20th Parliament · 1st Session
Mr. SPEAKER (“Hon. Annie Cameron) took the chair at 2.30 p.m., and read prayers.
– On Friday last, the honorable member for Melbourne (Mr. Calwell) called my attention to an article that was published in the Melbourne Age of the 18th September, and asked for my guidance on a matter of privilege in respect of it. During the week-end I had a look at the English authorities that I mentioned. In the Walkden ease, .the Committee of Privileges, whose members included the Attorney-General of England, reported as follows: -
They feel that he (that is Mi. Walkden) has disclosed to a newspaper information about party meetings which he well knew was intended to be secret, and the value of which to the newspaper concerned, was, indeed, that it waa confidential and not obtainable through normal sources.
In the A llighan case, the important statements made by the Committee of Privileges were as follows : -
Whether the actual betrayal of information about a private meeting of Members held in a. Committee Hoorn of the House or its publication in the Press constitutes a distinct breach of privilege is a separate and more difficult matter.
The report continued -
Where a Member publishes confidential information to a newspaper for reward,’ ot where a newspaper pays a Member for betraying confidential information which it proceed* to publish, it could hardly be said that either publication had been made in good faith: It is arguable; therefore, that the publication ot confidential information given for, or obtained by payment, about the transactions at a private party meeting, could by analogy be treated aa » breach of the rule against publication ot Parliamentary proceedings. In your Committee’s view, however, this would be straining the rule and this they are not inclined to do. They content themselves with observing that publication of information about secret meetings of his party by a Member clearly involves a gross breach of confidence but is not in itself a breach of privilege.
That conclusion was reinforced by the committee of privilege of this House last year to whose findings I call the attention of the honorable gentleman. If he has certain information which is not known to those, who, like myself, are aware only of the facts that were reported in the press, that is a matter which he himself may raise. However, on the face of the article as I see it, there is no breach of privilege involved.
– Has the Prime Minister received an application from the New South Wales Premier for additional money for the purpose of continuing work on the Blowering dam in Kew South Wales? If so, has the Australian Government any control over the expenditure of the sum of £53,000,000 that has already been allocated to that State? If this Government has no such control, has the New South Wales Government complete authority in listing the priorities in respect of the expenditure of such money ? As the New South Wales Government would appear to have insufficient money to enable it to continue work on the Blowering dam, would this indicate that that Government did not consider that work to be a high priority and preferred to expend the money that was made available to it on nationalizing generating plant - for example, the Balmain power house ?
– Order ! The honorable member is getting outside the scope of the authority of this House.
– If the matters I have detailed are facts, will the right honorable gentleman take them into account when considering such an application?
– I am not aware of the receipt of any such request from the Premier of New South Wales. I read in this morning’s press that he was proposing to send such a communication, but I am not aware of the arrival of one. As to whether this particular work - which is, of course, entirely within the jurisdiction of the State and not in any way under our command or controllable by us in point of priority - should be paid for by the Commonwealth, raises the same kind of question that has arisen all over Australia when, various attempts have been made for the second time to re-open the loan programme. This matter is one entirely for the New South Wales Government, and the question of whether one work or another should be done as a matter of priority is entirely outside the control of this Government. I want to reiterate my recent statement to the House, that to seek to impose a responsibility upon the Australian Government in respect of a matter of which it has no power of direction or choice is, I think, basically wrong.
– Will the Minister for External Affairs indicate the practical objection, if any, to the suggestion that the Government of the United Kingdom should be granted the privilege of having a military representative as an observer at the forthcoming military conversations at Honolulu by the representatives of the three parties to the Anzus treaty considering that the United Kingdom is an important Pacific power? If there is no practical objection, will the Minister take steps to ensure that the suggestion shall be carried into effect?
– I believe that the same considerations apply to the participation of Great Britain in the military discussions about to open at Honolulu as to the general participation of Great Britain in the work of the Anzus Council. I do not want it to be considered that in respect of our purely Australian affairs a representative of the United Kingdom would be anything but entirely welcome, but in this ca.se we are not alone. The Anzus Council is the body which carries out the Anzus treaty. That treaty embraces the United States, New Zealand and Australia. I do not think that it would be proper for me to express any personal view, or a view on behalf of this
Government, in connexion with a matter that concerns the three participants in the treaty. I assure the right honorable gentleman that what he has been good enough to say will be immediately considered. However, I cannot promise that any alteration of the general reply that I recently gave in respect of the Anzus treaty, and its extension, will be possible in the near future.
– Has the Minister for External Affairs any information about a statement that has been made in China to the effect that 2,000,000 Chinese people, described as “ anti-Communist bandits” have been murdered - “liquidated” I. believe is the technical term fashionable in Communist circles - during the last two years? Did this statement have any official backing, and if so, is it believed to indicate the true proportions of the purge of their unfortunate fellow citizens that has been carried out by a government which is now conducting a so-called peace conference in Peking ?
– I saw a published reference to the matter that the honorable mem ber has mentioned, that is the liquidation - to use the modern phrase - of 2,000,000 anti-Communist individuals in China. It is impossible to know precisely how many people have suffered death at the hands of the Chinese Communists. All that can be said, from evidence that we have obtained in many ways, is that very many persons have been killed at the directions of the Peking Government. Having regard to the existence of the great wall that now surrounds the whole of China, and also to other factors, it is not possible to make a more precise statement than that it is undoubtedly true that large numbers of individuals have been killed under the orders of the Government at Peking. As the honorable member has said, that is the Government that is now sponsoring a so-called peace conference at Peking.
– Can the ^Minister acting for the Minister for Labour and National Service inform the House of the landed costs of the prefabricated Nissen huts that are used by British mine-workers at Cessnock, Kurri Kurri and other places? “What is the overall cost of the huts after erection?
– I have not the figures in mind, but I shall obtain the information and supply it to the honorable member.
– My question is directed to you, Mr. Speaker. By way of explanation, I point out that, mainly a.= a result of press reports of the statement that you made to the House last Friday, many persons have inquired w hether the accounts of this House are audited. Are the accounts of the House audited? If so, who audits them? If cot, why not?
– The accounts of the House are audited by the AuditorGeneral, as is shown in his annual report.
– The question that I ask the Minister for Defence Production refers to further dismissals of staff that have taken place at the Lithgow Small Arms Factory. Is it a fact that a considerable volume of work that is being given to private annexes could be done at the Lithgow factory? If so, will the Minister take action to divert orders for such work to the Government establishment? “Will he also investigate the practicability of arranging for the Small Arms Factory to make certain technical equipment that is required by the Postal Department and thus ensure continuity of employment for the operators at the factory? Because of the uncertainty that the dismissals have caused amongst employees, will the right honorable gentleman make a statement that the defence programme will not be impeded and that the full labour force at the Lithgow Small Arms Factory will be retained ?
– The honorable gentleman has asked whether certain work that is being done at private annexes might be done at the Lithgow Small Arms Factory. I know of no such work. The class of work that can be done al the Small Arms Factory is somewhat limited. Although I know of no orders for such work that have been diverted from the factory, I have asked the Department of Defence Production to supply me with information so that I may determine whether it is possible to provide the Small Arms Factory with sufficient work to enable it at least to retain most of the staff that is employed there. The honorable member has spoken of dismissals. He knows that the Lithgow Small Arms Factory is a large establishment, which deals almost exclusively with small arms, and that, in times of peace, a full staff obviously cannot be maintained unless additional work of another kind is provided. Orders for such work were forthcoming from private enterprise, but many of those orders have now been cancelled. This means that employees who were engaged on that class of ‘ work have had to be dismissed. I shall examine the possibility suggested by the honorable gentleman and ascertain whether anything can be done to provide full employment for the staff at the factory.
– Can the Minister acting for the Minister for Immigration inform me whether the Commonwealth has any responsibility in respect of immigrants recruited by the several State governments for employment in public utilities in Australia? If the Commonwealth has any responsibility for them, can the Minister do anything to ensure that the legitimate and .probably contractual expectations of immigrants who have been recruited by the New South Wales Department of Railways, for example, shall not be disappointed?
– The Commonwealth has no responsibility with respect to immigrants known as project workers, who are brought to Australia under schemes conducted by the several State governments, and, in this particular instance, by the New South Wales Government for employment in the railway service of that State. The particular incident to which the honorable member has referred-
-Order! I ask the Minister to ignore the interjection, and reply to the question.
– The particular case to which the honorable member for Warringah has referred was reported to me yesterday. The matter was disturbing, because nineteen immigrants who came to this country in accordance with a representation that, immediately on their arrival here, they would be given employment in the New South Wales Department of Railways, were informed, when they reached Sydney, that there were uo jobs for them. Although it was not the responsibility of the Commonwealth, I naturally, because our immigration policy and our good name were involved-
– What good name?
– Order ! The honorable member for East Sydney must not interject.
– I communicated with a New South Wales Minister, who was good enough to tell me that the State Government was considering the matter, and would do what it could to ensure that those immigrants would obtain employment.
– Is the Prime Minister aware that the fact that some immigrants who come from Great Britain to Australia on the receipt of a promise, made before they leave the United Kingdom that they will be given employment here, and who refuse to work on their arrival in Sydney or Melbourne, is detrimental to the whole Commonwealth? In view of the fact that the States have been starved financially by the Commonwealth, will the right honorable gentleman take some action in order to relieve unemployment, not only among immigrants but also among Australian citizens ?
– The Minister acting for the Minister for Immigration will answer the question.
– I agree that the fact that immigrants who have been promised employment by State governments and who have not been given jobs on their arrival in Australia is detrimental to the good name of the Commonwealth. Tt was for that reason that I made representations to the New South Wales Government in respect of the immigrants to whom the honorable member for Warringah referred. Pending the result of those representations, the Commonwealth authorities are taking care of the immigrants in its hostels i:n. Sydney.
– My question is addressed to the Minister acting for the Minister for Labour and National Service, and I point out, by way of explanation, that. I have received representations from 8 number of immigrants who would like to engage in share farming. Is the Minister prepared to consider conducting a survey with a view to ascertaining the number of farmers who may be willing to provide a portion of their land for immigrants on a sharefa rming basis for the production of vegetables, fruit and. other commodities?
– The matter which flic honorable member for Sturt has raised is rather outside the scope of the, functions of the Commonwealth Employment Service. However. T shall examine the position with a view to ascertaining whether assistance can be given in the way suggested by the honorable gentleman.
4’/’/’, Ward hewing been called by Mr. Speaker,
Opposition MEM bubs - Hear, hear !
– Order ! Will the honorable member for East Sydney resume his seat? If there are to be cheers on these occasions, honorable members will find out that I have ray own way of dealing with the situation. The honorable member for East Sydney asks more questions in this House than any other honorable member.
– But I do not receive answers to my question..?.
– Order ‘ That matter is outside my control. I will not have it made to appear that I am exercising any bias against the honorable member for East Sydney when I call honorable members who desi re to ask questions without notice. Further, I wish to make ?’ very clear that if certain honorable members will indulge in interjecting while questions are being asked and answered, I shall regard each interjection a3 a question asked and the honorable members concerned will not then get the call very often.
– I direct a question to the Minister representing the Minister acting for the Minister for Civil Aviation, Since a working arrangement was determined by the Government with regard to Trans-Australia Airlines and Australian National Airways Proprietary Limited, is the Minister able to state approximately the percentage of mail traffic that has been allocated to Trans-Australia Airlines, Australian National Airways Proprietary Limited, and other operators?
– As the representative in this House of the Minister acting for the Minister for Civil Aviation, I shall refer the question, to my colleague and obtain an answer for the honorable member.
– I direct a question to the Treasurer. Has the Treasurer been able to give any consideration to the many representations, that have been received on the proposed amendment of the law with regard to the retiring allowances that are provided for in the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1952, that- is at present before the House? If be, has been able to do so, would he inform the House of any recent informal tion that is available?
– Subsequent to my introduction of the Income Tax and Social Services Contribution Assessment Bill (No. 3) .1952, many instances have been brought to my no.ti.Ge of eases in which clause 6 of the bill, which deals with amounts received-
– I rise to order.
– Will the honorable member state the standing order on which he bases his point of order?
– The question that has been asked by the honorable member clearly relates to business on the noticepaper. The Treasurer has brought down a bill dealing with the subject-matter of the question that has been asked and the Treasurer is proceeding to answer it. II is a clear rule of the House that business on the notice-paper cannot be anticipated.
-Order ! The honor.:ih ie member is quite wrong. Standing Order 142 states -
Questions may lie put to a Minister, relating to public affaire with which he is officially connected, to proceedings pending in the House, nr to any matter of administration for which he is responsible.
– I shall start all over again in reply to the question that has been asked by the honorable member for St. George. Since the introduction of the Income Tax arid Social Services Contribution Assessment Bill (No. 3) .1.952, many instances have been brought to my notice of cases in which clause 6 of the bill, which deals with amounts received on the termination of, or retirement from employment, may operate unjustly. Many examples have been produced of the effect which the clause would have on superannuation schemes.
-I rise to order. Is it in order for the Treasurer to read an answer to a question that allegedly has been asked without notice? 1
– Order ! If I have to enforce the Standing Order with regard to the reading of speeches in this House, very few will be made unless I take on the joh myself.
– This is a case of intelligent anticipation. Investigation of these cases has indicated that there are anomalies - -
– I rise to order. It is quite obvious that the honorable member for St. George asked whether he might be permitted to submit a question to the Treasurer without notice. It appears, to my small understanding, either that the Treasurer has anticipated the question in a most uncanny fashion, or that it was not asked without notice.
– It is not my duty to judge that issue. The habit of making arrangements with Ministers to answer questions is one that 1 have observed under other administrations. If the House wishes me to undertake the task of deciding when a question has not been asked without notice, I shall do so gladly.
– I rise to order. If I heard you correctly, Mr. Speaker, a few moments ago you said that if you prevented honorable members from speaking on the ground that they were reading their speeches, quite a few speeches would not be made. I have been a member of the Parliament for a good many years. .
– What is the honorable gentleman’s point of order?
– I believe that the great majority of the speeches delivered in this chamber are not read speeches. I think that your remarks are an unfair reflection on the members of this House.
– Order ! If it is a reflection, it will remain.
– In order that honorable members may learn the full content of the answer to the question, I shall start a.gain. In reply to the question asked by the honorable member for St. George, I desire to say that, since the introduction of the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1952, there have been brought to my notice many instances in which clause 6 of the measure, which deals with sums received on termination of or retirement from employment, may operate unjustly.
– I rise to order. I point out to you, Mr. Speaker, that item No. £ on the notice-paper, under the heading “ Government Business “, is “ Income Tax and Social Services Contribution Assessment Bill (No. 3) 1952 “-
– Order i I have already ruled against that submission
– I wish to direct your attention to that fact, and also to the fact that the Treasurer has already made a second-reading speech upon that bill. Apparently, he wishes now, in reply to a question alleged to have been asked without notice, to make another secondreading speech upon it.
-I have ruled that, so far, the Treasurer is in order.
– Let me begin my reply for the fourth time. I desire to say, in reply to the question-
– I rise to order. There is a standing order that deals with tedious repetition. The Treasurer has repeated a statement three times. I suggest that he be called to order for indulging in tedious repetition.
– If that standing order applies to the Treasurer, it applied first to those honorable gentlemen who are raising points of order.
– Let me make another effort to reply to the question. Subsequent to the introduction of the Income Tax and Social Services Assessment Contribution Bill (No. 3) 1952, there have been brought to my notice many instances in which clause 6 of the measure, which deals with sums received on termination of or retirement from employment, may operate unjustly. Many examples have been produced of the effect that the clause would have upon superannuation schemes. Investigation of these cases has indicated that, although there are anomalies that require to be removed, it is important that care should be exercised not to create others. In the circumstances, the clause, which is based upon a report of the taxation committee, should, in my opinion, he withdrawn so that the whole problem can be reexamined. I have discussed this matter with other members of Cabinet, and we have all agreed that that is the appropriate course to follow. Therefore, in committee, I shall move for the deletion of the clause, so that the whole matter may receive careful and full reexaminarion.
– My question is addressed to the Minister representing the Minister for Repatriation. Is it a fact thata trust fund has been established from which assistance can be given to exmembers of the armed forces who are in mental asylums? If so, could a payment be made from the fund to assist the mother of a mentally afflicted ex-soldier? She is 96 years of age, and is in need of assist- ance.
– If the honorable member will inform me of the details of the case to which he has referred, I shall cause inquiries to be made with a view to ascertaining . whether the assistance for which he has asked can be given.
reportofpublic Works Committee.
– I present the following report of the Public Works Committee : -
Re-submission of the proposal to erect the National Library and Roosevelt Memorial at Canberra. (Australian Capital Territory).
Ordered to he printed.
In Committee of Ways and Means:
Consideration resumed from the 18th September (vide page 1745) on motion by Sir Arthur Fadden -
– (1.) That, in this Resolution . . . (vide page 1738).
.- The Treasurer (Sir Arthur Fadden) made heavy weather in introducing this motion and also in the debate on a related measure. He was ill at ease. He has already described himself as being the most unpopular man in Australia, which is a description that fits him well. For once he has told the truth about himself. He will be equally unpopular after this resolution has been passed and the hill which will be based upon it has become the law of the land. The right honorable gentleman devoted a. great deal of his speech to an endeavour to make it appear that the argument submitted by the Leader of the Opposition (Dr. Evatt), that the proposed 10 per cent. reduction of income tax is not a worthwhile reduction because of the unstable conditions of our economy, is false. The basic wage increases every quarter because the Government is doing nothing to put value back into the £1. As a result of the Government’s inactivity each increase of the basic wage throws an additional tax burden upon the recipients. Therefore, as the Leader of the Opposition has pointed out, the so-called income tax , reduction of 10 per cent, will be of no financial benefit to a basic wage-earner or to any person whose wage’ is regulated in accordance with the quarterly increases of the basic wage. For instance, the Treasurer argued that the Leader of the Opposition was wrong, or was misled, in saying that a man with a wife and two dependent children, who is in receipt of a small wage, would be actually worse off after this alleged tax reduction of .10 per cent, had been granted. The Leader of the Opposition said that a taxpayer in receipt of an income of £500 a year would pay tax of £9 lis. this year, and that a person who had received a salary increase of £100, which would bring his income to £600 a year - and remember, that increase of £100 was given to meet the increased cost of living that had taken place in the previous year - would face a tax liability of £18 6s. this financial year. The Treasurer’s answer to that argument is that if the Government did not reduce taxes by 10 per cent, that person would have to meet a tax liability of £20 14s. instead of £18 (is. The truth is that such a tapayer will have to pay this year a tax of £1S 6s. as against the amount of £9 lis. that he paid last year, because his financial position has grown relatively worse in the intervening twelve months due to the inability of the Government to restore value to or maintain value in the £1. It should, at least, restore stability in the economy in which, of course, there is no stability now. The position is daily growing worse. It is idle for the Treasurer to say that when the Chifley Government was in office the money value of incomes changed and that no government can preserve a constant aggregate amount of income in the hands of taxpayers. If inflation existed at all during the regime of the Chifley Government, it existed only to a minor degree compared with present inflation. Last year, the basic wage was increased by 38s. a week: but it has already been increased by 27s. a week during the nine months of the current year. That means that consequent on the rise of the cost of living it has been necessary to increase the basic wage by £3 5s. a week in 21 months.
The Treasurer will not win any vote of thanks from the electors of Flinders or from Australians generally for the concessions that he claims the Government is making under this measure. The right honorable gentleman says that the Government is giving back £33,000,000 to taxpayers as a result of the remission of the overall increase of 10 per cent. But that overall increase was levied last year and despite its remission, the fact remains that during the current financial year the Government will collect an amount from taxes that will be almost double the . revenue that the Chifley Government, which, unfortunately, was defeated on the 10th December, 194.9, derived from taxation in 1949. Collections from indirect as well as direct taxation are expected to be 100 per cent, greater this year, whilst in the indirect tax bracket, collections from sales tax will also be 100 per cent, higher. Likewise, collections of company tax will be 100 per cent, higher than’ the revenue that was derived from that source in 1949. This Government will have to give back a sum many times greater than £23,000,000 before it will be able to recover its waning - I should say, its waned - popularity. Remissions of tax on personal incomes during the current financial year will total £14,000,000, but, of course; that amount will be only equal to the amount that was derived from the overall levy of 10 per cent, that was imposed last year. The Government cannot expect that the people will believe that this is an incentive budget in contrast to last year’s budget which, in the terminology of the Treasurer, was a “ horror “ budget. I believe that he has left that remark as part of the taxation history in this country and that that experience will not be repeated. But he attempts to justify these concessions by the argument that economic circumstances have changed compared with those that existed last year. If our economic circumstances have changed, they have changed not for better but for worse. The fact that the Government admits that at present there are over 58,000 persons unemployed, which, of course, is only a fraction of the real number of persons who are now unemployed, indicates that more persons are unemployed to-day than were out of work last year. When we look at the state of business generally and when we see the Government slashing imports to only 20 per cent, of total imports last year, be cause it frittered away £596,000,000 of our valuable London credits last year, we realize that economic circumstances have changed but that the changes are not of the order, or the kind, that the Government pretends they are.
The Government has been provoked by fear and inspired by terror to make the concessions that are being made under this measure. The effect that the “ horror “ budget had on the people struck terror into the hearts of all Government supporters whose sycophantic and synthetic cheers will not avail them in their present difficulty. Fear of what will happen to their colleagues at the election that is to be held for the Senate next year and to themselves at the next general election, has forced the Government to make the concessions that are now being made. The Government, also proposes to meet its budget deficit by the use of treasury-bills. It is anticipated that the deficit may be of the order of £100,000,000. But what is that to a government that finds itself in difficulties? Yet, in the past, this Government condemned the use of national credit for the purpose of balancing the budget. The Government is in a bad way. It is idle for it to contend that conditions to-day are better than they were twelve months ago, and that that fact justifies it in making these taxation concessions. If the Government had followed good Treasury practice it would not have been anxious to make these concessions in the face of the fact that economic conditions have deteriorated. These concessions would be fully justified if economic conditions had improved, but everybody is aware that they are growing worse. The Opposition longs for the day when it will have an opportunity to meet Government supporters on the public platform on the issue of the Government’s record. Some days ago, the
Prime Minister said, “Let us be judged on our record If these concessions are part of the Government’s record, my colleagues and I shall be pleased to let the Government be judged on its record.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
.- .1 desire to say a few words about the rate of income tax that is levied on the pay of members of the Citizen Military Forces, that is, the volunteer forces, and their equivalent in the Royal Australian Air Force Reserve and the Royal Australian Naval Reserve. Tax on such pay i3 assessed in exactly the same way a? it is on other personal income with which it is aggregated for income tax assessment purposes. That has the effect of placing these volunteer servicemen in a higher category for taxation purposes. On previous occasions, I have directed the attention of the Government to this matter and I am sorry that it has not seen fit to do anything about it. The first reason why I again direct attention to it is that the amounts involved are not large. The average pay slip for these volunteers in any of the branches of the services would not amount to £100. Consequently, assessment of tax on these amounts separately would not involve the Treasury in serious loss of revenue. However, although the total amount involved is not important, the regulations, as they are now applied, have a bad effect upon recipients of income of this kind. By aggregating this income with other income, the individual’s income as a whole is subject to tax at a higher rate than would otherwise be applied to it. Thus, these individuals pay more tax than they would be obliged to pay if they had not seen fit to give some part of their spare time to the service of their country. It would appear that the Treasurer’s only justification for this practice, as a result of which the Treasury obtains a few miserable additional pounds, is that it has the effect of placing recipients of this pay in a higher taxation bracket. The second reason why
I raise this matter again is - and I say this deliberately - that it creates a feeling among these volunteers that the Government does not recognize the importance of the services that they are rendering. It also creates a doubt that all the talk that they hear about the existence of an emergency and about the necessity for defence expenditure is not sincere, when by making a minor amendment the Government could remedy this injustice.
