23rd Parliament · 1st Session
Mr. SPEAKER (Hon. John McLeay) took the chair at 2.30 p.m., and read prayers.
– I ask the Minister for Trade whether he has ready for honorable members, and for general knowledge, the information which he undertook to produce in relation to overseas freights. Will he also make available any information he has on the increase in freights and the profits of shipping companies? If the information is not yet available, will he produce it as soon as possible? Can the right honorable gentleman state whether any agreement has been made recently between the parties? If an agreement has been made, do the Government and the Minister approve of the results of that agreement?
– I undertook to have assembled whatever information was available along the lines mentioned in the right honorable member’s question. I am not yet in possession of it, although I have directed that this be done. I will make immediate inquiries, and I assure the right honorable gentleman that the information will be made available to him as quickly as possible. I should hope that that would be in the very near future. I am not aware that any conclusion has yet been reached from the conference that has been taking place, so I understand, between the shipping conference lines - that is, the Australia-United Kingdom Continent Shipping Conference - and Australian shipper exporters and Australian producers. 1 will ascertain what is known and what position has been reached in these negotiations.
– I understand that results have been broadcast.
– That may be so, but they have not come to me yet. I will find out the position and let the right honorable member know.
– I ask the Minister for Trade what is the situation, both present and recent, regarding the availability of pig meats for curing into bacon and ham. Is it a fact that approval has been given to import 200 tons of pig meat from New Zea land? Has this been necessary owing to local shortage or to the inability of Australian curing firms to meet demand? Will this importation of pig meats from New Zealand have a depressing influence on the price to local producers? Finally, will the Minister have the matters I have raised investigated with a view to ensuring that, with the approach of the festive season, the traditional accompaniment of ham or bacon will not be missing from the Australian Christmas dinner, either because of shortage of supplies or because of excessive price caused by shortage of supplies?
– In reply to the honorable member for Mitchell who, I know, has interested himself in this matter, let me say that a request was made to the Department of Trade about a couple of months ago by pig meat processing companies, to be permitted to import some pig meat from New Zealand for processing, on the ground that there was a local shortage. Inquiries were made by my department of the Department of Primary Industry and of the appropriate industry organization, which I think is called the Australian Pig Society. As a result of those inquiries the Department of Trade was satisfied that there was a shortage here of pig meat for processing purposes, and licences were issued for the import of about 400 tons. The expectation was that this meat would be imported from New Zealand, but I am now informed that because of a shortage in that country there is a doubt whether the full amount can be procured there.
As we conduct the business of licensing for the purpose of conserving our overseas exchange resources, we would not normally license the importation of a commodity such as this, which is usually available in adequate quantities and at reasonable prices in Australia. We are satisfied that there is a shortage, and so the licences have been issued. But, against the contingency that there will soon be an adequate supply at reasonable prices in Australia, the licences have been made valid for a short time only. I believe that they are good until some time in November.
The purpose of issuing these licences is neither to deflate Australian prices nor to induce higher prices by limiting the amount of permitted imports. The circumstances are unusual, but we believe that in the end result our action will conserve our currency, will not produce any excess supply of pig meat in Australia - the quantity allowed to be imported under licence being only about 1 per cent, of the annual consumption here - and will avoid any shortage of this commodity, particularly at Christmas time.
– Can the Prime Minister say whether a meeting of the Prime Ministers of Commonwealth countries is to be convened at any early date? If there is to be such a meeting, can the right honorable gentleman say whether its primary purpose is to discuss matters associated with the summit conference that is to take place in the near future?
– 1 know that some thought is being given to this matter, but beyond that I cannot go at the present time. As my friend knows, these meetings are usually organized between the Prime Minister of Great Britain and the Prime Ministers of other Commonwealth countries, and until finality is reached it is not possible to say very much. All I say at this stage is that I know that some thought is being given to it.
– My question, which is addressed to the Treasurer, concerns the International Development Agency which is now being sponsored by influential persons in the United States. I ask the Treasurer whether, during his stay in the United States of America, any attempt was made to persuade him to urge the Australian Government to have this country join the organization I have referred to. Is it a fact that, according to the plans of the sponsors, the joining of this agency by Australia would involve the taxpayers of this country in an initial outlay of about £15,000,000, the benefits of which would flow to other countries for developmental purposes? If the right honorable gentleman had any conversations along these lines, did he stress Australia’s previous and prior commitment to the people of Papua and New Guinea and the increasing cost of meeting that commitment? Has the matter yet reached a sufficiently advanced stage for the Treasurer to be able to make a concrete statement on the subject in this House in the near future?
