20th Parliament · 1st Session
Mr. Speaker (Hon. Archie Cameron) took the chair at 10.30 a.m., and read prayers.
– I desire to ask the
Minister for Civil Aviation a question which arises out of the statement of Government policy in connexion with TransAustralia Airlines and Australian.
National Airways Proprietary Limited hat was made yesterday. Has the Minis- t er taken action to implement the sugges- t ion that I made last week that an examination should be made of theequip- ment used by both services because of the l ong period during which some aeroplanes lave been in use ? What does the Govern- ment propose to do in order to give effect to the statement of policy that was made yesterday? Will the Minister make a fuller statement concerning the implementation of the Government’s policy, which is as important a matter as the announcement of policy itself?
– In the statement which the Prime Minister made yesterday he said that it was hoped that the new arrangement relating to Trans-Australia Airlines and Australian National Airways Proprietary Limited would be operative in the new year. Of course, this will necessitate very considerable discussions with both organizations in order to effect the necessary economies, which will require a re-arrangement of services and a re-allocation of business. Discussions will also be necessary concerning new aircraft. When these matters have been fully considered a statement will, no doubt, be made concerning them.
– I point out to the Minister for Civil Aviation that the Nor- West Whaling Company Limited has succeeded, without assistance from the Commonwealth, in establishing a flourishing industry in a remote part of northwestern Australia. As that company pays substantial amounts in taxes to the. Commonwealth, it is entitled to receive some assistance from the Government. Will the Minister give every consideration to the request that was made some time ago that the Commonwealth, in co-operation with the company, should improve the landing strip at Point Cloates for the purpose of the establishment of a regular service by DC3 aircraft which are at present operating in the north-west of Western Australia?
– The general policy of the Department of Civil Aviation is to expend money only on those aerodromes to which regular services have been established, and which have become recognized stopping places in organized flying schedules. It would be a complete departure from that policy if I were to agree to the proposition submitted by the honorable gentleman. However, I shall examine any special circumstances which may exist in the case to which he has referred, and give his suggestion every consideration.
– I ask the Minister for Civil Aviation whether it is a fact that the departmental committee that inquired into the affairs of the airline companies reported adversely on the financial position of Australian National Airways Proprietary Limited and cast doubts on the airworthiness of its aircraft. Will he make the report available to honorable members?
– The report which was made available to the Government was the result of a confidential inquiry into the whole of the internal affairs of Australian National Airways Proprietary Limited, to which the company had agreed in order that the Government might be in a position to make a comparison between that company and TransAustralia Airlines. In view of that fact, it is not intended to make publicly available information given under those circumstances. The question of serviceability was not involved in the report.
– Is the Treasurer aware that shire councils in Victoria have claimed that Commonwealth Aid Roads Agreement moneys have been withheld from them during the current year? Can he advise the House on whether the money available under the act is likely to exceed the record grants that- were made last year? What course is open to local authorities to enable them to obtain their share of those grants?
– I have received complaints from local authorities in connexion with the allocation of federal aid roads funds that have been made available to the State Government by the Australian Government. If these local authorities have not received the amounts they consider to be their fair allocation it is due entirely to the ‘action of the State administration. I should advise them to approach their State go- vernment on this matter. It is anticipated that the record grants of last year will be exceeded this year on account of the fact that they will, in future; be made on the basis of petrol consumption. As consumption increases the grant will increase also.
– My question is directed to the Minister representing the Minister for Trade and Customs. Is it a fact thatmen’s and boys’ shirts, said to have been made in HongKong, are arriving in this country to be retailed at from 5s.11d. to 8s.11d. each ? Is the Minister aware that the material for these shirts has been sent from Japan or smuggled in bulk from Soviet China into the British possession of HongKong and that it is there made up by Chinese coolie labour, in order to get the tariff advantages that apply as between British Dominions? What steps can the Minister take to prevent such unfair practices and what further protection can be given to Australian shirt manufacturers? What is the capital investment and wages bill of the Australian shirt manufacturers who are threatened by this dumping?
– I have no information on the matters raised by the honorable member. I am not aware that his statement is true in actual fact, but I shall ask the Minister for Trade and Customs to consider the question and supply him with an answer.
– Has the Minister for Commerce and Agriculture any information to give the House concerning discussions and . negotiations “which have been in train with State Ministers for Agriculture about the position in relation to wheat for stock feed ?
– As the outcome of discussions between the Commonwealth and the States, which have continued for many months since they commenced last June when I made certain proposals to the Australian Agricultural Council on behalf of the Australian Government, a final arrangement has been made under which Australian wheat-growers will receive 16s.1d. a bushel, for their wheat which is sold for stock feed purposes in Australia. The State governments have undertaken to legislate to effect that rise in price. Under that legislation, however, the poultry, pig and dairying industries will pay only 12s. a bushel this year for their wheat, and- the Australian Government will make up the difference by way of subsidy to those industries in the interests of those engaged in the industries and to minimize the consequent price rise of the products of those industries. It has been agreed that this subsidy will cost the Commonwealth £5,300,000 this year. It has also been- agreed by all concerned that it is undesirable that any more wheat than necessary should be used for stock feed. Following a proposal advanced by the Commonwealth, it has been agreed that the seven governments shall engage in a campaign to try to increase the acreage planted with wheat and other coarse grain suitable for fodder, so that a greater amount of wheat may be made available for export for human consumption in other parts of the world. There is some political competition for the credit for this arrangement. I hope it will not be established that justice to any industry is dependent upon political manoeuvring. As a matter of fact, this reasonable arrangement, which was finally arrived at by negotiations between the Commonwealth and the States, was, as an historical fact, first advanced by the Commonwealth.
– In view of the fact that, under the scheme by which wheatgrowers will receive for wheat used for stock-feeding purposes in this country the International Wheat Agreement price, the wheat-growers will be called upon to make a sacrifice to the degree of the difference between that price and the world parity price, will the Minister for Commerce and Agriculture say whether it is proposed to place a. limit upon the quantity of wheat that may be made available for stock feed nt the concessional price? Will any steps be taken by the Government to ensure that graziers, owners and breeders of race-horses and other users of feed wheat will be required to pay a reasonable price for it, and will not be enabled to profit from the scheme at the expense of wheat-growers?
– The arrangement, which I did not explain, in detail, is that for all feed wheat the wheat-growers shall receive 16s. Id. a bushel, and that the Commonwealth shall pay a subsidy in respect of such wheat only when it is used in the poultry, pig and dairying industries. Race-horses and other exotic animals will have to be fed upon wheat at a cost of 16s. Id. a bushel. Obviously, an administrative problem is involved and I am glad to be able to say that all the State governments, recognizing that fact, have undertaken to co-operate with the Commonwealth in policing the actual use of the wheat. Further, it has been generally agreed that 26,000,000 bushels should be made available for feed. That was the quantity of feed wheat that was used last year for all purposes.
– Will the Prime Minister say whether the Australian Minister for External Affairs has asked the Prime Minister of Great Britain to arrange for an Australian representative to attend political and military discussions about Middle East affairs? If that be a fact, can the right honorable gentleman give the House details of the nature of the representation ?
– At the time of the original discussions regarding the formation of a Middle East Command, Australia, while approving of the proposal in principle, reserved for consideration the question of the nature of the higher political direction of any such command and of the share that countries like Australia might have in it. I have no doubt that that matter has been discussed formally or informally by the Minister for External Affairs during his absence abroad. I have no information about it beyond what I read in the press this morning. I expect that the matter has arisen in the course of discussions in London and that, naturally, the Minister has put the Government of the United Kingdom in possession of the views of this Government.
– My question is directed to the Minister representing the Minister for National Development. Is the proposal of the Joint Coal Board to sell £9,000,000 to £10,000,000 worth of coalproducing equipment to private coalowners being made in order to minimize risk if pillars in mines are extracted without an adequate system of stowage having been installed? “Will the Government issue a direction to coal-owners that this machinery shall not be used for the extraction of pillars in coal mines unless the lives of the miners are properly safeguarded by an adequate system of stowage ?
– From my recollection, the majority of the plant that is to bp sold by the Joint Coal Board is not deepmine plant, but open-cut plant. I shall bring the honorable gentleman’s question to the notice of the Minister for National Development and shall supply him with an answer to it later.
– Does the Prime Minister recall that this week the miners’ federation rejected by a small majority a proposal that machines should be used for the extraction of pillar coal, subject to proper safeguards, notwithstanding that it was supported by the Minister for Mines in New South Wales? Is the right honorable gentleman aware that all competent authorities haveagreed that the extraction of pillar coal by machines is safer than extraction of such coa] by hand? Has he seen the report of the South Maitland Coal-field Coal Conservation Committee, which has been quoted with approval by many honorable members, including the honorable member for Hunter? That report sta tes -
Where the pillars can be safely extracted’ by hu nd, there are mechanized “means where this can be done more safely.
In view of those facts, will the right honorable gentleman prepare for the information of honorable members and others who may be interested in the problem a statement showing the added degree of .safety in the use of machines in a proper manner for the extraction of pillar coal ?
– I shall convey the request that the honorable member ha.made to the Minister for National Development. I am bound to say, in reply to the second portion of the honor able member’s question, that the statements he has made are, to the best of my knowledge and belief, correct. Fol some time, I thought that it had been conceded that they were facts and that the resistance to machine extraction of pillar coal was based on entirely different grounds.
– Can the PrimeMinister say whether, at least three weeksago, the Queensland State Government placed a proposal before the Commonwealth for the joint expenditure by the two governments of the sum of £10,000,000 on the development of the Blair Athol and Collinsville coalfieldsand outlets to those fields? I point out that the proposal will enable those coalfields to increase their output to 1,500,000- tons annually, which is three times greater than their present output. The cost of such a scheme would not exceed the amount that the Government will pay within two years in subsidizing the importation of coal from South Africa and India. The scheme will add substantially to Australia’s assets. Will the Government favorably consider the proposal and come to a decision upon it at an early date?
– I do not propose to make any announcement of Government policy in answer to a question. In reply te the first part of the question that the honorable member has asked, I shall find out what the facts are and advise him later.
– Oan the Treasurerindicate the amount of the commitment charges that were payable at the 1st September last in respect of amounts undrawn from the loan from the International Bank for Reconstruction and Development? Did the interest that was payable on those amounts exceed that which was payable on the sums that were actually drawn from the loan at that date?
– At the moment, I have not available the information that the honorable member has sought, but I shall supply it to him as early as possible.
– The Treasurer, when he presented his budget to the Parliament, stated that one of its purposes was to damp down inflation. If the inflationary spiral refuses to take any notice of the budget, and if, at the end of three’ months it is rising more rapidly than ever, will the right honorable gentleman seek to introduce a system of prices and profits control such as is now having a stabilizing effect on the economy of the United States of America?
– -The honorable gentleman’s question involves a matter of government policy.
– Oan the Minister for Health give the House any information about the progress which is being made in America or elsewhere towards the production of an effective vaccine against poliomyelitis?
– The National Health and Medical Research Council, us I have stated previously in this House, has appointed the Epidemiological and Infectious Diseases Research Committee which consists of Professor E. Ford, who is the Director of the School of Public Health and Tropical Medicine at the Sydney University, Sir Macfarlane Burnet and other distinguished men. They have kept in constant touch with all progress that has taken place in other parts of the world in the conduct of research into poliomyelitis. Great changes have occurred during the last two years in regard to the possibility of extending the researches on a wider scale by reason of the fact that, instead of being entirely dependent upon the brains of monkeys for cultures, they are able to obtain cultures from other tissues. I have discussed with them this morning the report of the discovery of the three viruses of poliomyelitis in the United States of America, and they state that, although some progress is being made in those researches, there is no immediate prospect that a vaccine will be available from any sources within their knowledge, which will he effective at the present time in combating poliomyelitis.
– The necessity for extensions to the Bankstown post office, because of lack of space in the existing building, has been brought to the notice of the Postmaster-General on previous occasions. Can the honorable gentleman inform me whether he has any immediate plans for the extension of that post office? I point out to him that the present structure has served the Bankstown district for approximately 30 years, during which the population has increased from fewer than 5,000 to more than 60,000 persons. Will he take action to relieve the congestion that occurs in the Bankstown post office almost every day, but particularly on the days when pensions and child endowment are paid?
– The problem in connexion with the Bankstown post office is. unfortunately, somewhat common throughout Australia. Many of the post office buildings are in a run-down condition.
– Then why is the PostmasterGeneral’s Department dismissing staff?
– I arn referring to the condition of the buildings, and not to other matters which are associated with the department. If the honorable member for East Sydney would take a helpful part in the campaign to increase production, the department might be in a position to build extensions to existing post offices. The honorable member for Banks has brought to my notice on more than one occasion the congestion which occurs at the Bankstown post office and I recognize that such a situation requires attention. The department, as the honorable member probably knows, has erected a prefabricated building at the rear of the present post office and it proposes to transfer the postmen and the amenities section to it in order to provide more room for ordinary postal facilities. It also intends to make ‘ rearrangements within the post office, but it will not be possible to build any new structure at present. The department believes -that considerable relief will result from the new arrangements.
Mr. Drummond having ashed a disallowed question,
Notice must be given of Questions regarding the character or conduct of individuals other than Ministers or Members of the House.
Therefore, if a question does not make imputations concerning character or conduct, the fact that an individual is mentioned does not make it out of order.
– My intention is to disallow all questions without notice which refer to any person. I think such questions should ‘be asked upon notice. We have had excellent reasons in the past for ensuring that in the future such questions shall be placed on the noticepaper.
– Last year I asked the Minister for Health questions concerning the health of aborigines and the right honorable gentleman informed mp that a Commonwealth survey of their health problems was being made. I now ask him whether that survey has been completed, and whether the findings can be made available to the House and the public?
– After the honorable member had asked those questions, a conference was held of the medical officers in charge of aborigines in Queensland, Western Australia and the Northern Territory. I understand that the officers agreed to pool their knowledge. I shall ascertain whether their complete report has. been made available and I shall inform the honorable member accordingly.
– In view of the increasing telephone traffic between Sydney and Melbourne and the long delay that must occur before new facilities can be provided, can the Postmaster-General say whether a contract has yet been let for the installation of the new SydneyMelbourne trunk cable for which tenders closed early in this year? If arrangements have not yet been finalized, will the Minister indicate when the contract is likely to be awarded?
– No contract has yet been let for this work although tenders have been called. It is an extremely complicated project and many computations have to be made and a great deal of consideration must be given to various aspects of the undertaking.
– I direct to the Minister for Immigration a question relative to the urgent need for allocating more immigrant labour to rural industries. I understand that, under the Government’s immigration programme, schemes are operated whereby secondary industry authorities are able to nominate immigrants to come to Australia on the basis of an agreement for employment for two years, and that the cost of the passage is met by the industry on the basis of repayment to the industry by the immigrants during the course of their two years’ contract period. I understand also that if an immigrant does not carry out such a contract there is power to return him to the country from which he was brought. Those conditions provide some guarantee to the secondary industries concerned that immigrant workers will remain on the jobs for which they have been brought to this country. Is it possible for such an arrangement to be extended to cover the rural industries, so that people engaged in rural activities may have some guarantee that if they nominate immigrants, bring them to this country and pay the cost of their passages, they will be able to rely on their remaining in their employment for a period of two years?
– The position broadly in relation to what we term the “ special project procedure “ is as the honorable member has outlined it. It is true that, up to the present, it has not been applied to primary industries. It developed from applications by governments and semi-government employers mainly, andwas later extended to certain employers engaged on construction jobs and similar work. The honorable member’s suggestion is a useful one, and I cannot see, off-hand, any consideration that would make it impracticable. I shall be very glad to consider it. As I have said in this House on other occasions, the Government is most anxious to see a greater movement of immigrant labour into rural production, and if the honorable member’s suggestion is adopted it may encourage rural employers to bring out move immigrant labour thanhas been the case in the past.
– I ask the Minister for Immigration a question which relates to charges for accommodation in immigrant hostels. I refer to a communication which I have recently received from the Minister, in which he wrote -
Accommodation in hostels is on the basis of full board - there being no provision for lodgings only -a nd that is explained to migrants before they leave the reception centres.
The letter also explains that the immigrants are liable for the full charges whether or not they eat the meals provided. I had directed to the Minister an inquiry relative to a family which had incurred debts, amounting to a considerable amount, for board and lodging, including charges for meals that they had not eaten. I ask the Minister whether immigrants who do not like the meals provided at hostels, or cannot afford to pay for them because of family circumstances, or who, because they work long distances away, find it inconvenient to take the meals, shouldstill have to pay for them or whether he will review the present policy with a view to having some more equitable arrangement made?
– The tariff applicable to immigrants in worker hostels has been computed to return to the Government the cost of operating the hostels and it represents the out-of-pocket charges which the Government has incurred. It does not include any charge for the capital cost of construction of the hostels or any other costs such as interest payments. The tariff charged at these hostels compares very favorably with that which is charged at private establishments. In my experience cases of hardship are very rare. The wives of many of these immigrants take employment either in the neighbouring district or the hostel itself and the joint incomes of the husband and wife are quite substantial and adequate to cover the cost of their accommodation.
– Will the Minister for the Interior consider having prepared for publication statements setting out in detail plans for the development of minor industrial lease areas in the Canberra suburbs of Braddon, Kingston and Fyshwick, particularly in regard to areas held under lease for considerable periods, which have not been developed by the lessees?
– I do not know whether it is possible to prepare all these plans for publication, but I shall be pleased to supply any information that the honorable member or anybody else wishes to have in connexion with them.
– Is the Minister for Works and Housing aware of the fact that arrangements have been concluded for the delivery and erection of prefabricated houses in Queensland by European contractors? As the contracts will be handled by the Queensland Housing Commission, will the Minister confirm the fact that the Australian Government will pay a subsidy of up to £300 a unit on those houses?
– I think that this matter really comes within the province of the Minister representing the Minister for National Development. As far as I understand it, the position is that the Government pays a subsidy of £300 a unit on such houses. However, I shall make inquiries from the Minister for National Development and see that the honorable member is given a reply.
– I ask for leave to make a statement on the subject of copper in answer to questions that have been asked by the honorable member for Bendigo (Mr. Clarey) and the honorable member for Yarra (Mr. Keon).
-Is leave granted?
Opposition members. - No.
Leave not granted.
Motion (by Mr. Eric J. Harrison) put -
That so much of the Standing Orders be suspended as would prevent a ministerial statement being made by the Minister for Supply.
The House divided. (Mk. Speaker - Hon. Archie Cameron.)
Noises being audible in the chamber,
Question so resolved in the affirmative by an absolute majority of the whole number of members of the House.
Mr. BEALE (Parramatta - Minister for Supply). - My statement is being made in answer to questions that have been asked by the honorable member for Bendigo and the honorable member for Yarra. As I was refused leave to make it, I can only assume that the honorable members-
Some months ago, Australia was invited to participate in the International Materials Conference which arose out of the North American Treaty Organization. The materials to be discussed included copper, sulphur, zinc, tungsten, lead, and some others, and the principal producers and consumers of the free world were invited to attend, Australia being one of some twenty or more countries which accepted the invitation. At this conference it was agreed that there should be something of the nature of a pro rata share and share alike of the scarce materials among the member countries. Australia put forward its case based on its past consumption and present and future needs.
Australia obtained a consumption allocation of 8,900 metric tons of copper for the fourth quarter of 1951. This was the amount to which we were expected to limit our consumption for that quarter, so that it took into account our local production as well as what we would buy from abroad, if we could buy any. This allocation was less than our estimated needs by about 5,000 tons a year if that quarter’s allocation were worked out on an annual basis.
Some people have suggested that Australia should not have participated in the conference. The Government does not agree with that view. In the first place, there were other materials being discussed and allocated at the conference as well as copper. For instance, sulphur is vital to Australia, and if we had not been there, we would have suffered very greatly. If we had stayed away from the conference, we would most probably not be in a position to buy copper at all at normal prices, because the limited amount available would have been allocated among the participating countries. As it is, even with Our allocation, we have not, for some time, been able to buy any substantial quantities. It has also been suggested that our representatives did not obtain a big enough allocation. I suppose the representatives of every country are saying that sort of thing, but the fact is there was only a limited amount to go round and we got what we could. We were represented by two very able officers in Mr. Meere, Deputy Controller of Customs, who has had a wide experience in procurement problems, and Dr. Raggatt, who was then Director of the Bureau of Mineral Resources, and who knows the copper problem thoroughly, and also by others. These officers are nobody’s fools, and I am satisfied that on this, the first and somewhat tentative allocation, Australia could not have done any better.
The Government does most certainly think that Australia has a very strong case for a greater quarterly allocation hereafter, because of our defence needs and the special circumstances of OU expanding economy. We are, therefore, doing everything we can to ensure that we shall get the biggest possible allocation for the first quarter of 1952. in respect of which the International Materials Conference is about to resume its sittings.
To this end, we have been having discussions with several of the leaders of the copper-using industries and they have co-operated readily and generously with us. They have made available, and are sending to Washington, two very able and knowledgeable men who will act as advisers to the Government’s delegates there, so that Australia will .be able toput before the International MaterialsConference in support of its case, the best and most up-to-date information concerning Australian copper needs from the point of view of industry. These two men are Mr. Walmsley, secretary of the Electrolytic Refining and Smelting Company Limited, and Mr. Bult secretary of Metal Manufacturers Limited. The Government is quite certain that Australia will benefit from their presence in Washington. But getting a greater allocation is one thing and getting the copper within that allocation is another. For many months past, it has been almost impossible to buy copperabroad at normal prices. At present, theGovernment is giving all the assistancethat it can give, on a high level, to enableindustry to buy its requirements. Onlylast week I was in communication with the Minister for External Affairs (MrCasey) about the matter.
The honorable member for Bendigo(Mr. Clarey) asked me, in the courseof his question, whether the copper shortage was affecting our stockpiling policy. It is not affecting our policy decision,, which was taken last year, but it has. affected our ability to buy our copper stockpile in pursuance of that policy. So far, we have just not been able to- secure it. If we were able to get it, it would, of course, be at the expense of local requirements. At present, therefore, we are concentrating our efforts on securing enough copper for current needs, and to some extent at least, copper for stockpiling will have to wait until these needs are met.
Of course, copper can be bought at fancy prices. The normal world price is about ?227 sterling a ton, but although we cannot get it at that price, we can get it at a price two to three times greater and we are not having any. Japan, for instance, has been offering semi-fabricated copper at prices up to ?700 a ton and, no doubt, this comes partly from the 13,000 ton allocation which that country gets through the International Materials Commission. Speaking personally, I do not regard this as a very satisfactory state of affairs.
We have been turning our attention to local production also. The problems here largely concern plant and materials. For instance, I have been informed that there is a substantial tonnage of copper blister at Mount Lyell which cannot be refined because there is a shortage of coke. We shall do what we can to remedy this. Mount Isa has been out of production since 1946 and we had hoped that it would have been back in production a long time ago. Shortage of materials, and price factors, have had a lot to do with the delay, but I have now been informed that the company will be producing a substantial tonnage by 1952. The Government is giving, and will give, the company every assistance in its power.
There are several other aspects to this problem, such as the use of substitute 7na.ter.ials, the restriction on non-essential use. and the price of copper, all of which we have under consideration. I assure the House that the Government knows how important copper is to this country and that it is giving careful attention to the whole problem and will continue to do so.
There may be one or two details of the questions asked by the honorable member for Bendigo and the honorable member for Yarra which I have specifically covered in this general answer. If they will draw my attention to them. I shall deal with those matters separately.
Motion (by Mr. Eric J. Harrison) agreed to -
That the House, at its rising, adjourn to to-morrow, at 10.30 a.m.
– (Hon. Archie Cameron). I have received from the honorable member for Leichhardt (Mr. Bruce) an intimation that he desires to move the adjournment of the House for the purpose of discussing a definite matter of urgent public importance, namely :
The serious delays in providing shipping for large and urgently needed supplies of sugar now stored at ports and mills in Queensland, thus causing severe shortages and hardships to the people both of Australia and of the United Kingdom.
.- 1 move -
That the House do now adjourn.
-Is the motion supported ?
Bight honorable members having risen in support of the motion,
– Over a considerable period of time, I have made representations to the Minister for Shipping and Transport (Senator McLeay) about quantities of sugar that are awaiting shipment from Queensland ports. The Minister has endeavoured to secure the shipping that is required for the transport of the sugar. Having communicated with the shipping authorities, he has made the following statement in a letter : -
The Traffic Manager of the Adelaide Steamship Co. Ltd. has also advised that his company, in conjunction with the Colonial Sugar Refining Co. Ltd., is responsible for the coordination of arrangements for all vessels transporting sugar from North Queensland to the southern States throughout the sugar season. He has also reported that there is a particularly good shipping coverage at all sugar loading ports until mid-November.
The facts do not support that statement. I believe that the shipping companies have not supplied the Minister with accurate information. About 235,840 tons of sugar are awaiting shipment from Queensland ports. There are 7,332 tons at Port Douglas, 3S,127 tons at Cairns, 30,799 tons at Mourilyan Harbour, 28,791 tons at Lucinda Point, 40,767 tons at Townsville, 21,882 tons at Bowen, and 6S,142 tons at Mackay.
– On what date was that?
– On the 12th November, or approximately the period to which the shipping companies referred. Although the sugar crop for this year is not an exceptionally good one, on the 12th November there was awaiting shipment from Queensland ports 80,753 tons more sugar than was awaiting shipment from those ports at the corresponding period in 1950. I agree that since then some shipments may have been made.
The sugar now in store in those ports was .produced by members of the Australian Workers Union, who did their job without becoming involved in industrial troubles of any kind. The work has been done and the sugar has been produced. If there be a shortage of sugar, no blame can be attached to the workers in the Queensland sugar industry. No stoppages of work have occurred in the porta at which the sugar is awaiting shipment. It cannot be said that the waterside workers are in any way responsible for the delay. In radio broadcasts authorized by the British Government, Britain’s urgent need to secure supplies of five or six foodstuffs that are vital to the welf are of the British people has been stressed. Emphasis has been placed upon sugar. In Australia, especially in Victoria and New South Wales, there are shortages of sugar. Due to inadequate storage facilities, despite the fact that a great deal of money has been expended upon the establishment of stores at sugar mills and at ports, and to the failure of shipping companies to provide the vessels that are required, sugar, owing to exposure to the weather, is being lost or is deteriorating in quality. If sugar is bagged and left in the open, or even in a store, it is inclined to sweat and to deteriorate. I am interested, not in attacking any organization but in ensuring that urgently needed sugar shall be made available for consumption by the people both of this country and of the United Kingdom. The figures that I have cited show that
the shipping companies supplied inaccurate information to the Minister for Shipping and Transport.
During this session of the Parliament, the sugar industry was granted an increase of the price of sugar, but the advantage of that increase is being offset to a considerable degree by a lack of shipping, which is involving the industry in much expense. The Adelaide Steamship Company Limited and the Colonial Sugar Refining Company Limited are, and have been for a long time, responsible for transporting sugar from north Queensland. Directly or indirectly, all north Queensland depends upon sugar. Any impediment to the efficient working of the industry automatically affects every individual not only in north Queensland, but also in Australia generally. Every honorable member, irrespective of party, should give serious consideration to the facts that I have presented to the House. Regardless of party political considerations, no difference should exist between the Government and the Opposition in this matter. If I have stated the position inaccurately in any respect, I should be pleased to he corrected.
This problem concerns the welfare of not only the workers in the sugar industry, although, naturally, they are most affected, but also business people and the companies that are engaged in the manufacture of sugar. The port of Lucinda Point is practically controlled by the Colonial Sugar Refining Company Limited. It is significant that the increase of the lag at that port this year is much less than at ports such as Townsville, from which sugar that is mainly produced by co-operative mills is shipped. Whereas last year the lag at Lucinda Point was 26,489 tons and this year it is 28,791 tons, the lag at Townsville has increased from 23,605 tons last year to 40,767 tons, or an increase of approximately 27,000 tons. In view of that fact, it would appear that in the clearance of sugar stocks mills that are co-operatively owned by sugar farmers are not receiving as fair a deal as the Colonial Sugar Refining Company Limited is receiving. That company still owns a number of mills in north
Queensland. I admit that they are conducted efficiently. I also admit that the company did much to pioneer the industry, but for that contribution it has received an adequate reward. At present, the company performs important functions in the marketing of sugar. To a large degree, it controls the transportation of sugar from north Queensland to southern ports. We are aware of Great Britain’s urgent need for essential foodstuffs. Recently. the United Kingdom Government stressed the urgent need of the British people to obtain increased supplies of sugar. Therefore, the Government should remove this bottleneck in deliveries of sugar. The existence of the bottleneck shows that private enterprise is failing to discharge its responsibility to effect deliveries of sugar that has already been produced.
– Order ! The honorable member’s time has expired.
– The honorable member for Leichhardt (Mr. Bruce) has rendered a useful service to the Parliament by giving to it this opportunity to discuss the matter that he has raised. I propose to give to the House and to the people some of the reasons for the accumulation of sugar stocks at north Queensland ports. The position at present is - not very much different from that which has existed for a number of years since the end of the recent war. The storage capacity of sugar in north Queensland ports is estimated to be approximately 309,000 tons, and when supplies on hand exceed that quantity a serious problem arises. However, in November, 1949, while the Chifley Government was still in office, 248,000 tons were stored in those ports, whereas in the same month last year the quantity had been reduced to 220,000 tons and, at the same date this year, it had increased slightly to 238,000 tons. Thus, the position relatively has been much the same during the last few years except that this year the quantity of sugar in storage in north Queensland ports is 10,000 tons less than the quantity that was in storage in November, 1949, when the Chifley Government was in office.
The problem to which the honorable member has referred is due, first, to holdups of shipping that have been caused deliberately by members of organizations such as the Seamen’s Union; and,, secondly, to the slow turn-round of ships which has progressively become worse since 1939. It is important to remember that on the average a ship engaged in the Australian coastal trade now does only half the voyage mileage that it did in 1939. Consequently, although more ships are now engaged in the coastal’ trade, less tonnage is being lifted. 1 agree with what the honorable member for Leichhardt has said about the production record of growers and canecutters. However, I point out that canecutters are employed on a basis of incentive payments. That is one of the main reasons why the production of cane today compares favorably with production some years ago.
I have been advised that River Burnett is due to arrive at Pyrmont on the 4tb December next with 7,200 tons of sugar. However, in spite of the fact that greater facilities for discharging cargoes arenow available, it will take sixteen days tounload that cargo, whereas in 1939 a similar quantity of sugar was unloaded in half that time.
– The honorable gentleman should know the reason. There is no need for me to deal with it at the present time.
– Will the PostmasterGeneral tell me the reason?
– Order ! I ask the honorable member for Watson (Mr. Curtin) to refrain from interjecting.
– The honorable member for Leichhardt was disposed toblame private enterprise for the shipping difficulty, and to accuse it of having failed to do its job. I point out to him that ships have been provided for the coastal trade, but, as a result of the deliberate policy of the Communist-controlled Seamen’s Union of Australasia, vessels havebeen continually held up during the last twelve months, and, consequently, their lifting capacity has been substantially reduced. The dates on which some of those hold-ups began and ceased are significant. From the 1st June to the 18th September of this year, 78 coastal vessels were held up for periods of from ten days to a fortnight, because the Seamen’s Union refused to provide crews for them. It alleged that crews were not available to man the ships. Of course, the word had been furtively passed round that some members of the crews should leave certain vessels, and, in accordance with the conditions that pertain to the sailing of ships, those vessels could not put to sea without full crews. For that reason, many vessels which should have been engaged in the transportation of not only sugar but also steel, coal, lead, coke and other important materials, were laid up jit Newcastle and at other ports. But the significant fact is that, during the week before the referendum on communism was held on the 22nd September, no vessel was held up on the whole of the Australian coast.
– For a complete week?
– Yes, for the week that preceded the referendum on the 22nd September last.
– Marvellous !
– It indicates, if anything can impress the honorable member for Watson, that those persons who have authority to provide crews for ships had been engaged, from the beginning of June last until the middle of September, in preventing seamen from manning the vessels. The consequences of that policy had been felt by every person in the community. It is of little use for the cane-cutters, farmers and mill labourers in north Queensland to do their jobs if organizations that control labour in the transport industry and in other key industries are able to nullify those efforts and cause, possibly, substantial losses. The Government has not accepted such a position with equanimity. Something of a very substantial character must be done to try to relieve the situation that has been brought, very properly, to the notice of the House by the honorable member for Leichhardt. Yet, the position to which he has referred is not unusual. It has occurred year after year since the end of World War II., and, to-day, is relatively the same as it was in 1949 and 1950.
– The demand is more urgent now than was the case two years ago.
– I disagree with the honorable member for Leichhardt. The demand has been urgent ever since the end of the war. According to advice that I have received, most of the sugar is lifted in the earlier part of the season, and those operations are completed by the end of the season. The bulk of the sugar that is accumulated is required for the Australian market. The sugar that is exported is generally lifted by about the end of December. Most of the crushing, as the honorable member for Leichhardt and the honorable member for Herbert (Mr. Edmonds) are well aware, has been completed, except at one or two mills, and, therefore, it is not expected that, the position will become worse. The storage capacity is sufficient to cope with any additional quantities of sugar that may be received. The Colonial Sugar Refining Company Limited, which refines the bulk of the Queensland sugar crop and is the agent of the Queensland Sugar Board, has been busily occupied in endeavouring to charter ships from overseas sources. As a matter of fact, it has succeeded in chartering a number of vessels, which will become available for the Australian trade early in next January. I understand that approximately four ships have so far been engaged to make at least one voyage, and possibly as many as six voyages, in an effort to lift the crop.
I am not able to give to the honorable member for Leichhardt much more information about the matters that he has raised, other than to tell him that a number of vessels that normally carry sugar have been diverted to the transport, of coal from Callide. The output of coal from that source is increasing as a result of the policy of this Government in subsidizing-
– Order ! I ask the Postmaster-<General not to discuss the coal-mining industry. Sugar is the subject of the motion that is now under consideration.
