi 112 sum from him. He cannot cash the certificate of credit without the consent of the Commissioner, and in any case I do not see how he can possibly cash it, because only in his hands is it worth anything.
– It’ is like a pawn ticket.
– Exactly. Only in the hands of the employee to whom it i3 issued has it any value. The clause provides that the Commissioner of Taxation may consent to his selling it, but I cannot see bow he can sell it to anybody, because it is worth nothing to anybody but himself, seeing that he is the only person who can present it, or get credit for it. The honorable member for Robertson (M!r. Spooner) mentioned the ease of a man in constant employment for ten years, and therefore always taxable. Such a man will always have money withheld from him. That is to say, he will always be losing the advantage of his concessional rebates. He, or his estate, will get them in the long run. If he dies in 1955, the tax for that year will have to be paid and then his executor will present his certificates of credit. Only then will they come good, but apparently during his lifetime they will not be worth anything to him. That seems to be a very unfair way of depriving a man of the advantage of his concessional rebates.
– And the Government will probably take them in settlement of probate duties.
– I do not think it could do so. The only value of the certificate of credit is to the man or his representative in payment of income tax. It is not an asset of his estate, or in his own hands, for any other purpose than that of paying income tax due by him. This is unfair. He should have the right to cash his certificate of credit immediately he receives it. Apparently there is in the Commissioner a discretionary power to say, “ No more stamp deductions need be made from you “, but there is no duty on the Commissioner to do anything at all. The right of a man to receive his rebate of taxation as he has in the past should be clear. It should not be in anybody’s discretion to withhold it from him. The honorable member for Indi (Mr. McEwen) said that the Prime Minister had stated that if a man had borne heavy burdens in ths way of medical expenses, which would be allowable deductions, he would have the right to have his weekly deductions of salary reduced. I cannot see in the bill any clause conferring such a right. I suppose the clause referred to is 20, which amends section 221d of the principal act. In that case he may obtain a reduction of his weekly instalments if the Commissioner is satisfied that a continuance of the ordinary rate would impose serious hardship; but that does not relate to the case that was cited last night. To summarize, I consider that the taxpayer who has made an overpayment because he is entitled to a concessional rehate, has a right to recover the excess payment from the Taxation Department. That is a just system and it should not be abandoned.
.The hour is late, but I make no apology for joining in the chorus of protest against the Government in respect of this innovation in taxation practice, and, I also express the strongest criticism of the Government for carrying on a debate of such importance under these conditions. I believe that there will be grave dissatisfaction in the community generally when it is known that an important new principle of this kind was debated in Parliament at this hour. What chance have honorable members of applying a clear mind to this problem? Where are the independent members of this chamber upon whose vote the Government relies for its majority, and what ure their views upon this proposal? The only independent member worth a damn is the honorable member for Bourke (Mr. Blackburn) who, despite his independence, is a better Labour man than most of his colleagues who will cast a silent, vote on thi? iniquitous proposal. The Government has a very special responsibility in regard to measures which it brings forward in these times of national stress. The tone of .private and community life, and the attitude of mind of the civilians to the problems with which they are confronted, are to some degree conditioned by the attitude of the Government to the problems of government. I say with conviction that there is developing in this community a certain cynicism and scepticism regarding name of these matters, influenced largely by the approach which the Government has made to the problems of administration. By way of illustration I refer to the practice of the Government in imposing a 10 per cent, penalty upon taxpayers who are unable to meet their commitments on the due date. Yet the Government, when purchasing goods or services or acquiring property, is so dilatory in making payment that there is a constant chorus of complaints. By means of this iniquitous proposal the Government proposes deliberately to take and retain money to which it has no moral or legal title. If any civilian organization attempted to retain, in this manner, money belonging to its customers, it would be brought to law promptly and compelled to make restitution. Is it any wonder that a cynical spirit is developing in the community when people see a Government so devoid of principle that it is prepared to behave in this way? What effect will this practice have upon the Government’s ambitious in regard to the raising nf loans? What will be the view of the thrifty man who for years has been paying more than the average amount by way of insurance premiums, and to whom every encouragement should be given, when he suddenly finds that the privilege which lie has enjoyed in the past has been taken from him? What will his attitude be towards the Government when it says, “ We want you to lend to your fullest, capacity”? Will he feel happy about the treatment he is receiving? Obviously not. The proposal will not stand honest examination by the elected representatives of the people. It is, in effect, a form of compulsory borrowing. A strong case can be made out for the introduction of a system of compulsory borrowing - in fact many of us entertain grave doubt as to whether the Government will be able to carry out its loan programme by present methods - but if such a system is to be introduced, it should be universal and applied fairly throughout the community on the basis of capacity to pay. All individuals in receipt of the same income and bearing the same measure of responsibility, should be called upon to make the same contribution; but that will not be so under this measure. Obviously it is an expedient to grab money wherever it can be grabbed, irrespective of the personal and domestic circumstances of the individual. We on this side of the chamber cannot condemn this proposal too strongly. A “ certificate of credit “ is the name of the document that will be given to a taxpayer who has paid more than his just dues, but I say that it is more likely to be a certificate of discredit that will label the Administration which introduced it into this Parliament. Despite its protests, the Opposition may be compelled by weight of numbers to see this measure placed upon our statute-book, but I am convinced that it will have the very short life that its inherent weakness justly merits. I sincerely hope that every man with an independent mind and some adherence to principle will give his support to the volume of protest which we have commenced in this chamber, and which we shall continue to voice to the hI,st of our capacity.