In passing, I desire to deal with members of the Citizen Military Forces and those of allied organizations in the different branches of the services. The Army consists of three branches, the Australian Regular Army, which is of very small size, the national service trainees, who are very young and who in time of emergency could not be employed overseas because they are not volunteers and are too young anyway; and, finally, the Citizen Military Forces. The Citizen Military Forces are, in effect, the only forces that the country may call up and send overseas should an emergency arise. It is not for me to say whether such an emergency is likely to arise, but if we take heed of government policy and listen to the warnings repeatedly given by the Prime Minister (Mr. Menzies), the Minister for Defence (Mr. McBride) and other Ministers who have seen conditions overseas, then at least there is some possibility that an emergency may arise. As the Citizen Military Forces are the only forces, apart from our tiny regular army, that are in a position to fulfil the very large obligations that we have entered into with allied powers, then surely we should treat such forces in a proper fashion. The members of the Citizen Military Forces sign up to serve anywhere in the world, and I suggest that that is a considerable sacrifice because clearly their wives and families do not like them so doing. Moreover, they have to give up a great deal of their own time to the army, which certainly entitles them to retain their very small military pay free of taxation.
I believe that neither the Government, nor even the Minister for the Army, fully realizes the amount of time that it takes to be an active member in any one of our voluntary forces. The majority of those in the Citizen Military Forces are officers or non-commissioned officers, and they must parade once a week. They must also attend an annual camp of about eighteen days’ duration and must give up a lot of their week-ends to additional camps and parades. Any one of officer or noncommissioned officer rank has also a great deal of work to take home with him. It is certainly time that the Government recognized its obligation to these men and did something to meet them half-way in the matter of tax concessions. Indeed. I am amazed that something of this nature has not been done before this. The matter has been put forward, and fair words have come from this Government and from other governments. Fair words are not enough. The time has arrived when some action should be taken” It is no answer to our request to say, “ We should like to do something, but the Treasury has pointed out that there are difficulties in the way “. Surely the Treasury does not run the country. If it does it should not do so. We have a government in this country, and this is a simple matter of policy. Therefore, it is high time that it was attended to.
– The taxation of the forces was a matter of Cabinet decision.
– If that is so, it is a wrong decision. If the Government wants people to join the forces, it should meet them half-way in relation to their taxes. It is unjust and ridiculous that we should spend millions of pounds on recruiting campaigns which, incidentally, are not effective, and not help the men already in the services. One of the reasons why the recruiting campaigns are not effective is that ‘the Government will not do something for the people who are doing so much of the work and giving so much of their time to the security of Australia. The time has come when the great majority of the opinion in this Parliament, and there are many ex-servicemen here, can reasonably expect some action by the Government about this matter. I hope that the Treasurer (Sir Arthur Fadden”) will give it his most serious consideration, and I hope that next year I do not have r,o rise and make this speech all over again.
– The schedules now before the committee are rather illuminating. T am sure that the Treasurer (Sir Arthur Fadden) has not the slightest idea of the effect of the new scales upon certain groups of taxpayers. I am certain moreover that he has not the slightest conception of the effect that the new rates of taxation will have upon the income of a fitter, a basic wage earner or an average wage earner - and honorable members should bear in mind that there are about 2,600,000 wage and salary earners in Australia. I ask for leave of the House to incorporate three tables in Ilansard.
– What is the nature of the tables?
– They are three short tables that show the effect of rates of taxation on wage and salary earners.
– I have no objection to their incorporation in Hansard.
The DEPUTY CHAIRMAN (Mr. Bowden V - Leave is granted to incorporate the three tables in Hansard.
– The tables are as follows : -
The three tables that are shown above are all based on the basic wage in Adelaide and marginal rates, where applicable, for Adelaide. A basic wage earner with a wife and five children who paid no income tax under the 1949-50 and the 1951-52 budgets, will now be required to pay £3 12s.
– Why is that?
– because the basic wage has increased by about £100 a year.
– Yes, the sole reason is that the man now has more taxable income.
– But the purchasing power of his income has not increased. A man with a wife and two children who paid 10s. a week under the last Chifley budget, according to the new proposals will now pay £16 17s. 4d. That is an increase of £9 5s. 4d. on last year’s taxation rate and £16 7s. 4d. on the taxation rate of the last Chifley budget. Therefore, that wage-earner’s taxes have increased by 3,270 per cent, on the last Chifley budget rates.
– That is solely because the taxpayer has received more money, and consequently has a higher taxable income.
– He has received more money but his costs have increased. The Chifley Government recognized that a basic wage earner with a wife and two children, generally speaking, should not pay any tax at all, but under this proposal he will be required to pay £16 17s., which, I repeat, represents an increase of 3,270 per cent, on the amount he was required to pay under the last Chifley budget. I suggest that such a rate of taxation on a basic wage earner with a wife and two children is monstrous. Even the South Australian Liberal Government, until 1941, provided in section 12 of its Income Tax Assessment Act that -
Where the taxpayer has a spouse and at least one child under the age of sixteen years «t the commencement of the year of income, wholly dependent, on the taxpayer throughout the whole of the year of income, and the net income of the taxpayer does not exceed two hundred and twelve pounds, the taxpayer shall be exempt from tax.
The basic wage at that time was at the rate of £212” a year, and- so honorable members will perceive that in South Australia a person with a wife and one child did not pay any income tax at all if he earned only the basic wage. I agree with much that was said by the honorable member for Henty (Mr. Gullett). He is not the only one who has questioned the Government’s sincerity about taxation. However, I disagree with his statement that ex-servicemen are refusing to serve their country in the Citizen Military Forces because they have to pay income tax on their earnings. I do not think that he meant that, because I think that he would be the last to suggest that an exserviceman would not serve his country because he had to pay a little tax. Altogether I do not think that there is much validity in his reference to ex-servicemen. However, he spoke quite truly when he said that the people of Australia are beginning to doubt the sincerity of the Government, and I say that it is time that the Government did something of a practical nature to demonstrate its sincerity. The Government would have convinced the people of its sincerity if it had included in the bill a provision that any cost of living increment during the income year should be deductible for the purposes of tax. Such a provision would obviate the disability that I have mentioned.
The tables to which I have referred show that a man with a wife and two children, who earned the average Australian wage, paid £13 lis. under the 1949- 50 ‘ budget and £22 8s. under the 1950- 51 budget, but under the so-called incentive budget for 1952-53 he will pay £33 14s. Those figures show that his tax liability has increased by £20 3s., or 148.7 per cent., since the last Chifley budget was introduced. Nominally, his income is much larger than it was in 1949, but the cost of living has increased so considerably that its true purchasing power is no greater than it was in that year if, indeed, it is even as great. When we take into account the additional tax of £20 3s. that he must pay this year, it is obvious that the purchasing power of his net income this year will be less than it was in 1949. A fitter working under the metal trades award ia the most highly paid tradesman of all. Such a man, with a wife and two children, paid £10 9s. tax in 1949-50, and will be called upon to pay £37 Ss. this year. That means that his tax liability has increased by 257.8 per cent, since 1949. But that is not the case with the man who receives £5,000 a year. The Government has placed him in a different category. Last financial year, such a man paid £2,297 in tax. This year he will receive the benefit of a reduction of £229. That rate of income applies in the main to wealthy pastoralists, bondholders, and others-
– Members of the Liberal party.
– Yes. The incomes of such taxpayers are not affected by the fluctuations of the living wage. In the words of the honorable member for Henty, the people are beginning to question very much the sincerity of this Government.
– These tax proposals of the Treasurer (Sir Arthur Fadden) mark a welcome downward change in tax rates and, therefore, the general taxation scheme for the current year will be very acceptable. Certain details of the plan call for further examination, but that should not affect the overall commendation that honorable members and every honest-minded member of the community will give to it. I agree with the honorable member for Henty (Mr. Gullett) that something more should be done for part-time military trainees. This matter does not affect the revenue very much, but it affects the general outlook of the public towards the armed forces as a whole and towards the individual members of the forces. It is important that we should recognize the value of part-time military service, and I hope that the Government will take notice of the suggestion by the honorable member for Henty.
For two reasons, I am at variance with the proposals of the bill as it stands in relation to retiring allowances. I know that this involves a complex problem, upon which there is something to be said for each side. However, two aspects are worthy of consideration. First, the pre posed alteration of the law that the committee is now considering will affect very drastically the position of persons who have made plans for their retirement. The effect of the proposed legislation will: be in a sense retrospective, and thereforebad. I know that, technically, the provision will not be retrospective,, because it refers to rates of tax. that will be levied during the current income year. Nevertheless, it will have a.n adverseaffect on persons who have framed their whole way of life over many years oil the expectation of receiving a retirement allowance. Unless the bill is substantially altered, the value of the amount that they will receive will be drasticallyaltered by the Government in a way that will make their plans abortive. This is an injustice that the Government might well try to avoid. Such drastic changes always have undesirable features. .1 realize the complexity of the problem, but it requires attention. The second point that I emphasize is that persons who have invested lump sums in order to provide for their retirement will hedeprived of the age pension. After all,, the sum of £10,000, which the Treasurer has set as the upper limit for investment,, will not provide much more than the pension for a married couple if it returns interest at the rate of 4 per cent. Therefore, while the means test remains . in existence, we should provide for the assistance of persons who have made their own arrangements for retiring allowances. The clauses in relation to retiring allowances should be re-drawn.
The Government has tried to frame its taxation plan in such a way as to help desirable forms of production to the greatest possible degree. That is the whole, purpose of the incentive budget. However, production of an important kind has been overlooked. I refer to the mining and processing of uranium. Taxation policy should be framed specifically to enable us to take full advantage of the economic opportunities that are available to us. Special provision ia made in the taxation system for- the purpose of encouraging gold production. Gold is compulsorily acquired by the Government at a set price- and, under section 23 of the Income- Tax and1 Social
Services Contribution Assessment Act, profits derived from gold-mining are relieved of a measure of taxation. Uranium should be placed in the same category as gold. The Government has power to acquire uranium at an uneconomic price. The rate in Australia is 17s. 6d. per lb. of U308 content, whereas the equivalent rate in the United States of America is very much -higher. The price paid in that country is 5 dollars or 6 dollars per lb. How much wheat would be produced in Australia if the entire harvest were compulsorily acquired by the Government at 4s. or 5s. a bushel? Farmers simply would not grow wheat for such a low return. But such a condition of affairs is prevailing with respect to uranium. It is -compulsorily acquired, as is gold, yet the Government does not grant to uranium production the same tax concessions as Are granted to gold. I believe that the Government should remedy that matter.
In my opinion, there has been a fundamental failure in our approach to this problem. We have not given private enterprise the opportunity to mine uranium. We acquire, at an economic figure, all the uranium that is produced; we make it difficult for prospectors to get a title for the deposits they find and we tax them on their returns. The first two matters can, and should be remedied by administrative action, but the correction of the third matter will require legislation. I hope that the -Government will see fit to include in the Income Tax and Social Services Contribution Assessment Bill 1952 a provision that will place uranium on the same footing as gold in relation to tax concessions.
South Africa, which is vastly less well endowed with uranium than Australia, nas plans which, in the words of the Minister for Mines in that country, will make uranium in South Africa comparable in importance to gold. Incidentally, South African gold production is valued at approximately £180,000,000 a year. Australia, which has greater opportunities than South Africa in thirespect, should have comparable figures. Our national wealth should be augmented %y uranium by an amount approximately as large as the wool cheque! That accre tion will not happen until we get private enterprise interested in the production of uranium. 1 hope that the Government will give serious consideration to this matter.
The DEPUTY CHAIRMAN.Order! The honorable member’s time has expired.
Mr. CREAN (Melbourne Ports) [3.3SJ. - When the Treasurer (Sir Arthur Fadden) was presenting this proposed resolution to the committee last Thursday, he quoted, and disagreed with, the example used by the Leader of the Opposition (Dr. Evatt) in the budget debate to show that taxpayers in 1952-53 would be worse off, despite the reduction to be made in the rates of tax. The Treasurer ma( the following statement : -
The essence of this claim is that taxation rates should be levied in such a way that full account shall be taken each year of changes in money income in order to preserve a constant real income in the hands of taxpayers.
Later, the right honorable gentleman made the following claim : -
The taxing legislation is no place in which to attempt to offset fluctuations in money values.
I admit that when money values fluctuate as violently as they have in the last year or two it is difficult to preserve any sort of reality in the tax scale between concessions which at one time were deemed adequate, and those which are adequate under the altered conditions. Nevertheless, in the interests of justice, some attempt must be made in taxing legislation to offset fluctuations in money values. In other words, standard reductions for income tax purposes should be adjusted from year to year in the light of changes in circumstances. I shall point out the sort of differences that have occurred.
A fundamental difference in the method of taxation was made in the financial year, ended the 30th June, 1951, when there was a turnback from the concessional rebate method of granting allowances for dependants to the concessional deduction basis. Actually, a complete change was not made, because logically, if the new system of concessional deductions was intended to replace the concessional rebate system, there should also have been a reversion to the statutory exemption, which implied that a certain basic amount of income should not be taxable. That is, presumably, the amount of income which an individual requires to provide for his needs - a kind of subsistence allowance, which should be a basic amount, to begin with, with additional amounts for the support of a wife and each dependent child. Other concessional deductions were allowed in respect of payments for hospital treatment and medical attention, and contributions to life insurance companies and superannuation funds.
An examination of the table of concessional deductions supplied with this proposed resolution reveals that no provision is made in the tax schedules for a statutory exemption. It is perfectly true that income tax is not payable by a person unless his income exceeds £104 per annum. But if an individual has a taxable income, the first £104 of it becomes liable to tax. In other words, the principle of the basic statutory exemption has not been adopted. I suggest that a fairly radical change should be made in’ the tax structure, particularly at the present time when £104 a year, which is only £2 a week, is supposed to support a wife, £78 is supposed to support the first child, and £52 is supposed to support each succeeding. child. Those amounts are completely inadequate for such purposes in 1952.
A few days ago when the Prime Minister (Mr. Menzies) made a statement about the attitude of the Government towards the basic wage, he quoted the famous definition of Mr. Justice Higgins, to the effect that the basic wage should be the amount which would keep a man, wife and a family unit as human beings living in a civilized community. I mention, in passing,’ that a difference of opinion exists regarding the definition of a family unit. However, a normal human being living in a civilized community at the present time, requires more than £104 per annum for his support, more than £104 per annum for the support of a wife, more than £78 per annum for the support of his first child, and more than £52 per annum for the support of each succeeding child. I believe that a fundamental alteration should be made in the tax structure The basic exemption at least should be £300, or perhaps even £500 or £600, and no tax whatever should be levied on the statutory figure. I realize that the adoption of my proposal would mean that higher rates of tax would have to be applied ‘ to the taxable residue of the income, but, nevertheless, some attempt should be made in 1952 to determine a new standard higher than that which has prevailed throughout nearly the whole history of income tax in Australia. The amounts prescribed ten or fifteen years ago are entirely irrelevant to present-day conditions because of the violent fluctuations in money values.
I disagree with the statement of the Treasurer that the tax assessment legislation is no place in which to attempt to offset fluctuations in money values. I believe that money values are of vital concern to taxpayers, and the acceptance of that opinion is bound up with the idea of a progressive tax. Naturally, a progressive tax must take into account the basic factors of social justice, which are the sums required to keep a man, and his wife and family in reasonable circumstances under present-day conditions. I suggest that the table does not do that, because on a taxable income of £104 an individual pays a tax of 8s. 4d. and the levy grows as his income rises. Probably some taxation assessments hardly pay the cost of collection from an economic point of view when one considers the necessity of the taxpayer to lodge a return, and the paper work that must take place in the Taxation Branch. If the present schedule that is before the committee is studied carefully, honorable members will note that if an individual’s taxable income is less than £150, the difference between the tax that is paid on £104 and £150 is very small. “When an individual’ receives an income of £150, his tax is £1 13s. 4d. That sum hardly seems worth collecting when the amount of work that is involved in preparing the return, filing and recording it, assessing the tax and sending the demand to the individual is considered. Even on an income of £250, the tax that is payable in certain cases is only £7 a year. That is not a large amount and its loss would not involve a big decrease of revenue. In effect, this schedule is changed very little from that of the year ended the 30th June, 1950.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
– The honorable member for Melbourne Ports (Mr. Crean) dealt with a question that must be prominent in the mind of every honorable member. I believe that no Government can be too liberal with unemployment benefits, particularly if it considers unemployment relief to be only a temporary expediency. This Government proposes to double the amount that is to be paid for unemployment relief and to reduce taxation on other sections by 10 per cent., but then it proposes to fix a figure with regard to minimum taxable income that will bring a man’s meagre relief allowance within the taxation scale. I do not believe that such action was ever thought to be possible in a country such as Australia. The Treasurer (Sir Arthur Fadden), in considering some form of relief from income tax that was desirable for a section of the community, established a figure for the commencement of the taxation scale which he must have thought to be equitable. In dealing with those persons who are over 65 years of age in the case of men and 60 years in the case of women, the Treasurer said -
A further proposal in relation to individuals is the extension of the age allowance first introduced last year. This provision exempts from tax liability men over 65 years and women over 60 years whose incomes do not exceed the maximum permissible income for age pension purposes.
The Treasurer went on to say that the point of exemption was to be increased by £20 to £254 in the case of a single person and by £39 to £50’7 in the case of married couples. If the Government believes that those figures are the proper commencing point for the application of taxation, T suggest seriously that a similar scale should be applied to superannuated persons. I draw the attention of honorable members to the case of a superannuated railway worker who receives £508 a year from a contributory scheme because of the more humane approach of State governments to his problem. If he is a married man with a wife to keep, the Australian Government will extract from him about £22 a year in income tax, even under the proposals that are now before the committee. That example shows clearly the narrow-minded approach of this Government to the minimum rate of income a: which taxation commences. The whole structure of decency and fair play falls to the ground when a superannuated railway man has to pay £22 a year in taxation because he receives £1 a year more than an age pensioner and his wife. If it is equitable for an aged couple to have relief from taxation on a total income of £507, it is much more important that a young couple who are attempting to rear a family should be on the same basis for taxation purposes. The Treasurer has claimed that the Government is affording relief, but a very great hardship is to be imposed on that section of the community whose members contribute to superannuation. The proposed taxation scale will actually put a man who receives unemployment relief into th, income tax bracket. That alone would not be so bad, for the amount involved is small. But when that man returns tn work, the unemployment relief payments become taxable in addition to the remainder of the income. Every wageearner in this country, even if he be in receipt of only the unemployment benefit, will he brought within the field of income tax. I urge the Government strongly to do something to assist superannuated people. If it does not do so, it will hear more about the matter later.
– No threats!
– It would be far better to give relief from taxation in the manner that I have indicated than to reduce the income tax liability of the honorable member for Gwydir (Mr. Treloar) and myself by 10 per cent. Compared with the people to whom I have referred, we could well afford to do without that relief. It would be better for the Government to give relief to those who need it most - that is. people in the low income group. If the honorable member agrees that, in the case of a man over 65 years with a wife over 60 years, it is proper that income tax should be levied only upon the sums by which the joint annual income of the man and his wife exceeds £507, surely he must agree also that a similar provision should apply to a married couple in receipt of superannuation benefits. Under the Government’s proposals, if the joint income of such a couple exceeds £507 a year by only £1, income tax will be levied upon the whole of their income in excess of £104 and they will be required to pay £23 ls. a year.
If the Government does not amend that proposal, it will have much to answer for in the near future. I urge the Treasurer strongly to re-examine thi3 phase of his tax proposals, and to consider whether relief can be given to superannuated persons. Under this measure, some relief will be given to age pensioners, but undue hardship will be inflicted upon superannuated men and women. That position should not be tolerated by any government that has any conception of decency.
– I was astonished at the reply of the Treasurer (Sir Arthur Fadden) to the statements that were made by the Leader of the Opposition (Dr. Evatt) about the effect of the increased cost of living. The Treasurer’s statement that the increased cost of living does not justify an alteration of the basis of income taxation is, to some degree, belied by the proposals now under consideration. Paragraph 6 of the motion, which deals with the limitation of tax and social services contribution payable by aged persons, states that if the sum of the net income of such persons does not exceed £507, no income tax and social services contribution shall be payable by the taxpayer by reason of the provisions of the motion. If a man aged over 65 years, with a wife over 60 years, is still working, he will pay no income tax if the joint income does not exceed £507 a year. That figure represents an increase by approximately £39 of the limit applicable last ye.ar. Although the Treasurer said in reply to the Leader of the Opposition that income tax must be based, not on the cost of living but on income, he proposes to increase the sum that a man over 65 years of age with a dependent wife over 60 years of age may earn without incurring an income tax liability. The increase is to be made because, owing to a rise in the cost of living, pensions have been increased’.
The Government should give consideration also to the position of family men.. I believe that the Treasurer could assist such men very easily by a simplealteration of the income tax rates,, and I shall deal with that matterlater in my speech, if time permits. Under the present proposals, a. man under the age of 65 years, with a wife under the age of 60 years and with two dependent children, will be required to pay £8 14s. a year income tax on an annual income of £500. Such a man has to maintain a wife and two children, as well as pay fares and other expenses connected with the earning of his salary. After he has been allowed a deduction of £104 in respect of his wife, £78 in respect of his first child and £52 in respect of his second child, he will have to pay £8 14s. income tax this year. I contend that the Government has taken up an untenable position in this connexion. I do not think it can justify a system under which a man with a wifeand two children will have to pay £8 14s. income tax this year on an income of £500, whilst a man over 65 years with a wife over 60 years will not be required, in some circumstances, to pay any income tax upon a similar income. I ask the Treasurer, as a matter of simple justice to family men, to increase the allowable deductions for a. wife and children. I suggest that the deduction in respect of a wife should be increased from £104 to £156, in respect of a first child from £78 to £104, and in respect of a second child from £52 to £78. If those increases were made, a married man with a wife and two children would be required to pay only about the same sum in income tax as he paid when the basic wage was less than it is now and his income was about £400 a year. Surely no one will contend that an income of £500 a year is more than sufficient to enable a family man to maintain a reasonable standard of living. The extra £100 a year which he gets this year as against last year only helps him to meet the increased cost of living. When the cost of keeping, a family was £400 a year, or when the basic wage was at that level, a man on an income of £400 a year who had a wife and two children paid £2 8s. a year income tax. This year, on :an income of £500 a year, his income tax liability will be £8 lis. I admit that he is receiving more money, but I maintain that that additional money is barely enough to offset the increased cost of living. If the allowable deductions, were increased to the degree that I have suggested, he would be required to pay only £2 4s. in income tax this year. I contend that that would be fair. In those circumstances, a man with a wife and one child would receive about three-quarters of the benefit that would accrue to a nian with a wife and two children, and a man with only a dependent wife would get a half of that benefit. A man with no dependants would not be affected by the increased deductions. I point out that increases of the basic wage have been based, not upon the needs of a man without dependants, but upon the needs of a family unit. A. man without dependants whose income has been increased as n result of quarterly adjustments of the basic wage can afford to pay increased taxes, but some provision should be made to assist family men, because they need the whole of their increased income to meet the increased cost of maintaining their families.