– I am indicating to the honorable member for Leichhardt that the increasing output of Callide coal, and the necessity to transport it to the southern parts of Australia, are an important element in the diversion of shipping from the sugar trade, at least for the time being. Undoubtedly, our ability to lift, not only sugar but also other products, is somewhat deficient, but that position is due substantially to the efforts of the Communist-controlled Seamen’s Union of Australasia, which has prevented us from taking full advantage of the shipping facilities and capacity that are available in this country. Anything that can be done by the honorable member for Leichhardt, and other members of the Labour party, to break the hold of certain gentlemen on the Seamen’s Union will contribute materially to the solution of the shipping problem. Members of the Labour party should give a greater measure of assistance than they have given to date to the efforts that are being made by the Government towards that end. So far, we have not received any material assistance from them.
We think that, by about the middle of next year, the sugar crop will have been lifted. That estimate is subject to the proviso that something else does not arise to dislocate shipping. So far as it is possible for the Government, with the means at its command, and for the Colonial Sugar Refinery Company Limited and the Australasian Steamship Owners Federation, which has also chartered a. number of vessels that will come into the trade about the middle of January next, to alleviate an undoubtedly difficult situation, adequate steps to that end are being taken.
.- Because of the seriousness of this matter, I expected that the Postmaster-General (Mr. Anthony) would deal with it more calmly, and would reveal greater discretion than he has. As usual, he approached the subject with the same degree of discretion as we should expect from a gorilla at an afternoon tea party. The honorable member for Leichhardt (Mr. Bruce), who raised the matter of lack of shipping for the transport of sugar from north Queensland ports, was fair, discreet and calm, and set a standard for the debate that the PostmasterGeneral would have been well advised to emulate.
I am amazed that the PostmasterGeneral, who is a practical farmer and has been associated with primary production for many years, has so little knowledge of the sugar industry. His lack of knowledge was revealed by a statement that he made towards the conclusion of his speech. He considers that the shipping position will adjust itself,, and that all the sugar will be lifted from north Queensland ports by the middle of next year. In other words, such improvement must occur within seven and a half or eight months. That statement is evidence that_ the Minister knows nothing about sugar after it has been produced, and particularly when it is stored during the summer months in the tropical belt of north Queensland. The Minister evidently does not realize how much damage and loss are caused to the sugar industry as a result of the deterioration of sugar while it is awaiting shipment. Obviously, the honorable gentleman is also not aware that the canefarmer does not receive any payment for his sugar until it has been loaded into ships. If the honorable gentleman is aware of that fact, he has very little regard for the consequences.
The Minister said that he would discuss shipping over a period of years, but he confined his remarks to a brief period of only three years. I have received this morning from cane-growers’ organizations - not from branches of the Australian Labour party or from the Seamen’s Union - telegrams that declare that the shipping situation is worse to-day than it has been for many years having regard to all the circumstances. The Minister spoke of the volume of sugar that was awaiting shipment in 1949, but he did not say, probably because he did not know, that the 1949’ crop was of record proportions. That meant, of course, that much more sugar than usual was available for shipment. The current crop is relatively small. The Minister remarked that the mills had already finished most of the crushing. Usually crushing continues until the end of December, and sometimes it goes on into January. That fact should convey to the honorable gentleman some idea of the small volume of the surgar crop this year. It is a disgrace to the Government that, in these circumstances, sugar should be awaiting shipment.
The Minister spoke of the slow turnround of ships and said that the activities of the Communist-dominated Seamen’s Union were responsible for the delay in lifting sugar stocks. I do not know where the honorable gentleman obtained his information, because it was completely inaccurate. My authority for refuting it is the latest report of the Australian Stevedoring Industry Board. If the Minister will take the trouble to study that report, or to inquire from somebody who has read it if he does not want to do so himself, he will learn that the board considers that the intensity of loading at north Queensland ports is reasonable and no less than should be expected.
– How does it compare with 1939?
– I am not going back ro 1939. All I want is to have the sugar lifted. The Minister might ask the Australian Stevedoring Industry Board why it did not refer to 1939. The report shows that the rate of loading for the years to which it refers has been satisfactory. Nobody is entitled to point the finger of scorn at the waterside workers on that account. The Minister made a futile attempt to evade his responsibility by engaging in propaganda about Communist activities on the waterfront and on the ships. I remind the House that the seamen held up ships in Queensland during the regime of the Chifley Government; but that Government, with the assistance of the Australian Shipping Board, was able to bring about a steady improvement of the shipment of sugar.
I had hoped that the honorable member for Dawson (Mr, Davidson) and the honorable member for Capricornia (Mr. Pearce) would speak before I received the call from the Chair. I expected tohear some information from those honorable gentlemen because they, unlike the Minister, obviously know something about the sugar industry. I am disappointed that they have not asked questions in this House about the sugar situation. Members of the Opposition in this chamber and in the Senate have been relentless in their endeavours to have action taken to improve the position, but not one word ha3 been uttered on this subject by Government supporters who represent sugarproducing areas. Perhaps they are afraid to embarrass Ministers. I remind them that, when I sat on the Government side of the House, to which I expect to return soon, I was untiring in my efforts to ensure that justice should be done in the interests of the industry and the consumers. I am grateful for the ministerial response that made my endeavours successful. I now urge honorable members on the Government side of the House who come from sugar districts not to be afraid of embarrassing Ministers, but to “ have a go “ and try to get results. The telegrams that I have received this morning were sent to me by cane-growers’ organizations in the Lower Burdekin, Home Hill, Herbert River, Tully and Houghton districts, and they inform me that about 100,000 tons of sugar is awaiting shipment in those areas. The Minister said that everything was “ hunky-dory “ and that all the sugar would be lifted by the middle of next year. I warn him that unless some extraordinary event occurs, the mills will commence crushing the 1951-52 crop a month or six weeks before the middle of next year and before all the 1950-51 crop has been shipped. What has he to say about that ?
That situation would be serious enough even if deterioration did not occur in stored sugar. But, if the honorable gentleman will consult the honorable member for Dawson, the honorable member for Capricornia and the honorable member for Wide Bay (Mr. Bernard Corser), who at least know what happens, he will learn that deterioration begins in stored sugar as soon as the weather becomes really warm. The sugar stacks contain scores and scores of bags that once contained sugar but which now look like dirty lumps of molasses. That is how sugar is wasted. Even if the Minister is not concerned about the community generally, at least as an Australian Country party man and a champion of the farmers he should be sufficiently interested to do whatever he can to prevent that from taking place. Goodness knows how much sugar will he milled and ready for shipment by the middle of next year when, according to the Minister, all stocks will have been lifted.
-Order ! The honorable member’s time has expired.
.- The “ definite matter of urgent public importance “ on which the honorable member for Leichhardt (Mr. Bruce) has based his adjournment motion has constituted a serious problem to the sugar industry for the last ten years at least. The difficulty of transporting sugar from north Queensland ports to overseas markets and southern markets should be considered calmly, as the honorable member urged, in an attempt to improve the situation. The honorable member said that he would welcome correction of his statements if he made mistakes because he did not wish to mislead the House. I propose to correct some of the mis-statements that lie made, so that the House may have the facts of the matter. The major correction is in respect of the total of sugar at present outstanding at Queensland ports, in comparison with the total that was outstanding at the same time last year. I have checked this morning with two independent and reliable sources in Brisbane, and I can state with authority that the quantity of raw sugar at present outstanding in Queensland ports is approximately 20,000 tons more than it was at this time last year. That is a reliable figure, and it differs considerably from the figure of 80,000 tons that was given by the honorable member. I do not think that he made a deliberate .misstatement, but I can assure him that the figure that I have given is correct.
– I should like to see the figures.
– I shall be happy to allow the honorable member to examine the figures afterwards, and I think that he will concede that they are correct. Further, as the Minister (Mr. Anthony) has pointed out, the crushing of sugar- is practically finished in Queensland for the present season. By the end of this week only two mills will be continuing to crush sugar. That will mean that there will not be a further accumulation of raw sugar at ports, and, therefore, that the position will not become more serious than it is at present.
I am not making these statements with the idea of minimizing the seriousness of the position, because it is a serious one which the sugar industry would be pleased to have solved. As the honorable member for Herbert (Mr. Edmonds) has said, it is a bad thing for raw sugar to be stored after February, and the general position that the industry is facing now, and has Deen facing for the last ten years, is serious. Before the war it was possible to shift all raw sugar before the onset of the wet season in January and February, but for the last ten years it has not been possible to do so and many thousands of tons of sugar have had to remain in Queensland during the wet season. In many instances stored sugar has had to be reprocessed before it could again be handled. The blame for that situation does not lie at the door of this Government any more than it lies at the door of the previous Government.
The honorable member for Herbert said that when the previous Government was in office he found it necessary, from time to time, to speak rather plainly on the floor of this House about the position in an effort to have it remedied. 1 know that he did so. I also spoke in this House to the same effect during the previous regime. The previous Government applied itself to any request that was made to it about the matter, and did what it could to relieve the position, just as this Government is doing. That position has been caused by circumstances which are beyond the immediate control of this Government and were similarly beyond the immediate control of the previous Government. The honorable member for Herbert expressed regret that he had not heard me or any of my colleagues who represent sugar-producing areas ask questions during this session about this matter. Let me assure him that we have been continually pressing, in the correct quarters, for alleviation of the position. The remedies which the Minister has indicated are being adopted, particularly in regard to the charter of ships, are, to a certain degree, although not wholly, due to the representations that we have made in quarters where such representations have most weight. lt was found by about the middle of this crushing period that the situation in regard to the lifting of raw sugar was becoming serious, as it had done on previous occasions. So the Queensland Sugar Board, a State instrumentality that is actually responsible for shifting the sugar because it owns it, instructed the Colonial Sugar Refining Company Limited, as its agents, to attempt to charter further shipping to augment the coastal shipping. That action has been taken. As the Minister has pointed out, several ships have been obtained from sources overseas so that the present lag in coastal shipping may be taken up.
I shall quote some of the details that have been supplied to me by the company in regard to the charter of such ships. They are as follows: - Capo Noli, one voyage in January, 7,000 tons; Union Builder, three voyages, commencing in January, 5,000 tons each; Evanger, commencing in November, chartered for from four to five months, 5,000 to 6,000 tons each ; Hia Fey, commencing at the beginning of December, one voyage only, 6,300 tons. That means that the company, acting as the agents of the Queensland Sugar Board, has made provision for the lifting of approximately 55,000 tons of sugar over and above the capacity of coastal shipping. So it cannot be said that either this Government, or, to be quite fair, the Queensland Government, has been unaware of the position or has been in any way indolent about attempting to meet it. ‘ Therefore, the Minister was quite correct when he stated that, within a reasonable period, before the onset of June I believe, the position in regard to sugar removals in Queensland will be considerably relieved.
Let us examine one of the major causes of the present situation, because it is of no use for us to talk about a situation without attempting to remedy it. I say that the basic cause of the trouble is the slow turn-round of ships - that is to say, the slow loading rate in the Queensland ports and the slow discharge rate in the southern ports. That slow turn-round is the result of the attitude that the Waterside Workers Federation of Australia has adopted over a period of years. I do not make that statement dogmatically, but shall provide proof of its accuracy. The proof is contained in a comparison of the loading rates at the port of Mackay in 1939 and 1940 compared with the loading rates at the same port in 1950 and 1951. These figures have been compiled from tables kept by the Mackay Harbour Board, and cannot be gainsaid. They show that in 1939 six vessels were in the port of Mackay for a total of 36 days, during which period they loaded 42,059 tons of sugar, or 1,168 tons a day. I shall not use the fallacious method of giving the number of tons loaded by a gang an hour, because that could be misleading. I prefer to examine the overall position. In 1940 the loading rate for six vessels was 997 tons a day. In 1949 the loading rate for sixteen vessels had dropped to 679 tons a day. In 1950 it had dropped to 616 tons a day, and in the first two months of this year it had dropped to 510 tons a day.
– What about the manpower position?
– The man-power position is exactly the same as it was before. The loading rate, therefore, has dropped by more than 50 per cent, in ten years. There is the problem which must be rectified before there can be any amelioration of the position.
– Order ! The honorable gentleman’s time has expired.
.- I support the case that has been made out by the honorable member for Leichhardt (Mr. Bruce), who directed the Government’s attention to the serious position that has arisen in north Queensland in respect of sugar stocks. I do so despite the assurance of the Postmaster-General (Mr. Anthony), who represents in this House the Minister for Shipping and Transport (Senator McLeay), that no substantial losses would occur as a result of the accumulation of 238,000 tons of raw sugar at northern ports. The honorable member for Dawson (Mr. Davidson) referred to the fact that only 20,000 tons more sugar is stored this year than was stored at the same time last year. The honorable member knows very well that, as is normal at this time of the year, the sugar mills in Queensland are still working and many of them will be crushing up to January. But because of the fact that this has been one of the driest years in Queensland’s history, the quantity of sugar passing through the mills has been reduced. Therefore, the fact that the accumulation of sugar is now only 20,000 tons more than it was at this time last year indicates that there has been some problem in regard to the removal of raw sugar from north Queensland ports. Prom time to time the newspapers have published details of the difficulty which the people of Sydney and Melbourne have experienced in securing supplies of sugar. The industry is capable of producing the requirements of the whole of the Commonwealth and a considerable quantity for export overseas. The shortages that have been experienced in the southern parts of Australia are due to the fact that the sugar has not been lifted from the ports of north Queensland, in which’ 238,000 tons of raw sugar has accumulated.
The economic advisers to the Government have stated that Australia must increase its exports because, of the fall that has taken place in overseas balances. This industry could make the same substantial contribution to Australia’s overseas funds that it has made in the past. The honorable member for Dawson stated that the position had been serious for the past ten years because of the slow turn-round of ships and cited figures in relation, to the rate of loading at the port of Mackay. The reason for the delay caused to Commonwealthowned ships that have called at northern ports to pick up sugar is that when privately owned ships have entered those ports work on the Commonwealthowned ships has been suspended in order that the privately owned ships might be turned round quickly. The people have had to pay for the delay in the turn-round of their vessels. Instead of blaming wharf labourers for shipping delays honorable members opposite should examine the responsibility of management for the delays that have occurred. The blame cannot all be placed on the shoulders of the seamen and the wharf labourers.
As the honorable member for Dawson stated, when sugar is left in storage in
Queensland during the wet season it is affected by the humidity. The consequent losses have .been borne by the sugarfarmers and have been reflected in the general economy of the sugar industry. During the wet season sugar in store becomes hard and is much more difficult for the wharf labourers to handle, and. as a consequence, there is a reduction of the rate of loading. The Government should ensure that adequate shipping shall be made available for the purpose of carrying urgently required goods from southern ports to north Queensland ports. There is a shortage of steel right through the-
– Order ! That subject is outside the scope of this debate.
– There would be no difficulty in supplying cargo for ships to take to north Queensland so that they could return with sugar for the south. The honorable member for Dawson stated that 55,000 tons would be lifted from north Queensland dunnar the next few months. But 238,000 tons has accumulated in those ports. The Government should arrange for cargoes available in the south to be shipped to northern ports so that the vessels may then be loaded with sugar for the markets of the Commonwealth and for export abroad in order to increase our overseas balances.
– As the honorable member for Leichhardt (Mr. Bruce) said, there is a very serious menace to the sugar industry and the people of Australia. The sugar industry is perhaps the most highly organized and efficient industry in Australia. It has one serious difficulty and that is the shipment of sugar from north Queensland. There is not very much trouble in this respect in my own district but in the north of Queensland the problem has become a menace to the industry. It is a well-known fact among shipping people that in 1939 vessels spent two-thirds of their time at sea and one-third in port. Now twothirds of their time is spent in port and one- third at sea. The loading of sugar in north Queensland ports is dominated by the foreign-controlled Waterside Workers Federation. According to figures supplied by the Department of
Shipping and Transport, sugar was loaded at the rate of 23.3 tons a gang-hour in northern Queensland in 1939. In 1950, it was loaded at the rate of 13.7 tons a gang-hour. That deterioration in the rate of loading occurred during the period of office of the Chifley Government, of which the honorable member for Kennedy (Mr. Riordan) was a member. Yet never, during that Government’s term of office, did the honorable member make the ranting references to the industry that bo made to-day. As a member of the Labour Government, the honorable member must be held to be partly responsible for this state of affairs. He may find something of value to contribute to a debate on another occasion; he certainly did not do so to-day.
In 1939, 34.3 tons a gang-hour was loaded into ships in Australian ports. In 1950, 13.6 tons a gang-hour was loaded. F secured those figures this morning from the Department of Shipping and Transport. They illustrate the extent to which the handling of sugar has been delayed in north Queensland ports and the seriousness of the menace to which the sugar industry has been subjected. The sugar industry is controlled by the Government of Queensland by virtue of the fact that the shipment of sugar to the capital cities is arranged by that Government. So menacing has the position become that the industry is considering the possibility of bulk-loading ships so as to restrict the opportunity of the enemies of this country to damage the industry. Those people represent the only inefficient section of the industry. The people who grow the sugar operate their farms efficiently. They work in the fields in hot weather to produce the cheapest sugar in the world for the people of Australia. The sugar is transported to the wharfs efficiently. But those who work on the wharfs are apparently determined that the industry shall suffer some loss and they have succeeded in giving effect to that determination. The wharf labourers have acted in a manner that is detrimental to this country, and if we do not take action against them with the assistance of the trade unions of Australia and of Opposition members we shall come up against a brick wall, as the honorable member for Kennedy did before he voted against the Government’s proposals to control communism. I hope that honorable members will recognize the existence of this menace in northern Queensland. I compliment the honorable member for Leichhardt upon having raised the matter, and I emphasize that this action has been taken deliberately by Communists against the sugar industry and the people of this country.
.- I was very interested in the remarks of honorable gentlemen opposite who attempted to discredit the Government. Opposition members who have spoken on this subject have shown themselves to be completely out of touch with the industry. Those who have had contact with the shipping position in northern Queensland know full well that the slow turn-round of ships has been aggravated during the last few years by the influence of the Communist elements in the shipping industry, particularly those in the northern ports of Queensland. This Government had to undertake a terrific task in reorganizing shipping generally, and in particular in reorganizing shipping at the sugar ports. Shipping schedules had been so completely upset that the efficient shipment of sugar had become a task of great magnitude. If that had been the only problem the task would have been great enough; but the sugar industry is vital not only to northern New South Wales and Queensland, but also to the whole of the Australian economy. Our Communist friends, realizing this, have worked untiringly to upset this industry. It is all very well for the honorable member for Herbert (Mr. Edmonds) to shake his head about what I am saying; if’ he had had an unbiased mind he would have recognized it as truth.
The attempts to smash the sugar industry have been made by the enemies of Australia - the Communists. If the honorable member for Leichhardt (Mr. Bruce), the honorable member for Kennedy (Mr. Riordan) and the honorable member for Herbert had not gone onto the rostrum in order to protect the people who are helping to destroy the sugar industry in Australia, there would have been some justification for their attack on this Government in connexion -with its handling of these matters. From 1939 to the present time, there has been a steady deterioration of the rate of loading of sugar into ships in the northern ports of Queensland.
– That is not true.
– It is definitely true. I suggest that the honorable member who has just interjected should try to rectify this state of affairs. He is not without some influence in the trade union movement, and perhaps he could use that influence to clear Communists out of the waterfront unions in Queensland. The sugar is there, but the slow turnround of ships, aggravated by Communist influence in the waterfront unions, is gradually strangling the sugar industry.
– The honorable member has a phobia.
– That may be so, but mine is not permanent; the honorable member for “Watson’s is. Let us now consider the vessels that will be lined up in Sydney harbour to unload sugar. Lugano is due on the 26th November and will not be completely discharged until the 7th December. River Burnett is due
On the 4th December and will not complete its unloading until the 20th December. Bilkurra will arrive on the 12th December and will not complete discharging until the 20th December.
– Because the people whom the honorable member sponsors and attempts to camouflage, the enemies of this country, make it impossible for them to discharge within a reasonable time. Tambau will arrive on the 20th December and complete unloading operations on the 28th December. River Norman will arrive on the 24th December, but will not complete discharging its cargo until the 14th January. Therefore, honorable members will realize that the plain fact is that the Government is doing all that it can to organize the shipment of sugar from northern ports, but that in the north of Queensland a strong Communist influence is operating against the loading of ships, and in Sydney the rate of discharge of sugar ships has slowed down considerably. What is the good of criticizing the Government about this matter when it is bending every effort to get at the root cause of the whole trouble? Honorable members opposite make themselves appear ludicrous in the eyes of honorable members in this House and of everybody outside of it when they stand up and fulminate about something for which they are directly and indirectly responsible; that is, the complete domination by Communists of the Waterside Workers Federation and the Seamen’s Union of Australasia. Honorable members opposite are the guilty ones. Lt is of no use to say that the Government has done nothing. Honorable members opposite should realize that they have done something that is not to the advantage of Australia in that they have allowed the trade union movement to be. dominated by the enemies of Australia.
The honorable member for Herbert spoke about this year’s crushing of sugar cane. He certainly knows very little about it, as I shall soon prove. The crushing at Queensland ports is nearly completed. In Mackay all mills will complete crushing this week. That is contrary to what the honorable member for Herbert, in his ignorance, said. At Bowen, the Proserpine mill has completed its crushing, and the Inkerman mill will complete its crushing operations by the 21st December. At Townsville all mills will complete crushing by the 24th November. At Lucinda Point all mills have completed the crushing season. At Cairns, all mills will have completed their crushing by the end of November except the mill at South Johnstone, which will continue to crush until the 8th December.
– .Why does not the honorable member tell us the location of these mills that he has spoken about?
– If the honorable member does not know where the mills are in his own electorate, I am sorry for him and for his prospects at the next general election. All mills have almost completed their crushing. Therefore, the sugar is ready, the ships are ready, and the plans to put those ships into operation have been completed. If this Government had not taken over the problems of the sugar industry in north Queensland, I shudder to think what would have been the plight of the industry at the present time. In 1949, the sugar industry stood in the direst need of shipping. Port facilities had become more and more chaotic as the years passed during the regime of the Labour governments, until in 1949 the position was really desperate.
– Do not be silly.
– It is all very well for the honorable member to say that, but 1 direct his attention to the fact that at the last general election his majority was substantially reduced and in the 1949 general election he got the fright of his life. The sugar is ready for shipment in the northern ports of this country. If honorable members opposite want to do something constructive let them go out to the sugar districts and learn the facts of the industry. Then they may be worth listening to.
– Does not this Government want ships for the sugar industry?
– Of course it does ; but the friends of the honorable member, the Communists, do not want ships to carry sugar or, indeed, anything else. The sooner the honorable member uses his voice and influence in union affairs the sooner will the sugar industry start to run smoothly.
– Order ! The honorable member’s time has expired.
– The honorable member for Capricornia (Mr. Pearce) made some reference to shuddering. He will have to shudder between now and the next general election if the knowledge of the sugar industry he has revealed to-day does not improve considerably. I claim to know something about the sugar industry. I was Minister foi- Immigration in 1948, when the Labour Government allotted 1,000 new Australian labourers to the sugar growers. During that year the sugar industry enjoyed a record crop. We also provided flannels, blankets, socks, sandshoes, knives; in fact, anything that the labourers needed. If the Chifley Government had not taken that action that record crop of sugar cane would have rotted in the fields. That record 194S crop amounted to 900,000 tons of cane. The next year’s crop established an even greater record of 924,000 tons. Both crops realized an average price of about £24 a ton and millions of pounds went into the accounts of the sugargrowers of Queensland as a result of the Labour Government’s action.
This year, the Government anticipates a yield .of about 600,000 tons of sugar cane. Had the record crop of 1948 been repeated the whole of the cane would not have been cut, because the workers available would not have been sufficient. Even if a sufficiency of workers had been available, 300,000 tons of cane would still have remained uncrushed, if what the honorable member for Capricornia says is correct, namely, that all the mills have not yet completed their operations. The honorable member mentioned a sugar mill at Bowen. There is no sugar mill in that town, but I remember seeing a timber mill there. There is no sugar mill within four miles of Cairns. There are mills at Gordonvale, Goondi, Mourilyan and South Johnstone, near Innisfail, but none at Cairns. Labour governments did something of tremendous importance to the sugar-growers of Queensland and all that we ask iB that this Government shall do as well as we did. We suggest that this Government should move the sugar cane as expeditiously as we did and try to make an effort to get the necessary ships.
Every government has had difficulty about shipping matters. Shipping on the Australian coastline is in very poor shape. No ‘big ships have been put on the Australian coastal run by private enterprise for a number of years. It is time the Government made a greater effort to obtain ocean-going vessels for trade between Australia and Great Britain, and vessels for the Australian coastal trade. It is pure nonsense for honorable members to blame communism for our shipping troubles; in fact, it is worse than nonsense, it is dangerous propaganda which has been disseminated by people who know that they have no excuse for procrastinating and who want a bogy of some sort. Not one port in Queensland is dominated by Communist union officials. In Townsville there is a Communist secretary of the local branch of the Waterside Workers Federation of Australia, but the president and vice-president and the majority of the members of the executive are not Communists. This attempt by the honorable member for Capricornia to assist the Government by throwing up a “ red “ smoke-screen will not help the Government or the honorable member because we shall follow him into the electorate of Capricornia, remind him of the statements he has made in this House and ask him to explain them to the electors.
The honorable member for Leichhardt (Mr. Bruce) is to be complimented for having brought this matter up, and he deserves the commendation of the honorable member for Dawson (Mr. Davidson), who raised it when he sat in opposition to the Labour Government. Honorable members opposite should realize that when Labour governed the country it tried to meet the needs and requests of the Queensland sugar-growers. All that we ask i3 that this Government shall do as much as we did. If it does, we shall be satisfied.
The first order of the day having been called on,
– I suggest that this would be a convenient time to suspend the sitting for lunch.
– I rise to order, Mr. Speaker. Other honorable members wish to continue the debate.
– No honorable member rose to do so; consequently, I called on orders of the day.
– Before doing so, you should have put the question.
– There was no question to put.
– A motion had been submitted by an. honorable member.
– But it was not seconded; such a motion never is.
– The Opposition is quite dissatisfied with its treatment.
-Order! I am not in the least interested in that. The sitting will now be suspended until 2.15 p.m.
Sitting suspended from. 12. J/5 to 2.15 p.m.
Debate resumed from the 16th November (vide page 2245), on motion by Mr. Townley -
That the bill be now read a second time.
.- This bill makes provision for increased salaries to be paid to the members of the Commonwealth Grants Commission. The Opposition believes that, over the years, the commission has filled a very valuable place in the life of the Australian community and, therefore, that the members should be paid reasonable salaries. I point out to the Government that the proposed increases will not do much more than to compensate the members of the commission for the increased cost of living. However, that matter is the responsibility of the Government. The Opposition supports the bill.
Question resolved in the affirmative.
Bill read a second time, and reported from committee without amendment or debate; report adopted.
Bill - by leave - read a third time.
Debate resumed from the 11th October (vide) page 538), on motion by Sir Arthur Fadden -
That the bill be now read a second time.
.- The purpose of this bill is to raise £462,000,000, or £120,000,000 more than was raised by income tax and social services contributions during the last financial year. The Government proposes to obtain that vast additional sum in five ways. By the imposition of a special levy of 10 per cent, upon the income tax and social services contributions payable by individual taxpayers, it will deprive the people of £25,000,000 more than was taken from them last year. By modifications of the averaging system, including the exclusion from the system of persons whose annual taxable income exceeds £4,000, the primary producers of Australia will be deprived of £47,000.000 more than they would have had to pay if conditions had remained unchanged. By a system of advance payment of income tax by both public and private companies, an additional sum of over £11,000,000 will be raised. By the imposition of a primary rate of income tax of 7s. in the £1 and a special levy of 2s. in the £1 in respect of public companies another £11,000,000 will be obtained. By an increase from 6s. to 7s. in the rate of income tax imposed upon company incomes in excess of £5,000 the impecunious and spendthrift Treasurer of this nation will obtain another £6,000,000. In short, during this financial year, the Government will increase direct tax levies by about £120,000,000 .
The Labour party opposes these additional imposts on the Australian community. The Treasurer (Sir Arthur Fadden), since he introduced his budget, has been hard put to it to defend every one of his fiscal measures. This bill, which is the last of those measures to be dealt with by the Parliament, is as unpopular as are any of the others. It is proposed that 34 sections and one part of the principal act shall be amended or repealed by this measure. I am certain that if a referendum were taken upon it, 80 per cent, of the Australian people would vote against it.
– Why not say 100 per cent.?
– I do not say that 100 per cent, of the people would vote against it. I say that SO per cent, of the people would do so, not because they are not prepared to pay their just share of taxes without which this nation cannot progress, but because they regard the five additional imposts that I have enumerated as being iniquitous and unjustifiable, and certain to produce the very opposite effect to that which the Government desires.
The Government has said that the object of the imposition of additional direct taxes is to defeat inflation. The Treasurer himself has said, not that the budget is a defence budget but that it is an anti-inflation budget. He has stated that the whole purpose of his taxation proposals is to kill inflation. But this bill, like every other cognate measure, will aggravate inflation, worsen an already bad economic position and, in the end, cause a depression, if a depression is not already with us. There is ample evidence that the people are unable to bear the burden of direct and indirect taxation that has been imposed upon them, allegedly for the purpose of skimming off surplus spending power so that inflation may be defeated.
I was as amazed at the assurance with which the Treasurer addressed himself to the problems of taxation, as I was intensely intrigued by tlie bland manner in which he sought to gloss over difficulties and completely to forget the protestations that he and the Prime Minister (Mr. Menzies) made a few years ago about the need to reduce taxes in order that inflation might not become a menace to the nation’s well-being. The financial physician who once prescribed reduced taxes as a cure for inflation is now pres.scribing increased taxes as a cure for the same ailment. The physician diagnosed the ailment, not yesterday but yesteryear. Four or five years ago he wa.= talking about inflation, as was the Minister for Labour and National Service (Mr. Holt). I shall remind that Minister later in my speech of some things that he, too, would like to be forgotten. The audacity, toughness and nerve that the Treasurer has displayed in connexion with this measure are worthy of a better cause.
– It is an atom bomb in the field of taxation.
– -The remark of the honorable member for Port Adelaide (Mr. Thompson) is apt. The bill is an atom bomb in the field of taxation. The case against this Government is that it won the 1949 and 1951 general elections by false pretences. The leaders of the present Government parties made a series of fraudulent political promises that they knew could never be fulfilled, and that they never intended even to try to fulfil. The present Prime Minister, in the policy speech that he delivered during the 1949 general election campaign, said -
We believe that rates of taxation must be steadily reduced as national production and income rise, and as economies are effected in administration^
Has not national production risen? Does the Government claim that it has not been able to increase the production of coal, bricks and cement? If national production has increased, then on that ground taxes ought to be reduced. Are not incomes rising? Are not they going through the roof? Is it not a fact that on every occasion when the basic wage is increased, the rate of income tax applicable to a worker’s income is increased and, as a result, he pays more income tax? Is it not a fact that when the basic wage was increased recently by 14s. a week, the Treasurer took 2s. a week and the workers were left with 12s. a week to meet price increases which amounted to 14s. a week? The more the income of a worker is increased by costofliving adjustments, the more he pays in taxes and the more his standard of living is reduced.
The Prime Minister said that, when incomes rose, taxes would be reduced. Incomes have risen, but income tax has been increased. Even if it has not been increased, wage-earners, owing to their high income, would now be paying greater sums in income tax than they paid last year. The Prime Minister said that taxation would be reduced as economies were effected in administration. Has not the Government effected such economies by dismissing 10,000 public servants? Why, then, has it been necessary to increase taxes? It is obvious that all that this Government is doing to-day is in direct conflict with what the Prime Minister, when he was Leader of the Opposition, promised he would do. Let me reply to the Minister for Labour and National Service, who has interjected to the effect that I have misrepresented the Prime Minister.
– I did not say that. I am enjoying the honorable member’s speech, and I want him to go on.
– From now on, I shall enjoy the Minister’s discomfiture when he tries to reconcile what the Prime Minister said in 1949 with what is being done in 1951. If the Minister can bear with me, let me remind him that, in April, 1951, his leader said -
This is not the occasion for a new policy. What we ask for is a fair chance to carry out our existing policy.
That policy provided, among other things, for a reduction of taxes. Does the Minister for Labour and National Service still hold that view?
– That is our approach to the problem.
– I am glad to learn that that is so. The Prime Minister said in April, 1951, that he wanted a fair chance to carry out the Government’s existing policy. He appealed for a “ fair go “. What about giving the people of Australia a “ fair go “ in relation to taxation? On that occasion, the leader of the Australian Country party said much the same as did the Prime Minister. I am glad that honorable members opposite were able to bear with me while T repeated the promises about tax reductions that were made by their leaders. Some of them, at any rate, hung their heads in shame as I read to them the words of their leaders, who led them to victory by misleading the electors. Members of the Liberal party are becoming quite jittery about the present position. One must conclude that that is how they feel with respect to this measure when one reads the October issue of Liberal Opinion, which is described as the official organ of the New South Wales division of the Australian Liberal party. That journal states -
Mr. Menzies and Sir Arthur Fadden have incessantly been taunted on their joint policy of decreased taxation and anti-inflation measures made during the 1949 campaign.
The article continues -
The jibes have come alike from men who ure scared to death of socialism and from others who are Communists in all but name.
The increased taxation on incomes is not formidable and the stories of public rage are mostly the exaggerations of biased and selfish minds.
We don’t think for one moment that this a n ti-Menzies. anti-Fadden tirade really is designed to sweep them out of public favour and out of office; but that is what it could bring about.
Rebellion has apparently already reared its head in the ranks of the Government parties. That Liberal party journal continues -
This paper gives pride of place to no man mid no institution in its belief in freedom of expression, but we do most seriously ask those who are so bitterly attacking the Menzies Government to pause and reflect on the consequences of their conduct.