Mr. FRANCIS (Moreton) T3.25 a.m.]. - I rise to support the motion of the Leader of the Opposition (Mr. Fadden) to delete clause 21 of this bill, which, in my opinion, is an objectionable feature. I am amazed at the silence of honorable members opposite. Of all those who claim to be Labour men in this Parliament, only the honorable member for Bourke (Mr. Blackburn), an Independent, is prepared to express his views upon this proposal in the interests of the workers of this country. It stands to his credit that he has done so. Again and again the Treasurer (Mr. Chifley) has been asked to point to any similar provision in legislation applying in any part of the British Empire, but apparently he is unable to do so. This is a most extraordinary feature and it is hopelessly unjust. It is objectionable mainly because it differentiates between taxpayers, whereas a basic principle of taxation is that there should be no such differentiation. Under this proposal the wage-earner will be penalized because he has to make regular contributions to meet his taxation liabilities. If, at the end of the contributing period, the amount that he has paid in is in excess of his total tax, that excess is to he retained by the Government. Professional and business men will not be affected because they do not pay by instalments. Even at this late hour) I ask the Government to reconsider its position.
This is nothing more than compulsory borrowing. All that the contributor will receive for the excess payments will be a certificate stating that he has overpaid his taxes by so much. Apparently he will be expected to hold that certificate indefinitely in the hope that some day he will be able to cash it. That is an intolerable position; it is an indefensible proposal. This measure is full of injustices and this is the crowning injustice of them all. It amounts to confiscation, or borrowing by stealth. It is unheard of in democratic legislation. So far as I can ascertain, the bill makes no provision at all for refunds. I heard the Treasurer’s story, hut there can be no doubt that this measure will perpetrate a series of injustices to the detriment of the morale of the people. “Wage-earners generally will be furious when they realize the facts of this situation. The nominal aggregate value of their certificates will go higher and. higher, but they will not be able to realize on the certificates in any way, and so they will not be in a position to contribute to war funds as they would like to do.
– The honorable member is interfering with the war effort in making such statements.
– I cannot condemn these proposals too strongly, and I hope that even now the Treasurer will review the whole position. We need a contented community. Our people are anxious to make their best possible contribution to the war effort. They desire to stand behind the men of the fighting services. Measures of this kind, however, must inevitably undermine their enthusiasm. In all the circumstances I urge honorable members of the Labour party who have some regard for the interests of the worker, and who, in their party meetings, have condemned this proposal roundly, to stand by their convictions and support the Leader of the Opposition.
– I shall refer only briefly to certain points that I have made earlier in discussing this problem. It is becoming increasingly imperative in the interests of both the taxpayers and the Treasury that steps shall be taken to meet the situation that will arise when many of the people who are to-day working in industry will no longer be able to continue to work in it. After the war, and, for that matter, even during the war, many women in particular will retire from industrial activities, and will no longer be able to earn the high wages that they are now receiving. Many women are leaving their work week by week in order to marry, and great numbers of other women will ultimately rejoin workers who are in the lower brackets of incomes. When that occurs, what is to happen in relation to the taxes to which they will be liable in respect of their high earnings under existing conditions? Unless some arrangement is made to ensure that their taxes will be paid, husbands will have to pay the money or the women will have to struggle to pay it themselves out of greatly reduced incomes. Honorable members must realize, too, that one of the substantial causes of increases of prices is the creation of a higher purchasing power in the community. We all know that when women, as well as the male members of the family, are earning high wages there is a much more lavish expenditure than is usual in that family circle. Many married men and women are earning at the rate of £1,000 a year in these days at munitions factories. What will happen when they suddenly find their incomes reduced to, let us say, something like pre-war levels? Unless some provision, such as that prescribed in this bill in relation to certificates, has been made such people will have no money available for the payment of taxes, and the Treasury may be a heavy loser. As honorable members know, it is possible for certain individuals to make application for relief from the payment of tax instalments, with the result that such taxpayers may not pay any tax at all during a given year. How will they be able to pay, subsequently, the large amount of their taxes ? The Government had to examine the situation closely in order to find a way to meet it. I regret to say that, whereas on previous occasions during the war when taxing measures have been before this House, honorable members of the Opposition have been helpful to the Government, on this occasion they have refused such help. Previously a special committee of honorable members of all parties has considered taxation problems and, in consequence of the recommendations that have been made, long hours of more or less useless debate in this House have been avoided. For some reason, honorable members opposite have declined to take any part in such consultations on this occasion. The honorable member for Robertson (Mr. Spooner), for example, has been very helpful to the Government on other occasions, and I make acknowledgment of his services ; but no such help has been forthcoming on this occasion. I heard an honorable member behind me say something about an election looming up in the near future. I must confess that there seems to me to be a desire on the part of some honorable gentlemen opposite to make political capital out of the real difficulties which are facing the country in this connexion.
– That statement is not worthy of the Treasurer.
– I cannot help feeling that there must be a reason for the sudden withdrawal of the co-operative spirit in this matter by members of the
Opposition. I can understand members of an opposition resisting certain principles of taxation which a government may desire to apply ; but when such principles have been determined, and it is only a matter of providing machinery for their application it seems to me to be the duty of all honorable members to cooperate in providing the necessary machinery. There has been no co-operation of this nature in relation to this legislation.
– There have been marked differences of opinion on the whole subject on this occasion.
– I am aware of that fact. To-night the honorable member for Barker (Mr. Archie Cameron) expressed views which seemed to be in marked contrast to certain views held by some of his colleagues ; and I quite realize that strong differences of opinion exist on certain aspects of this measure among Government supporters. For this very reason, we should face the issues frankly.
It is true that refunds will not be paid under this measure. Up to a point, excess payments willbe drawn upon to meet new assessments.
– There will be no refunds until the old fellow with the scythe gets to work.
– The Government was faced with the necessity to ensure that taxes would be paid.
– And so it is proposing to apply a post-war credits policy at 2 per cent. interest.
– I think it is a postmortem credits policy.