My remarks are not intended to be merely an attack on the Government in relation to its tax policy. I am making them rather in the hope that the Treasurer will give consideration to them. T am attempting; to impress on the Government the -need to help wage-earners, with dependent families, who will now have to pay more taxation than they were Paying before the Government imposed a 10 per cent, levy on all income tax last year. When the Government introduced concessional deductions it abolished the then existing rebate system, as the honorable member for Melbourne (Mr. Calwell) has mentioned. Under that, system an increase of wage which followed an increase of tho cost of living automatically meant an increase of rebate in relation to dependants. Under the present system, however, wage-earners are to be penalized because their wages have increased as a result of the increased cost of living. The Leader of the Opposition dealt with that point .in his speech on the budget, when he stated that as a result of the increase of wages by £100 since last year a taxpayer who earns the basic -wage will pay more tax, even after the alleged 10 per cent, reduction of tax has been granted, than he paid on his basic wage income last year. I am now pleading for low wageearners with families. I admit that people who receive big incomes will derive benefit from the Government’s tax proposals. They would gain also advantage from the increased allowance in relation to a dependent wife, if increased to £156 instead of £104, as will men on low incomes. I have examined the tables carefully and I am certain that the basis on which I have worked out my figure.” is correct.
The DEPUTY CHAIRMAN. - Order The honorable member’s time ha* expired.
.- A year ugo the Government endeavoured to combat the inflationary evil by increasing rates of taxes on the community generally, including companies. Despite its efforts, however, inflation continued apace. 3 suppose the Government now hopes that it will be able to halt inflation by a reversal of its last year’s taxation policy. I do 11Ot think it will succeed. It is my belief that taxation policy can be utilized successfully in order to destroy the menace of inflation. The Government could have imposed an excess profits tax, for instance, and did in fact announce that it believed in the imposition of such a tax and would introduce it. Ultimately it decided not to do so. It could also have taken action to retain power to control the prices of commodities. Some people believe such control to be a method of countering the disastrous effects of inflation, but the Government has said f forthrightly, “ No, we do not wish to fix prices “.
– The people said “ No “ by way of a referendum on that issue.
– The Government claims that the people determined at a referendum that the power to control) prices should he taken out of the hands of the Commonwealth. The people were inspired to do so by the statements of the honorable gentlemen now in office, who claimed that inflation could be attacked without the Commonwealth control of prices. I suggest that, even without an excess profits tax, taxation policy can be used effectively to combat inflation. The Government could attack inflation if it introduced a steeply graded tax on unearned increments, so that a higher rate of tax would have to be paid on the incomes of investors than would have to be paid on incomes derived from personal exertion.
There was a period in our history when the rate of total tax on incomes derived from personal exertion was only half of the rate on incomes derived from property. Income from property includes income from investments of all kinds. After all, a person who receives £S0 a week from an investment of £5,000 in .Standard Cars Limited, or any other motor distributing agency, in . addition to his income from personal exertion, should have to pay an immensely higher rate of tax on that unearned increment than is payable on a similar amount that is derived from personal exertion. Such a rule should apply right down to the smallest taxable amount earned by personal exertion and the smallest taxable amount earned by investment. The effect of such a policy would not only be that the Government would receive extra revenue but also, to quote its own terminology, “ it would take over a surplus purchasing power “. The surplus purchasing power that it would take over would be that which is used to promote luxury and semi-luxury industries to the disadvantage of the promotion of essential industries. By taking in tax a big percentage of the moneys that are derived from investment in motor car distributing agencies and other semi-luxury enterprises it would help to promote the investment of capital in such essential industries as brickmaking. One of the reasons why the brickmaking industry and similar industries languish is that investors receive a return of only 10 per cent, from investments in such enterprises. Only recently the press reported that one motor distributing agency had paid a dividend of 122 per cent, on paidup capital. What investor would invest in brickmaking, even though it would help immigrants and other people to obtain homes, when he could receive a return of 122 per cent. from, an investment in a semi-luxury industry? I suggest that., if the Government really wishes to attack inflation and promote production of essential goods, it should exercise its tax powers to ensure that enterprises that do not operate to the best advantage of the nation, although they are most profitable to investors, should pay a rate of tax much greater than the rate of tax payable on incomes that are derived from personal exertion. There is nothing wrong in obliging a man, who has an unearned income, to pay tax at a higher rate than that at which tax is levied on the income of another man, who has earned it by the sweat of his brow or by any form of personal exertion. That principle is just and ethical. However, having regard to present inflation and the shortages of many essential commodities, the- Government should observe it also as. a mutter of expediency. It is desirable that all our resources should he mobilized in order to develop this country and maintain full employment and thus obviate dangers that follow in the wake of increasing population such as have risen in many other countries.
The DEPUTY CHAIRMAN Order! The honorable member’s time has expired.
.- I rise at this juncture solely in order to correct a statement that was made by the honorable member for Blaxland (Mr. E. James Harrison). He said that a man over 65 years of age, who was in receipt of superannuation benefit, and his wife if over 60 years of age, were permitted to have an income of £507 a year without being liable to pay income tax, but if the income exceeded that amount by only £1 a year the husband became liable to pay in tax the sum of £92. That statement is absolutely incorrect, and one might be justified in inferring from it that other statement? also that the honorable gentleman made were incorrect. I point out to him that in the instance that he mentioned, tax in respect of income in excess of £507 is levied at the rate of 10s. in the £1 until the sum of £22 becomes payable at that rate. That means that a taxpayer would require to have an income that was £44 in excess of £507 before he would become liable to pay tax amounting to £22.
.- Che Treasurer (Sir Arthur Fadden), in submitting the proposed resolution before the Chair, took credit to the Government for these proposed reductions of the rates of taxes. He said -
With the advantage of having’ considered the events that have occurred since the 6th August, and after having heard the criticism of the Opposition of those proposals, I find no reason to change the views that I expressed at that time, nor to wish to alter the proposals which we then made. Indeed, all the events since that date, and the paucity of the criticism of the Opposition, convince me that the steps that the Government has taken are the right steps.
The Government has done two things that are in marked contrast with that bold statement. Earlier to-day, the right honorable gentleman announced that it would withdraw one of the major amendments that it had previously announced and that it intended to introduce legislation for the purpose of making major alterations in that respect. Secondly, he went to great lengths to disprove certain statements that the Leader “f the Opposition (Dr. Evatt) made in the course’ of the debate on the budget. However, although the Treasurer made a long and involved speech, he failed to disprove those statements.”
– It was an interesting speech.
– It was a long recital dealing- with a situation to the existence of which members of the Opposition have continued to direct attention since the Government assumed office. The Leader of the Opposition contended that taxation rates in different countries are not comparable basically because one is unable to take into account not only Federal but also State rates of taxes, that is in countries where State laws operate, ms well as rates of local government taxes and a variety of other impositions. The Lender of the Opposition pointed out that even after allowing for these taxation concessions the burden of tax upon the community will not be lighter this year than it was last year. It i3 perfectly true that if the flat-rate levy of 10 per cent., which was imposed on incomes last year, were continued, the rates of taxes in the current financial year would be higher still. But the point that the Leader of the Opposition made was that, in fact, after allowing for the removal of that levy, the community will pay in taxes an amount greater than the amount that the Government extracted from taxes last year. As a result of the increases of the basic wage, recipients would be placed in a higher taxation bracket and would pay tax at a higher rate than they paid last year. That argument cannot be refuted. The Treasurer, after giving a long dissertation in which he did not refute but actually supported the arguments of the Opposition, proceeded to say that, after all, it was not the purpose of a taxing measure to achieve that objective. That had nothing to do with the proposition that the Leader of the Opposition advanced. He stated clearly that individuals in receipt of the basic wage will pay tax at a higher rate this year as a result of the adjustments of the basic wage to conform to the increases of the cost of living. As the honorable member for Hindmarsh (Mr. Clyde Cameron) has pointed out, this incentive budget which, it is clear, is designed to appeal to the electors, will leave a still greater burden of tax upon the workers than they were obliged to shoulder last year. The Government has not decreased but increased the taxation payable by that section of the community.
Whilst it is true that a taxation measure cannot wholly achieve the purpose of keeping down prices or of checking inflation it can be a valuable help in achieving that objective, but the point that the Opposition has invariably made since die Government assumed office is that, under inflationary, conditions, the individual automatically pays increased indirect taxation. That fact has been clearly demonstrated by members of the Opposition, and it has also been demonstrated by the inability and failure of Government supporters to refute it.
The Treasurer proceeded to point out that the Government proposes to make certain alterations with respect to company tax. In so doing, it has further confused the people with respect to its taxation proposals generally. Last year, it applied partially the pay-as-you-earn system to companies by obliging them to pay 10 per cent, of their estimated profits in advance. The net result of that change was not to increase revenue from company tax but to enable the Government to collect company tax earlier than it otherwise would. The Treasurer justified the introduction of that system as a substitute for an excess profits tax which, he said, it was impracticable to introduce. He said that the profits of some companies range up to a sum of six figures and pointed to dangers to the revenue that would arise if the Government failed to collect a proportion of that tax as expeditiously as possible. Clearly, that change was intended to be permanent, but once again the Government has made a complete switch. It now proposes to abolish the system of payment of a proportion of company tax in advance. This year, apparently, the Government is prepared to risk the dangers to the revenue which the Treasurer emphasized last year. In any event, the Treasurer said that that system had been introduced as’ a substitute for the imposition of an excess profits tax. In view of these switches of policy, there is little hope of expecting the Government to give a clear lead to the people. One must assume that the Government introduced the system of payment of company tax in advance only after it had given the matter the fullest consideration. The present proposal to abolish that system is inconsistent with normal practice and is most disquieting. The Government is consistent only in its readiness to make such switches of policy. The Treasurer dealt at length with the taxation of private companies which he said had proved to be a headache to all governments. He said that he had evolved a new system which, in his great optimism, he believed would provide a solution of that problem.
The DEPUTY CHAIRMAN. - -Order ! The honorable member’s time has expired.
– When I was speaking earlier, I sug gested that because of the violent fluctuations that had occurred in money values the Government should re-adjust the amounts allowed as concessional deductions for income tax purposes. I implied that there should be a greater degree of flexibility in the taxation structure in order to cope with changed circumstances. Total revenue from taxation of individuals and companies last year amounted to £560,000,000. .It may be that in 1952 many concepts about taxation arc radically different from the concepts held when income taxation was introduced. There are one or two anomalous situations which need correcting in the light of our present-day circumstances. In these times it is not difficult for an individual to start his own business from nothing, and in a year or two to reach the stage where he might have a taxable income of about £5,000 or £6,000. However, the taxation that he pays depends upon how astute he has been in using the income tax laws to his own advantage. If he had envisaged the prosperity of his business he might have taken his wife into it with him as a partner, and it is difficult under the Income Tax and Social Services Contribution Assessment Act for the Commissioner of Taxation to destroy, a partnership founded on the basis of husband and wife. In such a partnership the taxation, as against the taxation of a sole trader with the same income, is considerably less. I do not suggest that people are not entitled to avail themselves of loopholes in the law; nevertheless the tax structure should not place a premium on the use of such loopholes. A trader could perhaps consult a taxation expert to find out the level of his income at which it would pay him to incorporate himself into a private company or even into a public company. Astute persons who know the right people to consult can take advantage of all the provisions of the taxation law. On the other hand, people who are not so well versed in the stratagems of finance suffer in consequence of their ignorance. One man trading as a sole trader may have the same effect on the community as another man who trades as a partnership or as a private company. Just as there is a need for greater flexibility in the rate structure so is there need for greater clarification of the law by the Taxation Branch and the legislature. Those two authorities should also try to make readily available to the man in the street the advantages of trading under one system in preference to another. “When the rate structure was last altered a further anomaly was created because of the variation of the procedures for the averaging of incomes. A change was made ostensibly because of the great increase and wide fluctuations of incomes derived from wool-growing. Because such fluctuations took place the Government introduced the sort of panic and hasty legislation that it has applied in a great number of other circumstances, and the effect of that legislation has been to destroy the advantage of the averaging system for a large number of taxpayers. I pointed out last year that the circumstances that justified the introduction of the averaging system still apply. The reason for averaging incomes is that in primary production an income may fluctuate from year to year because of acts of God. The amendment made by the Government twelve months ago virtually places a great number of taxpayers in a dilemma. Those who have an income of more than £4,000, but less than that derived in previous years, are placed in the dilemma of having to decide whether it will pay them this year to go off the averaging system permanently or whether they should take a risk this year and continue with averaging for two or three more years in the hope that the logic of the system will prevail to their advantage. More assistance should be given by the Taxation Branch to the taxpayers concerned to help them to resolve that problem. The legislature, of course, could resolve the problem by not making it mandatory for a person, once having gone off the averaging system, to stay off it. It should not be difficult to alter the Income Tax and Social Services Contribution Assessment act to accomplish that effect. There are many people who, because of the complexities of the tax structure, may be required to pay more” taxation because of their ignorance of the law unless they take advantage of all sorts of advice which i3 sometimes not readily available. Taxa tion rates to-day are as high as 15s. in the £1, and therefore it is most important to the taxpayer to decide upon the basis of his income tax. A primary producer must consider whether he will continue on the averaging system and a sole trader must make up his mind whether he shall remain as a sole trader or go through the subterfuge of calling his wife a partner or having himself incorporated as a private or public company. Wide differences are involved in making such decisions, and the choice of an individual has wide repercussions on his economic circumstances and also, indirectly, on the revenue. It may be that there should be some fundamental reconsideration of the whole basis of taxation, because many of the concepts on which our law is based were first laid down in the early part of the century, when the income tax was first imposed. It may be that the old device of appointing a royal commission would be the most adequate way of having this matter examined. I do not think that there has been an adequate examination of the fundamentals of taxation since 1933. The royal commission held in 1933 made a number of valuable reports, but now it is easy to see that those reports were based on the conditions of 1933, and that circumstances have changed radically since them.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
– I desire to answer several matters raised by an honorable member who .is, I consider, the greatest calamity howler in this country. I refer to the Deputy Leader of the Opposition, the honorable member for Melbourne (Mr. Calwell). He said that the whole of our national life was being depressed, and he howled calamity, about everything in quite an unreasonable fashion. When the Labour Government was defeated at the general election of 1949, the honorable member for Melbourne, who had been Minister for Immigration in the Chifley Government, broadcast a certain statement. He said, “ Two years isn’t too long to wait “. It i3 quite apparent that he meant he did not believe that two years was too long to wait if only he could get back his Cabinet rank. Apparently, the honorable mem ber had no thought whatever for the good of the country. However, he did not base his estimate on sound premises when he said that he would have to wait for only two years, because the usual life of a government in this country is three years. Moreover, a general election was held within the two years specified by the honorable member, and at it Labour was soundly thrashed a second time.
I now wish to direct the attention of honorable members to certain statements that have appeared in the press. They have been made by citizens who apparently have no political affiliations with either the Government parties or the Labour party. Therefore, they can be said to be purely impartial comments. First, let me read this statement from the Melbourne Sun-News Pictorial -
The Royal Show is under way.
That is the Melbourne Royal Show. The honorable member for Melbourne should note, in spite of his calamity howling, that -
The show opened with a record of 10.64S entries and promises to be the greatest show ever.
The same newspaper stated in headlines -
Business is looking up. More people are buying now. City and suburban shops are doing greater business with a marked increase in sales over the last fortnight.
Another statement is attributed to a Mr. Thompson, who is a publicity officer for the Leviathan Limited. He said -
There seems to be a return of confidence on the part of the public. During the past fortnight our sales have been good.
Mr. Norman Smith, publicity officer for Manton and Sons Limited, is reported to have said -
We have noted a definite increase of buying in the last two or three weeks. There is buoyancy throughout the store.
Buoyancy throughout the store, I suggest, is a reflection of buoyancy throughout the country. That is because our economy has been placed on a firm foundation. When the Labour party was in office we went through a period of artificial prosperity, but there was no progress. That prosperity was caused by the money that entered the country during the war. I also point out to honorable members opposite that our savings to-day are at a record high level. It has been reported in the press -
Savings bank deposits reached a record total of £900,000,000 odd during July, an increase of £8,171,000 for the month. Savings banks accounts now average £104 14s. a head compared with £35 2s. at the outbreak of war. During the past year deposits have increased by 29 per cent.
All honorable members know how often honorable members have referred to savings bank deposits as being the best indicator of our prosperity. Our savings bank deposits are at a record high level to-day, so surely honorable members opposite must admit this to be an indication that our economy is on a firmer foundation. I know that there is some unemployment in the country, but I believe that to be merely a passing phase. In Queensland during the last fortnight there has been a marked increase of employment, and employment has started to increase again in the other States. The greatest problem facing Australia has been that of increasing production. In spite of some people being out of work at present, our production has increased. Therefore, when the men who are now unemployed are again brought back into production our overall production will be higher still. The method of changing people from less essentia] to more essential industries has been very successful. I agree that there was full employment during the régime of the last Labour government, but what is the good of full employment if there is not also full production ? When this Government assumed office the whole of the economy was run down. Now signs are appearing that efforts at restoration are meeting with success. The honorable member for Melbourne Ports (Mr. Crean) said that the Government had thrown the whole provisional taxation system introduced by the Labour Government out of gear because of its legislation. No doubt he was referring to the wool sales deduction legislation. This Government cushioned the effect of the provisional tax system on primary producers following the 1950-51 season of exceedingly high wool prices. Provisional tax, of course, is levied on the current year but is based on the income of the previous year. Therefore, in 1950-51, when many primary producers had big wool clips, they were called upon to pay, in provisional tax, in many cases, only one-fifth of the amount that was assessed about nine months later. But this Governmenthad introduced the wool sales deduction scheme, under which 20 per cent, of their gross returns was held for them. That helped to pay their tax liabilities. The honorable member for Melbourne Ports was partly right when he said that the wool sales deduction scheme cut across the provisional tax system. It did so, but that was to the advantage of the producers. Honorable members opposite will not find a primary producer anywhere to-day who will say that the Government acted wrongly when it introduced wool sales deductions at that stage. The deduction scheme saved many primary producers from bankruptcy. For a man like the honorable member for Melbourne Ports, who. studies taxation closely and speaks sincerely, to make such an error shows that the honorable gentleman is more closely in touch with the industrial electorate that he represents than he is with the primary producers.
Much has been said about the 10 per cent, special levy that was imposed last year and that is to be discontinued this year. Members of the Opposition said last year when the increase was made that only basic wage earners and others in receipt of small incomes would be adversely affected by the levy. But now when the reduction is made they say that only the basic wage earner and others in receipt of small incomes will suffer. Apparently, in their view, only the wage earners are affected by either tax increases or tax reductions. That is a fair example of the sort of argument we have heard from members of the Labour party in this chamber for many years.
The DEPUTY CHAIRMAN. - Order ! The honorable member’s time has expired.
.- The honorable member for Mallee (Mr. Turnbull) has achieved distinction to-day for a number of reasons. First, he is the only Government supporter who has been prepared during the last two hours to endeavour to support sincerely, if that be possible, the taxation policy of the Treasurer (Sir Arthur Fadden). Government supporters generally appear to be ashamed, as they rightly should be, of their repudiation of the policy that was enunciated on their behalf during the last general election campaign and, therefore, they are not prepared to defend the present policy. I am reminded of the time when the honorable member for Mallee sat on the Opposition side of the chamber, a place to ‘ which he will be returned in the not distant future. Like a roaring lion he attacked the Labour Government for its failure to reduce taxes. Since his emancipation, however, he has been as quiet as a rabbit suffering from myxomatosis.
The honorable member declared that the Government had inherited a run-down economy and tried to convince us that the Government’s method of first increasing a tax and then reducing it by the same amount in the hope that the people would be simple enough to believe that it was a tax reduction, was the right way to restore stability to the economy. I remind the honorable gentleman that the . Government inherited an economy in which there were over 100,000 vacancies for employment. Industry was booming at a rate never before thought to be possible in Australia. Production was at an all-time record level. Returns to primary producers were virtually unlimited. Sackings were unknown in that golden age under the Chifley Government. The honorable gentleman asks us to support the policy of a Treasurer whose incompetence has destroyed that sound economy. As a result of the taxation policy of this Government, over 100,000 Australians are seeking employment. Notwithstanding the size of the grand parade in the arena at the Royal Melbourne Show, the economy has been shattered. The honorable member was unable to substantiate any of the charges that he made against, the former Labour Government. The present Government’s taxation plan for 1952-53 is said to be based on its promise to reduce taxation. Apparently this Government does not follow the old, simple method that everybody understands. It does not follow the easy procedure of reducing a man’s tax liability from-, say, £20 to £15 a year. That -would be too simple. First, it adds 10 per cent, to everybody’s tax commitments. Then, twelve months later, it removes the special levy and says to the populace, “ Here is a grand tax reduction for you “. I had thought previously that at least some of the Government’s supporters were reasonably sane and sensible. But to-day, everybody on the Government side of the chamber, from Cabinet Ministers to the lowliest rank and filers, appear to think that the Australian people will believe that the Go.vern ment is reducing taxes below the levels that prevailed when the Chifley Government was in office. I should be underestimating the intelligence of the electors if I feared that they would be deceived by such a .foolish proposition.
The fact that the people realize that the- Government has not honoured its promises has been made clear recently at by-elections throughout Australia, in which Labour has swept the polls. As a result of the Government’s defections we shall- soon have the opportunity to- welcome to this Parliament a new Labour member for Flinders. The poll at the Flinders by-election will drive another nail in the coffin of the Government. The Government has claimed that the tax rates that it has fixed for 1952-53 will give to the people an incentive to- increase production. Workers in my electorate who put their shoulders to the wheel, at the request of this Government, and produced hundreds of thousands of pounds worth of good’s now find that the warehouses and the shops are stocked with the products of their industry, and they are told that they have over-produced and that the people have not sufficient money with which to buy the goods. Any worker who falls a victim to this Government’s demand’s for increased production is- in danger of producing himself out of employment in the immediate future.
What concessions does the Government propose to make under the new scale of tax rates?’ The truth is that the person who is- least able to bear the burden of taxation is to be given the worst deal. A single man without dependants who earns’ £600 a year, which is approximately the amount of the basic wage, is to be given a tax reduction of £5 3s. a year, which represents 2s. a week, or 5d. a working day. A single- man who earns- £800 a year will receive a reduction of 3s. Id. a week, or approximately 8’d. a day. Can honorable members- imagine such men putting their shoulders to the wheel and increasing production as a result of such an incentive ? A man who receives £20,000 a year - a fellow who is just battling along in the eyes of the Government - will benefit from a reduction of £25 a week, or £5 a day. Such a man could probably afford to continue to pay tax under the previous scale without suffering any hardship. Married men with dependants are even worse off than single men. A married8 man with a wife and two children who receives the basic wage will be allowed a reduction of only 8d. a week, or less than 2d. a working day. The reduction provided for him is 50 per cent, less than that provided for a single man. A man with a wife and two children who earns £15 a week will benefit from a reduction of ls. 9d. a week, which again is about 50 per cent, of the reduction to be granted to a single man on the same wage. As the Leader of the Opposition (Dr. Evatt) said in his speech on the budget, notwithstanding’ the discontinuance of the 10 per cent, levy actual taxes this year will be substantially higher than those that were levied by the- Chifley Government.
There is no reason why individuals whose spending power has been stringently curtailed as a result of this Government’s absolute failure to control prices should pay substantially more taxation than they paid in 1949, while vast companies and persons with large incomes will be given substantial concessions. Private companies will reap the benefits that they pressed this Government to give to them. Those benefits will be provided at the expense of the workers in the- low wage groups who to-day are paying more than they paid before. What is the use of tax reductions to the 100,000 Australians who are clamouring for employment? I notice that the honorable member for Riverina (Mr. Roberton) smiles. If he does not believe now that so many Australians are unemployed, he will learn the truth at the next general election, when the unemployed will vote against, him.
– That will not matter a scrap.