That article does not ooze optimism. It indicates that grave discontent over the Government’s taxation proposals now exists in the ranks of Government supporters.
– And that there is a fear that Labour may be returned to office.
– The honorable member for Gippsland (Mr. Bowden) lives in fear of what might happen when the Labour party is returned to office. The Labour party has never misled the people by promising to reduce taxes. .Yet, in each year from 1942 onwards, while it was in office, it progressively reduced income tax. On the other hand, the present Government parties promised to reduce taxes but they have actually increased them.
– The honorable member knows something about discontent.
– I do; I preach the gospel of divine discontent.
– Order ! The honorable member might deal with the subject of divine taxation.
– I am presenting evidence of the discontent that already exists in the community as a result of the Government’s failure to honour its election promises. I shall quote the opinion that has been expressed by Mr. K. B. Cameron, of Bullamon Plains, Queensland, who is a cousin of Sir Donald Cameron, former Liberal member of the Parliament. Mr. Cameron is one of the wealthiest cattle men in that State. I challenge any Government supporter, or anybody else, to contradict his observations. He is reported in the Queensland journal Country Life of the 15th November as having said -
When in Opposition to the Chifley Government, the present Treasurer said that the high taxes imposed by the Chifley Government caused inflation and the only way to end inflation was to reduce taxation. He has now imposed a ruinous rate of taxation as the only way of curing inflation. And that is what is wrong with the Country party.
With a drought on us which has already proved disastrous to many; bush Arcs raging throughout the State and even into the town; poor lambing, breeders dying and the Federal Administration squeezing the life out of the industry, the outlook is indeed gloomy.
Unable to read the writing on the wall, the Government bumped up income tax from 75 per cent, to 85 per cent., and, as a crowning act of folly and injustice, retrospectively abolished the averaging system back to the boom year ending June, 1950, when wool sold at twice its present value. This act alone cost the industry ?47,000,000.
Mr. Cameron advanced the following further argument ;
Every extra pound earned by the efforts of small growers is now an added liability with an income tax of 85 per cent., a wool-grower may have to pay ?160 on each ?100 earned.
I suggest that the Treasurer might debate that matter with Mr. Cameron in order to find out for himself what the woolgrowers really think about the Government’s policy with respect to the wool industry. I shall now cite the opinion of Mr. John B. Shannon, of Rockhampton, who also is well known to the Treasurer.
– He is very well known to me.
– Mr. Shannon is reported in the same issue of the Queensland Country Life as saying -
Averaging was introduced to enable the primary producer to carry on and exist at the business, and has paid enormous dividends to the Federal Treasury and the consuming public of Australia.
Does any supporter of the Government disagree with that statement?
– I certainly do.
– The Treasurer can debate that matter with Mr. Shannon also when he again visits Queensland.
– I have no need to look for arguments.
– I sympathize with the Treasurer. I think that he is suffering plenty in his own party room. Mr. Shannon paid a tribute to the late Mr. Chifley, who, when he was Treasurer, introduced the averaging system.
– He did not introduce it.
– This is what Mr. Shannon said about Mr. Chifley -
Averaging was introduced, and wisely so, by men whom, by results, we can call statesmen. The consuming public and the taxpayer have a lot to thank them for. I contend that, if this practice was necessary when instituted, then it is doubly so at the present moment. And I venture to say the Federal Government should be considering the advisability of extending the practice instead of wiping it out.
It seems to me that the’ two gentlemen whose views I have just quoted have, like the majority of Australians, just about “ had “ this Government. And those two gentlemen have “ had “ the Australian Country party in particular. If the Treasurer does not believe that widespread discontent exists over the Government’s taxation policy, I advise him to ascertain that fact from the latest gallup poll that has been conducted on this subject. If he would also read the press, he would see how unpopular the Government’s taxation policy really is. Indeed, resentment has already become apparent within the innermost circles of the Liberal party. The Melbourne Argus, the “ Fair Play” newspaper, in its issue of three days ago, reported that at the annual meeting of the federal council of the Liberal party, Mr. Mackinnon, who was member for Wannon in the Nineteenth Parliament said -
Taxation has almost wiped out incentive earning and crippled industry. If you want the primary producers to produce more, then you must give them some adequate return for their labour.
That gentleman sat among Government supporters in this chamber last year. What he said a few days ago is precisely what members of the Government parties in the present Parliament are thinking, but they are not prepared to back their thoughts with their votes. Terrorstricken, they are just waiting to meet their inevitable electoral doom. In order to show that Mr. Mackinnon’s opinion, which I have just quoted, is widely shared, I shall quote a scathing criticism of the Government parties that was made by Mr. Joseph Palmer Abbott, who was til e member for New England in the Sixteenth, Seventeenth and Eighteenth Parliaments. In a Sydney newspaper of the 12th October, he is reported to have said -
One nf the worst features of the budget is that it provides no action to halt inflation.
He indicated six ways in which, he suggested, the Government should deal with this problem; and his sixth suggestion was as follows : -
Encourage people to produce goods and not bring them, through excessive taxation, to such an anaemic economic condition that they will be too weak to carry on.
Mr. Abbott is a prominent member of the Australian Country party. The honorable member for Paterson (Mr. Fairhall) has gone on record as saying -
With the proposed rates of taxation in the budget the Government found itself a half shareholder in every successful enterprise in Australia.
I should not regard that honorable member as a thick-and-thin supporter of the Government if he could not find more encouraging words than those to apply to a measure for which he subsequently voted in this chamber. The honorable member continued- -
The Government was beginning to collect its taxes ahead like a bankrupt living from hand to mouth. Last year it was the wool income and this year it was the company tax which was being collected ahead.
The honorable member does not deny that those are his sentiments. He at last had the courage to say what he really feels, a quality not possessed by a lot of his colleagues. Apparently, they are not prepared to hang separately; but they will certainly hang together when the Government again goes to the country. On the 16th September, 1946, when a general election was imminent, the present Prime Minister, as Leader of the Opposition, said in this chamber -
The Government’s third line of defence is that the present high rates of taxation are necessary to avoid inflation.
The right honorable gentleman was attacking the Chifley Government. He continued -
They (taxes) not only can be reduced, but they must be reduced unless the extraordinary financial burder of war is to be made a permanent feature of peace if we arc to have any progress, any incentive to produce, any real national civil development .
We advocate tax reduction because we believe it will be the greatest stimulant to production, and therefore a powerful protector against currency inflation.
– Do not make Government supporters look so gloomy.
– I am sorry for them; but I must remind them that they cannot sail under two flags at the one time. They must sail under the banner of reduced taxation as a means of checking inflation, or under the banner of increased taxation for that purpose. The position does not change like the winds.
– Of course it does.
– At least the honorable member for Mallee (Mr. Turnbull) has made an observation that the people will profit from in the future. He says, in effect, that when a party is out of office any. argument is good enough to enable it to win an election, and that when it is in office it can preach an opposite doctrine and expect to delude the people.
The Minister for Immigration (Mr. Holt) said, in 1946, that the Liberal party undertook to reduce taxes by 40 per cent. during the following three years. In those three years, a Labour government reduced taxes by more than 40 per cent. On that occasion the Minister said -
I shall be very surprised and disappointed if an overwhelming proportion of that remission is not granted during the first financial year, because the party recognizes that, if tax reduction is to have the revitalizing effect that is so badly needed, the biggest cut must be made in the first year.
Yet, when his party was returned to office, he became co-author with the Treasurer of the most savage system of income taxation that has ever been imposed upon the people of Australia. All honorable members opposite would prefer a system of taxation that did not affect very seriously the wealthy interests of the country. They would also like to reduce probate duties, and bring about a situation in which wealthy groups would scarcely know from the taxation they paid that, they were alive, and when they died, their probate duties would be so small that they would not even know that they were dead. But I have in my dossier the reports of the opinions of persons who do not support the Labour party, but are most critical of the Government’s taxation policy. For instance, Mr. C. A.O. Sindel, the president of the Taxpayers Association of Australia, who has never spoken with me in the Sydney Domain or on Melbourne’s Yarra bank in advocating a better social order, has made the following statement about this bill: -
It does not matter how much taxpayers have their wages increased, they will still he worse off. . . .
The 10 per cent. levy falls proportionately most heavily on the low-income groups, and because of the principle of graduated rates of tax will fall heaviest on any extra income earned by hard work. The severity of the new charge will further discourage the working of overtime, the planting of more acres, and the risking of capital in extending businesses and starting new ones.
Mr. C.R. Hall, who is the director of the Chamber of Manufactures in New South Wales, has also denounced these tax proposals. The president of the Chamber of Commerce Incorporated, Sydney, Mr. K.F. Coles, a member of the firm of G. J. Coles, which is not exactly an organization of impoverished shopkeepers, criticized the taxation proposals of the Government in the financial year 1950-51. In some respects those proposals gave some measure of relief but, in other respects, they increased taxes. He said -
Taxation which still stands at 27 per cent. of the national income is surely at a most dangerous level. Undoubtedly, we will be shortly called upon to make a national effort that will be a drain on the nation’s purse. As any further taxation will defeat its own ends by reducing national income, it is difficult to see where this additional revenue is to come from.
Last year, the Government appropriated 30 per cent. of the national income by way of taxation compared with 27 per cent. in the previous year. This year, it will extract from the people 33 per cent. of the national income. The Director of the Associated Chambers of Manufactures of Australia in Canberra, has also condemned the present tax proposals, and Sir Charles Lloyd Jones, who received a knighthood from this Government, made the following statement about this budget : -
One thing certain is that while expenses will continue to mount in every direction, the additional taxation coming in a year of falling income is going to take its toll from every class of the community.
Sir Charles Lloyd Jones is the managing director of David Jones Limited, a big business octopus in Sydney.
Mr.Turnbull. - The Government is certainly hitting the big companies with its taxation proposals.
– The Government’s taxation proposals are hitting the little people harder than they are hitting the wealthy classes. When the little people in the electorate of Mallee have an opportunity to hit back, they will certainly strike hard at their present representative in this House.
– Order ! Will the honorable gentleman address me? I can hear the voice of the angel, but I cannot see his face.
– I am turning constantly towards you, sir, but I arn meeting with provocation from the ministerial benches.
– Order !
– I have taken the following extract from an article which is entitled “ High Taxation is the nursery of national trouble and is published in the October issue of Rydge’ s Journal : -
There has become fixed in the mind of to-day’s Government a conviction that taxation rates should be made so high that they drain off, or confiscate, the bulk of personal incomes, and that in the case3 of very large incomes, the rates should take substantially all the income over a certain limited figure. In wartime, where the need for sacrifice is great, the urgency of national security makes one cheerfully pay confiscatory taxation, but in peacetime one does expect a normality even in tax rates. This is admitted by the Government who, however, advances the alarming principle that higher taxation rates are necessary in order to combat inflation.
If ever there was a fallacy, it is that. Since when have high taxation rates been an antidote to inflation? In fact, the exact opposite is true. High tax rates encourage inflation; they are the breeding ground of inflationary tendencies; they are the nursery of national trouble.
Nobody can successfully contravert that opinion. I should mention that I am placing all the opinions on record because they will be most useful to many people a little later.
The Treasurer’s second-reading speech on this bill is, in my opinion, noticeable for too many evasions and too much double talk. As the nation’s financier, the right honorable gentleman is a failure, and his failure will have dire consequences for everyone. That is why the Labour party is determined to oppose this bill, as it has opposed other bills that have been introduced to give effect to the Government’s financial policy. We desire the people to know precisely our attitude towards it.
– They know that now.
– The preceding Labour Government did a good job for Australia. We left our successors a sound economy and plenty of money. Inflation was merely crawling along. It is no longer crawling; it is even past the galloping stage.
– It is flying.
– It is now travelling faster than sound. Of course, the end is not yet. Taxation is so high- that the Lord Mayor of Melbourne has been obliged to complain that all the recent increases in the cost of living, as a result of inflation and increased taxation, are having a serious effect upon hospital appeals. Many hospitals are finding that members of the general public are not able to make contributions to their finances. The Treasurer has reversed his opinions in many ways since 1949, and, I say, though with all due respect to him personally, that it is unfortunate for the nation that he has been in charge of its finances for two years. I remind him that other governments in other countries have found it possible to reduce taxation, although their economies are affected by inflation. The Government of New Zealand reduced taxation on the eve of the last general election.
– What rot !
– Does not the honorable member for St. George (Mr. Graham) know that the Government of New Zealand reduced taxation a few months ago ?
– Rates of income tax in New Zealand are substantially higher than even the new rates in Australia.
– The Government of New Zealand proposes to make further reductions of income tax. The fact that taxation is higher in New Zealand than it is in Australia is merely due to the fact that the Government of New Zealand did not have the advantage of possessing a treasurer of the calibre of Joseph Benedict Chifley.
– A New Zealand Labour government had Mr. Walter Nash as Treasurer for a number of years.
– I am aware of that fact, but I do not regard Mr. Nash as the equal, in matters of finance, of the late Mr. Chifley. The majority of Australians wish that they could erase the past, and restore the Labour Government of 1949. That administration at least would still be reducing direct and indirect taxes, and giving the public tremendous benefits that this Government has failed to give to them. This Government has not tackled the problem of inflation in the right way. [ am not permitted to canvass the measures by which a Labour government would tackle inflation, but at least such an administration would have prevented the ever-spiralling of prices, which have reached fantastic heights and resulted, together with other happenings, in the closing of woollen mills in Victoria.
– Order ! The honorable member’s remarks are not related to taxation. I have allowed him considerable latitude.
– I agree, sir, that I was straying a little from the subject of taxation, and I shall return to the bill. This Government has a case to answer before the Australian people. It must explain why it is increasing taxation, when, during the general election campaign in 1949, it promised to reduce taxation. It does not matter whether the Government pleads guilty or not guilty to that charge for it will be found guilty by the Australian people. The second charge which the Government has to meet before the Australian people is in respect of its decision to abolish the averaging system, which members of the Liberal party and the Australian Country party lauded in other days.
– Why was the averaging system abolished for the ordinary taxpayer previously?
– It was abolished for good reasons that were accepted by the Opposition of the day. However, the present Opposition does not believe that the averaging system should be abolished now or at any time, and contends that it is not fair to go back to a period of high wool prices as the starting point for the abolition of the averaging system. We also say that the flat rate of the 10 per cent., by which all income tax assessments will be increased during this financial year, is not fair, because a man on a high income or a man on a low income will be subject to that flat rate. For many years the income tax has been levied on a graduated scale. The proposed overall increase of taxation is at the same rate for the poor man as it is for the wealthy man, and, in that respect, the principle is wrong. As one of the leaders of the graziers has pointed out, it is possible for a man who has an income of £100 this year to receive an assessment of £160. Nobody’s ingenuity can find a sufficiently good argument to defend such an iniquity before tlie bar of public opinion.
By every criterion, the budget is bad, and this bill, in particular, is very bad. By every standard of straight public dealing, this Government has behaved badly, wrongly, and, if I may hazard the opinion, disgracefully .in the manner in which it has dishonoured its pre-election promises to the people. Throughout Australia to-day, one hears no criticism of the Labour party or talk about working for Chifley, or about the increased revenues that are to go into the coffers of the Labour Government. The people do not even mention that they will be required to pay higher taxes to the present Treasurer. All that they ask, in effect, is, “ When are we going to get rid of the present Treasurer and the Government?” In that spirit, I leave the bill to the consideration of the House. May the departure of this Government be hastened with the greatest possible speed, and may the Labour party have a fair opportunity, with control of the Senate and this House, to do justice to Australia.
.- The House has been entertained by a display of erudition by the honorable member for Melbourne (Mr. Calwell) on the subject of taxation, although 1 describe some of his views as peculiar. 1 suggest that the honorable gentleman does not seriously entertain the opinions that he has expressed, and that he has taken advantage of the fact that he is in Opposition to attack the Government with all the offensive remarks that he can muster. He has referred to the Sydney Domain, which is known to us all as the place in which people assemble to make speeches, or to listen to speeches, and he has said that Government supporters have not ventured there to argue with him the need or otherwise for increased taxation. But the honorable member for Macarthur (Mr. Jeff Bate), an honorable senator, and I are in a position to contradict that statement. I, personally, have stood on a hox in the Sydney Domain, and addressed an audience, though I admit that I did not get as much support as I might have received in more familiar places. However, the group of which I was a member had a most interesting time in the Domain, and were given the credit of having the courage to go there, and express our views. The honorable member for Melbourne has been guilty of the grossest political humbug in his references to the Government’s proposals. I admit that, in 1948, I thought that the late Mr. Chifley, who was then Prime Minister and Treasurer, was guilty of treating ex-servicemen with disdain because he refused to increase taxes in order to finance improved repatriation benefits. I confess my sin. I realize now that responsibility for the government of the country rests properly upon the shoulders of the administration and upon nobody else. It is mere humbug for an honorable member to say one thing when he is a Minister and something else entirely when he is in Opposition.
Reference has been made to tax reductions in New Zealand. Unfortunately, many Australians do not yet clearly understand that Australia has a particular relationship to New Zealand, Canada, the United Kingdom and the United States of America, which arises from the common necessity to combine for the defence of democracy.’ All the Premiers of the Australian States, Labour, Liberal and Country party, agreed in conference with the Prime Minister (Mr. Menzies) and the Treasurer (Sir Arthur Fadden) a few months ago that, under the existing conditions of inflation, it would be a sad and bad act of administration to obtain new money by means of government credit. Therefore, they decided that capital expenditure on public works in ali spheres should be financed from the Commonwealth purse, which, after all, is the public’s pocket. That is why the Government has incurred the considerable displeasure of the community in general by increasing taxes. The honorable member for Grayndler (Mr. Daly) and other members of the Opposition have referred to ,mi Alleged surplus of £114,500,000 for which provision has been made in the budget. In fact, that item does not represent a surplus. It was included in order to enable the Government to underwrite government loans in the event of public subscriptions failing to fill the loan quotas. In other words, it will enable this Government to keep the States solvent. It is the grossest act of political treachery to attempt to stab in the back a government that has agreed, for the first time in Australia’s history, to underwrite the responsibilities of the States. The Premiers of New South Wales and Queensland attempted to gain as much party political advantage as possible at the Loan Council meeting by standing out against this Government and the governments of the other four States. But one- greater crime was committed. That odd fellow who is the Premier of Victoria appeared to be very pleased when he left the conference chamber at Canberra and said, in a broad Scots accent, “ I have never been better treated “, but he returned immediately to his home town and proceeded to abuse the Prime Minister, the Treasurer and everybody associated with them for th, treatment that he had received.
– That is a reflection on the honorable member for Indi (Mr. Bostock).
– It is true. The Premier of Victoria did exactly as I have said.
– Order ! I do not know how the Premier of Victoria can be associated with the question that is now before the House.
– The Government must increase taxes in order to satisfy the needs of the States.
– Order ! I think that the new tax rates had been decided upon before the Loan Council met.
– I bow to your ruling. Mr. Speaker.
The honorable member for Melbourne spoke of our fear of socialism. The truth is that Australia has reached a stage at which it must make a far-reaching decision. The thoughts of many honorable members on the issue of socialism are, unfortunately, obscure. Australia must decide whether it is to be controlled, directed and virtually owned by a government or managed by a group of individuals who represent the people. That is the basic issue in relation to socialism. This Government acts on behalf of the people. It abhors the theories of the Opposition. Furthermore, before it has finished its task, it will’ unscramble the Labour party’s egg and put the feathers back on the chicken that the socialists have plucked. Honorable members will recall that the honorable member for Melbourne has devoted a great deal of energy in recent years to his attempts to convince us that we cannot unscramble a scrambled egg or put the feathers back on a plucked chicken. I am not Mandrake or Houdini, but I prophesy that the honorable gentleman will witness some astonishing achievements by this Government during the next couple of years.
Eight million Australians live under better conditions than any other white race has enjoyed during the last 150 years.
– Then why destroy those conditions ?
– The Government is not destroying them. I remind the honorable member for Wills (Mr. Bryson) that in no other country where there has been real political trouble would it have been possible for an organization like the Australian Labour party to develop and survive. Only in a country of enormous freedom where the most clever “ spivs “ could organize themselves could such a political party be formed.
– What has this to do with taxation?
Mi-. GRAHAM. - The Government has been obliged to increase taxation because of the grave problems that it inherited from the former Labour Government. The honorable member for Dalley (Mr. Rosevear) knows as well as I do thai the budgetary total of £1,041,000,000 was the irreducible minimum. He has not suggested how it could be reduced even by one penny. Do honorable members opposite suggest that the Government could reduce its commitments for defence, social services or repatriation? They have not said so. Therefore,
I consider that they are guilty of an immoral practice in treating this matter merely as a political plaything.
The Prime Minister of New. Zealand went to the people of that dominion this year and said that he would reduce taxation at a time when the present Government parties proposed to increase taxation. The honorable member for Melbourne and his colleagues conveniently overlook the fact that, although taxation has been reduced in New Zealand and increased in Australia, Australians are still less severely taxed than are the peoples of New Zealand, Canada, the United Kingdom and the United States of America. Taxes provide the means by which we can develop our capacity to fight, and we must fight as a member oi the great team to which those other countries belong. Australians should realize that they bear the lightest burden of the United Nations team. We are the people who lack the courage to face up to our real responsibilities. Members of the parliaments of Canada, the United Kingdom and the United States of America would be fully justified in saying that Australia was the “ weak sister “ of the United Nations team and that it wished to derive the greatest benefit from the minimum cost. The blame for this disease that infects the community must be laid at the door of those individuals who have benefited most from the travail of the last 50 years. Honorable members opposite know just what I mean. I do not think that Mr. Speaker would permit me to express myself in more direct terms. To wonder whether or not the Government’s actions will be popular in the community is of no value. I say to the honorable member for Melbourne that it is better to be unpopular in November of the year in which there was an election in April than to be unpopular in April of the year in which there is to be an election in November. The unpopularity or otherwise of the Government’s actions should not affect its decisions. Australia will be on the downgrade if its governments ever place more importance on political consequences than they place upon national welfare. I have answered, with some degree of success I hope, the criticisms of the honorable member for Melbourne. I support the bill.
– The bill provides for various amendments of the Income Tax and Social Services Contribution Assessment Act, many of which, apparently, were recommended to the Government by the special committee that it appointed to investigate taxation generally, ostensibly for the purpose of simplifying procedure and removing anomalies. This bill may remove some anomalies but many others will remain and new ones will be introduced. The most serious of the anomalies that will be apparent in the future will lie those that will arise from the abolition of the averaging system for primary producers. I realize that certain difficulties are attendant upon the sudden abolition of such a system of taxation, but the fact remains that the Government’s plans have been badly drafted. For the benefit of the Treasurer (Sir Arthur Fadden) I shall cite an example of unfairness that will arise from the discontinuance of the averaging system. 1 have personal knowledge of this case. The primary producer concerned had a taxable income of £17,797 for 1950-51, the year for which tax returns were recently lodged. His average income for that year and the four preceding years was £5,033. In the previous four years his total income was only £7,368. An amount of £9,500 of last year’s taxable income of £17,797 was the result of sales of live-stock during the year. An amendment which is to be moved by the Treasurer at a later stage, will at least indicate that there are certain anomalies attendant on the sale of live-stock. Ear from being actual income, moneys received from the sale of live-stock is, to some degree, a quasi-capital payment. There is a certain windfall element about it, and it should not be attributable as income earned in a particular year. The proposed amendment suggests that it is all right to consider it as income in one year if the land-owner were finally disposing of his property, but it is not necessarily all right to do so just because the taxpayer happens to sell a considerable proportion of his live-stock in one year. I suggest that the £9,500 that he obtained for the sale of live-stock last year cannot be properly held to be income attributable only to that particu lar year, but should be reckoned as income earned over a period of years. It was to meet such a position that the averaging system that was applied to the earnings of primary producers, was introduced, because the incomes of primary producers fluctuate from year to year. Suddenly, overnight and retrospectively., the Government has abolished the averaging system in certain cases.
I shall give the House figures that will: show the effect that the abolition of that system will have on this particular taxpayer. I shall repeat the facts. This year his taxable income is £17,797. His average income for this year and the four previous years was £5,033. If he were taxed under the old system he would have to pay £7,470 on last year’s income. Under the new system he will be taxed on the full income of £17,979-
– What would the ordinary taxpayer be taxed on the same income?
– Just a moment. I am citing this anomaly because the Treasurer is claiming that he has simplified the taxation system.
– Where does this taxpayer live?
– Swan Hill. Under th* proposed new provisions he will pay £11,470 tax on last year’s income of £17.797 instead of, as under the old system, £7,460. His provisional tax assessment, had he been assessed on the old basis, would have been £8,206. In other words, under the old system his tax liability would have been assessed at £15,666. His provisional assessment under the new system will be £12,616. Therefore the total amount of tax payable will be £24,086, an increase of £S,420. His provisional assessment for the year ended the 30th June, 1950, was £570, which indicates how small his income was prior to the last financial year. Under the old system his assessment would have been £15,666, less £570, or an amount of £.15,096, whereas under the new provisions the amount will be £23,516. He has already paid, according to his wool deduction certificates. £3,597, so that the net amount payable under the old system would have been £11,499, whereas under the new system it will be £19,919. That is £2,000 more than his actual income in the year ended last June, even after about £4,200 has already been paid in advance. Although this taxpayer had an indication of his potential income, he had no indication of the axe that the Government intended to wield, and so he reduced his mortgages and his overdraft at the bank, as he well might do, in view of the increase of his income. Having reduced his overdraft and mortgage by £6,000 he has already spent money that he will now need to pay in taxes. Has position will be very serious as a result of the Government’s retrospective abolition of the averaging system. I hope that the Treasurer will give serious consideration to the position of that taxpayer. I suggest that it is not an isolated case, hut that there are probably many other people, in the electorate of Mallee and elsewhere, who are in similar circumstances.
I turn now to income tax generally. Income tax purports to be tax on income. The aspirations of taxation authorities are well expressed in the report of the Committee on the Taxation of Trading Profits, known as the MillardTucker Committee, winch was established in 1949 by the United Kingdom Government. . Paragraph 8 of the committee’s report states -
The general scheme of the Income Tax legislation being not to tax anything hut income, capital increment as such being outside its scope and income derived from business being more usually denoted by the word “ profits we took as the first of those principles that as nearly as practicable the taxable profits should be no more and no less than the true profits of the business as computed on established accountancy principles.
In effect, that means that in taxing a business some regard must be had for accepted accountancy principles and some distinction must be drawn between what, under accountancy practice, is to be regarded as income on the one hand and what is to be regarded as capital on the other. In actual practice it is sometimes very difficult to decide whether an amount is income or whether it goes over the border into the capital field. Considerable difficulty is met with from time to time in drawing a line in income tax legislation , between income and capital. In fact, sometimes the line has had to be crossed because capital depreciation has to be allowed for in the computation of profits,” and sometimes what is normally regarded as capital is treated as income. We shall have another example to-night, when the relevant amendment comes before us, of how in the coal industry, for instance, what would .be regarded in another business as capital transactions will be held, under the legislation, as being of an income nature.
There are other anomalies in the principal act to which the Treasurer should give some consideration because they cause a great deal of difficulty. One such anomaly to which I shall refer affects ordinary taxpayers and arises from the operation of sections 26 (d) and 26 (e) of the Income Tax Assessment Act which refers to payments made to people on retirement from their occupations. I shall cite one example that I know from my own experience, because the person concerned came to see me recently about the matter. He had been employed by the tramway authorities in Melbourne and would have become entitled, on his retirement at the age of 65, to a gratuity of about £750. If he had retired from his occupation he would have been taxed on only 5 per cent, of that lump sum; but the tramway authorities asked him to remain at work because they were short of staff and, innocent of the pitfalls that enshroud interpretations of the Income Tax Assessment Act, he continued in his employment although he received hia gratuity of £750. Unfortunately for him, because he had not retired, under the technical meaning of section 26 (d), instead of being taxed on only 5 per cent, of the gratuity he was taxed on the full amount of it. The payment of that tax made a large hole in his retiring allowance. The Government has suggested that in the interests of increasing production people should continue in their jobs after they have reached the age of 65 years. If the Government really wishes people to heed that exhortation it should make some amendment of the Income Tax Assessment Act to provide for a notional kind of retirement so tbar people who receive a retiring gratuity at the age of 65, but do not retire, would be taxed on it as if they had actually retired.
Taxation Board of Review case No. 62 gives an example of the kind of ridiculous situation that .can arise. It deals with a school teacher who reached the age of 65 years while he was employed at a private school. On his retirement he became entitled to a lump payment of £800, only 5 per cent, of which would have been taxable. The school committee decided that it would be a. serious drain on its finances to pay that amount in one year, and decided, in effect, to pay it in three instalments of £100 in each of three years. So instead of being taxed only £15 in one year, which would have been the case had he received the payment in a lump sum, the school teacher was taxed on £100 in each of the three years. It is surely possible to have some definition in relation to such matters. The Parliament can express its will and indicate that it wishes that section of the Income Tax Assessment Act to operate in a cerain way. I suggest that the Parliament did not intend that section to operate in the way in which it operates. The learned editors of the Butterworth Taxation Service have given a reverse example of that in a footnote to the report of case No. 62. He says that if a person was paid £500 not to engage in some kind of employment because the person who paid the money considered that his engagement in that employment would interfere with the payer’s profits, that lump sum of £500 would be taxed under section 26 (d) of the act. If, however, the payment of the sum was divided into five equal instalments it would not be taxable because it would escape under the interpretation of section 26 (e). Such anomalies are ridiculous, and should be remedied.
I pass on to another example which arises from the operation of sections 83 to 86 of the Income Tax Assessment Act, which deal with the sale of businesses on lease-holds. These sections impinge directly on ordinary people in the community. I know that there is some doubt about the Parliament’s original intention in inserting these sections in the act. I was for some time employed in the Taxation Branch, and in those days it was understood that the sections had been put in the act merely to bring hotel licences within the scope of its provisions. Hotel licences are in a peculiar position in that they are limited in number by State laws. The increase of the value of such licences cannot be said to be primarily due to any efforts of the owners of them. Apparently, it is suggested that if a person who rents premises on which he conducts a small grocery business sells the business at the end of his working life and receives more for it than the value of the goods and equipment the excess amount is taxable income. If that was the intention of the framers of the legislation, it should be made clear by the Parliament itself. If’ the Parliament wishes to impose a capital gains tax it should legislate for the imposition of a capital gains tax. It should not simply make other taxation legislation applicable to people who are not sufficiently fortunate to own a freehold property. Under the interpretation of the legislation to which I have referred, persons who are economically substantial enough to own the freehold of a property are in a better position than those who only hold a lease. Dozens of cases have come before the Taxation Board of Review for determination of whether businesses have been sold at a capital gain. Battles take place between the representatives of the Taxation Branch and taxation agents who represent the taxpayers concerned. The person who has had a contract of sale drawn up is usually in a more fortunate position than the unwary person who has sold without taking cognizance of the circumstances. In volume 1 of the Taxation Board of Review Decisions, published by the Law Book Company of Australasia Proprietary Limited, a note has been appended to case No. 102 which reads -
An appeal to the High Court, in respect of the above decision, is pending.
The Taxation Board of Review was constituted in order to provide a simple form of ventilation of taxation cases. The High Court is not the appropriate place to resolve these difficulties. Cases which are not decided by the Board of Review in a manner satisfactory to the Commissioner of Taxation should be examined by the Parliament. In the same volume a note is also appended to case No. 105, which reads -
An appeal to the High Court, in respect of the above decision, is pending.
In those two cases, because the Commissioner of Taxation was not satisfied with the decision of the Board of Review, he has taken the case to the High Court. The people’s money will have to be spent in order to have the High Court determine a matter which should be determined by the Parliament. Fundamental principles of taxation are involved in case No. 105, which concerns a business in the State of Victoria. The law of that State provides that every worker shall receive two weeks’ annual holiday at the end of twelve months’ employment. The act has been so worded as to imply that one-fiftieth of that holiday period shall accrue automatically every pay-day so that at the end of a year, two weeks’ leave will have been accumulated. If at the end of the year a man ceases to continue in his employment and has not taken his holiday he is entitled to the equivalent of two weeks’ wages. Following what are regarded as normally accepted standards of accounting, some firms have decided to make a provision for the payment of accumulated holiday pay. As payment in respect of leave is obligatory by statute, reservation is made in respect of certain periods for payments is respect of such leave. In case No. 105 in the volume to which I have referred, Mr. Cotes, one of the members of the Taxation Board of Review is reported to have said -
These remarks appear to me to support a general principle that, in ascertaining the net income of a business for taxation purposes, the interpretation of the law should be brought into harmony with recognized accounting theory and practice, except where the specific verbiage of any section or sections of the Act precludes this course being followed.
A reference was made to such cases in paragraph 189 of the report of the Committee on the Taxation of Trading Profits. It was stated that where there is a statutory obligation to provide for a’ fixed annual holiday the amount involved is a definite ascertainable charge on a business and should be provided for by a reserve according to normal accounting practice. It was recommended that that practice should bo followed in countries where there were statutory enactments of this kind. The Board of Review acknowledged that principle, but the Commissioner of Taxation now wants a judgment to be given by the High Court. I suggest that that is an absurd state of affairs. Accepted accountancy practice should be followed unless the Commissioner of Taxation has very good reasons for considering that it should be varied, in which case the matter should be submitted, not to the High Court, but to the Treasurer. I consider that the act should be amended in order to provide for such a procedure to be adopted. Perhaps the cases that I have quoted could be considered by the House at a later date.
The Treasurer announced, perhaps rather buoyantly, that he would simplify taxation and remove anomalies, but a considerable number of anomalies still exist and apparently, rather than abolish them, he proposes to support the actions of the Commissioner of Taxation in approaching the High Court. These anomalies are very real to the persons whom they affect and who have paid thousands of pounds more each year in tax than they have received in income. Judged by accepted accounting principles, that state of affairs is an absurdity. At least this bill gives honorable members the opportunity to ventilate the anomalies which exist, inquire into the purport of the principal act and consider whether the desirable objectives that I have mentioned can be attained.