– Honorable gentlemen may call it what they like, but the fact remains that the liabilities for taxation that are being incurred day by day in consequence of the present high rates of wages that are being paid will have to be met in some way, or else the debts will ultimately have to be written off.
– Credits will be accumulated by taxpayers who are being deprived of concessional deductions.
– The point raised by the honorable member for Richmond should be examined. It is true that the bill provides for the payment of instalments under the average concessional deductions.
– That is the weakness of the measure. No provision is made for refunds.
– In some cases, payments will be below the assessments, and in other cases they will be above them. My view is that under the scales that have been formulated very few regular wage-earners will become entitled to refunds. I appreciate the point raised by the Leader of the Opposition that some taxpayers may have to incur extraordinary and unexpected expenses of one kind or another, but I point out that their position is met by the provision for the making of an application to the Commissioner of Taxation for a review of their instalments. Readjustments may be made from time to time. At the moment I am thinking of intermittent heavy expenses and not of continuing heavy commitments such as those relating to life assurance policies. Under the existing law, refunds are not available for a considerable time after extraordinary expenses have been incurred.
– That depends on how soon the assessments are made by the department.
– Up to a point that is true, but it may easily happen under the existing law that if unusually heavy and unexpected expenses are incurred by a taxpayer in July he may not be able to obtain a refund for eighteen months or more. The Government’s provision for the readjustment of instalments will meet that case.
– The Commissioner is given a discretion. Would the Treasurer agree to amend the provision to provide that the Commissioner must make adjustments ?
– I would not object to the use of the word “ must “. I do not deny that a big problem must be faced in this matter, but the Government considers that the steps it is taking will prove to he the wisest in the interests of the whole community. The revenue must he protected. Unfortunately honorable members opposite have not made any helpful suggestions to meet the situation. A good many of their contentions have been based on technicalities. I do not think that the provisions for concessional deductions will ever be removed from our taxation laws. I believe that there is a general agreement to-day that such deductions are desirable. But the subject of refunds must be examined dispassionately.
– I agree with the Treasurer. I think that, in some respects, the proposal is good.
– I am glad to receive even that crumb of commendation from an honorable member who, on other occasions, has been very helpful to me. What the Government is attempting to do is to meet a situation in which taxpayers are earning wages and salaries greatly in excess of those which they normally receive. If such taxpayers are involved in difficulties in consequence of unexpectedly heavy expenditure they have the right to apply for a reconsideration of their rates of instalments.
– But they have no right to reductions. They only have the right to apply for them.
– If the Treasurer would agree to the insertion of the word “ must “ or “shall” in lieu of the word “may” in section 221d he would go some distance towards meeting the complaints that have been made.
-I have heard a good deal in the last day or two about the discretion which reposes in the Commissioner on certain points. The Commissioner does not like this discretion overmuch. He prefers the Parliament to state the law in exact terms.
-It is of no use to insert the word “ shall “, because the Commissioner must be satisfied.
– If a man has incurred medical expenses amounting to £100, and receipts are produced at the end of the year for the purpose of obtaining the appropriate deduction from assessable income, I cannot imagine the Commissioner or any Deputy Commissioner refusing to make the necessary adjustment.
– That is not the point. The year in which he makes that approach is foreign to the year upon which he has a taxable liability. Therefore, he has to make up leeway. There is a difference between taxable liability and instalments.
– I do not intend to discuss such matters as the time lag. The general taxpayer assumes that his instalments in this financial year have been paid in respect of income earned in the previous year, and that when he gets an adjustment it will be based on certain deductions which should have been made in that year. The Leader of the Opposition has raised a pertinent point which is worthy of examination. I do not propose to accept the amendment, but I shall look into the matters raised. I realize that honorable members on both sides of the chamber are inclined, as I, myself, am sometimes, to indulge in a little political window-dressing, but I say franklythat any points such as those mentioned by the Leader of the Opposition and the honorable member for Bourke should be carefully examined, although the problems referred to do not arise at the moment. If honorable members opposite can offer any suggestions to overcome the difficulty which they declare has arisen, because, in trying to achieve one objective, injustices will be created in other directions - an argument which I do not accept - I shall endeavour to obtain advice from an expert committee as to an alternative method.
-Would that committee investigate points raised by the Opposition, such as the position of private companies?
– When the last budget was before us, the position of private companies was mentioned by the honorable member for Lilley (Mr. Jolly) and the honorable member for Robertson (Mr. Spooner), and I promised that an examination of the matter would be made. I was not then proposing to have the examination carried out immediately, because the matter did not demand instant attention. I had thought of inviting the honorable member for Robertson, representing the Opposition, and the right honorable member for Yarra (Mr. Scullin), as a representative on the government side, to consider the whole of the circumstances relating to private companies in conjunction with the Special Committee on Taxation consisting of the Deputy Commissioner of Taxation and two outside accountants. I have always regarded that advisory committee as representing a fair crosssection of those associated with taxation. I promised that such an investigation would be made, but, unfortunately, the right honorable member for Yarra has been ill. Nevertheless, I now repeat my previous promise that the position with regard to private companies will be examined. Some private companies do not want an alteration of the present law, and, no matter what decision was reached, all of them would not be happy about it.
– An alteration of the tax is provided for in this bill.
– Whatever has been considered a hardship in the past now becomes a greater hardship, but some of the private companies appreciate the fact that, in calculating their income, they get, an allowance in respect of the tax paid on undistributed profits in the previous year. They do not wish to lose that concession.
– With regard to section 221d, will the Treasurer arrange to have the word “may” altered to “shall”, when the measure reaches the Senate?
– I cannot give a definite undertaking in that regard. As the honorable member for Bourke has already pointed out, the Commissioner has to be satisfied, but I shall look into the matter.