– The proposal foi the organization to which the honorable gentleman has referred was one which came prominently into the discussions at the annual meetings of the International Monetary Fund, the International Bank and the International Finance Corporation at Washington. There had been preliminary discussions concerning it, because we knew that this was in the offing when the Finance Ministers of the Commonwealth met in London prior to the Washington meeting. It was first introduced in Washington by President Eisenhower in his speech of welcome to the delegates. He mentioned that it would be a proposal brought forward in the course of the conference by the Secretary to the United States Treasury, and this was subsequently done.
The proposal, in brief, is that the organization should function as an affiliate of the World Bank, and that it should be equipped in the first stages with capital of the order of one billion dollars, and that member governments which are associated in the International Monetary Fund and in the International Bank should also become associated in this new project. The purpose would be to aid the underdeveloped countries of the world which might have economic projects within their borders but be unable, because of convertible currency shortages or other problems, to qualify under the stiffer conditions imposed by the International Bank, or perhaps not have sufficient strength to go out to the bond markets of the world and borrow for their needs. There is undoubtedly a shortage of capital for those purposes, and the needs of the underdeveloped countries are undoubtedly great. The proposal was accepted by those present as an imaginative and constructive one. There was unanimous agreement, in principle, on the proposal, and a resolution was unanimously adopted that the executive directors of the International Bank should prepare draft articles of association which might then be considered by the member governments.
On behalf of Australia I pointed out what we are doing in directions comparable with the purposes which this project was intended to serve. I did express reservations on quite important points of detail - for example, whether external territories not members of those organizations could not receive loans of this character, and also the concern which might be felt by countries like Australia if too extensive a use were to be made of local currencies, later perhaps distorting the pattern of international trade.
– Will you move that the paper be printed?
– I should be glad to supplement what I am now putting to the House if the House is sufficiently interested to have the full story. However, I conclude by telling the honorable gentleman who asked the question that Australia is not committed at this stage to anything more than an expression of support, in principle. The very important details will yet have to receive the consideration of the Government.
– Has the Prime Minister noted the remarks of the Victorian Premier, Mr. Bolte, to the effect that the Commonwealth Government had financially throttled the States by using taxing powers that it no longer had the right to retain? In view of the seriousness of this statement will the Prime Minister arrange for a debate in the House on Commonwealth and State financial relationships and also on the charge made by Mr. Bolte that through the power of the purse the Commonwealth dictates State policy in most subjects?
– I noticed a report in the press that the Premier of Victoria had had some critical remarks to make which, unfortunately, were based on remarks attributed to me which I had not made. In a speech in Melbourne I pointed out that there is a paradox in Australian public opinion. I did not refer to States or State governments. I said that the paradox was that whereas every time there was a proposal to increase the powers of the Commonwealth Parliament, the people found it possible, and indeed necessary, to vote “ No “, yet the very people who opposed the granting of such powers would next day, perhaps, be on a deputation to the Commonwealth Government to ask it to accept financial responsibility for a matter that lay within the power of the States. I thought that was paradoxical. I am a federalist and 1 believe in the division of powers, but I pointed out that I thought there was a little strange and inconsistent thinking on that matter. Some newspaper was kind enough to say that I had criticized the States for wanting to retain their powers. I did nothing of the sort.
As to the question of the States retaking their direct taxing powers, I remind the honorable member that in March of this year we had a conference with the Premiers. In the course of my last policy speech, I had promised to call such a conference. We had a long, careful and valuable discussion on this very problem. The upshot of the discussion was that certainly four States exhibited a complete want of desire to be asked to raise their own taxes and to live on the proceeds of those taxes. I pointed out to them - I think honorable members will agree with me - that you cannot have a hybrid system in Australia. Either the States have their taxing powers and exercise them - I have always said that in principle we think that is right - or they do not; but the idea of the Commonwealth raising taxes under a uniform system in four States and abstaining from raising taxes for State purposes in two States is not only financially absurd but also has very doubtful constitutional justification.
The result of this very long discussion was as I have indicated. The Commonwealth’s attitude remains the same. When the State governments say that they would like to have their taxing powers back on suitable terms that have been indicated to them by me on repeated occasions, we will be most happy to engage in negotiations to help to produce that result. In the meantime it is quite beside the point for any individual State to attack us for retaining something against the will of the States. I point out that 66 per cent, of the States - I know it is nice to put these things in terms of percentages - in March, 1959, did not want direct taxing powers handed back to them.