.- I must refute the statement that was made by the honorable member for Melbourne Ports (Mr. Crean) to the effect that taxpayers have paid more in taxation than they have received in income. That allegation has been made very freely and is absolutely inaccurate. Reference to the income tax rates will show that it is impossible for a person to pay more in tax in respect of any financial year than he receives in income in that year, lt is true that provisional tax in respect of the next year’s income, plus the tax due on the current year’s income may exceed the income of the current year, but a person who found himself in that position would have the benefit of deducting from his taxation liability the amount of provisional tax that he had paid in the preceding year. If that provisional tax was not sufficient to meet the tax due in respect of the current financial year he would have to pay an amount which he may not have expected to pay. Nevertheless, such a person is in the position of providing for the future just as the wage-earner is who pays a high rate of provisional tax in the early part of a year and who receives such a low wage in the latter part of the year that his total income is not taxable. He would receive a rebate at the end of the year. Honorable members know that it is common for wage-earners to receive rebates at the end of the year. So other types of taxpayers can pay more in provisional tax than the tax assessed and receive a credit for the excess amount paid. But it is legally impossible for any person to pay more in taxation in respect of one year than his taxable income for that year.
The honorable member for Melbourne (Mr. Calwell) devoted a considerable part of his speech to quoting from newspapers and other authorities. I believe that he did try to string an argument around his collection of statements by other people. A number of the honorable member’s quotations were from editorials which did not represent the opinion of the subscribers to the newspapers concerned. But because a newspaper prints a statement in an editorial it does not follow that it represents any great volume of public opinion. But let us assume that newspapers, in their editorials, do express the belief of the public. The leading article of the West Australian dated the 26th October, after mentioning that a deputation from certain graziers’ and taxpayers’ organizations had failed to convince the Treasurer (Sir Arthur Fadden) that he should abandon the modified averaging system of taxation of primary producers’ incomes, stated -
It is difficult, in principle, to fault the arguments put forward by Sir Arthur for the change in the light of present economic conditions. Taxation methods, moreover, are flexible and always open to adjustment to meet altered conditions in the future.
Honorable members opposite have accused the Government of not keeping its promise to reduce taxation. Do they suggest that if they were in office and circumstances demanded that taxation should be increased they would not break a promise to reduce it? I draw attention to the fact that last financial year we very considerably reduced taxation. We carried out our promises to investigate the whole of the tax field. A committee is meeting at the present time and is discussing propositions that have been put to it. That committee can be approached by any honorable member in this House, and indeed by anybody in Australia. A number of such propositions and suggestions have been incorporated in the legislation that the Government has submitted to us. Any person of average intelligence is bound to perceive that the Government, by this measure, proposes only to adjust its financial arrangements to the economic circumstances of the time. I do not intend to state all the reasons which justify the budget and taxation proposals as honorable members know that they are genuine and inescapable. The West Australian article that I have already quoted continues -
The five-year averaging of incomes for Federal tax rating purposes now applies only to primary producers.
Once again the honorable member for Melbourne, who credited the late Mr. Chifley with introducing the averaging system, is completely wrong. The honorable member for Cowper (Sir Earle Page) introduced the averaging scheme into the federal taxation system in the early ‘twenties. At that time he was the Treasurer, and he did a remarkably good job.
– He was the tragic Treasurer.
– The honorable member who interjected merely gives a further display of his ignorance by repeating that parrot cry. New South Wales, the only State to adopt the average system, did so as the result of Country party representations. Therefore, representations were made by the Country party both in New South Wales and in the federal sphere to introduce averaging provisions in order to level out fluctuations in the yearly incomes of primary producers as the result of marketing and seasonal changes. In 1936, a royal commission on taxation considered the whole matter of averaging and decided that the averaging system caused great anomalies. It then suggested that it should be discontinued in respect of all incomes except those of primary producers. The royal commission also considered another matter that is pertinent to this debate. It decided that in the system of averaging there is a considerable amount of wasted effort in the preparation of taxation returns. Every honorable member knows that there is a serious lag in the issue of taxation assessments. Honorable members are continually getting letters from their constituents in which it is requested that the Taxation Branch should make ite assessments more quickly. At times, constituents have written that they owed three or four years’ taxes but could not get their assessments. Honorable members opposite will realize how embarrassing that must be for any government. About 80 per cent, of taxation returns of primary producers are not dealt with in the relevant financial year, and of those only about 80 per centare assessed and the tax collected. In other words, only about 60 per cent, of the income of each financial year is assessed and collected in the year. In the light of those facts it would bc sensible to abolish the average system which causes those anomalies and delays.
In 1938, the Australian Government removed the averaging provisions from all taxpayers other than primary producers. The matter has since been reviewed again, and in the light of present circumstances it has been considered wise to remove the averaging provisions from primary producers, whose income exceeds £4,000 a year. Primary producers are not at present suffering from the violent fluctuations of income that have occurred in the past. In fact, the incomes of many primary producers have increased on a gigantic scale. Taxable incomes have increased at a rate out of all proportion to the average incomes on which taxpayers are being assessed. That is all right for the primary producer while his income continues to increase, but it will be a different story when it begins to decrease. If the primary producer is to get any benefit from lower income taxes to see him through the difficult times which are coming, then he would be better off if this averaging system were abolished. I can see difficult times coming. Last year started with floods, this year started with fires, and perhaps next year will be notable for widespread droughts. The West Australian article to which I have referred continues -
Its retention (averaging) was intended to protect them against fluctuations in the prices of their products and from income variations due to seasonal conditions.
But the substantial rise in incomes in recent years has exposed weaknesses in the system and, as the Treasurer pointed out in his Budget speech, “ it operates to the advantage of a taxpayer in a year of high income when he is best able to pay and to his disadvantage in a year of low income when he is least able to pay “.
Briefly the Treasurer proposes that the averaging system should he abolished for the assessment of a primary producer’s taxable income in excess of £4,000 a year. It is in a period of high general incomes that such a change can be made with least difficulty for the taxpayers concerned.
The article then goes on to point out exactly what that means. The honorable member for Melbourne has suggested that primary producers do not want this change. I am probably in just as close touch with’ primary producers as is the honorable member for Melbourne, because I am a primary producer myself. I assure honorable members opposite that now that the system has been thoroughly understood, primary producers realize the wisdom and sense of this Government’s taxation proposals. Once it was believed that the new proposals would apply to all incomes of primary, producers, but now it is realized that it will apply only to incomes of more than £4000 a year, and that other primary producers will have a right to make an election. In the light of those facts a totally different view prevails among country people. If the contention be maintained that the primary producer has not fully considered the proposals, I draw the attention of honorable members to a report made by the Commonwealth Committee on Taxation which reads, inter alia -
That representations made to the committee on the subject of averaging do not reveal any unity of views, apart from a desire to escape the detrimental consequences during a period of declining incomes. The most important of the proposals put before the Committee were «s follows: -
Every primary producer should be given the option of making an election as to whether the averaging provisions should apply to him. Once the option had been exercised it should be irrevocable. . . .
That right to primary producers whose incomes are below £4,000 a year to make an election is exactly what has been put into this measure. The other suggestions of the Commonwealth Committee on Taxation, which have been supported by the Graziers Vigilance Committee, are that the averaging system should apply only in a case where the average taxable income is less than the actual taxable income of the year concerned, and that a new averaging period should commence when the income falls to an amount at least one-third below the average income. There is nothing unusual in taxpayers asking for concessions. lt is quite common, when taxpayers feel aggrieved or when honorable members feel that their electors may be aggrieved, to make the strongest possible representations that they should be relieved of taxation imposts. This legislation places no impost of any consequence on the people. It merely removes certain concessions that Iia ve been made during past years. Moreover, those concessions will be removed at n time when it is most favorable to the taxpayers to remove them and primary producers will fully appreciate this in years to come, when inevitably their income has declined. It is quite reasonable that the proposed change should be made at a time when incomes are high, so that the full benefit will accrue to taxpayers as their incomes decline.
There is very little more that I can say about that particular matter. I think honorable members will agree that now the provisions of the new averaging system are thoroughly understood by the taxpayers all objections to the system have disappeared. Objection has been raised in some quarters to the retrospective effect of parts of this measure. To give a thing a certain name is not necessarily to criticize it. When people say that this is a retrospective measure, and therefore bad, they entirely overlook the fact that because it is retrospective it is not necessarily bad. It can only be bad if it is proved in fact to be bad. While it may be said to have a retrospective effect, that is not necessarily bad. In the same bill that we are considering, it will be found that sub-clause (1.) of clause- 40 reads - ( 1 . ) The amendment effected by section six of this Act shall apply to assessments in respect of income of the year of income which commenced on the first day of July, One thousand nine hundred and forty-nine, and in respect of income of all subsequent years.
That is definitely a retrospective provision that applies to members of the Korean forces. It is a concessional provision. .Surely honorable members will not maintain that that is necessarily bad because it is retrospective? Sub-clause (2.) of clause 40 reads - (2.) The amendments effected by paragraph- ( b ) of section ten, sections eleven and eighteen, and paragraph (6) of section twenty, of this Act shall apply to assessments in respect of income of the year of income which commenced on the first day of July, One thousand nine hundred and fifty, and in respect of income of all subsequent years.
Again, that is a retrospective provision which is designed to eliminate the possibility of double taxation for Australian companies that operate outside Australia. Again, in sub-clause (4.) of clause 40 we read - (4.) The amendment effected by section nineteen of this Act shall apply for the purpose of ascertaining the amount of Australian tax payable in respect of an amount of income of the year of income which commenced on the first day of July, One thousand nine hundred and fifty, and upon an amount of income of any subsequent year.
I have therefore pointed to three retrospective provisions in this measure, all of which give concessions that date back a year or more, but all of which are definitely good and just. It is ridiculous to say that because a provision is retrospective it must be mad.
I now return again to the article from the West Australian which I previously quoted. This quotation reads -
In effect, the collection of taxation from primary producers is being brought nearer to the annual period in which the income is actually earned.
That is a very sound principle. The article continues -
In a sense the application of the new system is retrospective and in some cases there may lie embarrassment in meeting the cash taxation requirements because of commitments already undertaken.
That is a short-term problem and should not strain the facilities of rural finance. I believe that it is thoroughly sound. The article proceeds -
It should be remembered that many wageearners also had to make personal financial adjustments in the period of transition to pay-as-you-earn taxation.
That legislation was introduced by a Labour government, but now that the Labour party is in opposition, honorable gentlemen opposite say that something that their party did during its term of office is not suitable or satisfactory when this Government is in power.
It is perfectly sound in principle and in practice to exclude from the everaging system primary producers whose annual taxable income is in excess of £4,000 and to give to those whose annual taxable income is £4,000 or less the right to choose whether they will continue to take advantage of the averaging system. Those provisions will not increase the burden of the primary producer. Some primary producers will no longer be entitled to .enjoy a concession that they have enjoyed hitherto but that concession is a double-edged sword in a period of declining incomes as they will discover. The proposal that the modifications should be applicable to the year ended on the 30th June, 1950, is retrospective in name only. A great benefit will continue to accrue to primary producers as a result of the operations of the averaging system over the years. They are to be required to make a small sacrifice now, but that will be of advantage to them in the long-term.
.- During the last few months, the budget either has been condemned as bad or has been described as powerful medicine that is necessary in a difficult situation. Doubtless the harassed Treasurer (Sir Arthur Fadden) derived comfort from the fact that the honorable member for Lawson (Mr. Failes) described it as being sound in practice, fully acceptable to the Australian primary producers and in accord, with all the accepted principles of taxation, justice and equity, but I warn the right honorable gentleman that he will be very disappointed if he hopes that that view is being expressed throughout the country areas and the cities of Australia. The honorable member for Lawson was quite wrong. Nowhere is this budget accepted as being sound in principle, equitable in its operation and justified by the present circumstances.
Taxation has two major purposes. The first of these is to raise revenue to enable the Government to meet its ordinary administrative expenses, pay social services benefits and discharge its other commitments. The second, which ha3 come to be regarded in many quarters as the most important function, is to distribute the national income fairly among all sections of the community. Income tax is now regarded as the most equitable method of achieving both of those objectives. Many surveys have been made of taxation principles and practice. Those who have made the surveys have in every instance advocated that direct rather than indirect taxes should be imposed, and have condemned increases of indirect taxes. Income tax causes less hardship to the various sections of the community than do indirect taxes. It permits a very flexible system to operate under which allowance can. be made for family responsibilities for contractual obligations and for the meeting of the future needs of taxpayers and their families. Every enlightened Government regards income tax as the best means of raising revenue and of distributing the cost of national services equitably.
This Government has departed from all, the accepted canons of taxation. In an inflationary situation, it has budgeted for a huge surplus of revenue. As I said in a previous debate, that is not necessarily wrong because in certain circumstances it may be wise to budget for a surplus as an anti-inflationary measure. But a necessary condition is that the rates of income tax in operation at that time shall be low. At present, the rates of income tax are high. The action of the Treasurer in increasing them in order to enable surplus revenue to be accumulated reveals a complete misconception of the purpose of budgeting for a surplus. If the present rates of income tax were, let me say, between 6d. and 10s. in the £1, the
Treasurer would be justified if he decided to accumulate a surplus of revenue by increasing those rates, but, in the present circumstances, when the rates rise to as high as 15s. in the £1, it is bad to budget for a surplus, irrespective of what is proposed to be done with it.
The Treasurer has made a completely wrong approach to taxation and to the present economic position. In budgeting for a surplus, he has had recourse in a large degree to indirect taxes. By so doing, he has made certain that prices will rise sharply and will continue to rise. That is the very situation that he would have the country believe he has sought to avoid. He has explained that, by a courageous approach, he has sought to stem the rising tide of inflation, but no one in the community to-day will agree that that objective can be achieved by the methods to which he has resorted. By increasing indirect taxes and thus causing prices to rise sharply, he is bringing increasing numbers of people into the higher income tax field. As each adjustment of the basic wage is made, taxpayers in Australia are required to pay income tax at higher rates, and they have less money with which to meet the needs of themselves and their families. The Treasurer, by his financial measures, is causing conditions to alter in a manner that he should seek to avoid. The right honorable gentleman has said that, having regard to the present situation, a courageous approach is required. Is it courageous considerably to increase excise duties, sales tax and all kinds of indirect charges upon goods that are consumed, and are meant to be consumed, by the people of this country ? As the honorable member for Fremantle (Mr. Beazley) pointed out some time ago, it is clear that the Treasurer is not budgeting to reduce purchases by the Australian people. If he were doing so, he would not expect revenue to increase as a result of the operation of increased indirect taxes, but he does expect that purchases will increase and that the consequent increase of revenue will permit of the accumulation of a surplus.
The honorable member for Lawson said that the farmers do not object to the modification of the averaging system.
The fact is that the farmers do object to it. The honorable gentleman said that the farmers are beginning to realize that the modification of the system will be of great benefit to them. He emphasized that farmers whose annual taxable income is less than £4,000 will be allowed to choose whether to continue under the averaging system or revert to the normal system of taxation. At this stage, let me remind the Treasurer that the averaging system was considered by a royal commission.
– In 1927.
– Conditions have changed since then.
– Conditions have not changed since then. The principal fact that caused that royal commission to report in favour of the averaging system was that the incomes of the primary producers of Australia were fluctuating. That basic condition still holds good and will continue to do so. World prices will continue to fluctuate and so will the incomes of primary producers. Seasonal conditions will continue to vary and, as a result, the incomes of primary producers will continue to fluctuate. If there has been any change of the position since 1927, it is that the fluctuations of the incomes of primary producers have become greater. With the shortening cycle of economic boom and slump, the fluctuations now are very real and very sharp.
– And upwards.
– The Treasurer, quite clearly discomfited by the facts of the present situation, is seeking by interjection to divert me from my line of thought. A continuation of the averaging system would be quite justified, in view of the conditions that obtain to-day and that will continue to obtain in the future. There is no more justification for abolishing the averaging system now than there would have been in 1927.
The Treasurer has been responsible for some exceptional moves against the primary producers of this country. I shall not enumerate them now, because I did so in a previous debate. It is obvious that the right honorable gentleman has accepted the prevailing view that the farmers of Australia are responsible for the present inflationary conditions. He denies that he has accepted the view of Sir Douglas Copland, but it was that learned gentleman who drew attention to the incomes of farmers and singled out farmers as a medium through which inflation could be attacked. Sir Douglas Copland has claimed time and time again that the Government should look to the farmers for increased revenue for ordinary purposes, and that, in an attempt to curb inflation, some of their money should be taken from them. It is true that the incomes of farmers have increased vastly. Substantial benefits flow to the community as a whole as well as to primary producers from present prosperous conditions. But what is the Government’s approach to companies that are making vastly increased profits out of the farmers? During the last three years, some companies in the motor trade have paid dividends of up to 60 per cent, on the capital invested in their organizations. Agricultural machinery firms are reaping a harvest from the farmers; and wool-broking firms which, though few in number, are of vast financial strength, are making killings among primary producers. However, the Government, under its taxation policy, passes by the wealthy combines and ignores the large fortunes that those organizations are making out of the farmers. Primary producers must be astonished when a government, the Treasurer of which, is leader of the Australian Country party and the Minister for Commerce and Agriculture (Mr. McEwen) is deputy leader of that party singles them out to bear the brunt of additional taxation. It is idle for the Treasurer, the honorable member for Lawson and the honorable member for Moore (Mr. Leslie) to claim that the farmers do not resent such treatment. The Government is placing an unfair part of the taxation burden upon the farmers, and it is making an unrealistic approach to the problem of inflation. Time will prove whether the farmers welcome these additional imposts and the abolition of concessions that they previously enjoyed. Their reaction will be effectively tested when they are given the option of remaining under the averaging system of assessment of income tax. Let us see how many primary producers with taxable incomes of less than £4,000 a year will choose to withdraw from that system.
The Government has imposed a flat rate increase of 10 per cent, upon all taxable incomes. Quaintly, it has claimed that it has done so because such an additonal impost can be easily removed in the future. The imposition of additional tax on a flat-rate basis will assuredly impede ‘production. Such a system is unjust because it does not make any allowance in respect of the different obligations, family and contractual, of taxpayers. The flat-rate increase is a discriminatory tax. For that reason it must be condemned. When the supporters of the Government were in Opposition, they claimed that rates of tax at that time impeded production and that the Government of the day should evolve a new approach to the problem of taxation. On each occasion on which the Chifley Government reduced rates, the present Treasurer, who was then in Opposition, claimed that no actual reduction of taxes had been effected because the quantum of tax had increased. This Government is increasing not only the quantum of tax but also the rates. The flat-rate increase of 10 per cent, has been described as a shortterm tax which the Government hopes that it will be able to remove next financial year. The temporary nature of the tax will impede production. Manufacturers will not be anxious to increase production when they know that if they do so during the next twelve months they will render themselves liable for a disproportionate increase of tax. They will seek to escape from this temporary impost. The Government cannot justify the imposition of a flat rate tax on grounds of either accepted taxation principles or of equity.
Supporters of the Government have cited rates of taxes in New Zealand, Great Britain and the United States of America with a view to proving that Australian taxpayers, even after taking into account the increases of tax under the budget, will be better off than are taxpayers iu those countries. That is a completely dishonest and unconvincing approach to this matter. Such a comparison, in order to be valid, must take into account not only rates, but also total collections of taxes of all kinds in the respective countries, as well as the services, including social services, that are made available to the people in them. In Great Britain, for instance, substantial benefits of a social character are provided. Even the newly-elected Conservative Government of Great Britain has not indicated that it intends to abolish those benefits. But this Government, in addition to imposing these savage increases of taxes, is also levying new taxes which it is attempting to disguise with pleasant names. For instance, persons are now to be obliged to pay for hospital benefits under a scheme that is attractively styled an insurance scheme. The Government will oblige persons to pay additional charges for such services. Facts of that kind must be taken into account in any valid comparison between the position of taxpayers in Australia and in other countries. The Government has not disclosed such facts to the House.
When the Chifley Government introduced a measure to impose a tax on private companies, the present Treasurer waxed eloquent in his wrath and claimed that such a tax would grind companies out of existence and would ruin the business structure of the country. The wheel of political fortune has turned, and we now see how dishonest the present Government parties were in that respect and how unfounded were the claims that they then made. But those parties got the headlines in the press and the most favoured mention in their organs of public opinion. To-day, the same honorable gentlemen have not only accepted the principle that was embodied in the Chifley Government’s legislation but also closed the loopholes in it. The Treasurer has said that the Commonwealth Committee on Taxation has recommended that companies should be obliged to pay 10 per cent, of their assessed tax in the year in which it is earned, that is, in advance. As that is the sort of thing that the “Government has been endeavouring to do since it assumed office, the committee’s recommendation came as a pleasant surprise to it. It is true, as the Treasurer stated in his budget speech, that prior to the general election in 1951 the
Government made certain taxation concessions. Honorable members opposite should be thoroughly ashamed to mention such action as it was clearly electoral window-dressing. Prior to the last general election, when it should have been making an attack upon the vital problem of inflation, it was interested only in bargaining for political power in order that it might continue to govern in the interests of the great financial combines in this country. Now, it has obliged public companies to pay 10 per cent, of their assessed tax in advance, and has sought to justify such action on the ground that the Commonwealth Committee on Taxation recommended that it should do so. What an alibi! The Government will receive in the current financial year considerable revenue that it would not normally collect until next financial year. It endeavours to justify such a policy on the ground that it must meet in the current financial year certain expenditure of a non-recurring nature. In spite of that claim, governmental expenditure, and, consequently, taxes are increasing. The Government’s approach to the problem of inflation is unrealistic. It has adopted a dishonest method of finance for which it now stands condemned by the community and which will bring about its defeat at the next general election.
– I have been struck in the course of this debate by the fact that the honorable member for Melbourne (Mr. Calwell) and his henchmen have not made the slightest reference to the measure before the Chair. It is quite true that it relates to taxation generally. It is apparent, however, that members of the Opposition have not bothered to study its terms which are ancillary to those of other taxation measures that have already been passed by the House. The honorable member for Melbourne claimed that the abolition of the averaging system in the assessment of the tax payable by primary producers will affect harshly the small farmer, whilst it will be of advantage to the big farmer. I hardly think that the honorable member would wish to mislead the public. Therefore, I can only conclude that he has not studied that proposal. The modification of the averaging system will not in any way affect primary producers with a taxable income of less than £4,000 a year. Furthermore, it will not affect those who have a taxable income of up to £6,000 a year so long as their average income during the prescribed period does not exceed £4,000 a year. The income of the producer on a small scale it to be calculated, not upon his returns from high prices alone in the current financial year, but upon those of the four preceding years, during which his income progressed from, perhaps, an externely low Ague, to a much higher amount. But the averaging that has applied produces some astonishing results, ns is shown by figures that have been released by the Treasurer (Sir Arthur Fadden). A levy of 10 per cent, will be imposed during this financial year, not upon the total income, but upon the amount of tax that will be payable on the basis of the rates that were applicable during the last financial year. To suggest that the special levy has any relation to averaging is merely to attempt to muddle the whole situation, and make it more difficult for people, who are not experts on the subject, to learn the truth.
I do not think that I have misinterpreted a statement by the honorable memher for Melbourne to the effect that the Labour party now believes in the averaging system. The implication of such a statement is that, not so long ago, the Labour party was opposed to the averaging system. That statement, if the simple elements of it are analysed, means that the Labour party has changed its views, and, now that it is in Opposition, believes that the averaging system should be retained. I am perfectly well aware that some honorable members, when they enter this House, do not express their personal views on various subjects. They are the representatives, not so much of their electors, as of .certain organizations that fundamentally have been responsible for their election to the Parliament, and, therefore, expect them to advocate certain policies. For example, members of the Labour party are expected to voice in this Parliament the opinions or, say, the Australian Council of Trades Unions, the teachers’ organizations, and similar organizations. Government supporters also have their contacts with every section of the community, but Opposition members tend more than Government supporters to place emphasis upon one factor in preference to another factor. Members of the Labour party, in expressing themselves in favour of the retention of the averaging system, probably argue in the following way : - “ We are now in Opposition. The Government wishes to abolish the averaging system, and, therefore, we are opposed to such a proposal. If the political wheel turns, we shall be in office, and the Liberal party and the Australian Country party may then wish us to restore the averaging system. In such circumstances, we shall be opposed to such a move “. The attitude of members of the Labour party to the Government’s proposal to increase taxation is obscured by their reluctance to face certain obvious facts. Their contention, which has been volubly expressed by the honorable member for Melbourne, is that the Government has no right to increase taxation after members of the Liberal party and of the Australian Country party promised the people, during the general election campaign in 1949, that a non-Labour government would reduce taxes. Bearing that fact prominently in their minds, Opposition members consider that the Government deserves the censure of this House and of the people. I admit that, during the general election campaign in 1949, the present Prime Minister (Mr. Menzies) and the Treasurer decided that, on all the evidence that was available at that time, a non-Labour government would be able to reduce taxation. The Liberal party and the Australian Country party were returned to office, and the Treasurer provided in his budget last year for a reduction of taxation. A few months ago, another general election was held, and during that campaign the Prime Minister and the Treasurer warned the people that circumstances had so altered that the community would be compelled to make sacrifices that could not be foreseen in 1949. The attempt by Opposition members to brush aside such an obvious truth, their pretence that nothing has occurred since 1949 to justify an increase of taxation, and their accusation that the Government is guilty of a breach of faith are futile efforts to discredit the
Government, and, indeed, are not worthy of the Australian Labour party.
Opposition members, if they genuinely wish to challenge the Government on its taxation policy, should examine the inescapable facts. The world is trembling on the verge of war. A most inflammable situation exists in Egypt, and in other parts of the Middle East. The war in Korea is causing us considerable concern. Eastern Europe may be likened to a volcano that has been smouldering for some time and may erupt at any moment. Those inescapable facts constitute the test that should be applied by Opposition members to the necessity, or otherwise, for increased taxation and a greater measure of sacrifice on the part of the community. The Opposition, if it adopts that form of test, may attack the Government on the ground that the financial provision for defence purposes is insufficient. Australia has never suffered invasion, nor experienced the horror of being under an army of occupation. Members of the Labour party could claim that, for the sake of the women and the children, and in the interests of our national heritage, they should submit the Government’s defence programme to critical examination. If they decided that sufficient money had been provided for defence, they could seek to discover whether it was being expended wisely. That would be a legitimate basis on which to criticize the Government, although I, personally, do not consider that grounds for such an attack exist. In my opinion the Government has gone as far as it can go, in the time available, to place our defences in order. However, honorable members opposite have merely introduced into this debate piffling issues that are not likely to raise the status of the Labour party in the eyes of the public.
Whatever may be said in defence of the system of uniform income tax, it is a factor that is responsible for an increasing drain on the finances of the country. I admit that the way in which that system has developed is, to a large degree, unavoidable, as a result of the war-time conditions in which it was introduced, but the effect has been most unfortunate. Mr.
Colin Clark, M.A., made the following statement in a lecture that he deliveredon the subject, the “ Principles of Public Finance and Taxation “ : -
We require the responsibility of the Government to the people to be set out in Constitutional and legal form. Now, on its conduct on the levying and spending of money, as on all its other activities, a Government is judged by the electors in due course. The first principle of Public Finance is that a Govern ment will not undertake extravagant or irresponsible projects because it knows that it will have to pay for them by imposing taxation upon its own electors.
Mr. Clark considers that, according to such a test, we are suffering from a situation that is due to the system of uniform income tax. State governments are expending vast sums in the raising of which they have had no responsibility. I shall not labour that point, but I consider that one of the major factors that has led to extravagance in this country is that the Commonwealth, under the system of uniform income tax, is obliged to hand out huge sums to the States, which have none of the responsibility for raising them. Such a system undermines their whole financial independence. Perhaps the system of uniform assessments is inescapable and desirable. Mr. Colin Clark, whose ability will not be challenged by those who have any knowledge of this subject, considers that it is not impossible to devise an income tax assessment form on which would be stated the amounts that are due to the Commonwealth, a State and a local-governing body. By that means, the share of each of those three authorities would be pin-pointed and each would accept responsibility for the raising and expenditure of its portion. I know of no way in which responsibility can be imposed in any activity in rational civilized life unless a person who expends money is made responsible not only for the expenditure but also for the raising thereof. That principle, applies in a simple way to civil expenditure, and with much greater force to governmental expenditure. I believe that until the main responsibility for raising money is borne by those who expend it, this country will drift deeper into the financial morass and the Government will be obliged to impose additional taxation in an endeavour to extricate it.
Another factor that increases the drain upon our finances is the destruction, complete or almost so, of voluntary effort in the community. I was a member of the Legislative Assembly of New South Wales when a hospital benefits scheme that covered practically the whole of rural New South Wales was deliberately destroyed upon the introduction of the Commonwealth scheme. I protested in vain. That was a splendid scheme of self-help. It was extremely well organized and very economical in operation. The people were beginning to appreciate its advantages and to give their wholehearted support to it when, for the sake of obtaining a Commonwealth grant, the State Government ruthlessly destroyed it. All that remains of it to-day is the metropolitan section. The Government, realizing that the destruction of that section would cause it to become very unpopular, hastily dug up some flimsy excuse for retaining it and fortunately for New South Wales and also for the rest of Australia, because it affects a big proportion of our population, the section still operates. But the country section of the scheme was destroyed, notwithstanding its numerous benefits, and no attempt has been made since to resuscitate it. I believe that, as a result of the wisely conceived legislation that the Minister for Health (Sir Earle Page) . has introduced, that portion of the scheme will be re-established. Voluntary effort cannot be equalled by any paid service. The truth of that statement is exemplified by the work of those numerous individuals who, through churches and similar agencies, give service to the community without stint because of their beliefs. They seek no reward other than the joy that they experience as a result of giving service to their fellow men. The mistake that was made in New South Wales was repeated on a larger scale in Great Britain. When voluntary schemes are abandoned in favour of systems that must be financed bv governments, the result is a disastrous snowballing: of public expenditure.
I shall now refer to the bill in detail. It is a very technical measure, but it includes many worthy provisions. Two important objects are to assist and encourage the development of mining and to remove certain disabilities that hamper primary production. The relevant provisions will give effect to a policy that I advocated strongly earlier in the current session when I said that the Government should use taxation deliberately as an instrument of national policy to strengthen important industries which are tending to decline or which are not being developed quickly enough. “1 specifically mentioned primary production, mining, forestry and fisheries. Ali those industries are of basic importance to the national economy. The bill provides that expenditure of a capital nature incurred on necessary plant or the development of a mining property, or on housing or welfare in relation to mining operations, shall be allowed as a deduction in conformity with certain provisions that are embodied in proposed new section 122. The provision will also apply to mining operations in New Guinea that are conducted for the purpose of producing income that will be assessable for Australian income tax purposes. Section 123aa of the principal act authorizes a deduction in the year of expenditure of the cost of exploration and prospecting on mining tenures. The deduction is limited to the amount of mining profits derived by the taxpayer during that year. Section 23 (p) exempts income derived by a bona fide prospector from the sale of his rights to mine in a particular area for a prescribed metal or mineral. I believe that those provisions are extremely wise. However, more encouragement should be given by both State and Commonwealth authorities in the development of new mining ventures.
Many commodities other than coal and gold can be obtained by mining. One project in which I have taken an interest will, if successful, make it unnecessary for Australia to import bismuth at a cost of about £2,000,000 a year and will satisfy a. very important demand for a trace element with which to enrich many of our soils. I hope that, by means of this measure and future legislation of a similar character, the Government will be able to rectify the unfortunate lag in primary production. The granting of tax deductions for housing costs upon a suitable basis that would protect the Treasury would enable us to o vercome many of the difficulties associated with the establishment of immigrants in rural districts. I assisted the New South Wales Parliament to enact legislation that provided that SO per cent, of the cost of a house in the metropolitan area of that State should be allowed as a deduction for taxation purposes. The proportion was later increased to 90 per cent., and then to 100 per cent., and the Government guaranteed the financial liability of the householder with the institution that provided him with the money for the construction of li is house. However, that Government refused to extend such concessions to country districts. A primary producer with a taxable income of £4,000 who wishes to provide a house for an employee at a cost of £3,000, or a decent homestead for himself at a cost of £6,000, i3 placed in a difficult financial situation. He must resort to borrowing in order to provide himself with cash for his immediate needs. I am sure that the Treasurer, because of his knowledge of this subject, will take action, as soon as he is able to straighten out various difficulties that are involved, to provide tax relief for persons who wish to build houses for rural workers. I am pleased that steps have already been taken to rectify certain taxation anomalies that affect primary producers in other respects. These citizens should be helped by all available means to increase production for the benefit of the nation.
Members of the Opposition, in their youthful and other enthusiasms, would abolish all inheritances, or, at any rate, make death duties so severe that very little would be left for the beneficiaries of any estate. I issue a warning to them. Such a policy could have the most disastrous effect upon our economy. A successful sheep or cattle stud, for instance, cannot be established in a year. It must be developed over a life-time. Such a stud is of great value to the community because it makes possible the maintenance of high livestock standards. Excessive probate and death duties would cause the breaking up of first-class studs that can be developed only by the genius of good stock-masters. Very few stock-masters make a real success of their avocation and, if studs that had been painfully developed over many years were to be dissipated because of heavy death duties, the country would lose a great inheritance. That is also true of many other activities in the field of primary production. I am particularly interested in thisaspect of taxation because I have known many valuable properties to be divided and dispersed as a result of heavy taxation. I emphasize the fact that such estates are assets of the entire community, which will always be obliged tr> depend to an exceptional degree upon our primary industries. I pay a tributeto the Treasurer who, under extremely difficult conditions, has been able to provide for the needs of the community byplacing an effective brake upon inflation without allowing injustices to be perpetrated against individual sections of th, community.