– The Treasurer (Mr. Chifley) has stated that members of the Opposition have not been so helpful on this occasion as they have in the discussion of other taxation measures, but an important principle is involved in the consideration of this clause, and it has little’ to do with party politics. I might agree with the Treasurer if his object were to build up a reserve to enable a taxpayer to meet his commitments for future years. There would be merit in such a proposal if it applied to all taxpayers, or even to those in receipt of salaries and wages; but the reserve would be built up only by those who are not getting the full advantage of their proper concessional deductions. The taxpayer with practically no concessional deductions gets the benefit of an average. He will build up no reserve at all, and will be required to pay some amount later. Therefore, the only person who suffers under this proposal is the man who needs the advantage of the concessional deduction. Take the position of a person in receipt of £500 a year who is paying the present maximum of £100 for lifeassurance. His concessional deduction on the average would be only £31. The only taxpayer who would build up a reserve which would be applied to his assessment in future years would be the person who was overcharged to-day, and he would be the man who most needs the concession at present. Although he had paid life assurance premiums and met medical expenses, he would not get the full concessional deductions in respect of them. Therefore, the Treasurer’s argument falls to the ground, because it does not apply to the whole of the taxpayers whom he desires to catch in future years. The Opposition cannot be fairly accused of trying to embarrass the Government with regard to this matter. With every intention of being helpful to the Treasurer. I claim that the basis upon which his proposal is founded is unsound.
That the clause be agreed to.
The committee divided. (The Chairman - Mr. Prowse.)
Majority . . . . 2
Question so resolved in the affirmative.
Clause agreed to.
Clause 22 (Certificate of credit).
Question put -
That the clause be agreed to.
The committee divided. (The Chairman - Mr. Prowse.)
Question so resolved in the affirmative.
Clause agreed to.
Clause 23 agreed to.
Clause 24 (Payment of taxby tax stamps by persons other than employees).
– This clause proposes to amend section 221m of the principal act. That section provides that any taxpayer, not being an employee, may at any time purchase tax stamps, and that the provisions of the act in respect of those stamps shall apply to him as if he were an employee. Clause 24 of this bill contains the following provision : - (2.)Where a person who has purchased tax stamps in pursuance of this section produces those stamps to the Commissioner, and there is no tax payable by that person or the amount represented by the face value of the stumps so produced is greater than the tax payable by that person, the Commissioner shall pay to that person an amount equal to the face value of the stamps, or an amount equal to the difference between that face value and the tax payable by that person, as the case may be.
In the memorandum circulated by the Treasurer(Mr. Chifley), the explanatory note to this clause contains the following words: -
The effect of the amendment will be that tax stamps which are voluntarily purchased by taxpayers who are not covered by the instalment provision of the act will not be brought under the provision which relate to certificates of credit.
It appears that any person other than a wage-earner who purchases stamps in excess of his tax liability may obtain a refund, whereas the wage-earner who overpays in the form of instalments cannot. A professional man or a man in business is entitled to a refund should he purchase stamps, but the wage-earner is not. Right through this bill the wageearner is penalized. I should like the Treasurer to explain why this is so.
– It was suggested to me that other people besides employees might desire to pay their tax by purchasing stamps. Frankly, this provision was inserted so that employers could not say that they were not given an opportunity to purchase stamps.
Clause agreed to.
Postponed clauses 2 and 18, agreed to.
Clause 25 -
After Part VII. of the principal act the following part is inserted: -
Part VIIa. - Registration of Tax Agents. “ 251p. Where, under any provision of this Part, an obligation is imposed on a partnership to do, or refrain from doing, anything, every partner shall, upon the failure of the partnership to comply with the obligation, be guilty of an offence, and be liable to the penalty provided in respect of theobligation:
Provided that not more than one partner shall be punished for one offence.”
.My objection to the proposed new subsection is that it introduces a most dangerous principle. Should one member of a partnership commit an offence, the Commissioner may proceed against another partner who may be adjudged guilty of the offence and become liable to a penalty. An entirely guiltless person could be adjudged guilty of an offence committed by his partner. Under the existing law, if one member of a partnership prepares a false return, his partner is financially responsible for the consequences, but this proposal makes an entirely guiltless person criminally liable for the act of his partner. I cannot agree to such a departure from the accepted practice.
Mr.Chifley. - Unlike a company, a partnership is not a legal entity.
– Each partner should be registered, as is done in Queensland.
– It has been suggested that the words “ unless he proves that he had no knowledge of the failure “ should be inserted. I am willing that that be done.
– I am content with the Treasurer’s assurance.
Amendment (by Mr. Chifley) proposed -
That, in proposed new section 251p, after the word “ obligation “ the following words be inserted : - “ unless he proves that he had no knowledge of the failure “.
– That places the onus on the partner?
– I think that that is reasonable.
– The amendment of the Treasurer (Mr. Chifley) is a big improvement on the proposed new sub-section as it stands, but it still does not meet the position satisfactorily. A partner may accidentally submit an incorrect return, in which event bis partners who may be situated in other parts of the State, could be held liable. Any such partner would have to prove his innocence. That is not right. As the Leader of the Opposition (Mr. Fadden) says .that that is the position in Queensland, it would appear that a good deal may depend upon the administration of legislation of this kind. I see the possibility of ‘a grave injustice being done to innocent men. There is no need for such a provision. Each partner should be registered separately, and should he do anything wrong he should be punished; but we should not legislate to punish an innocent person for the action of a guilty partner.
– Who would be responsible if the partners were registered?
– Each partner would be responsible for his own acts.
– That is not the answer.
– If the honorable member for Warringah (Mr. Spender) realized the water-tight nature of the several departments of businesses conducted by a partnership, he would know that many partners cannot have any personal knowledge of the details of the work performed by other partners, in which event he would not extend the principle of joint and several financial liability as is suggested here. Although, apparently, my colleagues do not share ray view, I believe that each partner should be registered.