– I agree. The honorable gentleman will not be missed. However, that does not alter the fact that he will be missing. The tax rates that the Government has fixed show the utmost discrimination against those with the lowest incomes.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
– This debate has been most remarkable. The Treasurer (Sir Arthur Fadden) presented this proposed resolution to the committee last Thursday evening in order to give effect to the new rates of income tax and social services contribution, and, thereby, to the incentive budget about which we heard, so much a few weeks ago. At that time, honorable members were told that tax rates were to be reduced, so that everybody would have an incentive to work harder and produce more goods. I thought that Government supporters would be most eager to speak about the reduced rates of tax and to inform their electors of all the benefits that the Government proposed to confer upon them. However, we have witnessed a remarkable spectacle this afternoon. Only two Government supporters have participated in the debate. The honorable member for Henty (Mr. Gullett) did not find much in the new rates of tax to please him, and, very properly, criticized the Government for its failure to give any consideration to serving members of the forces. The honorable member for Mallee (Mr. Turnbull), who was the only other Government supporter to address the chamber, spoke about the Royal Show in Melbourne, and other matters, but even he did not enthuse over the details of the so-called incentive budget.
It is easy to understand why Government supporters do not display any enthusiasm for the new rates of tax. When we examine the details of the supposed concessions and deductions, we find that they are quite illusory. In fact there are no real concessions or reductions.
I have carefully read a copy of the speech made by the Treasurer when he presented this proposed resolution to the committee, and I note that he has placed emphasis upon four matters, which, he claims are incentives for the people. He says that the main purpose of the proposal is to remove the special levy of 10 per cent, that the Government ‘ was obliged to impose on taxpayers last year. The right honorable gentleman proceeded to speak in glowing terms of the great advantage that such a concession would confer upon the people, and said -
The advantage to individual taxpayers in thu current year will amount to £23,000,000 . . the benefit in a full year will be in the vicinity of £30,500,000.
Those words make the concession appear really worthwhile and substantial. Yet, when we read the explanatory memorandum, we are obliged to reverse this view. Doubtless, the explanatory memorandum has been prepared by officers of the Taxation Branch of the Treasury, who are concerned, not with the political effects of such matters, but with the facts, and they relate the bald facts in language that does not admit of the embellishments used by the Treasurer. The explanatory memorandum reads as follows: -
Rates of tax : i udi vidua 1 taxpayers - (1) That the special levy of ten per centum of income tax and social services contribution imposed for the last financial year shall not be re-imposed for the current financial year.
What a different picture is presented by those words! The Treasurer pretends that he is giving to the people a substantial incentive to increase production. The explanatory memorandum merely states that the special levy of 10 per cent., which was imposed last year, will not be imposed this year. In other words, the increased rates of tax that the Treasurer imposed upon the people last year will not be reimposed on them this year. Does the right honorable gentleman consider that the people have such short memories that they have forgotten the imposition of the special levy? The Government will not derive any credit for the abolition of the impost.
The second matter about which the Treasurer waxed enthusiastic concerns the age allowance, whereby a man over the age of 65 years and a woman over the age of 60 years are exempt from tax liability when their incomes do not exceed the maximum permissible income for age pension purposes. This reform, which was made last year, was most desirable. Persons who do not receive a greater income than they would be entitled to receive if they were in receipt of a pension, are not liable for tax. But the Treasurer, in his desperation to achieve some credit for a reduction of taxes, claims that the nroposed increase of the maximum permissible income by 7s. 6d. a week will confer a benefit upon the people concerned. In reality, the change merely takes into account the increased rate of the age pension, so that the tax benefit remains substantially what it was last year. No real increase of benefit will be bestowed upon the people.
The Treasurer follows exactly the same principle regarding the’ reduction of the rate of tax on the first £5,000 of taxable income of public companies. Once again, he has used extravagant language, as if a really substantial benefit is to be conferred. He said -
This proposed concession will provide relief to all Public Companies but it will be of substantial assistance to those companies in the lower profit earning ranges.
The Treasurer added that the concession was to be granted as a result of changed economic circumstances. The right honorable gentleman did not point out that, only last year, the rate of tax on public companies was increased from 5s. to 7s. in the £1 on thefirst £5,000 of assessable income and that the Government, in reducing the amount this year, is merely restoring the position to what it was before the imposition of the increased rates. The Treasurer also seeks to take credit for the abolition of the provision with respect to the 10 per cent. advance payment, which public and private companies were required to pay during the last financial year. He claims that, as a result of the removal of that impost, public and private companies will benefit by £14,000,000 a year. But here again, the position is merely being restored to what it was before the extra levy was imposed last year. Those four proposed alterations are the only matters of substance in the Treasurer’s speech. How. then, can he claim credit for reductions of taxes this year? As the list of proposed changes is so small, and as its basis is so illusory in view of the fact that the Government is merely reducing rates of tax which it increased last year, can there be any wonder that Government supporters have not attempted to take any credit for the so-called concessions in this so-called incentive budget?
While I am dealing with the subject of advance payments made by companies, I point out that, before the introduction of the budget for 1951-52, an excess profits tax was mentioned in this chamber on a number of occasions, and the Treasurer stated more than once that the Government had decided to impose such a. tax. The Commonwealth Committee on Taxation, which was appointed by the Government, examined that matter, and, in its report, opposed the imposition of an excess profits tax. The Government then introduced in the budget for 1951-52 a system that was described as an alternative to an excess profits tax, and companies were required to pay, in addition to their normal tax for the year, a 10 per cent. prepayment of tax, which was to be credited against their tax liability for the following year. The Treasurer did not mention that point in his budget speechlast year, but doubtless he had in mind the report of the Commonwealth Committee on Taxation which suggested that, instead of the imposition of an excess profits tax, companies should be placed upon the same basis as other taxpayers who were required to pay provisional tax, or to make regular payments under the pay-as-you-earn system.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
.- So many highly-respected members of the Opposition have directed attention to the non-participation of Government supporters in this debate that I propose to inject a few facts into the discussion. Some of the issues raised by Opposition members may be answered if we forget party politics on the taxation issue. The honorable member for Fawkner (Mr. W. M. Bourke) and the honorable member for Melbourne Ports (Mr. Crean) have discussed the excess profits tax. It is a fact that such a tax was mentioned in this chamber in 1950, and that the Treasurer (Sir Arthur Fadden) indicated that the introduction of such an impost was receiving consideration. I wish to make the point perfectly clear that the Labour party is interested only in limiting the capacity to earn. It does not believe that a person should be permitted to exert his maximum effort in order to obtain for himself the maximum return. After all, it is well known that the ultimate aim of the Labour party is the complete nationalization of everything that earns anything in the community. Let us suppose that a government owned all the things that earned anything. Would members of the Labour party recommend that an excess profits tax be imposed in order to prevent the Government from earning so much for the welfare of the people? Surely the advocacy of an excess profits tax must fail if the existing rates of taxes on companies and individuals give a fair return to Consolidated Revenue. That basic premise is either right or wrong. If it be right, the principle of an excess profits tax is wrong. Undoubtedly, profit is one of the two motives that animate human endeavour. People should be given an incentive to work harder and thereby earn more. High rates of tax destroy that incentive.
This Government assumed office in December, 1949. In its first year of administration, taxes were reduced by £25,000,000. The Government granted that measure of relief to the community, having due consideration to the state of the economy, the finances of the nation, aud its own commitments. At this stage T shall compare the commitments of the preceding Labour Government before 1949 with those of the present Government since it has been in office. From 1945 to 1949, in the post-war period, vast sums had accumulated in the community, and the special deposits lodged by the trading banks with the Commonwealth Bank totalled hundreds of millions of pounds. The Chifley Government was certainly in a position to say to the taxpayers, “ We shall now relieve you of some of the burdens that you have borne during the last seven years “. After all, the Chifley Government had practically no defence commitments. An amount of £250,000,000 had been allocated for expenditure on defence over a period of five years, and the provision for social services, in terms of money, was less than that of the present Government. However, the Chifley Government took no positive action to reduce taxes. From the beginning of the Korean incident, a general awareness of the vital urgency for defence measures developed in the free countries of the world. I do not for a moment accuse members of the Chifley Government of not having been aware, at one time br another, of the importance of defence, but I defy any one of them to prove that the defence commitments of Australia between 1945 and 1950 were any thing like as great as they have been since that date. I believe that commitments can be borne by a community almost in -the ratio of the national income to general prosperity. I remind the committee that the national income of Australia was £779,000,000 in 1938-39, £1,365,000.000 in 1946-47 and £1,752,000,000 in 1947-48. It rose to £2,293,000,000 in 1949-50, and to £3,136,000,000 in 1950-51, and in the financial year to the 30th June, 1952, it was £3,238,000,000. That is the measure of the country’s capacity to meet its commitments in terms of money. The Australian Government shoulders most of the responsibility of deciding just how that amount must be apportioned. However people may argue about the size of the burden and whether they agree or not that the Government should allocate £200,000,000 to defence and £300,000,000 to social services and repatriation, the fact is that nobody with any sense will deny that the discharge of the national commitments is the prerogative of the Government. Irrespective of the political colour of the Government, the rates of tax and the revenue to be raised are governed entirely by the commitments. In the budget of 1951-52, the Government imposed a surcharge of 10 per cent, on income tax to meet inescapable expenditure on defence, rising social services commitments and the extravagant public works programmes of the States, because the sense of responsibility of the governments of the sovereign States has long been related to taxation. I am happy to observe that in future the situation will be different, and that the country will be able to judge who is right and who is wrong in the way in which the commitments are apportioned. Even if the Government meets the commitments and adds an impost to enable it to do so, it proposes to reduce taxation by £50,000,000 this year. Any person who believes that that is not sufficient incentive should study the overall commitment in the budget and say how that might be reduced. Nobody in the Labour party has stated publicly how it can be done.
The honorable member for Melbourne (Mr. Calwell) made a statement that hurt me. He said that when the Government was proposing tax rates, he saw no relation between them and the taxation, both direct and indirect, that was imposed by the Labour Government. In that connexion I direct the attention of honorable members to some statistics. In 1947-4S, on an income of £600 a year, an unmarried individual paid £97 16s. in income tax under the Chifley Government. In the previous year, such a person paid £130. Then the Chifley Government reduced the tax from £97’ 16s. to £76 14s., and in its last year of office a taxpayer on the scale that I have mentioned paid £53 10s.
The DEPUTY CHAIRMAN. - Order ! The honorable member’s time has expired.
.- The honorable member for St. George (Mr. Graham) has not slain many dragons in the course of hi3 speech. His attack if one may call it that, was rather confused and he did not add to the stature of the Treasurer (Sir Arthur Fadden) in his apologies for the right honorable gentleman. In the first place, he referred to the excess profits tax. I know that it has not been the custom of the Government to honour its promises, but a definite promise was made with regard to the excess profits tax and a good case was made for its implementation. Honorable members on this side of the committee ask what has happened to it. The Government may brush off the question with abuse. That is about all that we usually get from the Government on that point. Rut the answer to the question what has happened to the excess profits tax has not been given to us and the public is still curious about .the proposition. If one turns to the pages of the newspapers containing news on finance and commerce’, one notes that although there arc many ways in which a balance-sheet can be presented to the public, the inescapable figures of dividends and earnings for the year must be shown. Recently they have become swollen to fantastic proportions. If the histories of the companies be studied, it will be noted that their dividends are out of all proportion to their earnng capacity over the last twenty years - or longer if they have been in existence for so long. If the Treasurer knows the rates of income tax and if his apologies for them are genuine, that is one of the explanations that he must give in answer to questions relating to the stability of the country. In respect of the excess profits tax, the members of the Government have folded their tents like the Arabs and as silently stolen away. The people want to know when the Government is going to stop such manoeuvres. The Opposition has properly taken the point that there has been a general let down with regard to a decision on excess profits.
The 10 per cent, surcharge was the next point to which the honorable member referred. He belongs to the fullblooded adventurers of private enterprise who will end up on a bank board, but he directs his courageous adventure and enterprise to the noble strugglers for 10 per cent, dividends. On this side of the chamber, honorable members believe that some of the prizes should go to the chap who misses out. We represent the working people of the community and try to put their case fairly. Because of the changes in the basic wage structure, the surcharge of 10 per cent, did not have the effect that the Treasurer claimed it had. The right honorable gentleman, in his second-reading speech, produced a lame apology, which is no defence of himself, and does not answer the Leader of the Opposition. If that is a noble piece of the new budgeteering technique, no wonder the country is in distress.
The. honorable member for St. George has spoken glibly in millions - rows of noughts with heads on them. He said’ that in 1945 nameless millions were expended and that now more nameless millions are being collected. According to him the proposition is that we are better off as a result. Is there not a simpler measuring stick? In Australia, as the honorable member for Mallee (Mr. Turnbull) has told the committee, there is £900,000,000 in the savings banks. The budget provides for the expenditure of £1,000,000,000 and there are 100,000 unemployed. Is there not something remarkable about that? Is there not something to answer? Does that state of affairs indicate equilibrium in the country, as is claimed by the Government? The honorable member for Mallee dragged into the debate the Herefords at the Melbourne Royal Show, but, as this is Spring and they have nothing to do with the case, I shall not carry that thought any further. The point is that the Government has claimed that there is equilibrium in the country. That cannot be so. There is unbalance in the community. Honorable members on the Government side talk of defence as though the provision of £200,000,000 for defence expenditure justifies all the bad management that has been associated with the Government’s budgetary plans over the last few years. Allowing that that sum may be used for defence, that does not justify the complete mismanagement that is inherent in the Government’s budgeting.
Another gibe of honorable members on the Government side is that when the Chifley Government was in power, it did not expend on defence as much as is now being expended. The honorable member for St. George was in the forces then, and so also were some of the 47 ex-servicemen who inhabit or infest the Government benches: They were yearning to get out of the forces then, and if any one had told them that another defence programme was about to be initiated and that they had better stay put, we should have had another war on our hands. The two circumstances cannot be brought together. The present need to expend millions of pounds on defence . arises from the fact that we failed to maintain the peace and that there are certain ingredients in the international set-up that render such expenditure imperative, but immediately after the war ended the principal objective was to have men and women demobilized. If the Chifley Government expended less on defence at that time, that- was the plan of the moment and one that can be justified, because we were putting men back, into industries to which they were anxious to return, and at that time there was no threat to peace. One of the big achievements of the post-war era was the celerity with which the men were returned to civilian occupations. Therefore, any attempt to compare defence preparations to-day with the defence problems of 1946 is out of character and ill-timed,, and has no validity.
The honorable member for St. George has loyally suggested that everything is right in this best of worlds. He has claimed that the workers should be delighted and should go home singing because a 10 per cent, surcharge has been lifted, and that, because a few minor taxation concessions have been included in this year’s budget, the income tax rates are not so bad as they were and the situation is not so disastrous after all. In making claims to that effect, the Government and its supporters are simply preparing themselves for another test that they will have to meet early next ‘month. The point to which one must inevitably return is that of performance. If this country is so splendidly off and if this Government has been able to restore equilibrium, can the honorable member explain why, with all the money in the banks, and with a budget three or four times the size of pre-war budgets, we still have 100,000 people out of work?
– That is the honorable member’s figure.
– If the honorable member for Mallee knows a more valid figure, I suggest that he divulge it to the committee. Honorable members have been informed by the Minister for Social Services (Mr. Townley) that there are 60,000 unemployed-
– Twenty thousand.
– Others give to honorable members different figures, and if. the
Government is not prepared to tell honorable members how many Australians are out of work, we are entitled to state a figure and ask the Government to deny its accuracy. If the Government will not give facts, that is the basic figure, and if there are 100,000 unemployed, something is wrong. If the budget is to cure all, why is it not taking effect in a beneficial way instead of throwing more men out of work? The inherent defects in the economy spring from the budget and the rates of tax that are provided in the budget. There is an unbalance in the community because of taxation. I invite honorable members to ask any man in the street whether that is not so. Question the man whose affairs are influenced by the situation, and honorable members will find that many erstwhile friends of the Liberal party are cursing those for whom they have voted during most of their adult lives. Follow the questioning further and ask them why they are offended with the Government and they will probably reply that taxation is punitive, that the concessions provided do not measure up to their difficulties, and that they are in trouble. Is it not a fact that the punitive, restrictive budget of 1951 was responsible for a situation from which the country has never recovered?
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
.- Honorable members on the Opposition side have been continuing the calamity howling of the Labour party in an endeavour to destroy the confidence of the people. If any persons are unemployed, they can thank the Labour party for being out of work. Only so far as the Labour party has been able to destroy confidence has business fallen off and have firms been obliged to dismiss empolyees. The true position was stated by that real Labour leader, Mr. Monk, when, in a sworn affidavit filed with the Commonwealth Arbitration Court only a few days ago, he stated that the Australian economy had never been sounder than it is at present. He pointed out that production had increased, and that, although twelve months ago industry had been unable to obtain coal, and black-outs due to lack of coal had caused a loss of production, now, because of the steps taken by this Government, industry was getting all the coal that it needed, and labour was available for the steel industry. He said that we were in a position to export both steel and coal.
The best way in which to test the economy of the country is to examine the savings of the man in the street. According to figures published last week, the deposits in the savings banks of Australia have reached a record figure. The shortages that were so apparent twelve months ago no longer exist.
Mr-. Clyde Cameron. - I rise to order. I am a loss to know how the remarks of the honorable member for Sturt (Mr. Wilson) can be related to the bill. Will you tell me, Mr. Deputy Chairman, whether the honorable gentleman is in order ?
The DEPUTY CHAIRMAN. - I can tell you that the honorable member for Sturt is in order so far - at any rate, as much in order as other honorable members have been. !Mr. WILSON.- I am sorry that the honorable member for Hindmarsh (Mr. Clyde Cameron) cannot take it. He loves to hurl abuse at others; but, when facts are stated in this House, he squirms. During the last twelve months we have removed shortages, and deposits in the savings banks have reached an all-time high figure. A record number of houses has been built. Last year, six times as many houses were built in this country as the Labour party was able to have built in 1945-46.
The DEPUTY CHAIRMAN- Order ! The honorable member is wandering from the bill.
Mi-. WILSON. - This proposed resolution reflects the improvement of our economy during the last twelve months. The Treasurer (Sir Arthur Fadden) is able to tell the people of this country that, because they have weathered the storm, he can relieve them of some of their burdens. Twelve months ago, when the Government increased income tax by a certain percentage in order to control inflation, the Labour party squealed and said that the increase would hit the small man. Now that the Government proposes to reduce taxation because our enonomy has been placed upon a sound basis, the Opposition says that the reduction will do no good and will not help the small man. That shows how utterly hypocritical the Labour party is, and how it tries to make political capital out of each action of the Government.
The relief from taxation outlined in the budget will be of tremendous benefit to the Australian people. Every one will receive the benefit of a 10 per cent, reduction of their income tax. In the very near future, that reduction will -be reflected in every pay envelope in Australia. Honorable members opposite have suggested that the proposed company tax concessions will be of no benefit to the community. I believe that a concession of the value of £500 a year will be of tremendous benefit to public companies. In addition, the abolition of the provision under which they must make advance payments of tax will enable them to provide additional employment. It will generate an increased buyer demand and, generally, will stimulate production and employment. The relief given to private companies by a very substantial liberalization of the provisions that relate to tax on undistributed profits will enable such companies to purchase additional capital equipment with- which to expand their operations on a long-term plan, to provide additional employment and to increase production. Private companies will be permitted to retain, tax free, 50 per cent, of the first £1,000 of their profits of any one year, 40 per cent, of the second £1,000, 35 per cent, of the third £1,000, 30 per cent, of the fourth £1,000 and 25 per cent, of the fifth £1,000. A private company that earns a profit of £5,000 in one year will be able to retain in its business £1,800 of that profit, tax free. It will be able to erect new buildings and factories, to purchase new plant and to provide for additional employment, which is needed at the present time.
The budget recognizes the importance of education, and some relief from taxation will be given to a family man who is paying the educational expenses of his children. Every taxpayer will be allowed a £50 deduction for school fees paid in respect of every dependent child under the age of 21 years who is receiving full-time education. That provision will be of very great assistance, especially to country people who send their children to, for instance, Adelaide, to receive higher education, and also to persons who live in Adelaide and send their children to private schools there.
Another very welcome concession is the relief that will be given to aged people. While the Labour party was in power it taxed such people. If a person over the age of 65 years received an income from his own savings or from his earnings, that sum was taxed by the Labour party, even if it was less than the age pension. When this Government came into power, it recognized that it was grossly unfair that a man should be required to pay income tax if his income did not exceed the age pension plus the permissible income. Therefore, in the budget of last year it was provided that any person of pensionable age should not be liable to pay income tax if his income did not exceed the sum of the age pension and the permissible income. It is proposed now that that provision shall be extended and liberalized, and that men over the age of 65 years and women over the age of 60 years shall not be required to pay income tax unless their income exceeds £254 a year or, in the case of a married couple, unless their joint income exceeds £507 a year. That is a most valuable concession.
The DEPUTY CHAIRMAN.- Order ! The honorable member’s time has expired.
.- I do not believe that ever before has this country had a government that has caused such chaotic conditions as those for which this Government is responsible, due to its policy of high taxation and credit restriction. One has only to travel through the country to see the deplorable condition into which we are drifting. Every week I travel from Canberra to my home town. Not a week goes by when I do not see nien carrying their swags in this country.
I have risen mainly to place on record a statement made, not by a member of the Labour party, but a supporter of the Government - a man who was in the running for selection by the Australian Country party as a prospective candidate for the electorate that I represent to-day. In the Young Witness of the .23rd July, that gentleman replied to advertisements and propaganda that had been inserted in country newspapers throughout Australia over the signature of the Treasurer (Sir Arthur Fadden). His reply was’ as follows : -
Assuming Sir Arthur Fadden to be, like Brutus, “ an honest man “, it would seem from his article in Friday’s “’ Witness “ that he is labouring under the delusion that his Government is helping the primary producers to expand production. Nothing could be further from the truth.
T agree with that statement absolutely -
During the time Sir Arthur has been treasurer in the present and in the previous MenziesFadden Government he has singled out the primary producer to bear the weight of his staggering tax impositions.
It began with the 20 per cent, wool tax and lias continued up to the present with the abolition of the averaging system and the cutting down to the initial depreciation allowance from 40 per cent, to 20 per cent. Despite all this, he now has the hardihood to pose as the friend of the primary producers.
Whilst I realize that high-pressure salesmanship is a part of the stock-in-trade of the politician, I do submit that one is not unreasonable in expecting something better from a senior Minister of the Crown who should at least aspire to bc a statesman.
I think that the Treasurer is one of the worst statesmen in the history of this country -
Sir Arthur, with characteristic modesty
– I rise to order. The honorable member for Hume (Mr. Fuller) has referred to the 40 per cent, original taxation deduction that the Labour party made as being better than the 20 per cent, deduction. We all know that, to be wrong.
The TEMPORARY ‘CHAIRMAN. - That is not a point of order. The honorable member for Mallee (Mr. Turnbull) will have an opportunity to make points of that kind at a later stage. I ask the honorable member for Hume to keep to the bill.
– The letter continues-
Sir Arthur, with characteristic modesty
– I rise to order. It has been a rule of this chamber for a long time that honorable members must refer to “ the Treasurer not to “ Sir Arthur
The honorable member for Hume has used the words “ Sir Arthur “ frequently:
– I am reading from a letter written by a supporter of the Government. It states -
Sir Arthur, with characteristic modesty
– I rise to order. I submit that an honorable member, even if he be reading from an article, should not refer to the Treasurer as “ Sir Arthur “. Will you keep that in mind, Mr. Deputy Chairman?
– I shall use the words “ The Treasurer “, if that will satisfy the honorable member for Mallee. The letter states that the Treasurer - . . with characteristic modesty, suggests in effect that the statutory deductions he mentions have originated from the generous impulse of his Government, whilst we primary producers know they have been in effect for years.