I have a tremendous respect for the value of good books. The legislation of some States provides that gifts and bequests of books shall be exempt from taxes. Books are of the utmost value to the community. Many of us can bear witness to their usefulness in many forms of education. Libraries are repositories of all that has gone before in human progress. Nobody would think of starting with a spade to develop a highly complicated piece of modern farming machinery. The expert would begin with a modern implement and, ‘applying the knowledge that he had acquired, would seek to improve it. We have a heritage of literature upon which to draw for the future benefit of the nation.
– Order ! The honorable member’s time has expired.
– The honorable member for New England (Mr. Drummond) usually makes substantial and worthwhile contributions to debates in this House. However, on this occasion, like other members on the Government side of the chamber, he has made rather heavy weather of his attempts to justify the Government’s taxation policy. The decision to impose substantial tax increases on the community is completely at variance with the promises that were made on behalf of the present Government parties during the election campaign of 1949. Prior to- the 10th December, 1949, when the Chifley Government was in power, the present Treasurer (Sir Arthur Fadden) maintained a continuous1 attack upon the Chifley Government on the ground that it had refused to reduce taxes and to effect administrative economies. The present Government parties made to specific promise to the people that, if they were elected to power, they would reduce taxes and reduce the cost of administration. They were returned to power, and they faced another general election in April of this year at which they told the people that they stood by the promises that they had made at the 1949 general election - in other words, that they stood by their promise to reduce taxes. Instead of reducing taxes, however, the Government, under this measure, which provides for a substantial all-round increase of taxes, including an increase of 10 per cent, on individuals, does the very opposite.
The Treasurer also provides for high rates of company taxation and for modification of the averaging system which has applied to the incomes of primary producers. I was interested to note that the honorable member for New England in the early stages of his speech chided members of the Opposition for their attitude towards the proposed modification of the averaging system, but he did not at any stage of his speech say .that he supported the Government’s proposals in that respect; nor did he say that he was in favour of the modification of the system in the form proposed, or in favour of the modification being retrospective in effect. It is easy to understand why honorable members opposite gloss over the very uncomfortable fact that the Government is not merely modifying the system but also making it retrospective, thus adopting a principle of taxation that is utterly indefensible.
I am pleased that the Treasurer is now in the chamber, because I wish to direct his attention to another matter that was debated in relation to a previous tax measure. I refer to the policy that he, or the Government proposes to apply in connexion with company taxation. During the course of the last Parliament the Treasurer con tinually stated in this House that the Government proposed to introduce an excess profits tax in relation to the earnings of companies. When pressed by honorable members on this side of the House to be definite about the matter, he said that there was no need to worry about any delay in the introduction of such a provision, because when it was introduced it would have retrospective effect to the 1st July of last year. Although the Treasurer has not said so, .he has apparently accepted the recommendations of the Commonwealth Committee on Taxation which, whilst it advised against the levying of an excess profits tax, made certain alternative proposals, one of which was that companies should nav their taxes on the pay-as-you-earn system over a period of three years. I ask the Treasurer to tell the Parliament and the people, so that individuals concerned with companies will know what their future commitments will be, whether the Government has a policy on this matter of placing companies under the pay-as-you-earn system. This year, he is not merely taxing companies on their earnings for the year, but also requiring that they shall make an advance payment equal to 10 per cent, of the tax payable for the current year, which is to be credited against each company’s liability for the financial year 1952-53. I ask the Treasurer to inform the House whethethat 10 per cent, levy is intended to apply only to this year, or whether it will apply to next year and the following year. Will he also say whether the Government is taking this step as a preliminary part of a long-range project to put companies on the pay-as-you-earn system.
I pass now from consideration of the general issues involved in this legislation, to the actual provisions of the bill which, as the honorable member for New England has pointed out, is concerned mainly with mining companies. The projected amendments appear to introduce some important principles that go far beyond the subject of taxation of mining companies alone, and I think that they are worthy of examination by the House. It must come as a shock to many people to learn that gold-mining companies are exempt from income tax and social services contribution. I do not know why that state of affairs exists, and I should like to hear the Treasurer justify it. I am notsuggesting that this Government is responsible for the practice because it has been in existence for some time. Nevertheless, the Government is continuing the practice and, in this legislation, actually proposes to extend the concession. One of the provisions of the measure is that gold-mining companies will be allowed to sell gold in the premium markets overseas, where the prices are high, instead of selling it to the Commonwealth Bank at a fixed price. The extra income that they will derive from the sale of their gold overseas will be free of income tax and social services contribution. What is the Treasurer’3 justification of that state of affairs?
The honorable member for New England has pointed out, very rightly, that the Government can use tax policy deliberately to encourage certain vital activities in the community, such as primary production. That is a submission with which many honorable members will agree. But in relation to goldmining companies there is not merely a concession, but a complete exemption from taxes. I do not know whether that principle is a relic of the days when we were on the gold standard and gold was all-important. I consider that the only importance that gold now has to Australia is that it enables us to earn credits, including dollar credits, overseas. The man-power and equipment that are utilized in the winning of gold could be utilized in another manner which would be more beneficial to this country. At present it is used to dig gold from deep mines and to sell it to buyers, who dispose of it. Eventually it finds its way to America, which is the great creditor country, where it is buried at a fort, and an armed guard is set to protect it. That is all the use to which it is put, and it does not help us or the world in any way. I submit, as my personal point of view, that the time has arrived when the Government and the people might examine the position, and ask what justification there is for the unessential gold-mining industry being given such a high priority and ifr. W. if. Bourke. being granted this astounding concession of exemption from income tax and social services contribution.
The concessions that apply to the gold-mining industry are now to be extended - to some degree - not wholly, to the coal-mining industry. Surely it is rather strange that the coalmining industry, which is the very basis of our production, should not have been enjoying any of the concessions that have applied to the gold-mining and other mining industries. It appears from the report of the Commonwealth Committee on Taxation that the Joint Coal Board made strong representations to the committee for the grant to the coal-mining industry of the same concessions as had been granted to other mining industries, with the aim of encouraging developmental activity and of increasing the production of coal. I think that most honorable members on both sides of the House will agree that the coal-mining industry should receive concessions in relation to capital expenditure and equipment in common with other mining industries.
Another important and rather novel principle is that the mining industry is allowed to treat capital outlay on plant and development, as a tax deduction. This principle is now to be extended to housing and other welfare activities, not merely in relation to the coal-mining industry but also in relation to all mining industries. At first sight that would seem to be a very worthwhile and desirable development, and I gather that the Joint Coal Board was anxious that this concession should be made to the coal-mining industry. I should support, without hesitation, any proposal under which coal-mining companies would spend money on welfare activities, as long as those welfare activities were not to be of a profit-making nature. The provision means that money spent in mining areas on hospitals, medical and dental clinics, child welfare clinics, libraries, sports arenas and play centres shall be regarded as deductible expenses for taxation purposes. That provision will have the effect of encouraging mine-Owners to undertake activities in that desirable direction, which will be all to the good.
But in regard to housing there is a very novel departure from anything that has been done before, as far as I know. The coal-mining industry and other mining industries are now to be enabled to spend money on housing activities and to claim expenditure as a deductible item for tax purposes. The objection I take to that provision is that it will operate for the benefit of mineowners, but not for the benefit of the miners, who should really benefit from it. I do not think that we shall be comferring a great advantage on the miners by encouraging mine-owners to build houses which they will be able to let to miners and from which they will derive a profit. I ask honorable members opposite to examine their consciences in relation to thi3 matter, and to ask how it can be reconciled with their oft-repeated statements to the effect that homeownership should be as widely spread throughout the community as possible.
– Hear, hear!
– I appreciate the support given to that statement, because I believe that every family should be encouraged and assisted by the Government, in a much more liberal way than is the case at present, to own its own home. I do not exclude the miners, who also should own their own homes. Yet here we; find the Government, which claims that it believes in widespread home ownership, proposing to grant a substantial and novel concession to encourage mine-owners to build houses, which they will let to miners and so receive an income from their investment - an investment made possible by the expenditure of tax-free money. There is no justification whatever for such a provision. I should support a proposal that the mineowners be encouraged to assist, in every way possible the building of houses for sale on extended purchase terms to the miners. Every Id. of outlay by the mine-owners on that form of activity certainly should be made a deductible item for tax purposes. But they should not be encouraged to build houses to rent to miners. The encouragement should be the other way round, and should .be encouragement of the miners to own their homes. There is a need for home ownership among the miners, as well as throughout the rest of the community.
I am particularly indebted to the honorable member for Shortland (Mr. Griffiths) who is an expert on the subject of coal-mining, for having directed my attention to a section of the Joint Coal Board’s third annual report, in which it is stated that encouraging results have accrued from the active steps taken by the board to encourage home ownership. That whole development, a result of the conscious and deliberate policy of the board, is now to be retarded and even put into reverse by the retrograde step that the Government proposes to take under this legislation. As the annual report of the Joint Coal Board is perhaps not so widely read as it might be, the section deals with miners, co-operative building societies is worth quoting here. It reads - lt is generally accepted that home ownership gives a man a greater sense of pride, citizenship and responsibility. For this reason and with the object of improving the sub-standard conditions of housing in most coal-fields areas, the Board sponsored the formation of building societies under the scheme inaugurated by the New South Wales Government. Details of this scheme have been given in previous reports. After two years’ operation of these societies it is clear that they will prove to be one of the most satisfactory and popular projects sponsored by the Board. The number of houses built or building with the assistance of the societies was 401 at 30th June, 1950. This compares with the 112 houses built or building at 30th June, 1949, the first year of operation of the societies.
The board then stated that although the number of applicants for assistance under the scheme was not very considerable a lot more people would have availed themselves of the opportunity to own their own homes if the materials had been available to build them; the small number of persons who had taken advantage of the scheme was not a fair indication of its popularity.
I suggest to the Minister for the Interior (Mr. Kent Hughes) who knows quite a lot about housing that the Government should make taxation concessions which will encourage the miners to own their own homes rather than rent them. This legislation is designed to encourage mine-owners to build houses in order to let them to their employees. It seems to me to he unwise to encourage employers to own the houses in which their employees live. I know of an industry in Victoria the proprietors of which decided to build a number of houses for its employees, but did not allow them to occupy them as tenants. Under the landlord and tenant law in Victoria the tenant of a house has certain rights and can be evicted from it only under certain well-denned conditions. If those conditions are not complied with the tenant can enjoy security of tenure. Lawyers advised that the provisions of this statute could be evaded by arranging for the employees to take up residence in the houses as licensees instead of as tenants. As licensees they could be ejected without being given any notice and at the whim of the proprietors. In these days of housing shortage the fact that a man with a family lived in a house owned by his employer with that form of tenure would enable the employer to exert great pressure on him. That is not a proper state of affairs. I submit that these facts illustrate that there is a fundamental objection to the extension of the scheme that the Government proposes to foster under this legislation.
If the rather novel innovation in the bill which provides for taxation concessions to be granted in respect of money spent on housing for the benefit of the employees were modified to provide that the employees should purchase the houses rather than rent them I should like the scheme to be widely extended in the way suggested by the honorable member for New England. Such concessions could well be granted to a wide range of industries, including primary production, in order to encourage employers to provide homes for their employees. We have failed to solve the housing problem in this country. This is not a party matter, but a national matter and honorable members and the community generally have reason to be ashamed of the lack of progress in the provision of housing.
– Order ! The House is discussing a taxation bill.
– I am discussing the taxation bill insofar as it applies to housing. I am relating my remarks very definitely to the matter of taxation.
– But in what way?
– I propose to show you in a moment.
– The honorable gentleman has spoken on housing for quite a while and I consider that I have given him a lot of latitude. The bill is a taxation bill about which I think he showed, in the earlier part of his speech, that he knows a lot.
– It is a taxation bill, but this important part that I am discussing concerns taxation concessions in respect of money spent on houses.
– Which is the relevant clause ?
– Clause 122.
– There are only 40 clauses in the bill.
– I do not think that the Treasurer would disagree with me on this matter.
– It is not a matter of whether the Treasurer disagrees. It is a matter of whether I disagree.
– These are the amendments that were placed before the House yesterday.
– What is the number of the section to which the honorable member refers ?
– Section 122.
– Amendments are dealt with in committee. They are not a matter for discussion by the House.
– I thought that I was one of the first speakers who actually dealt with the subject in this debate.
– I agree. But, latterly, the honorable gentleman has left the subject. Unless he is discussing the depreciation of housing values he is on a different subject altogether.
– I rise to order. The honorable member for New England (Mr. Drummond) was permitted to discuss this matter at length and the honorable member for Eawkner (Mr. W. M. Bourke) wishes to reply to the remarks that he made.
– Any remarks in regard to the depreciation of house values are quite in order. But the question of whether the housing situation is satisfactory or not may not be debated in connexion with this bill.
– These amendments do not concern merely the subject of depreciation. The purpose of the amendment is to encourage people who are engaged in mining to build houses for their employees. I have pointed out th at there are some favorable aspects of this proposal but that there are also some pitfalls in it. I was replying to the honorable member for New England, who suggested that these taxation1 concessions should not be confined to the mining industry but should be extended to other industries. He instanced the case of the primary producing industries and I was proceeding to give other illustrations of spheres in which the housing problem could be tackled and alleviated by means of taxation concessions which would encourage big firms to provide housing for employees.
– Those remarks are quite in order. But the general housing situation may not be discussed.
– If big companies such as General Motors-Holden Proprietary Limited and the Broken Hill Proprietary Company Limited, which conduct their production activities on an efficient basis, were prepared to apply their organizational genius and engineering skill to the problem of providing houses for their employees it might be possible to make up the tremendous leeway in bousing. I suggest to the Treasurer that provided employees are enabled to purchase the houses, the concessions which the Government has proposed to grant to the mining industry in this respect should be extended to industry generally. Such concessions should be of a substantial nature, so as to encourage great corporations to provide houses for their employees. Those companies would bo able to apply the processes of the production line to housing construction and thus make a substantial contribution to the solution of this problem.
Another matter that comes to mind when considering the subject of taxation concessions is the amount that has been squandered by many firms on advertising. This expenditure is an allowable deduction for taxation purposes and many firms, instead of paying high taxes, spend a considerable amount unnecessarily on advertising. The fact that the expenditure reduces the country’s revenue suffers the greatest loss. The Treasurer could well consider the advisability of limiting the amount of advertising expenditure that may be claimed as an allowable deduction for taxation purposes. We have witnessed the ridiculous spectacle of big radio shows being conducted by people who are paid huge salaries-
-Order ! The honorable member’s time has expired.
.- 1 had hoped that when the honorable member for Fawkner (Mr. W. M. Bourke) rose to speak he would provide me with some ammunition. But, except for his opening remarks, I am afraid that I have to agree with what he said. There was a lot of meat in the honorable member’s speech, on which I congratulate him, because he dealt with a subject which interests me and of which the Government and the people of Australia should take more notice. However, other Opposition members, particularly the honorable member for Melbourne (Mr. Calwell), whose speech I heard even though I was outside the chamber, staggered me. I cannot understand how the Labour party can justify its criticism of increased taxation. One would imagine that it was pledged to a policy of low taxation. Honorable members opposite are trying to get the public to believe that it should strongly resent this increase of taxation, which the Government is obliged to make because of certain circumstances to which I shall refer later. They wish us to believe that the Labour party is leading public opinion in that regard and that a great body of public opinion objects strongly to the increase. Nothing could be further from the truth, and the height of hypocrisy is reached by any honorable member opposite who makes statements similar to those that were made by the honorable member for Melbourne to-day.
It seems to me that the Australian Labour party is abandoning all its old principles. It has always been a party that has carried out a policy of “ soak the rich and it has ignited and fanned the fire of class warfare in the community. The Australian Labour party’s taxation policy has always been a potent weapon in the carrying out of its general policy. One has only to refer to the imposition of taxation during the war, when the Labour party was in power, to establish the truth of that statement. When taxation needed to be increased because of the exigencies of war, it was made to bear so heavily on the people who had some capital assets, and on certain industries, that it was not possible to increase it any further. Had honorable members opposite had their way they, would never have reduced that high taxation. When they did eventually make some reduction of taxation the reduction was not in proportion to what had been imposed.
The Labour party is a high taxation party, and it ill becomes its members to advocate in this House that this Government’s taxation policy is wrong. When they do that, their attitude is completely inconsistent with the declared policy of their party. A Socialist policy demands that private industry shall be taxed out of existence. It is the purpose of the Socialists to tax industry until the Government becomes the owner of all the means of production, distribution and exchange. When that, to them, happy stage has been reached God help the people who live under their rule, because only then will taxpayers learn the degree to which they, as individuals, can be taxed.
The company and other taxation that will be imposed by this measure has very largely been made necessary by the huge, expensive, government edifice that was erected by the Australian Labour party during its last eight years of office. On every possible occasion that party has embarked on the establishment of huge government departments. Its policy, as recently debates have made clear, has been to have more and more, and bigger and bigger public departments, and thus to cause government expenditure to rise sharply. Therefore, when this Government assumed office in 1949 it had to set about unravelling this network of high government expenditure that had been woven about the people of Australia. I have every confidence in the common sense of the people, and I therefore know that they realize that this web cannot be unravelled in five minutes and that the position cannot be righted by a stroke of the pen, but must be done gradually. During the unravelling process we must do some very distateful and unpleasant things. We did not like discharging 10,000 public servants, but we must try to clear up the unholy mess into which the Australian Labour party got the country.
The Government parties are low tax parties, and the people know it. Honorable members opposite may rail at us, but the people of Australia are realizing more and more, as the days and the years pass, the reasons for what we are doing. They are now beginning to appreciate that they may trust us eventually to reduce taxation to the lowest possible level. They know also that we shall not. carry on a policy of continuously increasing government expenditure and of nourishing the government octopus that the Australian Labour party hatched and reared.
Opposition members interjecting,
– Order ! If honorable members on my left will not restrain themselves I shall have to take some action.
– Interjections from honorable members opposite do not worry me. The honorable member for Melbourne and other honorable members opposite have charged us with not having kept the promises that we made to the electors in 1949. They have said that we promised to reduce taxation but have not done so, and that therefore we have not kept our promises. Nothing could be further from the truth because last year, when our budget was before the Parliament, we provided for a considerable decrease of taxation. The Treasurer (Sir Arthur Fadden), and the Government generally, kept faith with the people on that occasion to the maximum of their ability to do so.
During the debate I have not heard one honorable member opposite make any statement in recognition of the international situation, which has changed considerably since they relinquished office. A major calamity has occurred to the people of the world since the end of 1949. That is the outbreak of the Korean war. Since that time the democracies have had to make hasty preparations for the protection of the freedom of all their peoples. We have heard nothing about all that from, honorable members opposite. The Korean war, as a part of a world challenge to democracy, is the fundamental reason why taxes have had to be increased. The Australian people realize that, even if the members of the Opposition try desperately not to see it. Can any honest, conscientious member of the Opposition deny that that is one of the major reasons for greater government expenditure at the present time ? If they do not admit it, their policy is completely consistent with the campaign that is now being waged in all the suburbs of Sydney, and, I believe, throughout the other cities of Australia, by the Communist party, which is objecting to the additional taxation imposed by this Government on the ground that a great part of the revenue raised in that way will be used to prepare for another war. This Government is not preparing for war for the purpose of making war, but because we are living in a world in which we must resolutely face up with the rest of the democracies to a force that is seeking to take away from us the dearest thing in our lives.
– Now tell us the story of Mickey and Minnie.
– Order ! The honorable member for Watson (Mr. Curtin) will restrain himself.
– The preparations for war now being made all over the world are the reason being made for world-wide inflation. Great Britain, the United States, Canada and the other democracies are caught up in an inflationary spiral at the present time because of the need for defence preparations. Australia proposes to expend, proportionately, very much less than will be expended by the other democracies. That is because Australia is a young country and must carry out great national developmental works in order to exploit its natural resources and increase its population. Australia at present is expending vast sums on these, national works, and at the same time is sharing fully with the other free nationsin the preparations for defence.
While preparing for war’ and develop ing our country we must attempt to control local inflation, or at any rate do our part to control world inflation. If we are to do that we must curb the spending of, the surplus money in the hands of the people. Our national income last year was £800,000,000, or 35 per cent, more than in the previous year. Notwithstanding this vast income, the income tax imposed on individual taxpayers has been increased by not more than 10 per cent. That is certainly not the terrible thing that the Leader of the Opposition (Dr. Evatt) and the honorable member for Melbourne would have us believe it is. The additional income tax will produce only another £25,000,000.
The Opposition has been pressing for the imposition of an excess profits tax. I remember clearly the frequency with which its members made a similar demand last year. The imposition of an additional tax of 2s. in the £1 on all profits over a certain sum will produce the same result as would the imposition of an excess profits tax. Honorable members opposite were very vociferous in their advocacy of such a tax last year, yet they now intend to vote against it. That tax will produce nearly £28,000,000. Despite the total increase it is still true to say that taxation is lower in Australia than in any other democratic country. Even our great need for money for developmental and defence work does not alter that position. Let me compare the income tax paid in the United Kingdom, New Zealand and Australia by a man who has an income of £1,000 a year. Doubtless honorable gentlemen opposite will agree that that is a very small income. They are in receipt of £1,500 a year, and I am certain that they would like to be paid more than that. A man with an income of £1,000 a year who has no dependents pays in income tax £283 8s. a year in the United Kingdom, £208 10s. a year in New Zealand, and only £148 10s. a year in Australia. Those figures take into account the recent reduction of income tax in New Zealand and the increase of rae tax in Australia. A man with an income of £1,000 a year, who has a dependent wife, pays in income “tax in the United Kingdom £245 8s. a year, in New Zealand £185 2s. 6d. a year and in Australia only £121 18s. a year. A man on that income, who has a wife and two children, pays in income tax in the United Kingdom £178 18s. a year, in New Zealand £163 2s. 6d. a year, and in Australia only £91 10s. a year. Those figures show that the Treasurer, in framing his taxation proposals, was fully aware of the need to protect and assist families. The accusation of the Opposition that income tax in thi3 country is now at an excessively high level is not borne out by the facts.
The right honorable gentleman has seen fit to make a number of taxation concessions that will be of great assistance to some sections of the community. This year, no tax will be levied upon servicemen’s pay. Doubtless honorable gentlemen opposite will agree that that is an excellent provision. It cannot be denied that, in the past, ago and invalid pensioners were not treated fairly.
– Do not tell us that.
– Remarks of that kind show the hypocrisy of the Opposition in relation to such matters. During the 1949 general election campaign, the Labour party advocated an increase by 10s. a week of age and invalid pensions, but when this Government increased pensions , by that sum, honorable gentlemen opposite said that the increase was not targe enough.
-Order! Age and invalid pensions are not covered by this measure.
– Age and invalid pensions are paid from revenue derived from taxes that will be levied under the terms of this bill.
– The bill deals not with expenditure but with taxes.
– I am dealing with concessions that the Treasurer has ‘been able to make only ‘because he expects to receive sufficient revenue to enable him to do so. Old married couples who are not in receipt of age pensions and whose joint income is £468 a year will now pay no income tax. That is an excellent pro vision. It is obvious that the Treasurer has given great consideration to the needs of various sections of the community. I do not suggest that there are not errors in and omissions from his proposals. We do not all see eye to eye upon such matters. There are certain things that I should have liked to be done, but I believe that, on the whole, the Treasurer’s taxation proposals are excellent.
The need for increased revenue is apparent. This year, payments to the States will be £38,000,000 greater than last year. Upon defence, an additional £34,000,000 will be expended. The payment of social services benefits thi3 year will entail an expenditure of over £23,000,000 more than last year. The payment of war pensions will co3t the Treasury this year an additional £6,000,000. Who will deny that it is necessary for the Treasurer to raise additional revenue by the imposition of increased taxes in order to meet those commitments? I repeat that the present level of taxation can be justified only if the Government adheres strictly to its policy of reducing the cost of government as far as possible. I am convinced that it will do so. We do not want high taxes in this country for any longer than is necessary. We hope sincerely that the war clouds will clear and that then, because a vast expenditure upon defence preparations will not be required, we shall be able to give to the people some relief in respect of taxes. The Treasurer’s taxation proposals are sufficiently elastic to allow adjustments to be made quickly.
I cannot understand why it has been considered necessary to impose upon property owners taxes that are not imposed upon other sections of the community. I realize that the Government, in doing that, has, as it’ were, followed tradition, but I cannot see the justice of it. No section of the community in this country to-day has been hit harder than have the property owners. The rents that they receive from their properties have been pegged much more effectively than have prices. Statistics show that rents, or the incomes of property owners, have increased but little, if at all, since 1939. Notwithstanding that, the Government has apparently come to the conclusion that it should, in accordance with custom, impose upon property owners additional taxes to which other sections of the community are not subjected. I do not blame the Treasurer for what lias been done, but I think the time has come when the Government should give some consideration to the principle in accordance with which ta_es are levied upon property owners, with the object of ensuring that justice shall be done. I hope that the Australian people are not coming to believe that property ownership should not be encouraged. I think it is fair to say that the property owners of this country are making a greater contribution than is any other section of the community to the maintenance of the standard of living in this country, hecause,, under the iniquitous laws of the States, they are compelled to make a gift to the people of millions of pounds each year.
I agree in general with what has been clone in connexion with depreciation allowances upon machinery, but I thinkthat an exception should have been made in the case of auxiliary power plants for the generation of electricity. In Sydney, and to a lesser degree in Melbourne, organizations have been encouraged by the State governments to install auxiliary power plants, not only to enable them to keep their factories in operation during electricity black-outs, but also for the purpose of feeding electricity into the general electricity system for the benefit of the people as a whole. Surely organizations that have made an effort to help the country by installing auxiliary power plants should be allowed to claim such depreciation in respect of that machinery as will enable them to write off the capital cost of the machinery by the time when it will be of no further use to them. I am not talking about machinery becoming obsolete or wearing out. It is safe to say that in three years, or at the most four years, adequate supplies of electricity will bc available in this country. Certainly that is true of Sydney. The auxiliary power plants to which I have referred will not be worn out by then, but so many plants of that type will be available then that they will be worth, as it were, two a penny. It will be impossible to sell them.
Therefore, the capital value of the machinery will have vanished. I urge the Treasurer to give consideration to placing machinery of that kind in a special category in regard to a depreciation allowance. I know how well organizations in Sydney responded to the call to assist the State Government by installing auxiliary power plant, at considerable expense to themselves. If those organizations have to rely upon ordinary depreciation allowances, they will be treated unfairly. I have no doubt that the Treasurer will give sympathetic consideration to my suggestions.
The Government’s taxation measures are not so dreadful as the Labour party has tried to make the Australian people believe that they are. The taxes that are now being imposed are not excessive. They are necessary for the welfare and security of this country. I believe that the people of Australia will, when they realize the true position, cheerfully accept the extra sacrifice that they are being asked to make. I am certain that tha. people are beginning to realize that the present rates of tax are necessary, ami that they can rely upon this Government to reduce them at the earliest possible date.
Silting suspended from 5.58 to S p.m.
.- Just prior to the suspension of the sitting, we heard the honorable member for Bennelong (Mr. Cramer), as, indeed, we had previously heard the Prime Minister (Mr. Menzies), the Treasurer (Sir Arthur Fadden) and most of the Govern.ment supporters who have spoken in relation to financial measures, endeavour to excuse the fact that such measures are in direct conflict with the promises that the Government ‘parties made at the last general election. Those honorable members said, in effect, “ You know there is a war on now, and, therefore, you cannot expect us to carry out promises that we made in 1949, and again in 1951 “. They invited the House to .believe that when they made those promises they did not know that the cold war was on. They now claim that the Government is justified in introducing this bill and kindred measures to impose heavy increases of taxes simply as a result of the war in Korea. I am sure that the Minister for the Interior (Mr. Kent Hughes), who appears to be about to interject, will not invite me to believe that the leaders of his party, when they made those promises in 1949, and again in 1951, had not heard of the Berlin airlift, that Czechoslovakia had fallen to the Communists, that fighting was taking place in Indo-China, that the Communists had gained control of China, and that bandits and Communists were busy in Malaya. Surely, supporters of the Government do not invite the House to believe that when they made their election promises, in flagrant breach of which these heavy increases of tax are being imposed, they did not know that the Soviet bloc had decided upon a plan of world conquest by either a cold, or a shooting, war. I refuse to believe that they were not aware of the position that existed at that time, or that the Prime Minister, when he promised that his Government would reduce taxes, did not realize the seriousness of the international situation. I should hesitate to believe that any honorible member opposite could claim for party political purposes - although some c>f them have done so - that when the Government parties made those promises they were not aware of the seriousness of the world situation.
– “Was the Labour party aware of it?
– I shall deal later with the position of the Labour party in that respect. To-day, Government supporters find that the realities of the situation do not permit them to carry out the promises that they made to the people at the last general election. In view of that fact, they stand convicted on either of two counts. If, when they made those promises, they sincerely believed that they could honour them, they stand convicted of having lacked completely knowledge of world affairs and of the consequential defence requirements of this country. Or, if they had such knowledge they stand convicted of having made those promises solely for the purpose of gaining control of the treasury bench, to the detriment of the morale and welfare of the nation. Is there any wonder, therefore, that since the budget was introduced the Gallup polls have shown that support for the Labour party has increased from 46 per cent, to 54 per cent, and that, if a general election were to be held to-morrow, La’bour would be swept into office?
– Order ! I ask the honorable member to deal with the subject of taxation.
– I propose to deal with that subject upon the basis on which supporters of the Government have discussed this measure. I agree with them that we must view taxation measures of the Government in the light of the expenditure that has been thrust upon us as a result of the cold war, and having regard to the world position and our consequential defence obligations. But if measures of this kind must be considered in that light, why has not the Government proceeded to honour the promise that the Prime Minister and the Treasurer have made time and time again that it would introduce an excess profits tax? I believe in facing up to realities. We must prepare our defences; and we must approach financial measures from that stand-point. As supporters of the Government accept that view, I cannot understand why, when it is prepared to conscript youths of eighteen years of age for essential military training and is anxious that the workers shall do their share in relation to defence in order that the nation may prepare to meet the eventuality that the cold war may develop into a shooting war, the Government is not prepared to conscript wealth and profits that are being made as a result of its expenditure on defence preparations. Why has not the Government been prepared to deal with warprofiteers as strongly as it has been prepared to deal with other sections of the community? Obviously, as the Treasurer himself has enunciated in several speeches, it should attack this problem by instituting an excess profits tax. The Treasurer’ now says that the Government has increased company taxation to 9s. in the £1. I point out that that tax really affects only companies that earn dividends of from, say, 5 per cent, to 10 per cent. It does not really hurt companies that are paying dividends of from 100 to 200 per cent. There are many such companies, and they are mainly engaged in the manufacture of defence materials. The Broken Hill South (Proprietary) Company Limited, which has a capital of only £800,000 but now has assets valued at over £8,000,000, paid a dividend in 1948-49 of 130 per cent. Last year, it paid a dividend of 120 per cent, and for the first half of the current year it has paid an interim dividend of 80 per cent., which would indicate that its final dividend for this year will be 160 per cent. The Government should introduce a measure very different from that which is now before the House in order to deal effectively with company profits of that magnitude.
– The Government has no courage in that respect.
– No. The United States of America is regarded as the best example of world capitalism, because companies in that country are supposed to be able practically to have their own way. On the 3rd January last, President Truman introduced a bill that was designed to raise three billion dollars from a tax on excess profits. I shall give details about that measure in the faint hope that the seed may fall on fertile soil in the Government parties and that, notwithstanding the attitude of the leaders of those parties, some backbenchers on the opposite side of the chamber may be impelled to ask the Government to do something along similar lines. It is useless for the Government to talk about national morale and to ask the workers and the small business man and farmer to make sacrifices in the critical position in which we find ourselves, if those persons read in the financial pages of the daily press that companies that are actively engaged in the production of defence materials are making profits of from 150 to 200 per cent. Under the American excess profits measure, tax on company profits was increased from 25 per cent, to 47 per cent, on the first 25,000 dollars of profit and a tax of 77 per cent, was levied on excess profits which were defined as earnings that exceeded 85 per cent, of the average profits for the three base years from 1946-47 to 1948-49, which were record trading year3. That tax was made retrospective to the 1st July, 1950, in order to catch persons and companies that took advantage of the panic buying after the war in Korea had got under way and had made excessive profits because they were able to corner the market, which had been upset as a result of the outbreak of that conflict. Under that measure, the American Government took 62 per cent, of company net earnings in ordinary corporation and excess profits taxes. If the United States of America could take such action, having regard to the position in which it found itself, why cannot this Government follow a similar course? It will not be said that the Government of the United States of America is Socialist, or leftist, in character. Indeed, it subscribes more fully to the theory of capitalism and free enterprise than does any other country. However, that Government found, as the Australian Government will find, that it could not expect the ordinary man in the street to pay his tax, to do his part in any defence effort and to be conscripted for military service unless it also dealt with excess profits of companies. Supporters of the Government have said that the increases of taxes are justified by the fact that we are engaged in a cold war that is likely at any time to develop into a shooting war. On that basis, the Government has failed the nation. It has not taken the necessary steps to ensure that nobody shall profit by reason of its defence preparations, or because of the nation’s necessity to obtain vital strategic materials. I hope that as a result of this debate, and also of the pronounced swing of public opinion in favour of the Labour party, the Government will examine its conscience in regard to this matter and that if it believes that we must organize our economy for a defensive war it will be prepared to conscript wealth as well as youth.
The second matter to which I wish to refer is the Government’s proposal in respect of gold. The Treasurer, in the memorandum that he circulated to honorable members, stated -
The -purpose of this bil] is to exempt, from tax income that is derived by Australian gold producers from the sale of gold on overseas markets for industrial purposes.