– Some firms may have a- registered partner or partners, but another member of the firm may not. be approved as a taxation agent.
– I hardly like to express an opinion, but it would appear that a man who could not secure registration should not be a partner in a business requiring the registration of it3 .principals.
– T’he.e are firms of that ki nd.
-Although I agree that the amendment is an improvement on the proposed new sub-section as it stands, I am nervous on behalf of many men who- may incur a liability for something about, which they know nothing.
– T do not agree with the honorable member for Robertson (Mr. Spooner). As one who has had some experience of the registration of tax agents, I believe that it is only reasonable to provide that a partner shall not be held responsible for the acts of the partnership only if he can prove that he is innocent. The essence of a partnership is that each partner must accept responsibility for what is done by the firm. Tha onus is on him to prove his innocence. I regard the amendment as reasonable in the circumstances.
– I agree with the amendment. The essence of a partnership is that one partner is responsible for the acts of the other partner or partners. It would not be difficult for a partner to claim that he was not responsible for the preparation of a taxation return or any act of another partner. In that respect I differ from the honorable member for Robertson (Mr. .Spooner).
.Whilst I do not object to a taxpayer who earns substantial income in States other than that in which he lives being compelled to lodge his return of income with the central taxation office at Melbourne. I do not think that it is necessary that taxpayers, the bulk of whose income is earned in their home State and only a small part in other States, should also be compelled to make their return to that office. I cite as an example of the many cases that have been brought to my notice that of a company in Queensland with an income of £35,000, of which £200 is earned in New South Wales. Before the introduction of a uniform income tax that provision did not matter greatly, because the company also had to make a return to the taxation office in Brisbane in respect of State income tax. The company was then able to discuss with the Deputy Commissioner in Queensland any matters associated with its income tax. but, under the new procedure, the company will have to send a representative to Melbourne to discuss with the Deputy Commissioner there any matter that it may desire to raise. This is a matter of administration. I think that the Taxation Department would agree to an instruction being given that the Deputy Commissioner shall use his discretion in decidingwhether taxpayers the bulk of whose income is earned within a State shall lodge their returns with the Deputy Commissioner in the State concerned or with the Deputy Commissioner at the head office. I suggested to the Treasurer (Mr. Chifley) that the Commissioner of Taxation or the Deputy Commissioner should regularly visit the various capital cities in order that taxpayers may have the opportunity, to discuss matters with him on the spot. Such visits are more than ever necessary under the uniform tax system.
– When the honorable member for Lilley (Mr. Jolly) mentioned that matter to me recently I promised to discuss it with the Commissioner of Taxation. I realize that it would be of great advantage for a taxpayer to be able to discuss taxation matters with the DeputyCommissioner in the State in which he lived rather than have to travel to some other capital city. If it is possible administratively to comply with the honorable member’s request I shall do my best to have it complied with.
– It is obvious that the proposed new sections relating to the registration of tax agents will enable the Taxation Department to increase the precautions against evasion of taxation. The establishment of a special investigation branch of the Taxation Department which would vigorously pursue tax evaders is long overdue. Hundreds of thousands of pounds of revenue that would otherwise have been lost owing to evasion of taxes has been brought into the Consolidated Revenue of Queensland by the Investigation Branch of the Department of Taxation in that State. That branch has exercised a most efficient vigilance and the results it has achieved have more than provided its worth. My humble view is that there is a great deal of evasion of payment of taxes in the community, and that the increased rates of tax will accentuate that evasion. The Treasurer (Mr. Chifley) would be wise to establish an investigation branch of the Commonwealth Taxation Department in order that we may ensure that people shall make accurate returns, because the income tax is a tax on the community, and if “ Paul “ does not pay “ Peter “ must pay more.
– Queensland investigation officers are now acting for the Commonwealth. Investigation in Victoria has disclosed evasion of taxation among aliens. The honorable member’s suggestion will be borne in mind, and, when it is possible to find suitable men to act as investigation officers, they will be appointed.
Amendment agreed to.
Clause, as amended, agreed to.
Clause 26 -
After section two hundred and sixty-two of the principal act the following section is inserted : - “262a.- (1.) Subject to sub-section (2.) of this section, every person carrying on a business shall keep sufficient records in the English language of his income and expenditure to enable his assessable income and allowable deductions to be readily ascertained and shall retain such records for a period of at least ten years after the completion of the transactions, acts or operations to which they relate.
.I move -
That, in proposed new section 262a (1.), the word “ ten “ be left out with a view to insert in lieu thereof the word” five”.
– I will compromise if the honorable member will make the period seven years.
– I accept that, and ask leave to withdraw my amendment.
A m end m en t - by leave - wi thd r a wn.
Amendment (by Mr. Holt) agreed to-
That, in proposed new section 262a (1.), the word “ ten “ be left out with a view to insert in lieu thereof the word”seven”.
Clause, as amended, agreed to.
Clause 27 postponed until after consideration of new clauses.
New clause 8a.
– I move -
That after clause 8 the following new clause be inserted: - “ 8a. Section seventy-twob of the principal act is amended by omitting sub-section (1.) and inserting in its stead the following subsection : - (1.) Where, in the year of income, the taxpayer has, for the protection of persons or property from hostile action by the forces of any country with which His Majesty is at war, incurred expenditure on or in connexion with premises or part of premises owned or used by him primarily and principally for the purpose of producing assessable income, or in carrying on a business for that purpose, that expenditure shall he an allowable deduction.’ “.
Section 72b of the principal act provides for the allowance of a deduction of expenditure for enemy raid precautions incurred for the purpose of protecting persons employed on premises owned or used by the taxpayer for the purpose of producing assessable income.