The grim fact is, whether we like it or not, Sir Arthur has not increased tax concessions we enjoyed before the present Government took office.
Sir Arthur appears to make political capital out of his amendments to the provisional tax. He ignores the fact that to make the hazardous occupation of primary production subject to any form of provisional tax is both unjust and unworkable.
At best it is a go-getter revenue measure and to seek to justify it is a sorry form of rationalization. It is cheerful to learn from the Treasurer’s own pen that he has won the “ Battle against Inflation “.
I only wish I could believe it. Perhaps Sir Arthur or one of his apologists will explain that if indeed he has inflation by the throat, why are the costs of goods and services still rising and with them the basic wage? “We all know that credit inflation has suffered a temporary check by the employment of two very questionable and depressionmaking expedients of credit restriction. We also know that cost inflation still spirals apace and will continue to do so whilst industry - primary and secondary - is stifled, in fact and in impulse, by a rate of taxation direct and indirect, that amounts to confiscation.
Is it not time, Mr. Editor, that the Treasurer ceased to throw dust in his own eyes as well as in those of the electors and approached public matters of grave import on a sober and realistic plane?
If Sir Arthur is really anxious to curb inflation and lower the cost of living, he must readily agree with me -
If Sir Arthur has any doubts about the soundness of such a policy, might I suggest he tries it, as an experiment, in wheat production. Were he, for instance, to free wheat farmers of the provisional tax, lower the rate of income tax, restore the 40 per cent. depreciation and pay cash for the crop when harvested, he wouldfind a bumper harvest next year, granted favourable seasonable conditions.
As I said earlier, that letter was written by a man who sought Australian Country party pre-selection at the 1949 general election.
Mr.Fitzgerald. - Who is he?
– Eric Campbell. Everybody realizes that he has no association with the Labour party. The fact that he -wrote that letter proves that honorable members on this side of the committee are not alone in attacking the Government.
– Order ! The honorable gentleman’s time has expired.
– Because of the lack of argument from the Opposition side of the chamber I have little to answer, so my speech shall be short. The fact is that the Government, since it came into office, has not only granted to the people reductions of income tax but also increased expenditure on defence preparations and the provision of social services. The Government is meeting responsibilities that the Labour Government dodged. A large proportion of its commitments was left to it by the previous Government. For instance, it had to meet the payment to ex-service personnel of more than £60,000,000 in war gratuity. That is a burden that was left to it by the Labour Government. The Government is endeavouring to meet its obligations now instead of leaving them to posterity as the Labour Government did. It is fully seized of the defence needs of the country and, therefore, has increased expenditure on defence preparations until in this financial year it has reached an estimate of £200,000,000. Since it assumed office it has also increased payments to age and invalid pensionersby a total of £30,000,000. It has also increased the scope ofchild endowment by paying endowment in respect of the first child, which the Labour Government resolutely refused to do. How could the Government, in face of all these commitments, possibly give effect to the reductions of tax that honorable members opposite demand but Were unwilling to grant when they were in office? Expenditure on social services has increased from £81,000,000 in the last year of Labour rule to an estimated £168,000,000 this year. Although the reductions of tax granted by the Government are not so great as they could be, they represent a tremendous relief to the general public. The Opposition has evinced no desire to assist in promoting increased production any more than it did when it was in office. In fact, some trade unions, the views of which the Opposition rejoices to echo, are to-day demanding fortheir members a working week of 35 hours and a weekly wage of £20. If such demands were granted, millions of pounds would be added to the cost of production and complete stagnation would be caused in the building industry, which has had record achievements under this Government. Never before has an Australian government equalled the achievements of this Government. It has provided £30,000,000 to the States and £28,000,000 for war service homes, and has increased rural building by allowing primary producers to write off, as a depreciation allowance, 20 per cent., in each of five years, of the cost of constructing accommodation for workers. Yet, although it has made such great efforts, it proposes to reduce taxation by almost £50,000,000. We are proud of the record of the Government. It is only because there is so little in its record to be cavilled at that the Opposition has been able to say so little in this debate.
Question resolved in the affirmative.
Standing Orders suspended; resolution adopted.
That Mr. Eric J. Harrison and Mr. Francis do prepare and bring in a bill to carry out the foregoing resolution.
Bill presented by Mr.Eric J. Harrison, and passed through all stages without amendment or debate.
Sitting suspended from 5.58 to 8 p.m.
Debate resumed from the 18th Septem ber (vide page 1752), on motion by Sir Arthur Fadden -
That the bill be now read a second time.
.- I move on behalf of the Opposition and, I believe, on behalf ofthenation -
That all words after “That” be left out, with a view to insert in lieu thereof the following words: - “the bill be redrafted to provide for -
1 ) greater reductions and concessions in relation to the subjects of taxation;
a broader definition of the concession in respect of money paid or expended for educational purposes;
3 ) a liberalization of the means test ; and
the increase of the amount granted by way of deduction from assessable income in respect of the spouse and dependants of taxpayers “.
The House will readily appreciate that the Opposition is not satisfied with this bill in at least four respects. This Government is giving back too little too late, and it has not appeased the wrath of the Australian people. This is the measure that purports to make concessions in respect of direct taxes. In other words, this bill is the kernel of the Government’s so-called incentive budget. The second-reading speech of the Treasurer (Sir Arthur Fadden), was a masterpiece of distorted facts and misrepresented truths. In order to make the farce complete, the right honorable gentleman, in the final sentence of his speech, said -
I like the pleonastic touch about the phrase “fully and faithfullly” fulfilled. But that is further evidence of the muddled thinking in expression as well as in economic reasoning that characterizes this Government’s proposals.
What are the promises that the Government claim to have “ fully and faithfully” fulfilled? Obviously, they are the promises that the Government parties made during the general election campaign in 1949. Those promises make interesting reading. I thought that the Government was preparing to deny that it had ever made any promises during that campaign but, doubtless, as there are limits beyond which the audacity of an anti-Labour government dare not go, Government supporters now try a new trick and soundly proclaim that the promises to reduce taxes that they made in 1949 have been fulfilled. Let us have a look at those promises. The Treasurer is Australia’s present self-styled most unpopular Treasurer. I am not inventing terms. He has proclaimed himself to be the most unpopular person in Australia, and many people will regard that as a vast understatement. The right honorable gentleman, in the policy speech that he made as Leader of the Australian Country party during the general election campaign in 1949, said -
If the Socialists are defeated, therefore,rates of taxation, both direct and indirect, can and will be steadily reduced. In short, our policy is a progressive reduction of taxation on individuals, and the community in general, commensurate with national economic and financial policy.
– Australia was not at war then.
– The Vice-President of the Executive Council (Mr. Eric J. Harrison) is trying to find means of escape in the Treasurer’s concluding words, “ commensurate with national economic and financial policy”. Let us examine what was happening when the Chifley Government was defeated in December,1949. In the financial year 1949-50, the year in which this unhappy Treasurer made the promise that I have just quoted, direct taxes on individuals totalled £203,000,000, whereas for the last financial year they totalled £409,000,000.
– And what was the amount of the national income then?
– The right honorable gentleman promised to reduce taxes, yet the collections from the taxes this Government levied last financial year were double those that resulted from the taxes that were levied in 1949-50, and for the current financial year it is estimated that taxes on individuals will yield a total of £395,000,000. Yet, with a temerity worthy of a better cause, the Treasurer in introducing this bill used the following words, which confirm the promise that I have just quoted from the policy speech that he made as Leader of the Australian Country party during the election campaign in 1949 -
In the policy speech upon which this Government was elected, we undertook to rationalize thu taxing laws of the Nation, to reduce the rates progressively, to simplify the enactments and to grant concessions in quarters where they were warranted.
That is what the right honorable gentleman said. In his second-reading speech on this measure, he enumerated for the benefit of honorable members a lot of footling things that he has done, but he has not -reduced the burden of taxation upon the people of Australia. As a matter of fact, every person who is paying tax in Australia to-day is paying more than he was paying when the Chifley Government was in office, and every person who is earning approximately the basic wage is paying much more to-day than persons who earned the basic wage paid in tax when the Chifley Government was in power.
– But how much greater is the present income of persons who are earning the basic wage?
– The Commissioner of Taxation has taken something out of each increase, of the basic wage and consequently the standard of living of workers on the basic wage is falling to a corresponding degree. The worker has not benefited from any increase of the basic wage, whether it has been 10s., 14s. or 7s. a week, that has been granted to enable him to meet increases of the cost of living. And he has actually received only that proportion that has been left to him after tax has-been levied at a correspondingly higher rate. In 1949, when the basic wage was £6 10s. a week, a married man with a wife and two children could have an income of £450 a year, which was nearly £2 in excess of the basic wage, without being liable to pay income tax. Can any one say that any worker in Australia to-day who is earning £2 a week more than the basic wage is not liable to pay income tax? Of course, he is. Indeed, a man on the basic wage with a wife and two children is now paying probably £20 a year in income tax. That is a heavy impost upon the workers. Therefore, the Government cannot possibly justify the claim that the Treasurer has made that taxes have been progressively reduced. Taxes have been progressively increased.
I am sure that every honorable member and every taxpayer in Australia will readily appreciate the fact that the Treasurer, who promised to reduce both direct and indirect taxes, has not only failed to carry out that promise but, on the contrary, has actually doubled both direct and indirect taxes. It will also be readily seen from the figures that I have cited that the Treasurer is now taking in taxes an amount which is 100 per cent, in excess of the amount of total collections of tax when the Government assumed office. The Government proposes to remit only the sum of £14,000,000 in direct taxes. This is a mean and tawdry trick. The Treasurer cannot claim to have reduced taxes when, as a matter of cold fact, taxes on personal income and companies yield £272,000,000 more today than collections under that heading amounted to when the Government assumed office.
– And individual incomes are higher, too.
– The honorable member for Mallee (Mr. Turnbull) can make his apologies to the electors in due course. I am dealing with the promises that the Government made and to which the Treasurer adverted in his second-reading speech on this bill. I am pointing out that taxation on personal incomes and on companies is £272,000,000 higher to-day that it was when the Government assumed office ; and £272,000,000 is a lot in anybody’s money.
– What about the increases of individual incomes?
– If inflation is running wild in Australia, that is the fault of the Government. If there are problems associated with taxation, they are the responsibility of the Government. Of course, there were times when the Communists were blamed for everything, but we do not hear so much about them to-day. This is the record on which the Government has to be judged during the forthcoming by-election campaign in the electorate of Flinders
– Order !
– That is what they said, Mr. Speaker.
– Who said that?
– The Prime Minister (Mr. Menzies), I presume, who speaks on behalf of the Government. If that he the record on which Government supporters wish to be judged, they will not find many taxpayers who will accord to them, a vote of thanks. The three budgets that the Treasurer has introduced have earned for him the reputation that as a writer of fiction he is Australia’s worst seller. He claims that he has done something worth while for the benefit of individual taxpayers. I have pointed out that the individual taxpayer in Australia is paying a very heavy amount of tax. I do not need to go further than the Federal Research Director of the Federated Taxpayers Association of Australia, Mr. McKellar- White, to find support for the contentions of the Australian Labour party in this matter. This is what Mr. McKellar- White was reported in a daily newspaper on the 7th August last to have said about the budget -
What we needed was a courageous budget to restore incentives. What we got was an anticlimax. .All the Federal1 Treasurer proposes to do is to- cut taxes by £40i million. This should bc compared with- the £201 million which was the increased tax arising from last year’s budget. I doubt if this is enough to restore health to our economy. I don’t think it is enough to give a real impetus to more work, production, and employment. Last year’s taxes, including State taxes, represented £117 per head of population. The present cuts will reduce this by about £(i per head.
Let any Government supporter who tries to defend this budget call a meeting in his electorate and seek to find any sup porter of these tax reductions. Although the people value any reduction of taxes, however insignificant it may be, they still want a bigger tax cut than will be effected under this measure.
In respect of company tax the Treasurer will not deny that his proposals, as they affect public companies, merely mean that the Government will give back to them only a proportion of. the tax that was imposed upon them last year, which was an increase on company tax for 1950-51, and a vast increase on company tax in 1949-50, the last year of the Chifley Government’s term of office and the last days of the golden age. But happy days will come again, and they will not be long in coming either. When they come, they will bring reduced taxes. Happy days will not come again in this country until Australia knows a budget something like the last budget of the late lamented J . B. Chifley. That budget involved only £504,000,000, but the Government parties^ who were then in Opposition, claimed that that amount was too great. They said that when they attained office they would reduce taxation, but to-day they are still taking hundreds of millions of pounds more out of the pockets of the Australian people than Labour governments ever took. Perhaps the Government believes that the Australian people will allow themselves to be fooled by spurious promises at election time and will forget all about those promises after the election have been won. I do not believe that the Australian people are as gullible as that. Our people expect governments to keep their promises, and governments that will not keep their promises, as I have said on a number of occasions, are frauds on democracy and should be destroyed.
In- the matter of company taxation, the most benefit that any company will get from the reductions now proposed by the Government is only about £500 a year. I am sure that the Treasurer will not mind me reminding him that when he was in Opposition, as Leader of the Australian Country party he used to inveigh heavily against the Chifley Government on the ground that the rate of company tax - which, was then only 6s. 8d. in the £1 - was far too great. Now the rate of company tax is 9s. in the fi. In the halcyon days when, he used to attack the Labour party he went on record as saying-
I doubt if it is wise to put such a load permanently on company enterprise, which plays a large part in the industrial development of Australia; and only the urgent need of revenue- has necessitated the increase nowproposed, as a war-time measure.
The years sped by and the Chifley Government, in each year following the conclusion of the war, reduced all forms of direct taxation, whether company or individual, as well as indirect taxation. The benefits that we gave to the Australian people generally in the way of reduced taxation amounted to £218,000,000 a , year at the time when we were dismissed from office. On present money values that sum would be worth at least £436,000,000 a year. The Chifley Government gave that amount back to the people, but this Government has piled burden upon burden in such a way that the Australian people are almost rebelling against our present scale of taxes. It is strange that those who, when in Opposition, urged all sorts of tax reductions, should be the architects of a plan of ruinous and excessive taxation which now weighs so heavily on the Australian people. There is no one who will deny that taxation iri Australia under the Menzies Government has reached the confiscatory stage. I heard some one say that all taxation is confiscatory. Of course it is; but no country in the world, despite what the Treasurer has said, is burdened with taxation as is this country to-day, and as it has been since the present Government assumed office. This is a young, developing country, but this Government has placed a burden on the Australian people which is almost insupportable. Yet it is composed of honorable members who, when in Opposition, used to urge a policy of low taxation. Honorable members on the Government side are to-day the proponents of high taxation and think that because of the miserable hand-out that they have given in this budget they will got support from the Australian people. Let them be under no illusion about that; they will not.
The Treasurer, in his policy speech, made another promise. He said that there would be a. progressive modification of the means test.. In this bill the means test remains exactly where it was, last, year. The means test is- still. 30s. for a single person and £3 for a. married couple. The Minister said: that the income in the hands of pensioners would not be taxed until the income of a married couple exceeded1 £507 a year. Let there be no mistake about this matter either, the means test is still 30s. for a. single person and £3 for a married couple, as it was when the Chifley Government left office. The Chifley Government eased the means test, and, indeed, it. is the only Government ever to have done so. The present Government promised to liberalize the means test but it has done nothing at all about it except make a miserable allowance in respect of the ownership of property.
– I rise to a point of order. The honorable member for Melbourne (Mr. Calwell) said that the Government had promised to remove the means test and had done nothing about it. That is definitely not so-
-Order! The Minister for Social Services (Mr. Townley) is completely out of order.
– This Government has not reduced the means test at all, and the claims by the Treasurer, the Minister for Health (Sir Earle Page) and the Minister for Social Services (Mr.. Townley) will not hear investigation. The Treasurer, when he was introducing his so-called concession in the matter of education, said -
I lune great pleasure in announcing this concession to a most worthy cause.
There were the usual sycophantic cheers from honorable members opposite when the Treasurer said that. If honorable members look carefully into the so-called concession, they will see how little it will benefit the vast majority of Australian parents who have children at school. There will be no benefit at all for the parents of children who are attending government schools in Australia, whether they be State schools or public schools. I repeat, there is no benefit in the concession at all for such parents. The benefit to the parents of children who are attending registered primary schools, which are generally denominational schools, will he limited to the amount paid in tuition fees. That sum will not amount to anything like £50 for each child each year. In the field of primary education, hooks are provided free in most State schools. Therefore, the cost of books will not be a worthwhile concession to parents who have children at school. Those remarks also apply in the case of parents with children who attend registered primary schools. The benefit will be greatest to those who can afford to send their children to boarding schools. To the parents whose children attend secondary schools as day pupils, the benefit certainly will not amount to anything like £50 a year.
– It will be a mere pittance.
– Yes, as I am reminded by the honorable member for Lalor (Mr. Pollard) it will be a pittance. The pupils attending what are known as the Great Public Schools in some States, and secondary public schools in other States, will enjoy the concession to a major degree. The parents of children who attend schools in Victoria like Geelong Grammar School, Xavier College and Melbourne Grammar School will benefit. This concession will not benefit a most worthy cause, as the Treasurer so confidently asserted. The workers who have children at school will get no benefit at ail. The loss to the revenue from this concession, as the Treasurer stated in his budget speech, will be about £1,500,000 a year. I notice the honorable member for Henty (Mr. Gullett) laughing about that matter. If the honorable member cannot read or write, then I cannot inform him, except by word of mouth, of what the Treasurer said. The benefit will not accrue to anybody this year, it will accrue from the beginning of the next financial year. However, there is another point to remember about this matter. The concession in respect of books will be granted only when the books have been bought from schools or universities. Amounts spent in purchasing books at book-sellers will not be included in the concession, so the Treasurer and the Government are again hitting at the book-selling trade, irrespective of the very serious blows they struck when they imposed import restrictions on school books and other books in February of this year. This Government has no claim on the affections of parents who are finding it so hard to educate and clothe their children. The Treasurer is only trying to fool the people when he says that this tax concession of £50 a year is a worthwhile one.
I now refer to proposed new section 26c. It cannot be said that the withdrawal of clause 6, notice of which was given to-day, was a draftsman’s error or a typist’s mistake. It has been made necessary by the result of the activities of a pressure group of very wealthy people who believe that a retiring allowance of £10,000 a year or more should be free of all taxation. They are the greedy, grasping people to whom the Government this day surrendered!. I ask honorable members to contrast the speed with which the Government acceded to the demands of the Fairfax and all the other wealthy people with the treatment it has accorded to the age and invalid pensioners in regard to the means test. The baste with which the Government prepared its legislation is shown by the fact that not until to-day were members supplied with the memorandum of 123 closely printed pages containing explanatory notes on each section and sub-section of the proposed legislation. There is further proof of the bill having been hastily drawn in the announcement by the Treasurer only to-day that proposed new section 26c, which deals with the taxation of retiring allowances, is to be withdrawn and may be re-drafted. The Government intends to do that in committee and, perhaps, we shall not see the proposed new section again. It may be that we shall see it in a form that will benefit the very wealthy people in the community and will do nothing for the very poor. I do not intend to take up the full threequarters of an hour to which I am entitles because I am leading the Opposition’s attack on this measure. I shall content myself by directing attention to a statement made by the Minister for Commerce and Agriculture (Mr. McEwen) when he addressed an Australian Country party conference in Brisbane, on Wednesday, the 30th July last. His statement was reported in the morning press of Australia on the following day as follows : -
The Government’s financial policy was the essence of flexibility. Nothing had been done which could not be altered or removed by a stroke of the pen.
There is the budget. There is the taxation measure before the House that implements the budget proposal. This Government says that it is prepared to be judged on its actions as they are illustrated by those documents. It will be judged, whether it likes it or not, and found wanting.
– I rise to support the measure and to oppose the amendment. It is not that I should not like to see every proposal in the amendment incorporated in the Income Tax and Social Services Contribution Assessment Act, but we must realize that the Treasurer (Sir Arthur Fadden) has a responsibility to this country, and that it is easy for irresponsible people to give money away. All that the honorable member for Melbourne (Mr. Calwell) has proposed in his amendment could have been done when he was a member of the last Labour Government. It is significant that it was not then done. ‘ The irresponsible speech to which we have listened to-day was made by an honorable member who was known throughout the world, as our most unpopular Minister for Immigration. The honorable member made great play on the taxation of the basic wage. He said that a man in receipt of the basic wage to-day would be taxed £20 for the year, but he forgot to add that, since this Government has been in office the Commonwealth Court of Conciliation and Arbitration has added a prosperity bonus of £52 a year to the basic wage. The honorable gentleman said that the Government had been entirely responsible for inflation and was entirely responsible for its correction. That was a most irresponsible statement. The honorable member is as much responsible for inflation as is any other person, in the community. We all recall the occasion when he told the people to spend all the money they had. In other words, he advised them to accelerate inflation. That advice was as irresponsible as were the statements he made earlier this evening. He said that happy days would come again. Happy days for whom? If the Labour party ever regains power, it will be a happy day for members of the Opposition, but certainly not for other Australians. Three more years of socialistic government would cost Australia about £1,000,000,000. The honorable member for Melbourne complained that this Government’s taxation policy was confiscatory. As a doctrinaire socialist and a keen Fabian, he should have no ground for complaint if that were true. He ought to be pleased, if he believes his own statement, because confiscatory taxation is the ideal of the socialist and the Fabian.
This Government has improved the taxation laws in a number of ways. It reduced taxation in its first year of office. It amalgamated the income tax and the social services contribution and, in doing so, reduced the tax on the lower income groups. It simplified the assessment schedule so that taxpayers could check their own assessments. Previously, even accountants could not check assessments unless they had the book of rates published by the. Taxation Branch. It also simplified the income tax return form. It changed the method of making concessional allowances from the rebate system to the deduction system. The honorable member for Melbourne tried to pass that off as a change of no consequence, but he was most unsuccessful. The alteration to the deduction system for concessional allowances definitely involved a tax reduction. The Government also rationalized the conditions governing concessions to dependants, particularly parents and student children up to 21 years of agc. It increased the allowances” for medical, dental and hospital treatment and the permissible deductions for insurance and superannuation payments. It introduced an age allowance, which has been of great assistance to elderly taxpayers and, in fact, has removed elderly persons in the lowest income group entirely from the field of taxation. All these improvements were effected prior to the introduction of the bill now before the House.
This bill provides for a simplification, and improvement of the company tax system. The improvement envisaged is not so great as I should like it to be, but it will be a move in the right direction. The proposed concessional allowance of £50 for education expenses, notwithstanding the criticism of the honorable member for Melbourne, is a reasonable provision. I shall discuss it later. The Government also proposes to simplify the law in relation to goodwill in the sales of businesses. This provision has been the cause of dissatisfaction for a long time. Special concessions will be granted to primary producers. The writing ofl of the cost of new plant and equipment over a period of five years will encourage them. The Government has decided also that book profits that result from the receipt of insurance payments or from forced sales of stock on account of fire, flood or drought may be spread over five years for taxation purposes. That will be another much-needed improvement of the tax law. The Government will correct anomalies in relation to the dissolution of partnerships, and the new provision will be effective retrospectively to July, 1950. The bill reveals that the Government has adopted a generous taxation policy for the Northern Territory which should encourage the investment of capital in that area. The general maximum permitted to be set aside for the provision of pensions for employees will be increased from £100 to £200 a year. Self-employed persons also will be enabled to establish funds for their mutual benefit on the same basis as those that may be established by employers for employees. The Government would like to make many other improvements, but is unable to do so at present.