– I ask the Minister for Trade a question. As the European Common Market can now be called a going concern, has the right honorable gentleman any information that he can give to the House in regard to the effect that the common market may have on Australia’s trade, particularly in relation to trade missions and discussions that have been held with countries from this area?
– The common market arrangement in Europe does not inhibit Australia from conducting trade negotiations with individual countries. Indeed, we have recently conducted and concluded trade negotiations with West Germany, the outcome of which is quite satisfactory to this country. In certain fields in particular, new opportunities will be opened for us to sell additional quantities of grains and certain other foodstuffs to West Germany. There is nothing to inhibit us, provided the opportunity is given, from conducting similar negotiations with other countries of the so-called European Economic Community.
– I direct my question to the Minister for Supply. In view of the rapid and important progress being made at Woomera, which must naturally be reflected in the general growth of Salisbury, will the Minister investigate the possibility of establishing an adjunct of Finsbury at Port Pirie or Port Augusta, bearing in mind the important factor that both Port Pirie and Port Augusta have direct standard rail services to Woomera?
– I think the present and potential facilities at Salisbury are sufficient to meet our trials programmes at Woomera. At this moment, therefore, it is not contemplated that we will need annexes at either Port Pirie or Port Augusta. If my information proves to be incorrect, in the course of time I shall be pleased to bear the honorable member’s point in mind.
– I desire to ask the Postmaster-General a question. In view of the fact that only one application for a commercial television licence has been received from each of the cities of Townsville and Rockhampton, will the PostmasterGeneral consider giving some priority to the hearing of these applications and the granting of licences in order to reduce by many months the time needed to bring this long-awaited amenity to a large percentage of the population of north Australia?
– Naturally, as a north Queenslander myself, I appreciate the desire expressed by the honorable member for Herbert to have the benefits of television made available to residents in the northern part of Australia. He suggests that that could be done by giving some degree of priority to the hearing of applications from both Townsville and Rockhampton, as only one application has been received from each of those two centres. However, as I have said previously, it is the present intention of the Australian Broadcasting Control Board to complete the hearings of all the 45 applications in this present phase before submitting its recommendations to the Government. That is desirable, because quite a few questions which have a general bearing on the grant of licences and on which evidence will be required from the applicants in the various centres, will need to be determined. It has been decided - quite rightly, I think - that there will not be any priority of determination given to any centre and that, therefore, the time or the priority of hearing of the applications will not have any bearing on the actual date by which the successful applicants will be able to commence operations.
– Will the Minister for Labour and National Service ascertain the capacity of various Commonwealth departments to absorb and train apprentices? Will he indicate how far the Commonwealth has carried out, for its part, this most important responsibility to train the nation’s future tradesmen?
– The problem has already been considered by the various Commonwealth instrumentalities that can employ apprentices, but I will pursue the matter further and see whether I can get a better reply for the honorable gentleman. I will also try to get for the honorable member figures to illustrate just what is the capacity of these instrumentalities to take an increasing number of apprentices.
– I desire to ask the Minister for Trade a question. Under the provisions of the new trade agreement with Germany, that country has agreed to allocate a quota of 150,000 tons for Australian wheat and 250,000 tons for our coarse grains. As these quotas do not represent commitments to buy, and as Germany is an exporter of wheat and flour, will the Minister tell the House whether the new commodity limits will have any practical value to this country?
– The opportunity to sell commodities of this kind in West Germany is dependent not only upon the competitive position of the proposed exporter but also upon the policies prevailing in that country regarding the issuing of import licences, which are limited and have, on occasions, been restricted as between countries. Our experience in respect of grains has been that when West Germany has announced quotas - that means quotas for the supply of which we are entitled to bid - it has always followed that we have secured business to the full amount of the quota. Indeed, on the last occasion, when a quota of 150,000 tons of coarse grains was allocated for a year, by some means we got a little more than that. But we have always got the business. The new trade agreement provides that, this year, West Germany will allocate to Australia the right to bid for the supply of 100,000 tons of soft wheat, which is the Australian f.a.q. wheat, and 250,000 tons of coarse grains.
– And hard wheat, too.
