House of Representatives
28 November 1950

19th Parliament · 1st Session

Mr. Speaker .(Hon. Archie Cameron) took’ the chair at 2.30 p.m., and read prayers.

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Prime Minister · KOOYONG, VICTORIA · LP

– At the outset of the day’s proceedings, Mr. Speaker, I should like to say that we are all delighted to see you back in your accustomed place, apparently vigorous and in good health. I also take this opportunity to say with what great regret we have heard of the indisposition. of the Leader of the Opposition. I am sure that we all hope that he will have a very speedy recovery and return soon to his plane in the House.


– I concur with the Prime Minister in what he has said about your return, Mr. Speaker. I also thank the Prime Minister, for his reference to the Leader of the Opposition. The latest news about the Leader of the Opposition that I have received to-day is much more satisfactory than the news of yesterday. I am sure that the Prime Minister’s expression of regret and of good wishes, as endorsed by the House, will be of great help to the Leader of the Opposition.


– I thank the Prime Minister and the Tight honorable member for Barton very much for what they have said. I assure them that they are not more pleased to see me back than I am pleased to be here.


– Has the Prime Minister seen a statement made by Mrs. Bloggs, the president of the Darling-East Malvern women’s branch of the Liberal Association, to the effect that politicians who blame all present imperfections on previous governments should be fined, and that any who deliberately lie should be gaoled ? Does the right honorable gentleman agree with that opinion, as I do, and will he take action to put the suggestion - made by Mrs. Bloggs into operation, no matter what. its effect may be upon his supporters!


– The matter is one of very great moment, but unfortunately I have not seen the statement to which the honorable gentleman has referred.

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– Oan the Prime Minister inform the House whether there is any substance in the statement, which has been repeated in various places, that it is proposed to amalgamate Australian National Airways Proprietary Limited with. Trans- Australia Airlines? If the statement is not correct, can it be formally and officially contradicted?


– I have heard the subject of merger mentioned, as the right honorable member for Barton must have done, many times during the last two or three years. It is an undoubted fact that it has been mentioned in various quarters from time to time, but there is no substance for the belief that any such proposal is under the real or active consideration of the Government.

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– I understand that the quota of pick-up balers allowed into Australia is ridiculously low. Will the Minister consider making dollars available for the importation of pick-up balers from America in order to permit of greater fodder conservation in this country?

Minister for Works and Housing · LP

– At the moment I have not the figures for which the honorable member has asked, but I shall ascertain the facts of the matter and ascertain whether the action requested can be taken.

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– Did the PostmasterGeneral observe in the Melbourne press, about three weeks ago, a glamorous description of a new ultra-modern block of flats situated, I think, in Toorak, in the course of which it was stated that telephones were installed in the bathrooms? Does the Postmaster-General know whether the purpose of these installations might be to call up the plumber if the tap fails to stop or to send an S O S for more soap, or to give a running commentary on “ me in my bath “? In view of the grave shortage of telephone instruments which is preventing hundreds of essential users in the country and in towns from obtaining telephones, is not the installation of telephones in the luxury bathrooms of luxury mansions carrying luxury a little too far and creating a dangerous precedent?

Postmaster-General · RICHMOND, NEW SOUTH WALES · CP

– I have no knowledge of the case to which the honorable member has referred. Subscribers have the option of having their telephone installed wherever they wish, whether in a bedroom, a bathroom or a pantry. If thehonorable member wants his telephone shifted to his bathroom, I shall see that that is done.

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Mr.HULME. - I desire to ask the Prime Minister a question relating to the passports that have been issued to certain Australian Communists who are at pre sent overseas and to statements by the Minister for Immigration to the effect that permission to travel in Communist countries has been withheld. In view of the fact that at least some of these persons have entered Communist countries and are expressing themselves in a manner contrary to Australian sentiment, will the Prime Minister give an assurance that the Government will seek to have the maximum penalties imposed on such persons including refusal of re-entry to Australia to those who are not native-born Australians ?


– I regret that the Minister for Immigration is not able to be present this week. I assure the honorable member that the various aspects of the interestingproblem to which he has referred engaged the attention of the Minister before his departure from Canberra and that all the necessary, appropriate instructions have been given in connexion with it.

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Mr.BIRD. - In the absence of the Minister for Labour and National Service, I ask the Prime Minister whether his attention has been drawn to the reported statement of the chairman of the Oversea ShippingRepresentatives Association in which the chairman questioned the decision made by Judge Kirby in his capacity as arbitrator in connexion with the recent, dispute on SS.Caradale? Does the Prime Minister think that such comments, coming from the chairman of an employers’ organization, do a grave disservice to the arbitration system by criticising decisions which have been made by a judge in his position as an arbitrator ?

Minister for External Affairs · WARRINGAH, NEW SOUTH WALES · LP

– At the conclusion of question time I shall ask for leave to make a statement on the dispute to which thehonorable member has referred.


Minister for External Affairs and Minister for External Territories · Warringah · LP

by leave - Honorable members will be glad to know that work has resumed upon the waterfronts in Melbourne and Sydney. In Melbourne, the resumption took place yesterday morning and Judge Kirby went to

SS. Caradale, where he made a determination. As a result, the men concerned were permitted to return to Caradale. An offer to take this action was made by J udge Kirby last Tuesday and, had the men been prepared to accept that offer then, they would have had no occasion to go on strike. It is unfortunate that as a result of the dispute in Melbourne 207,000 man-hours were lost.

In Sydney, work was resumed this morning and the men returned upon prestrike conditions - 317,000 man-hours were lost as a result of the dispute in Sydney. Yesterday afternoon, at the instance of the Australian Government, an application was made to Judge Kirby in respect to certain privileges enjoyed by the members of the Waterside Workers Federation. On the application of the Australian Stevedoring Industry Board the matter has been stood over until the 6th December. Neither in Sydney nor in Melbourne did the men accomplish anything which they could not have accomplished by conciliation and arbitration, and in Sydney they accomplished nothing at all. The only result of the disputes was that commerce and industry were held up, and the transport of goods was stopped. The cost of those goods to the community has been substantially increased. It is to be hoped-

Mr Ward:

– The Minister is being provocative.


– I am not being provocative. I am stating the facts which are as I have indicated them. I hope that sanity will prevail in the future because it must be clear to honorable members that in a nation which depends upon transport for its existence as much as does Australia no government can permit ports to remain idle.


Mr Mullens:

– I ask for leave to make a statement on the dispute in Victoria.


– Is leave granted?

Government Supporters. - No.

Leave not granted.

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– Last week I asked the Minister for External Affairs a question regarding the rates of pay of troops serv ing the United Nations in Korea. As no consideration has yet been given by the the United Nations to equalizing the rates of pay for the troops of various nationalities, will the Minister consider approaching the United Nations with a view to having all its troops now engaged in action in the Korean campaign placed on a common basis insofar as rates of pay, rations and amenities are concerned? I ask this question in view of the fact that these troops all operate as one unified force under the direction of the United Nations, and therefore should not be subject to differentiation insofar as conditions are concerned, as the degree of sacrifice is equal and differentiation is not conducive to the maintenance of a high standard of morale among the troops who are receiving the lower standards of payment and conditions.


– I gave an interim reply to a similar question asked in this chamber last week. Before I make any further comment, may I say that, despite the disability that the honorable member has spoken of, I have no reason to believe that there has been any lowering of the morale of any of the forces operating in Korea. A similar problem arose in various other forms during World War II. The American forces in Korea are paid rates which, when translated into our currency, are very substantial indeed. To achieve the position of having uniform conditions of pay, scales of rations, and so on, is not as easy of solution as it seems. It is clear, of course, that the sacrifices made by the personnel of one nation serving in Korea are similar to those made by similar personnel of any other nation serving there. I told the honorable member last week that I would consider the matter. Even were it decided that the course suggested by the honorable member should be pursued, the machinery cannot be set in motion overnight, and cannot, indeed, be set in motion very quickly. It would involve, amongst other things, action to fix contributions by a large number of nations. On other occasions, it has not been easy either to reach agreement or to carry into effect an agreement. All that I can do is to repeat what I said last week. I realize the inequalities that result from the fact that different rates of pay and ration scales are provided for the troops of different nations. I shall give further consideration to the representations made, but I would be misleading the honorable member if I told him that I was sanguine as to what can be done.


– I ask the Minister for Defence whether, in view of the bitterly cold weather and the mountainous conditions in which our servicemen are now fighting in Korea, he can tell the House what action the Government is taking to see that our troops have adequate amenities? Is it the intention of the Government to encourage a comforts fund appeal in Australia and also to facilitate in every way the despatch of comforts parcels to our men at the front ?

Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– I can assure the honorable gentleman that the Government has taken every step possible to ensure that proper amenities, particularly Christmas cheer, shall be available to our troops in Korea. I believe also that the Minister for the Army has been particularly active in connexion with the provision to the troops of the kind of clothing that is necessary in the Korean winter. I should say that the Government would co-operate with any society or organization that wished to provide comforts for our fighting men. The Minister for Air has already stated that he will make air transport available for the carriage of parcels to the troops in Korea.


– I desire to address to the Minister for the Army a question about the welfare of our troop3 in Korea, and I mention, by way of explanation, that I have vivid recollections of Ministers in previous governments who contended that all was well with our troops in the field when quite the reverse was the case. In view of the many complaints about the clothing and equipment of our troops in Korea which have been made by troops who have returned to Australia from that area, will the Minister inform the House of the steps that he proposes to take to ascertain whether or not there is any substance in those criticisms?

Minister for the Army · MORETON, QUEENSLAND · LP

– I propose to make a statement to the House at a later hour to-day about the subject to which the honorable member for Henty has referred, but, in the meantime, I inform him that

I am certain beyond any shadow of doubt that the instructions issued on that matter have been fully carried out, and that every member of our battalion in Korea to-day is fully equipped with all the clothing necessary to withstand the Arctic winter which will be encountered. Our troops have special equipment obtained from the United States of America, which, for some years, has been making special investigations into, and technical examinations of, the best materials and equipment needed to combat Arctic winters. The Americans, as a result of a very lengthy examination and investigation, have produced the best clothing for that purpose in the world, and it has been issued to our forces. Everybody who knows Lieutenant-General Robertson has the highest regard for his integrity and straightforwardness, and is well aware of his interest in the welfare of the troops. He has given me an unqualified assurance about the equipment of the men, and that has been supplemented by the Commander of the Force, Lieutenant-Colonel Ferguson, who is more than satisfied that the men have all the clothing that is required. Additional clothing is available for the force when the weather gets colder. In addition, Major-General KingsleyServices, who has been to Korea at my Norris, the Director-General of Medical request to examine the medical and hospital arrangements for the troops, has just returned to Australia, and he has endorsed the assurances that have been given about the men’s clothing. Brigadier R. S. Parkes, who will command the New Zealand Force which will proceed to Korea, has examined the conditions in that theatre, including the equipment that will be issued to his men, and he has given us an assurance that our troops are more than adequately provided for.

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– I have received a circular letter from a firm which manufactures and distributes modern pharmaceutical products with which it enclosed a pamphlet headed as follows: -

Sir Earle Page expounds his ideas.

Full text of speech to Brisbane Medical Congress.

I ask the Minister for Health, first, whether the pamphlet that I have mentioned is an official publication, and whether, before I read it, I may regard its contents as being accurate; and secondly, if the pamphlet is official, whether the Minister will say why it has been supplied to me by a private firm instead of through governmental channels ? Again, if the pamphlet is official, why should private individuals and firms be able to supply such information when honorable members have been unable to obtain that information in the House even when they have asked questions on the matter of the Minister?

Minister for Health · COWPER, NEW SOUTH WALES · CP

– The pamphlet that the honorable member has in his hand, a copy of which has also been sent to me, contains a verbatim report of a speech that I made in Brisbane in May last. ‘Copies of that speech were sent to the Leader of the Opposition and the Deputy Leader of the Opposition in this chamber, and I think also to the Leader of the Opposition and his deputy in the Senate. The pamphlet contains, I repeat, a verbatim report of the speech that I delivered on the occasion referred to1, and if the honorable gentleman cares to read it he will find it very edifying. Furthermore, it will assist him to understand the present position. That speech has been printed verbatim not only by the particular firm to which the honorable gentleman has referred, but also by practically every medical and pharmaceutical journal in the world.


–Can the Prime Minister say whether a Commonwealth medical officer is entitled to charge a fee in relation to people whom he examines when such persons are sent to him for examination by another Commonwealth department? Is the Prime Minister aware that recently a pensioner was charged 10s. to have his deaf and dumb son examined by Dr. Blumer at Newcastle, to whom he had been sent by the Commissioner of Taxation. If no charge is payable in such circumstances will the Prime Minister have inquiries made why a charge was made in the case to which I have referred, and whether it is the practice of that doctor to charge persons whom he medically examines on behalf of the Commonwealth.


– I shall inquire into the actual practices observed throughout all the departments and let the honorable member know the result of my inquiry.


– Has the Minister for Health been able to finalize arrangements for the provision of free medical attention to age, invalid and service pensioners? If he has not been able to get the necessary printing done in order to finalize those arrangements, as he expected to be able to do about the first of next month, can he say when the scheme is likely to be put into full operation?


– I am endeavouring to put into operation almost at once that part of the scheme which directly relates to actual attendances by and visits to doctors. That will be by far the most costly part of the scheme and as the printing requirements in respect of it are relatively limited no difficulty should arise in implementing it almost immediately, leaving the other parts of the scheme to be implemented later. Both the doctors and chemists have been doing their utmost to evolve the simplest means of facilitating payment and quick checking in respect of the provision of medicine but so far they have not been able to make a submission to me on that matter. I intend, therefore, to. implement the scheme in stages, and I expect to be able to make a definite announcement on the subject before the end of the year.


– Has the attention of the Minister for Health been directed to a recent press statement attributed to a Mr. Scott, who, I understand, is a prominent officer of the Pharmaceutical Service Guild of Australia, to the effect that the Government owes a considerable amount of money ,to chemists for payment on account of medicine which they have dispensed for persons under the Pharmaceutical Benefits Act? Will the Minister inform me whether that statement is correct ? If it is correct, will he take appropriate action to ensure that the accounts will be paid, in order to prevent hardship from being inflicted upon the chemists concerned, and, naturally, to preserve the good name of the Government?


– If the honorable member for Grayndler had taken the trouble to read the whole of the statement to which he has referred, he would have seen that Mr. Scott suggested that one of the reasons why accounts were unpaid was that certain chemists had forwarded incorrect statements, and that the chemists themselves were doing everything possible to prevent a repetition of it. I have been informed by the chemists’ organizations, and by individual chemists, that practically all of them have received payments for the first two months in which the scheme has operated - September and October - but the Department of Health is still receiving accounts for drugs supplied under the formulary prepared when Senator McKenna was the Minister for Health. That formulary covered a very limited area, yet accounts for medicines that were dispensed under it are still being received and are being checked, after the expiration of many months, because of difficulties associated with the manner in which it was presented.


– The Minister for Health denied last week, in answer to questions that had been asked by myself and the honorable member for Dalley, that he had any knowledge of the existence of correspondence directed by the British Medical Association to it9 members in which it stated details of the proposed free health and medical scheme as they applied to age and invalid pensioners. The honorable member for Dalley and I claimed that the correspondence included advice that the doctors were authorized to collect a fee- of 5s. for any call that was made after 6 p.m. and also to make a charge when they were asked to go beyond a radius of 3 miles from their surgeries in answering calls. Has the Minister made any inquiries in order to ascertain whether such correspondence passed between the British Medical Association and its members and, if so, whether it was authorized by the Department of Health? If the right honorable gentleman has corresponded with the British Medical Association on the subject, will he make available for perusal by honorable members the complete file of the correspondence that has been directed to the association by him and the replies to such correspondence?


– Last week the honorable member for Dalley and the honorable member for East Sydney* asked me whether I had issued any instructions on this matter. I told them that no instructions whatever had been issued by me, that I had not seen any documents in connexion with the matter, and that full details would be supplied at the appropriate time and place. It is possible that the honorable member has seen some confidential document. Whether he has stolen it or obtained it by some other means I do not know.


-Order ! The Minister must not imply that a document was stolen.


– All I can say is that it was a confidential document-

Mr Ward:

– I ask for a withdrawal of the Minister’s statement. (Sir EARLE PAGE. - I withdraw it if it is offensive to the honorable member. All I can say is that any correspondence in which the British Medical Association may have asked its members for their views concerning the terms on which they would be willing to serve under the health and medical scheme would be confidential. Such correspondence would concern only the association and its members. The Government has not issued any correspondence of that sort and has not received any up to the present.


– I desire to ask the Minister for Health whether the document to which the honorable member for East Sydney and I have referred in previous questions really existed. Whether it was a confidential document of the British Medical Association or the Government does not matter. I desire to know whether the doctors are asking for or have been granted the right to charge old-age pensioners 5s. for calls which they make after 6 o’clock at night and to charge mileage rates.


– I endeavoured to elucidate this matter when I replied to a question by the honorable member for Port Adelaide. One of the matters still at issue is the payment to be made in respect of night calls and mileage and the manner in which such mileage will be checked. A great deal of difficulty is anticipated in checking the time spent on visits after hours and the number of miles travelled, and that is one of the reasons why the Government will at once proceed-

Mr Rosevear:

– Why did the Minister deny the existence of this document ?


– The honorable member asked me whether any instructions had been issued. . I say definitely that no letter went from me to the British Medical Association in regard to this matter. I have found out since that a confidential letter was sent by the secretary of the British Medical Association to the members of that association asking their views in regard to these matters.

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– I have been advised that kangaroo shooters in central Queensland are hard put to it to obtain ammunition for the destruction of that pest. Will the Minister for Supply consider making an allocation of .303 ammunition similar to that which he so graciously made to Western Australia for the destruction of emus?

Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– Following a question asked in this House by the honorable member for Kalgoorlie about the destruction of vermin and other pests in the north-western part of Western Australia, my colleague, the Minister for the Army, who was extremely helpful, released from army sources a large quantity of ammunition, which has, I understand, already gone to Western Australia for the purpose required. I shall bring the request made by the honorable member for Capricornia to the notice of the Minister for the Army, and I am sure that he will do what he can for Queensland.

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– Has the Prime Minister’s attention been drawn to the result of a comprehensive gallup poll on price fixing which appeared in the Brisbane press of 25th November? The poll was carried out in the six States of the Commonwealth and showed that an overwhelming majority of those who voted in the poll were ‘ in favour of the Commonwealth taking over prices control. In view of the result shown by the poll will the right honorable gentleman take an early opportunity of holding a referendum of the people in order to give them an opportunity of voicing their opinions on the most vital and important question of prices control?


– The answer to the first question is “ Yes “ ; the answer to the second is “ No “.

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– Is the Minister acting for the Minister for the Interior aware that many government-owned buildings in Jervis Bay, for which tenants are paying rentals of as high as £900 a year, are falling into an advanced state of disrepair and white ant infestation? Is he also aware that the rehabilitation centre in that area is similarly affected, and is tending to become unusable?


– I am not aware of such conditions as the honorable gentleman has related, but I shall have inquiries made about the matter.

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– Has the Minister for External Affairs seen certain reports according to which Russia has claimed that the United States of America, through its occupation force in Japan, has been arming and training Japanese nationals in numbers beyond the limits of domestic police purposes? Has the Minister any information available which would indicate whether or not these reports are statements of fact?


– I have noticed the report to which the honorable member has referred. The only fact that could in any way support such an extravagant statement is that after the troops had left Japan for Korea it was necessary, for security purposes, to increase the police force in Japan. Apart from that fact there is nothing whatever to justify the statement that has been made. For the purposes of ascertaining how far the statement departs from the truth I sh: endeavour to have more particular detail* made available to the honorable member.

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– I address a question to the Minister representing the Minister for Fuel, Shipping and Transport. By way of explanation may I say that the South Australian Parliament has recently legislated to enable the setting up of a commission to determine the route that the proposed converted standard gauge railway shall follow between Port Augusta and Telford, which will be the station serving the Leigh Creek coal-field on the proposed railway line. I believe that the Australian Government will be represented on the commission. In view of the importance to the Northern Territory and South Australia of the standardization of rail gauges, will the Minister confer with his colleagues with a view to having the scope of this commission widened so that it may. explore, while plant and labour are on the job, ways and means of completing the conversion of the existing line through to Alice Springs, and thus redeem in part the undertaking given by the Australian Government to South Australia to complete the north-south railway?


– As a result of discussions between the Government of South Australia and the Australian Government, it has been decided to endeavour to settle some difference of opinion that has arisen concerning part of the route of the proposed railway by referring it to arbitration. For that purpose, and pursuant to that agreement, legislation has just been passed by the South Australian Parliament. I anticipate that corresponding legislation will be introduced into this House within the next few days. The legislation is designed to give effect to the particular agreement made by the two governments, and as the matter is urgent it is not proposed to extend the scope of it.

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– I ask the PostmasterGeneral whether the Australian Broadcasting Control Board has completed its survey of the power increases that can be granted to broadcasting stations throughout Australia? In particular, has any decision been made with regard to station 2 AY at Albury, which operates on 200 watts while its nearest competitors at Wagga and Shepparton operate on 2,000 watts?


– The Australian Broadcasting Control Board has been engaged in investigating power increases and has issued interim decisions from time to time. Many commercial broadcasting stations in Australia have already been granted increases of power from, in most cases, 200 watts to 500 watts, and in other cases from 500 watts to 1,000 watts. I cannot say whether the Albury broadcasting station has yet been included in the stations granted increased power, but I shall have inquiries made and inform the honorable member accordingly.

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– Is the Minister for Supply aware that petrol users in the Wollongong and Port Kembla districts are obliged to pay 3d. a gallon more for petrol than do users in Sydney and other ports in New South Wales? Is he aware that petrol is taken from the tanks at Port Kembla in exactly the same way as it is unloaded at Sydney and other ports and, therefore, should be sold at the same price? In the interests of the people of the Wollongong and Port Kembla districts, will he have an investigation made with a view to rectifying this grievance ?


– The matter that the honorable member has raised has not previously been brought to my notice. I shall submit bis request to the Minister for Fuel, Shipping and Transport and let him know the result.

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– During the last general election campaign, a newspaper advertisement that was authorized by the Liberal party stated -

The biggest single factor in bringing about price increases was the Chifley Government’s abrupt and unwarranted withdrawal of price subsidies and its refusal to grant funds to the States to replace .subsidies.

I ask the Prime Minister which of the subsidies that the Labour Government removed have been restored by the present Government and what funds have been made available by the present Government to the States to replace prices subsidies that were formerly provided?


– I have not at hand the detailed items for which the honorable member has asked but I shall make them available to him later. However, the total amount of subsidies that were paid by the Australian Government last year was of the order of £25,000,000 whereas the total amount that the Government has budgeted for this year is of the order of between £44,000,000 and £45,000,000.

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– I ask the PostmasterGeneral whether he has power under the Post and Telegraph Act to cancel the registration of a periodical for transmission by post as a newspaper if it is shown that it contains material that is blasphemous, indecent or obscene? What specific authority is vested in the Minister to determine whether published matter comes within those categories? What procedure must be followed if it is desired to bring allegedly offensive publications to the notice of the Postal Department ?


– Power is provided under the Post and Telegraph Act to prohibit the transmission by post of printed material of the kind to which thi honorable member has referred. The procedure would be to make a complaint either to the Postal Department or to myself. The complaint would be thoroughly investigated and a decision would finally be given, I presume, by me.

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– On the 14th November last, I asked the Minister for Works and Housing to inform me of the provision that had been made for the proper storage of parts of prefabricated houses which were being sent to Australia. The right honorable gentleman favoured me with a reply, and, for the purposes of accuracy, I shall refer to it. I learned that four ‘ separate firms are supplying 2,582 prefabricated houses for the Commonwealth, and, in reference to storage, the reply stated -

In respect of two firms, the Director of Works has been asked to provide wool store types of storage.

Will the Minister inform me whether such storage has been supplied, and although the other two contractors claim that they have packaged their prefabricated cottages, will he state whether any place has been obtained in which the parts may be stored and checked before they are taken out? In view of the fact that not all of the prefabricated houses will be built on level ground, has any provision been made for their storage pending the preparation of foundations so as to avoid deterioration of the materials?


– I shall take steps at once to obtain the more detailed information for which the honorable member has asked. I have given directions to the department concerned that every possible care must be taken, especially in the early stages of the import programme, to ensure that all prefabricated houses shall arrive in Australia and be erected in the best possible condition. It is important that, at the beginning of this new undertaking, the users of the buildings shall be completely satisfied with them. I do not know for how many years the importation of prefabricated houses will continue, but clearly the programme must last for some years. We must establish in the public mind confidence that a prefabricated house is in every way at least the equivalent of a locally built house. The instructions that I have issued provide for the utmost care to be taken in inspections prior to shipment, in the packing and despatch of the buildings, and in inspections after their arrival so that the desirable end that I have mentioned may be achieved.

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– I have been informed that all peace officers employed by the Commonwealth in Queensland have been served with notice of termination of their services. These exservicemen were informed when they were engaged that their appointments would be permanent. As they are performing work of paramount importance in the protection of valuable Commonwealth property, much of which consists of defence equipment and supplies, will the Prime Minister inform me whether there is any truth in the report that I have received ? If the- appointments are to be terminated, will the right honorable gentleman state the reasons for the dismissals and tell the House to what organization the task of protecting government property will be given ?


– I cannot give the honorable member any particulars in reply to his questions. The Government has been aiming at effecting certain reductions of the force that he has mentioned because, in its view, the existing establishment is larger than is necessary. Certain changes have been made in pursuance of our policy of endeavouring to effect some economy of administration and the use of man-power. I do not know whether notice has been given to all peace officers in Queensland, as the honorable member has suggested, but I shall ascertain the facts and inform him of the position.

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– I ask the Minister for the Army whether the members of the Australian military forces who are now serving in Korea and Japan are receiving the same rates of pay and allowances for their dependants as were announced by the Prime Minister in connexion with the current recruiting campaign?


– The new pay code for the armed forces, which was announced by the Prime Minister, has been effective since the 8th September. The new rates of pay have applied to all members of the armed forces since that date.

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– Many exservicemen have been denied the right to receive war gratuity payments because of unfavorable references in their discharge certificates, some of which are said to be unwarranted. Does the Minister for the Army know that a considerable amount of money is involved in the cancellation of such payments? In view of the fact that war gratuity will soon be payable, will the honorable gentleman consider the appointment of a committee of departmental officers and representatives of exservicemen’s organizations in order to examine cases of the cancellation of gratuity? Some of the ex-servicemen affected served for at least two years in the Middle East.’


– The legislation which authorizes the payment of war gratuity also provides for a special board to examine all applications in respect of payments. Whenever an applicant has communicated with me and expressed dissatisfaction with his treatment by the board, I have asked the board to review the case. Every application of this sort has been examined twice and the decision of the board, under the law, is final.

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– On the 22nd November the honorable member for the Australian Capital Territory (Dr. Nott) addressed this question to me -

I should like to explain that the question which I shall address to the Prime Minister is tinctured with a certain amount of unpleasantness but that will not deter me from asking it. Can the right honorable gentleman inform me whether a refrigerator has been installed in the offices of the Public Service Board? What was the cost to the taxpayer of the installation? Has the refrigerator been used for the storage of alcoholic liquor? If it has been used for that purpose, will the Prime Minister inform me who purchased the liquor, what was the cost of it, and under what vote the purchase was made? Will the Prime Minister state whether a refrigerator is now to be regarded as standard departmental equipment? Does the Government consider that such a practice is desirable?

The following reply has been furnished by the Public Service Board: -

A small household type refrigerator was installed in the office of the Public Service Board in 1948 when it moved to its present premises. It cost £104. The refrigerator is part of the women’s staff lunch room equipment and is located in the lunch room. It is also used by the watching staff who are in attendance at all off-duty hours. The refrigerator is not used for the storage of alcoholic liquor. A number of departments have provided this type of amenity as part of lunch room equipment where cafeterias and other facilities are not readily available.

Mr Hughes:

– A good answer.


– I think so. I want to add that I think it is a matter of regret that questions so damaging to the Public Service Board administration should be asked with such a lack of foundation. Should any honorable member desire information about what I may call the domestic administration of the department, the chairman of the Public Service Board will at all times be willing to supply information or facilitate the making of suitable inspections. The Public Service Board enjoys the confidence of the Government in the policies which it is pursuing. It would be highly undesirable that the board should become involved in publicly defending itself against criticisms made in this House. This is not to say that the board’s administration is beyond criticism; it is merely to say that honorable members should be reluctant to make charges in relation to matters which they have not most thoroughly examined.

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Motion (by Mr. Menzies) - by leave - proposed -

That the House, at its rising, adjourn to to-morrow, at 11 a.m.


– The Opposition will not oppose this motion. Last week the Prime Minister (Mr. Menzies) made available to the Leader of the Opposition (Mr. Chifley) a provisional list of proposed legislation to be dealt with during the remainder of the present sessional period. I ask the Prime Minister if he will endeavour to have that list revised. I do not think it was final and I ask that the programme be organized in such a way as to permit of the maximum possible, debate by all honorable members within the time allowed.


– Yes. I shall do that.

Question resolved in the affirmative.

page 3138




– I ask the Minister for Supply whether he made a hurried trip to Hobart last week and interviewed the Premier of Tasmania? Is it a fact that the Australian Government is anxious to sell its share interests in the enterprise being developed by the Aluminium Commission to private enterprise and is seeking to have the Tasmanian Government sell its share to private enterprise also?