When I suggested, mildly, that the Government might, perhaps, explore the possibility of selling Australian meat and other primary products on the dollar market in order to earn additional returns for primary producers and to benefit the country generally, the Treasurer metaphorically waved the Union Jack and exclaimed, “ You want to cut the painter “. He employed similar language in an endeavour to smear the Labour party simply because I suggested that the Government should sell Australian meat and other primary products on world markets in order to ensure greater returns to Australian producers. Yet despite the charge of disloyalty that the Treasurer levelled at the Labour party when I made that suggestion, the Government now proposes not only to allow gold to be sold on the world market but also to exempt completely from tax additional profits that gold producers derive from such sales. He said that such action would provide an additional inducement to our gold producers. He conveniently forgets that the trade balance with Great Britain has never been so unfavorable since the end of the recent war as it is to-day. Therefore, it is strange, indeed, that the Treasurer should accuse persons of disloyalty because they suggest that Australian primary products should be sold on the world market.
– The Government is making an incentive payment to gold producers.
– Yes ; but in view of the profits that some companies are making, I wonder whether they require any incentive. For instance, the Bulolo Gold Company of New Guinea, which will benefit under the Government’s proposal, has made astronomical profits which it will increase by selling its gold on the world market. It will now receive a price of 50 dollars .an ounce compared with the Australian price of 30 dollars an ounce. That company recently paid a dividend of 50 per cent, to its shareholders. It is not possible to obtain .much information about that company, because it is registered in British Columbia, although a large number of its shareholders live in Australia. I invite members of the Australian Country party to state whether they consider that thu Government should give concessions of this kind that are not deductions, but complete tax exemptions on the extra income that those interests will receive from the sale of gold on the world market. Would it not be better to grant tax concessions to the producers of butter, meat, onions and potatoes? Can we wear gold, or eat it? Everybody knows that we cannot do so. The people who should receive the tax concession to be given under this bill are those who produce the first requisite for human life on this planet - food - and I invite the attention of the members of the Australian Country party, and of the “ ginger group “ in the Liberal party, who deal with rural problems, to this matter, because the concession will mean millions of pounds to the persons who will receive extra income from the sale of gold on the world market. The price of gold in Australia is equivalent to 30 dollars per fine oz., but those interests will receive approximately 50 dollars per fine oz. on the world market. Like the original 30 dollars per fine oz., that additional money will be completely free of tax. I hope that the Government will rectify that anomaly before this bill is passed by the Senate.
Mount Morgan Limited is another producer of gold, although it also produces copper and sulphur. Actually its output is approximately 45,000 fine oz. of gold and 3,000 tons of copper per annum, and it pays the “ mild “ dividend of 80 per cent. That company will benefit from the tax exemption on the additional money that it receives from the sale of its gold overseas. I again invite the attention of members of the Australian Country party to that concession, and suggest that if they have any influence with the Government-
– They have not.
– I doubt whether they have any influence with anybody. But if. by chance, they have any influence with the Government, they should demand that the bill be amended in the Senate in the manner that I have suggested. I realize that gold-mining is often a speculative enterprise, and that special provision must be made in cases in which the element of speculation exists; but no one can convince me that Mount
Morgan Limited, which pays a dividend of80 per cent., is a speculative enterprise that is entitled to this concession.
What will be the effect of this concession on Mount Morgan Limited? I have already stated that it produces not only goldbut also sulphur and copper. Honorable members are well aware that Australia is vitally in need of increased supplies of copper, and members of the, Australian Country party should know that it is desperately short of sulphur for the production of sulphuric acid, which is used in the manufacture of superphosphate. Yet this Government, which believes in the principle of incentive payments, is giving Mount Morgan Limited an incentive to produce gold as against copper and sulphur.
– That seems to be having an effect upon the honorable gentleman.
– The effect is to arouse me to a state of considerable indignation, which is shared by the people who are affected by the Government’s taxation proposals. The people have discovered that this Government is prepared, despite its pre-election promises, to increase the rates of income tax that are applicable to persons in receipt of small incomes, while granting tax exemption in respect of the earnings of a company that is paying : v dividend of80 per cent. The effect upon the majority of the Australian people will be translated into electoral language at the next general election.
Provision is also made in the bill whereby mining companies, particularly coal-mining companies, will be allowed to claim as a deduction for taxation purposes capital expenditure on equipment. Such a provision comes somewhat strangely cheek by jowl with the announcement by the Government of the intention to sell to private coal-mining companies the plantand equipment of the Joint Coal Board. So far as I am able to judge, private companies which buy plant and equipment from the Joint Coal Board will be able to claim tax concessions, so that in a few years they will have acquired it for practically nothing.
– Can the honorable member name any equipment that is common to the coal-mining industry and the goldmining industry?
– I do not understand what the honorable member for Forrest (Mr. Freeth) means. I am referring to the sale by the Government of equipment that is owned by the Joint Coal Board–
– Order ! The sale of coal-mining equipment is not mentioned in this bill.
-I submit that it is germane to the provision in the bill which provides that capital expenditure on coalmining plant shall be subject to the tax” deductions that are to be allowed in respect of other mining plant. That matter is specifically mentioned in the explanatory notes that have been issued by the Treasurer.
– That is quite so, and it is quite in order. But the honorable gentleman, when he attempts to discuss the sale of equipment by the Joint Coal Board, is out of order.
– I strongly object to the provision which, in effect, will make a gift of the Joint Coal Board’s equipment to the private coal-mining companies. The Treasurer has painstakingly attempted to justify the tax concession that is granted to coal-mine owners in respect of capital expenditure on plant. The right honorable gentleman has stated that those companies must be given an incentive to install modern plant and increase their efficiency. But I cannot help wondering why similar provision has not been made for the men who are employed in the coal-mining industry. After all, they have only one lot of machinery to wear out. They have only one pair of legs, one pair of lungs and one pair of hands, which are subject to depreciation.
– And each has only one life.
Government supporters interjecting..
– I expect my remarks to be greeted with laughter by Government supporters, because they are never prepared to do anything for the workers. They condemn the influence of communism in the coal mines–
– Order ! The House is not discussing communism, and I do not think that the honorable gentleman can logically class a human being with machinery.
– This bill deals, not only with tax concessions in respect of machinery, but also with the tax that is imposed upon the incomes of individuals. I suggest that the employees who wear themselves out by working overtime in industry in order to increase production, should receive special consideration in the form of tax concessions. If the principle under which the Government is granting concessions to wealthy companies is carried to its logical conclusion, how can the Treasurer refuse to grant concessions to the workers to whom I have referred? Obviously, a man who is prepared to work overtime digging potatoes or lifting onions on a farm is entitled to such a concession. I realize that the majority of members of the Australian Country party are not farmers, but they should know enough about conditions in the primary industries to agree that the producer, if he is prepared to perform extra work, which saps his bodily strength, is entitled to a tax concession. The Australian Country party should demand a concession from the Government for the section of the community that it claims to represent. Tax concessions should not be confined to wealthy mining companies and coal owners, but should be extended to the producers in the community - the people who do the real work. It is quite logical to apply the Government’s own principle in respect of expenditure On coal-mining plant to the man who assists to increase production by working overtime.
My last comment upon this bill is in relation to the provision under which money that is expended by mining companies on housing may be claimed as a deduction for the purposes of taxation. I am a little concerned at the willingness of the Government to allow coal-mining companies to claim that concession. I should like to be informed why it is not prepared to extend such a concession to the coal-miner who buys the house in which he lives. The Government grants a tax concession to a coal-mining company that provides a dwelling on the coalfields for a coal-miner. Therefore, I contend that a miner, who is prepared to buy a house for the accommodation of his family and himself, should receive a similar concession. The Government should be consistent in that respect, and extend that provision to the man who purchases a house. After all, a miner who owns a dwelling on the coal-fields is more likely to remain in that district than is a miner who lives in a cottage that he rents from a coal-mining company. At present, coal-mining companies, as a result of the shortage of labour on the coal-fields, are willing to provide accommodation for .their employees. But when conditions get a little tougher, as inevitably they will if this Government continues in office, the attitude of those companies will change. I, personally, do not relish the prospect of villages completely inhabited by miners who live in cottages that are owned by the coal-mining companies. Honorable members are doubtless aware of such establishments in the United States of America. The arrangement is most satisfactory when business is good, but when conditions become tough the first economies that are made are effected at the expense of the employees, who are dependent for their livelihood and their accommodation upon the coal owners. This bill should provide concessions for persons who show a spirit of independence, and build their own houses. I should like to see, not villages owned by the coal-mining companies, but a condition of affairs in which miners own their homes, and blocks of land, so that when conditions become tough, they can keep a cow and grow vegetables. Such a diversion would be a welcome break from the coal-mining atmosphere. It would give to a miner an opportunity to work in the fresh air, and to provide for his family fresh food as a result of his own efforts.
– The honorable gentleman should join the Australian Country party.
– Unfortunately, that kind of policy was abandoned by the Australia Country party years ago. The moment it came under the wing of the Liberal party, the Australian Country party forgot whatever principles it had.
– Order ! the Australian Country party is not subject to taxation, and is not mentioned in this bill.
– I offer that suggestion to the Government as one that embodies a constructive proposal. The Government is always complaining that the Opposition indulges in purely destructive criticism. I hope that a tax concession will be granted to the coal-miners in order that they may have an incentive to remain in the coal-mining industry. The Government, if it really believes that we are engaged in a cold war and that our financial policy must be designed to meet an emergency, should tax the excessive profits of companies to which I have referred. Let it tax the wealth as we’ll as the man-power of the community. Let it show the people that it is fully aware of the position. 1 hope, but am afraid that my hope will be in vain, that the Government will take heed of the constructive suggestions that I have submitted on this bill. The Government, instead of confining tax concessions to wealthy coal-mining and gold-mining companies, and to interests that should be described as war profiteers, should extend the concessions to the real producers in the community. I refer to the men, whether they be independent farmers, proprietors or employees, who produce the real wealth of Australia. If the Government adopts my recommendation, this bill may have some effect upon the inflationary conditions that now prevail. To date, its financial policy has had no effect in checking inflation. Unless the Government is prepared to amend this hill as I have suggested, it will have no beneficial effect upon the people.
.- I suppose that no legislation that comes before this House provides a greater scope for contentious debate than does one that deals with taxation, and this bill appears to be no exception to that rule. We have listened to the imaginative wanderings of members of the Opposition and have been amazed by the absolute lack of logic in the arguments that they have used. The honorable member for Melbourne (Mr. Calwell), for instance, urged that the utmost protection be accorded to the primary producers, who to-day are earning substantial incomes. Members of the Opposition generally have referred on many occasions recently to the fact that primary producers are in exceptionally prosperous circumstances. In direct contrast to the speech of the honorable member for Melbourne was that of the honorable member for Yarra (Mr. Keon), whose principal theme was based on an objection to high company profits and a complaint that the bill does not provide for an excess profits tax. I remind him and his colleagues that the proposal to levy tax on excess profits was referred by the Government to the special committee that it appointed to inquire into taxation problems generally. Many of the recommendations that were made by the committee have been embodied in the bill. Provision was not made for an excess profits tax because the committee did not recommend such a measure.
Members of the Opposition refer frequently to so-called excess company profits. I realize that some companies pay dividends at rates as high as 20 per cent., but the number is small. Occasionally a company may declare a dividend of over 100 per cent. The correct way in which to assess company profits is to relate dividends to the prices that are actually paid for shares by the public. If honorable members opposite will study a stock exchange list they will find that, on that basis, the actual return to shareholders varies from perhaps 3 per cent, to 5 or 6 per cent. Therefore, I consider that there is no real ground for serious complaint about company profits and distributions to shareholders. The attitude of honorable members opposite to company profits is also illogical on another ground. They continually argue that industrial workers should be paid higher wages. I remind them that the ,basic wage has increased by approximately 100 per cent, in recent years. Yet they persist in suggesting that retired persons who are dependent upon small incomes from investments, mainly in company shares, should be entitled to receive dividends only at the meagre rates that have prevailed for many years. If it be fair to increase wages by 100 per cent., it is not unreasonable to ask that dividends be increased similarly.
The honorable member for Melbourne did not make any original or constructive contribution to the debate this afternoon
Instead, he quoted statements by all sorts of persons in relation to the hill. Naturally, all sections of the community are inclined to be critical of any taxation measure, and especially one that provides for higher taxes. The honorable gentleman quoted a comment by a Mr. Cameron, of Queensland, who first referred to the sufferings of the graziers as a result of drought and fires and then went on to say that the Government was squeezing the life out of industry. It is regrettable that graziers in Queensland are suffering from drought and fires, but primary producers in other parts of Australia are in entirely different circumstances. The Government has the utmost sympathy for those who are experiencing hardship as a result of drought and fires, but it believes that the more fortunate majority of primary producers is under a considerable obligation to the remainder of the community. Graziers and. other producers who are receiving high incomes should be required ro bear at least the same measure of responsibility as is imposed on other sections of the people.
The honorable member for Melbourne quoted a statement by somebody whom he described as the president of the Taxpayers Association. I do not know whether it was the federal president or a State president; that is immaterial. The fact is that it is unreasonable to refer to such an authority for the sake of criticizing this bill. That official represents an organization that has only one view. It contends that taxation should never be increased and, when rates are reduced, it invariably claims that the reductions are inadequate. The association, unlike the Parliament and the Government, has no national responsibilities. Therefore, its opinions are narrow and have little regard for the national welfare. The position of the president of the Taxpayers Association is not dissimilar to that of a barrister who receives a brief and goes into court to do his utmost on behalf of his client in that he merely tries to do the best that he can for members of the association.
The honorable member for Melbourne also referred to the policy speech that was made by the present Prime Minister (Mr.
Menzies) in 1919. That speech referred to tax reductions. The honorable member has betrayed his complete inability to comprehend the problems that confront the Government to-day. He has ignored the necessity to prepare for war and to deal with the threat of inflation. The honorable member for Yarra said to-night that the world situation in 1949 did not justify the undertaking to reduce taxes that was then given by the present Prime Minister during thi; general election campaign. The truth is that conditions to-day are entirely different from those that prevailed in 1949, and that therefore the processes that must be adopted by the Government are entirely different from those that the people might reasonably have expected to be adopted when they elected the Liberal party and the Australian Country party to power. The Labour party should have regard for the basic principles that mu?’ be observed in order to solve the pro. lems with which the community is beset. Since 1949 it has ignored those vital principles. In fact, after having listened to numerous speeches by its representatives in this chamber during the last two years, I gravely doubt whether it has any principles in relation to any subject.
I shall refer now to details of the bill that we are considering. The rates of tax that will apply under it are set out in the first schedule to the introductory resolution, copies of which have been circulated to honorable members. The basic rates of tax on personal incomes will remain as they were for last year but there will be a 10 per cent, additional levy. I agree with the principle of maintaining the basic rate unchanged and increasing the charges on a percentage basis. Unfair discrimination often results from the use of a sliding scale. I remind honorable members of the Opposition that the sliding scale that was introduced by this Government last year was similar in most respects to the scale that was established by the former Labour Government. The schedule shows that the rate of tax on incomes of from £400 to £500 a year will be 32d. in the £1. The rate for incomes of from £l,SO0 to £2,000 a year will be 96d. in the £1, which is exactly three limes as much. The 10. per cent, levy will increase the charge on the lower scale of incomes by 3. 2d. and on the higher scale by 9.6d., which again is three times iis much. This method preserves the proportion of the differentiation in the basic scale. The honorable member for Melbourne suggested that, because there was no additional differentiation against higher incomes, taxpayers in the lower wage groups would not have any incentive to show initiative and enterprise. If a tax increase of 3.2d. in the £1 is going to discourage initiative and enterprise, how much more will an increase of 9.6d. in the £1 discourage them?
The rate of tax imposed on public companies will be increased to 9s. in the £1 overall. The basic rate is 7s. and the additional levy will he 2s. I believe that company director.; and shareholders generally consider this increase to be acceptable in the circumstances. Public companies also will be obliged to pay an amount of 1s. in the £1 in advance in respect of taxation for .1952-53. I do not think that this will occasion any considerable hardship. The basic rate payable by private companies will be 5s. in the £1 up to £5,000 and 7s. in the £1 above that amount. The perennial problem of adopting a fair policy in relation to tax on undistributed income arises again on this occasion. Directors of most private companies consider that they should be able to set aside from their profits reasonable sums to provide for extensions and additional capital. I accept the assurance of the Treasurer that the effect of the Government’s policy in relation to private companies will be to place them on a basis similar to that of [partnerships. Most private companies are neither more nor less than partnerships that have accepted limited liability under State company laws.
I recall the time when the size of the principal act was probably only one-sixth, of its present size. Much of thf> increase of volume has been caused by the addition of special provisions to cover loopholes that were . discovered by companies. We intend now to close up more of those loopholes. One of them is in relation to private companies which have been subdivided into two or three different companies . so that they may be able to reserve a greater amount of actual profit as capital. The second loophole is in relation to private companies that have obtained tax benefits that were available to public companies. Where the actual control of a private company is in the hands of a very few persons we have decided that the shareholding which indicates where that control lies shall be the deciding factor in the matter of whether it is a private company or a public company for the purposes of taxation.
Another provision which I consider will be welcomed by many people is that which relates to aged persons. A single woman of 60 years of age or a single man of 65 years of age will be permitted to receive tax-free an income of £234 a year. The exemption in the case of a married person who has to look after his or her mate will be £46S. I believe that this is a most desirable provision because women over 60 years of age and men ever 65 years of age are generally retired and are living on fixed incomes, such as superannuation and dividends from small investments.
I suppose the most contentious portion of the measure is that which relates to the averaging system. It will do no harm to restate briefly the exact position in relation to the averaging of incomes. Let us assume, first, that the income of primary producers is increasing, as it has been over the last few years. In the last year of a five-year period that income may have been, say £20,000, but the average income over the five years may have been only £12,000. The effect of the application of the averaging system is simply that the tax on the last year’s income, although paid on £20,000 is not. as it is in the case of taxpayers who are not primary producers, at the rate that applies to £20,000, but at the rate that applies to only £12,000. Honorable members will easily see that over the last few years, with the incomes of primary producers on the rise, they have benefited from the averaging system. Now let us take the reverse position which, I believe, will begin to operate from this year onward. With incomes decreasing the average over a period of five years may be greater than the income of the last year of the period. That will mean that the primary producer will have to pay on the low income of the last year of the period at the rate that applies to a high income. He will therefore find himself in a difficult position in endeavouring to meet his tax liabilities. As the Treasurer has. indicated, the averaging provision has existed in our tax laws for about 30 years. For the first sixteen years of that time it applied to all taxpayers, but from the 1st July, 1937, it was made to apply to primary producers only. This afternoon the honorable member for Melbourne said that it was included in the legislation to assist primary producers. The statements that I have made show that the honorable member was entirely wrong.
Is it reasonable that primary producers with incomes of more than £4,000, and average incomes of more than £4,000, who will benefit without the proposed alteration of the averaging system, should be protected to a greater degree than is the rest of the community? Let us examine the statistics in relation to incomes earned by different sections of the community. I should like honorable members opposite to take particular note of these figures, in view of statements that have been made, particularly by the honorable member for Melbourne. About 60,000 primary producers have an average income of £5,166. Three million taxpayers who are wage and salary earners have an average income of only £500. There are 450,000 taxpayers - business and professional people and small primary producers, such as poultry-farmers - whose average income is between £889 and £963. Do not these figures throw an interesting light on the peculiar attitude that was adopted by the honorable member for Melbourne this afternoon? He proposed to give the utmost possible protection to primary producers who, on those figures, have incomes in excess of £5,000. Yet members of the Labour party who sit with him endeavour to convince us and the people outside that they really represent the wage and salary earners. Is there any wonder that when more than 3,500,000 people have incomes of less than £1,000, trade unionists and wage and salary earners, on whose behalf no honorable member opposite has spoken during this debate, but whose interests have been championed only by this side of the House, this Government was returned to office in 1949 and again in April of this year ? I believe those people will a.gain return it to office at the next general election. If we analyse the figures in relation to the total amount of tax we shall find that the primary producer with a high average income is to be subsidized to the amount of 7s. in the £1 on his tax by the wage and salary earners and by business and professional people whose incomes are less than £1,000 a year. I suggest that the line of argument that was adopted by the honorable member for Melbourne shows up rather poorly in the light of those figures.
A matter which I believe is causing some concern relates to the tax concessions to sufferers from drought. A man told me recently that this measure would cause great embarrassment to sufferers from drought. He said that he had suffered a loss of as much as £80,000 in one year. I refer honorable members to section SO (2.) of the Income Tax Assessment Act, which deals with that matter. That section provides as follows : -
So much of the losses incurred by a. taxpayer in any of the seven years next preceding the year of income as has not been allowed as a deduction from his income of any of those years shall be allowable as a deduction . . .
That simply means that losses may be carried forward. I shall illustrate the possible effect of that provision. Let us assume that the actual loss in 1952 is £80,000. The taxable income for that year will be nil. In 1953 a profit of £30,000 is made, but for the purpose of assessing tax the loss incurred in the previous year is carried forward and the tax liability is still nil. The profit in 1954 is £25,000 but because there is still an excess of loss over income there is still no taxable income. In 1955 a profit of £20,000 is made and, because the profits of the three years have not absorbed the loss of £80,000, the taxable income will still be nil. Let us assume that in 1956 a profit of £20,000 is made. At the end of that period when the loss is subtracted from the profit, a net income of only £15,000 remains. The average net income over the five-year period would therefore be only £3,000 a year. The tax that the producer will be called upon to pay will not b’e at the rate applicable to £15,000. On £4,000 he will pay at the rate applicable to £3,000 and on the balance of £11,000 he will pay at the rate applicable to £15,000. So I submit that a primary producer in such a position will have received the same protection as any other business undertaking. 1 foresee one difficulty that will face the primary producer this year. He will receive an ordinary tax assessment based on last year’s income, plus a provisional assessment of tax. It is generally accepted that this year’s incomes of primary producers, particularly of wool-growers, will prove to be considerably less than last year’s. Because primary producers will receive an ordinary assessment, plus a provisional assessment, it is possible that their total tax liability will exceed the actual amount of their income in this current year. It is wrong that people should consider that they should pay tax on last year’s income out of this year’s income. I believe that taxpayers should accept a principle that was stated to me many years ago. It is, that a certain proportion of income does not belong to the person who earns it, but automatically belongs to the Government immediately it is received. So the high incomes of last year should be used to help to pay the high taxes of this year. I have had a good deal of experience with the Taxation Branch and I have always found it to be most sympathetic in cases of hardship, so I am sure that people who find themselves in difficulties because they receive high assessments in a year of low income will have no difficulty in arranging for time to pay.
I say in conclusion that I believe that the people of Australia have accepted the Government’s budgetary provisions, including increased taxes, in the spirit in which good Australians would be expected to accept them. Had it not been for the frustrating tactics that the Labour party has adopted for party political ends, and had that party been prepared to tell the people, as the Government has endeavoured to tell them, the truth about the causes of inflation, there would have been very little criticism from the community of the Government’s tax proposals.
.- I can assure the honorable member for Petrie (Mr. Hulme) that the Labour party does appreciate the causes of inflation and is doing its best to let the people know how inflation is operating, as well as to make it clear to them that the high taxes to be imposed by this legislation would not have been necessary had the Government taken steps to check the inflationary trend. When Opposition members point out the harshness and unfairness of the taxation proposals of which they are asked to approve they are not actuated by party political motives. They do so in order to acquaint the people with the tremendous responsibility that will be placed upon them and the necessity for them to safeguard their interests by ensuring that the government of the country shall be carried on in a proper manner.
Very interesting contributions have been made to this debate by the honorable member for Petrie and the honorable member for Bennelong (Mr. Cramer). Certain comments must be made on the statements of those honorable members, which are not in accordance with the generally accepted principles of taxation. Probably unintentionally, their statement of the effect of the taxation to be imposed by this measure was unfair. For instance, the honorable member for Petrie took exception to certain quotations that were made by the honorable member for Melbourne (Mr. Calwell) in regard to the impact of taxation. One can readily understand the feelings of the people on this subject when one considers that in the year 1950 taxation was increased by £110,000,000, and that it is proposed to increase it in 1951 by the enormous sum of £160,000,000. Honorable members have been asked to consider the imposition, by means of this legislation, of additional taxation amounting to £100,000,000 in the form of income tax to be imposed on wage and salary earners, primary producers, and public and private companies. It is proposed that the high mark of £741,000,000, raised by way of taxation in 1950. shall this year be raised to the higher mark of no less than £957,000,000.
It is quite understandable that all sections of the community, whether in high or low income-earning groups, are gravely concerned at the position that is arising and at the ever-increasing burden of taxation that they are being called upon to bear. The honorable member for Petrie described as fair the 10 per cent, additional tax which it is proposed shall be imposed on the incomes of salary and wage-earners and others. “With this statement other Opposition members and I disagree. The imposition of a- 10 per cent, increase on all income tax is not in accordance with the principles of taxation that are . accepted in most English-speaking countries. Honorable members on the Government side of the House, as well as Opposition members, have always advanced the view that taxation should fall most heavily on those who are best able to bear it. Although the amount of tax payable by those in the low income group may be regarded as small, a 10 per cent, increase will impose a much greater burden on them than on those whose high incomes are much in excess of their personal needs. Those people in the low income groups who will have to pay the additional 10 per cent, will also have to meet very heavy increases of sales tax on articles in everyday use which are not included in the basic wage regimen. Consequently, one can understand that the impact of increased indirect taxation plus the 10 per cent, increase of direct taxation will impose on them a burden that is unfair and unjust.
The honorable member for Bennelong raised a number of matters. He suggested that the increase in relation to company taxation is in the nature of an excess profits tax. If the honorable member would give a little further consideration to the matter I believe that he would modify that statement. Again, in the case of company taxation, we find that it matters not whether a company earns a small profit or an exceedingly large profit which is considerably in excess of what might be regarded as normal earnings; the amount of tax proposed is the same in both instances. The honorable member for Yarra (Mr. Keon) named companies that have made abnormally large profits. When, as a consequence of the conditions that are operating in the community, a particular group is enabled to earn profits considerably in excess of those derived by others who are supplying the ordinary needs of the country, the community should be entitled to take a big proportion of those profits into governmental revenue in order to assist the nation during a trying period. It is neither fair nor logical to claim that the increased rate of company taxation is in the nature of an excess profits tax.
Another point was raised by the honorable member for Bennelong and other honorable members opposite upon which some comments should be made. When the Treasurer (Sir Arthur Fadden) made his second-reading speech he circulated among, honorable members two statements - “ A comparison of United Kingdom, New Zealand and Australian Taxes upon Income from Personal Exertion “, and “ A Statement of Income Tax and Social Services Contributions “. These documents have been cited with a great deal of satisfaction by Government members as indicating that taxation is levied at a much lower rate in this country than in New Zealand or the United Kingdom. If one examines the statement headed, “ A Comparison of United Kingdom, New Zealand and Australian Taxes upon Income from Personal Exertion “ one will observe that monetary figures are compared without taking into consideration the different conditions which operate in the countries concerned.
– The figures are relative.
– They are not relative. They have been stated on the assumption that the income of similar classes of people in the United Kingdom and New Zealand are exactly the same and that a given amount has the same purchasing power in the two countries. In order to help the honorable member for Bennelong - who, I believe, desires to understand the Opposition’s point of view - I point out that the figures in relation towages paid in Australia are much higher than the figures in relation to wages paid for corresponding work in Great Britain. For instance, the basic wage in Australia is £10 a week. The average rate of pay for skilled tradesmen in Great Britain, excluding overtime, is between £6 and £6 10s. a week. In the statement, persons who receive .between £6 and £6 10s. a week in New Zealand and whose cost of living corresponds to those figures are compared with persons in Australia who receive the same amount in Australian currency, which has a lower purchasing power than has New Zealand currency. In order to make a proper comparison it would be necessary to compare the £300 to £450 income group in New Zealand with the £400 to £600 income group in Australia. Then one could observe the relative positions of those income groups in each country. Secondly, I point out to the honorable member for Bennelong that the statement assumes that the only tax payable in. Australia is income tax. Yet sales tax has been increased during the last twelve months by no less than £66,000,000.
– And what is the purchase tax in England ?
– The purchase tax in England is not nearly so severe as is the sales tax in Australia.
– The rate of purchase tax in England is 100 per cent.
– It is not. I disagree entirely with the statement of the honorable member. Excise in respect of certain commodities such as wines, spirits and tobacco may be more severe in England than in Australia, but the people of England do not pay nearly so much in purchase tax as the people of Australia pay in sales tax. Because the Governments of the United Kingdom and New Zealand do not receive as much revenue from sales tax as does the Government of Australia, that Government should be able to impose a lower rate of income tax than is imposed by the governments of those two countries. It will be found that, after taking into consideration the dual taxation which is in operation in Australia, the people of this country are in a much worse position from a taxation stand-point than are the people of New Zealand or the United Kingdom. Government supporters have simply taken certain figures, put them next to others and contended that Australians are paying very little in taxation. They have endeavoured to establish a fine reputation for themselves in that way. They have forgotten entirely that since the present Government came to office it has in- creased taxation by £107,000,000 in one year and now proposes to increase it by a further £160,000,000, and thereby reach the high level of no less than £957,000,000. If Government supporters regard such a proposal as implementation of a policy of low taxation then their idea of what is low taxation is extraordinary indeed. The fact is that Australians are rapidly becoming one of the most highly taxed peoples in the world, and this measure will aggravate their position still further.
I shall now deal with the averaging system, which was mentioned by the honorable member for Petrie. I believe that in departing from the system of averaging primary producers’ incomes, although the departure might affect only those with incomes greater than a. certain sum, the Government is embarking upon a very dangerous course of action. It may be said that at present we are not living under normal conditions. It is quite true that our primary producers have been receiving recently very good incomes, but they have come in the nature of a bolt from the blue. They were never expected, but have been very thankfully received. It is very dangerous for the Government to decide to reverse a taxation procedure that was adopted many years ago after very careful inquiry, merely because of those abnormally high incomes. At a time when incomes and conditions generally are abnormal the alteration of taxation procedures is fraught with peril. “When the averaging system was pui into operation it was pointed put that primary producers were subject to conditions that did not normally apply to other sections of the community. Foi instance, persons engaged in manufacturing, mining, transport or commerce, were not subject to the same degree as were the primary producers to certain natural hazards over which they had no control, such as the incidence of fires, floods and droughts. Those natural risks and the impact of world prices on primary products in any year could so affect the farmers that their incomes would be either very good or extremely bad. The best illustration that could be given of that fact is the manner in which prices of primary products varied between 1929 and 1940. There is no need for me to tell honorable members of the very perilous position into which the primary industries of this country fell between 1929 and 1940, because the nature of the general economic conditions of that period is well known to all. When a country is producing more primary products that it can consume it must find an outlet for them on the world’s markets. If those markets should collapse, in spite of hard work and considerable capital expenditure the return to primary producers could be very low.
The whole principle of averaging was designed to take into consideration the abnormal conditions which prevail in the primary industries and which are not applicable to the rest of the community. Averaging of incomes was instituted to enable the primary producers to .pay only their fair share of taxation without being driven off the land. It may be a good thing to drop the averaging system in respect of some people. That is a matter that could be debated. However, the objectionable aspect of this measure, and the one that must receive most careful consideration from the Government, is that once the proposed change is made it is irrevocable. The primary .producers cannot go back to the averaging system if once again the conditions should prevail that prevailed between 1901 and 1914 and again between 1.929 and 194.0. It may be that what is proposed to be done will cause a falling off of primary production and very great hardship among farmers, and will be bitterly regretted in the future by the Government itself. If this were being done for a trial .period I could understand it, but the Government intends to make a change for all time; and 1 believe that it will do a great injustice to a very important section of the community.
There are two other matters to which I wish to direct the attention of the House. The first concerns the taxation proposed to be imposed upon private companies. The la w is to be tightened up to protect the community against all sorts of devious ways of overcoming the taxation laws. In so far as the law must be strengthened to prevent people from evading their responsiblities, I agree with what is to be done. But there are certain ways that should be pointed out in which the impact of the law on some private companies will frustrate the national policy of endeavouring to. increase production and decentralize our industries. I am principally concerned about the effiect on private companies of the statutory retention reserve. In mi own electorate there are some small private companies that are performing excellent work by producing goods that are in keen demand.
In one of the cities in my electorate there is such a company engaged in making doors, window frames and sashes, built-in furniture and other things required in the construction of houses. This firm is also engaged in the production of prefabricated houses. The company is not big, and it is not overcapitalized. At the present time it is experiencing many difficulties. It is suffering from a shortage of raw materials, a shortage of labour, high replacement costs and the general restriction of credit. The result of all that is that this company, and other companies like it, have become hard pressed to find the necessary money to carry on their operations. They are unable to put back their profits into the business to the extent that they would like, in order to expand and to purchase raw materials. That is because the existing law provides for a statutory retention reserve and because the undistributed profits that can be retained in the business are specified in the schedule to the Income Tax and Social Services Contribution Assessment Act. This bill provides that the retention allowance shall now be the aggregate of 50 per cent, of the first £1,000, 40 per cent, of the next £1,000 and so on, plus 10 per cent, of the reduced distributable income over £10,000.
Unless relief is given to small companies of this nature, they will find it impossible to carry on their manufacturing, to replace raw material and to get the financial assistance they need to produce their goods. They cannot get financial assistance or new plant to overcome their man-power shortage, and a lot of the small private companies have been placed in a difficult position. The Government should give consideration to an amendment of the statutory retention reserve provision so that in certain cases the additional profits may be used to enable the companies to get results which will benefit themselves, increase production a nd help to decentralize industry.
The second matter that I desire to mention has reference to the taxation imposed on associations that may be regarded as charitable organizations, which I believe to be unfair. The existing legislation exempts certain societies from the provisions of the Income Tax and Social Services ‘Contribution Assessment Act. In the main, the exemptions operate in respect of wholly charitable societies or institutions, trade unions, friendly societies, societies whose dominant and main objective is the furtherance of the arts, music, science and literature, and similar bodies. A number of clubs and institutions at present operate on a non-profit basis. They operate in a community sense and become a community means of giving charitable assistance. They are wholly outside the exemptions specified in the act. Recently an organization which 1 believe you will agree is very important, Mr. Speaker, the Maryborough Highland Society, brought under my notice the fact that, although all the profits that it had received from carnivals had been distributed to charitable organisations, it found itself subject to taxation on its net proceeds. On New Year’s Day the organization holds a very big carnival in Maryborough. After deducting expenses - and very little is paid by way of salaries or wages - the balance is distributed to hospitals and other worthy bodies. This club recently received from the Taxation Branch a bill for £700, which was said to be the tax on the profits from carnivals for the last four years. The whole of the proceeds from its voluntary efforts had already been distributed, and although it has been in operation for about 90 years, its liquid assets total only £350. That is an indication of how rapidly its profits are distributed.