I refer again to the provision for the granting of a concessional allowance of £50 for education expenses. I admit frankly that I am not happy about this provision. I had hoped that it would he more extensive than it is. The honorable member for Melbourne tried to make a great story about the provision, hut he missed the main point, which is that country residents who have to send their children away to attend high schools must pay boarding expenses for the children during their absence. I consider that such expenses should have been included in the provision for a concessional allowance. Most honorable members on this side of the House, I believe, thought that such expenditure would have been included. However, the matter has been brought to the attention of the Treasurer and he is investigating it. I have not the faintest doubt that the provision will be extended in order to include such payments next year if the right honorable gentleman cannot see his way clear to do so this year. I shall certainly continue to urge that such an amendment be made.
The provision for the writing off over a period of five years of the cost of plant and equipment installed on farms will be of great advantage to primary producers. It will encourage them to improve their holdings by installing hulk handling equipment for wheat, building houses for employees and so forth. It will stimulate primary production. Primary producers often acquire large profits on paper only as a result of forced sales of stock or from insurance on account of losses of stock due to five, floods or drought. This circumstance arises, for example, when stock valued on the owner’s books at, say, 10s. or £1 a head, are destroyed but are insured at a higher rate than is shown on the books. Such book profits should be spread over five years for taxation purposes, as the Government has provided in the bill. The Government also has included in the measure a reasonable arrangement in relation to the alteration of partnerships. As the Treasurer has explained, under the present system each partner’s interest is valued and thereby a large profit is disclosed. Consequently, when a partnership is dissolved each party has to pay an enormous tax. This has made it almost impossible for partners to dissolve their agreements. In the district that I represent, many fathers and sons have established partnerships. However, whenever a father and son have sought to break up a partnership, so that the son may establish himself on his own account, as often happens, great difficulties have been raised by the taxation problem. Frequently, partnerships have been unable to pay the heavy costs involved.
This form of tax was not introduced by the present Government. It was in force during the regime of the Chifley Government, but, of course, that Government did nothing to remove the injustice. When members of the Labour party are in Opposition and have no governmental responsibility, they urge the Government to do all sorts of things. They do not care whether the Treasurer can obtain enough money with which to pay for our defence and for social services, but they are always willing to advocate improved social services and reduced taxes. They cannot have it both ways. We must pay for better social services and adequate defence if we are to have them. Not many years ago, hundreds of thousands of Australians were prepared to go down on their knees and give everything they had to the government of the day if they could be saved from the Japanese. That number included many honorable gentlemen who now sit on the opposite side of the House. The squeal that was raised at that time was terrific.
I am sorry for the honorable member for Melbourne, because the speech that he had planned to make to-night was ruined by the Treasurer this afternoon. It was most unfortunate for him-
– Order ! The honorable gentleman must not refer to discussions that took place in committee.
– I was referring to a question that had been asked, Mr. Speaker.
– Order ! The honorable gentleman also must not do that.
– As far as I can see, all members of the Opposition based their objection to the bill principally on clause 6, which refers to amounts paid as retiring allowances. Apparently they had read the opinion of the Sydney Morning Herald and proposed to tear the Government to pieces. That was evident to anybody who had eyes to see and ears to hear. However, they were forestalled by the Treasurer and had to recast their speeches. The honorable member for Melbourne, who usually takes the full time allotted to him and asks for a little more, finished his speech before his time had expired. The reason was that he had been robbed of the main part of his speech on clause 6. The Treasurer is to be complimented because he is broadminded enough to accept suggestions and to listen to arguments. He has decided to examine the representations that have been made to him on clause 6, and the Opposition has been forced to change its tune.
That is the general position. I have no doubt that every honorable member on this side of the chamber is in favour of every one of the amendments submitted by the honorable member for Melbourne, but we realize that the Treasurer has the responsibility of collecting sufficient revenue to meet the expenses of the nation. All that money is not expended by this Government. The State governments have been supported to an increasing degree. This Government has made available to the States all the loan money that has been raised in the last twelve months, with the result that it has been obliged to finance its capital expenditure from revenue. The Treasurer has done the best job that could be done in the circumstances, and I have not the faintest doubt that his next budget will be an improvement on his present budget, just as the present budget is an improvement on the last one. 1 oppose the amendment, and will support the bill.
– The honorable member for Gwydir (Mr. Treloar) has made a complete misstatement. He appears to think that the attack by the Opposition has been directed to proposed section 26c, which appears in clause 6 of this bill. That view is quite incorrect. The honorable member obviously knows nothing about the matter. Why has clause 6 assumed importance? The reason is not difficult to discover. The Treasurer (Sir Arthur Fadden) introduced this bill last Thursday evening. Clause 6 incorporates proposed section 26c, which deals with amounts received on the termination of, or retirement from, employment. It was an important provision. It was subjected, and the Government was subjected, to a most fierce attack in a Sydney newspaper last Saturday, and again on Sunday. To-day, the Government abandoned the provision. I do not know whether an error was made in the drafting of the provision. There was hardly time to consider it. But what is the position of the Government ? It introduced a serious tax proposal last Thursday, and then, in the unseemly proceedings that occurred here this afternoon, the Treasurer yielded to pressure before the chamber, which represents the people, had had an opportunity to consider the position. The criticism of the provision seemed to have some warrant, though no doubt it was greatly exaggerated. But what is to become of this country in the present economic situation, if the Government will not stick to its views for 24 hours? Why cannot the House debate this provision? The honorable member for Gwydir, conscious of the extraordinary retreat of the Government, has tried to praise the Treasurer for hi3 decision. Obviously, the right honorable gentleman has been forced to surrender by pressure groups. That retreat is indicative of the kind of Government that is in office at the present time. It is a government that has ceased to govern.
The second matter that I mention,, again in answer to the honorable member for Gwydir, deals with taxation. The honorable gentleman made excuses for the Government’s failure to reduce taxation,, and referred to the cost of the war in Korea. He did not mention the actual expenditure incurred on that war. Let meremind him, and his colleagues, that this Government succeeded in gaining office, because it promised, amongst other things, to reduce taxation. Under the Chifley budget of 1949-50, the total revenue was £504,000,000. The honorable member for Gwydir said that the Menzies Government reduced taxation in the following year. That was perfectly true. But last year, the Government increased taxation. This year, taxation will be slightly reduced. But it is fair to contrast the taxation imposed in the last Chifley budget with the taxation to be extracted from the people under the present budget. I omit the two intervening years to which the honorable member for Gwydir has referred. Taxation has increased from £504,000,000 in 1949-50 to no less than £863,000,000 in the current financial year, an increase of £360,000,000. How does the honorable member for Gwydir explain that? Of course there is no explanation. It is a complete repudiation by the Government of its pre-election promise. Every head of taxation has been increased since this Government assumed office. “ The receipts from sales tax, tax on income derived from personal exertion, and company tax have been doubled. Revenue from customs has been reduced simply because the Government has restricted the entry of goods into Australia. The late Mr. J. B. Chifley had established large overseas balances, and this Government allowed them to become seriously depleted. Receipts from excise have increased by 40 per cent., and collections from the pay-roll tax have almost doubled. That is how this Government has honoured its pre-election promise to reduce taxes.
I now pass to a matter of supreme importance, and that is the proposal of the Government regarding education expenses. At the outset I should like to contrast two statements made by the Treasurer on . this matter. The right honorable gentleman said, in his budget speech -
It is proposed accordingly to allow parents a concessional deduction for education expenses incurred, up to a maximum of £50 for each dependent child under 21 years receiving full-time education.
The right honorable gentleman mentioned no limitation in respect of schools or methods of payments. It was a concessional deduction for education expenses incurred by parents.’ But what is the right honorable gentleman’s proposal in this bill? How does he give effect to his promise ? He said, in his secondreading speech -
A most important amendment proposed in this bill is the allowance, for the first time in the history of Australia, of a concessional deduction in respect of expenses incurred by parents in educating families. Having regard to the ever-increasing costs of education, this concession will represent a very acceptable and practical form of taxation relief at the present time.
That is perfectly true. We welcomed the Treasurer’s announcement of the concession in his budget speech, although we. considered that the proposal did not go so far as we should like. We recognized that the concession would assist persons in the higher income brackets rather than those in the lower income groups, but we regarded it as a step in the right direction. What is the essence of the proposal? The right honorable gentleman said in his second-reading speech -
Taxpayers will be allowed a deduction as from the 1st July, 1952, of amounts paid to schools, colleges or universities for the fulltime education of dependent children under the age of 21 years. … I emphasize that the allowance will include tuition fees, board, text-books and extras, so long as the amounts claimed have been paid directly to the educational institution in connexion with the fulltime education of the child. It would not bo practicable to allow a deduction for casual payments made otherwise than to an institution providing full-time education, even thought those payments may relate to the child’s education.
I am compelled to challenge the Government on that point, and ask it to review the position. Why should payments incurred in respect of education expenses be limited to those made to schools, colleges, or universities? That simply cannot cover a great range of payments made by parents who. are educating their children. The provision has been carefully drafted in order to limit the benefit in such cases, and hundreds of thousands of parents who are bearing the expenses of board and text-books, will receive no advantage. I consider that the benefit should be broadened in the manner explained by the honorable member for Melbourne (Mr. Calwell).
In order that the benefit may be granted, an amount must be paid by the taxpayer in the year of income to a school, college, university or tutor, for or in connexion with the education of a person who is receiving full-time education at that school. Now, hundreds of thousands, perhaps millions, of parents in Australia are educating their children in primary schools, high schools and universities, and bear the heavy expenses associated with the purchase of textbooks. People do not buy the text-books from the schools. They buy the books from booksellers in the cities. In Sydney, the books are bought from Angus and Robertson and in Melbourne, from Robertson and Mullens. The cost of textbooks is an enormous burden upon the average parent. I ask the Government to review this position. The Government has reviewed proposed section 26c in clause 6 in the light of criticisms published in the press. Let the Government now review proposed section 82j in clause 15 in the interests of parents of the nation. I accept the statement that the provision in respect of payments of fees to a school is not applicable to government high schools or primary schools. I do not question that decision. But the Treasurer has said that payments for board and text-books will be allowable deductions only if the payments are made to a school, college or university. Let us consider that position. Whoever heard of a university student buying text-books from the university? The parent pays for the text-books while the student is attending the university. The parent may buy the books at the university union representing the students, or from a bookseller. Is not the parent entitled to the tax concession? This provision must be liberalized.
– Why did not the preceding Labour Government grant such a concession?
– The Vice-President of the Executive Council (Mr. Eric J. Harrison) is perfectly right. He is entitled to claim credit for the Government for the institution of this reform; and I again give to the Government credit for it, as I did in my speech on the budget. But the Government, if it is to do something for the benefit of the parents in respect of the education of their children, should not be mean, niggardly or halfhearted. A’ real concession should be granted for the benefit of the parents of the nation, irrespective of the school, college or university that their children attend. I do not know precisely why this limitation has been imposed. Nowadays, with the enormous increase of the cost of living that has occurred under this Government, which promised to reduce it, expense incurred on education is substantial. The cost of books at the primary stage is heavy. The expense of secondary education is enormous. The expense of a university education is even greater. What is the objection of the Taxation Branch of the Treasury” to checking claims for tax deductions on account of education expenses? The branch allows medical expenses and dental expenses upon the production of receipts for the payments. Can there be anything wrong, in principle, in accepting receipts given by booksellers on proper authentication? The objection cannot be that. No! The purpose of this provision is simply to show that the Government is beginning a reform. But it is proceeding in a niggardly way to discriminate between parents, and that is completely unjustifiable. Therefore, I ask the Treasurer to review proposed new section 82j.
Proposed new section S2J provides that the amounts paid by the taxpayer in the year of income to a school, college, university, or tutor for or in connexion with the education of a person who is a person in respect of whom the taxpayer is entitled to a deduction under section 82b of the act shall be allowable deductions up to £50. All that need be done is to amend the proposed section in order to provide that amounts paid by the taxpayer in that year of income to a school, college, university or tutor for or in connexion with the education of a person or amounts otherwise expended by the taxpayer in the year of income for or in connexion with the education of his children shall be deductible up to £50. Is there any objection to that in principle? The expenditure would need to be verified and authenticated. That could be done as it is done in the case of other expenses. The Government is entitled to credit for commencing a scheme under which deductions up to £50 may be allowed, but there are other points with which I could deal. If the maximum age of a student under this provision is to be. 21 years, the assistance will be only of a minor nature in the case of a parent whose son or daughter i3 attending a university because he or she would hardly be likely to finish a professional course before reaching the age of 23 or 24 years. I cannot agree with that limitation and I ask the Government, as a matter of urgency, to review that provision. The age need not be specified. The concession need not be limited simply to payments to a university because such a payment is unusual except in the case of fees. The cost of school books is not as a rule paid by parents to the university so that the benefit will largely be nullified. That applies similarly to equipment that is required by science students at universities and at technical or secondary schools of the States, irrespective of how they are conducted. This step forward would be made more popular and the provisions would be more beneficial if the additional provisions that I have suggested were adopted. That could be done very conveniently in committee of the House when the bill reaches that stage.
– I understood that honorable members were speaking to an amendment designed to change the whole substance of the bill that is before the House. Before dealing with the terms of the amendment, I wish to refer in some detail to the arguments advanced by the Leader of the Opposition (Dr. Evatt). In the first place, he dealt with clause 6. The Government intends to move for its omission when the bill is being considered in committee. The right honorable gentleman made the charge that the Government should stick to its point once it had made up its mind. That is a peculiar attitude for any honorable member to adopt towards the measure. It means that even though the Government should discover that some anomaly or injustice may be caused, it should set its mind against alteration of the terms of the bill. That may be the attitude of the Opposition, but it is not the attitude of the Government. This proposed new section was considered quite carefully, but when it was shown that it would cause certain injustices, the Government wisely said that it was prepared to examine it further. The Government wanted to be sure that only genuine employees would receive benefits that might be given by employers, but it found that there were cases of well-known abuses, and decided that they should be stopped. Unfortunately, when the provisions were drawn, ‘they not only closed the loopholes but also gave rise to injustices, and the Government acted wisely in deciding to examine them again. That is being done now, and in due course the Government will make its intentions clear.
The Leader of the Opposition referred secondly to education expenses. He conceded that the Government proposed a step in the right direction and I give to him credit for so doing. This procedure is a novel one that has not been attempted by any other government in Australia. The Leader of the Opposition has charged the Government with niggardliness but I suggest that he cast his mind back to the eight years during which the Labour party was in office. During those years,, it made no attempt to examine the problem, let alone to solve it.
– Educational costs have doubled in the last few years.
– What has that to do with the matter? That approach is characteristic of the Labour party. Evade your responsibilities somehow. Never face realities, but try to escape .the consequences by drawing a red herring across the path. The Leader of the Opposition forgot certain facts. The first is that the Labour party either did not think of this concession or, if it did so, it studiously avoided any action in this House to assist those who wanted to have their children educated privately. The Prime Minister (Mr. Menzies) has made it clear in this House on many occasions that he regards it as the duty of governments to provide for the essential educational’ needs of children. No Australian Government has given greater educational facilities than has the Menzies-Fadden Government. The Leader of the Opposition, instead of generously accepting the Government’s proposal, has tried to damn a genuine concession to those who want to educate their children privately. The right honorable gentleman adopted a typical lawyer’s attitude to the matter by concentrating particularly on one word - the word “ to “. He asked why the Government would allow concessions only when the amounts were paid to the school itself. The Treasurer said in his second-reading speech -
Taxpayers will be allowed a deduction as from the 1st July on amounts paid to schools, colleges or universities for the full time education of dependent children under the age of 21 years. The allowance will be subject to a maximum deduction of £50 for each child.
The right honorable gentleman then went on to say - and this is the relevant portion -
The allowances would include tuition fees, board, text books and extras so long as the amount claimed be paid directly to the educational institution in connexion with the full-time education of the child.
Two points arise here. In Australia, under a federal system of government, the basic responsibility for education, and particularly for primary education, lies with the States. The Australian Government has not attempted, and could not attempt, to invade that field. That fact has been conspicuously overlooked by the Leader of. the Opposition. The Government intended to grant a taxation concession to every mother and father who claims the right to have a child educated in a private school. It is providing for a concessional allowance of £50 in respect of each child on amounts paid to schools, colleges, tutors or universities for the full-time education of dependent children. That is a very generous concession and it is in line with the concessions that the Prime Minister has indicated he is only too happy to provide. The -Leader of the Opposition has singled out the word “ to “ in the provision that the amount claimed as a deduction must be paid by the parents “ to the educational institution “ and has claimed that the provision should refer to the amount paid to any one. There is some substance in that argument. The Government could make the concession more generous. But honorable members should remember that this is the first step that has been made in this direction by any Australian Government. The concession is for parents who send their children to school and where payments will have to be made. The Government intended it to apply only to an amount paid in respect of the education of a child. If, at some future time, the Government wishes to extend the concession, then by all means let us give consideration to it. But surely on this occasion, when a concession is being introduced for the first time, we can at least expect the Opposition to study the matter generously and say that it is a splendid concession. Surely it could applaud the Treasurer and the Government for this action.
The second reason why it was not possible at present to extend the concession was based on the ground of practicability. The Treasurer stated with regard to this point -
It would not be practicable to allow a deduction for casual payments made otherwise than to an institution.
Finally, the administrative problemsinvolved are associated with a novel situation and a novel piece of law. This Government, as much as any other federal government in the history of” Australia, recognizes its responsibilities to the children of the nation and will goout of its way to ensure that proper educational facilities shall be provided by it if they are not provided by the Stategovernments. I believe that theseremarks cover effectively the points that were introduced into the debate by theLeader of the Opposition.
I shall refer now to the amendment that was moved by the honorable member for Melbourne (Mr. Calwell). He dealt with the various matters rather lightheartedly in his usual fashion, and gavethe impression that he was having a game rather than taking part in a serious debate. The honorable member dealt mainly with one problem - the reduction of taxation. I should have thought that the Opposition would have hesitated before embarking on such a perilous course, because the Prime Minister has indicated clearly that if the arguments of the Opposition on various occasions had been accepted, a treasury-bill issue totalling between £350,000,000 and £400,000,000 would have resulted. At a time when the Government is trying to Control inflation, the Opposition is advocating measures which would mean the greatest inflationary move in Australia’s history. Between £350,000,000 and £400,000,000 would have been involved in the quack remedies and quack nostrums advocated by the Opposition, which, up to the present time, has not been able to find an individual whom it can put up to lead it in debates on treasury problems. The Treasurer will know that, whenever he has to come into this chamber to listen to arguments of the Opposition on treasury, budgetary and financial problems, he does not know which honorable member the Opposition will put up to speak for it. It has been stated quite authoritatively- that the Labour party must look outside the Parliament for some one to lead it in budget debates.
I want to put this problem in proper perspective. We have a defence vote of £200,000,000, a social services programme greater than any previous one, and a very large repatriation programme. We are expending large sums upon subsidies. It is wise to consider the remedies suggested by the Opposition and the proposals of the Government, not in isolation, but in their proper setting. The Opposition should concede, at least, that the Government has presented its budget in perilous times, when our defence preparations are getting into top gear and we have great military commitments overseas. Any thinking person who examines the problem from that standpoint will concede that the amendment moved by the honorable member for Melbourne is rather nonsensical. The honorable gentlemandealt with tax reductions, but he did not tell us how reductions could be effected. If a person says a certain thing should be done, surely it is up to him to say also how it should be done. It is a specious method of argument to mouth the phrase “ Reduce taxation “, and at the same time to ignore the implications of such a reduction and to neglect to name the source from which the necessary finance should be obtained, the degree to which the issue of treasury-bills should be resorted to, and the expenditure that should be reduced. Many problems must be considered in dealing with a matter of this kind. It should not be dealt with in the airy-fairy and glib manner in which the honorable member for Melbourne dealt with it.
The honorable gentleman touched upon the very contentious question - contentious for the Labour party - of a reduction of taxation, but he did not say how the reduction could be effected. The Opposition dealt with that matter previously on the basis that we should inflate our way out of all our problems - that we should inflate our way out of inflation, inflate our way out of our defence problems, inflate our way out of our repatriation problems and, in fact, inflate to the point at which the economy would burst. That is the only remedy which the Opposition has been able to suggest. . This Government was elected on a policy of reducing taxation as and when circumstances permitted. If there were a reduction of international tension, if there were an increase of the productivity of this country and, consequently, of its national income, or if other favorable circumstances were to arise, this Government most certainly would reduce taxation. No one is more committed to a policy of tax reductions or faces the problems involved in it more- realistically than does the Treasurer or the Prime Minister. I give the lie direct to the statement that this Government will not reduce taxation as and when circumstances permit. Our policy always has been, and always will be, to reduce taxes when it is possible to do so, but we are not prepared to use unlimited treasurybill issues, inflation or other specious financial methods that would impose additional burdens upon the people at a time when it would be inadvisable to do so.
The honorable member for Melbourne mentioned a criticism of the budget that had been made by the research director of the Federated Taxpayers Association of Australia, who said that it was an overcautious budget. That is one view. I could cite the views of half a dozen men holding responsible positions in the community who have applauded the action? of this Government and have commended the policy it has adopted. The secretary of the Associated Chambers of Commerce said -
The budget should be looked upon as the first leg of the return journey to incentive taxation. Only irresponsibles or those with an equity in bad times could term it a depression budget.
That gives the lie direct to the statement made by the honorable member for Melbourne. A man connected with one of the most vital industries in this country applauded the budget. The executive director of the Building Industries Congress said -
The new budget will do something to restore public confidence, which is one of the main needs of the building industry.
He knows that the building industry needs a budget that will restore incentive and increase the demand for buildings. He went out of his way publicly to applaud the action of this Government in reducing taxes and presenting an incentive budget. The secretary of the Primary Producers Union, who knows a great deal about the primary industries of this country, said -
The budget provides an incentive for people to work. It will help those keen to reap the benefit of hard work. Although taxation remains high, primary producers, particularly dairymen, will welcome the relief contained in the new budget.
When we examine, not the statement of one individual but the statements of dozens of representative individuals who hold high positions in the community, we see that they are prepared to give credit where credit is due, and to applaud the Government for having brought down a courageous incentive budget.
Clause 6 has been the subject of considerable comment. It has been dealt with by the Leader of the Opposition and by the honorable member for Melbourne. Let me make it quite clear to the House that the decision to move for the deletion of the clause was taken by members of Cabinet, who, having considered the anomalies to which they thought it might give rise, decided, in their wisdom and common sense, that the clause should be further considered. To say that there is something sinister
– Why did not the Government think of that before it drafted the bill?
– We did not think of it when the bill was being drafted. We thought of it afterwards. One day, if you are fortunate enough to retain your seat and to become a member of Cabinet, you will realize that these things do not work out-
– Order ! The Minister must address the Chair.
– The amendment asks for a liberalization of the means test. Let me remind honorable gentlemen opposite that this Government, since it has been in office, has made eighteen amendments of the means test. What a specious argument it is to say that we have made no concessions in that connexion ! We are committed to the abolition of the means test when times become a little more normal and we are able to abolish it with justice and efficiency. The Minister for Social Services (Mr. Townley) has said that he hopes to be able to do something to solve that problem during his tenure of office. There is no greater advocate of the the abolition of the means test than the honorable member for Sturt (Mr. Wilson). It is strange that, when his efforts .have been so successful that eighteen amendments of the means test have been made, the Opposition should jump upon his band waggon. The amendments of the means test include an increase of the property limit from £750 to £1,000, an increase of the widows’ allowance from £1,000 to £1,250, an increase of the life insurance allowance from £250 to £750, and an increase of the permissible income of blind pensioners from £5 17s. 6d. to £10 a week, and, finally, the abolition of the means test applicable to them. The honorable member for Melbourne either had not given those concessions very much consideration or, if he had done so, chose to ignore them in the interests of .shabby politics. He jumped upon the band waggon, of the honorable member for Sturt, who, since he entered the Parliament, has dealt with this matter sincerely, not with the object of gaining a temporary political advantage from it.