– I think that hard wheat not only may be within that quantity but may even be outside it. “ Coarse grains “, in this context, means barley and oats. We may bid for the supply of 250,000 tons of coarse grains a year, and, in the present atmosphere and on past performances, I am confident that this will result in sales to West Germany of tonnages to that total when we have the grains available. Tn order to explain my last remark with some emphasis, I may say that we have the right to sell certain quantities to the United Kingdom, but not an obligation to supply them. Last year, because we did not have the wheat available, we did not supply the United Kingdom. But my experience is that where we have negotiated a right and have an expectation to sell, the negotiating country has always seen to it that the transactions have come about.
– I ask the Prime Minister a question without notice. Is the right honorable gentleman aware that the Australian Coastal Shipping Commission states, in its report for the year ended 30th June, 1959, that in that year three cargoes of Australian pig iron were delivered to Japan in ships owned by the commission? 1 have no doubt that vessels owned by other organizations, also, have delivered Australian pig iron to Japan. Does the Prime Minister consider that the export of pig iron conflicts with the intention, which was announced by the right honorable gentleman last week, to prohibit the export of iron ore to Japan or any other country because our iron ore deposits are limited?
– I am not aware of these alleged facts. I would, of course, point out to the honorable member that, when it comes to treating iron ore, you may produce pig iron - a commodity with which 1 was once honorably associated - or, it may be, steel, which we undoubtedly export in the circumstances referred to yesterday by the Minister for Trade. But as for the report that has been mentioned, I am not aware of its contents. I will find out.
– I wish to ask the PostmasterGeneral whether he will investigate a claim by certain technical authorities that the Postmaster-General’s Department could save some millions of pounds by abandoning the proposed interstate coaxial cable and1 using wide-band radio channels instead. Secondly, will the Minister investigate a statement to the effect that coaxial cables are not so effective for television and that, mainly for this reason, European countries are now abandoning them?
– The decision to provide coaxial cable communications between the various cities of Australia - particularly between Sydney and Melbourne, I think through Canberra - was made after very close consideration by departmental officials and highly competent engineers. Various other methods of communication, such as the use of micro-wave links, were investigated. However, the department was finally satisfied that the coaxial cable provided the most satisfactory and efficient method of improving communications in Australia. When this matter was first approached by our top level engineers there was an impression that possibly the use of some other method may be preferable. But as a result of very thorough investigations it was found that the coaxial cable method would be the best. 1 have not heard of the claim to which the honorable member for Ryan refers. If he would like to submit it to me in detail I will have it referred to the authorities in my department and have a complete and technical reply provided for him.
– Will the Minister for Health inform the House whether it is a fact that the provisions of the national health scheme and the pensioners’ pharmaceutical benefits scheme are such that doctors are prevented from nominating particular brands when prescribing medicines and drugs? Does the Minister consider it likely that such a restriction could result in the increased use of inferior quality medicines and drugs which sometimes show a greater margin of profit but which are often produced in sub-standard factories and laboratories without the benefit of modern scientific techniques? Does the Minister consider it desirable that doctors should be denied the right to specify, on behalf of patients, particular brands of commodities the standard and reputation of which inspire confidence and professional and public demand?
– The short answer to what the honorable gentleman asks me is that I do not think the danger that he apprehends exists. But this is a rather technical question and if he will put it on the notice-paper I will see that he gets a complete answer.
– Can the Minister for Primary Industry say what progress has been made towards the inauguration of a research scheme for the beef industry, a matter which, I understand, was left in the Commonwealth’s hands at the last meeting of the Australian Agricultural Council?
– The Australian Agricultural Council has, in effect, given its approval to such a scheme and recommended that investigations be made as to the possibilities of implementing it. The only difficulty that exists before the Government can consider such a scheme is the reconciliation of the different viewpoints on representation as between organizations. The head of my department, at my request, has had two conferences with these organizations but, so far, the matter has not been satisfactorily settled.
– Is the Postmaster-General aware that postal workers in the Mail Branch in Sydney intend to take strike action if proposed rosters which will worsen working hours, and also a method of giving time off in lieu of paying penalty rates for overtime worked at week-ends, are put into effect? Will the Postmaster-General intervene to prevent a worsening of working conditions in his department and avoid a disruption of mail services in the event of a strike? Will the Postmaster-General say why it is necessary to worsen working conditions of postal workers in order to improve postal services for which his department has just increased charges to the extent of £17,000,000?
– In submitting his question, the honorable member for Banks referred at least twice to the worsening of conditions. That is not a correct statement of the position. It is quite right, as he has said, and as has been stated in the newspapers, that certain members of the Amalgamated Postal Workers Union of Australia in Sydney intend to conduct a regulation strike. I believe that that intention is confined to the Sydney Mail Branch and does not affect many thousands of other workers in the Post Office who have been working without question on their various jobs on Saturdays for a number of years.