I suggest to the Minister for Social Services (Mr. Townley), who is now at the table, that such a case should be investigated. The hardship provisions of the act might be put into operation and this club might be given credit for the work that it has done by not having to pay such heavy taxation. I hope also that the other matters that I have raised will receive the attention of the Government, because I think that it is most desirable that when heavy taxation is being imposed every effort should be made to ensure that hardship, injustice and unfairness shall not operate in the collection of it. [Quorum formed.]
.- Members of the Opposition have advanced conflicting arguments. Some of them have urged that more money be expended upon concessions to an increasing number of people, and others have stated that taxes are too high. The Opposition cannot have it both ways. Honorable gentlemen opposite have criticized the Treasurer (Sir Arthur Fadden) for having budgeted for a surplus of approximately £114,000,000. The right honorable gentleman has said on many occasions, but his words do not appear to have sunk into the minds of members of the Opposition, that a part of the surplus will be used to supplement Commonwealth and State loans for public works. We are living in very troubled times. I believe that the Treasurer has acted correctly in having budgeted for a surplus as a part of the surplus will be available for use in . an emergency should one arise at any time. Honorable gentlemen opposite are at cross purposes with themselves. I suggest to them that they confer together and decide what their policy shall be.
When the honorable member for Melbourne (Mr. Calwell), who is one of the foremost men in the ranks of the Labour party, spoke upon this measure, he abandoned logic for entertainment and the applause of his followers, for which he waited. He abandoned fact for the spectacular. I listened to the honorable gentleman talking about what he described as heavy increases of taxes, and afterwards I heard the honorable member for Yarra (Mr. Keon) repeat, parrotlike, the cry that the Government is imposing heavy increases of taxes, irrespective of the earnings of the taxpayer. The honorable member for Melbourne, in support of his contention that taxes are too high, cited the cases of G. J. Coles and Company Limited, David Jones Limited, and other big companies. The honorable member for Yarra said that those companies should pay more iu taxes than they are paying now. The average person in the community is at a loss to know what the Labour party desires. He does not know whether it desires that the taxes paid by big companies shall be decreased, as the honorable member for Melbourne appeared to suggest, or increased, as the honorable member for Yarra suggested.
The attitude of the Opposition to this bill is very confusing. I venture to 3ay that no other bill that has been discussed in this chamber has given rise to so much confusion in the minds of the public as has this one. Only last week 1 travelled in a train.
Opposition members interjecting,
– I travel in trains very often. When I was travelling in a train last week, a man said to me that the budget was terrible for the primary producers. I asked him to state his reasons, and he replied that the budget would hit the primary producers very hard. I asked him to tell me the source of his information, and he <aid that it was the head-lines in the newspapers. When I asked him to say what he objected to in the budget as not being fair and reasonable, he replied that he could not say precisely what he objected to; but, according to the newspaper head-lines, the primary producers would lie hit heavily.
– I bet that the honorable gentleman did not say that he was a member of the Australian Country party.
– The man to whom I have referred has been a ‘personal friend of mine for many years. It was not necessary to tell him that I am a member of the Australian Country party, but it was necessary to inform him of the budget proposals and of the objectives that they are designed to achieve.
When I had done so, he said that the position had been misrepresented to him. At my request, the editor of the Countryman printed a statement to the effect that I was aware that people in my electorate were being wrongly informed about the nature of the budget and that I had requested that meetings be held in order that I might explain the true position. In this Parliament and elsewhere, the Labour ‘party has tried to confuse the issue, just as it did in relation to the wool sales deduction, which was so beneficial to one or two honorable gentlemen opposite who have returned to this House after having been defeated at the 194’9 general election.
I have a statement in which the increases of taxes for which this bill makes provision are tabulated. There are very few people in fulltime employment in Australia to-day who are earning only £350 a year, but that is the point at which the table begins. The tax payable at the present time upon an annual income of £350 is I63. a year, and under the new proposal it will be 18s. a year. There will be a tremendous increase of 2s. a year. The tax payable u’pon an annual income of £500 is £8 14s. a year at the present rates, and under the new proposal it will be £9 lis. a year. There will be an increase of 17 s. a year. If the increase were 17s. a week, there might be some validity in the arguments that have been advanced by honorable members opposite, but the increase will be only 17s. a year. The income tax payable by a man who earns £600 a year will beincreased by £1 1Ss. a year. He will pay £20 14s. a year in income tax, and will be left with £579 6s. of his salary. The income tax payable by a man who earns £1,000 a year will be increased by £8 6s.. and he will have left to him £908 10s. A man with an income of £4,000 a year will pay this year in income tax £133 lis. more than he paid last year, and he will be left with £2,530 14s. of his income.
Every honorable member would like taxes to be reduced. I do not favour high taxes, because I do not believe that they are in the best interests of this country. But neither do I believe that being unprepared for war is in the best interests of this country. Circumstances often dictate action. The honorable member for Melbourne said, with a spectacular wave of his hand, that if the Labour party were in power now it would still be reducing taxes. If it were doing that, it would not be preparing this country for war. The honorable member for Yarra spoke disparagingly of the Government’s scheme under which young men are required to undergo military training. With one or two exceptions, there has been in the speeches delivered by honorable members opposite an undercurrent, the implication of which is that, in their opinion, young Australians should not be compelled to undergo military training and that the ti 82,000,000 that this Government is raising by taxation for expenditure upon defence will be an entire loss. If ev:ry.body in this country subscribed to that view, there would be no insurance policies in force; yet money expended upon insurance premiums cannot be regarded as having been lost if the motor car that is insured is not stolen or the house that is insured is not destroyed by fire. Expenditure upon defence preparations is fin insurance of the security of this country in the event of war, which may occur at any time. Let us hope that it will not occur. If it does not, let us be thankful that at this stage in our history we were able to raise the money that made it possible for us to prepare, at any rate to a certain degree, to fight a potential enemy and to put on a bold front. Peace can be maintained only if the democracies prepare for war. Let us thank God for the fact that we have had bountiful seasons and “have been able to raise money for expenditure upon objectives that are vital to the preservation of the security of this nation and of civilization generally
The honorable member for Melbourne said that the Labour Government left a sound economy and left money in the coffers of the Treasury. What the people are thankful for is that the Labour party left the treasury bench. The Labour Government was supposed to have left enough money in the coffers of the Treasury to pay the war gratuity, but every body knows the actual position. The economy that the Government left had been riddled with socialism for eight years. Young men in this country were led to believe that the Government would look after them from the cradle to the grave. As a result, we cannot exert the effort that we could exert in more virile days. The honorable member for Melbourne cited the president of the Australian Taxpayers Association in support of his case that taxes are too high. He said that that gentleman is not a Labour supporter. The president of the Australian Taxpayers Association, no doubt, is eager that the taxation system of this country shall be a fair one. If he believed that the Labour party would be fair in its taxation measures, doubtless he would be a Labour supporter, but the honorable member for Melbourne, knowing that the Labour party has never taxed the people of this country fairly, realized that he would not be a Labour supporter under any circumstances.
The budget has been criticized because it is designed to raise £1,000,000,000 as revenue. When honorable gentlemen opposite talk about increases of pensions, they say that £1 is now worth only 5s. If that argument were used in relation to the budget, we should talk about not £1,000,000,000 but £250,000,000. Members of the Opposition, when it suits them to do so, say that the value of the £1 has decreased considerably, but when they criticize the Government’s taxation proposals they conveniently forget what they have said on those occasions. Their attitude is illogical. I am certain that they have caused more confusion in the public mind in relation to this bill than in relation to any other measure.
Inflation in world wide. I noticed that the honorable member for Yarra (Mr. Keon) took from old newspapers most of the quotations that he made. He produced his scrap book, which he called his dossier. I shall depart from my usual practice and, on this occasion, I too she quote from a newspaper.
– Of what date?
– It is the Melbourne Herald of to-day’s date. I refer to an article that was written by that newspaper’s New York correspondent, Don Iddons. The article reads -
While I have been away with the Royal tour everything here - prices, taxis, rents, fares mid blood pressure - has gone up. I slipped the colored porter at the Grand Central Station one dollar (8s. lid.) for carrying my four bags.
He said, “ That’s not enough, Mistah ; it’s 25 cents for each bag now and then there’s my tip “.
So it cost me lis. 6d. to get my luggage carried. In future I travel light and carry my own.
I crossed the picket line despite hoots and hisses to get a haircut. Price was one dollar, 25 cents - another lis. Cd. - and the barber told me the plan was to raise the price to two dollars for once over lightly and not too much off the back.
That is the way events are tending in the United States of America. The article continues -
Reuben Maury, editorial writer of the New Yorker Daily News, America’s largest newspaper, thinks it is going to end in a bust, in a crash and in a sickening toboggan slide.
What goes up must come down, and believe me, what a fall there could be.
The point is, how and when?
Your guess is as good as any American’s. The window cleaner knows as much about that ns the Secretary of the Treasury.
Yet, the honorable member for Bendigo (Mr. Clarey) has just told the House that if the Government had done certain things that he could have advised it to do, Australia would not now be experiencing inflationary conditions. I point out to him that although the former Socialist Government of the United Kingdom instituted all sorts of controls and red tape, as the Labour party would do in this country if it were given the opportunity to do so, inflation is on the run in Great Britain. I do not blame the “Government of the United Kingdom for that state of affairs. I do not believe that any individual can evolve a solution of the present inflationary problem. Indeed, any individual who could do so, would, regardless of his party political affiliations, immediately win world renown. However, some problems that we2-e of equal gravity have been solved by simple means. I believe that the honorable member for Yarra nearly stumbled upon a solution of inflation when he suggested that the Govern- ment should make concessions to those in the community who work the longest hours. More workers should be called upon to work for longer periods than they work to-day. If that were done the Government would be enabled to defeat inflation. However, whilst the honorable member practically advocated that the Government should make concessions to every one in the community, he implied that no individual should be obliged to make concessions in the interests of the nation. Inflation is forcing up costs, and we shall not arrest it until we increase production.
Members of the Opposition have spoken about many things that Labour would do if it were in office and have said that, at the same time, it would reduce taxes and enable national production to be increased. Could any one imagine that if Labour had been in office during the last two years it would have increased the pension payable to totally and permanently incapacitated service pensioners by £3 9s. a week as the present Government has done?
– Order ! The honorable member must confine his remarks to the bill before the Chair.
– I shall now refer to the modification of the averaging system. No honorable member can effectively represent primary producers - I represent a great number of them - unless he gives just consideration to the requirements of other sections of the community. Last year, the primary producers enjoyed an exceptionally good season and received high world price? for their exports. Under the Government’s proposal, a primary producer whose taxable income exceeds £4,000 n year and whose average income over 5 years exceeds that amount will automatically cease to be treated under the averaging system. I should like to have seen the system continued for current financial year and eliminated next financial year. However, even members of the Australian Country party, who fight incesantly in the interests of primary producers, could not very well put forward such a proposition. About 78 per cent, of primary producers will not be affected in any way whatever by the modification of the averaging system. That proposal will affect only those in the higher ranges of income. It is strange that on this occasion members of the Labour party, for party political purposes, should defend those producers. Whilst I believe that the abolition of the averaging system will affect some primary producers rather harshly in respect of the tax that they will be called upon to pay in this financial year, they will, during the following four years, actually benefit under this proposal. That system is of advantage to them only when prices are rising. After prices reach their peak and begin to fall, the producer loses that advantage. Producers in my electorate are now enjoying their sixth successive good season and prices are still high. Many of them whose average taxable income is less than £4,000 a year have stated to me that they will take advantage of the Government’s proposal and will withdraw from the averaging system. I have advised such persons to examine closely their financial position before they actually take such a step.
Members of the Opposition have claimed that producers generally will be obliged to pay a tremendous amount in tax during the coming financial year. Much of that tax will be provisional tax the payment of which is not in any way related to the budget proposals. The fact that one may disagree with the system of provisional tax is quite different. Provisional tax would have had to be paid regardless of what government happened to be in office. The rate of provisional tax for primary producers will decrease only when prices fall or as a result of bad seasons. However, I do not think that any man on the land would like to have had a bad season last year merely in order that his provisional tax for the current financial year would be reduced. Furthermore, before producers will be called upon to pay provisional tax and normal tax this year, they will have received their wool cheque, the first payment of 7s. lOd. a bushel on wheat; an early second payment to bring the amount up to the full cost of production; payment of an increase based on the difference between the homeconsumption price and the International Wheat Agreement price for feed wheat, and repayment of contributions they have made to the No. 12 pool. Thus many producers, after having paid their provisional tax this year, may find that such payment is sufficient to meet their tax liabilities in respect of the following year or two. Eventually, they must come out on top as far as this legislation is concerned because,, as a result of the Government’s policy,. the purchasing power of the £1 should be much greater a few years hence than it is to-day.
Members of the Opposition have had a lot to say about the failure of the Government to reduce taxes and put value back into the £1. As I have said on previous occasions in this chamber, one cannot expect a boxer to win a fight in the first round. The Governmenthas been in office for only two years.. and during the life of the Nineteenth Parliament its legislative efforts were frustrated by a hostile majority in. the Senate. Yet, already, production is beginning to increase in the coalmining industry and in other basicindustries. The Government will be enabled to reduce taxes as economic conditions return to normal and as the purchasing power of the £1 increases correspondingly. I firmly believe that before the next general election comes round the Government will havereduced taxes substantially. Whilst it must make provision this year for an expenditure of £182,000,000 on defencepreparations, it is likely to be enabled to reduce expenditure under that heading within the next few years. Obviously the Government will not find it necessary to continue to stockpile armamentsafter it has made reasonable provision in that respect. Should that prove to be the case, this country will be enabled to enjoy economic prosperity and progressto the fullest degree.
.- The three most interesting features of this bill are the modification of the averaging system, the alteration of the rates,, and the alteration of the initial depreciation allowance in relation to industry. The modification of the averaging system in relation to the primary producerhas been dealt with most dishonestly- by the honorable member for Mallee (Mr. Turnbull), and, indeed, by other members of the Australian Country party. I shall summarize the position of primary producers over the last five years, and, for that purpose, shall take the most spectacular primary industry, namely, the wool-growing industry. My figures are those of the actual gross incomes of woolgrowers, and their gross incomes under the averaging system. They are as follows : -
Of course, the financial year 1950-51 was a period of record wool prices, and in respect of the figure £274,000,000, I set aside the special impost - the wool sales deduction. The Treasurer (Sir Arthur Fadden) examined the position, and, while ill in bed, told a deputation of primary producers that they had been generously treated during the previous five years. I remind the House, in passing, that the Chifley Government, which he had denigrated throughout the Commonwealth as the enemy of the primary producers, had been in office during the period to which he referred ; but probably the right honorable gentleman believed that he was on his deathbed when the deputation interviewed him. because he had an unusual resort to the truth. He told those representatives of the. primary producers that, in the previous five years, under the averaging system, woolgrowers had benefited by an amount of £77,000,000 in respect of tax that they would have been obliged to pay, had their incomes been treated on an annual basis. He proceeded to inform them that, unless he altered the averaging system this year, a further benefit of £62,000,000 would accrue to wool-growers in respect of the financial year 1949-50.
It is fascinating to find the Treasurer referring to the concessions that were granted during five years of the Chifley regime as a reason why he should nol make concessions now. That is a most interesting deviation for a Treasurer who is a member of the Australian Country party. But if we analyse the falsity of his argument in favour of change from the averaging system, we find the extremely interesting fact that he is repeating what he did last year : he is taking in advance payment of taxation. The proceeds of the wool sales deduction represented a drawing on the following year’s revenue, and he has deprived himself of that amount in this financial year. Therefore) he has to alter the averaging system in order to draw on revenue that is really due to Treasurers in the future. It is true to say that, over the era of rising prices, the primary producer has benefited from the averaging system. If that system remains unchanged, and if prices take a downward trend, the primary producer will pay tax at a rate applicable to a higher income. Future Treasurers, or the present Treasurer if he remains in office for five years, will get less revenue if he now alters the system, and seizes tax payments in advance.
I emphasize that the present proposal represents an advance payment of tax similar to the wool sales deduction. An extremely dishonest feature of it is its relationship to what the Treasurer pretends is his refund to wool-growers after the rejection of the referendum on a wool reserve price. The right honorable gentleman wished to retain the custody of £45.000,000 that belongs to the woolgrowers. The scheme, as it was called, was submitted to the wool-growers by way of a referendum, and they rejected it. The Treasurer was then confronted with the necessity to refund the amount of £45,000,000, and by this manoeuvre of altering the averaging system, will increase his revenue this year by £47,000,000. In other words, ha will repay the wool-growers with their own money. That is the real purpose of the Treasurer in altering the averaging system at the present time.
Whilst it may appear unjust that the primary producer should have benefited by an amount of £77,000,000 from the averaging system over the last five years, it is most important that we should note the extreme probability that the treasury benefited by more than that sum. I mean, by that statement, -that while prices were rising and taxable income was the average paid for the previous five years, the primary producer paid less tax than he would have paid in other circumstances, and had moTe money to reinvest in his farm. Some of that money, of course, was not used to increase production, but some of it was devoted to that purpose. The overall picture of that concession is probably that of an expansion of primary industrial activities and of all incomes, and, through the income tax, an increased return to the Treasury that would nullify, at least in part, the temporary concession of £77,000,000. It would not lie a concession at all when a primary producer’s income was falling.
The honorable member for Petrie (Mr. Hulme)., who attacked the Labour party, said that we were concerned not about the man in receipt of £500 a year, but about the primary producer in receipt of £5,000 .a year. Of course, a producer in receipt of £5,000 a year is an “” average “ person, and that average .is struck after taking into account some high incomes and some moderate incomes. But the position of the primary producer over the last few years has been such that, without the authorization of this Cabinet, a food committee has been formed in the Government parties, the purpose of which is to alter the policies of the Government in relation to primary industries.
The 40 per cent, initial depreciation allowance has not actually been altered under this .bill, but the Treasurer has threatened a possible alteration .of it in a year’s time. That concession was made by the Chifley Government “to persons who were equipping industries with machinery. The fact was recognized that some machinery was not of the high quality that is now being manufactured, and that depreciation would be more rapid. Many orders for machinery had been delayed for years, during which the prices rose considerably. In order te encourage the re-equipment of Australian industry, the Chifley Government introduced the provision that the 40 per cent, depreciation allowance could be claimed
I as] in the initial year of purchase. The Treasurer now threatens to alter that system a year hence. He has given advance notice of that possibility, and is leaving industry in a state of confusion. The business community deserves from the right honorable gentleman a clearer declaration of his intentions.
This afternoon, the -honorable member for Bennelong (Mr. Cramer) made a long speech, in the course of which he compared Australian rates of tax with those of New Zealand. He also claimed that this Government had reduced expenditure, and that the 10 per cent, increase of income tax during the current financial year would yield an additional £25,000,000. Those were the three central features of his speech, and every one of them stated a falsehood. The comparison with New Zealand, which he made from the tables that were circulated by the Treasure, was true, but the intention behind his comparison was to suggest that this Government had reduced rates of tax in relation to those of New Zealand. Of course, Australian rates of taxation are spectacularly lower than those of New Zealand and substantially lower than those of the United Kingdom ; but the suggestion that those lower rates are an achievement of the present Government is false, because the same relationship existed between Australian tax rates and those of New Zealand and the United Kingdom in the last year of the Chifley Government. The present Government merely inherited a situation in which Australians pay the lowest rates of tax in the world. The honorable member for Bennelong could not stand in his place, and declare that he had made a similar comparison during the general election campaign in 1949. Indeed, no Government supporter could honestly say that, in that campaign, he had compared Australian rates of tax with those of New Zealand and the United Kingdom. That matter has no relevance to the achievements of this Government, because it was a situation that existed under the Chifley Government. This government must justify the manner in which it has increased rates of tax since it has been in office.
The second claim by the honorable member for Bennelong was that this
Government had reduced expenditure. He described this Government as an “ expenditure-reduction government “. It was to the credit of the Prime Minister (Mr. Menzies) that he told the Liberal party convention a few days ago that whilst it had been easy to promise reductions of expenditure when he was in Opposition, he found that he could not effect them when he assumed office. The right honorable gentleman told his audience that conditions looked very different from the “ inside “ than they appeared to be when he made promises during the general election campaign in 1949. The right honorable gentleman’s admission was really a confession of ignorance; but when the honorable member for Bennelong said that the Government had reduced expenditure, as though the Prime Minister himself had not repudiated such a claim, the statement was not made in ignorance but was a falsehood.
The third falsehood that the honorable gentleman uttered was that the 10 per cent, increase of income tax would yield an additional £25,000,000. He asked, “ What is that amount in comparison with a list of increased expenditures by the present Government that add up’ to £50,000,000^ The honorable gentleman must have read the budget papers, in order to obtain the information that the collections of income tax last year amounted to £250,000,000. Of that sum, £173,000,000 came from direct income tax, and £77,000,000 from the social services contribution. This levy of 10 per cent, will not increase the income tax collections from £250,000,000 to £275,000,000. The budget papers show that the increase will be from £250,000,000 to £4.1.9,000,000. The 10 per cent, levy will increase the tax yield by nearly 70 per cent. That increase of £169,000,000, which will result from inflation because incomes are not remaining constant, will far outweigh the increases of expenditure to which the honorable member for Bennelong referred. I ask the Treasurer to cease publishing meaningless tables of statistics. On page 102 of the budget papers there is a table of figures that purports to compare tax at war-time rates, the present tax and contribution, and the proposed tax and con- tribution. What is meant by “ war-time rates “ ? Rates of tax were not constant throughout the war. There were six years of war and in each of those years different tax rates were imposed. I have ascertained from the Government’s advisers that the- reference in the table to tax at war-time rates applies to the peak year of taxation in 1943. But it would weaken the propaganda value of the table to make that clear. Therefore, the figures are described as tax at “ war-time rates “.
– They refer to taxation for the emergency of war.
– The emergency of wa.v passed through many different phases and there were many different scales of tax., The figures refer to the peak year of 1943. The honorable member for Mallee said that a man who earned £350 a year would pay 18s. this year, compared with 16s. last year, if he had a dependent wife and two children. A man who receives less’ than £7 a week and who has a wife and two children should be entirely exempt from taxation. In fact, I doubt whether such a man exists in Australia, although there may be a few individuals whose income is derived from a pension or similar allowance. The honorable member for Mallee might just as well have argued that the nominal increase from 16s. to 18s. represents a decrease, because 18s. this year is worth less in terms of purchasing power than 16s. was worth last year. That fact exposes another deceitful feature of the comparative table that I have already mentioned. That table shows that, on the war-time scale of taxation, a man who received £350 a year paid £31 2s. as income tax. But at that time the basic wage amounted to £220 a year. Therefore, a man who earned £350 was receiving one and a half times the basic wage, or slightly more. That rate would be equivalent to £15 15s. a week to-day. Such comparisons, therefore, have no real meaning. A man who earned £350 a. year would have been in clover during the war if he had been required to pay 16s. as income tax because £350 was then a high income. When I entered this Parliament in 1945 the basic wage was only £4 5s. a week. The income tax levied on incomes of from £300 to £350 a. year has been reduced during the last five or six years of necessity because of the decreasing value of money. The reductions have not involved real concessions to the taxpayers concerned.
A very weak argument advanced by the Government and its supporters in favour of the flat rate levy is that it is easier to use this method than to effect a graduated increase, beginning with 1 per cent, on the lowest level of taxable income and increasing progressively through the higher levels. That is an amazing argument. Every honorable member must know that the entire taxation curve can be altered without difficulty in a graduated manner by the Government’s experts. It is just as easy to have that done as it is to impose a 10 per cent, flat increase. The Government’s method is an extremely bad evasion of the principle of graduating income tax rates.
Another objectionable argument used by Government supporters is that the overall increase is necessary in order to provide for heavy additional defence expenditure. The budget provides for a surplus, but nobody in this House really believes that the eventual surplus will be only £11-1,500,000. If the Treasurer has correctly forecast the trend of inflation and the consequent increase of revenue from income tax, it will be the first time in five or six years that this has been done. It is extremely probable that the surplus will amount to about £200,000,000. Therefore, the Government spokesmen who use the defence argument and then declare that the surplus has been designed to counteract inflation fail to state any valid reason why that surplus should not be derived from a more just graduation of tax rates under which the increases would fall most heavily on luxury incomes. In the City of Perth alone, according to the Treasurer’s statistics, there are 697 persons who earn more than £15,000 a year. The 10 per cent, increase of direct taxation will not curb their luxury expenditure in any way, and the Treasurer’s estimation of the increased return from the higher rates of sales tax this year shows that he is aware of that fact.
The Treasurer’s arguments in support of the abolition of the averaging system in relation to primary producers are merely intended to conceal from the people the fact that once again he is drawing on future revenue, as he did last year by imposing a special levy on wool. The right honorable gentleman also has not been honest about the 40 per cent, initial depreciation allowance. The argument that the 10 per cent, levy is an anti-inflationary measure and also an instrument of defence policy is not valid, and the comparative tax tables that have been presented in support of the bill are false. Therefore, the measure ought to be rejected.
.- Many strange events have occurred in the world recently, but none has been stranger, in my opinion, than the rapidity with which certain members of the Opposition alter their views. One is entitled to ask whether these honorable gentlemen have changed their opinions because they have been redeemed or merely because they hope to gain party political advantage by their manoeuvres. I have been a member of this House for a number of years, and I have noticed during that period that members of the Labour party have been fairly constant, when in Opposition and when in Government, in their criticism of the wool-growers. Until recently I had never heard them utter even one word in favour of the wool-growers. But now we find that they have suddenly reversed their former attitude. “Why have they done so? Is it because they sincerely believe that the wool-growers are worthy citizens, or is it because they hope to curry favour by raising fictitious injustices and appearing to defend the interests of the primary producers?
Some years ago in this House 1 listened to a speech that was made by a very prominent member of the Labour party who was then the Minister for Post-war Reconstruction. That honorable gentleman said that he was not interested in the workers owning their own homes and becoming little capitalists.
– He did not say that.
– It has been proved in court. I remind the honorable member for East Sydney (Mr. Ward) that Mr. Dedman failed in his action at law on this issue. I repeat that he said on the occasion to which. I have referred that he was not interested in turning the workers into little capitalists by letting them own their own homes. Earlier in this debate the honorable member for Yarra (Mr. Keon) and the honorable member for Fawkner (Mr. W.. M. Bourke) said, I hope with sincerity, that the reason why they criticized the Government’s proposal to grant tax concessions to mining companies in respect of expenditure on house construction was that the concessions were not to be extended to the miners. If that be the real reason for their criticism - and I hope that it is - both honorable members must have experienced a great change of mind for the better. Every honorable member on this side of the House would be happy if every family in Australia could own its own home, and I shall he delighted if the view that the two honorable members expressed is the view of the Opposition as a whole.
I wish to refer to two special features of this bill. The first is the provision for the exemption from income tax of the pay and allowances of men engaged on war service. I am sure that no honorable member will object to that provision. However, I point out to the Treasurer (Sir Arthur Fadden) an omission that might well be remedied. Many Australians who are not members of the armed forces are working in the field in Korea and other operational theatres. I refer particularly to members of the Red Cross, the Salvation Army and a few other organizations of a similar character. Those people serve on practically the same conditions as soldiers do. They are quartered and rationed by the Army, transported by it and receive medical treatment from it. To all intents and purposes they are on an equal footing with soldiers, and for that reason they should also be entitled to such tax exemptions as apply to members of the forces. They are not highly paid, and those honorable members who have served in the field know what a high level of service they give. I am sure that the matter having been brought to the notice of the Treasurer he will be prepared to make the small amendment of the measure that is necessary to grant these concessions to those people who so thoroughly deserve them.
I turn now to the development of the coal industry. We all realize how great is the dependence of this country on coal. My mind goes back to a speech that was made by a man who is probably well known by name to many honorable members. I refer to Mr. Hilaire Belloc. He took part in a debate with Mr. George Bernard Shaw and Mr. H. G. Wells in London many years ago on the subject, “ Our present civilization and what it rests on “. George Bernard Shaw made an amusing speech and was followed by Hilaire Belloc, whose speech consisted of the following verse : -
Our civilization is founded on coal.
Our civilization, that curse of creation,
Our civilization, without any soul,
Our civilization is founded on coal.
I consider that that verse represents the views of everybody in this House. The trouble is, however, that whilst we recognize the importance to our civilization of coal, it is not so well recognized outside the Parliament, particularly by the people employed in the coal industry. For that reason I welcome the provisions in the measure for the encouragement of development of the coal industry and of the provision of amenities for coal-miners, which will be done, of course, by means of the fiscal weapon. But coal, after all, is not the only basic commodity on which any country depends. We can no more live without food than we can prosper without adequate supplies of coal, and therefore the principle that is to be applied in relation to the encouragement of development in the coal-mining industry should also be applied to encouragement of the rural industries. I do not suggest an overall encouragement of primary industries, many of which are now in a prosperous condition, but I do say that some of them require encouragement. The only way in which the Government can give that necessary encouragement is through tax concessions.
The measure proposes that the cost of bouses built by the coal-mining industry for miners shall be an allowable deduction for tax purposes. The cost of coalmining plant will also be an allowable deduction. Certain selected rural industries require a similar concession. More housing is necessary in country areas, and if land-owners can be encouraged to build houses, and so make an increase of the rural work population possible, we shall have taken a great step towards increasing primary production.
We have rightly, to some degree, abolished the initial depreciation allowance of 40 per cent. on plant, but I consider that in certain specified industries, such as potato-farming, an increase of the depreciation allowance in respect of such equipment as mechanical diggers and loaders would lead to an increase of production. I recommend those two suggestions to the Treasurer, particularly that in relation to the exemption from taxes of auxiliary workers with our forces in the field. I hope that he will give consideration to them.
– I desire to–
Motion (by Mr. Davidson) put -
That the question be now put.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Majority . . . . 19
Question so resolved in the affirmative.
Question put -
That the bill be now read a second time.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Question so resolved in the affirmative.
Bill read a second time.
Clauses 1 to 5 - by leave - taken together and agreed to.
Clause 6 -
After Section 23a of the principal act the following section is inserted: -
Amendment (by Sir Arthur Fadden) proposed -
That, at the end of the clause, the following proposed section be inserted: - “23c. - (1.) Income derived by a company from the sale of gold produced in Australia or in the Territory of New Guinea shall be exempt from income tax where -
all the shareholders of the company are carrying on, or have carried on, mining operations in Australia or in the Territory of New Guinea wholly or partly for the purpose of obtaining gold;
the company is, on the last clay of the year of income, a company approved by the Treasurer for the purposes of this section;
the gold was purchased by the company from the Commonwealth Bank of Australia; and
the goldhas been exported or is to be exported with the consent of that bank. (2.) For the purposes of paragraph (c) of section twenty-three of this Act, a dividend paid to a person wholly and exclusively out of income which is exempt from income tax by virtue of this section shall be deemed to be income derived by that person from the sale of gold obtained from the working of the mining property in Australia or in the Territory of New Guinea on which that person is carrying on, or has carried on, mining operations.’.”.
– I desire to draw the attention of the Treasurer (Sir Arthur Fadden) to the request that I made early in the proceedings connected with this matter. 1 requested that members of auxiliary services such as the Bed Cross and the Salvation Army should have similar concessions extended to them so that they might receive exemption from income tax on pay and allowances when serving in an operational area. I think that the Treasurer is aware that the service rendered by the personnel of these bodies is in every respect similar to that which is rendered by service personnel. These people are not enlisted personnel but they are placed on the same footing as enlisted men. They are fed, transported and paid by the Army. In addition they render very valuable services. I therefore suggest the proposed benefits should be extended to them. The number of persons affected would be extremely small and the amount of money that the Government would lose would be nothing to worry about.
– Consideration will be given to the matter raised by the honorable member but the proposed amendments before the committee are of an urgent nature. They affect the goldmining andcoal-mining industries and the averaging system. As I have said, the point which the honorable member has raised will be considered. I hope to introduce a further bill to amend the principal act before the 30th June, 1952.
Amendment agreed to.
Clause further verbally amended, and, as amended, agreed to.
Clauses 7 to 39 - by leave - taken together and agreed to.
Clause 40 consequentially amended, and, as amended, agreed to.
Mr.Ward. - I rise to order, Mr. Chairman. I submit that you cannot put two amendments to one vote.
– I have declared the decision of the committee.
– Under what standing order can you submit two amendments to the committee on one vote?
– It was done by the leave of the committee.
– Leave was not asked for.
– Order! It was asked for.
New clause 9a.
Motion (by Sir Arthur Fadden) proposed -
That, after clause 9, the following new clause be inserted: - “9a. Section forty-four of the Principal Act is amended by adding at the end thereof the following sub-section: - (4.) Where a company has received a dividend paid wholly and exclusively out of income which is exempt from income tax by virtue of sub-section (1.) of section twentythree c of this Act, that dividend shall, for the purposes of the application of paragraph (c) of sub-section (2.) of this section in respect of dividends paid by that company, or by a. company which is a shareholder in that company, be deemed to he income derived by that first-mentioned company from the working by it of a mining property in Australia or in the Territory of New Guinea.’.”.
– I should like the new clause to be read.
– The clause reads - 9a. Section forty-four of the Principal Act is amended–
– Mr. Chairman–
– The honorable member will sit down when I am speaking or I shall name him.
– The Opposition has been completely co-operative on this measure. I ask you to take cognizance of that fact, Mr. Chairman.