As I have said already, it is apparent that the Opposition’s case for a reduction of taxation is completely specious, because it has advocated only a course of action that would inflate the economy to bursting point. It has not advanced a suggestion that could be adopted by this Parliament in a spirit of realism. The answer to the Opposition’s argument about the tax concession in relation to education expenses is that the Government has taken a step in the right direction by giving greater concessions to people who want to educate their children in their own way. I know that my colleagues will be able to deal very effectively with the proposal that the means test be liberalized if it be raised again in the course of the debate. I believe that the amendment has been moved, not in a spirit of sincerity but in order to raise political problems that may help the members of the Opposition in another sphere. I shall be astonished if it does help them very much. I ask the House to reject it, and to accept the proposals made by the Treasurer.
– I have found rather interesting the speech of the Minister for the Navy (Mr. McMahon), which was full of “ ifs “ and “ when “. It would appear from it that the country will receive a great number of benefits when it is suitable and possible for the Government to grant them. The Minister, however, cannot evade the fact that when honorable members opposite were in Opposition during the Chifley Government’s term, there were no “ ifs “ and “ whens “ in their statements about the policy they would follow when they regained office. They said that they could, and would, carry out their political promises.
– When the opportunity arose.
– When the opportunity arose ! The Government has been in office for almost three years and has done very little towards achieving the goals that it said it could achieve. The Minister referred to the Government’s actions in relation to the means test, and the success of efforts for the abolition of the means test in which the honorable member for Sturt (Mr. Wilson) has been engaged for a long time. I admit that the honorable member for Sturt has long advocated the abolition of the means test, but I ask the Minister to say how much relief, as a result of a relaxation of the means test, the Government has given, since it has been in office, to any person who owns less than £750 worth qf property. More than 90 per cent, of pensioners do not possess property to the value of £750. The way in which to abolish the means test is either in one operation or by stages, each of which will be of value to the class of people that most requires the benefit of any relaxation of it. When honorable members opposite gained office in 1949 the permissible income of. a single pensioner in receipt of full pension was 30s., and of a married pensioner couple, £3 a week. When we have mentioned the means test in this chamber honorable members opposite have asked us : “ What did you do in the eight years you were in office ? “ The facts provide the answer to that question. When Labour came into office the permissible income, addi tional to pension, of a single pensioner in receipt of full pension was 12s. 6d. a week, and of a married pensioner couple 25s. a week. While we were in office we raised the permissible . income to 30s. and £3 respectively, as I have said. Honorable members opposite have not made any alteration in that respect since they came into office. The Minister states that the Government has raised the permissible property ownership of a pensioner from £750 to £1,000. Only pensioners who own property worth more than £750 and less than £1,000 will receive the benefit of that relaxation, hut no benefit is to be accorded to pensioners who do not own property of that value.
I admit that the Government is to be commended for its provisions in respect of blind persons, but the benefit of them will be enjoyed by only a small section of the community. True, abolition of the means test must benefit the community generally and not blind persons only. I am willing to give to the Government due credit for such good as it has done, but do not let it run away with the idea that we wish to get on to its band-wagon regarding the abolition of the means test because, apart from the relaxation in respect of people who own property worth between £750 and £1,000, and blind persons, the Government has made practically no alteration of the means test.
I turn now to some of the other matters that have been mentioned in the debate. The Minister for the Navy attempted to reply to the statements of the Leader of the Opposition (Dr. Evatt) in relation to the proposed education allowance. The Minister started to read a list of the Government’s achievements in this respect. It is interesting to examine the Treasurer’s explanatory note on the proposed new section 82j, which relates to this subject. It reads as follows: - :
The new section 82j will authorize the allowance of a deduction for expenditure incurred by a taxpayer in connexion with the full-time education of dependent children under the age of 21 years. The maximum deduction allowable in respect of each child will be £50 per annum.
The deduction will be allowable in respect of payments made to the school, college- or university at which the child is receiving full-time education. It will extend to payments for tuition, as well as payments for board, textbooks, coaching in special subjects, &c, so long as the payments are made direct to the educational institution.
After the Treasurer had made his budget speech, in which he referred to this proposed deduction, I was asked by some people whether they would be allowed a deduction of £50 in respect of the cost of educating their children. I told them that they would be allowed a deduction only in relation to such an amount . for the expenditure of which they could produce evidence. Further on the explanatory note reads as follows : -
Payments made otherwise than to the educational institution at which the child is receiving full-time education or otherwise than to the person from whom such education is received will not be subject to the proposed allowance. Accordingly, no deduction will bo allowable in respect of such expenses as fares to and from school or the cost of school requisites purchased from stationers.
The University of Adelaide, has few residential colleges. Most of the students who attend it have to obtain board privately or have to travel distances of as much as 8 or 10 miles from the suburbs to the university each day. Such board expenses and fares will not be allowable as a deduction under the measure. Relatively few people who bear a heavy burden of fares in relation to their children’s education are able to send their children to colleges or private schools. Most school children in this country attend government secondary schools, technical high schools and high schools. No allowance is to be made in respect of the cost to the parents that arises from the education of such children. The only concession received by the parents of a child who attends a government school is to be the ordinary dependant’s allowance in respect of that child, the benefit of which would be received even if there were no expense associated with the child’s education.. Yet such parents are faced with the payment of high fares, which are, in fact, so heavy nowadays that some people have to skimp on other things in order that they may pay the fares of their children to school. The position is so bad in that respect that people have asked me whether the State welfare authorities would pay their children’s fares to school so that the parents would be able to afford to pay for extra tuition for them. Nothing is to be done for such people under this measure. The only people who will benefit from the concession will be people who can afford to pay to send their children to a private school or college or to a university such as St. Patrick’s, Prince Alfred College and some other church colleges in the vicinity of Adelaide. In those circumstances, I consider that the Minister laboured the alleged generosity of the Government. It was that fact that led me to deal with this particular subject.
The Minister also stated that the Opposition was willing to make airy suggestions, but not concrete suggestions, about the steps that should be taken. I shall now make a concrete suggestion to him in relation to one of the matters that the honorable member for Melbourne (Mr. Calwell) mentioned. I refer to dependants’ allowances. The dependants’ allowances for wives and children is exactly the same as was allowed more than two years ago, when the Government abolished the rebate system and resumed the old straight-out deduction practice. After the Government came into office it made the allowable deductions for dependants £104 for a wife, £78 for the first child and £52 for other children. The tables that show the amount of tax deductions to be made from earnings each pay period make provision for such deductions but make no provision in relation to the amount that a taxpayer may have to expend on doctors’ bills, for instance. It would be ridiculous to claim that it is possible to keep a wife and two children now on the same amount as that on which they could have been maintained two years ago, because the cost of living now is almost double what it was two years ago.
The point on which the Opposition differs from the Government in relation to taxation is the incidence of taxation. “We have always held, and always will hold, that taxes should be levied in accordance with the ability of the taxpayer to pay. When the late Mr. Chifley introduced his tax reductions the Treasurer and other Ministers, who were then in Opposition, complained that he had not adopted the flat rate system of reductions to cover all taxpayers. I remember that in the last year of the Chifley
Government’s term of office the present Treasurer stated that the non-Labour parties would reduce taxes by 10 per cent, all-round, when they gained office. All that the non-Labour parties have done so far is to give the benefit of big reductions of tax to the people who need the benefit of such reductions least. The Treasurer’s own figures will prove that point. He said that a man with a dependent wife and two children who earned £600 a year last year paid an amount of £20 14s. in tax, and this year will have to pay an amount of £18 6s., or £1 18s. less in tax. That reduction will by no means off-set the increased cost of living to which such a taxpayer has been subject in the last year.
Now let us examine the position of a man with a wife and two dependent children who earns a net salary of £5,000 a year. He will pay tax amounting to £1,940 this year or a reduction of £194 from last year’s tax liability. So the man on the basic wage is to receive a reduction of £1 18s. whilst the man who earns £5,000 is to receive a reduction of £194. “When Mr. Chifley was Treasurer tax reductions were made on a graduated scale so that the people on the lowest range of income gained the greatest benefit from them Instead of, for instance, a flat rate reduction of 10 per cent, being made to apply t» all taxpayers, the low wage-earner might receive a reduction of 60 per cent, whilst a man on £5,000 a year might get a reduction of only 3 per cent, or 4 per cent. That was a much more equitable manner in which to reduce taxes. The Leader of the Opposition and his deputy, the honorable member for Melbourne (Mr. Calwell), agree with me that the impact of the increased cost of living on taxpayers on the lowest range of income should be recognized and that they should accordingly receive the greatest benefit from tax reductions. They are not to receive such a benefit, however.
I turn now to the position of a man who earns £600 this year, but earned only £500 last year, the additional £100 being the increase of wages that has resulted from the adjustments of the basic wage due to the increased cost of living. The cost of living of such a man, with a wife and two children, certainly has increased in a year by at least £100, and in many instances by more than that amount. The Government should be consistent in this matter. Two years ago, it fixed the concessional deductions at £104 in respect of a taxpayer’s wife, £78 in respect of H3 first child, and £52 in respect of his second child and each of his other children, making the total concessional deduction in respect of those three dependants £234. Twelve months ago, a man with an income of £500 who had a wife and two children paid tax amounting to £9 lis. To-day, the same taxpayer’s income, amounts to £600, allowing for increases of the basic wage on the basis of cost of living adjustments. The Government should enable the taxpayer to utilize such additional income to meet increases of the cost of living. ‘ It could do so by increasing the concessional deductions by £52 in respect of a wife and by £26 in respect of each child, making the total concessional deductions allowable to a taxpayer in the class that I have indicated £338 instead of only £234. On that basis, the taxpayer would pay approximately the same tax relatively as he paid last year when his income waa £500. On an income of £600, he would pay tax amounting to £S 6s. compared with an amount of £8 14s. which he paid in tax last year on an income of £500. Under the Government’s proposals, however, persons in the higher ranges of income will receive relatively a far greater benefit than will persons in the lower ranges of income. Last year a man with an income of £1,000 who had a wife and two children paid tax amounting to £83 and, assuming that his income this year will be £1,100, his tax under these proposals will amount to £118 6s. If the concessional deductions in respect of his wife and two children were increased in the way that I suggest, he would be obliged to pay this year £82 8s. on an income of £1,100, whereas last year his tax amounted to £83 4s. on an income of £1,000. In that way the Government would enable a taxpayer with a wife and two children to utilize increases of wages that have been granted in accordance with increases of the cost of living for the purpose of meeting the latter increases. If the Government increased the concessional deductions in the way that I suggest a man with a wife and one child would receive three-quarters of the benefit that a man with a wife and two children would receive ; and he would still pay a little more in tax than he paid last year on the lower income. However, the latter taxpayer has not the same costs to meet as has a man with a wife and two children. Correspondingly, a taxpayer in the same income bracket with a wife only would receive half the benefit that a taxpayer with a wife and two children would receive. I have no objection to a taxpayer without dependants, who has only himself to maintain, being treated in accordance with the Government’s present proposals.
The Government should act on my suggestions in order to help people who need assistance most. When we speak about the incidence of taxation we should do our utmost to ensure that it shall operate to the benefit of the community as a whole. No one is more deserving of consideration in this respect than is a man with a wife and children. However, under these proposals the family man will be penalized whereas the greatest benefit will be conferred upon persons in the higher ranges of income. I was interested in the statement that the Treasurer made in reply to the Leader of the Opposition, who contended that under the Government’s proposals a taxpayer with an income of £1,000 will pay more in tax this year than he paid last year as a result of increases of wages that have been granted in accordance with the increases of the cost of living. The income of such persons will have been increased on the average by £100, and they will be taxed at a correspondingly higher rate.
– That is nonsense.
– It is a fact. The honorable member for Gippsland (Mr. Bowden) must be aware that salaries as well as wages are increased in accordance with increases of the cost of living. The same principle is followed in not only the Public Service, but also private enterprise generally. Salaried employees of General
Motors-Holden’s Limited in Adelaide, for instance, are granted such increases. The Treasurer, in his second-reading speech, stated -
Taxing legislation is not the place to attempt to offset fluctuations’ in money values.
As I said this afternoon when speaking on another measure - i -
– Order! The honorable gentleman may not refer to a .debate that took place in the Committee of Ways and Means.
– At the same time, the Treasurer has, in one instance, acted on the principle that something should be done under taxation measures to enable certain persons to meet the increased cost of living. Whereas, under these proposals, a man over 65 years of age who has a wife over 60 years of age will be permitted to have an income of £507 without being liable to pay income tax, last year the same taxpayer would have been obliged to pay tax on an income of that amount. The Treasurer has made that change this year in order to enable taxpayers in that class to meet the increased cost of living. Why should not a similar concession be given to a married man under 65 years of age who has a wife under 60 years of age and two children? Instead, such a taxpayer will be obliged to pay tax amounting to £8 14s. a year on a similar income. In this matter, the Government is adopting a jaundiced attitude. I am aware of the reason for this anomaly. The Government has exempted aged couples from liability to pay income tax on an income of £507 because a pensioner couple who receive pension at the rate of £3 7s. a week each whilst the husband is permitted to earn an income up to £3 a week, making a total combined income of £9 15s. a week without rendering themselves ineligible to receive the full rate of pension without paying any income tax. I cannot understand the reason for the Government’s refusal to extend a similar benefit to a man on a similar income who has a wife and two children. We should give every recognition to family units. I am not attacking the Government in this matter.
I am simply saying that it is not doing justice to families. I made similar pleas when the Chifley Government was in office, particularly with respect to the application of the means test, and, in some instances, the position of such persons was alleviated. I regret that this Government refuses to be influenced by similar representations even when they are made by its supporters. I urge the Government to consider the suggestions that I have made. I cannot estimate the loss of revenue that would be involved, but it would not be very great. “When I was discussing this matter recently with a friend and I told him that I could not calculate the loss of revenue that would be involved, he replied, “Why should that count? It is solely a matter of doing justice to these people “.’ Anomalies of the kind that I have indicated arise as a result of the Treasurer’3 mania for making reductions of taxes only on a flat-rate basis, instead of endeavouring to do justice in particular instances. At the same time, however, persons in the higher ranges of income will benefit to a greater degree than will persons in the lower ranges.- ‘ The Government talks about inflation and the difficulties that people have to meet. 1 was rather interested to hear the statements that the Minister for Air (Mr. McMahon) read in reply to a statement that a member of the Opposition had received from a pensioners’ association. I should have no difficulty whatever in obtaining opposing statements from authoritative sources. A few weeks ago, I attended a meeting of representatives of wheat-growers’ organizations that was held in South Australia. It was addressed by the federal secretary of the Wheat Growers’ Federation, and if Government supporters had heard what he said about the incidence of taxation upon primary producers they would not he quite so satisfied as they now appear to be. However, we shall not make any headway in this matter merely by arguing on the basis that what Jones says is right and what Brown says is wrong. I again urge the Treasurer to give serious consideration to suggestions I have made.
I regret that the Treasurer has circulated an amendment to omit clause 6 of the bill as drafted, because the clause would have met difficulties of the kind that are encountered from time to time with respect to the taxation of retiring allowances. I was amused when honorable members opposite implied that members of the Opposition have been furnished with prepared statements in order to enable them to attack the Government on that amendment. That allegation is quite groundless. Indeed, I was pleased with a portion of clause 6 as drafted. About two or three years ago a public servant who retired upon reaching the age of 65 years and who, after ceasing work for a few days, went back to a job in a lower classification, paid tax in respect of only 5 per cent, of the total amount of his retiring benefit. However, at the same time, a public servant who was employed in the lowest classification and who took his superannuation benefit in a lump sum was obliged to pay tax in respect of the whole of that sum if he returned to work in the Service. The latter would have to return to his former classification because it was the lowest in the- Service and he could not qualify to enter a higher classification. That was unfair to the man at the bottom rung of the ladder. I was of the opinion that clause 6, as drafted, would have helped to overcome an anomaly of thatkind. I am sorry that the Treasurer has circulated an amendment to omit that clause from the bill as drafted.
I welcome the Government’s proposal to exempt community hospitals from liability to pay income tax. Such an improvement should give great encouragement to institutions of that kind. The management of a community hospital in my electorate was greatly concerned about its liability to pay income tax and I made representations to the Taxation Branch on its behalf when I learned of the Government’s proposals. I was very gratified.
– Order ! The honorable member’s time ‘has expired.
Mr. WILSON (Sturt) [10.01.- The honorable member for Port Adelaide (Mr. Thompson) invariably addresses the House with sincerity. Unfortunately, on this occasion he has not been placed in possession of the facts. Therefore it is necessary for me to refer to the various inaccuracies that have, I am quite sure unwittingly, crept into his speech. The honorable member stated that, while the last Labour Government was in office, whatever reductions it made in taxation were made on a graduated scale. The fact is to the contrary. While the last Labour Government was in power the very few taxation reductions it made were made on exactly the same basis as the reductions made under this budget, that is on a percentage scale. The honorable member stated that he believed it to be grossly unfair that age pensioners with an income of £507 a year should be free of income tax.
– I did not say age pensioners.
– I apologize to the honorable member. He said that it was unfair that aged married couples with an income of £507 a year should be free of income tax whereas persons who receive the basic wage are taxable. I point out to the honorable member that when a man has attained the age of 65 years and when a woman has attained the age of 60 years it is extraordinarily difficult for them to supplement their incomes, but a young man is able to earn overtime and pick up additional income in many different ways. I wholeheartedly support the action of the Government in giving this concession to aged persons. It would be grossly unfair to place people who are ineligible for the age pension because of the means test in a worse position than they would be in if they were in receipt of the age pension. I believe that every man more than 65 years of age and every woman more than 60 years of age will breathe a sigh of relief when they know that a married couple in which the man is 65 years of age or more and the woman 60 years of age or more are to be free of income tax if they have a joint income not exceeding £507 a year. Similarly, single persons, widows or widowers will be just as thankful when they discover that they will not have to pay any income tax at all if their incomes are less than approximately onehalf of £507 a year. The honorable member for Port Adelaide complained that the deduction allowed under the income tax law in respect of the man with a wife and children was insufficient. However much we may agree with the honorable member, the specific deduction which is now applicable is exactly the same deduction as was applicable during the eight years of Labour administration. Therefore, it is extraordinary that honorable members who had the power to do something during a period of eight years and did nothing, should now criticize this Government for not doing what they failed to do. This Government has been in office for approximately two years, and during that time it has made very substantial tax reductions. The Labour party was in office for eight years, and during the whole of that period it retained at the present rate the allowance applicable to a taxpayer with a wife and children.
The honorable member for Port Adelaide also complained to the effect that the new provision for an educational allowance should not be ratified by the Parliament. His reason for that was that it would not substantially benefit the parents- of children who attend State schools. I point out to the honorable member that because of the bounty of the State, such parents do not have to pay any school fees. Therefore, as they do not have to pay school fees at all, it is quite impossible to give to them an allowance for something that they do not pay. This measure proposes to grant, a concession to the many thousands of people in Australia who have to pay school fees for their children, partly because the State educational institutions have not sufficient facilities and are quite incapable of coping with the education of the thousands of children that now attend private schools. If all the private schools in the country were’ suddenly closed it would be quite impossible for the State schools to provide educational facilities for the children so displaced. The State schools have neither the teachers nor the buildings necessary to do so. I understand that between 33 per cent, and 50 per cent, of Australian children attend schools to receive instruction for which their parents have to pay. That being the case, this is a concession to the section of the community that has to pay school fees while the other section of the community is fortunately relieved of that obligation. Therefore, I am afraid that I must join issue with the honorable member for Port Adelaide and whole-heartedly support the Government’s action under this measure which for the first time in the history of Australia will give to parents of children who attend private schools a taxation allowance up to £50 for each child so attending in order to compensate them for the very high cost of education,
The Leader of the Opposition (Dr. Evatt) and the honorable member for Melbourne (Mr. Calwell) have also spoken in this debate. I cannot attribute to them the same sincerity that I have attributed to the honorable member for Port Adelaide. The speeches of the Leader of the Opposition and the honorable member for Melbourne did not do justice to what was once the great Australian Labour party. Their speeches were insincere and irresponsible, and they incorrectly stated the facts. The Leader of the Opposition said that because the Government was proposing to amend this bill it had ceased to govern. That clearly demonstrates that the mental attitude of the Labour party is completely dictatorial. Its attitude may be summed up by saying, “ Once we have made our decision it does not matter what the people say. We are not going to alter that decision “. We know that during the eight years of Labour rule, the Labour Government would not accept any amendments of its measures no matter what the public thought. The Labour Government tried to force upon people against their will, the banking legislation and many other socialistic measures designed to take away their liberty and freedom. This Government adopts a completely different attitude. It is susceptible, to the views of the people, and realizes that it is the servant of the people, not their master. Provided the people come to it with a sound and well-reasoned case it is prepared to make proper amendments of its legislation to meet the justice of the situation. On this matter the people pointed out to the Government that the bill, as drafted to deal with retiring allowances, would give rise to hardships. The Treasurer (Sir Arthur Fadden) being impressed with the arguments and the justice of the case, said, “ That being the position, I shall remove those clauses from the bill until the Government has re-considered the matter “. Could there be anything fairer, more just or more democratic than that? Does not that prove that while there is a Liberal government in power the will of the people shall prevail? While a Labour government holds office the people have a government that is completely dictatorial, that rides rough-shod over them and wipes them off if the.y are not amenable to its doctrines and beliefs.
Another remarkable statement made by the Leader of the Opposition was that the reduction of income tax by 10 per cent, provided for in the bill, was a bad thing because the people of Australia would pay more in tax than they had paid before.
– He did not say that.
– That was the effect of the charge of the- Leader of the Opposition. That is what he tried to convey to every member of the Australian community. Of course the amount of revenue derived from taxation will be greater, because under this Government the prosperity of the people has been greater. Consequently the taxes paid by the people have, been greater. The national income of this country is published by the Commonwealth Statistician, who is completely free from party bias and who remained in office while the Labour Government was in power. That gentleman has pointed out that in 1949, which was the last year of Labour’s administration, the national income was £1,938,000,000. Last financial year, under a Liberal government, it was £3,258,000,000. The national income has increased in a ratio of three to two. Therefore, even though the rate of tax is lower, taxation naturally will bring in more revenue. The Commonwealth Statistician also has reported that in 1949 the national expenditure of the Commonwealth was £3,251,000,000. At the present time, under a Liberal government, the people are spending much more because they have more to spend. The national expenditure has now risen to £5,080,000,000. In other words, everybody is better off and is able to spend more money. It does npt matter how much the Labour party tries to create a bad impression in this country, all the people of Australia, if honest with themselves, know that they have more money to-day than they had when Labour was in office. The fact is that the people know that they are better off, and have more money in their pay envelopes than they ever had when Labour was in office. Under the Labour Government there was a shortage of almost everything that the people needed.
The Leader of the Opposition next criticized the Government because the cost of buying books for school children would not be deductible for income tax purposes in certain circumstances. I do not know the procedure that is followed in New South Wales, which has had the misfortune to be under a Labour government for many years, but in South Australia, which has had the blessing of a Liberal government for many years, every parent of a child attending a State school receives a grant of £3 a year to pay for school books. It would be utterly useless to provide an allowance for the cost of school books if children, in South Australia at any rate, receive them free of charge. I suggest that members of the Opposition should have a quiet conference with Labour members of the New South Wales Parliament and try to persuade them to adopt the liberal social legislation that has been enacted in South Australia under the direction of the honorable Thomas Playford. By that means they might achieve some worthwhile results.