– It is a fact that I went to Tasmania and had a confidential conversation with the Premier of Tasmania, Mr. Cosgrove. The rest of the matters alleged by the” honorable member are not facts.

page 3138


Motion (by Dr. Evatt) - by leave - agreed to -

That leave of absence for one month be granted to the right honorable member for Melbourne Ports (Mr. Holloway) on the ground of ill health.

page 3138



by leave- On the loth November, the honorable member for East Sydney (Mr. Ward), speaking on the motion for the adjournment of the House, stated that unrest had been caused in the Public Service by the acti’on of the Public Service Board in withholding the payment of recent cost of living adjustments and the recent increase granted by the Commonwealth Public Service Arbitrator from female members of the Public Service who now receive the adult male rates of pay. Following on inquiries made, I advise the honorable member that, by a decision of the Women’s Employment Board, female officers employed in the mail branch were paid the full male rates and postwomen were paid rates approximately equal to 90 per cent, of the male rates. When the Women’s Employment Act was declared invalid the Public Service Board decided that the rates formerly payable under determinations of the Women’s Employment Board should be continued until such time as a policy decision had been reached on the rates of pay of females in the Public Service. The board anticipates that it will be possible to reach a decision on the rates of pay of females in’ the Public Service in the very near future, and in view of this it advised the Postmaster-General’s Department recently that no further adjustments should be made in the rates of pay of these female employees pending this decision being reached. It is desired to emphasize that no reduction in the rates of pay of these employees has taken place, and I have been advised by the Public Service Board that the unions concerned will be consulted before a final decision is reached.

Mr Calwell:

– Will the PostmasterGeneral (Mr. Anthony) move that the statement that he has just read be printed in order that we may have an opportunity to discuss it?


– I do not think that it is competent for the Minister to submit such a motion because the statement that he read-

Mr Anthony:

– The statement was in reply to a question.

Mr Calwell:

– Nevertheless, it contained certain assertions.


-Order ! The Minister asked for leave to make a statement in reply to a question that was asked some time ago, and leave was granted. I think that that ends the matter.

page 3139


Second Reading

Debate resumed from the 18th October (vide page 977), on motion by Mr. Fadden -

That the bill bc now read a second time.


.- If I might be permitted to digress for a moment I point out that the absence from the chamber of the Leader of the Opposition (Mr. Chifley) due to illness is his first absence from the House on any occasion since he was reelected to the Parliament in 1940, which is more than ten years ago. Because he was Treasurer in Labour administrations for a record period, it, is unfortunate that he is not present to lead the Opposition in discussing the finance measures, including the present bill, that will De considered by the House.

This bill is another of the series of measures to restore value to the £1 introduced during the present sessional period. We are all familiar with the. promises made by the leaders of the present Government from public platforms during the last general election campaign to put value back in the fi, to increase the purchasing power and to reduce living costs. When the Treasurer (Mr. Fadden) introduced the present measure he described it as an instalment of the Government’s scheme for the progressive simplification of the Commonwealth taxation laws. However, there 13 nothing in the measure which proposes to effect a considerable reduction of taxation, either of income tax or any other form of tax, and I dispute the claim made by the right honorable gentleman that the bill is an instalment in a series of progressive simplifications of the taxation laws. I do not think that it is an instalment of taxation simplification at all, and I consider that other reasons, which are entirely unrelated to a simplification of taxation procedure, have been responsible for the introduction of the bill. This measure, like the provision for strategic roads in the Commonwealth Aid Roads Bill 1950, which we discussed last week, will do very little and will take a long time to do that little. I propose to quote from the speeches made by the two leaders of the present Government in order to show just how far this legislation departs from the enticement held out to the people of Australia to vote for the candidates of the Liberal party and the Australian Country party on the 10th December, 1949. For example, in the course of his policy speech during the election campaign, the present Treasurer said -

If the Socialists are defeated rates of taxation, both direct and indirect, can and will be steadily reduced. Iri short, our policy is a progressive reduction of taxation on individuals and on the community in general, commensurate with national financial and economic policy.

The right honorable gentleman made that statement on the 17th November, 1949. However, when he introduced the budget on the 12th October last in his capacity as Treasurer he included in bis remarks this interesting and naive explanation of the Government’s policy -

The Government considers that in the light of the inflationary economic situation and of present and prospective expenditure commitments, it is necessary to preserve existing sources of revenue, so that no general reduction can be made in rates of income tax this year, Nevertheless, the Government proposes to make certain major reforms in the taxing system which will in themselves contribute in an important way towards amelioration of the tax burden.

The speech made by the right honorable gentleman when he introduced the budget is important for two reasons. First, it repudiated the election promise made by him as leader of the Australian Country party to reduce taxation, and, secondly, it claimed that the Government’s proposals will help taxpayers because they are specially designed to enable taxpayers to bear the burden that they carry at the present time. Of course, that burden is very much less, because of the reductions made by the Chifley Administration over the years, than that which was borne by the people during the war. In the course of the statement that he made when he introduced the budget, he elaborated on the various paints of major reform which, he said, the Government proposes to undertake. I shall deal clause by clause with the bill and compare those provisions with what the Treasurer has claimed on behalf of the Government to be Government policy. In the course of the .policy speech that he delivered on the 17th November, 1949, he said -

The present laws relating to tax assessments have reached such a pitch of complexity that even the experts find difficulty in comprehending their meaning. We will, therefore, establish a competent committee to review them fully with a view to evolving a simplified assessment act.

I do not accept the assurance given by the Treasurer when he introduced this legislation that the laws relating to income tax and social services contribution have been permitted to fall into a serious state of complexity. That statement was a mere assertion, and I believe that it is contrary to the facts. It seems to me that in the opinion of members of the Government and their supporters the only taxation laws that are not complex are those of pre-war days, that bore lightly .on recipients of big incomes and heavily on the earners of small incomes. Indeed, one of the great benefits of uniform taxation is that the burden of taxation has been distributed evenly and fairly over all incomes in all “parts of Australia. Prior to the introduction of that system of taxation the Legislative Councils of the State Parliaments determined the rates of tax to be levied on different incomes and decided who should bear the main burden. The burden of taxation fell unheavily in those days and always on the wrong shoulders. The Minister said that in his view two factors contributed most forcefully to the alleged state of complexity io our taxation laws. The first factor was the separate levying of social services contribution and income tax, and the second factor related to the concessions granted to taxpayers in respect of dependants, life assurance and other payments that are treated as deductions from income for taxation purposes. The Labour party introduced those two systems, to which the right honorable gentleman objects. It was the Chifley Government that introduced the system of the separate levying of social services contribution.

Mr McMahon:

– Was it not the Curtin Government?


– It was introduced in September, 1945. Mr. Curtin died in the previous July. It was also the Chifley Government which introduced the system that is now generally known as the rebate system, as distinct from the concessional system. The introduction of the system of levying social services contribution was resisted by the representatives of the Australian Country party and the Liberal party. I shall quote later from the speech of the present Treasurer on that occasion. The other system to which the Treasurer takes objection, and which he proposes to amend, was introduced as a result of a recommendation of a committee that was presided over, I believe, by Professor Mills, of which the former right honorable member for Yarra, Mr. Scullin, and the then honorable member for Robertson, Mr. Eric Spooner, were members. It is true that Mr. Scullin had argued long and repeatedly, over the years, that the rebate system would be fairer to people on small incomes and he had given the matter very great study. J consider that some of the remarks of the Treasurer in his second-reading speech proved that people on big incomes and not people on small incomes will benefit from the proposed reversion to the concessional system. The Treasurer proposes to merge both in’come tax and social services contribution into one levy. He has claimed certain advantages for his proposal. He has stated that it will be easier for the Taxation Branch to send out one assessment, after the two levies have been amalgamated, than to send out two assessements in the one notice; and that the change will be helpful to the taxpayer.

In an attempt to save his position the Treasurer has said that taxpayers will know just how much they have paid in social security taxation and also how much is being paid out of that fund for the provision of the services, to the cost of which they have contributed. The Labour party believed that there were advantages in a separate assessment for social services contribution, which altogether outweighed any disadvantages. In the first place, under the existing system each person is able to know just how much he pays. Under that system each person is able to know, aa he is entitled to know, how much he pays for the social services that he may have reason to draw upon later. We were able to know just how much, in total, was paid into the fund and how much was being drawn out of it from time to time. When we took office the total amount that was being paid annually in social services benefits to the people was about £18,000,000. When we left office we were paying out to the people about £100,000,000 a year. The £18,000,000 that was being paid out annually when we assumed office was, of course, paid directly out of revenue. The social services contribution was introduced in 1945 and was operable only from that year. Social services benefits that are paid under legislation that was introduced by Labour governments include age, invalid and widows’ pensions, the last of which are paid to women who have been bereft of their husbands by death, to those unfortunate women whose husbands are immured in hospitals for the insane and also to women whose husbands have deserted them or have been sent to gaol for six months or more.

The various measures that were enacted by the Seventeenth and Eighteenth Parliaments gave benefits to the people, but the cost, which was considerable, had to be met. There is no doubt that the Treasurer has some purpose in his mind in desiring to change the present method of the levying of separate taxes. In the policy speech that he made during the last general election campaign he used the following words -

We say that the present system of financing social services by a flat rate tax which takes up to ls. Gd. out of every £ for that purpose alone must be replaced by an equitable contributory scheme.

Later in his policy speech he said -

This should be accompanied by a progressive modification of the means test so that no one will be deprived of benefits in respect of contributions.

I challenge the Treasurer’s statements that the present social services contribution scheme is not equitable and that it is not a contributory scheme. I consider that behind the Government’s proposals, first, to amalgamate the two levies into one tax, and secondly, later on, to introduce what the Government will call a contributory scheme for social benefits, and which will have the effect of throwing a very heavy burden upon low-scale wageearners and lower middle class incomeearners, lies a plan for national insurance. I consider that this plan is reactionary and that it should be opposed by the Parliament.

Mr Hasluck:

– What is the honorable gentleman’s evidence for his opinion?


– My evidence is contained in the statement of the Treasurer, from which I have quoted. I was about to compliment the Treasurer for having been at least open and candid enough to say that the real purpose behind the proposed amalgamation of those two levies was the preparation of . what he calls “ an equitable contributory scheme”. I consider that there will be great disadavantges in reversion to the system that he has proposed. If the Government amalgamates the two taxes and levies the new combined tax at the present rates it will throw an unfair burden on the smaller income-tax payers. Any advantages that the proposal has will accrue to the wealthy classes. I have no’ desire to protect wealthy people from the imposition of a fair burden of the cost of government in this country. As a matter of fact, in view of the Treasurer’s statement in his budget speech that he is unable to grant tax relief because of inflationary trends, I think he is bound, particularly because of the wool tax that the Government is seeking to levy, to consider increasing the taxes on higher incomes. If the Government desires to stop inflation it must drain off money from those who have the biggest share of it. Instead of trying to pose as a particularly virtuous Treasurer and saying that inflationary trends prevent him from lowering taxation, the right honorable gentleman should be considering the imposition of higher income taxes on those people in the community who obtain big incomes from all sorts of activities. The Leader of the Liberal party was no le3S promising when he made his policy speech at Canterbury in Victoria on the 10th November, 1949. At that time both the Prime Minister and the Treasurer, according to their speeches, could be said to have been most “ promising “ politicians. The Prime Minister said at that time -

The Commonwealth taxation revenue is £200,000,000 moTe than in the most critical vear of the war.

Now the Prime Minister has found that he is faced with admitting that the income of his Government this year is at least £130,000,000 more than the income of the Chifley Government last year, and that his taxation revenue is certainly not less than that of the Chifley Government, because he does not propose to make any real reductions. The national income of Australia is rising considerably owing to the kindliness of nature and the fact that our wool-growers are enjoying unprecedently high prices. There again we find the old saying exemplified that “ One man’s meat is another man’s poison “. We are growing rich as a nation because of the misfortunes and needs of other people. Having complained that the revenue of the Chifley Government last year was £200,000,000 more than it was during the most critical year of the war, the Prime Minister will have to explain why, now that his income is more than that of the Chifley Government, he has not done something considerable to reduce taxation in Australia. The Prime Minister was informative enough to say this -

We still believe that rates of taxation must be steadily reduced, as national production and income rise, and as economies are affected in administration.

National production has not fallen, incomes have risen, and no economies have yet been affected in administration.


-Order ! The honorable member is departing from the terms of the bill, which involve only the matter -of assessment.


– I thought that I might refer to the fact that there are more public servants employed to-day than ever before.


-I have perused the bill. I do not think that for the past quarter of an hour the honorable member has been referring to it even in the widest sense.


– I have been quoting from the policy speeches of the leaders of the Government parties, and have been discussing the matter of taxation. I have been contrasting what they said then with what they are doing now. The Prime Minister said in his policy speech -

We will also set about liberalizing the tax allowance in respect of medical, dental, optical and aural expenses, and in respect of fees and donations for educational purposes.

To some extent those promises have been carried out, but not to the extent that many people expected. Although the burden of direct taxation has been eased a little, there have been increases in sales tax amounting to about £10,000,000. The Treasurer spoke of the work of the committee on taxation that he had appointed, which consisted of representatives of the legal and the accountancy professions. I have no. doubt that those gentlemen are very eminent in their professions, but the accountants are all accountants of big and wealthy companies and their main concern in any recommendation that they might make to a government of the present political colour would be to have taxes in respect of those companies and their principal shareholders reduced. The Treasurer said that the committee had made its recommendations, and he indicated what the Government proposed to do in respect of each of them. Nobody can doubt that when he said that the provision of taxation remissions could not be achieved without loss to the revenue, he was perfectly correct. Then he said that it was estimated that about £1,750,000 would be remitted to the taxpayers in a full year. I propose to show that this benefit will not be shared by the whole of the people, and although thirteen items of concession are enumerated, the remissions to be made in those items are to be made to the people who have least need of them. I think that the Government will find that the number thirteen will be its unlucky number. I believe that this reduction of £1,750,000 will not be of benefit to the masses of the people.

I do not object to the concessional allowance for the benefit of children up to the age of 21 who are receiving an education, but the total benefit is only £150,000. I have a daughter who will come within that category, but I do not regard the concession as big. The Treasurer said that it would be -

A welcome relief to many parents in the lower and middle income ranges who make great sacrifices to give their children secondary and higher education.

I do not so regard it. It is quite true that many parents make those sacrifices, but £150,000 will not compensate them to any marked degree. Then the Treasurer said that he was prepared to make a concessional allowance in respect of a parent who is not wholly maintained by one taxpayer. The Commissioner of Taxation is now to be charged with the responsibility of making a fair apportionment on a basis which he will consider “ reasonable” in cases where there is partial maintenance of the parent by each of two or more children. But this will mean a tax remission of only £300,000 per annum.

The Treasurer said that in future - dependants other than a parent will be subject to a test of maintenance the same as for a spouse; that is the deduction is not to be diminished if the separate net income of the dependant is less than £52 in the year.

That is to be arranged by another formula, and the total benefit to taxpayers will be about £250,000. That would have been real money in a pre-war budget, but to-day it is a very small concession. The next concession which the Treasurer gives is by way of raising from £50 to £100 the limit of the concessional allowance for medical expenses. That benefit will cost the revenue another £230,000. Another concession is to be by way of raising the concessional allowance for dental expenses from £10 to £20, and the cost to revenue will be only £200,000. There are other benefits enumerated in the bill, and I shall mention them briefly together with the amount involved in each case. The deduction in respect of medical expenses will be widened to include medical expenses paid by the taxpayer on behalf of any dependant for whom the taxpayer is entitled to a concessional deduction; and that alteration will involve an annual cost to the revenue of £100,000. Next, the allowance for medical expenses will be extended to cover therapeutic treatment in certain circumstances; and that will mean an additional annual cost to revenue of £150,000. The allowance of deductions of payments to medical and hospital funds will involve an annual cost to revenue of £200,000. The extension of the concession for funeral and cremation expenses will involve an annual cost to revenue of £10,000, which is almost too small an amount to notice. The proposal to raise from £150 to £200 the present maximum allowance in respect of life insurance premiums, superannuation contributions and like payments will benefit the taxpayers concerned by only £35,000 a year. I do not think that it is much of a concession. If it represents any real benefit at all it will be enjoyed by persons not in the lower but in the higher ranges of income. The extension of the concession to premiums or sums paid for insurance against sickness or accident for the taxpayer or his family will involve an annual cost to revenue of £100,000.

Then, we come to the things in which honorable members are vitally interested. It is proposed to convert to a deduction basis the rebate concession previously allowed in respect of calls on shares in mining, prospecting and afforestation companies and syndicates ; and that” alteration will benefit persons who hold such shares by £25,000 a year. Why has the Government found it necessary tom ake this concession in the present circumstances? But it has kept the good wine till the last; and it is certainly heady wine for persons who are interested in private companies because they are to receive the greatest benefit that is to be provided in the budget. The concessions that are to be granted to those persons will absorb £1,000,000 of the total annual cost of £1,750,000 to revenue of the concessions that are to he provided, in respect of taxation. I have always regarded a private company as one which enjoys all the advantages of a publiccompany whilst, at the same time, it escapes all the disadvantages of a partnership. That statement may be an oversimplification of the position, but there is no doubt that persons who form private companies generally retain most of the shares and they usually have only to give them the number of shares required to form private companies under the acts of the- six State Parliaments. The greatest benefit that is to be given will be enjoyed by such persons. The proportion of their income that is now free from undistributed profits tax is to be increased from 30 per cent, to 50 per cent. That undistributed income has been held by private companies against the day when taxes would be reduced, and much of it has been held for quite a long time. The only way in which the Government could give benefit to its particular supporters in that group of financiers was by increasing the proportion of their holdings which will be free from undistributed profits tax. I repeat that that benefit i3 to be made available to only a few people.

The Government proposes to set up a third board of review. That body will be just another board, and it is estimated that it will cost £10,000 annually. That proposal exposes the Government’s cry for economy as being insincere. The bill has two good features which I shall comment upon briefly because every honorable member will agree that they are worth-while. The first of them is the provision for the exemption from tax of allowances received under the Tuberculosis Act and for a variation of the conditions attaching to the exemption of the remuneration of officials of certain international organizations; and the second of them is the proposal to amend the income tax laws to grant exemption in respect of the pay and allowances earned outside Australia by the members of the special overseas force. Those provisions are to be commended. However, the Government has run away from the responsibility of increasing income tax just as it has run away from its responsibility to re-value the Australian £1, which is a step that almost every Liberal member of the Parliament would endorse. But the Government, cannot continue to run away from its responsibility to balance the budget; and, sooner or later, it will be obliged to increase taxes. “Whilst the bill proposes to amend certain laws those amendments will not be beneficial. The Government’s supporters will thereby receive the greatest benefit. The Treasurer made that perfectly clear when as a member of the Opposition he opposed the Social Services Contribution Bill 1945. Speaking on that measure in September, 1945, he described it in these terms -

It is economically unscientific, it is actuarially unsound, and it is politically unjust.

The right honorable gentleman has invariably maintained that attitude towards that legislation. He continued -

Many a person now contributing to a superannuation fund will also have to contribute for social services, but he will enjoy no contractual right to receive subsequent benefits.

That, of course, was not correct. He went on -

Because of the means test, he will be unduly penalized for his thrift and self-reliance. A man would have to save about £5,000 and invest it in government bonds at 3i per cent, in order to obtain the equivalent of the oldage pension for himself and his wife. Under the present proposal, even if he paid his social services contributions regularly every year, he would still not be eligible for a pension. On the other hand, a spendthrift and ne’er-do-well, who may not have contributed Id. to the social services fund, would be entitled to receive the old-age pension upon reaching the prescribed age.

The right honorable gentleman concluded -

I know that it is futile to urge the Government to take immediate steps to rectify the matter; but in order to place on record the policy of the Australian Country party, I urge the Government, first, to withdraw the present unsound plan; secondly, to introduce a contributory scheme on a sound actuarial basis; and, thirdly, to abolish the means test.

The right honorable gentleman who is the Leader of the Australian Country party made that proposal on the 28th September, 1945. In the policy speech that he delivered during the general election campaign in 1946 he promised to abolish the means test, but in the policy speech that he delivered during the general election campaign last year he merely promised to review the whole subject of the means test. His budget speech of this year does not contain any reference at all to any promise to abolish the means test. His attitude on this matter as a whole is that of conservatism and reaction. The interests that the present Government parties represent disliked the scheme that the Labour Government introduced. They objected to the imposition of social services contribution independently of income tax. When the present Leader of the Opposition introduced the measure under which that change was effected five years ago, the present Treasurer, who was then in Opposition, directed attention to a number of speeches that members of the Labour party had made in 1938 and 1939 on the ill-fated National Health and Pensions Insurance Act. Under the measure now before the chair, the Treasurer is endeavouring to pave the way for the introduction of another national health and pensions insurance scheme, but the objections that members of the Labour party voiced to such a scheme ten or eleven years ago still hold good. The objection which I take to this proposal of the Treasurer is in line with the objections which most Labour men uttered in those days. I do not want to say any more about that legislation. It is on the statute-book, but it has not been proclaimed, and no government has seen fit to repeal it. I hope that the present Government does not propose to produce another instalment of its tax and social services legislation in the form of an amendment to the unproclaimed National Health and Pensions Insurance Act. I believe that, generally, this Government functions as every antiLabour government functions, and that is on the principle that the people who have the money must be looked after before those people who have little or no money. I should like to quote the Scriptures to this Government, because I believe that it tries to interpret that passage of the Holy Writ which says : “ To him who hath shall be given, and from him that hath not shall be taken away, even that which he hath “. We who have struggled for so many years to establish an equitable form of taxation in this country, and who have always fought for the right canons of taxation in our laws, view this bill with suspicion.

Mr McDonald:

– The Devil has quoted the Scriptures, too.


– I have no doubt. I know many members of this Parliament who make a devil of a mess of quoting the Scriptures on occasions.

Mr Beale:

– The honorable gentleman himself is not too familiar with the Scriptures.


– I am thinking of a son of the manse, who has just interrupted me.

Mr Beale:

– I have been checking the honorable member’s quotation from the Scriptures, and I find that he is all over the place in his rendering of it.


– The Labour party will review this legislation when it comes back to office. That day, of course, is not far distant, as everybody who has been sounding public opinion knows full well.


.- This bill deals with the assessment of income tax and the social services contribution. I commend, for two reasons, the move that has been made by the Treasurer (Mr. Fadden), to simplify tax returns. One is that the actual filling in of the returns will be simplified, and will be much easier for the ordinary taxpayer to perform. I am sure that most taxpayers will be grateful for that slight amelioration of past conditions. The second, and the more substantial reason, is that the new system of simplified taxation will mean a benefit to the taxpayer, because it will take directly into account special circumstances which may apply to him in respect of family responsibilities, commitments for medical expenses, and other special charges of that kind. Perhaps the value of the changes may be best illustrated if I quote some of the figures which have been supplied to honorable members by the Treasurer, comparing rates of tax under the old system and the rates of tax under the new system. It will be sufficient for my purpose if I quote the tax on income derived from personal exertion by a taxpayer -with a dependent wife and two children. A man in such circumstances, with an income of £350 a year, would have paid £2 4s. a year under the old system, and he will pay 16s. a year under the new system. A man with a dependent wife and two children, with an income of £600 a year, would have paid £26 5s. a year under the old system and £18 16s. a year under the new system. Honorable members will see that there are direct and immediate benefits from the change of system.

The honorable member for Melbourne (Mr. Calwell) has tried to suggest that the benefits of the change will fall chiefly on persons in the higher income groups, but, in brief answer to that contention, I point to the same table of figures from which I have quoted, and indicate that whereas the reduction of tax for the man with an income of £350 a year i3 63.6 per cent, and for the man on £600 a year 28.4 per cent., the percentage of reduction is only 6.1 per pent, ‘for a man with an income of £2,000, and it dwindles to 2.8 per cent, for a nian with an income of £4,000 a year. Those figures illustrate quite clearly that the benefits of this change in the method of assessment will be felt chiefly by the persons in the small and middle income groups. The honorable member for Melbourne, when referring to the proposal to alter the system under which the social services contribution and income tax are collected, tried to suggest that the present proposal is linked with some nefarious plan in connexion with the Government’s intention to introduce a far-fetched contributory scheme of social benefits. It is true that the Government has under consideration, and will bring down, a contributory scheme of social welfare, but it occurred to me, when the honorable member for Melbourne was speaking, that he followed the well-known technique of interpreting something the Government said rather than having regard to precisely what it said, and, having made his own interpretation, used it as the basis from which to draw his conclusions. The conclusions which he drew were based only on his own interpretation which, in turn, was not based on the actual statements made by Government speakers.

My object, in speaking in this debate, is to draw attention chiefly to two small matters which seem to call for remedy by the Treasurer. The first one gains in topicality from the fact that the first Test match of the current series will commence next Friday. I should like to draw attention to the special position in which the cricket associations of Australia are placed in financing cricket in this country, and the disability which they suffer in comparison with comparable organizations, by reason of the fact that they are liable to a substantial deduction of the income which they derive from the game. In order that my point may be made clear, I shall refer to section 23 of the Income Tax Assessment Act, which is subject to amendment by clause 6 of this bill, and, in particular, to paragraphs (?)> (/)> (SO an(5 W of it. Those provisions read as follows : -

  1. The following income shall be exempt from income tax: -

    1. o ) In com e de ri ve( -
    1. by any club or association in any other part of the British Empire as its share of the proceeds of cricket, football or similar matches played in Australia by a team controlled by that club or association visiting Australia from that part of the British Empire, and recognized by the authority controlling that class of match in Australia as being representative of that part of the British Empire; (/) the income of a trade union . . . [g) The income of a society or association not carried on for the purpose of profit to the individual members thereof, and being a friendly society, or a society or association established for musical purposes, or for the encouragement of music, art, science or literature; (ft) The income of a society or association not carried on for the purposes of profit or gain to the individual members thereof, established for the purpose of promoting the development of aviation or of the agricultural, pastoral, horticultural, viticultural, manufacturing or industrial resources of Australia;

The meaning of the existing provisions of the act is that, if the present series of Test matches in Australia were being promoted- by the miners’ federation, the Young Men’s Christian Association, the Canberra Repertory Society, an agricultural society, or any other body of that kind, the proceeds would be exempt from income tax. But, because they are being promoted by a cricketing organization, the proceeds are liable to tax, which will account for a substantial part of the takings. Cricket, as distinct from many other sports in Australia, does not .draw large sums in gate money continuously throughout the year. Only now and again, on such occasions as test matches, do cricketing organizations receive large sums of gate money. Then, just as the sport is reaping its harvest, along comes the tax gatherer and insists upon taking a large part of it. Having regard to the way in which the sport is fostered, promoted and financed without thought of profit by a body of men who are devoted te the game only for the love of it, special consideration should be given to cricket associations. They should be put in the same category as are the other bodies that I have mentioned, the members of which do not reap any individual benefit from the proceeds ot the functions that they sponsor. In making this plea to the Treasurer, I remind him of the fact that admission fees to cricket grounds are subject to entertainments tax, by which means the sport makes a very substantial contribution to the public revenues. I merely ask that the proceeds of the cricket associations be exempted from income tax. I understand that representations on this subject have been made to the Treasurer and have been referred to the Commonwealth Committee on Taxation. I hope that they will receive the earnest consideration of the committee and that, with the full support of members on both sides of the House, on a future occasion, we shall have an opportunity to consider a measure to amend section 23 of the principal act in order to extend the field of exemptions as I have suggested.

The second and final question to which I wish to refer relates to persons who receive small incomes from property or who receive their total income from superannuation funds. Their position has now become anomalous, largely as the result of the general extension of social benefits. In saying what I propose to say, I shall not criticize in any way or attempt to minimize the social benefits that have very properly been extended throughout the community. I do not suggest that any pension or other benefit should be reduced. All of us have rejoiced at the increases that this Government has granted, but the mere granting of those increases has established certain anomalies in relation to persons who, because they possess property or receive superannuation payments, are not entitled to draw the age pension. .My argument can best be illustrated by reference to “concrete examples. Under the amended pensions provisions, it will be possible for a man and wife to receive a combined pension of £5 a week and in addition, subject to their physical capabilities, to earn an income of £3 a week, making a total income of £8 a week. I am sure that all honorable members agree that the pension of £5 a week for a man and his wife represents the bare minimum, and perhaps less than the bare minimum, on which a couple can live to-day. Having agreed upon that point, we should be specially concerned about the situation of persons whose income from property or from a superannuation fund amounts to £5 a week or less and is subject to income taxation.

Under present conditions, a man would need to have a property investment of a capital value of over £7,000 in order to obtain a safe return of £5 a week. An investment of almost £12,000 would be needed to provide a return of £S a week. “We all know, if we search our memories, that at one time a man who contributed to a superannuation fund from a modest income might reasonably be expected to have contributed, if he was careful over his payments, for an income after retirement of as little as £250, £300 or £400 a year. In those days, too, a widow for whom her husband had made provision prior to his death might have counted herself fortunate if she owned property worth £5,000 or £6,000. Property of that value would have provided an income on which a widow could live. But to-day the situation is -vastly different. The income from property valued at £6,000, after allowing for the payment of taxes, as well as rates and other charges, is often considerably less than the age pension. Few such unfortunate persons are in receipt of a net income greater than they would be entitled to receive as pensioners without property.

The suggestion that I make to the Treasurer is that the income of persons who receive modest returns from either property or superannuation funds but who otherwise would be entitled to receive the age pension upon attaining the appropriate age be exempt from income tax up to the amount of the pension. The effect of the proposal would be that a man who received, say, £300 a year from superannuation would be allowed to. deduct from that total the equivalent of- the pension of £5 a week for himself and his wife when preparing his income tax return. Tax would be levied only upon the residue after any other allowable deductions had been made. That would be an equitable method of treating such persons. It would be administratively practicable and would do no more than justice to persons whose only error has been that they have made some personal provision for their old age. Of course, one criticism of the suggestion might be that persons who have large incomes from property would take advantage of the concession. A practical reply to any such criticism would be to impose an upper limit to the incomes of such persons beyond which the concession would not apply. I suggest that the limit could easily be calculated by making an estimate of the capital value of the estate that would be necessary to produce a round income of, say, £300 or £400 a year or of the capital value of superannuation which would provide an annual payment of the same amount. Having regard to current rates of interest, the upper limit of property value might be fixed at £12,000. The act could be amended so as to provide that a person who, by reason of age and other qualifications, would be entitled to an age pension but for the possession of property or of an interest in superannuation of a capital value of less than £12,000, should be permitted to deduct from his income for the purposes of income tax an amount equivalent to the pension. I earnestly commend the suggestion to the Government because I consider that its implementation would give deserved relief to many persons who, through no fault of their own, have been sadly affected by rising costs and have been placed at a disadvantage by the very commend able and worthwhile extension of social benefits to other members of the community.