– I had started to read the new clause in response to the request of the honorable member for East Sydney (Mr. Ward), but he continued to interrupt me. The proposed new clause 9a reads as follows: - “ 9a Section forty-four of the principal Act is amended by adding at the end thereof the. following sub-section: - (4.) Where a company has received a dividend paid wholly and exclusively out of income which is exempt from income tax by virtue of sub-section (1.) of section twentythree c of this Act, that dividend shall, for the purposes of the application of paragraph (c) of sub-section (2.) of this section in respect of dividends paid by that company, or by a company which is a shareholder in that company, be deemed to be income derived by that first-mentioned company from the working by it of a mining property in Australia or in the Territory of New Guinea ‘.”.
New clause agreed to.
New clause 14a.
Motion (by Sir Arthur Fadden) proposed -
That, after clause 14, the following new clause be inserted: - “14a. - (1.) Sections one hundred and twenty-two and one hundred and twenty-three of the Principal Act are repealed and the following sections inserted in their stead: - 122. - (1.) Where a person, in connexion with the carrying on by him of mining operations upon a mining property in Australia or the Territory of New Guinea for the purpose of gaining or producing assessable income, has incurred expenditure of a capital nature on necessary plant, development of the mining property or housing and welfare, an amount ascertained in accordance with this section shall be an allowable deduction in respect of that expenditure. (2.) Subject to the next succeeding subsection, the deduction allowable is the amount ascertained by dividing the residual capital expenditure, as at the end of the year of income, ascertained in accordance with the succeeding provisions of this section, by -
a number equal to the number of whole years in the estimated life of the mine as at the end of the year of income; or
b ) twenty-five, whichever number is the less. (3.) Unless the taxpayer makes an election under the next succeeding sub-section in relation to the year of income, the maximum amount of the deduction or deductions allowable under this section is an amount equal to so much of the assessable income of the year of income as remains after deducting all allowable deductions, other than deductions allowable under this section or under section one hundred and twenty-three aa of this Act. (4.) A taxpayer may elect, in relation to a year of income specified in the election, that the last preceding sub-section shall not apply in respect of a deduction to which he is entitled. (5.) For the purposes of this section, but subject to the succeeding provisions of this section, the residual capital expenditureshall be ascertained by deducting from the sum of -
so much of the amount which, for the purposes of section one hundred and twenty-two of the Income Tax and Social Services Contribution Assess ment Act 1930-1950, was the residual capital expenditure at the end of the year of income which ended on the thirtieth day of June, One thousand nine hundred and fifty-one, as remains after deduct ing from that amount the amount of any deduction which has been allowed or is allowable under that section from the assessable income of that year of income; and
the total amount of expenditure specified in sub-section (1.) of this section incurred after the year of income which ended on the thirtieth day of June, One thousand nine hundred and fifty -one, any part of the expenditure included in that sum which -
has been allowed or is allowable as a deduction under section one hundred and twenty-two a of this Act, or under section one hundred and twenty-three of the Income Tax Assessment Act 1936-1047 or of that Act as amended by any Act up to and including the Income Tax and Social Services Contribution Assessment Act . 1.950, from the assessable income of a year of income;
has been allowed or is allowable as a deduction under this section from the assessable income of a year of income prior to the year of income: or
was incurred on -
property which has, after the year of income which ended on the thirtieth day of June, One thousand nine hundred and fifty-one, been disposed of, lost or destroyed ; or
property the use of which for the purposes of the mining operations or of housing and welfare has, after that year of income, been otherwise terminated, and has not been allowed and is not allowable as a deduction from the assessable income of any year of income which ended before the year of income in which the disposal, loss, destruction or termination of use took place. (6.) Where property referred to in subparagraph (ii) of paragraph (e) of the last preceding sub-section again comes into use for the purposes of the mining operations or of housing andwelfare, the residual capital expenditure shall be deemed to be increased by so much of the expenditure on that property as the Commissioner determines. (7.) Where an amount of income derived by the taxpayer from the sale, transfer or assignment of rights to mine on any mining tenement is or has been exempt from income tax by virtue of paragraph (p) of section twenty-three of this Act, the residual capital expenditure shall be deemed to be reduced by -
any excess amount of expenditure, in relation to that tenement, to which sub-section (3.) of section one hundred and twenty-three aa of this Act applies or has applied; or
the amount of that exempt income, whichever is the less. ( 8. ) In this section, “ housing and welfare “ means -
residential accommodation for the use of employees of the taxpayer engaged in, or in connexion with, the mining operations of the taxpayer referred to in sub-section (1.) of this section, or for the use of dependants of those employees, being accommodation situated on or adjacent to the mining property; or
health, educational, recreational or other similar facilities, or facilities for the provision of meals, provided at, or at a place adjacent to, the mining property, being facilities which -
are provided principally for the welfare of those employees or of dependants of those employees; and
are not conducted for the purpose of profit-making by the taxpayer or any other person. 122a. - (1.) A person who, in the year of income, has incurred expenditure specified in sub-section ( ] . ) of the last preceding section on plant or development may elect that the provisions of this section shall apply -
in the case of expenditure on a unit or unite of plant specified in the election - inrespect of that expenditure; or
) in the case of expenditure on development - in respect of the whole, or a part specified in the election, of that expenditure. (2.) Expenditure to which an election made under the last preceding sub-section applies shall be an allowable deduction from the assessable income of the year of income in which the expenditure was incurred. 122b. - (1.) Where a person who carries on mining operations in Australia or the Territory of New Guinea for the purpose of gaining or producing assessable income appropriates assessable income derived in a year of income for expenditure of a capital nature on necessary plant or on development of the mining property, and an amount of the income so appropriated is not expended during that year of income, he may elect to have this section applied in relation to that amount. (2.) So much of the amount in relation to which an election is made under the last preceding sub-section as the Commissioner is satisfied will be, or is likely to be, not later than the end of the year of income next succeeding the year of income in which the assessable income from which that amount was appropriated was derived, expended by way of capital expenditure on necessary plant or on development of the mining property shall be an allowable deduction from the assessable income of that last-mentioned year of income. (3.) Where, under this section, a deduction has been allowed or is allowable from the assessable income of a year of income, the assessable income of the year of income next succeeding that year of income shall include so much of the amount allowed or allowable as a deduction as has not been expended, at the end of that next succeeding year of income, by way of expenditure of a capital nature on necessary plant or on development of the mining property. (4.) Where an amount appropriated has been allowed or is allowable as a deduction under this section, or under section one hundred and twenty-three of the Income Tax and Social Services Contribution Assessment Act1936-1950, and that amount or a part thereof is expended before the end of the year of income next succeeding the year of income in which the assessable income from which that amount was appropriated was derived -
the amount so expended shall be deemed not to be expenditure specified in sub-section (1.) of section one hundred and twenty-two of this Act: and
for the purposes of sections one hundred and twenty- four and one hundred and twenty four c of this Act, that deduction, to the extent of the amount so expended, shall be deemed to have been allowed or to be allowable in respect of the expenditure of the amount so expended. 123. - (1.) A person may elect that no deduction shall be allowed under this Division in respect of expenditure on a unit of plant specified in the election incurred in the year of income specified in the election or in any subsequent year and, where such an election has been made, no such deduction is allowable. (2.) In this section, “plant” has the same meaning as it has in section fifty-four of this Act.’. “ (2.) Notwithstanding the repeal of section one hundred and twenty-three of the Principal Act, an amount which would, in pursuance of that section, have been included in the assessable income of a taxpayer of the year of income which commenced on the first day of July, One thousand nine hundred and fifty-one, if that section had not been repealed is, for the purposes of the Principal Act as amended by this Act, assessable income of that year of income.”.
. -So many amendments in the form of new clauses are to be proposed that it is almost impossible for honorable members to follow them. I suggest that the Treasurer (Sir Arthur Fadden) should withdraw the bill and recast it.
– Mr. Chairman, I should like this new clause to be read..
– The proposed amendments have been circulated and it is quite customary, in committee, for amendments to be taken as read when they have been circulated.
– I rise to order. I understand that if it is asked that a clause be read, it must be read.
– Will the honorable gentleman quote the standing order on which he relies ?
New clause agreed to.
New Clauses 14b, 14c, and 14d.
Motion (by Sir Arthur Fadden) agreed to -
That, after new clause 14a, the following new clauses be inserted: - “ 14b. Section one hundred and twenty-three aa of the Principal Act is amended -
by omitting from sub-section (1.) the words ‘ coal or ‘ ;
omitting from sub-section (1.) the words ‘ mining tenures ‘ and inserting in their stead ‘ mining tenements in Australia or in the Territory of New Guinea’; and
omitting from paragraph (b) of subsection (3.) the words ‘section one hundred and twenty-three ‘ and inserting in their stead the words section one hundred and twentytwo a “ 14c. Section one hundred and twenty-three a of the Principal Act is amended by omitting sub-section (3.) and inserting in its stead the following sub-section : - (3.) The provisions of sections one hundred and twenty-two, one hundred and twenty-two a, one hundred and twenty-two b and one hundred and twenty-three aa of this Act do not apply to, or to moneys appropriated for, capital expenditure on prospecting or mining for petroleum or plant necessary for the treatment of petroleum’.’.”. “ 14d. Section one hundred and twenty-four of the Principal Act is repealed and the following sections are inserted in its stead: - 124. - (1.) This section applies where deductions have been allowed or are allowable, under this Division or under provisions, relating to the taxation of income derived from mining operations, of a previous law of the Commonwealth, in respect of expenditure of a capital nature and, in the year of income, property on which any of that expenditure was incurred has been disposed of, lost or destroyed, or the use of that property for the purpose of the mining operations or of housing and welfare has been otherwise terminated. (2.) Where the aggregate of -
the sum of the deductions so allowed or allowable in respect of expenditure on the property so disposed of, lost or destroyed, or the use of which has been so terminated; and
the consideration receivable in respect of the disposal, loss or destruction, or, in the case of other termination of the use of property, the value of the property at the date of the termination of use, exceeds the total expenditure of a capital nature by the taxpayer on that property, so much of the amount of the excess as does not exceed the sum of those deductions shall be included in the assessable income. (3. ) Where that total expenditure exceeds that aggregate, the excess shall be an allowable deduction. (4. ) In this section - “ expenditure “ does not include expenditure in connexion with coal-mining operations incurred before the year of income which commenced on the first day of July, One thousand nine hundred and fifty-one; “ the consideration receivable in respect of the disposal, lose or destruction “ means -
in the ease of a sale of the property - the sale price less the expenses of the sale of the property;
in the case of loss or destruction of the property - the amount or value received or receivable under a policy of insurance or otherwise in respect of the loss or destruction;
in the case where the property is sold with other property and no separate value is allocated to the property - the amount determined by the Commissioner; and
in the case where the property is disposed of otherwise than by sale - the value, if any, of the property at the date of disposal, but does not include an amount which is included, or will, when received, be included, in the assessable income of any year of income under Division 4 of this Part. 124a. - (1.) Where a person has purchased property from another person carrying on mining operations in Australia or in the Territory of New Guinea for the purpose of gaining or producing assessable income, so much (if any) of the purchase price as exceeds the sum of -
the amount which, if the property had not been sold, would have been, at the end of the year of income in which the sale took place, the portion of the residual capital expenditure of the vendor attributable to expenditure on that property; and
any part of the purchase price which is included in the assessable income of the vendor in pursuance of the last preceding section, shall not, for the purposes of this Division, be included in the expenditure of the purchaser on that property. (2.) This section does not apply where the
Commissioner is of opinion that the circumstances are such that it should not apply. 124b. An election under any of the pro visions of this Division -
shall be made in writing signed by or on behalf of the taxpayer;
shall be delivered to the Commissioner -
in the ease of an election under section one hundred and twenty-two, one hundred and twenty-two a or one hundred and twenty-two b of this Act - on or before the last day for the furnishing of the return of income of the year of income; and
in the case of an election under section one hundred and twenty-three of this Act - on or before the last day for the furnishing of the return of income for the year of income specified in the election, or within such further time as the Commissioner allows. 124c. - (1.) Where the whole or a part of expenditure of a capital nature has been allowed or is allowable as a deduction under this Division, or under provisions, relating to the taxation of income derived from mining operations, of a previous law of the Commonwealth, that expenditure shall not be an allowable deduction, and shall not be taken into account in ascertaining the amount of an allowable deduction, under any provision of this Act other than a provision of this Division.’.”.
New clause 15a.
Motion (by Sir Arthur Fadden) agreed to -
That, after clause 15, the following new clause be inserted : - “ 15a. After section one hundred and fifty- nine of the Principal Act the following section is inserted: - 160.- ( 1 . ) This section applies to a tax payer where -
the whole of the assets of a business of primary production carried on by-
i ) the taxpayer ;
a partnership in which the taxpayer is a partner; or
the trustee of a trust estate of the net income of which the taxpayer (not being a person under a legal disability) is presently entitled to a share, are, in the year of income, disposed of by sale or otherwise for the purpose of putting an end to that business ;
those assets include live-stock which is disposed of at a profit;
the taxpayer has not elected, in pursuance of sub-section (3.), (4.) or (5.) of section thirty-six of this Act, that his assessable income of the year of income shall be reduced in accordance with that section ; and
Division16 of this Part applies to the taxpayer for the purposes of tax upon his taxable income of the year of income. (2.) Where, in the case of a taxpayer to whom this section applies, the tax which would be payable by the taxpayer in respect of his taxable income of the year of income, if there were not allowable a rebate or credit under any of the provisions of this Act, exceeds the notional tax ascertained in accord- a nce with the next succeeding sub-section, he shall be entitled in his assessment to a rebate of the amount of the excess. (3.) For the purposes of the last preceding sub-section, the notional tax is the sum of the following amounts: -
the amount ascertained by applying to the abnormal income a rate per pound ascertained by applying to a taxable income equal to the average income of the taxpayer the basic rates of tax declared by the Act imposing tax for the year of tax and dividing the resultant amount by a number equal to the number of whole pounds in the average income of the taxpayer;
the amount ascertained by applying to the amount by which the taxable income exceeds the abnormal income the rates of tax applicable under the Act imposing tax for the year of tax in the case of a person -
to whose income Division16 of this Part applies;
whose taxable income is equal to the amount of that excess; and
whose average income is equal to the average income of the taxpayer;
the amount ascertained by applying to that part of the taxable income which is derived from property, and to which any further rates of tax declared by the Act imposing tax for the year of tax in respect of taxable income derived from property are applicable, the rates so declared; and
where the Act declaring the rates of tax for the year of tax imposes additional tax at a rate per centum of tax which would otherwise be payable - the amount ascertained by applying that rate per centum to the sum of the amounts ascertained in accordance with the preceding paragraphs of this sub-section. (4.) For the purposes of the last preceding sub-section -
where the assets are disposed of otherwise than by a partnership or the trustee of a trust estate, the abnormal income is the amount of the profit on the disposal of the live-stock ;
where the assets are disposed of by a partnership, the abnormal income is, for the purposes of the assessment of a taxpayer who is a partner in the partnership, so much of the profit on the disposal of the livestock as is included in his individual interest in the net income of the partnership ; and
where the assets are disposed of by the trustee of a trust estate, the abnormal income is -
for the purposes of an assessment of the trustee under any of the provisions of Division C of this Part, so much of the profit on the disposal of the live-stock as is included in the part of the net income of the trust estate to which the assessment relates; and
ii ) for the purposes of the assessment of a taxpayer who is a beneficiary in the trust estate, so much of the profit on the disposal of the live-stock as is included in the share of the net income of the trust estate to which he is presently entitled. (5.) In this section - “ the average income of the taxpayer “ means the average income ascertained in accordance with section one hundred and forty-nine of this Act for the purposes of the assessment of tax upon income derived during the year of income by the taxpayer to whom this section applies; “ the profit on the disposal of the livestock “ means the profit on the disposal of the live-stock referred to in paragraph (b) of sub-section (1.) of this section, ascertained in accordance with sub-section (8.) of section thirty-six of this Act.’.”.
Title agreed to.
Bill reported with amendments; report - by leave - adopted.
Bill - by leave - read a third time.
Motion (by Mr. Townley) proposed -
That the House do now adjourn.
– I desire to draw the attention of the House to the cases of several individuals who have been affected by the Government’s recent retrenchment decision. It will be recalled that on the 2nd October the Prime Minister (Mr. Menzies) made a statement to this House on retrenchment in the Public Service. In the course of that statement he set forth a list of priorities in dismissal for members of the Public Service. The list, in order of first retrenchment, was as follows: - Married women, women over the compulsory retiring age of 65 years, men over the compulsory retiring age, single women and widows, persons qualified for permanent appointment, relatives of deceased soldiers, female ex-members of the forces, single men, married men without family, married men with family, male ex-members of the forces.
The first case to which I desire to refer is that of Mr. “ X “. I so describe him as I understand that I am not allowed to mention names at this stage.
-Order! There is nothing to prevent the honorable member from mentioning a name on the adjournment, although unless he has a definite reason for doing, so I do not think that unnecessary publicity should be given to the affairs of private citizens.
– I thank you, Mr. Speaker. I shall continue to refer to this man as Mr. “ X “. I brought the matter of his dismissal before the House on the 4th October. He is a man of 62 years of age and had had 26 years’ service in various government departments in Canberra. He is married, which puts him into the third last category for dismissal. He was dismissed. Following upon representations that I made in this House, and further representations that I made to the Prime Minister’s Department, in which he was employed when dismissed, I received a letter from the Prime Minister. That letter reads -
I refer to your statement upon the motion for the adjournment on Thursday, 4th October, regarding Mr. X, formerly . an officer of my Department, whose services were recently terminated.
I have looked into this case and find that Mr. X was a temporary officer of tlie Department of the Interior from 1st April, 1925, to 1st March, 1946, the Prices Branch from 4th March, 1948, to 26th September, 1948, and my Department from 27th September, 1948, to the date of his retrenchment.
Mr. X is a man of 62 years of age and is suffering from heart trouble which very much restricts his activities. During the three years he has been with my Department, he has had almost six months’ sick leave. It has for some time been very obvious to the administrative officers of my Department that Mr. X’s efficiency was very much impaired and in ordinary circumstances his services would have been terminated. However, in view of his long services as a temporary officer, the Department sympathetically tried to fit him in where he could perform some useful function.
In implementing the decision to reduce the numbers of the Public Service, a reduction which was spread proportionately over all Departments, my Department, a relatively small specialized Department, examined the position with a view to determining how a maximum efficiency could be maintained with a reduced staff. In the interests of Departmental efficiency, the services of Mr. X had to be terminated.
In view of these circumstances, I do not feel that Mr. X should be reabsorbed in my Department.
That letter was signed by the Prime Minister, who had previously set out to the House and the nation the order in which public servants were to be dismissed. ‘I repeat that in that list married men were in the third last category. However, this man, aged 62, after having had 26 years of service in various government departments, was summarily dismissed. “With some help he was finally able to secure a position with another department in Canberra. It is ironic that on the morning he commenced work, and within an . hour of starting, he was served with a fortnight’s notice of dismissal. After some telephone conversations that notice was withdrawn and he is still employed in that department. The point is that had the Prime Minister’s orders been obeyed that man would never have been dismissed. He should not have been uprooted out of the department in which he had been serving.
The second case is that of Mr. “ Y “. I mentioned his case in the House on the 11th October. He is a veteran of two world wars and an original Anzac. He had been employed for six years in a professional capacity in the Department of National Development. He is not to be dismissed, but is to be reduced in status while preference is being given to German immigrants in that department. In response to representations that I made to the Minister for National Development (Senator Spooner) I received the following letter: -
I refer again to your representations to my colleague, the Hon. Harold Holt. Minister for Labour and National Service on behalf of Mr. Y, of 2 Leslie-street, Ainslie.
You will appreciate that the retrenchments necessarily involve the discontinuing of certain activities. This applied to the work on which Mr. Y was engaged.
The fact that the department is continuing to employ German migrants is not relevant to Mr. Y’s case. The migrants are expert cartographers who have been brought to Australia to undertake the preparation of special maps of resources. This work is for publication and must he of a very high standard. Unfortunately Mr. Y’s qualifications and experience do not fit him for this task.
As 3’ou know, although Mr. Y has been employed as an acting draftsman for some years, his permanent classification is that of Assistant, Fourth Division.
The possibility of continuing to employ Mr. V in suitable drafting work in some other section of the department is being examined. If this cannot be done Mr. Y will still he employed in the Department but it will be necessary for him to revert to his permanent classification.
I repeat that that man was a returned soldier of two world wars, an original Anzac, and therefore a man who was in the last category to be affected by this system of retrenchment.
The third case is that of Mr. “ Z “. He is 64 years of age, and I mentioned his case in the House on the 11th October. T-Ie will be 65 in March next year. He is a returned soldier of two world wars and also an original Anzac. For three years he had been employed in the housing division of the Department of National Development. He was dismissed under the retrenchment scheme. After representations had been made, I received the following letter from the Minister for Labour and National Service : -
I promised to let you know what assistance in obtaining employment could be given to Mr. Z, of 8 Bougainville-street, Manuka, about whom you wrote to me on 12th October, 1951.
I am now writing to say that following his discharge from the Commonwealth Public Service, Mr. Z did not ask the help of my Com monwealth Employment Service in finding other employment. However, he was invited to do so if he had not already secured a suitable position and as a result he registered at the District Employment Office, Canberra, on 31st October. Efforts are now being made by my Canberra Office to find him suitable employment and I hope that they will soon be successful.
Each of the men whom I have mentioned was in one of the lowest categories mentioned by the Prime Minister when he made his statement in this House. Each should have been given preference over many others who have been retained. I ask the Prime Minister whether, in view of his announcement to the House and the nation of the order in which dismissals would be made, he is giving the orders and issuing the instructions or whether his orders and instructions are being flouted by Ministers of his own Cabinet, or by heads of departments?
.- I desire to raise a matter which I think will be of concern to all honorable members. Recently the arrangements under which transport has been provided for members of the Parliament have been extended. Ex-Ministers are now provided with a car from the airport to their homes and from their homes back to the airport when proceeding to or from Can’berra. Car travel is provided for members travelling before 8 a.m. in the morning and after 8 p.m. at night. I understand that the Minister for Supply (Mr. Beale), who is in charge of the motor car pool, is instituting a system of spying on ex-Ministers and members of the Parliament who use cars. Each driver is required to report personally to the Minister upon the persons who use his .car. By that I mean that his report goes to the officer in charge at the car depot, but it is for the personal information of the Minister. The driver must report the names of those who ride in his car and their particular destinations. I should have no objection if the system were intended to apply to the use of all Commonwealth cars, but it is not intended to do so. I shall be quite willing for reports upon my use of a Commonwealth car to be submitted, provided that reports of the same type are submitted in respect of the use of cars by every member of the Parliament and by Ministers themselves.
– And by departmental heads.
– And also by departmental heads. When the honorable member for Hindmarsh (Mr. Clyde Cameron) asked to be allowed to peruse the running cards of these cars, he was told that he could not be permitted to do so. If the Minister wants to deprive me, as an ex-Minister, of a car for my personal use, I shall not object. In my opinion, it is ridiculous that an exMinister, on arrival at an airport, should have the sole use of a car to take him to his home when other members of the Parliament have to travel to the city in the bus provided by the airline and then make their own arrangements for travelling to their homes. It would be proper for Commonwealth cars to be shared by honorable members who live in more or less the same area. It is wrong that a car should be used to take only an ex-Minister to his home.
I was criticized because I asked a question in this Parliament about the use of a government car by the wife of the Prime Minister (Mr. Menzies). I was criticized also because I wanted to knowhow it was that a government car had both a Victorian number-plate and an Australian Capital Territory numberplate. Why is there all this secrecy in regard to the use of government cars? As this concession has been given to exMinisters and members of the Parliament, why should there be a system of spying upon them? Is the object of the system to enable the Minister to make the terrible revelation that when I travelled from an airport in a government car I took in the car with me, say, the honorable member for Phillip (Mr. Fitzgerald) and the honorable member for Kingsford-Smith (Mr. Anderson), who wished to travel in the same direction as I did, and that the car, in taking those honorable gentlemen to their homes, travelled for half a mile or a mile further than it would have done if it had gone only to my home ? I suggest to the Government that this matter should be reviewed and placed upon a sensible and proper basis.
– I desire to refer to the matter that wat> raised by the honorable member for the Australian Capital Territory (Mr. J. R. Fraser). It is obvious from the case? that the honorable gentleman mentioned that the Government does not know when it stands in connexion with the retrenchment of public servants. The dismissals have been made, not on a selective basis as was promised, but in a haphazard manner. Some time ago, I directed to the Prime Minister (Mr. Menzies) some questions upon notice about dismissals from various Commonwealth departments. I received the replies to them only to-night. The first question that I put to the Prime Minister was -
How many Communists are included in the list of public servants who, during the months of September and October have received notice that their services are no longer required?
The reply was that the details are not known. In view of the allegations that members of the Government parties made about the policy of the Chifley Government in connexion with the Public Service, that reply is very significant. The best tribute that could be paid to the Chifley Government, in this connexion, is that this Government is not aware that there are any known Communists in the Public Service, and cannot say whether any known Communists are included in the publicservants who have been dismissed.
Ex-servicemen were supposed to be the last of the public servants to be dismissed. I asked the Prime Minister how many returned servicemen of World War I. and World War II., and ex-servicemen generally, were included among the dismissed public servants. The reply that I received to that question is as follows : -
This information could be obtained only after detailed analysis of departmental records The administrative effort and expense involved in extracting tlie information would be excessive.
Apparently the Prime Minister does not. know how many ex-servicemen were dismissed from the Public Service recently. It is obvious that the Government does not know where it stands in this matter, although it stated that the retrenchments would be made on a selective basis. The comparatively insignificant expenditure of time and money that would be involved in obtaining the information foi which I asked, and which would be available to the Government, is to be allowed to stand in the way of strict justice being done. Doubtless the full story will be known in due course, but the Government ought to know it now. It formulated a policy, and it should have the whole picture before it.
– I shall not attempt to follow the honorable member for East Sydney (Mr. Ward) over the country that he chose to travel. During my experience of thi3 Parliament, which now extends over many years, I have never known the transport services of the Commonwealth, outside of Canberra, to be run more efficiently than at the present time, nor have I known more sympathy to be shown to members of the Parliament in connexion with them than is being shown now. I do not intend to reflect upon the transport services in Canberra. I have excluded them from my remarks only because they do not come within the jurisdiction of the Minister for Supply (Mr. Beale). When the Minister assumed office, there was a slap-dash, casual atmosphere about the transport services. When we recall the kind of uniforms, or the lack of uniforms, that were worn by the men who drove Commonwealth cars, and the lack of dignity ; and when we contrast the position that existed then with that which exists to-day, we can come to no conclusion other than that great credit is due to the Minister. I know that he regards the needs of members of the Parliament as a very real consideration. I do not remember a.ny period in the history of the Commonwealth when private members of the Parliament, Ministers and exMinisters, had greater privileges in relation to motor transport than they have at the present time. I deny categorically the allegation that the Minister is indulging in sneaking and pimping. I know him as a man. That is not his character.
Mr. Ward interjecting,
– The honorable member for East Sydney has made denials in various places which were not believed by his peers in this country, and they said so very emphatically. I shall bring this matter to the attention of my colleague. I suggest that any honorable member who views this matter objectively will agree that the Minister is doing a most efficient and thorough job in connexion with motor transport.
I respect the honorable member for the Australian Capital Territory (Mr. J. R. Fraser) and the views that he expresses. I say that quite sincerely. But to-night, in seeking to champion the cause of ex-servicemen who have been retrenched from the Public Service he said, by implication and by direct statement, that this Government has no regard for the rights of ex-servicemen and that, as a matter of policy, it is giving preference to German immigrants as against Australian ex-servicemen. I have personal knowledge of only one of the cases that the honorable gentleman mentioned. I gathered from what he said that the man whose case was referred to me has now been offered alternative employment. It is not easy in Canberra, where opportunities are limited in comparison with other capital cities, to place a clerical employee overnight in another clerical post. I gather that the man has been offered a position in one of the other Commonwealth departments and, for all I know, he has accepted it. The charge has been made that this Government has no regard for ex-servicemen. I do not presume to speak for the ex-servicemen, but I say that on the Government benches of this Parliament there is a greater proportion of ex-servicemen than in any other parliament of the British Commonwealth. I challenge honorable members opposite to disprove that statement. The ex-servicemen of this country know that this Government has a genuine regard for their interests.
I emphatically deny that preference is being given to German immigrants. During recent weeks, there has been a lot of sniping from back-benchers of -the Labour party in connexion with German immigrants admitted into this country. I challenge the leaders of the Labour party to say where their party stands upon that matter. Are they prepared to accept into this country immigrants from Germany who have been screened by an organization that was established by the Labour party when it was in office, or do they say that they will not agree to the admission to this country of any German immigrants, no matter how carefully they may be screened ? I am becoming a little tired of back-benchers of the Labour party sniping at the Government on this issue, while those who claim to lead the party remain silent.
– I rise to order. I take exception to the Minister’s remark that I, as a back-bencher, have been indulging in sniping on this issue. I direct your attention, Mr. Speaker, to the fact that the question relates not to immigration, but to the employment of returned servicemen.
– I do not think there is any substance in the point of order raised by the honorable member for the Australian Capital Territory. On the motion for the adjournment of the House, an honorable member is entitled to talk upon any matter that comes to his mind. If the Minister wishes to avail himself of that right, it is not my affair. If the Minister said anything to which the honorable member for the Australian Capital Territory could take exception, I did not hear it. I admit frankly that, having regard to the noise in the chamber, it is somewhat difficult to keep check upon what is said.
– If the Labour party is opposed to the policy of the Government in connexion with the admission into Australia of German immigrants, let the honorable gentlemen who have authority to speak for the Labour party say so. A policy that they claim to support should not be destroyed by back-benchers, apparently irresponsibly and without reference to their leaders, sniping at it. Ex-servicemen in the Public Service have enough good sense to know that they can look to thisGovernment and its supporters in this Parliament to treat them with a measure of justice that certainly will be no whit inferior to that which they could expect from the Labour party.
Question resolvedin the affirmative.
House adjourned at 11.29 p.m.
The following answers to questions were circulated: -
d asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows : -
s. - On the 20th November the honorable member for Isaacs (Mr. Haworth) asked me a question about a report that Communists in Korea had committed atrocities against prisoners of war. The honorable member stated that he had directed attention to the report on the adjournment of the House on the 16th November and that in replying I had made a limited statement on the subject. He asked whether I had received any further information about these alleged breaches of the Geneva Convention. I informed him that I had followed up my original signal to LieutenantGeneral Bridgf ord by sending him a reminder and that when his reply was to hand I would make it available. I now advise the honorable member that I have received a reply in the following terms : -
No evidence available that victims include Australian personnel. Prisoners of war and missing casualties to 21st November, 1951, are as follows: - Two prisoners of war, 21st January, 1951; three missing, 24th April, 1951. “ Current Affairs Bulletin
– On the 27th September the honorable member for Darebin (Mr.
Andrews) asked a question relating to the publication of the Current Affairs Bulletin. I now inform the honorable member as follows: -
Ithas for some time been considered that the publication of this bulletin being chiefly related to adult education is not properly a function of the Commonwealth Government and it has now been decided that the Commonwealth should discontinue its activity in this field. Because of the undoubted value of the booklet to discussion groups and teaching staffs, the Government has no desire to see the publication cease entirely and has accordingly made arrangements with the University of Sydney’ for the continued publication of the Current Affairs Bulletin by the university. The Commonwealth Office of Education and the Department of Tutorial Classes of the University of Sydney are at present arranging the transfer. It is expected that there will be little, if any, interruption in the publication of the bulletin.
s. - On the 11th October the honorable member for Darling (Mr. Clark) asked the Minister in charge of the Commonwealth Scientific and Industrial Research Organization a question relating to the spread of myxomatosis Australia. Further to the answer then given by the Minister, I have ascertained the following facts relating to the honorable member’s question: -
There is no direct proof that the mosquito is responsible for the spread of encephalitis although the available evidence supports this theory.
The question of a campaign in the Murray Valley to eradicate mosquitoes is considered to be a matter of State administration.
d asked the Prime Minister, upon notice-
– The honour conferred by His Majesty the King upon the Governor-General of Australia, Sir William McKell, has, I feel sure, the unanimous support of the Australian people. I am willing to discuss the matter with the Leader of the Opposition if at any time he should indicate his desire for such a discussion.
Group Constructions Proprietary Limited.
Mr.Ward asked the Prime Minister, upon notice -
Is it a fact that in evidence given on oath last week in court proceedings in Melbourne connected with the liquidation ofa building company known as Group Constructions Proprietary Limited, a Mr. Peter Russell-Clarke, a formerdirector of the company, in explaining the expenditure of large sums of money, stated that it had been used for the purpose of entertaining Senator O’Sullivan, Minister for Trade and Customs, at night clubs and in his own flat?
Did Mr. Russell-Clarke claim that government contracts were discussed on these occasions ?
Does he approve of government contracts being discussed under such circumstances?
If not, has he instituted any inquiries or does he propose to take any action in the matter?
s. - The answers to the honorable member’s questons are as follows.
d asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows : -
n asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows : -
d asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : - 1 and 2. The Government recently received a request from the Association of Co-operative Building Societies to remove all credit restrictions on housing finance. The position is that under present advance policy there is no restriction on the extent to which banks may lend to co-operative building societies. There is, of course, no control over the amount which may be provided by lending institutions other than banks. In the case of the individual home-builder, banks are permitted under advance policy to provide up to £3,000 to finance the building of a house for occupation by the applicant. This figure may be increased to £3,500 where it is necessary to purchase land on which to erect the building.
s asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
t asked the Minister for Immigration, upon notice -
– The answers to the honorable member’s questions are as follows: -
Cite as: Australia, House of Representatives, Debates, 22 November 1951, viewed 22 October 2017, <http://historichansard.net/hofreps/1951/19511122_reps_20_215/>.