It should be realized that the action to which the honorable member has referred follows the continual effort that is made by the department to improve services to the people of Australia. In my secondreading speech on the Post and Telegraph Rates Bill I stated that we proposed to do certain things to effect that improvement. One of the matters that are giving rise to the re-adjustment of rosters and so on in the Mail Branch, which is the subject of this discussion, is the inauguration of an extended air mail service, the object of which is to ensure the more rapid conveyance of letter-form mail. This will mean that services which now reach the Sydney Mail Branch, say, on a Sunday may arrive on the preceding Saturday. To say the least, mail will arrive earlier than it previously did and, therefore, a reorganization of the rostering of mail sorters is necessary.
In addition, over a period an increasing volume of letter mail for Sydney addressees over the week-end has developed. Many thousands of private box holders in Sydney expect, and are entitled to obtain, that mail from their boxes during the week-end if it arrives on Saturday. The volume of this mail has been increasing steadily and1 the Post Office, therefore, is taking action to adjust the rosters of the mail sorters to ensure that this improved service will be rendered. I repeat, Mr. Speaker, that nothing is being done which will worsen the conditions of the staff.
– Do you not think that interference with rosters is a worsening of conditions?
– I am replying to a question dealing with rosters. I have gone into this matter and I know what I am talking about. I do not quite understand the objection of some employees because, in some eases, the altered rosters will mean that the department will be required to pay an increased amount in overtime.
– Can the PostmasterGeneral inform the House when the Aus, tralian Broadcasting Commission will’ make a decision on the question of where it will establish inland television stations? When the decision is made, will areas which were not allocated provisional commercial licences be given the highest priority?
– The honorable member has asked whether I can indicate when the decision of the Australian Broadcasting Control Board regarding what we have termed the third phase of television will be available. I am sorry that I cannot give any indication of the actual date. As I have pointed out in the House on several occasions recently, the investigations will take quite a considerable time because of their scope and the number of inquiries that have to be determined. I expect that it will be well into next year - the first two or three months of next year - before the board will be in a position to make a recommendation to the Government. Then, of course, the report will have to be considered and the decision of the Government announced. I should think that it will be at least March of next year - this is only an estimate - before any recommendation will be made.
– What about a national station?
– As to a national service, it will be remembered that when the Government’s decision regarding the third phase of television was announced, it was pointed out that because of the new problems involved in extending television to country areas a complete survey would have to be made of the applications for commercial licences and a determination made as to whether commercial licences should be granted before a national station commenced operations. I have made it plain that the Government’s policy of providing a dual service - a policy which the Government adopted when television was first introduced into Australia - has not been departed from. Therefore, when we reach the stage of being able to announce the allocation of additional commercial licences, an announcement will be made regarding national stations.
– I address my question to the Postmaster-General. Will he, as a matter of justifiable urgency, introduce a booster station in the Wollongong and Port Kembla district of New South Wales, in view of the extended delay which will occur before any local television station can be brought into operation in this heavily populated area? Is the Minister aware that at present many holders of television licences in the Wollongong district are unable to obtain satisfactory television reception, and that many other people in that district, because of local geographical features, have no chance at all of obtaining television reception?
– 1 am aware of the quality of television reception in the Wollongong area. I should think that people in the area who have paid some £200 or more for a television set would also be aware of the quality of reception in the area before they committed themselves to that expense. It is true that reception in some areas is not good, but the people had an opportunity to test reception before they involved themselves in any expense.
In reply to the first part of the honorable member’s question as to whether I would agree to the immediate provision of a booster station in the Wollongong area in order to give the people there the advantage of television at an earlier date than would otherwise be the case, I point out that this is one of the matters of policy which the Australian Broadcasting Control Board is required by the Government to investigate and report upon. Until that report has been received no decision along the lines requested by the honorable members can be taken.
– I direct my question to the Minister for Social Services who represents the Minister in charge of the War Service Homes Division. Is the Minister aware that in a recent broadcast from a Melbourne station the Deputy Leader of the Opposition, when making reference to war service homes, said that many applicants must secure temporary finance, and are forced to pay 9 to 10 and in some cases 12 per cent, interest? I ask the Minister: Is this a statement of fact?