.- This bill is alleged to provide for a simplification of the method of assessing and collecting, income tax and the social services contribution. The Government claims also that it provides for the easing of the burden of taxation. I hope to demonstrate later that it will achieve neither, of those results in any remarkable degree. First, however, I shall refer briefly to the speech that was made by the honorable member for Curtin (Mr. Hasluck), with most of which I agreed. The suggestion that he made for the exemption from income tax of revenue derived from special functions by sporting bodies that are conducted on a nonprofit basis for the benefit of the public has much to commend it. There is no reason, of course, why the proposal should relate only to cricketing bodies, although mention of that sport is topical. The plan could well include exemption from entertainments tax as well as income tax for the general run of sporting bodies that promote healthy outdoor activities. The existing law provides that profits gained by visiting sporting organizations, such as the English cricket team, shall be exempt from income tax. The case in favour of a similar exemption, as well as exemption from entertainments tax, for Australian sporting bodies that are conducted solely to encourage healthy physical exercise calls for our sympathetic attention.


– Such a concession would also help the national fitness campaign.


– That is true. It would be advantageous to grant the proposed exemption to a wide range of sporting bodies. Strong representations on this subject were made some time ago. to the present Leader of the Opposition (Mr. Chifley) when he was Treasurer, and he granted some alleviation. I believe that even more good would be done by removing the revenues of legitimate non-profit sporting bodies from the field of taxation. In any case, they provide only a very small contribution to government revenues.

The honorable member for Curtin also discussed the effect of taxation upon persons who receive small incomes from property or from superannuation funds. The honorable gentleman rightly spoke sympathetically of such people, but his explanation of their circumstances clearly demonstrated why the income tax law must, of necessity, be complex. The suggestion that he made for the relief of such individuals would introduce various qualifications, limitations and so forth into the tax law. It is because a tax law cannot apply to every member of the community in equal degree or to all circumstances in exactly the same way that amendments must be made to it from time to time. Thus, over the course of years, any income tax law must become complicated. The proposal that the honorable member has made requires further clarification. At the moment I cannot see how it could be implemented equitably. I do not believe that it could be embodied in the law without involving such complications as this bill is supposed to prevent. The suggestion could be implemented perhaps by increasing the amount of income that is exempt from tax. When there was a State and a Federal income tax incomes below £250 were not taxed. I believe that a minimum income on which taxation may be levied should be fixed.

Mr Hulme:

– What about income from property?


– An income from property below which no tax may be levied could also be fixed. An income which is the minimum amount required to maintain a man, in the case of a single man, or a man -and his wife in the case of a married man should not be subject to tax. A statutory limit might meet that situation. Because the amount of pension payable had risen above £104 a year I understand that the practice was adopted during the last financial year of treating a married man as a single man for taxation purposes if he and his wife were both pensioners. As the wife receives more than £100 a year from the pension she is no longer regarded as a dependant who is fully supported by the husband, who, consequently, is treated as a single man and is taxed on the full amount of his pension and any other income he may have. I think that that practice is contrary to the spirit of the act. The resultant revenue received- by the Treasurer must be small and I hope that he will end the practice as soon as possible.

It has been alleged that, by means of this bill, the Government will simplify taxation procedure. The Treasurer stated in his second-reading speech that there was complexity in the assessment of the social services contribution and income tax separately in that two separate acts were required for the collection of these moneys and when an amendment had to be made to one of the acts it had to be made also to the other. But there was no complexity so far as the taxpayer was concerned and it is the taxpayer whom the Treasurer alleged that he sought to benefit. At present, the taxpayer fills- in one taxation return on the basis of which is assessed his income tax and his social services contribution liability. The primary purpose of the social services contribution was twofold. Members of the community had had it pointedly brought home to them from time to time that if they received the invalid or the age pension or other social services benefits they were virtually paupers in receipt of charity. The Government therefore provided that the social services contribution should be collected and paid into the National Welfare Fund. In doing so, it pointed out that everybody who had an income would contribute to that fund ; therefore those who received social services benefits would merely receive a repayment of contributions that they had made over the years.

Mr Hulme:

– The benefits are not received by all individuals.


– By all in some degree.

Mr Hulme:

– Very little.


– Not very little. The maternity allowance and the hospitalbenefits

Mr Hulme:

– The payment of the age pension involves tremendous expenditure, but very few are entitled to benefit from it.


– A very great number is entitled to benefit from it. That number has been made eligible to receive the pensions in recent years by the actions of Labour governments and it is increasing year by year. Those people have made their contribution to public moneys, not only by way of direct income tax and social services payments, but also by the payment of a whole range ot consumption taxes. If the honorable member for Petrie (Mr. Hulme) alleges that persons who receive the age and invalid pensions have made no contribution to the social welfare fund he will find that that is a very difficult argument to prove.

Mr Hulme:

– I did not suggest that recipients of the pension had made no contribution. “What I said was that all who make the social services contribution do not receive the benefit of the pension.


– They receive a very substantial benefit in the form of various types of social services. That is a benefit which they have earned and which the country owes to them. The previous Government considered it to be necessary to establish a special fund. There is a very great number of misconceptions about the “ fund “ system. The Treasurer, by his recent comment on treasury-bills, did his orthodox theory a great deal of harm. Social services payments in any year must be made from funds raised to cover those payments in that year. The Government considered that if a fund were established there would be less likelihood of a future government reducing the social services benefits that have been granted. Those were the two reasons for the collection of income tax and social services contribution as separate levies. The Government now proposes to have only one act to deal with the purposes that were dealt with by the Income Tax Assessment Act and the Social Services Contribution Assessment Act. It has changed the title to “ Income Tax and Social Services Contribution”. In that way the Government has conceded the correctness of the view of the Chifley Government.

The Treasurer has stated that another cause of complexity in connexion with income taxation was the system of concessional rebate which replaced that of allowable deductions^ This practice did not involve any real complexity. The only argument against it was that .the rate of tax was struck on the gross income and that the rebates also were made at the rate applicable to the gross income. The substitution of deductions for rebates will not simplify taxation law considerably. Over recent years the rates of tax have been so high that the people have had a grudge against them. The Government has attempted to direct their attention away from the rate of tax to what it alleges to be the complexities of the taxation law. Taxation law, necessarily, has always been complex. But the present income tax law is a far less complex mechanism than that which operated when the tax was payable to both the State and the Commonwealth. In recent years, for party political reasons, the Treasurer has directed attention to what he has alleged to be the unnecessary complications of the act, and has now been forced to seek some way out of his dilemma. The two measures that he has now introduced do little, if anything, to remove the complications alleged to exist.

Apparently, calculations prove that the deduction system makes very little difference to the amount of tax payable as compared with the rebate system. It is possible to prove that the deductions favour a particular range of income earners, compared with the rebate system, and vice versa. It is true that the deductions proposed do give a benefit to the higher range income earner. Formerly, the taxpayer in the higher bracket of income did not receive the full benefit of the rebates allowed. There was a limit beyond which the rebate did not operate. The deductions which may now be made are not to be subject to a limit. People who receive the higher income may obtain a maximum deduction which they would not have obtained formerly, but that benefit will not be so great comparatively to the average wage-earner; The first child in each family is now endowed to the amount of 5s. a week and the deduction from income tax allowed in respect of that child is £78 a year. The deduction allowed for each additional child under the age of sixteen years is £52 a year. I should like the Treasurer to make clear whether the difference between the amount of deduction in respect of the first child and that in respect of the subsequent children is due to the fact that 5s. a week endowment is payable in respect of the one whilst 10s. a week is payable in respect of the others. The Treasurer announced that the student allowance would now apply to students up to the age of 21 years. The student allowance was introduced by the Chifley Government in order to enable .parents to receive a rebate in respect of student children over the age of sixteen years. The Government proposes to extend the age limit to 21 years. It is worth while doing this although only a small cost of £150,000 a year is involved.

The Treasurer has directed attention to the fact that the Government has set up a committee for the purpose of examining taxation law. I am never very impressed by committees of this sort. It seems to me that the Government, as is usually the case, is seeking to pass on its responsibility. No doubt, in due course, the committee will present a report which the Government will use as a complete alibi, and will adopt in toto. An investigation of the whole body of taxation law, direct and indirect, might be useful but I do not expect any thing useful to be accomplished by a taxation body appointed as this one has been. Even if it were to travel right round the world and were to obtain particulars of the taxation system of every country, a committee, the object of which is to consider the mechanics of taxation and to deal with its complexities could not achieve anything worthwhile.

The Government has extended a few more concessions which are very simple and will, give very little to the taxpayer. In doing this, it has carried on the policy of the Chifley and Curtin Governments of giving benefits as and when possible. Unlike the Chifley Government, however, this Government has not reduced tax rates nor the yield obtained from taxation. Over the last six or seven years, honorable members have heard references to what is called the “ quantum “ of taxation. The previous government was told that it had not reduced taxation because the “ quantum “ of taxation was higher than it had been. This Government cannot claim to have reduced taxation even in a minor degree because the quantum” this year is greater than it has ever been before. That is not unreasonable. Honorable members of the Opposition believe that to be necessary, hut we point out to the people of Australia that the argument used by the Government parties when they composed the Opposition was adduced merely in an attempt to deceive the people and to gain votes by that deception. That is a poor way of gaining the treasury bench. It will bring to the Government it own reward or retribution. The Minister for Immigration (Mr. Holt) is reported to have said recently that the Government was the victim of its own propaganda. Indeed, the arguments advanced by members of the Government and their supporters in defence of their financial proposals make it quite plain that they have been the victim of their own propaganda.

Legislation imposing taxes has three purposes. First, taxation is levied to provide the revenue necessary for the Government to carry on administration, to construct works and to provide social services. It is clear that expenditure on those items cannot be reduced. The Government has shown that it cannot reduce expenditure in the departments and services that it administers, and it does not propose to reduce expenditure on social services, but, on the contrary, to increase it. The second purpose of the general body of taxation law is to provide a system for the redistribution of the national income. That function of taxation was denied for many, many years, but it is now accepted as sound practice to take money from those in receipt of high incomes in order to pay some of it to those who are less fortunately situated. That principle operates to the advantage of every member of our community, and it possesses the added advantage of stimulating the production of goods by increasing the consuming power of the community, on which our producers and manufacturers depend. Thirdly, direct taxation is the principal weapon for use in countering an ida. tionary spiral. Since the present Government has now realized that it has been the victim of its pre-election propaganda, it ought to admit that it should increase income tax and other direct taxes such as death duties before invading the specialized field of indirect taxation such as sales tax, or introducing sectional taxes such as that recently introduced by the Government. Of course, if the Government admitted the necessity for increasing direct taxation it would have to eat the words that it uttered so continuously and “. so loudly during Labour’s administration. Nevertheless, I believe that the people are more willing to accept a difficult situation when a government, disregarding its former attitude, adopts methods to deal directly with the situa- tion confronting it. The present situation is that a vast sum of surplus money is in circulation in the community. That has contributed, and is contributing, to unduly high incomes, dividends and company reserves. The clear duty of the Government is to draw off some of that excess spending power, and it can do so t by employing a variety of methods, of which an increase of income tax is one. I firmly believe that instead of increasing indirect taxation and imposing special sectional taxes, such as the wool sales contribution, the Government should go ahead and increase income tax.

The Government proposes to adopt a course that will have the effect of encouraging private companies to retain a substantial proportion of the profits they have made without payment of tax on them. “When the previous Labour Administration introduced amending legislation to. deal with the huge profits made by private companies, the present Treasurer, who was then Leader of the Australian Country party in Opposition in this House, said that the bill would sound the deathknell of private companies in Australia. He contended that no private company could afford to continue to function as such, and that every private company would be compelled to revert to a simple partnership or to enter the realm of public companies. However, since then the Treasurer has apparently changed his views considerably. This bill does not propose to discontinue the special rates of tax introduced by Labour. The Treasurer proposes to increase the amounts that may be expended or retained by private companies without paying the high tax on undistributed profits that they are called upon to pay under the present legislation. As the honorable member for Melbourne (Mr. Calwell) has said, huge sums are often expended or placed in reserve by wealthy private companies in order to avoid the heavy tax that they would otherwise be called upon to pay. Such conduct on the part of some of the more powerful private companies undoubtedly amounts to an abuse, and the Treasurer should maintain a close surveillance over the undistributed profits of all private companies.

Of course, the Treasurer might argue, and with some justification, that by increasing by some thousands of pounds the amount of undistributed profits that private companies may retain without paying tax is due solely to the depreciated value of money consequent upon the rise of prices that has occurred since the Government assumed office. The right honorable gentleman might also contend that the increased amounts that he proposes to permit them to retain free of tax are not, in reality, any greater than the amounts that they were permitted to retain under the previous legislation, when money had more value. He has pointed out that the loss of revenue that is expected to occur as the result of the concessions that he is making to private companies will amount to approximately £1,000,000. The proportion of the first £1,000. of undistributed profit that a company will be permitted to retain tax free is proposed to be increased from . 30 per cent, to’ 50 per cent., which is an increase of 20 per cent. However, I point out that the limited number of comparatively big private companies has established huge reserves in recent years, and could well afford to carry on under the present legislation. It is true, of course, as I have already pointed out, that the value of money has depreciated considerably, and that instead of private companies being able to retain more than they did previously, the effect of this legislation will be merely to permit them to retain virtually the same amount of money value.

The bill provides concessions for the members of the special force serving outside Australia at the present time and also for persons who are in receipt of the allowance payable under the Tuberculosis Act. The concessions proposed to be provided are in line with recent trends, and undoubtedly the recipients of the allowance payable under the Tuberculosis Act should be given similar increases to those given to recipients of age, invalid and waa- pensions. However, the bill indicates that the Government has not been able to live up to its pre-election promises. In fact, it has not even attempted to honour the promises that it made from week to week and from day to day during the parliamentary session that preceded the general election in December of last year. It is idle for the Treasurer to argue that the Government did not know of the inescapable commitments that confronted the Commonwealth and that it did not expect the world situation to deteriorate.

Mr Freeth:

– More blame on Labour for not having recognized that fact.


– We maintained taxation rates at a fairly high level.

Mr Beale:

– The previous Labour Government declined to do anything worthwhile about defence.


– That is wholly and completely untrue. The money allocated by the previous Labour Government for expenditure upon defence could not, in fact, be expended, and we were criticized for having allegedly allocated too much money for defence. That brings me to one of the criticisms that was made most regularly by the anti-Labour parties when they were the Opposition. They continually complained that taxation rates were too high, and in support of that complaint they pointed to the fact that the then Government was financing capital works from revenue. Of course, that practice is regarded as perfectly sound and desirable in industry and business, and it must be sound governmental policy also. Instead of being praised for conserving the public founds, we were blamed by the political parties represented opposite.


– What has that to do with the bill?


- Mr. Speaker will correct me if I am digressing from the measure, and, in any event, I have the floor now. When Labour was in office it provided all the funds necessary for the conduct of the Parliament, the maintenance of governmental services and the proper defence of the country.


– Order ! The honorable member’s time has expired.

Motion (by Mr. Daly) negatived -

That the honorable member for Perth (Mr.. ‘ Tom Burke) be granted an extension of time..


.- The most outstanding contribution to the debate made by the honorable member for Perth (Mr. Tom Burke) in the course of his speech was his honest admission that the present Government was following a policy of conferring benefits on the people by reducing taxes and by extending the range of concessions to taxpayers. That is precisely what the Government pro- . poses to do in this measure, and’ it is refreshing to hear an admission of that fact from a member of the Opposition. Of course, the honorable member for Perth dealt with a number of other matters. J did not regard at all convincing the argument that he advanced in support of his contention that the social services contribution and income tax should not be amalgamated, as is proposed in the bill. The point that he endeavoured to make concerning the complexity of taxation and the proposals in the bill that are designed to simplify it, also was not convincing. I remind the honorable gentleman that under the Income Tax Assessment Act it is impossible for an individual, other than a highly qualified taxation specialist, to assess the tax for which a taxpayer will be liable when he submits his return. Is not that a complexity and a difficulty that is due to the present system? The bill contains proposals that will enable a taxpayer to ascertain, when he submits his return, exactly what tax he! will be called upon to pay. When the honorable gentleman contended that thepresent measure will not simplify the taxation procedure he was obviously en- gaging in a foolish argument.

The honorable gentleman also raised the old contention that a government is justified in using trust funds to redeem treasury-bills. Although I do not agree with the practice, I know that all administrations have arranged finance through the cancellation and re-issue of treasurybills. Consider the National Welfare Fund and the War Gratuity Fund, the latter of which has only a nominal credit of £37,000,000, the money having actually been expended. In this year of grace economic circumstances may be such as to render it extremely difficult for a government to raise the money that it would be called upon to provide- to meet Australian funds that have been used.

Mr Tom Burke:

– That is true of all funds.


– Of course, it is also true of all governments. If money that -has been collected is placed in trust by the Government for a particular purpose, -I do not consider that the Government is justified in expending it for any other purpose. I contend that in respect of trust funds the Government is in no different position from that of any ordinary individual or private concern entrusted with money for a specific purpose. That money should be available for use when required. I remind the honorable member of the unfortunate circumstances that the Western Australian Government faced during the depression years, when it was forced to sell its savings bank to raise money because it had followed the practice of using for general expenditure moneys that had been entrusted to it by the people.


-Order ! I have tried to keep the debate within the limits of the measure. I think I shall have to become a little more drastic. The honorable member must confine himself to the measure.


– I have dealt with the point that was raised particularly by the honorable member for Perth. He also said, in the course of his remarks, that the re-introduction of the system of deductions instead of rebates would be of very doubtful benefit. I suggest that if he takes any sequence of figures that he cares to select he will find in them definite and conclusive proof that the new system will be of benefit. Under the existing system the tax to be paid is assessed at the rate applicable to the gross income, and that rate is applied also to the concessional rebates for the purpose of determining the amount to be deducted from the gross tax. Under the proposed system, the tax will be assessed at the rate applicable to the net income after allowable deductions have been subtracted. The adoption of the new system, therefore, will mean a considerable saving for people on lower incomes.

It cannot be denied that the measure proposes a lightening of the burden of income tax. I say frankly that I do not like the bill, because I do not like income taxation, or, in fact, any form of taxation. However, the levying of taxes is one of the unpleasant, unpalatable, objectionable and unpopular things that a government has to do, and any government with a full sense of responsibility does it with honesty. I consider that the bill will bring about a vast improvement of the conditions that now apply in relation to income tax. As the honorable member for Melbourne (Mr. Calwell) has agreed, the measure provides for concessions which will leave an extra £1,750,000 in the pockets of the taxpayers. Taxpayers in the lower income groups will benefit from most of that saving. Other concessions that the measure proposes include an increase of the allowable deductions for dependants, medical expenses, funeral and cremation expenses, life insurance premiums, medical and dental fees, and contributions to medical and hospital benefits funds. All those concessions will be of direct and major benefit to taxpayers in the low income groups.

Mr Bryson:

– They will be of greater benefit to the higher income groups.

Mr. LESLIE. They will not. Although the allowable deductions of the taxpayer whose income is high may be greater than those of the taxpayer whose income is low, on a comparative basis in relation to gross income the benefit to the former will be negligible whereas to the latter it will be considerable.


– They will also be negligible in relation to the small income.


– They will not. These matters must be judged on a comparative basis. The taxpayer with a low income will gain comparatively a more material benefit from the concessions than will th taxpayer with a high income.

I confess quite openly that there is one concession, proposed by the bill, about which I am not happy. I refer to the concession in relation to undistributed profit tax which will increase from 30 per cent, to 50 per cent, the amount of undistributed profits that are to remain taxfree. I consider that companies that are prospering to-day are able to pay the full tax on their undistributed profits.


– The concession refers only to proprietary, and not to limited liability companies.


– It refers to private companies. However, I do not wish to differentiate between various kinds of companies, because all kinds of companies are able to recoup themselves for any extra tax burden that is placed on them. In the long-run businessmen do not pay the increased tax. The consumers pay it. Therefore, the proposed concession will be of considerable benefit to companies. The proposed concession will encourage some companies to set aside more of their money in undistributed profits in the hope that at some time in the near future they will receive the benefit of a reduction of taxes. The criticism that the honorable member for Perth levelled at the taxation committee is entirely unjustified. If the simplified system of taxation and the concession in relation to the deduction that are proposed in the measure are the result of the recommendations of that committee, then I consider that it has done an excellent job. I believe that it will do a still better job if its inquiries are continued along similar lines in the future. As far as I can judge, the aim of the committee was to recommend ways and means of removing injustices in the present tax laws and also to recommend measures that could be adopted for the adjustment of existing anomalies. It has succeeded in bringing to the Government’s notice the necessity to remove some of those injustices and anomalies.

There are two aspects of income tax law to which I particularly desire to. direct the attention of the Treasurer and into which I hope the committee will make some inquiry. One of them is in connexion with the system of deductions for deferred maintenance. During the war period the government in office recognized that war-caused circumstances prevented businesss undertakings and primary producers from carrying out normal repairs to and maintenance of their properties, and that it would therefore be unjust to tax them on the whole of their incomes, a part of which would be required normally to pay for maintenance that was then necessary but could not be carried out. Provision was therefore made in the income tax laws that an industrialist or a primary producer could apply for a certain proportion of his taxable income to be marked off as an amount that was likely to be expended on maintenance as soon as conditions allowed that to be done. A similar set of circumstances as those that prevented the carrying out of maintenance work in war-time is now in existence, because of various difficulties that I do not require to mention, since honorable members are only too familiar with them: Chaotic circumstances exist to-day as a result of the deliberate disruption of our basic industries which is causing a shortage of basic materials and so is denying business firms and primary producers the opportunity to carry out replacements and proper maintenance of plant and equipment. As a result, producers are now paying a far higher rata and a far higher amount of tax than they would be paying if the material that they require so urgently were available to them. I doubt whether the Commissioner, of Taxation or any court that had a tax appeal before it, would consider that the disruption that has caused the shortage of materials to-day could be said to be war-caused. In consequence, it might ba, held that the conditions that applied in; relation to deferred maintenance in wartime cannot apply to-day. Nevertheless, I am firmly of the . opinion that the circumstances of to-day are, such that provision should be made, to extend, for a specified period, the) operation of the deferred maintenance, system that was incorporated in the Income Tax Assessment Act during. the war. Such, a step would certainly remove some of the elements that discourage producers from making a maximum effort at a time when this country needs it so much. Producers see money that should be going into improvements and the maintenance of farms and businesses being taken by the Government in taxes, and so are discouraged. That position could be remedied by the application of the deferred maintenance provisions that operated during the war. It should be quite easy to extend those provisions to the circumstances that now exist. It is only too evident that the present unsatisfactory circumstances that affect the production of basic materials are being caused by the activities of Communists in the coal and steel industries and elsewhere, but, whatever be the cause, the deferred maintenance system could be reverted to until the Government was able to complete the joh that it has started out to do, namely, that of achieving peace and greater production in industry.

There is another point to which the taxation committee should turn its attention. I refer to the anomaly that exists in relation to the amount of allowable deduction that a farmer is permitted in connexion with the keep of his hired hands. He is permitted to deduct only £1 in respect of the keep of his farm worker, even though in a number of instances the award of an industrial court values the keep at a much higher figure. In any case it costs the farmer considerably more than from 15s. to £1 a week to maintain his employee. The argument advanced by the Taxation branch against any alteration of the method of assessing such keep is that this system has been applied for many years and that it is difficult to find a different basis for deduction that would apply uniformly. I submit that that is not a valid argument but one of defeatism which will solve no problem at all. It is the duty of the Government, the Treasurer and the Taxation branch to find a way out of this difficulty, and I suggest that there is no insurmountable obstacle to their doing so. If anomalies are uncovered in the attempt to find a different basis it should be remembered that there are anomalies in all legisla- tion and that most anomalies can be overcome. The provision in the Income Tax Assessment Act for the maintenance of a farm worker should be altered, and I hope that the committee of review set up by the Treasurer will turn its attention to this matter and correct an anomaly which is causing great dissatisfaction among primary producers. At present farmers need to pay far more to maintain their farmhands, but they are not allowed to return the whole of the cost as a deductible allowance for taxation purposes.

Another point that requires the attention of the committee concerns donations made to charitable organizations and institutions which are not allowed as deductions. The organizations in respect of which donations’ by taxpayers are deductible allowances are mentioned in the Income Tax Assessment Act, but there are many organizations performing charitable functions which are not mentioned. Many of them are government organizations to which private citizens contributed financially. I mention, for instance, the infant health clinics in Western Australia. They do not perform a charitable function, nevertheless it is an essential function. In Western Australia these institutions are sponsored and supported by the Government, but they have been developed by money subscribed privately throughout the State. Donations for the support of infant health clinics are not allowable deductions under the Income Tax Assessment Act. I contend that they should be, and that the act should be amended accordingly. People who contribute to the maintenance of infant health clinics are helping to defray governmental expenses because to that amount the Government is relieved of expenditure.

Those are the three items that I should like to see included in the list of proposed amendments to the Income Tax Assessment Act which we hope will be placed before this House next year as the result of the work of the committee. During the period of office of this Government it has not been possible to investigate the whole of the ramifications of the income tax law, but I believe that the Government has done all that it could have been expected to do. Circumstances have now arisen which no one could have foreseen and which have had a tremendous effect on the national economy and the national outlook of the country generally. Those circumstances are now apparent in the international sphere. They have a bearing on what this Government has done compared with what it might have done. Considered in the light of all the circumstances, the Government has gone a tremendous way towards achieving its stated objectives.

The Government and all honorable members of this House have a great responsibility to the nation and to the people, and it ill becomes any honorable member to shrug aside that responsibility. During the last week-end the honorable member for Melbourne addressed a meeting in Adelaide. According to reports of the meeting he told the workers who composed his audience to spend their money now while they can. Yet the same honorable member comes into this chamber and castigates the Government for not putting value back into the £1. Outside this House he apparently does everything possible to undermine what the nation is trying to do to maintain its financial equilibrium. Statements such as that, made by an honorable member who held a responsible position in a previous government can be considered at the best as showing bad taste, and at the worst as showing a lamentable lack of a sense of national responsibility. I do not think honorable members need worry much about him because his- technique is typical of that which the Opposition has employed. This is to aggravate any existing circumstances which might not be quite so happy as everybody could wish and then to blame the Government for such aggravated circumstances. Actions such as that of the honorable member for Melbourne show that if honorable members opposite can reduce the effectiveness of any action by this Government they will definitely do so, and no doubt glory in the achievement. I support the bill and commend the Government for taking this early step towards putting its income tax propositions into effect and lessening the burden of taxation.

It is not possible to ignore the rates of taxation when discussing this measure. Honorable members will find that the burden of income tax will be lightened by an alteration of the fates and a liberalizing of the concessions to a total of about £16,000,000. That is not to be sneezed at, and is certainly not a minor amount as honorable members opposite would have us believe that it is. This bill is evidence of the Government’s attempt to redeem the promise that it made to the people prior to the 10th December last that it would review downwards the incidence of taxation.


– Order ! The honorable member’s time has expired.


.- The honorable member for Moore (Mr. Leslie) referred to what he considered to be a lack of national responsibility on the part of the honorable member for Melbourne (Mr. Calwell). If I wished to be malicious towards the Government in the matter of responsibility, I should do no more than wish that it should have the same degree of co-operation from the Opposition as the late Government had from the then Opposion on measures that it took to control prices and to keep down the cost of living.

The honorable member for Moore has found the proposed tax concessions to be rather great. All that I can say is that it is a miraculous achievement of the Government to reduce taxation and yet collect an additional £140,000,000 in revenue. So as to achieve this strange effect the Government has increased indirect taxation while reducing direct taxation. That action has had the effect of putting £140,000,000 more into revenue than was collected last year. In spite of all that the honorable member for Moore said in answer to an interjector from this side of the House, when direct taxation is reduced those with higher incomes are benefited to a far greater degree than are those with lower incomes. In the reductio ad absurdum, a man who pays no taxation is not benefited by any taxation concession and a man who pays £10 a year cannot be benefited by more than £10 a year by any reduction, whereas a man who pays £5,000 a year benefits to a considerable degree by a 1 per cent, reduction. Therefore, in general, if one increases indirect taxation and reduces direct taxation one benefits a section of the community which least needs to be benefited, and casts an extra burden upon the man who should not be called upon to bear it; that is, the family man.

Every honorable member on the Government side is aware of that principle, and used to put it forward whenever a sales tax measure was introduced by the previous Government. I am glad to hear that £1,500,000 and £16,000,000 are to be the sums allowed in reduction of income tax, but I point out that the £25,000,000 taxation reduction measure of the Chifley Government was treated with contempt by the then Opposition. I offer no criticism of the concessions that the Government is making.; in fact, I am glad that they are being made. However, I suggest an additional concession. The honorable member for Moore spoke in particular about the primary producer. I want to speak about an aspect of the primary producer’s activities which affects the community in general. I do not say this in criticism of the Government, but it should do something that the last Government failed to do, that is, to increase the tax concession in respect of expenditure incurred on the control of soil erosion. Soil erosion does not concern the primary producer only. Just as child endowment is provided in order to conserve the nation’s biological asset, its children, so any concession that is granted in respect of the control of soil erosion will assist to conserve another national asset, the soil.

Mr Anthony:

– Generous concessions are now given to taxpayers in respect of expenditure on the control of soil erosion.


– I am concerned about not the rate but the amount of the concession. For instance, if a farmer paid tax at the rate of 5s. in the £1 and expended, say, £250, on the control of soil erosion, he would benefit by that number of 5s. I suggest that a farmer in a lower range of income who expended a similar sum on the control of soil erosion should be given a straight out rebate of tax of, say, £125. While travel ling around the country recently I havebeen struck by the degree to which soil erosion is extending. I suppose, however, that that process would be more apparent in a period during which heavy floodswere experienced such as have occurred during recent years.