It has been pointed out that the section does not provide for the allowance of a deduction in respect of expenditure incurred by a landlord in the construction of shelters for the protection of tenants and employees and customers of tenants or of a taxpayer’s customers where he is engaged in a business.
Sub-section 1 of the section has accordingly been redrafted to ensure that the deduction will be allowed in respect of expenditure of this nature in all cases except where the expenditure is incurred in connexion with premises not used primarily and principally for the production of assessable income.
I think that ii will be clear to honorable members that we are endeavouring to remove an anomaly.
.- I am pleased that the Treasurer (Mr. Chifley) has moved for the insertion of the proposed new clause 8a, but will its effect be retrospective ?
– I should like to be assured that it will be so because much of the expenditure on enemy raid precautions was incurred before the 30th June, 1942.
– We discovered the anomaly and in order to overcome it I have moved for the insertion of the proposed new clause. If I am not interpreting the clause correctly when I say that it will be retrospective I shall act in the matter because it is our intention that it shall be retrospective.
New clause agreed to.
New clause 17a.
– I move -
That after clause 17 the following new clause be inserted : - “ 17a. Section two hundred and seventeen of the principal act is amended -
by inserting, before sub-section (1.), the following sub-sections: - (1a.) Tax shall not be payable on the income derived by a person in the year of tax in which he dies. (1b.) The amount of tax. payable by a person or the trustees of the estate of a person in respect of the income of the year of income immediately preceding the date of the person’s death shall not exceed an amount which bears to the amount of tax which would have been payable on the income of that year of income, if the person had not died in the year of tax immediately succeeding that year of income, the same proportion as the period of time during which the person survived the expiration of that year of income bears to a whole year.’;
by omitting from sub-section (1.) the words ‘ date of ‘ and inserting in their stead the words ‘ and of the year of income immediately preceding’; and
by inserting in sub-section (2.), after the word ‘ person ‘, the words ‘ up to the end of the year of income immediately preceding his death.’ “.
Section 217 of the principal act reads -
That enables the Commissioner to assess the earnings of a deceased taxpayer up to the date of his death. I want the committee to distinguish clearly between the year of tax and the year of income. In this particular year, which is a year of tax, we are taxed upon the year of income “which ended in June of last year. My amendment stipulates that the tax shall not be payable on income derived by a person in the year of tax in which he dies. It will not be disputed that a taxpayer is liable in respect of the year of income immediately preceding the year in which he dies. If a taxpayer dies, say, in September, his executors are liable, if he has not paid the tax in respect of the year ended the 30th June preceding the date of his death, and also the period between the 1st July and the date of his death. Regardless of the history surrounding the imposition of tax in this way, the cold fact is that a taxpayer is taxed in the year of tax upon a year of income, which is the preceding year. Regardless of how that arose, it is clear that well over 99 per cent, of taxpayers pay their tax as they go along out of income. No honorable member would argue otherwise. That is the way of the average man. Thus next year a taxpayer will pay out of his income in that year the tax imposed in respect of the income he earns this year. I shall now recapitulate what I said upon this matter in my second-reading speech. It is all very well to levy tax upon the present basis when earning capacity exists, but when a taxpayer dies a great hardship is imposed on his executors and widow. When the rates of income tax were not very high, this was not a real problem; but every honorable member will agree that the tremendous upsurge of tax now imposes a hardship upon countless people, who have no real assets.- I refer to ordinary executives, skilled workers, or persons on the average income of from £400 to £600 a year and who have struggled to buy a home, usually on amortization, having sixteen or twenty years to pay it off. They also take out life assurance policies in the hope that they will have something to live on should disaster overtake them, and they also have a little furniture. Beyond those assets, however, usually they do not possess anything. When, death intervenes the estate of the man who paid income tax out of current income on the basis of income earned in the preceding year, is called upon to make a very substantial contribution. The source of income is cut off. The Treasurer will agree that real hardship is being experienced in countless cases, in respect of which it is not sufficient to rely on the hardship provisions of the act. The dependants of taxpayers should be entitled to the relief which I now propose as a right. The widow should not be called upon to mortgage assets in order to meet the tax. Estate duty has to be paid as well as the tax which is based on the earnings of the deceased. The rationale of the formula which I propose for the assessment of tax is that the basis of income tax is continuity of earning capacity, namely, that a man pays his tax from his income as he goes along. So long as a taxpayer is alive no serious complaint arises in this respect ; but when death occurs the only impost made on the deceased’s estate in the year of death, because that is the year of impost, should really be the estate duty, and a tax based on the immediately preceding years of income, depending upon how long in the year of tax he has lived. This is an important suggested principle. We can take, for example, the case of many civil servants, who, while they are working, receive substantial incomes, probably from £600 to £700 a year. On their retirement, their income drops to £3 or £4 a week. That in itself is a hardship ; but a greater hardship is imposed when the taxpayer dies. My amendment is based on justice. When a man, upon the continuity of whose earnings depends his ability to pay, dies, his estate should not be called upon to pay in respect of the year of income which has passed more than a proportion worked out on the formula I have indicated. I dealt fully with this proposal in my second-reading speech. Sooner or later we must face up to this problem, because of the increasing cases of hardship occurring. My amendment is not designed to enable anybody to escape tax. Every honorable member knows of many cases where really desperate circumstances have been forced upon a family because of the existing provision. Their breadwinner has gone, and their income ceases almost overnight.