We heard from the honorable member for Melbourne, the Deputy Leader of the Opposition, who is normally described as “ the old pretender”-“
– The future Prime Minister.
– That is his hope. Because of his aspirations, he is generally known as “ the old pretender “. He has many supporters amongst members of the Opposition in his campaign to gain leadership of the Labour party. The honorable gentleman said that the Treasurer had promised to reduce taxation but had increased it. What an extraordinary statement to make in a debate on a bill that provides for the following list of tax benefits: -
A reduction by 10 per cent. of the income tax liability of every citizen.
A reduction by 2s. in the £1 of the tax on every company up to the first £5000 of income.
Abolition of the advance payment of income tax at a cost to the Government of £14,000,000.
A reduction of the advance payment of taxation by private companies.
Substantial reductions of the tax on undistributed profits.
A concession of £50 in respect of the expenses of every child receiving fulltime education.
An increase of the allowance for contributions to employees’ provident funds from £100 to £200.
A special concession for aged persons that will increase the exemption from £234 to £254 in the case of single persons and from £464 to £507 in the case of married couples.
I doubt that any bill ever presented to this House has provided for tax reductions of a wider nature or of greater benefit to the community. Yet the honorable member for Melbourne says, “ How strange that the Treasurer promised to reduce taxation but has not done so “. The right honorable gentleman has honoured his promise magnificently. The Australian people are tremendously proud of the manner in which the Government has weathered the storm during the last twelve difficult months, so that it is now able to say to them, “ We ha ve overcome our difficulties and we shall reduce your burdens by making substantial tax cuts “.
The next amazing statement by the honorable member for Melbourne was that, when happy days came, taxation would be reduced. Of course we all knew that he was thinking of the happy days when he would be either Prime Minister or Treasurer of Australia. However, I think the natural reaction of every citizen will be to say to the honorable gentleman, “ You were in office for eight years. Why did you not do something about taxes then? We have had to wait for a Liberal government to reduce taxes “. Why did not the Labour government help the aged members of our community? During its term of office those unfortunate citizens had to pay tax even if they were in receipt of less than the age pension. The people had to wait for a Liberal government to afford relief to them.. The aged will not pay tax unless their income exceeds the age pension plus permissible income. We had to wait for a Liberal government to make wide concessions for education expenses and contributions to provident funds.
The next statement that the honorhonorable member for Melbourne made was completely erroneous. We all like the honorable gentleman and have a sneaking regard for him because we appreciate his sense of humour, but it is most regrettable that he cannot be accurate in his treatment of facts. He said that the tax on companies would be 9s. in the £1 He knew that his statement was incorrect. The truth is that the tax on companies will be 7s. in the £1 for the first £5,000 of income and 9s. in the £1 for income above that level.
– I was half right.
– As the honorable member has admitted, his statement was half right but, like the curate’s egg, bad in parts.
We all like the honorable gentleman, but we should like, him very ‘much more if he were not so careless with the truth. He then proceeded to state that taxation under the Menzies Government had reached a confiscatory level. I remind him that taxation under the Menzies Government has never amounted to more than a fraction of the taxation levied by various governments in which he has served. Therefore, if taxation under the Menzies Government has reached- a confiscatory level, I am at a loss to find a word with which to describe taxation under the Curtin Government and the Chifley Government. In fact, taxation in Australia to-day is lighter than in many other countries, including Great Britain and also, probably, the United States of America. A person in receipt of an income of £500 a year, which is approximately the basic wage, would pay £75 in tax in the United Kingdom and £67 in New Zealand but, under this bill, will pay only £35. Thus, in this country he will pay less than one-half the amount that he would have to pay in the United Kingdom and slightly more than one-half the amount that he would have to pay in New Zealand. Therefore, if taxation in Australia is at a confiscatory level, I ask the honorable member for Melbourne to provide me with a word that will adequately describe taxation in the United Kingdom and New Zealand. Let us consider the case of a man in receipt of £1,000 a year, which is probably one-half the income of the honorable member for Melbourne. That man would have to pay £246 in the United Kingdom and £208 in New Zealand but, under this bill, he will pay £135. What utter nonsense it is to use language as extravagantly as the honorable member used it when criticizing the Government’s taxation proposals!
The next alarming and inaccurate statement by the honorable member for Melbourne was to the effect that this Government had promised to liberalize the means test but had not done so. That was definitely incorrect. The Government has liberalized the means test in nine different ways in the last couple of years. Limitation of time does not permit me to deal with every instance but, for example, it has exempted the surrender value of insurance policies up to £750, abolished the means test in respect of the first £3 of pension payable to blinded persons, increased the permissible property limit, and exempted payments to superannuation funds. I am confident that the Minister for Social Services (Mr. Townley) will have his way and eventually abolish the means test, and I am sure that he has the backing of every honorable member on this side of the House so that, before this Government goes out of office, the means test will be totally abolished.
Another amazing statement by the honorable member for Melbourne was that a concession of £50 in respect of the education expenses of each child of a taxpayer meant little. AH I need say in reply to that assertion is that I have received letters of gratification and appreciation from hundreds of parents in the electorate that I represent. The concession will be of great assistance to the parents of children who attend Rostrevor College, Loretta Convent, St. Peter’s College, King’s College, Prince Alfred’s College, the Presbyterian Girls’ School, and Girton House in or near the electorate of Sturt. They say, “ At last we have a government that is prepared to recognize the value of education and to grant to us a tax allowance for education expenses “. The honorable member for Melbourne may have his own opinion, but the people of Australia will decide at the next general election whether this concession is of little value or not. 1 know that I am not the only member of this House who has received fan mail on this subject. This allowance will be the most popular of all the concessions that have been granted by any government for many years past.
– Order! The honorable member’s time has expired.
– The honorable member for Sturt (Mr. Wilson), at the conclusion of his speech, apparently found some cause for congratulation and self-satisfaction in the proposed concession in respect of education expenses. However, prior to mentioning that subject, he, like other Government supporters, had little heart in the debate. This bill is cue of a series of measures that give effect to the concessions about which we have heard so much. I believe the reason why the honorable member for Sturt and other Government supporters have had no great heart for this debate is that they realize, although they have not said so, that the concessions proposed in this bill, and in other legislation giving effect to the so-called incentive budget, will merely return to the people a portion of what the Government took from them in the budget last year.
The House will recall that members of the Liberal party and the Australian Country party, prior to the general election in 1949, made sweeping but definite promises relating to reductions of taxes. They assured the people that, if they were flipped to office, they would reduce taxes. The reduction of taxation was the main plank of their election platform, and the main factor that induced the people to return them to office. The Treasurer (Sir Arthur Fadden), in his first budget in 1950, granted minor reductions of taxes. ‘ His next budget, as the people remember only too well, substantially increased taxes. For example, the tax on income derived from personal exertion was increased by 10 per cent., and a similar levy was imposed on companies.
– Indirect taxes were savagely increased.
– That is true. Admittedly, the Government is making some reductions of taxes during the current financial year, but such concessions will merely give hack to the people a small part of the extra imposts that the Government levied in 1951. lt appears, from the speech of the honorable member for Sturt, that apart from the education allowance, the only consolation that Government supporters can draw from the bill is that they can point to rates of tax , in other countries and say, *’ Although rates of tax in Australia are still heavy, they are not so high as are those in New Zealand and Great Britain “. In order to answer that claim. I have only to cite a brief extract from the Treasurer’s second-reading speech on this bill. He was considering the proposed new method of dealing with the undistributed profits of private companies, and was answering complaints made by some persons that it was improper to tax profits of a company when they were in the hands of the company, and again when they were in the hands of shareholders in the form of dividends. The Treasurer cited the procedure followed by other countries in that matter, and said -
In any discussion of these1 problems it should not be overlooked that an examination of any particular form of taxation in isolation from .the general fiscal system of any country may present a misleading picture.
Very true words! They effectively answer the point made by the honorable member for Sturt that the rates in Australia are not so high as are those in Great Britain and New Zealand. We should have to examine the rates of direct and indirect taxes and the whole fiscal systems of those two countries in order to ascertain exactly what is the proportion of the national income that is taken by the Governments of the three countries in the form of taxes.
The Minister for the Navy (Mr. McMahon) was the principal Government spokesman on the bill this evening. T was interested to hear him discuss the onerous and heavy problems confronting the Government to-day. He spoke “ with responsibility “, as he expressed it, and- his attitude was in striking contrast to the completely irresponsible attitude adopted by members of the Liberal party and the Australian Country party during the general election campaign in 1949. Three years ago, they made the rash and sweeping statement that if they were elected to office they would reduce taxes and governmental expenditure. This evening, the Minister adopted a different tone. He 3aid that this Government will reduce taxation but he added “ as and when circumstances permit “. He proceeded to say that “ if the war tension eases and if there is increased productivity and so on, then the Government, in those circumstances, will reduce taxation.
– If and when.
– Yes, there were many “ ifs “ and “ when “. It is regrettable that honorable members opposite did not adopt that attitude of responsibility, which has now been forced upon them, when they were in Opposition and were endeavouring to secure popular support during the general election campaign in 1949. Admittedly, the problems facing this country are severe. “We realize that we have great fiscal problems, that our budgetary problems are serious, and that we have heavy expenditure to meet. But this Government cannot get away from, the fact that its supporters were completely irresponsible prior to the end of 1949, and made rash promises that the people will not forget.
The honorable member for Sturt laid great stress upon the proposed education concession. That is an important proposal. For myself, I am pleased to know that the concession is to be granted. I consider that honorable gentlemen on this side of the chamber should say, as the Leader of the Opposition has said, that it is a. step forward. We give to the Govern ment credit for having taken that step. But, as the Leader of the Opposition has also stated, we think that the concession should go further. Taxpayers will be allowed a deduction as from the 1st July, 1952, of amounts paid to schools, colleges, tutors or universities, for the full-time education of dependant children under the age of 21 years, but the allowance will be limited to an amount of £50 in respect of each child. I merely repeat, the statement of the Leader of the Opposition that the proposed concession, as far as it goes, is a step forward, and that we approve it.
However, the allowance, although it will include tuition fees, board, text books, and extras, will be granted only so long as the amounts claimed to have been paid have been paid directly to an educational institution for or in connexion with the full-time education of a child. The Leader of the Opposition asked: What about text books and other education requisites? His question was not answered. As a child becomes older and attends a secondary school, the cost of books becomes a heavy item. Yet, under proposed section 82 j expenditure on books purchased from book-sellers - and that is the normal way in which text-books are purchased: - is not to be an allowable deduction for taxation purposes. That is the weakness of the proposal. I should like the concession to be made broader, so that the heavy expenditure incurred on the purchase of text-books may be an allowable deduction.
Another point made by the honorable member for Sturt was that the national income of Australia has increased considerably during the last few years. He cited figures to show what the national income was in the days of the Chifley Government and what it is now. He referred to national expenditure and showed how the figures had increased. He claimed that the statistics indicated that Australia is enjoying great prosperity and that everybody is better off now than he or she was a few years ago. He said that the national income is high and that although rates of tax might be lower the net return from taxation would be greater. The honorable gentleman did not point out that much of the additional national income, or perhaps most of it in the last few years, has resulted from increases of salaries and wages to . compensate workers to some degree for increases of the cost of living. It is a well-known fact that when the basic wage is increased a man , who receives the basic wage is actually worse off than he was previously, because the amount granted does not compensate him fully for the increase of the cost of living that took place in the previous quarter. Although the national income has risen, the experience of the average housewife shows clearly that far from prosperity being increased, the burden of the cost of living is greater now than it was before, and the general standard of living has fallen.
The national income is the fund from which the Government, by means of taxation, draws off the share that is required for governmental purposes. “While I an: discussing the national income it will be interesting to examine the various constituent parts in order to observe the sources of the national income. This survey will lend added weight to the point that I have made that the increase of the national income is constituted largely by increases of salaries and wages, which largely reflect increases of the cost of living. Of the national income of £3,238,000,000 in 1951-52; salaries and wages constituted the greater part, namely, £1,870,000,000. The next biggest item was farm income totalling £431,000,000. The third biggest item was company income of £425,000,000, Then came income of unincorporated busness, professions, &c, £370,000,000; net rent of dwellings, £84,000,000; other net rent and interest, £53,000,000 and surplus of public authority business undertakings, £5,000,000. ‘
The national income is the general fund from which the Government draws off its share of revenue in order to pay for the general services of government. It is interesting now to consider the general principles of taxation that the Government applies when determining exactly what part of that income it will draw off in order to pay for the various services of government. Direct taxation, of course, is based, upon the principle of ability to pay. “We on this side of the House believe that direct taxation should be the major source of income of a government, because it is based upon the equitable principle of ability to pay. It has been noticeable, since the present Government has been in office, that a departure has been made from that general principle, and that the proportion of indirect taxation to the total amount of revenue is increasing each year. The receipts from sales tax, customs and excise now constitute a greater proportion of the total revenue of the Government than was the case previously. That is a serious departure from the principle that the greater proportion of the revenue of the country should come from direct taxation based upon ability to pay rather than from indirect taxation based upon consumption per unit and bearing no relation whatever to the income of a person, or to his or her ability to pay. “Whilst it is the general and equitable principle of taxation that ability to pay should be the main criterion, there ar” in the system of taxation that has been established in Australia, some exceptions to the principle which are founded upon merit and social equity. Some of them should be maintained, and even extended, and others, which, in my opinion, cannot be sustained upon those principles, should be examined. The first exception to the general principle that taxation should be based on ability to pay, apart from the question of indirect taxation, is that concessions are made- to families irrespective of the amount of income or the ability of the family to pay taxation. Family responsibilities are taken into consideration by way of concessional allowances. The honorable member for Port Adelaide (Mr. Thompson) dealt with this matter at considerable length and I support him in his views. He put forward a . constructive suggestion that will appeal to the people although it has made »no impression upon the Government. He showed with great clarity and force that the concessional deduction system which now operates in respect of dependents allows a taxpayer a deduction of £104 for a wife, £78 for the first child and £52 for each subsequent child under the age of sixteen years. “When those concessional deductions were introduced two years ago in place of the rebate system, they represented something fairly substantial. In the two years that have elapsed since they were introduced, the cost of living has increases, the basic wage has risen and the revenue of the country has grown; but those important concessions to the family man for his wife and children have remained stationary and no attempt has been made to increase them so that the family man’s position would be protected as the cost of living rises. That is one of the most serious faults in the income tax legislation as it stands to-day, and it should receive attention from the Government.
The greatest criticism that can be directed at this bill is that the vital principle that taxation should be based on ability to pay and according to family responsibilities is now losing its force. That is another important benefit that is being whittled away by inflation and rising costs. If the Government intended to do justice to the family man, it would give attention to this matter and increase the amount of concessional deductions for a wife and family. The honorable member for Port Adelaide gave a telling illustration of that point. He said that an income of £500 last year was taxed at the rate of £9 lis. The income of a man who received £500 last year would be £600 this year because of the rise of the basic wage for extra living costs. That increase of £100 put the taxpayer into a higher range of income and lie will now have to pay £18 16s. even at the new rate of tax which is said to include a reduction of 10 per cunt, on last year. Even if concessional deductions for a wife were increased from £104 to £156, if the allowance for the first child were increased from £78 to £104, and that for other children from £52 to £78, the man with a family would only be in relatively the same position as he was in last year with regard to taxation. Those increases would be granted if the Government were giving effect to the principle of adequate concessions- for the family man. To put it mildly, it is a gross injustice on the part of the Government to overlook this matter. It is a grave wrong to the. family man that his position in the community, in relation to that of other persons,, lias been allowed to deteriorate because of the failure of the Government to increase the amount of concessional deductions.
There are other concessions which cut across the overriding principle of ability to pay. One of these is based on the location of industry. The income tax laws contain provisions that income tax derived by residents of the Territory of Papua and New Guinea and of Norfolk Island should be exempt from taxation completely, and that income from primary production, mining and fishing in the Northern Territory should be exempt also. In my opinion, some of those exemptions are rather difficult to justify. Apparently the Government has reached the same conclusion, because in this bill it proposes to abolish the concession with regard to income from primary production, mining and fishing in the Northern Territory. We need people to go to the Northern Territory to increase production, but complete exemption from taxation merely encouraged people to take as much as they could get out of the territory without putting anything into it: Honorable members on this side of the House support the measure by which complete exemption from income tax for people in the Northern Territory is to be abolished and, replaced by concessions which will mean that money spent on plant and machinery and structural improvements in the territory will be deductible items for income tax purposes, although it is considered that these concessions are not extensive enough. As a result, people will receive concessions on money that is invested in the territory. I believe that that step is a wise one and that it will help to develop the territory, but why has the Government not modified or abolished the exemption on income received in the Territory of Papua and New Guinea where the big trading corporations, including Burns Philp and Company Limited and others, register their organizations in Port Moresby, and thereby gain complete exemption from taxation? They earn as much money as they can from operating in the territory, but make no attempt to develop the country through contributions to income tax.
The third exception to the general principle of taxation based on ability to pay is that certain industries receive taxation concessions as industries. Looking at the. matter on a logical basis one would think that industries which are basic to our economy and to all development would receive the special concessions for industries. For example, coal mining and the manufacture of iron and steel are basic industries which are essential to most forms of industrial development, but they do not receive the benefit of these concessions. On the other hand, the gold-mining industry pay« no income tax at all, and some other forms of mining receive important concessions under which capital expended on development and the purchase of plant becomes an allowable deduction for income tax purposes. Important concessions of a similar nature are made in the sphere of primary production. All honorable members on this side of the House support the concessions which have been made in order to encourage primary production. Most of those concessions were introduced by the Chifley Government. Although supporters of the present Government talk a great deal about its actions to assist primary production, we find upon analysis that most of the concessions which primary producers rightly enjoy have been in operation for a considerable time. For instance, an amendment to section 75 of the Income Tax Assessment Act, which became operative before the present Government assumed office, provides that the taxpayer may claim as a deductible allowance for income tax purposes, money expended on irrigation, pest destruction, timber and scrub cutting, the destruction of weeds, the preparation of land for agriculture, the ploughing and grassing of lands for grazing, the draining of swamps and combating the soil erosion. That very important provision was introduced by the Chifley Government in 1947. The concession also extended to money expended on the construction of dams, tanks, channels, bores, and wells for conserving water. Admittedly, this Government has extended the concessions. It allows depreciation of 20 per cent, over a period of five years on plant and machinery used by primary producers. However, although the Government claims great credit for this concession, it plays down the fact that it abolished the 40 per cent, initial depreciation allowance which previously applied to such items.
I believe that taxation concessions should also be made in order to assist, the housing programme. The primary needs of man are food, clothing and shelter. The man who produces food is a very important person, and it is right that he should be granted special concessions. Housing is also one of our basic needs, and it is a tragedy that in Australia the housing problem has not yet been solved.
-Order! The honor able member’s time has expired.
Debate (on motion by Mr. Gullett) adjourned.
Motion (by Mr. Eric J. Harrison) proposed -
That the House do now adjourn.
.- Mr. Speaker-
Motion (by Mr. Eric J. Harrison) pui; -
That the question be now put.
The House divided. (Mr. Speaker - How. Archie Cameron.)
Majority . . 19
Question so resolved inthe affirmative.
Original question resolved in the affirmative.
The following papers were pre sented : -
Lands Acquisition Act - Land, &c, acquired for Defence purposes - Garbutt, Townsville, Queensland.
Public Service Act - Appointments - Department -
Civil Aviation - F. J. Arnold, R. C. Fawkes, J. Glindemann.
Defence Production - J. A. Foley, R. R. Smart.
Repatriation - A. B. Conomy, R. M. Dunn, C. M. Maxwell, J. H. Simpson, T. E. Waters, E. C. Wilson.
Shipping and Transport - W. C. Millar.
Seat of Government (Administration) Act -
Notice of variation of plan of lay-out of City of Canberra and its environs, dated 26th August, 1952.
House adjourned at 11.7 p.m.
The following answers to questions were circulated: -
s asked the Treasurer, upon notice -
– The answers to the honorable senator’s questions are as follows : - 1, 2 and 3. No dollars are being made available for the importation of tobacco or cigarettes during 1952-53. However, an allocation of £A. 8, 500,000 has been made for the issue of import licences during the 1952-53 licensing year for the importation of tobacco leaf from the dollar area for the manufacture of tobacco and cigarettes in Australia.
– On the 10th September, the honorable member for Banks (Mr. Costa) asked the following question : -
Recently, the Treasurer supplied me with a reply to a question in which he indicated that expenditure upon education during the last financial year amounted to £10,200,000. Can the right honorable gentleman supply any details about how that expenditure was distributed ?
I now advise the honorable member that expenditure of this amount in 1951-52 was made upon education and research (excluding defence research and capital expenditure) as follows : -
Mr.Crean asked the Treasurer, upon notice -
What were the total numbers of individual taxpayers for the year ended the 30th June, 1951, according to grades of actual income ?
What were the total taxable incomes for that year according to such grades?
What was the net income tax assessed for that year according to such grades?
What would have been the estimated amount of tax derived from the segregation of the first 18d. in the £1 (or less rate) payable by taxpayers for the year ended the 30th June. 1951, if the separate social services contribution had continued?
If such information is not available in grades of income can it be given approximately in aggregates?
– The answers to the honorable member’s questions are as follows : - 1, 2 and 3. The latest available tabulated statistics of income tax assessments are those in respect of the 1950-51 assessment (1949-50 income year). In that year the figures were as follows: -
Mr.Crean asked the Treasurer, upon notice -
What were the total amounts of income tax collected from the various States of the Commonwealth in each of the five years prior to the introduction of uniform taxation indicating separately the amounts derived from individuals and companies?
What were the proportions of the amounts payable by each State to the total collected for each of these years?
What were the proportions of the population of each State to the total population for each of these years?
– The answers to the honorable member’s questions are as follows : -
n asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
n asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : - 1, 2 and 3. The information requested is not available by grades of taxable income.
The assessment programme in respect of the financial years mentioned is not completed and further assessments will issue during the current financial year.
n asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follows : -
The information requested in respect of the year ended the 30th June, 1950, is contained in the following table. The statistics in respect of the year ended the 30th June, 1951, have not yet been extracted.
y. - On the 29th August the honorable member for Reid (Mr. Morgan) asked the following question: - = gome time ago I submitted a question to the Minister for National Development about certain prefabricating works at Villawood which had to dispense with the services of 400 workers because qf the falling off ‘of orders from governmental and private concerns. The Minister said that he would consider whether the works could be put back into production. At . present the establishment is merely being held together with a technical staff and is operating at a loss. Will the Minister indicate whether there is any possibility of production living resumed at the works and of providing thom with government orders either in Canberra or elsewhere?
The Minister for National Development has now supplied the following information : -
I understand that since I replied to a similar question from the honorable member on the 0 th May last, staff employed by Vandyke Brothers Proprietary Limited at Villawood, New South Wales, has been reduced from about 120 to 00. This reduction has been largely due to reduced orders for prefabricated buildings from the New South Wales Housing Commission, but orders placed for prefabricated buildings for the Snowy Mountains Hydro-electric, Authority. Department of the
Army, and the Joint Coal Board, have helped Vandyke Brothers Proprietary Limited during the last few months. Tenders have been called for further orders for twenty barrack units required by the Snowy Mountains Hydroelectric Authority. Vandyke Brothers Proprietary Limited are free to submit tenders for these buildings as are any other manufacturers of this type of building.
z asked the Minister acting for the Minister representing the Minister for Shipping and Transport, upon notice -
– The Minister for >Shipping and Transport has supplied the’ foi* lowing information : -
Cite as: Australia, House of Representatives, Debates, 23 September 1952, viewed 22 October 2017, <http://historichansard.net/hofreps/1952/19520923_reps_20_219/>.