The only other matter upon, which I wish to comment is the Government’s intention to conceal the social services contribution under the general heading of income tax. It is a sound principle that persons who are obliged to pay tax for a particular purpose should be able clearly to ascertain how much they contribute for that purpose. It is not a bad principle that a person who pays, say, £125 in tax should know that of” that sum, let us say, £53 is to be paid into the National Welfare Fund for the purpose of financing social services benefits. Our social services structure has existed in one form or another since the old-age pension, as the present age pension was then known, was introduced in 1909. The present agitation for the abolition of the means test did not arise until 1945. The causes of that agitation are easy to discern. It arose, first, beause the age pension was increased to a rate at which it became of real value to those who would qualify to receive it; and secondly, because the introduction of the social services contribution independently of income tax made people conscious of the fact that in paying social services contribution they were paying for benefits such as child endowment, sickness and unemployment benefits, widows’ pension or the maternity allowance and, therefore, should be entitled to receive such benefits whereas previously they had concentrated their attention on the age or the invalid pension, which they did not or knew they would not become eligible to receive. There is no doubt that the present Government parties in their propaganda in criticism of the mean3 test succeeded in conveying the impression that the Chifley Government was responsible for instituting the means test and that it was not applied many years ago in respect of applications for the age and the invalid pension. It is also clear that those parties by their attack on the means test and by their advocacy of its abolition gained much support at the last general election. The Government’s intention to conceal the social services contribution by reintroducing a unitary income tax is designed to take some of the sting out of the current agitation to abolish the means test. The Government realizes that it will have much more difficulty in abolishing the means test in view of the fact that when its members and supporters originated their attack on the means test the rate of pension wa3 only £2 2s. 6d. a week, and its aggregate cost was £58,000,000 a year, whereas the rate of pension is now £2 10s. a week. The recent increase of the pension to the latter rate will make the abolition of the means test a remote contingency whilst the Government’s additional expenditure in respect of defence will make it a still more remote possibility.

Mr Wilson:

– It was never suggested that the means test could be abolished without the introduction of a contributory social services scheme.


– I am glad of that interjection. The abolition of the social services contribution will mean the introduction of a contributory social service? scheme. I am opposed to both the abolition of the social services contribution and the introduction of a contributory sheme If the Government introduced a contributory scheme the 480,000 aged persons who are now receiving the age pension would not have any equity in the new fund and, therefore, could not draw any benefit from it. Their pensions would still have to be financed out of receipts from income tax. Thus, in addition to meeting that commitment taxpayers would have imposed upon them, a contribution in order to finance the contributory scheme under which they themselves would benefit at some time in the future. That is a practical difficulty that the Government would have to face if it endeavoured to establish a contributory scheme. However, of more importance still is the fact that social services contribution is paid on a graduated scale. Whilst the maximum contribution is ls. 6d. in the £1 some taxpayers are paying only at the rate of 3d. in the £1. Consequently, taxpayers in the lower ranges of income contribute less to the National Welfare Fund than do those in the higher ranges of income. If the measure now before the Chair is merely a preliminary to the introduction of a contributory social services scheme, I should like to know whether the Government proposes to re-introduce the national health and pensions insurance scheme of 1938 in respect of which legislation was passed but never implemented. Under that scheme the employer was to make a contribution which he could pass on to the general public and contributions were not graduated according to income whilst, for instance, a lawyer with an income of £5,000 a year, who did not have any employees at all, would make no contribution whatever. I am afraid that this measure is a preliminary move on the part of the Government to abolish the social services contribution which I repeat is paid on a graduated scale, and that it is designed to clear the way for an ungraduated social services scheme. If that is so - and the interjection that the honorable member for Sturt (Mr. Wilson) just made lends colour to the possibility - it will be very bad for the people. I do not see any virtue in concealment from the taxpayer of the proportion of his tax that is paid in respect of social services benefits. It is not something to be trumpeted abroad, or admired, and it cannot be claimed to be a means of simplifying present taxation procedure. The social services contribution involves a very healthy principle even though it has led to the present agitation for the abolition of the means test. It enabled taxpayers to ascertain how much of the tax that they paid was to be expended on the provision of social services. Under the Government’s proposal they will be denied that knowledge.


.- Whilst the honorable member for Fremantle (Mr. Beazley) dealt with only two, or three, aspects of the measure now before the chair his speech in the main was an apology for the budgets of Labour governments in the past. I am unable to make head or tail of the arguments that he advanced. His main argument was based on the fear that if the Government abolished the social services contribution it might take some of the sting out of the agitation for the abolition of the means test. My colleagues and I do not share the honorable member’s fears in that respect. It is generally conceded that no previous Australian government fulfilled its promises to the degree to which the present Government has fulfilled the promises it made at the last general election. If the Government continues to live up to the record that it has already established in that respect in the brief period since it assumed office there can be no doubt that it will in due course consider the introduction of a national insurance scheme and will formulate concrete proposals that it will place before the people at the next general election. Therefore, honorable members opposite should forget the fears with which the honorable member for Fremantle is obsessed. Up to date the Government has not evolved such a scheme. When it does so it will submit it to the people who will be asked to decide whether they desire that such a scheme shall be established.

Let us examine the arguments that were advanced by the honorable member for Melbourne (Mr. Calwell) on behalf of the socialists in this House. He said that the present Government parties had repudiated their election promise to reduce all classes of taxes. That, of course, is incorrect. The budget includes proposals that will have the effect of reducing taxes by £15,000,000 in a full financial year. This year the Government has to meet additional expenditure of £50,000,000 in respect of strategic defence stock-piling, £133,000,000 for defence, and £67,000,000 for the payment of war gratuities - of which sum the Chifley Government filched £37,000,000 from the War Gratuity Fund - or a total additional expenditure of £250,000,000. In view of this expenditure it is not possible this year for the Government to reduce taxes substantially. It cannot do so because of the Communist party’s agitation and activity in the country. That party was protected by the Labour party when the Communist Party Dissolution Bill was before the Parliament.

The honorable member for Melbourne criticized the statement of the Treasurer (Mr. Fadden) that the socialists had permitted the income tax law to become as complicated as it is. The honorable men].ber said that the only simple principle of taxation that the Government acknowledged was that persons in receipt of large incomes should be taxed lightly whilst those in receipt of small incomes should be taxed heavily. That statement, of course, is not correct. The Government has devised a simple system of taxation under which justice will be done to all sections of the community. It is not necessary to retain the complications that exist in the present taxation law. It can be simplified by the re-introduction of the system of concessional deductions. In that way justice will be done to the poorer sections of the community, if it can be said that there are really poor groups in our community to-day.

The honorable member for Melbourne raised a point which my colleagues and I expected him to raise when he said that he did not like the proposal to abolish the social services contribution. He said that every taxpayer wished to know what proportion of the tax he paid would be used to provide social services benefits. I do not think that the average taxpayer is concerned at all about that aspect. His main concern is to know how much tax he has to pay ; he does not care two hoots about how much of the tax that he pays will be credited to the National Welfare Fund or some other fictitious fund. The National Welfare Fund is the greatest fiction that has ever been devised in the history of budgeting in this country. That fund exists not in fact but in name only. That is all I wish to say by way of actual criticism of the points raised by Opposition members to this bill. They have shown clearly that they are not greatly interested in this debate. They are putting up a front, but they realize in their hearts that the Government is doing something for the benefit of the community in simplifying our taxation laws.

The Government is committed to a policy of progressively simplifying the taxation laws of the Commonwealth, subject to the overriding principle that they must be based upon the capacity of the individual to pay, and upon a progressive system of taxation. The Income Tax and Social Services Contribution Assessment Bill and the Income Tax and

Social Services Contribution Bill were designed with that simple object in view. Within the general structure of a system of tax based on ability to pay, and on principles of equity, the Government has attempted to design a simple system of income tax, remove anomalies, increase benefits to taxpayers, particularly those with family responsibilities, include new items of deductions, and, as far as possible, give an incentive to producers to increase production, thereby reducing the cost of living in this country. The first problem is to simplify the taxation laws. The Liberal party and the Australian Country party, as a part of their policy during the last general election campaign, made it clear that, if returned to office, they would progressively simplify the taxation laws. They said that they would appoint a special committee of experts to study tax matters and that its recommendations, if considered reasonable, would be incorporated in the Income Tax Assessment Act. The legislation that is now under consideration is the first instalment of reforms.

The existing tax laws are most confusing. The average person, if he wishes to compute his tax, has to take into account six, seven or even eight different components in his return. They are income tax, provisional income tax, the social services contribution, the provisional social services contribution, the two acts and the two sets of regulations under which the income tax is assessed, and a system of rebates based upon a most complicated mathematical formula. A primary producer is subject to the averaging system. All those components, if I may so describe them, make the most horribly complicated system of tax in the world to-day. Let us also examine the social services contribution. There is the basic rate, a concessional rate, and a concessional average rate. I could continue in that manner minute after minute, detailing special taxes and special means of computing tax. Opposition members will concede that the time has arrived when the taxation laws of the Commonwealth must be simplified. The Government ha9 embarked upon that task. It has decided to repeal the Social Services Contribution Assessment Act and the Social Services Contribution Act, and the regulations thereunder, and to substitute a system of concessional deductions for the existing system of rebates.

Let us examine the system of social services contribution, upon which most of the debate on this bill has been concentrated. It was introduced in 1945 with one purpose only, namely, to deceive. It was considered that wage and salary earners could be induced to believe that they alone were making a contribution to social services. That is not correct. Every taxpayer pays the social services contribution. Companies pay it by way of the pay-roll tax of 2^ per cent. Collections from that source this year will amount to £26,000,000. Therefore, honorable members will see that the socalled grounds of the social services contribution were fictitious. Every taxpayer pays the social services contribution and, therefore, I contend that the arguments that were put forward in support of the tax can quickly be rebutted.

Honorable members who examine the’ social services contribution will find that whilst nominally and theoretically there are two levies, there are, in fact, only one tax, one’ levy and one fund. That levy is payable by each taxpayer. I believe quite frankly that, when everything is taken into account, the so called benefits of the social services contribution scheme are completely nugatory. The money that is paid into the Consolidated Revenue Fund allegedly as a social services contribution may be used for social services or for general revenue purposes. For those reasons, I consider that the Treasurer is conferring a great benefit on the community in abolishing the social services contribution, and in repealing the Social Services Contribution Assessment Act and the Social Services Contribution Act, and the regulations thereunder.

It is interesting to examine the history of the system of rebates. The former right honorable member for Yarra, Mr. Scullin, when speaking on the bill under which it was introduced, made it perfectly clear that he was interested in only two matters. He said in effect, “ First, I have to try, if I possibly can, to reconcile the various State acts, and, secondly, I must maintain revenue at the highest possible level “. The system of rebates was not founded on a basis of theoretical justice, or ability to pay. Mr. Scullin blatantly said, “ I base it on two facts. I must keep up the yield of tax, and I must try to reconcile State acts “. Those persons who have tried to make the arithmetical calculation involved in computing their concessional rebates have found it to be a most difficult task. The Government has decided that the rate of tax shall be calculated on the basis of net income. In other words, persons who pay insurance premiums, contribute to medical and hospital funds, and support elderly relatives and the like, will be permitted to deduct all or a part of those sums, depending upon the amounts, from their gross income before taxable income is determined. They will no longer be bothered by this dreadfully complicated system of rebates. I believe that such a change is essential if the income tax laws are to be understood and if a sensible system of income tax is to be introduced.

The Government has also decided to alter the tax scales, that is to say, the proportionate amount of tax on various classes of income. At present, there is a fractional system of taxation, based upon each £1 of income. Under that complicated system, a taxpayer who wishes to work out his liability must calculate to two or three decimal places of a penny. The Government has decided to introduce what is called the step system of taxation, under which steps of £50, or a multiple of ‘£50, will be taken. The Government has also decided to calculate tax in terms of pence rather than to three decimal places of a penny. Therefore, the new system will greatly simplify the methods of taxation and the application of the scale of taxation in this country.

I now wish to submit for consideration by the Treasurer some reforms which, I believe, should be incorporated in our taxation laws. The time factor compels me to proceed backwards with the order in which I initially intended to make my points, because the last point is, perhaps, the most important. An amendment which, I believe, should be accepted by this House, is one that would permit a system of deductions to be applied in respect of the replacement of mechanical equipment.

Under the present system of taxation, as an example, 20 per cent, may be allowed in the first year, and 10 per cent, in each succeeding year. That system is based on conventional systems of accountancy. In other words, it is based on the assumption that the value of money remains stable, whereas its purchasing power fluctuates. Money is losing its value very quickly. According to the “ C “ series index it has lost about 50 per cent, of its value since 1939. That means that equipment which cost, say, £1,000 ten years ago may cost £2,000 to replace at the present time, yet all that a person is allowed under the income tax law is £1,000 for replacement purposes. In addition, a person who is trying to put aside undistributed profits to pay tha additional amount of between £1,000 and £2,000 is subject to a tax of approximately £600 on those funds. Therefore, a. company or an individual engaged in production instead of being able to replace equipment for £1,000, has to set aside “ £2,600 for that purpose. In many countries, replacement allowances are permissible, and a person, if he is sensible enough, may set aside the replacement value of his equipment. The replacement allowance could be related to an index of inflation, and if equipment which cost £1,000 ten years ago costs £2,000 at the present time the taxpayer could be allowed that replacement price for the purposes of. taxation.

I offer two suggestions to the Government. The first is that replacement allowance should be permitted, and should be related to a prices index. Secondly, all taxes on undistributed profits that are set aside for replacement purposes should be abolished. Those reforms, if adopted, would materially assist to achieve maximum production, because companies and individuals would be encouraged to install modern mechanical equipment and, in that way, industrial efficiency would be maintained. After all, that is the greatest need in Australia to-day.

I come now to property tax. Income tax is levied on total income. In addition, a surtax is imposed on income derived from property. The Government has decided to adopt a new method of computing property tax. In my opinion it is a complicated method, and I suggest that it should be altered. We could allow a one-fifth deduction in respect of personal income, then add the personal income from property and apply one rate of tax in accordance with the formula com.tained in the proposed resolution submitted by the Treasurer in Committee of Ways and Means in respect of income tax. In other words, that complicated system can be avoided and a definite incentive given to the individual who derives income from personal exertion, whilst at the same time persons who derive income from property would not be unduly penalized. I commend that suggestion to the Treasurer, and I hope that he will discuss it with the Government.

We cannot have a truly democratic community unless we have an informed public opinion. Therefore, it is the responsibility of this Parliament to make laws that can be understood by the people. I go so far as to say that the tax laws cannot be understood by any honorable member of this House and, consequently, an urgent, and even desperate need exists 10 achieve some degree of simplicity. This bill is the first instalment of the Government’s proposals to introduce sanity into our tax laws. Opposition members may dispute this point, but I claim that it is the first attempt progressively to reduce rates of tax.

Sitting suspended from 6 to 8 p.m.


– I ask for leave to continue my speech at a later hour this day.

Leave granted; debate adjourned.

page 3163


Minister for External Affairs and Minister for External Territories · Warringah · LP

by leave - It needs no statement of mine to emphasize the dangers which to-day confront free nations. We live in a world of great insecurity. Deeply though we are dedicated to peace, and profoundly though we desire it, we know that goodwill is not enough. We have learned that in the world of to-day right without might is powerless against those to whom might alone is right. How tragic it is that whilst- the countless millions of people of the world seek peace, they have not been able to achieve what their hearts desire. Mounting tension between nations has miserably shattered the high hopes of men and women who only five years ago saw the dying flames of a terrible conflict. We witness a world which has moved ominously into two powerful armed camps. The great problem -which confronts Australia, as it does every other free nation, is what can we do to avoid the terrible disaster of another war whilst holding fast to the deep and precious heritage of liberty which is ours.

In my speech in this House on the 9th March, 1950, I set out in some detail the fundamentals of Australian foreign policy and reviewed, in the field of international affairs, the broad global picture which must be understood if we are to see in their true perspective the problems of particular regions and individual countries. I feel confident that honorable members will agree that events since March, 1950, have confirmed the analysis of the situation which- was then made. The San Francisco conference, which drew up the United Nations Charter, ended on the 26th June, 1945, that is, shortly after the defeat of Germany but before the end of hostilities with Japan. The Charter was based on certain assumptions, the most important of which were that all nations would conduct themselves in accordance with its high principles; would practise tolerance; would live together in peace with one another as good neighbours, and would unite their strength to achieve and maintain international peace and security. In particular it was supposed that Soviet Russia would, after the war, act in unison with its war-time allies, at least to the same extent as it had done during the war. It was believed that Soviet Russia would faithfully carry out the obligations which it undertook when it solemnly put its seal to the Charter, and would labour alongside those with whom it had fought to achieve victory in order to establish lasting peace. The history of the subsequent five years has made only too clear how sadly unjustified these basic assumptions were. As a result, some of the most important articles of the Charter, includ- ing Article 43 which provides that all members of the United Nations shall make available to the Security Council “ armed forces, assistance and facilities . . for the purpose of maintaining international peace and security” became a dead letter. Cynicism gradually replaced the high hopes with which the United Nations was created.

The decision of the leaders of the Union of Soviet Socialist Republics to abandon their war-time comradeship with western countries, and to revert once more to a policy of pressure, internal or external, against non-Communist countries, has been a tremendous tragedy. Had the Soviet Union been prepared to associate itself with the countries of the west in repairing the economic ravages of war, had it devoted itself to peaceful pursuits instead of setting out on a road of imperialist aggression and expansion, had it refrained from disruptive interference with the internal affairs of other nations, had it not engaged in the countless activities against the sovereignty and integrity of other nations with which we have unhappily become only too familiar, had it not misused its position as a permanent member of the Security Council by using its veto power in such a way as to paralyse the council and so prevent it from discharging the important functions for which it was established, what a different, what a happier world we should know to-day. But the rulers of the Soviet Union decided otherwise. They must bear, therefore, the heavy responsibility for bringing about, by their post-war policy, a gradual aggregation of powers into two major groups whose objectives are at best divergent and at worst antagonistic. Whether we like the situation or not, it has been forced upon us by events largely outside our control, in spite of the fact that all of us are well aware of the dangers inherent in such opposing consolidations of power. The tragedy is that the foundations of permanent world peace could be securely laid to-morrow if - but there is the rub - Soviet Russia turned from the path of aggression to the highway of peace. Whether the world is to be permitted to devote the talents of mankind to the pursuit of peace and happiness will depend in the final analysis almost wholly upon one nation - Soviet Russia.

But, although the primary responsibility for the present world tension and the alarming drift towards war is clear, nevertheless the world would to-day be a securer place had the free countries of the world not learned so tardily that aggression grows like a weed and that like a weed, it must be rooted out; that aggression, wherever it lifts its head, must be resisted. Unfortunately, the years which followed the close of hostilities witnessed too many acts of policy which, whether so intended or not, could only be construed as appeasement. This, as it has a habit of doing, merely whetted the appetite of the nations of the Soviet group. We indeed learn slowly and at great cost. Eventually, however, it was seen that the only way to protect national and individual freedom was to build up with other friendly States economic and military strength. The most notable steps in this direction were taken in Europe and the North Atlantic area where the Marshall plan was devised and put into -effective operation, the Brussels Pact was signed and the North Atlantic Treaty organization was established. By means such as these the necessary barriers against aggressive Communist pressure in Europe were erected. It is now more than two years since the so-called “ Berlin Crisis “ was at its height. Although, since that date, the countries of Europe have had and still have their difficulties, no similar period of equivalent tension has recurred in that area since the Communist challenge to Berlin was successfully resisted.

Unfortunately, comparable steps to meet, by collective action, Communist pressure in the Ear East had not been taken before the attack was made upon the Republic of Korea by North Korean forces. Then, and then only, did the United Nations begin to take effective action of a kind which may well mark a turning point in United Nations history. This action, which is still continuing, was followed up by further efforts in the United Nations Assembly to measure up to the needs of the situation by devising new machinery for maintaining peace. At the meetings of the United Nations Assembly, both in dealing with the developing situation in Korea and in planning means of preventing such situations from recurring in the future, Australia has played a part, not without distinction, in arresting the drift which followed for a substantial period after the termination of hostilities in World War II. I shall refer later -in my speech in more detailed terms to the action taken by the United Nations Assembly now sitting in New York. For the moment, however, I desire to submit to the House a number of guiding principles which should, it is thought, govern our approach to the problems which now meet us in the international field.

The first principle is the necessity for building up collective armed strength for peace. And this involves as a necessary corollary that we, in Australia, must hasten to build up and. strengthen our own armed forces and the economy upon which they are based. Collective armed, strength is the overriding task to which we must to-day direct our efforts. If we are unable to secure international peace, all our national efforts to improve domestic living standards and to maintain individual freedom may prove completely ineffective. Our relationships with other countries to achieve common ends are not merely important : they may well be the determining factor in the continuance, or otherwise, of our domestic way of life. We have learned by bitter experience that international peace can be secured only on a collective basis. It is essential, therefore, to use existing United Nations and other machinery to this end, and to improve it from time to time in order to meet successfully new and unexpected forms of aggression. This overriding task imposes a tremendous responsibility upon all of us to construct our defences for peace - not for war - and in the process to guard against the danger that great concentration of power, if not used wisely and for carefully chosen ends, can increase rather than diminish the risk of conflict. In view of the tremendous consequences to civilization as a whole, which any modern war must inevitably bring, foreign policy must constantly be directed towards avoiding conflict, although at the same time military preparations must be made in order to give added weight to foreign policy and, in the last resort, to meet and defeat an aggressor if all peaceful means of avoiding an outbreak of hostilities should fail.

The second guiding rule to which I wish to direct the attention of honorable members is the avoidance of any policy of appeasement or compromise with principle. “In our lifetime, history has shown in the clearest terms the complete ineffectiveness of such a policy. Before the outbreak of World War II., there were many who thought that Hitler could be appeased. It was not difficult to find colorable reasons in favour of accepting without challenge Hitler’s successive acts of aggression. In many cases, arguments were readily forthcoming in support of the theory that Hitler was only trying to win again territory or populations which had been traditionally German. The Rhineland was occupied; Austria was swallowed up; and Czechoslovakia was forced to agree to surrender to Germany the area inhabited by the Sudeten Germans. It was not until Hitler reached out to swallow up Czechoslovakia as a whole that the conviction grew, too late, that a policy of appeasement only led to increasing demands and pressure by the aggressor.

So, too, after World War II., no firm stand against aggression” was taken by the Western democracies for a period of years. Then, slowly, the lines of organized resistance were established, one after another, and the Marshall plan, the Brussels Pact and the North Atlantic Treaty Organization came into being. Even then, it was not until the act of naked aggression in Korea lifted the scales from their eyes that the vast majority of members of the United Nations realized that, whatever might be the complications and dangers of granting assistance to the Republic of Korea they . had to be faced courageously if worse risks were not to befall us in the future. For it is through strength, and through strength alone, that the tide of aggression can be halted.

In insisting, as a cardinal principle of policy, that there shall be no appeasement, we must avoid falling into the error of intolerance of the views of others. No nation or collection of nations has a monopoly of wisdom. No nation or collection of nations is always wholly right. And so it is that the point of view of other nations or groups should never be simply ignored. For war may come, not merely through the deliberate and malicious intent of an aggressor ; it can come through genuine misunderstanding. It is necessary that we should remind ourselves that, however clear to ourselves our own intentions may be, these intentions may be misinterpreted or misunderstood by other nations. In such circumstances it is a misuse of language to describe as appeasement attempts to make clear to other countries what our real intentions are, even though this may involve delay, patient explanation and even, sometimes, acceptance of a temporary disadvantage. There could be no greater tragedy than the outbreak of another world war, with all its inevitable desolation and misery, based upon real misunderstanding by one party of the intentions of the other. In such cases it is our duty aud a sign of strength, not of weakness, to do our utmost to ensure that our real intentions shall be understood and to attempt to remove any cause of misunderstanding.

The third principle that I wish to stress is that while refraining from appeasement and while building up our strength, we must avoid provocation in acts or words. The world situation to-day is so explosive, that acts or language of provocation could lead us into the abyss. Confidence very naturally grows with strength, but over-confidence, from which provocation often springs, is not a sign of strength. Power wrongly used may provoke the very thing we wish to avoid. Power must be exercised wisely, so that it attracts people to our standards because it is based upon fundamental human principles. There is far too great a tendency to-day to see all things and people as either pure white or pure black. Yugoslavia has swung away from the orbit of Communist imperialism. Here is one Communist country that is learning to live with the nations of “Western Europe. If we are wise in ‘the use of our collective power, there is no reason to suppose that there will not be others.

Fourthly, we must explore every genuine opportunity for a permanent settlement with Soviet Russia and nations within its sphere of influence. Our unhappy experience of the last five years should not deter us from seeking some measure of agreement with Communist countries, based upon recognition by the latter of the growing strength and determination of the free peoples of the world to defend their way of life and to resist aggression. It is a counsel of despair, not in my opinion justified by the facts, to act on the assumption that no mutually advantageous arrangements can ever be arrived at between the Communist and non-Communist worlds. Limited agreement in certain fields should be possible and should be sought, and there should be a constant effort to widen such fields of agreement.

The fifth principle we must constantly keep in mind is that nations which aremore economically developed and thus aremore fortunately placed than are lessdeveloped and under-developed nations, must give aid to the latter. This is not. a policy of mere humanitarianism ; it is also a policy of serious self-interest. There is a school of thought which arguesthat the under-privileged nations should be left to look after themselves and that all our resources should be expended directly upon our own immediate domestic needs. Indeed, there are some who proclaim that, to assist in any way those who are much less fortunate than we are would be to build up the strength of potential enemies. This is a disastrously mistaken viewpoint which completely fails to take into account theobvious facts of current international life.. Amongst the new nations of Asia, there isa struggle for greater economic security and the improvement of living standards. But, from Australia’s point of view, there is much more than that, vastly important though that is. Here we areconfronted with a contest for the friend ship of the countless millions who dwell there, a contest for the minds and heartsof men and women. If we completely ignore or neglect the economic and political problems of these Countries, we can be quite sure that the effect will be to encourage them to look elsewhere for support and counsel. Failure to improveliving standards will undermine political stability and lead to chaos in which the strong, ruthless and unscrupulous will win governmental control. It i.° my firm belief that we must take up this challenge and demonstrate to these people, by our acts, our genuine understanding of their problems and our sympathetic readiness to help them to help themselves. To a country geographically situated as is Australia, the benefits of such a policy could be incalculable.

I have returned from overseas with an increased consciousness of the dangers and difficulties of the world in which we live “to-day and with a heightened sense of the urgent necessity for every man and woman in this favoured country-

Mr James:

– I rise to order. Is it in accordance with parliamentary procedure continually to read a speech? I should like to know who prepared the speech for the Minister.


– The Standing Orders provide that speeches shall not be read, but that practice has not always been observed in this place. If it be the wish of the House that I should observe it, I shall apply it equally to all honorable members.


– I asked for leave, M.r. Speaker, to make a statement on foreign policy which concerns every country in the world and in which every word is important. It is essential that such a statement should be prepared.


– Order ! The Minister will proceed.


– I have returned from overseas-

Mr James:

– “Who wrote the speech for the Minister?


-Order ! The honorable member for Hunter -(Mr. James) must restrain himself.


– I have returned from overseas with an increased consciousness of the dangers and difficulties of the world in which we .live to-day and with a heightened sense of the urgent necessity for every man and woman in this favoured country to play their full part in meeting the serious problems which beset us. We can succeed only if we are prepared to work, if we are prepared to sacrifice, if we are prepared to help our friends and confound our enemies. Peace for ourselves and for our children can be maintained only if we recognize its high value and are prepared to pay the price necessary to obtain it. Peace can be won and maintained if every one of us is prepared to devote all the knowledge, all the wisdom, all the energy, and all the imagination and determination he possesses to secure it.

I now propose to deal in general terms with a few important matters to which I feel the Hou9e would wish me to make a specific reference. The first is the situation in which Australia finds itself at present in relation to the problems of global planning for security. My comments on this matter, and in particular the stress which I shall lay on the need for establishing or improving machinery for effective collaboration in the Pacific region, should not be interpreted in any sense as a modification of the views that I expressed in my speech to the House on the 9th March last when I said -

One further general observation should be made. It is a fundamental fallacy to imagine that different areas of the world admit of solution of their special problems without regard to all other areas of the world. There is not a number of entirely separate solutions to apparently separate problems. Each bears h. relation to the others, sometimes a profound one.

Regional organization is, however, important and planning in regard to one region can usefully supplement planning in another region. Nevertheless, wherever the planning is done, the problems of a particular region should not be allowed to overshadow the basic problems of the world as a whole. The matter is not one of making a choice between one region and another, but rather of ensuring that sufficient attention shall be given to world problems insofar as they manifest themselves in different regions.

As a member of the British Commonwealth, Australia is, of course, in constantconsultation with other members of tha Commonwealth and, in particular, with the United Kingdom on matters covering every field of activity, including the military field. Nevertheless, it is a fact, which must be recognized and stated, that Australia’s views in regard to world strategy and global planning cannot, under existing organizational arrangements, be expressed as effectively and carry the same weight at the appropriate point of time as oan the views of some other countries that are members of a regional organization such as the North Atlantic Treaty Organization.

It is appropriate, I think, to remind honorable members of the main features of the North Atlantic Treaty. The parties to the treaty affirm their faith in the purposes and principles of the United Nations Charter and undertake to settle international disputes by peaceful means. They bind themselves to encourage economic collaboration with one another and to maintain through self-help and mutual aid their individual and collective capacity to resist armed attack. If threatened, the parties will consult together and they agree specifically, under Article 5 of the treaty, that “ an armed attack against one or more of them . . . shall be considered an attack against them all “. Such an attack is to be resisted immediately “individually and in concert “, at least until such time as the Security Council is able to deal with it. Under Article 9, a council is established to consider matters that concern the implementation of the treaty, and subsidiary bodies may be and have been established by this council, including a Defence Committee.

I must pay tribute to the originators of the North Atlantic Treaty and to the very effective political, economic and military organization which has been established under it. At the same time, having watched carefully the operations of the North Atlantic Treaty Organization during the past year, I feel bound to say that one of the unintended effects of its establishment has been a tendency towards over-concentration by the parties to the treaty upon the European and North American picture and toward under-concentration upon the problems of other areas in the world, particularly Asia and the Pacific.