– As the honorable member for Warringah (Mr. Spender) knows, section 217 was inserted in the principal act to meet the particular case he mentions, namely, that of a. man who dies after, say, three-quarters of the year of tax has elapsed. It was felt strongly that he should not escape tax for that portion of the year prior -to his death. However, a few cases have been brought to my notice recently, in which it would appear some hardship has been caused. I cannot accept the honorable member’s amendment at this stage, but I shall examine it very closely. The principal point he made is that the tax has to be paid as well as probate duty, and in many cases that imposes a burden on a family which suddenly finds itself in a very difficult position owing to the death. of the breadwinner. I do not know that the amendment moved by the honorable member offers a solution of the problem. I was under the impression that the Hardship Board dealt very fairly with all cases of hardship. I shall examine the honorable member’s proposition.
. - Hardship boards and their consideration of hardship cases do not in any way meet this case. I have seen their decisions, and the Treasurer may be assured that it is always necessary for the representatives of a deceased taxpayer to show that they are unable to pay the tax out of assets before they can get relief. It is not a question of the fair incidence of tax. Sheer inability to pay must be shown. The Treasurer will be wise to look into this matter, because there is no doubt about the unfair operation of taxation on deceased estates under the present law, which compels the representatives of taxpayers to pay up to the date of death, regardless of the fact that this may include a period in respect of which tax has already been paid. In Other words, if the position is as we believe it to be, that a taxpayer, having paid in 1942-43, is taxed for that year based on the previous year, then it seems to be quite inconsistent with that position that upon his death his legal representatives should be obliged to pay on the income of 1942-43. The Treasurer would go & long way towards clearing Up the difficulty of which we have spoken during recent weeks if he agreed to amend the existing section substantially. The proposed new clause is a half-way house between the present system and the proposal that has been recently urged here to impose taxation upon current income. What the honorable member has suggested would grant relief in the case of deceased estates, but still would not grant it in the case of retirements. As has been said, if a public official retires on the 30th June on a pension of £150 a year from a position in which he has received £800 a year he has to pay the tax on an income of £800 for the previous year from an income of £150. There are many such instances all over the country to-day. The hardship applies not only to officials but to any man who, reaching the age of 60 or 65, is .able to retire. He must, before doing so, provide for the tax upon the income of the previous year.- Therefore what is now suggested by the new clause goes half way. If it were accepted by the Government in its entirety it would clear up the position so far as deceased estates are concerned, but still leave unsolved the difficulty of the man who wanted to retire, and also that of which I spoke in earlier stages of the debate, whereby taxpayers would still be obliged to pay in one year upon the income of an earlier year. The Treasurer, having fairly stated earlier that he will take an overall view of these problems and cause them to be investigated, might well add this one to the subjects for serious deliberation. He might then go a considerable portion of the distance, although not by any means the whole distance. The Treasury would not lose the whole of the tax that would be remitted, because ir. the case mentioned, where a deceased estate carries heavy liability for accrued income tax, this it is true has to be paid by the estate, but it is also an allowable deduction from the gross estate for the purpose of arriving at the probate duty. Consequently, what the Crown lost on the one hand it would partly, although not fully, recover on the other. The problem is one which the Government and the Treasurer can freely and properly examine. If the Government decides that it will not go the whole way in giving full relief, this is at least a compromise and a move in the right direction.
.Parliament has not fully appreciated what it has done during the last few years with respect to the duties on deceased estates. That has’ largely arisen from the necessity of the Treasury to find additional finance for war purposes, which has led to the doubling of the total ditty collected in respect of deceased estates. That has been a very remarkable and sweeping increase in a very short time. The honorable member for Warringah (Mr. Spender) when Treasurer had to increase the rates, and the present Treasurer (Mr. Chifley) also made an increase, which had the effect, cumulatively with the previous one, of doubling the total amount collected by that means. I have previously urged in this chamber that, whilst we accept this as a necessary part of our war finance, it must be reviewed by Parliament at the earliest available opportunity when our financial circumstances are a little easier, because the effect on particular estates can be extremely severe. Instances have been brought tomy notice where the wishes of the testator have been almost entirely frustrated by the effects of the heavy imposts now being levied.
– Very frequently the wishes of testators are frustrated.
– But often a man in making a will anticipates that circumstances will be somewhat similar in the future to what they are atthe time, and bequeaths legacies to various beneficiaries thinking that he is still leaving his wife and children substantially well provided for.
Mr.Chifley. - The will may have been made ten years ago.
– That is so, and a prudent man will constantly review the provisions of his will, in order to ensure that they conform with changing circumstances arising from changed legislation or declining values, but in practice the majority of men do not make such reviews. Since the war began, cases of great hardship have arisen from the changed circumstances. To the extent that the new clause will help to overcome part of the hardship, it is to be commended. It must be remembered, particularly in this country, that what we may term large estates often consist of an interest in a going concern or in a landed property, and the very heavy duties now payable create serious practical difficulties when it comes to realization.
– That is not so good an argument as the one the honorable member was using generally.
– That may be so, because the Treasurer no doubt had that in his mind. Still I am sure that instances have been brought to his notice of the real practical difficulties arising in such cases. To the extent that the new clause helps to meet the situation, which in many cases is causing hardship and difficulty, it merits the earnest consideration of the Treasurer and his officials.
– I understand that the Treasurer will look into the matter.
– I shall do so.
New clause negatived.
Postponed clause 27 - (2). The amendments effected by sections seven, eight, twelve and fifteen of this Act shall apply to all assessments for the financial year beginning on the first day of July, One thousand nine hundred and forty-two, and all subsequent years.
– I move -
That, in sub-clause 2, after theword “ eight “ the words “ eighta, eleven “ be inserted.
This amendment is being made as a consequence of the inclusion in the bill of new clause 8a, which is being made to apply to assessments for the financial year 1942-43 and all subsequent years. Clause 11, which amends the private company division of the principal act, is very closely related to clause. 12, which makes a similar amendment to a later section of the same division. Clause 12 is being made by the bill to apply to assessments for the financial year 1942-43, and accordingly clause 11 is by this amendment being given a similar application.