If proof of this statement were necessary, it has surely been made clear in the last few months in Korea. Since the Berlin crisis of 1948, all the signs have pointed to an immediate concentration of Communist pressure in Asia and South-East Asia rather than in Europe. Yet no steps were taken in the Pacific area in any sense comparable to those taken in the North Atlantic to meet this pressure and, as a result, the mem- bers of the United Nations, including all the members of the North Atlantic Treaty Organization, have found themselves engaged in the unexpected task of diverting resources to Korea to resist actual aggression rather than to prevent its taking place.

I admit at once the fact that the countries of the North Atlantic area are a cohesive group which, for that reason, can be more easily organized to help one another and to resist aggression. I admit also the outstanding importance of sustaining Western civilization in Europe and of ensuring that the great industrial capacity of Europe shall not be forfeited or lost to an aggressor. Nevertheless I assert with confidence that too little attention has been given to the problems of collective security and mutual help in the Pacific, and that the time has come to rectify this situation, step by step, by the most practicable means.

It is often forgotten that a positive decision by an organization like the North Atlantic Treaty Organization frequently involves at the same time a negative decision which may be of great importance to countries that are not members of the organization. For instance, if it be decided to concentrate military supplies in Europe, it will follow automatically that those supplies will not be available in other areas. Even in the economic field, the admirable process of collaboration and mutual aid amongst the member countries of the North Atlantic Treaty Organization may have the unintended effect of depriving other countries, faced with somewhat different problems, of vital resources. Moreover, there is a growing tendency for the planning of the North Atlantic Treaty Organization to extend beyond the confines of the North Atlantic area and directly or indirectly to involve decisions which have world-wide implications.

I believe that I should be f ailing in my duty if I did not point out these facts to the House and if I did not make clear the reasons why, during my visit overseas, I constantly pressed the argument that ways and means must be found to enable a country like Australia, which has proved its readiness and ability to play an important part in the international sphere, to make its contribution to collective planning and to express its considered opinion on matters which affect its own vital interest. After all, Aus1tralian soldiers, sailors and airmen have fought in Europe and in the Middle East, as well as in the Pacific, in two world wars.

The House will naturally desire to know how far this matter of improving the machinery for collaboration has been carried forward during my discussions in the United States of America. In a short discussion with the President of the United States, I put the views of the Australian Government before Mr. Truman. I pointed out that, whilst machinery had been established under the North Atlantic Treaty which permitted each member nation to discuss and influence important questions of policy, many of which have global effects, there was no comparable organization in the Pacific through which similar problems with similar effects, and where Australian interests were deeply involved, could be discussed. There was in fact no organic international body dealing with security and related questions to which Australia was a party, except, of course, the United Nations. As a consequence, Australia, which had never sought to escape its international responsibilities, was not able to play more than a relatively minor part in influencing policies and events which inevitably involve Australia. This being Australia’s position, it was reasonable to point to Australia’s record in the discharge of its -international responsibilities and its contribution to the maintenance of world security in comparison with some of the nations which are afforded facilities of membership in the North Atlantic Treaty Organization. At the same time, the capacity of Australia to discharge its appropriate responsibilities would be greatly conditioned by the existence of firm Collective security arrangements in the Pacific region. In short, it was Australia’s view that the interests of world peace and stability, and Australia’s capacity to work with other like-minded nations towards these objectives, would be greatly served by some form of regional pact.

The President, who gave me a most cordial hearing, and recorded the warm friendship which exists between our two peoples and his admiration for Australia’s conduct in coming so quickly to the aid of the United Nations in Korea, requested me to take up the problem with the Secretary of State, Mr. Dean Acheson. This I did, and I also had subsequent talks with Mr. Averill Harriman, special assistant to the President on Foreign Affairs. Later, just prior to my departure from the United States, I had a long discussion with Mr. Dean Husk, Assistant Secretary of State for Far Eastern Affairs, and Mr. John Foster Dulles, consultant to the Secretary of State. On these occasions I elaborated in some detail the views which I had briefly put before the President.

It has never been considered by Australia that the arrangement of such a pact would be an easy matter. Such questions as the area it should cover, the countries which would be parties to it, the contingencies against which it should guard, and other related questions do not admit of quick or easy answers. But such difficulties only condition the form of the end result; they should not, in Australia’s considered view, prevent the achievement of the essential purpose.

I desire to record in this House that I found in the United States that a most genuine friendship exists towards Australia and Australians, which, I need hardly say, is warmly reciprocated. The association between our two countries has never, at any time, been more intimate, and the discussions I have had could not have been on a more cordial or understanding basis. It might be said that there is no doubt at this moment that this warm-hearted nation would immediately and effectively come to our aid in the event of an act of aggression against Australia. But it is not one-way traffic in obligations with which Australia is concerned. What we seek is an effective way of contributing to the fashioning and maintenance of world peace. What we desire is a permanent regional basis of collective security, constructed in accordance with the United Nations Charter, which has as its pivotal point some obligation camparable to that set forth in Article 5 of the North Atlantic Treaty, namely, that an armed attack upon one shall be deemed to be an armed attack upon all. We desire to see formal machinery set up to which, amongst others, the United States of America and ourselves shall be parties, which will enable us effectively to plan the use of our resources and military power in the interests of peace in the geographical area of the world in which we live. But world security problems cannot be dealt with in geographical compartments. We desire, therefore, to see established a political liaison between whatever Pacific regional security arrangement may be accomplished, and the existing North Atlantic and Western European organization, so that Australia shall not be denied its right to have a suitable voice in the determination of policy and the shaping of events which deeply affect Australia wherever they may take place.

It would be inappropriate for me to say at this moment what will be the outcome of my discussions in the United States of America. I shall content myself with saying that I am not without hope that at a comparatively early date it will be found possible to embody in formal machinery an acceptable solution of this important problem.

The second important problem to which 1 wish to direct the attention of honorable members is that of a Japanese peace treaty. The House will be aware that, on the 14th September, 1950, President Truman made a statement on the Japanese peace settlement, in which he said that it had long been the view of the United States Government that the people of Japan were entitled to a peace treaty which would bring them back into the family of nations. He had therefore authorized the State Department to : initiate informal discussions as to future procedures, in the first instance with those governments represened on the Far Eastern Commission, the ones most actively concerned with the past war “. I point out now that Australia was one of those nations. He said that no formal action could be expected until an opportunity had been had to assess the result of these informal discussions. Subsequently, I had discussions in New York with Mr. John Foster Dulles, who, since the 18th

May, has been giving special attention, on behalf of the Secretary of State, to J apanese peace treaty problems.

Mr. Dulles presented a document outlining the views of the United States on the type of treaty envisioned by them as proper to end the state of war with Japan. The object of such a treaty, in the words of the United States Government, would be to “restore Japanese sovereignty and bring Japan back as an equal in the society of free people “. They suggested that the treaty should reflect the following seven principles: -

  1. Parties. - Any or all nations at war with Japan which are willing to make peace on the basis proposed, and as may be agreed should be included.
  2. United Nations. - Membership by Japan would be contemplated.
  3. Territory. - Japan would (a) recognize the independence of Korea; (b) agree to United Nations’ trusteeship, with the United States as administering authority, of the Ryukyu and Bonin islands; and (c) accept thefuture decision of the United Kingdom, Union of Soviet Socialist Republics, China, and the United States with reference- to the status of Formosa, thePescadores, South Sakhalin and theKuriles. In the event of no decision within a year after the treaty had come into effect, the United Nations General Assembly would decide. That meansthat in relation to those particular territories, if the four nations indicated by the United States Government could not reach agreement within a year it would be left to the General Assembly of the United Nations to make the decisionSpecial rights and interests in China would be renounced.
  4. Security. - On the matter of security the point made in the memorandum submitted to us was that thetreaty would contemplate that, pending satisfactory alternative security arrangements such as United Nations’’ assumption of effective responsibility, there would be continuing cooperativeresponsibility between Japanese facilities and United States and perhaps other forces for the maintenance of internal peace and security in theJapan area.
  5. Political and commercial arrangements. - Japan would agree to adhere to multilateral treaties dealing with narcotics and fishing. Pre-war bilateral treaties could be revived by mutual agreement.
  6. Claims. - All parties would waive claims, which would include reparations, arising out of war acts prior to the 2nd September, 1945, except that - (o) the allied powers would, in general, hold Japanese property within their territories, and (6) Japan would restore allied property or, if the property were not restorable intact, provide yen to compensate for an agreed percentage of lost value.
  7. Disputes. - Claims disputes would be settled by a special neutral tribunal to be set up by the President of the International Court of Justice. Other disputes would be referred either to diplomatic settlement, ‘ or to the International Court of Justice.

Similar approaches were made by Mr. Dulles to other member countries of the Far Eastern Commission, including the Union of Soviet Socialist Republics. for & preliminary exchange of views. In my consequent discussions with Mr. Dulles, I bore in mind not only the views of the Government in regard to Japan, as expressed in my speech on foreign policy on the 9th March, 1950, but also the discussions which took place on this subject in London in May, 1950, between (representatives of members, of the British Commonwealth. The purpose of those discussions was to seek to reduce to a common denominator the maximum field in which agreement could be reached.

Without elaborating in detail the precise matters which are still the subject of discussion, I believe that honorable members would wish me to indicate the basic approach of the Government towards the problem of a Japanese peace settlement. It is our view that, as has been stated by us before, an early peace settlement with Japan is desirable. This settlement must be of such a kind as to contain appropriate safeguards against any resurgence of Japanese militarism. We cannot lightly forget that it is only five years since Japanese military imperialists attempted to dominate Asia and SouthEast Asia by the ruthless use of force.

It is asking too much of any Australian to believe that, in this short lapse of time, all the basic factors which made it possible for Japanese aggression to be as successful as it was until checked have already disappeared. Our approach to a Japanese peace settlement must therefore be one of the most careful scrutiny of any proposals under which there could result a resuscitation of Japanese militarism.

Having said this, however, it is equally necessary for me to add that it is in our own interest to develop and maintain relations with Japan such as normally exist between two countries at peace. It is necessary, in addition, that Japan shall be permitted and encouraged to become economically viable. It is moreover in our interest to see that Japan shall not become a military vacuum which might be filled by forces or controlled by influences antagonistic to us. The problem of security in relation to Japan, therefore, is twofold. In the first place, we must ensure that our own security shall not be imperilled by the nature of the peace settlement with Japan. Secondly, we are concerned that the security of Japan itself shall not be endangered, because, in this latter event, our own security, too, might be affected.

It is inadvisable, if not impossible, at the present time to attempt to draw a precise dividing line between the two factors that I have outlined above. I can assure the House, however, that the Government will give the most careful consideration to the results of the conversations now taking place between the United States of America and other countries represented on the Far Eastern Commission, and that our general approach to the problem will be as follows : - Without vindictiveness, but also without wishful thinking, and without forgetfulness of the past, we shall endeavour to facilitate acceptance of a peace settlement which, after first providing adequately for what we regard as our legitimate security requirements, would then seek to restore to the Japanese Government and people control over their own affairs, but first subject to that security provision. It is our earnest hope that the Japanese will show themselves capable of exercising such control in a spirit of responsibility and that Japan will show by its conduct that it can safely be brought into the family of nations in the shortest practicable period. We must, however, repeat that we regard it as vital that safeguards against Japanese militarism shall be forthcoming, and we shall be constantly on our guard to provide against any possible misuse of the powers restored to Japan.

The problem posed by Japan for Australia is a difficult one. Let us be frank and say that we have twin objectives which, to some extent, overlap. This problem might be expressed in the form of questions. How can we prevent the resurgence of a militaristic Japan whilst at the same time allowing it to qualify for admission to the society of nations as a sovereign power? How shall we prevent it from becoming again a threat to the security of Australia whilst permitting it to have sufficient strength to resist the threat of international communism? ‘How do we, in short, impose the conditions essential to secure Australia against future Japanese aggression whilst moving towards normal international relations between our two countries? This is the basic problem which we have to face and which we have to do our best to solve. The most appropriate solution can be worked out only in close discussion between all the countries that are concerned in the Japanese peace settlement. I need hardly add that in this matter the Government’s duty is to interpret the will of this Parliament. We shall welcome any views that honorable members may care to put forward.

Mr Hasluck:

– When?


– Before the Parliament rises. The third main topic, to which I now. turn, is Korea. Honorable members are fully aware of the dramatic change that took place in the military situation in Korea as a result of the successful landing of United Nations forces at Inchon. As a result of that operation, brilliant in conception and execution, the resistance of North Korean forces then in South Korea was quickly overcome. Their remnants withdrew with all speed to the north and soon

Pyongyang, the capital of North Korea, was captured by United Nations troops advancing from the south. Meanwhile, in the United Nations General Assembly in New York, Australia’ played a substantial part in the establishment of the new United Nations Commission on Korea, on which it is represented. That commission, which has just held its first meeting in Tokyo and has now moved to Seoul, has an .extremely important and difficult task to perform. In particular, it is charged with the responsibility of representing the United Nations in bringing about the establishment of a unified, independent and demo,cratic government of all Korea. I am confident that the members of the com-= mission will readily face the inevitable discomforts and difficulties of carrying out their functions in an area devastated by war. Theirs is a task of the first importance, and the members of the United Nations rely upon them to carry out their heavy responsibilities impartially, courageously and with determination. Soon after the Inchon landing had compelled the quick withdrawal of North Korean forces from the south, there was every reason to expect a speedy end to military operations in North Korea so that full attention could be given to the problems of relief and rehabilitation. In the last few weeks, however, a new and unexpected situation has developed in North Korea. General MacArthur has reported to the Security Council that substantial numbers of Chinese Communists have crossed the Manchurian border to give aid to North Korea. Whilst it is true that the Peking radio refers solely to the use of Chinese “ volunteers “ in Korea, the new situation is undoubtedly explosive and must be handled with the utmost care.

A resolution sponsored by six countries is now before the Security Council. It calls upon all States and authorities to prevent their nationals from giving assistance to North Korean forces and to cause the immediate withdrawal from Korea of such nationals. It requests the Interim Committee on Korea and the United Nations Commission for the Unification and Rehabilitation of Korea to assist in the settlement of any problems relating to conditions on the Korean frontier in which States or authorities on the other side of the frontier have an interest. This resolution has, so far, been discussed in a preliminary way, but no specific vote on it has been taken. Meanwhile, a Chinese delegation from Peking has arrived in New York. The Australian Government has been, and continues to be, in the closest consultation with the United Kingdom, the United States and other governments in regard to the new and difficult situation which has developed in North Korea. The basic difficulty in dealing with the new situation is that of knowing accurately the reasons that have prompted Chinese nationals to cross the Manchurian border to assist the forces of North Korea. There has been a great deal of speculation as to those reasons. They range, on the one hand, from fantastic mistaken fears that the operations of United Nations forces in Korea are only a preliminary to operations north of the Manchurian border, to a planned determination to endeavour to throw United Nations forces out of the whole of Korea, on the other hand. In the present extremely delicate situation, I am sure that the House will agree that, in the circumstances, we must deal with events as they develop, keeping in mind, first, the basic objectives of United Nations assistance to South Korea and, secondly, the need for deliberation in any step taken so as to avoid unnecessary extension of hostilities.

There is a further matter of importance to which I direct the attention of the House. That is, the series of resolutions adopted by the General Assembly on the 3rd November last with a view to ensuring united action for peace. Although it is true that the Security Council took firm action with the utmost speed in dealing with the outbreak of hostilities in Korea, honorable members will no doubt realize that such action was made possible only through the accidental circumstance that the representative of the Soviet Union was not present at the early meetings of the Security Council and, for that reason, no veto was imposed on the Security -Council’s action. The return to the Security Council of the Soviet representative, and his frustrating activities during the month in which he acted as its chairman, made it clear that the

United Nations General Assembly, as distinct from the Security Councill, was bound to take some steps that would assist in dealing with situations similar to that which developed in Korea, even if action by the Security Council should be stultified by use of the veto. The General Assembly decided, therefore, that, if the Security Council failed to exercise its primary responsibility for maintenance of international peace and security, the General Assembly should consider the matter immediately with a view to making recommendations to members for effective collective measures. Under that resolution, the Assembly is now authorized to meet in emergency special session within 24 hours after receipt of a request by any seven members of the Security Council or by a majority of the members of the United Nations.

In addition, the General Assembly established a Peace Observation Commission composed of fourteen members to “ observe and report on the situation, in any area where there exists international tension, the continuance of which is likely to endanger the maintenance of international peace and security”. That commission can enter national territory only with the consent of the State concerned, and its services can be utilized only if the Security Council is not exercising the functions assigned to it by the Charter with respect to the matter in question, and only if two-thirds of the members of the Assembly, or of the Interim Committee, present and voting, approve such action. It can be seen, therefore, that it is limited in several ways. Further, the Assembly established a Collective Measures Committee consisting of fourteen members, including Australia, which has been directed to study, and to make a report to the Security Council and the General Assembly not later than the 1st September, 1951, on, methods that might be used to maintain and strengthen international peace and security, taking into account collective self-defence and regional arrangements under Article 51 and 52 of the Charter, which deals with the provision of forces for the purpose of maintaining security. But the most important portion of that resolution is that which recommends to member governments that each member shall maintain, within its national armed forces, elements so trained, organized and equipped that they could promptly be made available, in accordance with the member’s constitutional processes, for service as a United Nations unit or units, upon recommendation by the Security Council or General Assembly. That recommendation will be adopted by this Government, which has taken the view that strength must be given to the United Nations if that body is to succeed in the discharge of its high and important functions. The far-reaching importance of the resolution on united action for peace needs emphasis, for it imposes upon us, in this country, an obligation to have certain of our national forces so trained, equipped and organized as to be immediately available for United Nations purposes on the decision of the Government.

It would be wrong for me to convey the impression that I believe that these resolutions on “ uniting for peace “ are a complete answer to the problem of giving strength to the United Nations. Indeed, I believe that they represent only the first step. The Collective Measures Committee, to which I have already referred, provides a great and challenging opportunity to make the necessary recommendations to the United Nations with a view to arming the Security Council and the General Assembly with the authority and the means to enforce the provisions of the Charter. I am sure that honorable members will agree that the resolutions upon united action for peace passed by the United Nations General Assembly constitute a new and important advance in organizing collective resistance to aggression. It will be noted that the Security Council will still have, under the Charter, the primary responsibility for maintaining international peace and security. If, however, the Security Council fails to act, the collective opinion of the members of the United Nations as a whole upon the matter at issue can quickly be ascertained. Investigation of the facts can be facilitated, and recommendations can be made to governments on how they should deal with the situation.

I consider that I should not conclude my statement on the international situation without some reference to Dutch New Guinea. In my statement to the House on the 8th June, I outlined the policy of the Government in respect of that area. Both before and since that date I have, on a number of occasions, stated in clear and unmistakable terms Australia’s attitude on this important issue, which, the Government believes, has the overwhelming support of the Australian people. There is, accordingly, hardly any need for me to repeat what I have constantly asserted even as late as last week in this Parliament. During my visit to the Hague last August, I formally conveyed our viewpoint to the Royal Netherlands Government. I expressed in concise terms the reasons, which I have stated on many other occasions, why the Australian Government considers that the Indonesian Government has no valid claim to Dutch New Guinea. I conveyed those same opinions to the then Indonesian High Commissioner in the Netherlands, who is now the Indonesian Minister for Foreign Affairs. I also had full discussions regarding Dutch New Guinea with the relevant Dutch Ministers. Not only have our views been communicated to the Netherlands and Indonesian Governments, but in addition the necessary action has been taken to ensure that they shall be known to the world at large. During my visit overseas I conveyed the views of the Australian Government on this matter to governments in various countries that I visited. In addition, I took every suitable opportunity to make them widely known, together with the relevant facts, to the general public as well. I profoundly hope that the Indonesian Government will not press its claim any further. We have, on more than one occasion, given unmistakable proof of our friendship for the Indonesian people. That friendship remains unaffected. But to us, Dutch New Guinea is, and must remain, an area vital to our national security, which is the supreme interest of any nation. It was accordingly essential that our views should have been communicated to the Netherlands and Indonesian Governments in the manner that I have described, particularly since

Australia will not be represented at the Netherlands-Indonesian conference on New Guinea which is to take place within the next few days.

To-day we see round us the picture of a world in travail. None of us can see very clearly into the darkness of the future. I am confident, however, that, if the free nations steadfastly adhere to the general principles that I have outlined, we can successfully overcome the obstacles that lie in the path of peace. The world indeed is insecure, and so it will remain for a long time to come. But, whilst we cannot see far ahead, we can nevertheless be confident that there exist high and bright places of human achievement to which we shall ultimately win. I do not think honorable members will regard it as out of place if I say that it will not be sufficient for us to rely purely upon material things to accomplish the tremendous task of achieving world peace. It is proper that, as a government, we should constantly remind ourselves that we are a Christian people and that, by adherence to the simple but profound teachings of the Christian faith, we shall find not only the fortitude, but also the inspiration to support us in the difficult days that lie ahead. I reject and deplore loose talk about the inevitability of war. Nothing could be more disastrous or dangerous. If we have a faith by which we live; if we are prepared to carry the present sacrifices which planning for peace must involve; if, strong in our power, we use our power wisely, I believe that the darkness which envelops us to-day will be dissipated and that, in the end, we shall emerge into the clear light of international understanding.

I desire to table, in addition to the statement I have just made, a factual statement upon recent developments of international affairs which deals with a number of other matters. It would be inadvisable, and, indeed, impossible, in a statement on foreign policy to do other than to seek to confine one’s remarks to general questions of policy. I have sought to assist honorable members of the House by including a factual statement dealing with other parts of the world to which their attention and their queries may be directed. I therefore lay on the table the following papers: -

Foreign Affairs - Ministerial Statement, 2Sth November, 1950, and

Supplementary Factual Summary on recent developments in International Affairs, by the Minister for External Affairs. and move -

That the papers be printed.

Debate (on motion by Dr. Evatt) adjourned.

page 3175


Minister for Commerce and Agriculture · Murray · CP

by leave - An announcement was made on the- 26th October last that there had been discussions in London between representatives of Australia, New Zealand, theUnion of South Africa, the United Kingdom and the United States of America on the impact which United States military requirements would have on the market for wool. It was stated that the problem would be reviewed and that a system of pre-emption of enough wool to meet the emergency needs of the United Statesof America - but not such quantities aswould harm the auction system - would be examined by missions to be sent from the United Kingdom and the United States of America to the southern Commonwealth countries.

That examination was made by delegations from the five countries in discussions that took place in Melbournefrom the 15th to the 24th November, when the representatives of the United States were able to give more precise information about their emergency needsthan was available at the London talks. The quantity of wool needed for theUnited States emergency reserve contracts for fabrics which will be placed by the United States Government beforethe end of June, 1951, will not exceed 100,000,000 lb. clean, of which about onehalf will be used for the manufacture of woollen as distinct from worsted fabrics. Thirty million pounds of this will be bought by the Commodity Credit Corporation from merchants in the United’ States according to plan, for ultimate processing into military clothing. Thebalance will be obtained through ordinary trade channels, as it is required by manufacturers who are successful in obtaining contracts for fabrics.

It is intended to place these contracts on the basis of competitive tenders and to provide for deliveries extending into the United States fiscal year ending the 30th June, 1952. Further details of the programme will be announced later by the United States Army Department and the Commodity Credit Corporation. This method of acquisition of the wool required to meet the emergency needs of the United States of America will ensure the most economical use of the wool and will allow supplies to be drawn throughout 1951 from existing stocks in the United States, from South America and from the United States domestic clip, as well as from the three southern Commonwealth countries.

It has been concluded that a system for the pre-emption of wool would not in present circumstances constitute a practicable means of securing the United States military reserve requirements. It was considered that the legal and administrative difficulties, in the United States and in the producing countries, of instituting such a system could not be surmounted in time for pre-emption to assist the United States materially in meeting its requirements. Although it is considered that no special arrangements are necessary in order to ensure that the 100,000,000 lb. of. clean wool shall be available to the United States mills, a careful study has been made of preemption systems and of the various legal and administrative measures which would be necessary to implement them. The results of this study will be available in case of future need.

The opportunity provided by these discussions on wool has been taken to have some general talks on the commodity problems which confront the three southern Commonwealth countries. Information was also provided on the operation of United States priority and allocation powers and on the United States export control system.

That is the statement which has been finally agreed upon between the five countries as setting out the conclusions of the wool talks which began in London in September-October and which were concluded in Melbourne last Friday.

The essential point of interest to the Australian wool industry is that the United States Government has recognized that a system of pre-empting Dominion wools to meet its present special military reserve requirements could not be usefully introduced. Ordinary bidding at auction will be relied upon. That bidding will be through ordinary trade channels. It will be remembered that these wool negotiations originated in August with the request by the United States Government that the International “Wool Study Group should consider and devise a system of international allocation of wool, and that some steps should be taken to avoid what were referred to as serious price abnormalities. The United States Government suggested that, in the meantime, the Dominion governments should take steps to suspend public auctions of wool. ‘

The United States Government explained that these requests emerged from the circumstances of a general world shortage of wool and the special huge military requirements of the United States of wool for current use and for an emergency military reserve. The Australian Government declined to take any steps to suspend public auctions and took the stand that, except in a war crisis, maintenance pf the public auction system was essential to the well-being of the Australian wool industry. It was pointed out that prices control and public auctions were not compatible, and that, apart from its beingundesirable, it was not possible to operate any system of international wool allocations while still maintaining effective public auctions. The Australian Government made it clear that it was prepared to examine seriously the military wool requirements of the United States, and the best means by which those requirements could be satisfied.

In its approach to the problem the Australian Government was conscious of the dominant position of Australia as a producer of wool and of the responsibility pertaining to that position. On the other hand, the Australian Government was no le9s conscious of the necessity to protect the present and future interests of our most important industry. As a part of those interests it recognizes the. necessity to avoid such serious disruption of the trade of our traditional principal purchasers - particularly the United Kingdom - as might impair their capacity to continue as our principal purchasers. Without traversing the details, I might say that at the London wool talks, at which I represented Australia, the major conclusions were -

First, that a case had not been made for international allocation of wool.

Secondly, acceptance of the principle that the auction system should continue.

Thirdly, that even if a case were subsequently established for the necessity to abstract some quantity of wool for American military needs before auction, the price should be the price established at auction, that is, the price currently established at auction for wool of similar type. .

It was also agreed in London that the current military requirements of the United States of America, as in the case of those of the United Kingdom, should, like their civilian requirements, be procured through channels of trade in the auction rooms. Thus, at this point, the original very far-reaching proposal of the United States of America had been reduced to a consideration of how best the emergency military reserves of the United State of America could be procured. These were estimated to involve 100,000,000 lb. of wool, clean basis, from the dominions. At the conclusion of the London talks it was arranged that missions from the United Kingdom and the United States of America should visit Australia to examine the problem on the spot in conjunction with delegations representing Australia, New Zealand and the Union of South Africa. The Australian Government associated with its own delegation representatives from the wool-growing organizations and a representative each of wool-selling brokers and wool-buyers. In London, and at all stages since, representatives of Australian wool-growers have acted as advisers to me and to the official Australian delegates.

Arising out of the request that Australia should examine the case for some special steps on wool in the interests of the United States of America, we, on our part, asked for a concurrent examination by the United States of America of problems of supply which affect us in relation to our military and developmental needs for other materials. This request was readily met and talks on this problem took .place concurrently with the wool talks in Melbourne. In conclusion, it will be seen that the Government has at all times reconciled its responsibilities to the Australian wool industry with its general sense of responsibility to our great and powerful friend, the United States of America.

The final outcome of the talks in London and Melbourne should give satisfaction to the wool industry, as it has to the Government. The understanding reached is that, in the present circumstances, the essential military needs of the United States of America can best be met without interference with the traditional and essential marketing arrangements of our greatest industry.

I lay on the table the following paper : -

Wool requirements of the United States of America - Ministerial Statement, and move -

That the paper be printed.

Debate (on motion by Mr. Pollard) adjourned.

page 3177



Debate resumed (vide page 3175).

Deputy Leader of the Opposition · Barton

– It was arranged that after the important statement of the Minister for External Affairs (Mr. Spender) to-day, a short interruption should occur while the Minister for Commerce and Agriculture (Mr. McEwen) made an even more important statement, affecting certain interests, to which later a reply will be made. It was arranged that after that statement ‘had been made the statement of the Minis.ter for External Affairs should be debated. Therefore, I propose to make a few observations on the Minister’s statement. It was a lengthy statement which consisted of fifteen pages of typescript. Although I received a copy of it just before the debate commenced, I endeavoured, as I am sure every other honorable member did, to follow it closely.

The statement falls into two distinct parts. The first part deals with what I venture to call abstract propositions of general policy. Those are fairly summed up in an article that the Minister contributed on foreign affairs to the Melbourne Herald of Saturday last. In that article he raised substantially the same points as those to which he has referred in the statement that he has just made. I should like to say a few words about those general propositions. They are five in number and I shall quote them from that newspaper article because the Minister has merely elaborated them in the statement that he has just made to the House. The first of those propositions is -

The establishment, as swiftly as possible, of measures of collective security. This may be done through regional arrangements under the charter of the United Nations (like the Atlantic Pact).

No one will disagree with that proposition. It is simply the fundamental principle of the United Nations and, as the Minister quite properly observed, it is possible to fulfil that general obligation that is contained in the Charter by regional arrangements, which the Minister favours. The Minister stated his second proposition in the following words : - “ Avoidance of appeasement “. There is no need to use abstract phrases such as communism or imperialistic communism. That proposition means that we are not to yield because of pressure or fear of force to demands that we do not regard as being reasonable. The Minister referred to the fact that that policy was adopted before World War II. in relation, first, to Japan, and later to Italy and Germany. The first break in the line of international peace at that time was the action of Japan in connexion with what was called the China Incident. Japan tore up the League of Nations Charter by aggression in China and it also tore up the agreement under which it was the 1 trustee of the islands north of the equator which originally belonged to Germany. That action and subsequent action on the part of Italy and of Germany resulted from a policy of appeasement. We must avoid such a policy in the future. We must not misunderstand this proposition to mean that we should not make an arrangement if we believe it to be a just arrangement. On the contrary, it means that we are not to throw a further bait to a strong power in the hope that such action will be enough to appease it. That theme was the subject of famous cartoons by Low, particularly with respect to Hitler. We accept the Minister’s second proposition, realizing that difficulty will arise in the application of it.

Proposition No. 3 is a new statement of principle which the Minister has correctly emphasized. That proposition is -

No provocation by act or conduct; we must use wisely the military power which we build up.

Whilst anybody can worsen a position by making provocative statements, that fact should not debar criticism or condemnation that is fully justified. However, provocation is undesirable. The fourth proposition, is -

Patient search and exploration for a permanent basis of understanding with the Soviet Union and other Powers associated with her;

That emphasis is important, but it is rather novel coming from the Minister. It is apparent that in the twelve- months during which he has been Minister for External Affairs he has been brought face to face with difficult practical problems. He agrees that the view enunciated in that proposition should be our objective. It is not impossible of attainment. I recall the view which Mr. Churchill, when he was Prime Minister of Great Britain, expressed in a letter that he wrote to Stalin in 1945. I have cited that view on previous occasions in this House. It was to the effect that a struggle between Russia and the Western democracies would probably tear the world to pieces and that, therefore, everything that statesmanship could do to prevent such a struggle from occuring should be done. The Opposition agrees with the Minister’s fourth proposition. His fifth proposition is -

The use of economic strength to- assist the less economically favoured nations.

That refers to the provision of financial and economic assistance, particularly to the peoples of South-East Asia. The Chifley Government adopted that principle. We did not give it any special name, but we agreed that the democracies should make material contributions to the welfare of the peoples of India, Malaya, Burma, Pakistan, Ceylon and Indonesia. We sought to apply that principle not on a grandiose scale but on a scale commensurate with our resources. We provided medical aid and certain educational facilities, including scholarships for the education of students from those countries in Australia. In that respect we made a limited but practical contribution.

The Minister’s five abstract propositions are acceptable to the Opposition, and, that being so, we need simply ask what the Government proposes to do about them. The Minister in the article to which I have referred also said -

I believe that it is possible for the two divergent political systems represented by Soviet Russia and ourselves to exist peacefully side by side. That belief is echoed throughout the free world.

It may be difficult to achieve that objective. Whilst some say that it is impossible of achievement I believe the contrary to be the case. Some representative Americans advocate a preventive war, that is, the use of the atom bomb and other weapsons of mass destruction, on the principle that it is best to get the trouble over and done with because the threat is so dangerous to the democracies. However, I support the view that the Minister has expressed.

I wish to refer to the application of those general propositions to particular situations. First, the Minister applied them to the proposed Pacific pact. During World War II. - and we were not to be astonished by the fact - the European countries for the most part concentrated their attention not upon the Pacific, but upon Europe. We endeavoured to get allied strategy modified because at certain stages of the recent war it constituted a grave threat to the security of the allied countries in the Pacific, including that of Australia. As the Minister has pointed out, the United

States of America, Canada and the European countries that would be concerned in a Pacific pact on the whole devoted most of their attention to Europe. That attitude was not unnatural on the part of Canada and the United States of America, whose eastern seaboard faces Europe. The Minister desires to arrange a Pacific pact and he wants the United States of America to be a party to it; but he has not mentioned what other countries he would like to be parties to it, nor has he indicated what the precise obligations would be under such a pact. His attempt to obtain a binding arrangement of that kind was doomed to failure because I do not believe that the United States of America would ever regard the security of Australia as being of no concern to it. That country would always be vitally concerned about our security. I vividly recall conversations of the kind that the Minister mentioned that I had with the President of the United ‘States of America and various Secretaries of State in that country. For instance, at one stage, Manus Island was proposed as a possible base for the United States in the Pacific, but the interests of that country in the Pacific had on the whole shifted to the islands north of the equator because, as a member of the United Nations, it is the trustee of all the islands that were previously controlled by Japan, including the Marianas and the Carolines. Under that arrangement the centre of gravity of the interests of the United States of America in the Pacific moved northwards. Consequently, I suggested on behalf of the Chifley Government that the Pacific countries should establish a pool and that under that arrangement bases controlled by any country could be used in common by all countries. Mr. Byrnes, who was American Secretary of State at that time, said that the United States of America did not want an arrangement of that kind because American relations with Australia were so close and intimate. Thus, we do not need a pact of that kind.

If an arrangement can be made on the basis of a regional agreement in respect of the Pacific, well and good. However, it will bind the parties to it to do only the things that are laid down in it. Who will be the parties to it ? When the Minister was. abroad he indicated that such an arrangement should include certain Latin American countries with sea-boards on the Pacific. Such an arrangement would have to be worked out. However, that proposition must tend to divert attention from the main issues, which are our membership of the United Nations and of the British Commonwealth of Nations and our actual relationship with the United States of America independently of any formal agreement.

I do not propose to pay special attention to the phrases that the Minister has used. The next matter to which I shall refer is of far more importance to Australia than is the proposed Pacific Pact. I refer to the proposed peace treaty with Japan. The Minister, in the course of his statement, referred to the proposal that Mr. Dulles made in which he outlined the views of the United States of America on the type of arrangement that the United States of America envisaged a9 being proper to end the state of war with Japan. That matter deserves the most serious consideration of the House. The Minister correctly pointed out that it will be the Government’s duty to interpret the views of the Parliament on it. He said that the Government would welcome the expression of those views. My first comment is that admission of Japan to membership of the United Nations should be subject to certain conditions. Japan should not be admitted to the United Nations until it has served some period of probation or tutelage. The idea that everything can be wiped out because of the situation that exists with respect to Russia is not only fallacious but also dangerous to Australia’s security. What is the proposed territorial arrangement? One part of it provides that Japan would recognize the independence of Korea. But Japan has done that in the armistice. That is a part of the armistice agreement which was signed, and upon which the fighting stopped. There is nothing new about it.

Mr Haylen:

– And in the Potsdam agreement.


– I am referring to the armistice that was signed in the Bay of

Tokyo, by which Japan is bound. The Minister stated -

Japan would (a) recognize the independence of Korea ; ( 6 ) agree to United Nations’ trusteeship, with the United States as administering authority, of the Ryukyu and Bonin Islands, and (c) accept the future decision of the United Kingdom, Union of Soviet Socialist Republics, China, and the United States with reference to the status of Formosa, the Pescadores, South Sakhalin and the Kuriles.

As a matter of fact, the Ryukyu and Bonin Islands are the only territorial possessions of Japan that are not covered by the armistice agreement. Opposition members would welcome the United States trusteeship of those territories, because the Ryukyu Islands include the great base of Okinawa, and the Bonin Islands include the great naval base of the United States task forces at Iwo Jima, which the Americans conquered from the Japanese. The Minister stated that Japan was to be asked to accept the future decision of the United Kingdom, the Union of Soviet Socialist Republics, China and the United States with reference to the status of Formosa, the Pescadores, South Sakhalin and the Kuriles. Such provision is made in the armistice agreement. Is it the intention of the United States Government to adhere to the armistice agreement with Japan, or to amend it? Under that armistice agreement, and the Cairo declaration embodied in it, Formosa is to go to China. That is to say, it is to be regarded as a Chinese possession by an agreement to which have been given the signatures of Japan, Russia, the United States, the United Kingdom and all the other participants to the Japanese armistice agreement, including Australia.

Mr Spender:

– We did not adopt it.


– I did not say that we had adopted it. The Minister has asked for our views, and I propose to state them. I say that the views put forward would be dangerous to the security of the Pacific and would mean tearing up the present armistice agreement with Japan. I also point out that the Pescadores were to go to China. I am not dealing with which of the two Chinas is to receive them. That is a different matter. Similarly, South Sakhalin and the Kuriles were, by solemn agreement, to go to Soviet Russia. Is that to be an open question in future?

I am not dealing now with the merits of it. This was an agreement made in substance at Yalta, by Mr. Churchill, Mr. Roosevelt and the Russian Government. Is that to be honoured, or is it to be torn up ? If it is to be torn up, I should imagine that it would be a fertile cause, and an immediate cause, of the greatest conflagration in the history of the world.


– Has everything that was agreed to at Cairo, Yalta and Potsdam been adhered to by Russia ?


– I say that we were a party to everything that was agreed to in respect of those matters.


– Have the other parties kept to the agreement?


– I do not think it is suggested that there has been any breach of this agreement in any respect relevant to these matters. It would be a very serious matter for Australia if the armistice agreement with Japan were not kept. Never mind about the preliminary arrangements early in 1945. Is the armistice agreement to be binding upon the parties? The Minister also stated in’ reference to Japan -

In the event of no decision within a year after the treaty had come into effect, the United Nations General Assembly would decide.

That means that the fact has to be faced that those territorial settlements, if we should desire to revise them, would never bc agreed to except by a majority of the General Assembly of the United Nations. I say, quite frankly, the Russians would be overruled by the majority. The Minister then stated -

Special rights and interests in China would be renounced.

There are important rights in Manchuria. Is that matter to be covered by the agreement? I shall not discuss the Minister’s statement in great detail, except to point out that his remarks about Japan deserve the close attention of the House. He wishes to do two things. He wants to have safeguards against any resurgence of Japanese militarism. Everybody will agree with that. He said -

We cannot lightly forget that it is five short years since Japanese military imperialists attempted to dominate Asia and South-East Asia by the ruthless use of force. [Extension of time granted.] The honorable gentleman has informed us, correctly, that one of the objectives is to avoid the resurgence of Japanese militarism, yet at the same time he wants to “ develop and maintain relations with Japan such as normally exist between two countries at peace “. There is the contradiction. It must be resolved. I do not think that any value will come out of attempting to rip up the armistice agreement in relation to Japan. All that would be done would be to encourage militarism in Japan again. At this moment in that country, the great powerful families - the Zaibatsu interests, the monopolists and the people who were the industrial basis of Japan’s aggression - are gradually returning to power. There is not the slightest doubt about that. Decision after decision of the Ear Eastern Commission, on which Australia is represented in Washington, goes forward, but nothing is done to implement them. The Minister has said so in public statements. On this matter, we must stand on one side or on the other side. We must adhere to that agreement, or agree to tear it up. I think that it would be dangerous to Australia for Mr. Dulles, or any other representative of the United States, to come forward with a new settlement for the future of Japan. We undoubtedly want a peace settlement with Japan, but tearing up the armistice agreement would be resented by 90 per cent, of the people of this country, and by all those exservicemen who fought in the terrible conflict against Japan. It would be dangerous to our future security.

I do not intend to refer to the subject of Germany. The problem of that country is similar to that of Japan. I pass over it, and deal with the problem of Korea. The Minister gave an historical account of that country and then said -

In the present extremely delicate situation, I feel sure that the House would agree that in the circumstances we must deal with events as they develop.

I believe that we should try to deal with events before they develop. Too little has been said about the policy in relation to Korea. The Labour party, under the leadership of the right honorable member for Macquarie (Mr. Chifley) supported action that had been taken in relation to South Korea. That was a unanimous decision of the House. However, we made two suggestions to the Government, and they were repeated over and over again. One of them was that, on the mill. tary side, Australia should be at the level of planning and determining policy. That has never been done. Australia, although having an important interest, has not been in the strategic council that has been, responsible for the direction of the war in Korea. Had Australia been represented there, I think that the position would have been much more satisfactory from our point of view.

Mr Davies:

– We have a right to be there.


– Yes, we have just as much right to be there as we had to be represented on bodies such as the Pacific Council during World War II. That suggestion was made to the Government during the debate on the war in Korea, but, so far as I know, nothing has been done to implement it. Everything has been left to the discretion of the Supreme Commander. I believe that, brilliant general though he is, there are aspects of that matter to which we could have made a contribution.

I come now to my second point. The future of Korea is a matter of tremendous difficulty. The Leader of the Opposition has referred to the problem of the two governments - the Government of North Korea, which is Communist and totalitarian, and Syngman Rhee’s Government, which is totalitarian to a large degree. But I shall not go into the details of that matter. The settlement of that dispute was of the utmost importance, and progress towards that end should have been made. We should know more about the facts. Is it a fact that the United Kingdom Government takes a different view on the matter from that of the United States Government? We know it to be a fact that the United Kingdom Government recognizes the Government of China, but that the United States Government will not do so.

Mr Handby:

– The Australian Government has not recognized the Government of China.


– I think that a great mistake has been made in delaying for so long. I am quite agreeable that some period of waiting is advisable, but, in the long run, we have to recognize a government which, although we may intensely dislike it, is de facto in control of the territory. I am not saying that that is the whole solution of the problem, but we must know, and we should know, the ba:kground of the Korean position, so that progress towards mediation, if any progress can be made, may be effected.

Mr Spender:

– Does the right honorable gentleman propose that we should recognize the Communist Government of China immediately?


– I did not say that at all. The governments of the United Kingdom, India, Pakistan, Ceylon and other countries in the Pacific recognize the Chinese Government but the United States of America does not recognize it. That seems to be one of the great obstacles to a settlement. I think that it will be found, in the long run, that the view taken by governments of British Commonwealth countries, other than the Australian Government and the New Zealand Government, is the wiser.

Mr Spender:

– And the South African Government.


– Yes, the South African Government, too; but it is obviously affected to much less degree than is Australia.

I come now to the problem of Dutch New Guinea. In my opinion, the policy of the Government in giving aid to SouthEast Asia is sound. The Leader of the Opposition and I have made suggestions in relation to Dutch New Guinea to the effect that it is vital that Australia should have some place in the settlement of affairs that affect that area. It is perfectly useless, in my view, just to make public statements about that matter. It was a matter for the United Nations, and it could have been brought before that body. I understand that at Lake Success the Australian Council of Churches recommended to the Minister that the matter should be brought to the United Nations for consideration so that the whole problem of Dutch New Guinea could be worked out at that level.

Mr Spender:

– That was not the right honorable gentleman’s view when he was Minister for External Affairs.


– It is absolutely true that the position of Australia is vitally affected by Dutch New Guinea, but we cannot get a real voice in the settlement of that problem unless or until we are at the meeting, whether it be of the United Nations or of a special committee, at which that problem can be worked out.

Mr Spender:

– Was it not the view of the right honorable gentleman that consideration of that problem should be solely a matter for the Dutch and the Indonesians ?


– No, it was not. My view has been that as Australia, America and Belgium are the conciliating bodies, it is part and parcel of Australia’s jurisdiction.

Mr Spender:

– That was not the right honorable gentleman’s view before.


– I made this suggestion to the Minister six months ago in the House, and he said that the matter was receiving attention. I drew the inference from his statement that something was being done to bring Australia into those discussions, but that has not been done. A conference begins in a few days’ time, and we are not to be represented at it.

Mr Spender:

– The right honorable gentleman has changed his views.


– I have not changed the substance of my views about Dutch New Guinea in any way.

The final matter to which the Minister referred was that of a Pacific pact. I have covered that subject sufficiently. T agree broadly with the abstract propositions in relation to it, but I wish to see Australia’s friendship with important nations of South-East Asia, such as Indonesia and India, confirmed and strengthened. I do not think that Australia’s relationships with either of the countries are at present satisfactory. Everything should be done to improve them. That would be a practical step towards the carrying out of the abstract principles to which the Minister has committed himself but to which, in practice, he does not always remain faithful.


– Order ! The right honorable gentleman’s extended time has expired.

Debate ( on motion by Mr. Hasluck) adjourned.

page 3183


Minister for the Army and Minister for the Navy · Moreton · LP

by leave - Because of misguided and misleading publicity in a section of the press regarding the equipment and clothing of the Australian troops in Korea, I wish to state the facts and, at the same time, relieve the anxiety of their relatives regarding their welfare. Immediately it was decided that Australian troops would be employed in Korea, preparations were made to equip them to withstand Korean climatic conditions. Arrangements were made to procure a full range of clothing, which had been evolved from United States Army research for use in the Arctic regions. We recognized that, with the approach of winter in Korea, our troops should receive special clothing. Because of the delay that would have occurred in producing special Arctic clothing in Australia, requisitions were placed with the United Nations authorities for the issue of clothing to meet abnormal winter conditions.

Early in September, LieutenantGeneral Sir Horace Robertson, Joint Commander of the British forces in Korea and Japan, assured me that a complete issue had been secured. However, on the 22nd November, Australian Associated Press correspondent, Roy Macartney, cabled that all the men in North Korea were in need of still warmer clothing whilst several of the veterans, who had faked their ages in order to fight again, were succumbing and being taken out of the line. I communicated with Lieutenant - General Robertson, who replied that Macartney had stated that the newspaper article which he had sent had quoted Colonel Ferguson as saying that the battalion had all the clothes it needed for the present conditions and that the extra items to fit inside the windproofs would be issued when the winter really set in. Macartney had insisted that he had no criticism to make of what had been issued to the Australian battalion. Macartney was filing another message showing that the Australians were better equipped for cold weather than were most of the Americans and that the cold weather really would not start for another three weeks. But, on the 25th November, before I had received this message, the Melbourne Argus published a leading article and a special article by Helen .Seager based on Macartney’s despatch, which had been published on the 22nd November. I again communicated with Lieutenant-General Robertson, who advised me that on the 26th November he had stated in Tokyo that Australians had gone to Korea completely equipped with Australian winter clothing and that specially designed American “wet cold”, wind resistant, water repellant outer coats and trousers, woollen mufflers and zippered sleeping bags had been issued to them before the first cold snap of the early Korean winter; that subsequently, additional American special footwear and clothing had been issued ; and that, when the deepening cold of the Korean winter necessitated it, American sub-Arctic winter clothing items would be issued. He further stated that the soldier in Korea to-day was wearing and carrying clothing, of a total weight of 37 lb. LieutenantGeneral Robertson considered that there was no better clothing in the world than the scientifically designed and specially tes.ted American equipment available to our troops. He stated also that, personally, he was unable to find any cause for concern, and that this week the troops had stated that they had too many warm clothes to carry when the weather was mild.

Lieutenant-General Robertson is concerned about the wrong impression that has been given by sections of the Australian press in recent articles, which, he has stated with emphasis, could not have been supported by their press correspondents in the battle areas; the 3rd Australian Battalion was as warmly clad and as well supplied with everything as was any other fighting force in Korea. From what I have said, honorable members will appreciate that everything possible is being done for our lads in Korea. With the British, United States, Canadian and other national forces in Japan, the Australians compose a United Nations Force. Consequently, the full resources of the United Nations can be drawn upon to provide the troops with their essential requirements.

I have been assured by Lieu tenantGeneral Sir Horace Robertson ; the Officer Commanding, 3rd Battalion, Royal Australian Regiment, Lieutenant-Colonel Ferguson; members of the Army Headquarters staff who have recently returned from the front line in Korea; MajorGeneral Kingsley Norris, the DirectorGeneral of Medical Services; and Brigadier R. S. Parks, a New Zealand officer who returned after a short visit to Korea to survey the situation preparatory to the New Zealand troops proceeding there, that everything possible is being done for the comfort and well-being of the Australian and other United Nations troops in that area, and that they have the warmest clothing in the world, evolved from the United States Army research in Arctic regions. I assure honorable members that the welfare of our troops will continue to be the Government’s prime consideration.

I lay on the table the following paper : -

Australian Troops in Korea - Clothing and Equipment - Ministerial Statement. and move -

That the paper be printed.

Debate (on motion by Mr. Haylen) adjourned.

page 3184



Debate resumed (vide page 3177).


.- -The subject-matter of the statement by the Minister for Commerce and Agriculture (Mr. McEwen), the talks in London and in Australia recently concerning the proposal of the United .States Government for the pre-empting of wool for its emergency war stock-pile. has caused a great deal of worry and perturbation amongst the wool-growers of Australia over a period of months. When the nature of the proposal was announced in cable messages from .London, Australians naturally assumed that the representative of the Australian Government would be in a position to inform the representatives of the United States of America immediately that it would not tolerate any interference with the wool auction system. Surely a strange state of affairs has arisen when a great and wealthy country like the United States of America asks that it, alone of all the wool-purchasing countries, which of course include many that were our allies in “World War II. and would be our allies again in any future conflict, should be granted most favoured nation treatment by Australia for the supply of the relatively small quantity of 100,000,000 lb. of wool. The purchase of that quantity of wool would involve the United States of America in an immediate outlay, if it obtained two-thirds of the quota for a start, of about £A.40,000,000 or £A.50,000,000. Surely the prospect of saving 10 per cent, of £40.000,000 or £50,000,000 would not warrant the Government of the great United States of America entering into negotiations with the Government of Australia for the granting of special treatment, particularly in view of the fact that the United States of America still maintains a heavy duty against the importation of Australian wool !

Surely it is strange also that the Minister for Commerce and Agriculture when in London was not able to tell the representatives of the United States of America forthrightly that in no. circumstances would the Australian Government agree to such a proposal! Instead of making such a declaration, the Minister agreed, apparently as a result of the insistence of the delegate of the United States of America, supported possibly by the United Kingdom delegate and others who were present at the International Wool Study Group conference, that representatives of the United States of America should come to Australia for further discussion of the plan. As press reports of the discussions in London leaked through to us, we heard a great many expressions of opinion on behalf of the wool-growers. Their representatives declared direct and emphatic hostility to the proposal. Tonight the Minister for Commerce and Agriculture announced–

The final outcome of the talks in London and Melbourne should give satisfaction to the wool industry as it has to the Government. The understanding reached is that, in the present circumstances, the essential military needs of the United States can best be met without interference with the traditional and essential marketing arrangements of our greatest industry.

I direct the attention of honorable members to other interesting features of the Minister’s statement which deserve consideration. For instance, the honorable gentleman said -

Arising out of the request that Australia should examine the case for some special steps on wool in the interests of the United States, we, on our part, asked for a concurrent examination by the United States of problems of supply which affect us in relation to our military and developmental needs for other’ materials. This request was readily met and. talks on this problem took place concurrently with the wool talks in Melbourne.

At that point all information about those’ discussions ceased. This House and the country should know what was the outcome of the talks. What was the attitude of the representatives of the United States of America to the suggestion that, in the event of arrangements being made to pre-empt Australian wool for the United States of America, reciprocal concessions should be granted to Australia? We have been left completely in the dark on that subject.

The Minister also stated -

It was also agreed in London that the current military requirements of the United States, as in the case of those of the United Kingdom, should, like their civilian requirements, be procured through channels of trade in the auction rooms.

He also said -

The Australian Government declined to take any steps to suspend public auctions and took the stand that, except in a war crisis, maintenance of the public auction system was essential to the well being of the Australian wool industry. It was pointed out that prices control and public auctions were not compatible, and that, apart from it being undesirable, it was not possible to operate any system of international wool allocations while still maintaining effective public auctions.

The Australian Government made it clear that it was prepared to examine seriously the military wool requirements of the United States and the best means by which those requirements could be satisfied.

That statement indicates that this Government was prepared to take into consideration the needs of the United States of America and the best means of satisfying them. I assume - I believe correctly - that all other great buyers of Australian wool with military needs, such as the United Kingdom, France and

Belgium, were waiting on the side-lines in the expectation that, if the Australian Government conceded the demands of the United States Government, special arrangements would also be made to satisfy their requirements. I trust that this1 matter of providing some special privileges for countries such as the United’ States, or, for that matter, the United Kingdom, in time of peace, will not be given further consideration.


– It is a peaceful time, is it not?


– There are no actual hostilities at the moment. There is no evidence that the Government is taking the action necessary to deal with any crisis. I hope that honorable members will hear no more proposals of this character so far as the United States is con.cerned This country has essential war stock piling requirements as well as has the United States of America, and I should like to know what the wealthy chemical industries of the United States, either directly or through their own government, have indicated to the Australian Government they are prepared to do to assist Australia’s war stock piling programme. Honorable members have no information about what concessions the United States was willing to make in respect of this country’s requirements of machinery, diesel tractors or other war plant and equipment.

The Minister said that information was also provided on the operations of the United States priority allocation powers and on the United States export control system. I wonder whether any pressure was brought to bear on the Australian Government in the form of a threat, that, ;.f some special concessions were not made to the United States in respect of its war stockpiling requirements the United States might exercise some export control over our requirements.

Mr McEwen:

– No such suggestion was made.


– I am glad to hear that, but I should like to learn from the Minister what requests were “ readily met “ in respect of our requirements, and whether these matters were merely discussed or whether a concrete proposal was made to provide a quid pro quo in the event of these arrangements being entered into. I am gratified to learn that, to some extent, the Minister has cleared up this problem of the wool-growers who, apparently, may rest assured for the time being that they will not suffer the indignity of having their wool pre-empted in what is a peacetime era and not an immediate war crisis.

Debate (on motion by Mr. Charles Anderson) adjourned.

page 3186


Minister for External Affairs and Minister for Externa] Territories · Warringah · LP

by leave - It is only nine months since the idea was conceived of formulating a comprehensive and co-ordinated economic and technical assistance programme, on a regional basis, for South and South-East Asia. At the conference of Commonwealth Foreign Ministers at Colombo in January of this year, the Australian delegation took the initiative in advancing specific proposals for a concerted Commonwealth approach to the problems associated with the economic progress of the less developed countries in this area. As a result a Commonwealth Consultative Committee was established, and held its first meeting at Sydney in May. A second meeting, of which this report is the outcome, was held in London in September and October, with representatives of the United Kingdom - including the British Territories of the Federation of Malaya, Singapore, North Borneo and Sarawak - Canada, India, Pakistan, Ceylon, New Zealand and Australia participating. Following this meeting a conference was held with representatives or observers from Indonesia, Burma, Thailand, and the .Associate States of Indo-China, Cambodia. Laos and Viet-Nam.

The presentation of this report to the Parliament of the Commonwealth, and its publication throughout the world, are the culmination of months of painstaking research, of critical examination and of the discussion of specific plans by the members of the Commonwealth, and represent an important stage in the advancement of a progressive and realistic programme for the economic development of the less developed countries, with the objectives of increasing production and consumption levels and of raising standards of living.

The results .so far achieved clearly demonstrate the usefulness and the importance of regional co-operation and what can be done to prepare the way for a large-scale attack against poverty, social unrest, political instability and extremist ideologies.

The impetus given at Colombo to the idea of an organized co-operative approach to the problems of South and South-East Asia, was carried through the Consultative Committee Conference at Sydney, where it was agreed that a report should be prepared setting out the need for development, and the development programmes of the countries of the area which might be expected to be completed over a period of the six years ending June, 1957. At the same time it was decided that a technical assistance programme should be established immediately whereby each government would contribute an agreed share of up to £8,000,000 sterling to provide technical aid for the benefit of the less developed countries. The Australian Government accepted this recommendation in August and agreed to contribute up to approximately £3,500,000 Australian over a three-year period for the Commonwealth programme of technical assistance. Under an existing Fellowship and Scholarship programme we have already provided free training facilities for many Asian students. Over 1,000 Asian students are at present taking courses at their own expense in Australian educational institutions. The present scheme will greatly increase the numbers receiving assistance, free study and instruction in Australia. In addition we have already made arrangements for a number of Australian technical experts to serve in the region for varying periods so as to assist the countries with their development and research. Plans are being prepared to provide technical, educational and other equipment, and other forms of assistance. With the heavy demands for training facilities and for technical personnel in Australia for our own development programmes these measures themselves constitute a very substantial contribution by us to the countries concerned.

Following the May conference, detailed programmes of development were prepared by India, Pakistan, Ceylon and the

British territories of Malaya, Singapore,. North Borneo and Sarawak, and these were carefully examined at the London conference of the Consultative Committee in September. The essential features of these programmes, their cost, and the financial and economic requirements involved, were critically examined, and are described in the report. At this conference special consideration was given not only to the programmes themselves, but also to the extent to which each country could, by its own unaided efforts and with its immediate or potential resources, implement the whole or a part of the economic development programme. It was recognized that the under-developed countries should help themselves as much as possible, but the analysis of the plans and the discussions clearly indicated that these countries are in a position to furnish only a limited proportion of the needed capital, because there is little margin for domestic savings so long as production levels are low. The under-developed countries, therefore, find themselves caught in a vicious circle, and it is clear that the solution of the problem is beyond their own resources. The most careful consideration was therefore given to the obvious solution, viz., the provision of an expanded flow of external finance.

It was found at London that the plans put forward rightly laid ‘special stress on measures designed to increase agricultural production, and upon the development of transport systems and new sources of power. The approach to industrial expansion is modest but realistic. Thirtytwo per cent, of the cost of all the development programmes is for agricultural development and expansion; 34 per cent, for transport and communications; 10 per cent, is for industrial development and 18 per cent, is for social services. It is expected, as the report points out, that when the programmes are completed something like the following results, among others, can be anticipated: increases of 13,000,000 acres of land under cultivation, of 6,000,000 tons of food grains, of 13,000,000 acres under irrigation, and of 1,100,000 kilowatts generating capacity.

Obviously the critical problem of the development plans is that of providing the necessary external financial and economic assistance. The total of the programmes is estimated at £1,868,000,000 sterling over the six-year period, of which £1,084,000,000 sterling will be required from external sources. Of the sum required from such sources, as the report indicates and on the assumptions stated, £246,000,000 would need to be provided from existing sterling reserves.

By proposing to draw to the fullest possible extent consistent with minimum reserve requirements, on the sterling funds they have built up during the war, the Governments concerned have shown that the policy of self-help, and the utilization of the maximum amount of external finance from their own resources are an- essential and important part of their development plans. Commonwealth countries are now examining the extent to which they may be able to contribute. I have on more than one occasion made it clear that this is a world problem and that the combined resources of the countries of the Commonwealth alone are insufficient to solve it no matter what financial or other contribution they are able to make.

The report deals only with the plans of India, Pakistan, Ceylon and the British Territories of South-East Asia. It was not possible in the time available to secure full participation by other countries in the area, but representatives or observers from Indonesia, Burma, Thailand and the Associate States of Indo-China, Cambodia, Laos and VietNam attended a special session of the conference, at which were discussed problems of common interest, and the principle of a concerted regional approach. It is hoped that all these countries will participate in the economic development and technical assistance programmes.

Early in December the first meeting will be held at Colombo of the Council of Technical Co-operation, the constitution of which is contained in the present report. It will carry on the very useful work already commenced by the Standing Committee of the Consultative Committee in examining requests for, and assisting in the provision of, technical assistance. The activities of the Standing Committee and the technical aid pro- grammes under way amply illustrate what can be done by co-operative effort.