Amendment agreed to.
Clause, as amended, agreed to.
Title agreed to.
Bill reported with amendments; report - by leave - adopted.
Motion (by Mr. Chifley) - by leave - proposed -
That the bill he now read a third time.
– This is the only opportunity that I have had to refer to a matter mentioned by the Leader of the Opposition (Mr. Fadden) on the second reading of this measure, namely, the position of private companies. At an inappropriate stage of the bill, the Treasurer (Mr. Chifley) made some reference to private companies, and the Chairman of Committees, being very tolerant, permitted him to continue. This is a matter of great importance, and I know that the Treasurer has had in mind for some months the necessity to deal constructively with the problem of taxing private companies. The fact that action has not been taken this financial year is imposing considerable hardship on certain concerns, and I hope that before the 1st July Parliament will have an opportunity to alter the basis of taxing these companies. If a new financial year is embarked upon with the existing system still in operation, it may be some time before relief can be given. The unfortunate practice of taxing 100 per cent. of the undistributed profits of a private company has caused many injustices, although what the Treasurer said was perfectly correct. There are individual cases where it suits private companies - most one man companies - because they are able to leave their profits undistributed and carry forward the tax paid thereon as a deduction against the next year’s assessment; but the majority of the private companies that are genuine trading concerns - the backbone of Australian commerce to a large extent - are at a disadvantage compared with public companies in regard to taxation, and I hope that before the 30th June remedial measures will be taken by Parliament.
Question resolved in the affirmative.
Bill read a third time.
In Committee of Ways and Means: Consideration resumed from the 11th February (vide page 563)on motion by Mr. Chifley -
1 ) That on and after a date to be fixed by proclamation, published in the Commonwealth of Australia Gazette, not being earlier than the date upon which an act to establish a National Welfare Fund comes into operation, a tax be imposed upon income at the following rates: - (vide page 560).
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Chifley and Mr. Lazzarini do prepare and bring in a bill to carry out the foregoing resolution.
Bill brought up by Mr. Chifley, and passed through all stages without amendment or debate.
Motion (by Mr. Chifley) agreed to -
That the House, at its rising, adjourn to this day at 11.30 a.m.
The following paper was presented : -
Lands Acquisition Act - Land acquired for Commonwealth purposes - Smithton, Tasmania.
House adjourned at 5.21 a.m. (Friday).
The following answers to questions were circulated: -
Price of Firewood.
asked the Minister representing the Minister for Trade and Customs, upon notice -
What amount of beer was produced and what amount was released for consumption in each of the States during each month of 1941 and 1942?
– The information is being obtained.
Citizen Military Forces : Vaccination and Inoculation.
e. - Last week, the honorable member for Melbourne (Mr.Calwell) directed my attention to the regulations governing vaccination and inoculation of personnel called up for military service in Australia.
I now inform the honorable member that, pursuant to previous representations, I have had the whole question considered by the appropriate military authorities. A full submission in the matter will shortly be ready, and the representations made by the honorable member will be borne in mind when it is under consideration.
e. - On the 25th February, the honorable member for Dalley (Mr. Rosevear) asked me how many hostels were opened in Australia by the previous Government.
I now desire to inform the honorable member that no hostels were opened in Australia by the previous Government. The hostels provided by Army formations by direction of this Government have been so provided to meet the need created by the growth and wider dispersion of the Army, which has made the generous help rendered by philanthropic bodies no longer adequate, as they have to also meet expanded responsibilities in other directions.
asked the Minister for Repatriation, upon notice -
– The answers to the honorable member’s questions are as follows : - 1. (a) The average weekly cost of maintaining a patient in repatriation tubercular sanatoria during the financial year 1941-42 was- >New South Wales, 82s. 3d.; Victoria, 96s. 3d.; Western Australia, Ills. 5d. (6) The average weekly cost of maintaining an in-patient at repatriation general hospitals for the financial year 1941-42 was - New South Wales, 918.; Victoria, 103s. 3d.; Queensland, 92s. 2d.; ‘South Australia, 96s. 3d.; Tasmania, 100s. lid. The cost of maintaining tubercular inpatients at repatriation general hospitals, as distinct from those undergoing other treatment thereat, is not segregated.
n asked the Minister for Social Services, upon notice -
– The answers to the honorable member’s questions are as follows : -
n asked tho Minister representing the Minister for ti e Interior, upon notice -
– The answers to the honorable member’s questions are as follows : -
Mr. P. 0. Carlsen.
e. - On the 25th February, the honorable member for Melbourne (Mr. Calwell) asked the following question : -
Will the -Minister for the Army lay on the table of the House the file of Mr. P. 0. Carlsen, a former captain in the Australian Military Forces ?
I now desire to inform the honorable member that it is not considered desirable to make public details of the personal careers of individual officers, and therefore I do not propose to table the file dealing with Mr. P. O. Carlsen. If, however, the honorable member so desires, the file will be made available for his private .perusal.
n asked the Prime Minister, upon notice -
– Inquiries are being made, and a reply will be furnished to the honorable member as early as possible.
Duties and Taxes on Canteen Goods.
s asked the Treasurer, upon notice -
Will he inform the House of the amount collected during the year 1942 in customs and excise duties, sales tax, and other forms of taxation, on goods purchased by the Australian Defence Canteens Board for resale to members of the fighting forces?
– The Australian Defence Canteens Board makes its purchases of goods for resale from various manufacturers and importers, who have already paid customs and excise duties, sales tax and any other taxation leviable on such goods. Information as to the amount of such taxation is not available.
Cite as: Australia, House of Representatives, Debates, 4 March 1943, viewed 22 October 2017, <http://historichansard.net/hofreps/1943/19430304_reps_16_173/>.