The action initiated by the Australian Government at Colombo in January, 1950, for a regional concerted and cooperative approach to problems of such magnitude, importance and urgency as face the people of South and South East Asia, and exemplified in this report, demonstrates clearly the movement from the discussion of principles into the field of action. The task is, however, only commencing.

My information is that the United Kingdom Government, when presenting this report to Parliament, will indicate the amount of sterling funds which, it estimates, it will be able to release to participating countries over the six-year period of the plan. . It is relevant to point out that the Australian Government has in several ways helped to make such releases of sterling possible and that it recognizes the importance of this contribution. The release of sterling funds will necessarily throw a burden upon the economy of the United Kingdom.

In sponsoring the proposal for the joint Commonwealth approach to the plan for economic development in South and South-East Asia, the Australian Government fully recognized its responsibilities towards, and interest in, the countries of this region. Despite the fact that we have already given substantial financial and material aid to other countries in the post-war period, and that the strain on our resources is considerable, the Australian Government is now giving careful and sympathetic consideration to the amount and the type of financial and economic assistance that it is able to provide. An announcement will be made on this subject in the near future.

I lay on the table the following papers : -

Colombo Plan for co-operative economic development of South and South-East Asia -

Ministerial Statement, and

Report by the Commonwealth Consultative Committee, London, September-October, 1950. and move -

That the ministerial statement be printed.

Debate (on motion by Dr. Evatt) adjourned.

page 3189


Debate resumed (vide page 3184).


.- The Minister for the Army (Mr. Francis) made a statement earlier concerning a matter that has been agitating the minds cf the Australian people. Shortly expressed, the cause of their anxiety has been the suggestion that our troops in Korea were not adequately or efficiently equipped for the sub-Arctic weather that they have had to endure in the last few months. In consequence of the statement made by the Minister this evening, I think that there was some justification for the doubts expressed earlier. However, the reports from Lieutenant-General Sir Horace Robertson, the DirectorGeneral of Medical Services, and Brigadier Parkes, the Commander of the New Zealand forces, who recently passed through Australia, substantiate the fact that equipment for the cold sub-Arctic conditions in Korea has now been provided. The severity of the winter in Korea was stressed in the House by the honorable member for Chisholm (Mr. Kent Hughes), who, because of his unfortunate experience in Asia as a prisoner of war, knows something of those conditions. At the same time, I think that it is unfair to accuse the press of misreporting the matter or to blame our servicemen in Korea for the fears expressed. In fact, I spoke to our ex-servicemen, who returned from Korea only a few days ago and are now in the Repatriation General Hospital at Concord, Sydney. The conditions which they described characterized the situation in Korea from six to eight weeks ago, before the winter had set in. At that time it appeared that there would be insufficient winter clothing for our troops during the winter. It is also obvious, from the statements made in the House, that there was some administrative slackness earlier. Whether the fault was due to the fact that the commissariat could not catch up with the swiftly moving campaign, or whether arrangements had been made but not disclosed, I do not know. In any event, I think that there was much valid criticism in the articles that appeared in the press of the nonavailability of winter equipment. The press reports and comments were not extravagant, but merely pointed out that warm clothing was apparently not on hand, and that statements made by servicemen who had returned to Australia to the effect that there was a shortage of winter clothing and warmth-giving foods had not been officially contradicted. However, it is quite obvious from the statement made by the Minister that the matter has now been adjusted, and that the members of our battalion in Korea will get only the best.

When the Minister has a further opportunity to speak on this matter I should like him to give to the House an assurance that our servicemen in Korea will be supplied with the best amenities available, and that those amenities will be readily obtained. We do not want our servicemen to be the poor relations of the United Nations’ forces in Korea. Because of the splendid job they are doing we want them to be given the very best. In the circumstances, I regard the statement made by the Minister as one that clears up misconceptions that have arisen in the minds of the people in consequence of press reports, and for that reason the statement was especially significant to us. I think that because of the authority behind the statement we must regard it as on that completely covers the position. If our servicemen in Korea have not obtained every requirement down to the last gaiter button, we at least have the assurance of the responsible authorities that they have been so equipped. Of course, if it should transpire that our troops are deficient in any material equipment we shall know where the responsibility rests.

Debate (on motion by Mr. Davidson) adjourned.

page 3189


Second Reading

Debate resumed (vide page 3163).


.- Four hours ago I was discussing this bill, which proposes to amend the Income

Tax Assessment Act and certain other legislation. Without reflecting on those honorable members who have taken partin the discussions that have ensued since the sitting was suspended, I must remind the Government that this morning it gave an undertaking that the maximum time would be made available for discussion of this measure. At that time we certainly did not contemplate that so much time would be taken up by ministerial statements and speeches on them. When I was brusquely interrupted at 6 p.m., I was pointing out that the Government intends,’ through the passage of this measure, to carry out a simplification of the country’s taxation laws. I believe that the Governments made its intention clear some time ago, when it stated that it intended to make considerable improvements within the general structure of progressive taxation, and in accordance with the capacity of people to pay. In accordance with those principles, the Government set itself the task of introducing certain amendments to the present taxation legislation. I have already pointed out, and I repeat now for the sake of emphasis, that in making an assessment the Commissioner of Taxation has to pay regard to six ov seven different components. There is, of course, the levying act, the Income Tax Assessment Act, and there are the Social Services Contribution Act, the Social Services Contribution Assessment Act and a number of social services measures, apart altogether from a multiplicity of other matters to which the Commissioner must pay regard. The Government said, in effect: “Let us eliminate as much legislation as possible, and let us remove any legislation that we consider does not contribute to the welfare of the community “. The Government decided first of all to repeal the Social Services Contribution Acts and all that those measure’, involved in the way of additional work for the Taxation branch. I make it perfectly clear that in doing so the Government had always at the back of it9 mind the fact that it must maintain the present system of equitable taxation, and that in drafting this measure it has observed that principle. When this legislation is passed no one will be worse off than he’ was under the previous legislation. On the contrary, taxpayers with family responsibilities will be substantially better off than they were before.

I pointed out earlier that the operation of this measure will save the taxpayers approximately £15,000,000 in a full year, and that it is an indication of the Government’s determination to ease the burden on men with substantial family responsibilities. I also pointed out earlier that the present Government proposes to ease considerably the various acts which prescribe the applicable rates of tax, because they determine how much tax shall be paid by each individual. Those acts discriminate unnecessarily between income derived from personal exertion and that obtained from property. I cannot see any reason why there should be such a distinction. In other countries, such as the United States of America and New Zealand, no such differentiation is made. Even in the United Kingdom, a simplified system has been introduced by the socialist Government of that country, and I suggest that a similar system be adopted in Australia. Under that system, onefifth of income derived by a taxpayer from personal exertion is deducted and he is allowed to keep it. That, after all, is a just provision. The Government of the United Kingdom then taxes the individual on the balance of his income. And that is, broadly speaking, the purpose of this suggestion.

Not only did the Australian Government set about adopting this system of simplification, but it also included in the new system provisions to liberalize the taxation laws generally in favour of people with substantial family responsibilities. One effect of the passage of this measure will be to remove the tax payable on the allowance received under the Tuberculosis Act, which was introduced by the present Government. With Senator McCallum I was a member of the committee of the Liberal party that recommended the payment of an allowance to sufferers from tuberculosis, and I am glad that the Government accepted our. proposal. I am even more pleased that the Government has gone a step further, and that it now proposes to exempt that allowance from taxation. Other classes of persons who will benefit from the concessions contained in the bill are members of the’ special forces operating overseas and persons with dependants between the ages of sixteen and 21 years who are attending schools or universities. Under this bill the total amount of the allowable deductions in respect of life assurance premiums, superannuation, and other specified expenditure incurred by a taxpayer in any one year is being increased from £150 to £200. However, I remind the Government that an anomaly has crept in. inasmuch as the benefit of that provision is not being extended to persons covered by sections 66 and 79 of the Principal Act. Those sections relate to employers who pay insurance premiums of superannuation contributions on behalf of their employees, and I strongly suggest that t he benefit of the increase should also be applied to such persons. The provision embraces medical expenses and hospital contributions. Under the hill the amount of medical expenses which a taxpayer may claim as a concessional deduction is being increased from £50 to £100 a year, and the increase in respect of expenditure upon dental services is to be from £10 to £20 a year. It is clear, therefore, that the Government has embarked upon a deliberate policy of liberalizing the income tax assessment act. Those provisions are designed to benefit the whole community, and particularly those who have a number of dependants.


– Order! The honorable member’s time has expired.

Mr. THOMPSON (Port Adelaide) 1 10.29]. - I have been particularly in*terested to hear the comments made by honorable gentlemen opposite on this measure. The honorable member for Curtin (Mr. Hasluck) referred to the need to simplify the procedure involved in preparing income tax returns, and the honorable member for Lowe (Mr. McMahon) made some rather extraordinary statements about the amounts by which taxpayers will benefit under this measure. It seems remarkable that greater benefits can be conferred on people without increasing the complexity of the work involved in making a return for income tax purposes. I cannot understand what saving of the taxpayers’ time will be effected by the proposal in respect of deductions for medical expenses. After all details of the amounts expended will still have to be furnished in the income tax return. In fact, a taxpayer will be called upon to furnish precisely similar information to that which he has been in the habit of furnishing. I, warn the people of Australia that the remarkable simplification of taxation procedure which the Government claims will be achieved has not yet been demonstrated to the Parliament. People usually find difficulty in working out exactly how the taxation system operates in respect of their incomes. As the honorable member for Lowe has stated, most people are interested only in how many shillings will be deducted from their salaries for income tax and social services contribution. I have been giving a great deal of thought to the Treasurer’s claims that the taxpayers will derive great benefit from the unification of income tax payments and social services contributions. Everybody will agree that most of the country’s taxpayers are wage and salary earners with no income other than their wages and salaries. Some of them have small properties or small additional incomes such as interest on saving bank accounts. I appreciate the inclusion in the measure of a provision that the first £100 of income from property should be dealt with as ordinary income. That provision will be an improvement on the old system and will benefit a number of taxpayers. It will mean that only one set of mathematical calculations will be required in assessing the liability of people who have a small income from property in addition to their income from personal exertion, instead of, as previously, two different assessments being necessary.

I have been examining the question of who will gain the benefit from the proposed alteration from the rebate to the deduction system. I have examined it in relation to my own income tax return to see how it will affect me personally, and I have found that on my income of last, year under the proposed system I would have paid an amount of £22 7s. 8d. less in taxes than I paid under the present system. Am I one of the poor workers on the basic wage and with a large family, whom the Government claims that the alteration of the system will benefit? Everybody knows that I am not such a person. I do not earn the same wage as a tradesman nor have I a large family to support. Yet I shall save more than £22 in taxes under the new system, if my income is exactly the same as it was last year.

Mr Leslie:

– The new system will be of great benefit to the man with a large family.


– If I had a large family and received the same income as a tradesman I should not save in taxes anything like the amount that I have stated I shall save under the new system, because under the rating system that was introduced by a Labour government I should not be paying any income tax. Under that system a man with a wife and five children who earned £8 a week did not have to pay one penny in tax or in social services contribution. I do not see, therefore, how the new system will simplify things very much for him, because he will still have to enter on his taxation return the names and dates of birth of all his children under the age of sixteen years, and all the details of amounts that he paid in medical fees for himself and his family, just as he has had to do in the past. Such a wage-earner, I repeat, has had to pay nothing in taxes under what honorable members opposite term the “iniquitous Chifley or socialist system of taxation”.

The honorable member for Lowe stated that the new deduction system would mean that the taxpayers would save £16,000,000. I shall save more than £22 this year myself. I can recollect that, during the life of the last Parliament, members of the parties now in office criticized the then Treasurer, Mr. Chifley, on the ground that, although he had stated that he had reduced taxes, he was in receipt of a bigger return from taxation than ever before. The Treasurer’s budget speech also contained statements about reductions of taxes, yet the returns from taxes will rise by £61,000,000 from £95,416,000 in the last financial year to £157,000,000 in this financial year.

Admittedly there is to be a reduction of social services collections from £100,000,000 to £71,000,000. The Treasurer’s figures show that this year he will receive from taxation of individuals, and social services contributions, an extra amount of £32,000,000, yet the people are being told that they will pay less in taxes. The figures that I have given were arrived at before the recent £1 a week increase of the basic wage and before recent cost of living adjustments were made to wages. The taxpayers will find that although the Government claims to be reducing taxation, it will still cost them the whole of their wages to live just as it has done in the past, because of the increases in the cost of living. They will also find that they will pay next year the same amount of taxes as they paid last year, and in cases where they receive the increased basic wage they will pay even more tax than they paid last year. They will be paying the higher rate of tax on that proportion of their income that has been increased for this financial year.

I am advancing those arguments to counteract what I regard as just a lot of pats on the back that Government supporters are giving the Treasurer for what he has done. I give him credit for providing for an alteration of some of the tax rates. I give him a pat on the back on behalf of the pensioner for the increase on the surrender value of his life assurance policies from £200 to £500. How many of the workers in industry can look forward to a pension that is worth more than £200 in surrender value at the present time? Very few of them ! A man who has a pension with a surrender value of £500 has also considerable property and income. At the same time, I recognize the justice of the proposed alteration. I am not objecting to the provision, because I know individuals to whom it will be very handy but I point out that they are people who have a considerable amount of money.

Whether the taxation system is what the honorable member for Lowe termed “ a socialist system “ or any other system, taxes must be collected because the Government must obtain the revenues that is necessary to run the country. If I remember correctly it was that honorable member who mentioned that some /ears ago the former right honorable member for Yarra, Mr. Scullin, had stated that no matter whether a government was Labour or antiLabour, it had to get the money that was necessary to conduct the country’s affairs. The only difference is that a Labour government levies taxes so that they will fall most lightly on the people least able to bear them and most heavily on the people best able to bear them. An anti-Labour government imposes taxation in a way that assists the interest of people on big incomes.

Mr Eggins:

– That is not a fair statement to make.


– I say that it is a fair statement and I am prepared to debate it with the honorable member. The record of anti-Labour governments shows that the biggest benefit derived from any measures for taxation relief that they have introduced has gone to companies and to the richer taxpayers, and not to the ordinary run of taxpayers. The measure makes provision for one alteration that I support, which is in relation to the allowable deductions for members of a family who maintain between them a parent who is not wholly maintained by any one of them. I took such a case to the Treasurer some time ago, and it was ultimately resolved satisfactorily. The proposed provision is that where several children are maintaining a parent each can show as an allowable deduction a proportionate amount for the upkeep of the parent. I turn now to the deduction system as against the rebate system, but before doing so I shall put a certain case before the House. I consider that in this particular case the Taxation Branch has shown itself to be rather heartless in its attitude. I am referring to the taxation of retiring allowances of members of the Public Service. Half a dozen men retired from the service because they had reached the age of 65 years. Some of these men were retained at a reduced rate of pay in the department in which they had been working. Because their salaries dropped from a higher to a lower rate the lump sum that they received was taxed at only 5 per cent, of the sum. One man had been employed in the lowest paid job of all. He broke his service for one day, like the other men, but when he went back to the same job the Commissioner of Taxation said to him, “ You have not finished your job; you are continuing it and you will therefore have to pay tax at the ordinary rate upon the whole of your lump sum “. If it had been possible to put that man on a job at a lower rate of pay, which was impossible because he had been working in the lowest paid job, his lump sum would have been taxed at 5 per cent, and he would thus have been saved a considerable sum of money. If he had left the job entirely and taken another job at twice the pay in some other employment he would have been taxed at the rate of only 5 per cent, of his lump sum. I hope that the Treasurer will give further consideration to cases such as that, because it is quite obvious that the man who deserved the greatest consideration was the man on the lowest rate of pay, but he was the only man who was refused any consideration.

The Commissioner of Taxation and his deputies should be given discretionary power in dealing with the application of the provisions of the legislation which relates to allowable deductions. Throughout my fairly long experience in parliaments I have found that it is not possible to deal with many deserving cases by direct legislation. Only by the application of the principles of fairness and equity by the administrative officers can such cases be dealt with. Some years ago a difficulty arose in South Australia in connexion with taxation, in which it was found that the State act did not cover a number of cases. If the act had been amended to cover those cases, loopholes would have been left for people to take an unfair advantage of the provisions. Therefore the South Australian taxation law was amended to give the State Commissioner of Taxes power to allow deductions in certain cases in which he believed that deductions should be allowed. Before the Treasurer brings forward any more amendments in connexion with this matter, I ask him to ascertain whether a provision can be put into the act to give a properly protected discretion to the Commissioner of Taxation and his deputies to enable them to deal with cases such as I have mentioned. I shall not proceed any further along these lines because I believe that such matters can best be dealt with during a discussion of rates of taxation.

I say to those who are laudatory in their statements about the simplification of taxation to remember that the Government in making it simpler for the Taxation Branch, for some honorable members and for people who calculate their own taxes, may not be making it simpler for the ordinary taxpayer. Some years ago I stated that the complications in our taxation law were caused mainly by members of Parliament. I repeat that now. When people complain about our complex system of taxation and say what the Taxation Branch does and what it does not do, they should remember that most of our complications have been caused through members of Parliament having provisions made to cover certain cases. Then, in order that they may not be abused, the provisions have to be hedged around with all sorts of conditions and provisions. Moreover, when the Commissioner through prompting, perhaps by a Minister or a Treasurer, meets a certain case, he has to make further provision against the abuse of the precedent that he has created. There has been a lot of talk about the simplification of our taxation forms, but the ordinary worker does not need a simpler form. The presentform is quite simple enough for him. Simplification will not make much difference to gentlemen such as those who occupy the Country party corner of this House. They mainly own farms or small businesses and they want all the deduc- ti ons that they can possibly get. When they receive their new forms they will find that they know no more about them than they knew about the old ones and they will still need their taxation experts to ensure that they get every £l’s worth of deduction that it is possible for them to get.

The members of the general public should not be misled into the belief that this Government is making some wonderful simplification which will make it easy for them to make out their forms, and which will give them some great benefit. The bigger the income a person has the more he will get out of this system of taxation. The smaller his income the less it will benefit him. The honorable member for Lowe spoke about the calculations required in our present income tax forms. While he was speaking I was thinking of the case of a man who earned £9 a week and what he had to do under the so-called socialist system of taxation. If he had a wife, all that he had to do was write on the form that his income was £450, and put down £150 rebate for his wife. He would then know that his net income was £300. He did not have to pay income tax on that. He only had to pay social services contribution on the £300 income rate on his £450 income. To say that such a task is difficult merely amuses me. That rate is calculated on 3d. in the £1 on the first £100 and the next £200 he multiplies by 3 and divides by 80 and obtains a second amount representing so many pence in the £1. He adds the two amounts together and obtains the sum of 10£d. in the £1. That is all he has to pay on his £450 income. That calculation is as simple as falling off a log. In fact it is only mental arithmetic. At meetings which I have attended workers have come to me, told me their salaries and the number of their dependants, and have asked me what they would have to pay in income tax and social services contributions. I have explained it all to them without finding it necessary to write anything down. If a primary producer taxpayer needs to set out the natural increase of his stock, his depreciation of plant and machinery, and the depreciation of his land through erosion and all sorts of things like that, then making the taxation form out is difficult. Bur such people will still have to go into all sorts of complicated mathematics in the future in order *-q get the full benefit of the income tax law. To the ordinary wage-earner the old socialist system, as it is called, was not a very difficult one after all. At least it worked to the advantage of the man on the bottom of the scale. I. do not raise any great objection to the proposed alteration, because I consider that it may simplify the preparation of income tax assessments, although not a great deal of simplification was required from the viewpoint of the ordinary worker.

However, when taxpayers generally receive their income tax assessments next year they will no doubt appreciate that the much-vaunted simplification is not really as effective as honorable members opposite would have them believe. I am afraid that, because of increased wages, instead of being required to pay a smaller amount of tax next year, generally speaking the people will be called on to pay a greater amount.


.- I do not wish to indulge in a great deal of criticism of the statements that have been made by the honorable member for Port Adelaide (Mr. Thompson), although I shall comment on some of the points raised by the honorable member. I consider, however, that it is most desirable that I should strenuously resist the suggestion that he has made to the effect that honorable members on this side of the chamber represent only those who earn large incomes. I point out to honorable members opposite that if that were so we should not be on the Government benches. T suppose that 80 per cent, of the people who earn incomes are employed for wages. The Government parties must have received more than 50 per cent, of the total votes polled at the last general election or they could not have been elected to office. I suggest that it is ridiculous for the honorable member for Port Adelaide, or for any other honorable member, to say that honorable members on this side of the House represent only one section.

Mr Thompson:

– I did not say that.


– The people of Australia know perfectly well that the members of this Government represent all sections of the community, including those who are sometimes referred to as working people.

The main criticism of this bill during this debate has been that the Government has not carried out its policy to reduce taxes. Many honorable members opposite have made that assertion, and as many honorable members on this side of the House have refuted it and have pointed out that this Government appreciates the desirability of further reductions in taxes and of those reductions being made at the earliest possible moment. The members of the Government also appreciate that with the continuing high rates of taxation, together with the increasing cost of commodities, there is very little left from the ordinary man’s income that he may put away as savings. If a man is unable to save, his general attitude of mind is affected to a considerable degree. The peoples of the British Empire have long recognized that thrift is a most desirable quality and that it has been responsible for much of the progress that they have made during past centuries. The sooner the opportunity for thrift is restored to the community the sooner will this country progress as it should do. This Government desires to reduce taxes at the earliest possible moment, but honorable members of the Opposition should understand that there are factors, over which the Government has little or no control, which make it difficult to do so. An important factor was the outbreak of war in Korea and the necessity for increased defence expenditure. This year, including the £50,000,000 for stock piling of defence material, it has been necessary to increase the estimates of defence expenditure by £91,000,000, and at the same time to provide an amount of £31,000,000 in order to meet the cost of the war gratuity. An additional £122,000,000 must therefore be found. In the light of those figures, how can any honorable member opposite, if he faces realities, suggest that the Government could reasonably reduce taxes at the present time ? I sincerely hope that next year there will not be the same necessity for defence expenditure. Certainly there will not be an expenditure of money on the war gratuity. I trust that there will be a reduction in expenditure and that a reduction in taxes will then be possible.

This bill provides for some improvements which will be welcomed by the people of Australia. It consolidates income tax and social services contribution, which is a reversion to the principle that was in operation until it was altered during the term of office of the Chifley Government. Previous to that alteration, the tax on income was simply an income tax. It was credited to Consolidated Revenue, and all payments which were made by the Government were appropriated from

Consolidated Revenue. This Government is merely reverting to that system. I say definitely that the Chifley Government made the alteration in order to delude those people who paid up to eighteen pence in the £1 in social services contribution that they would not pay any income tax at all. I suggest that a type of fraud was perpetrated on the people by that endeavour to make them believe that although they paid a social services contribution they did not in fact pay income tax. The Chifley Government also endeavoured to give rise to the impression in the community that it was a great social services Government.

Mr Calwell:

– Hear, hear!


– The honorable member for Melbourne (Mr. Calwell) says, “ Hear, hear “, because he has made the Suggestion on many occasions. Unfortunately for him, the facts do not indicate its truth. I admit that the Chifley Government collected very large sums by way of social services contributions, but I point out that much of that money was not expended by that Government for the purposes for which it was collected. That is why, at the commencement of office of the present Government, the National Welfare Fund showed a credit of more that £100,000,000 of social services contributions collected from the people of Australia. That sum represented the first eighteen pence in the £1 paid by them, and that amount was credited to the fund but was never expended by the Chifley Government.

Mr Calwell:

– It was never intended to be expended.


– I correct my statement, because, in point of fact, it was expended, although not on social services. The money that was contained in the National Welfare Fund. and also in the War Gratuity Fund, was not expended for those purposes, but was spent by some other authority, through some other fund. Those funds may be restored by going to the people and asking for a loan of approximately £100,000,000, but that is hardly possible, in view of the borrowing requirements of the Australian Government and the various State governments. The only other alternative is the issuing of more treasury-bills. The Leader of the Opposition said that that fund was uti lized for the purpose of redeeming treasurybills. If the present Government increased treasury-bills the Opposition would be the first to criticize it foi having done so.

This measure embodies the realistic provision for the collection of tax under the one general heading. The whole of the collections will be paid into the Consolidated Revenue Fund, from which the Government will meet all its commitments, including the cost of social services benefits. It is also proposed to alter the basis of assessment of income tax. At present an individual pays tax on net income after concessional rebates have been deducted, but tax on that net income is payable at the rate that applies to gross income. For instance, if a person had a gross income of £500 and a net income of £350 after deducting concessional allowances, he would pay tax on the latter sum at the rate that is applicable to the gross income. Under this measure it is proposed that tax shall be payable on the net income at the rate that is applicable to that income. The honorable member for Perth (Mr. Tom Burke) said that that alteration would not be an improvement on the existing procedure. At present, social services contribution is calculated on the gross salary or gross earnings, before deducting concessional allowances, at ls. 6d. in the £1 and income tax is calculated on the same income as is social services contribution but at varying rates. In order to ascertain the correct rate that is applicable to one’s income, one must refer to the Income Tax Assessment Act, or to the rates book that is issued by the department, or accept the rate that the department itself applies. I have found that very often the department has applied an incorrect rate. Then is deducted the total value of concessional allowances at the total of the rates of both income tax and the social services contribution of ls. 6d. in the £1. In finding this deduction of concessional allowances great care must be taken that particular items do not result in a rebate in excess of the maximum allowable. For instance, in respect of the second and each subsequent child in a family the maximum rebate allowed is £8. If the rebate is greater than the maximum allowable the concessional allowance is excluded; and when the rebates are ascertained on those that do not exceed the maximum then such other maximum amounts are added and the total of rebates is deducted from the gross income tax. Having thus ascertained the social services contribution and income tax payable the two sums are added to give the total tax payable. I do not raise the question of provisional tax. My example is applicable to a wage or salary earner who pays social services contribution and income tax. Under this measure the procedure of assessment will be to deduct the total concessional allowances from the gross salary and to assess tax on the net income at a rate that will be ascertainable from a schedule of rates that will be set out on the assessment notice. Obviously, this will be much simpler than the existing procedure. It represents an improvement that is based on common sense and logic.

The ‘Chifley Government conceived the system of concessional rebates during the recent war solely as a means of increasing tax without, apparently, increasing tax rates. The Leader of the Opposition said that under the proposal contained in this bill taxpayers in the higher ranges of income would receive greater benefit than those in the lower ranges of income. That statement is correct when the amounts of tax that will be payable are compared; but when percentages are compared taxpayers in the lower ranges of income will receive by far the greater benefit. I shall examine the right honorable gentleman’s contention in greater detail. For instance, the maximum rebate now allowable in respect of a taxpayer’s wife is £45. But in order to receive the full amount of that rebate a taxpayer would require to have a net income in excess of £2,400 per annum after concessional rebates had been deducted, and on that income he would be taxable at the rate of 104d. in the £1. According to the annual report of the Commissioner of Taxation for the year ended the 30th June, 1946, which is the latest report available, only 1,770 taxpayers out of a total of approximately 1,500,000 taxpayers, that is, .11 per cent, of the total number, or eleven taxpayers out of every 10,000 taxpayers, had an income of £2,400 or greater in that year. Even assuming that since that date persons who at that time had a net income of £1,500 a year had since come within the category of the higher income that I have mentioned, only 4,160, or .26 per cent., or 26 out of every 10,000 taxpayers would now have a net income of £2,400 or greater. From those figures it is obvious that the number who will benefit is negligible and the amount of benefit in money is not worth mentioning. All honorable members accept the principle that persons in the higher ranges of income are best able to bear the tax burden. Why should not that principle be applied in respect of deductions in order that the benefit of such deductions might be equitably made available in respect of all classes of taxpayers? It is obvious that the Opposition, in protesting against this improvement, is trying to make a song about nothing at all.

Finally, I wish to deal with the proposals in respect of private companies. The Treasurer (Mr. Fadden), in his second-reading speech, pointed out that under this measure private companies would be brought into closer relationship with partnerships. The Leader of the Opposition said that because a private company has a limited liability it should not receive any tax consideration. Apparently, he believes that any partnership that takes full advantage of the provisions of the relevant company legislation should be penalized by taxation legislation. Hundreds of partnerships have developed to the stage at which they are entitled to the privileges that are made available to limited liability companies. State legislation relating to companies does not impose a penalty upon those persons, but, because they have taken advantage of State legislation, the Leader of the Opposition desires that a penalty should be imposed upon them under Commonwealth taxation legislation. I cannot imagine a more illogical proposition than that.

What is the real position in business at the present time ? We know that owing to increased costs less goods can be purchased with a given sum of money than could be purchased three or four years ago with the same given sum. But the selection of goods that a shop offers to the purchasing public is part and parcel of the service that the shop provides, and if we discriminate against private companies, those companies will not be able to retain sufficient capital to enable them to purchase the selection of goods that they were able to purchase three or four years ago.

Mr Calwell:

– This bill relates to the undistributed profits of companies.


– The undistributed profits of a company increases the capital and, therefore, the purchasing power of the company. A private company already pays 5s. in the £1 on the first £5,000 of its distributable income and 6s. in the £1 upon the remainder. I challenge the Opposition to advance one valid reason why a private company should be placed in a worse position than a public company or a partnership. In my opinion, the penalty that the Leader of the Opposition desires to inflict upon private companies is a severe one. It is not a penalty that the people themselves, if they’ understood all the implications of this matter, would inflict upon a private company trading in Australia - and trading, to a very large degree, for the benefit of the purchasing public. The Government is to be complimented not only upon the provisions of this measure to which I have referred, but also upon other provisions to which I have not referred.


.- I assume that the object of this bill is to simplify the taxation laws. The Treasurer (Mr. Fadden) has said that those laws are very complex, and I presume that we may regard that as a statement of fact. Much has been said about the present system under which social services contributions and income tax are levied separately, and about whether the Labour party acted properly in giving the people an indication of the amounts that they were paying in social services contributions. That system is at any rate blatantly honest. I know that quite a number of persons noted the large sums that they were paying in social services contributions, and, having estimated the very small benefit they would, for one reason or another, receive in return for their contributions, became very critical of the system-. The Government has shown a certain degree of shrewdness by proposing to merge the two levies into one levy. The criticism that was levelled at the Labour party from time to time will not be directed, at this Government when the bill becomeslaw, although the result to the taxpayers will be approximately the same as under the present system.

It occurred to me that, with theadvent of social services benefits, but for actuarial complications and difficulties many of the State superannuation schemes could, with some advantage, have been organized upon a voluntary basis, but the reverse has been the case. Since the social services scheme began to operate, the number of compulsory superannuation schemes has increased progressively. The latest compulsory superannuation, scheme in Victoria is one which covers municipal employees. I do not deny that these schemes confer substantial benefits upon contributors to them, because the governments, municipalities and private organizations” that establish them pay by far the largest proportion of the contributions, but I feel that in many instances the payment of the contributionsimposes a burden upon young people who are starting to rear families and who need urgently all the money that they earn.

The bill makes provision for a reversion to the system of concessional deductions.. In my opinion, under that system it will be far simpler for a taxpayer to estimate the amount of tax that he will be required to pay than under the present system. I have always considered that it is very unsatisfactory for a taxpayer to receive an assessment that can be interpreted only by someone who is well versed in accountancy and, who, even then, has the greatest difficulty in explaining it to the taxpayer. The proposed system is not a new one. It was inoperation prior to the introduction of the present system, which has, in my opinion, been found wanting in some respects. T believe that the reversion will be as welcome as it is justified.

The Treasurer has implied that the Government’s proposals will afford very little relief to taxpayers. He has said -

The allowance of the deductions on the basis proposed will not be of less value to any taxpayer than is the present concessional rebate . . . The proposed concessional deductions will accordingly afford the largest measure of relief to -those taxpayers with family responsibilities.

The concessions proposed by the Government will ease the burden upon taxpayers by only £1,750,000 a year. Having regard to a budget of approximately £750,000,000, that is not a very large amount, especially as a good deal of relief was promised to taxpayers by the present Government parties before they assumed office.

I am very interested in the proposal to extend the concessional allowances in respect of student children. The present concessional allowance for children receiving full time education at a school or university applies to children over sixteen years but under nineteen years, and it is proposed that the age limit shall be extended to 21 years. That will afford a very welcome relief, even though the concession will, in the main, be of benefit to people who are well placed financially. It is a concession that is well deserved, because parents who undertake to educate their children to the age of 21 years expect very little return from their expenditure. The advantages that accrue from education extend equally to the community as to the individual, but about the only satisfaction that a parent can derive from ensuring that his children have a good education is that he can look forward with greater certainty to their future well-being. I make a feature of this matter, because I desire to ask the Treasurer (Mr. Fadden) to consider the advisability of extending this concession still further. The annual cost to revenue of the concession now being provided is estimated at £150,000. It is not a substantial concession to parents in the lower and middle ranges of income, who make great sacrifices to give their children secondary and higher education.

I believe that a similar concession should be granted to parents whose children are undergoing training as apprentices. Their financial position is often overlooked quite unnecessarily, and unjustly, and I hope that it is not too late for the Treasurer to give sympathetic consideration to their circumstances.

Parents who encourage their children to become apprenticed in various trades realize that it is necessary that the lads must be educated to a junior or even a senior technical certificate standard before they will be accepted by an apprenticeship authority. The period of an apprenticeship is approximately five years. A lad who leaves school at the age of sixteen years does not complete his training as an apprentice until he is approximately 21 years of age. He receives that training in conjunction with his work, and his pay is discouragingly small compared with that of a lad with a similar education who obtains employment in the clerical section of a railways department, and frequently parents are obliged to dip into their own pockets to assist him to buy clothes and pay his travelling expenses. Those parents incur a substantial financial burden, from which they should be relieved at the earliest possible moment. I contend that for taxation purposes, the position of the parents of a lad who is being trained as an apprentice is analogous to that of parents whose children are receiving full-time education at a secondary school or a university. Every encouragement should be given to parents to apprentice their children to various trades. The serious shortage of apprentices in Victoria alone may have, dangerous repercussions in many industries. I am only asking for comparative justice when I say that the parents of apprentices should receive the same consideration for income tax purposes as is given to the parents of children who are receiving a secondary or university education. f Other tax concessions are granted in this bill. In cases of partial maintenance of a parent by one child, or by each of two or more children, the deduction is to be apportioned on such a basis as the Commissioner of Taxation considers reasonable. The annual cost to revenue of the extension of that concession is estimated at £300,000. I note with a great deal of satisfaction that the Commissioner of Taxation is to be allowed a certain degree of discretion in relation to various cases. I agree with the statement of the honorable member for Port Adelaide (Mr. Thompson) that such a discretionary power is necessary. Doubtless all honorable members have had occasion to interview the Deputy Commissioners of Taxation on behalf of constituents, and have remarked that little latitude is allowed in the act to meet injustices which are not specifically covered by it. I am gratified that, under this bill, the Commissioner of Taxation will have a certain measure of discretion.

The liberalized conditions in respect of funeral expenses, medical expenses, life insurance premiums, and contributions to superannuation funds are completely justified, and will benefit persons in all sections of the community. Fees for medical treatment have increased sharply, whilst fees for dental treatment have soared to almost inconceivable levels. People should be encouraged to visit their dentists regularly, in the interest of their health, and the raising of the limit of the concessional allowance for dental expenses from £10 to £20 will ease their financial burden. I, personally, believe that dental care should be included in a national health and medical service, but until that is done, the concessional allowances for dental expenses proposed in this bill will be most welcome. I regret that the concession for funeral expenses has been fixed at a maximum of only £30. The cost of a funeral is substantial, and the bereaved persons deserve at least all the consideration that the Treasurer has shown for them in this bill. I consider that the maximum of £30 should be increased. I make a passing reference to indicate my approval of the action that has been taken by the Treasurer in respect of those persons who come under the provisions of the Tuberculosis Act. The bill provides exemption from taxation of allowances received under that act. It is essential to give every encouragement to sufferers to obtain treatment in order that the national scourge of tuberculosis may be overcome as quickly as possible. This provision is a common-sense gesture, and Australia as a whole will derive a benefit from encouraging them to seek a cure.

It would be futile at this late hour to labour the various criticisms which have been voiced against other provisions of the bill, but I hope that the Treasurer will pay careful attention to them. I again make a special plea to him to extend to the parents of apprentices the same sympathetic consideration as he has shown to the parents of children attending secondary schools or universities. It seems to me that the instances that I have cited are analogous and that the Treasurer might well look into the matter to see whether he can make a further concession to parents who are carrying very heavy burdens in the maintenance of educational standards. The right honorable gentleman should keep in mind that apprenticeship is quite as important as secondary education and even university education. It is a fundamental part of the Australian economy, in which encouragement is well deserved. Justice should be done in connexion with a section of the community that cannot afford secondary and university fees.

Wide Bay

. - I desire to raise a matter of considerable interest and importance to the grazing industry. An anomaly occurs from a taxation point of view when a grazier transfers an interest to his son. Live-stock are being treated in the same manner as ordinary trading stock by the interpretation that is being placed on the provisions of section 36 of the act. This causes injustice and unfair discrimination. Where a grazier breeds his own stock they are valued for taxation purposes while he holds them within the prescribed limits of 4s. and £1 a head for sheep, and £1 and £10 for cattle, unless stock at higher prices have been purchased at some time. Sheep have been valued over the years at 4s. a head, but when a parent decides to take his son or daughter into partnership they are valued at present-day rates. I can best illustrate this matter by reading to the House portion of an article by A. M. Magoffin, in The Chartered Accountant in Australia, of the 20th October, which reads -

A is a grazier with 5,000 sheep valued for taxation purposes at an average of 10s. per head. He takes his son into partnership giving him a half interest. The market value of the sheep on the date of the partnership formation is 50s. per head. From the way that Section 36 is applied, A will find himself up for taxation on the difference between 10s. and 50s., and that for his entire flock. Thus he will be assessable on £10,000, although his financial position has not improved one iota.

I bring this matter forward in the hope that the Treasurer (Mr. Fadden) will take steps to correct the anomaly.

Question resolved in the affirmative.

Bill read a second time and committed pro forma; progress reported.

Message recommending appropriation reported.

In committee (Consideration of GovernorGeneral’s message) :

Motion (by Mr. Anthony) agreed to -

That it is expedient that an appropriation of revenue he made for the purposes of a bill for an act to amend the Income Tax Assessment Act 193G-1949, to repeal the Social Services Contribution Act 1945-1949, and the Social Services Contribution Assessment Act 1945-1948, and for other purposes.

Resolution reported and adopted.

In committee: Consideration resumed.

Clauses 1 to 36 agreed to.

Schedules and Title agreed to.

Bill reported without amendment; report adopted.

Bill - by leave - read a third time.

page 3201


In Committee of Ways and Means: Consideration resumed from the 18th October (vide page 982), on motion by Mr. Fadden -

That the contribution imposed by the Social Services Contribution Act 1945-1949 be not imposed . . . [vide page 977).

Question resolved in the affirmative.

Resolution reported.

Standing Orders suspended ; resolution adopted.

Ordered -

ThatMr. Anthony and Mr. Spender do prepare and bring in a bill to carry out the foregoing resolution.

Bill presented by Mr. Anthony, and read a first and second time.

In committee:

The bill.


. -I refer to the First Schedule, which sets out the basic rates of tax and contribution. The rate that will apply to taxable income not exceeding £100 will be 1d. in the £1. When the taxable income exceeds £100 but does not exceed £150, the rate will be 6d. in the £1. The rates of tax were graduated in decimal propor tions under the system that will be revoked by this bill and I believe that it gave a much fairer deal to the taxpayer than will be given by the proposed system. Time will tell how the scheme will operate, but I am confident that scientific arrangements cannot be made to increase rates progressively, as proposed in the schedule, by stages of £50 or more of taxable income with equity to the taxpayers.

Bill agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 3201


Assent reported.

page 3201


The following bills were returned from the Senate : -

Without amendment -

Wool Sales Deduction (Administration) Bill 1950.

Without requests -

Wool Sales Deduction Bill (No. 1) 1950.

Wool Sales Deduction Bill (No. 2) 1950.

page 3201


Waterfront Employment

Motion (by Mr. Spender) proposed -

That the House do now adjourn.


.- This afternoon the Minister for External Affairs (Mr. Spender) made a senseless, stupid-


– Order ! The honorable member must not describe the speech of another honorable gentleman in that way, and he may not debate, oh the motion for the adjournment of the House, subjects that have already been discussed during the day.


– Very well, I shall express myself in another way. This afternoon I was prevented by the Minister for External Affairs, by the exercise of that extreme tact and discretion which characterize him, from defending my friends and constituents, the waterside workers who recently participated in a strike, which has now been settled to the satisfaction of all and sundry. Far be it from me to deny the Minister, fresh from his triumphs abroad, his contacts with the great, his pacts - of which we have been presented with a sample this evening - and his global peregrinations, the right to utter a lofty snort at the expense of the waterside workers. I looked at him and saw on his face an expression of intense agony because he, the Minister for External Affairs, a figure of world-wide repute, should be so hurriedly cast into a scene of intolerable vulgarity, a strike by waterside workers, which was evidently detrimental to his peace and dignity. He was repelled by the extreme contrast between his experiences abroad and at home. Overseas, he had been rubbing shoulders with the great, joking with beauteous damsels, receiving flattery, and making and unmaking the fortunes of men. Then, lo, he finds that these presumptuous varlets, the waterside workers, are on strike. I think the Minister has revealed his form as a union hater and union smasher. That is his traditional role in this House. Now he has reverted to it quite gratuitously. He intruded without justification or reason into a sphere of activity that belongs to the Minister for Labour and National Service (Mr. Holt), who had dealt adequately with the situation, and succeeded in settling the dispute. The unbounded egotism of the Minister for External Affairs forced him to intrude. . Was he resentful that the dispute had been settled, or was he’ merely a prey to blind prejudice, so that he could not control himself, and had to vent his spleen on a body of decent Australians? He referred to their failure to grasp the instrument of arbitration. May I remind him that, while he was obsessed with momentous world problems, these men gathered in a spirit of sweet reasonableness around a box on the wharf, and the dispute was adjusted on the spot, to their great credit.

Mr Haworth:

– After it has cost the community many thousands of pounds.


– If the official who was delegated to exercise the functions of arbitration had acted in a reasonable manner at the outset, if he had not har boured prejudice of the extreme kind exhibited by the Minister for External Affairs to-night, and had treated thewharf labourers as decent men instead of telling them that they would be struck off the roll, if he had recognized that thedispute involved a genuine safety issue, there would have been no strike on the wharf. I am complaining of the lamentable lack of knowledge displayed by theMinister.

Mr Haworth:

– The honorable member does not look very serious.


– I am very serious now. I told honorable members that they would hear more of this subject. The Minister for External Affairs is apparently unaware of the intrinsic merit of the workers’ case in many industrial disputes. He and others like him lump all industrial disputes together. They are too apt to generalize about such disturbances. The Minister for External Affairs was aided and abetted by theMinister for Air (Mr. White) in hispetty obstruction of a back-bencher who wished to discuss the case. I congratulate the Minister on his knowledge of the intricacies of our domestic problems. If he possesses the same intimate knowledge of international affairs, then, in the light of his exhibition to-night, the foreign policy of Australia is in safe hands.

Wednesday, 29 November 1950


’. - I desire to bring to the notice of the Government a matter that is of importance to the people who reside in thenorthern suburbs of Melbourne. It is proposed to extend the Commonwealth Serum Laboratories, and a part of the undertaking is the closing of Oak-street,, which extends from West Brunswick to Flemington-road. It is the only supplementary road between Sydney-road and Mount Alexander-road, in Moonee Ponds, and its closing would increase the congestion that already exists in Sydneyroad. Because of that, the people of Brunswick are anxious that Oak-street shall not be closed. I have made representations on the subject to the former Minister for the Interior (Mr. McBride) “who said that, before any action was taken, a conference would be held with representatives of the West Brunswick Association and the Brunswick City Council.

Mr Haworth:

– What newspaper has the honorable member before him?


– It is a particularly important paper called the Leader Budget, which is published in Brunswick. Later, the then Minister for Supply (Mr. Casey) said that the whole matter had been settled. The Minister for Health (Sir Earle Page), who is interested in the matter, has said that there is no opposition to the proposed closing of the road. That is why I have brought the matter up, and why I have these newspapers before me. From one of them I read the -following headings : -

Strong objection to proposed closing of Oak Street.

Amazing disclosures on Oak Street annexation scheme.

I have received a communication from all the big factory owners in West Brunswick protesting against the proposed closing of the road. It would cost £100,000 to construct the suggested subsidiary road, which would be practically useless, and that cost would be added to that of the additions to the serum laboratory. It would also be necessary to resume properties in Brunswick, and this would cause dissatisfaction, and add to the existing housing difficulty. Previously, several suggestions were put forward for the construction of roads to take the place of Oak-street. Mr. Mcllroy, secretary of the State Department of Works in Victoria, said that in his opinion, the present position of Oak-street was the best position obtainable. Mr. Robinson, the Melbourne City Engineer, in a memorandum prepared in 1947, stated-

Hie proposed road does not provide any better facilities for traffic movement than the existing road which is superior to either of the proposals.

In view of the fact that Ministers promised the people of Brunswick and the West Brunswick Progress Association that prior to any action being taken for the deviation of Oak-street they would be consulted it is incumbent upon them, even though they be members of a Liberal ministry, to keep their promise. The Minister for Supply was approached and it was suggested to him that as £100,000 would probably be wasted on this project, he should make a ten-minute journey from his office in Melbourne and traverse the proposed site in order to see which road would be most beneficial. So satisfied are the people who are objecting to the deviation that the existing road is the most satisfactory that they consider it should only be necessary for the Minister for Supply or any other Minister to view the site of the road to become convinced that they are right in the attitude they are adopting to the proposal. The deviation of this road would be prejudicial to the interests of businesses in the west of Brunswick. It would cause congestion of traffic, and the expenditure on it would be unwarranted. The Ministers who promised the Brunswick Council and the Brunswick Progress Association that they would grant them an interview before a final decision was made should, even at this late stage, hold the promised conference with these people. That is incumbent upon them, not only as Ministers, but also as men.

Dr. NOTT (Australian Capital Territory) T12.7 a.m.]. - On the 22nd November, 1950, I addressed a question to the Prime Minister which I prefaced in these terms -

I should like to explain that the question which I shall address to the Prime Minister is tinctured with a certain amount of unpleasantness.

I said that I asked the question at the request of certain individuals who had expressed concern about the installation of what I referred to as a refrigerator in the offices of the Public Service Board. To-day, I received from the Minister a reply which was, in effect, a statement by the Public Service Board. I accept that answer. At the same time, the information given to me in the reply was not couched in as full and as technical terms as it could have been and will itself be the subject of questions in the near future. However, at the conclusion of the reply, the Prime Minister said -

I think it is a matter of regret that questions so damaging to the Public Service Board administration should be asked with such a lack of foundation.

There was no lack of foundation for the question that I submitted, as subsequent questions will prove. The Prime Minister continued -

Should any honorable member desire information about what I may call the domestic administration of the department, the Chairman of the Public Service Board will at all times be willing to supply information or facilitate the making of suitable inspections.

I should not be prepared, under any circumstances, to communicate with the chairman or with a member of the Public Service Board nor to inspect their department and, having made an inspection, or having received a confidential document, pass it out for public information. The Prime Minister concluded -

The Public Service Board enjoys the confidence of the Government in the policies which it is pursuing. It would be highly undesirable that the board should become involved in publicly defending itself against criticism made in this House. This is not to say that the board’s administration is beyond criticism; it is merely to say that honorable members should be reluctant to make charges in relation to matters which they have not most thoroughly examined.

There was no charge in the question that I asked. I merely submitted, as I have a perfect right to do as a member of this House, a series of questions seeking information - a policy that I propose to pursue. My question merely canvassed a matter of public concern that has been publicly discussed, and I hope that at no time will honorable members be precluded from prosecuting inquiries in the interests of the community that they were sent into this House to serve. At an early opportunity I shall submit a further set of questions in relation to this matter and I hope that I shall receive a reply that will satisfy those people who are most concerned.

Minister for External Affairs and Minister for External Territories · Warringah · LP

a.m.). - in reply - The remarks made by the honorable member for Gellibrand (Mr. Mullens) merely prompt me to say that it is regrettable that an honorable member, whether he be old or new in service in this House, should engage in abusive attacks on any other honorable member. We have learned only too well in the very brief period during which the honorable gentleman has been a member of this Parlia ment that he makes somewhat the same kind of speech on every occasion and I am told that he did so also in the years during which he was in the Parliament of Victoria. This morning the honorable member asked for leave to make a statement.

Mr Mullens:

– And the Minister refused to give it.


– I did. And I shall refuse in similar circumstances in future. This Government controls the business of the House. It is quite obvious that the honorable member for Gellibrand had nothing to say this morning because to-night he did no more than .make an abusive attack upon me because of my refusal to give him the leave that he sought. The reason for the honorable member’s annoyance is that he was not given a chance to indulge his vanity over the air this morning. That is as plain as a pikestaff. What did he complain about ? This morning I said three things which I want to repeat because I do not believe in neglecting to tell the public the .facts. I said that the two waterfront disputes had been settled ; that both of them should not have taken place; that both were unjustified; and that the loss of man-hours had been about 200,000 in Victoria, and more than 300,000 in New South Wales.

I think it is about time it was made clear, to the people of Australia that the economy of this country cannot be sustained if these constant stoppages of work continue. I directed attention to the fact that the judge had said that he had offered his services to those men last Tuesday, but that his offer had been rejected. That is not my statement; it is the statement of Judge Kirby. His Honour further said that had the men accepted his offer and followed conciliation and arbitration practice, no strike would have been necessary. That was proved by the award that he made when he went to Camdale and made his determination on the spot. It is about time we had a little more plain speaking in this connexion. The judge offered his services to those men, and the offer was rejected. Their reason does not matter.

Mr Mullens:

– It does.


– Even assuming that the men thought that they had a bona fide case, the fact remains that they eventually accepted Judge Kirby’s offer to go to Caradale. They could have accepted that offer on Tuesday last. As the result of their failure to do so, there has been a stoppage for a week in one of the major ports in this country. How that can be justified by any man is beyond my comprehension. The honorable member for Gellibrand obviously is not concerned about the welfare of the community and rose only to argue a special case. I have said that there was a clear distinction between the dispute in Victoria and that in New South Wales. In New South Wales the stoppage was entirely unjustified, yet 317,000 man hours was lost at a time when it was desperately urgent that we should keep our transport moving. Two ports have been tied up for over a week and the men concerned have gained nothing. I have directed attention to the fact that in connexion with Caradale, the men could have had what they wanted without any strike. I have said that in New South Wales, the men returned to work on pre-strike conditions, and accomplished nothing by their strike.

Mr Ward:

– That is not true.


– It is perfectly true. There is not the slightest doubt that the strike in Sydney was Communist inspired - I do not say that of the Victorian dispute - and I should expect the honorable member for East Sydney (Mr. Ward) to support it. When, after the Conciliation and Arbitration Act has been completely defied, ports rendered idle, and transport brought to a standstill at a time when such hindrances contribute substantially to already high costs, the men return to work having gained nothing at all, we should not fall over backwards and say “ Thank you very much “. It should be made plain that the men have failed to observe the provisions of the Conciliation and Arbitration Act, and by their actions have done great harm to the community. A little more plain speaking would be very good for this country.

Question resolved in the affirmative.

page 3205


The following papers were presented : -

Lands Acquisition Act - Land acquired for Postal purposes - Moorook, South Australia.

Seat of Government Acceptance Act and Seat of Government (Administration) Act - Regulations - 1950 - No. 0 (Building and Services Ordinance).

House adjourned at 12.19 a.m. (Wednesday).

page 3205


The following answers to questions were circulated: -



Jervis Bay

Mr Davies:

s asked the Minister for Worksand Housing, upon notice - 1.Isitafactthat, on the 28th July, twelve painters were dismissed from a departmental project at Jervis Bay?

  1. If so, were these men given any reason for their dismissal, and have they been’ victimized in connexion with other public works in the district where they have lived for many years ?
  2. Will he arrange for an investigation into this matter with a view to ascertaining whether these men have been deprived of the right of earning a living?
Mr Casey:

– The answers to the honorable member’s questions are as follows,: -

  1. Yes.
  2. The reason for dismissal was made clear to the men and to representatives of unions who interviewed departmental officers on the matter. The union representatives expressed agreement with the departmental decision. The men had not been victimized in connexion with employment in the district, and as the department does not intend re-engaging them, they are free to accept any employment they desire.
  3. An investigation is unnecessary. The honorable member for Macarthur has made several representations to me regarding matters associated with the departmental project in question, and I have also had discussions with him in connexion with the matters raised. As a result of the representations made, it has been possible to take remedial action for the adjustment of some minor items, but these had no bearing on the re-employment of the men mentioned, who were dismissed for unsatisfactory work.

Cement Pipes.

Mr Fadden:

n. - On the 22nd November, the honorable member for Bendigo (Mr. Clarey) asked the following questions : -

  1. Is the Treasurer aware that asbestos cement water pressure pipes are imported from Europe by State and municipal authorities for urgent reticulation projects, and that such pipes are admitted to Australia, under by-law, free of duty?
  2. In view of the necessity for ample supplies of such pipes to overtake thelag in developmental work, can the Treasurer assure the House that such pipes will continue to be admitted to Australia, under by-law, free of duty after the 31st December, 1950?

The Minister for Trade and Customs has furnished the following reply: -

  1. At present there is no by-law prescribed for the admission under customs by-law of asbestos cement water pressure pipes shipped to Australia on or before the 31st December, 1950, but, when warranted, applications for concessional treatment under temporary bylaws for these goods have been approved.
  2. Consideration will be given to the admission free of duty under customs by-law of specific shipments of asbestos cement water pressure pipes on receipt of applications by the Comptroller-General of Customs.


Mr O’Connor:

r asked the Minister for Immigration, upon notice -

  1. Was Mr. V. Greenhalgh, Chief Migration Officer of the Australian Mission in Germany, recently recalled to Australia for the purpose of discussing the present migration organization in Germany?
  2. Are any changes as to policy and staff to be made as a result of this conference; if so, what is the nature of these changes?
Mr Holt:
Minister for Immigration · HIGGINS, VICTORIA · LP

– The answers to the honorable member’s questions are as follows : -

  1. Mr. G. V. Greenhalgh, Chief Migration Officer of the Australian Military Mission in Germany, which is responsible for recruitment and selection of displaced persons for settlement in Australia, was recently recalled for general discussions so that plans could be formulated for obtaining migrants from western Europe when the displaced persons’ scheme, terminates in 1951.
  2. Organization changes, if any, in the present Australian migration staff in Europe will be determined by the sources from which migrants are to be recruited and the numbers to be obtained from each source, as may be finally decided by the Government in planning its future immigration programme. buildingmaterials.
Mr Daly:

y asked the Minister for National Development, upon notice - 1.Whatquantities of (a) iron and steel,’ (b) bricks, (c) tiles, and (d) corrugated iron were produced in 1938?

  1. What quantities have been produced this year?
  2. What is the estimated production and estimated requirements of each item for 1950?
Mr Casey:

-The answers to the honorablemember’squestionsareasfollows -

  1. Production 1938. - Figures are not available in all cases for the specific period mentioned, but those relating to the nearest period for which statistics are available are as follows: - (a) Iron and steel, 1,380,187 tons - fiscal year 1938-39. This includes 1,170,103 tons of ingot steel, 34,727 tons of castings, and 175,357 tons of pig iron. Details of steel products produced that year are not available but are estimated at 912,000 tons. (b) Bricks, 720,000,000- fiscal year 1938-39. (c) Tiles (all types), 44,174,000 - fiscal year 1938-39. (d) Galvanized iron, 78,544 tonscalendar year 1938. Separate figures are not available for corrugated and plain galvanized iron.
  2. Production January- June, 1950. - (a) Australian production of pig iron totals 503,000 tons, including pig iron for steel production. Production of ingot steel by the major steel works was648,488 tons. In addition, steel works produced approximately 16,185 tons of iron castings and 18,553 tons of steel castings. Production of pig iron at Whyalla, forming the major part of pig iron for foundries, was 59,522 tons during the period, (b) Bricks, 309,133,000. (c) Tiles, 40,075,000. (d) Galvanized iron, 43,180 tons.
  3. Estimated production and estimated requirements for 1950 -


Mr.Calwell asked the Minister for National Development, upon notice -

  1. How many prefabricated houses have been ordered by this Government overseas (a) on its own behalf and (b) on behalf of the States under the Commonwealth and State Housing Agreement?
  2. How many such houses have so far arrived in Australia under each category?
  3. What is the total amount of contracts in each such category?
  4. How many houses in both categories are expected to arrive in Australia at each of the twelve months commencing from next month?
  5. How many such houses (a) have been’ delivered in Canberra to date and (b) are expected to be delivered in Canberra in each of the next twelve months?
Mr Casey:

y. - The answers to the honorable member’s” questions are as follows : - 1. (a) The Commonwealth Government has ordered 2,582 homes to date, including 182 tropical type houses. (b) The State housing authorities have placed orders as under: - New South Wales, 1,000; Victoria, 2,750; Queensland, 1,450; Western Australia, 900; total, 6,100. (Western Australian Housing Commissionis nearing finality in its negotiations for the purchase of 900 homes. ) As the honorable member is aware, the States are principals under the Commonwealth and State Housing Agreement -and therefore negotiate and place orders direct with contractors. It is expected that the houses mentioned above will qualify for acceptance under the agreement. The South Australian Housing Trust has ordered 1,008 houses but, as the honorablemember may be aware,- South Australia, whilst a signatory to the agreement, has not yet elected to operate under it. Tasmania has not yet ordered any housesbut it is understood is at present considering inviting tenders. Any houses purchased will not come under the agreement as Tasmania has now withdrawn from . it. In addition, the Victorian Railways Department has ordered 2,150 homes and1,150 of the houses have been sold to the State Rivers and WaterSupply Commission and State Electricity Commission.

  1. Commonwealth. - Advice has been received that 78 houses, the first instalment of its orders, have been shipped from the United Kingdom. Progressive deliveries are expected. Queensland. - The first shipment of houses from the Queensland orders is expected early in December. A’ steady rate of delivery is scheduled. Victoria. - In September, the Victorian Railways Department reported the arrival of components for. the first 1,000 homes of its order and it is anticipated that up to 1,200 homes will have been delivered under this order by the end of this year. Delivery of houses in respect of other orders is expected to continue at a steady rate. South Australia. - The South Australian Housing Trust expects to receive delivery of the first 64 of its 1,008 homes before the 31st December, 1950. The first three sample houses have arrived and have been completed. The rate of delivery in the New Year should be at’ 64 a month.
  2. Total Commonwealth contracts placed to date for supply and erection, excluding an order for 162 tropical type houses, £6,494,000; 162 tropical type- houses, £467,000. In respect to State orders, the attention of the States has been invited to the honorable member’s request and the information will be supplied as it is received.
  3. Schedule for delivery of existing Commonwealth orders over each of the next twelve months is as follows: - December, 186; January, 140 ; February, 780; March, 350; April, 380; May, 80; June, 230; July, 80; August, 80; September, 80-; October, 80; November, 80; and December, 76; total 2,582. Portion of the order for tropical houses will go direct to Fort Moresby and other areas. Concerning State deliveries, the attention of the States has been invited to the honorable member’s request and the detailed information will be supplied as it is received. However, it is anticipated that up to 10,000 houses coming in under State orders will be delivered in the next twelve months. 6. (a) Two prototypes. (6) December, 24; January, 8; February, 10; March, 22; April, 32; May, 40; June, 40; July, 40; August, 56; September, 80; October, 80; November, 80; and December, 76; total, 588.

Cite as: Australia, House of Representatives, Debates, 28 November 1950, viewed 22 October 2017, <>.