– I am tolerably certain that no one knows better than the honorable member for Mallee that the Deputy Leader of the Opposition is the gay cavalier of socialism in our country. The Deputy Leader of the Opposition is not always responsible for what he has to say from time to time. I find it very hard to take exception to his Celtic flights of fancy, so long as they are recognized as Celtic flights of fancy. But if what the honorable member for Mallee says is correct then I inform both the honorable gentleman and the Deputy Leader of the Opposition that when an application for a war service home is granted, temporary accommodation is not always required by the applicant. Where it is necessary, the applicant frequently is able to make his own arrangements at nominal rates of interest. A recent survey made by the division reveals that 97 per cent, of those who are required to find temporary accommodation pay rates of interest which range from 5± per cent, to 10 per cent., and only 3 per cent, of the applicants pay rates of interest in excess of 10 per cent.
– My question to the Postmaster-General is prompted by the question asked by the honorable member for Herbert. I ask the Postmaster-General: If the service efficiency in television is going to be no better than the efficiency of the broadcasting and telephone services in north Queensland, will the Minister consider channelling to those services the same amount of money as would be required for television in order to make them more efficient?
– I confess that I am not quite sure what the honorable member means by his question. Perhaps I am a little dense. I think he referred to service efficiency. I think that the postal services have established a high degree of efficiency. As to broadcasting, I have advised the honorable member on several occasions of the proposals which the Australian Broadcasting Control Board puts forward from time to time and which the Government implements to improve service efficiency in that particular field. I assure him that when television comes to north Queensland the same standard of efficiency will be maintained.
– I lay on the table the following paper: -
Commonwealth Grants Commission Act - Commonwealth Grants Commission - Twenty-sixth Report (1959).
The recommendations contained in the report will be adopted by the Government and the enabling legislation will be introduced shortly. Copies of the report are available for honorable members.
.- In accordance with the provisions of the Public Works Committee Act 1913-1953, I bring up the report relating to the following work: -
Proposed construction of a Supreme Court Building at’ Darwin, Northern Territory. and move -
That the report be printed.
In 1955 the Public Works Committee first examined a proposal to erect a new Supreme Court building at Darwin. Its recommendations called for certain modifications and the present submissions deal with new plans produced consequent upon the first report. There is no call to repeat the committee’s views about the urgent need to replace in Darwin the improvised buildings which have been available to the Supreme Court, except to emphasize that the passage of time has done nothing to mitigate the urgency.
We have been advised by the AttorneyGeneral’s Department that the time for the appointment of a second judge to the Supreme Court in Darwin is imminent and that, of course, calls for certain increases in the size of the Supreme Court buildings. This, in turn, calls for changes in site. All these matters have been considered.
The committee concerned itself also with additional accommodation in Darwin for the Crown Law offices. While appreciating that it would be desirable to have the
Crown Law offices separate from those of the Supreme Court building, the committee had regard for the cost of construction in Darwin, and the fact that if the buildings were separated it might mean that each building would be unsatisfactory. So the two sets of accommodation have been incorporated in the same building. By providing limited access from the Supreme Court building to the Crown Law suite, and opening the Crown Law offices by way of a public entrance to another street, it is felt that a suitable compromise has been reached. At the same time, a good deal of flexibility has been provided for future development in Darwin, depending upon the growth of these activities.
The committee gave a good deal of consideration to problems associated with the tropical conditions existing in Darwin, particularly the desirability of shielding the building from the sun. We were able to use a series of solar screens which, while preventing the sun from penetrating the building, still allow adequate internal light, and at the same time, I think, add something to the decorative qualities of the building. Excessive temperatures will not be experienced in the building, because the committee has recommended the use of airconditioning, which it regards as completely necessary in Darwin.
As to the general appearance of the building, it is perhaps unfortunate that ornamental stonework has become associated with the majesty of the law. I think it will be appreciated that the elaborate style of architecture usually associated with court buildings would be impracticable, and certainly would not be appropriate, in Darwin. The building which the committee is now recommending to the House is conservatively modern but functional in every way. The estimated cost is £421,000, but, having regard to the abnormal levels of costs of both transport and construction in the Northern Territory, this amount is considered reasonable.
.- The Chairman of the Public Works Committee has made an important statement with regard to the building that is proposed to be erected at Darwin. I rise to make a few remarks about the importance of the activities of the Public Works Committee, and to suggest that the Parliament seems to be completely impotent to deal with recommendations made to it by this committee. I believe the situation should be clarified. If this committee, having been appointed by the Parliament, visits a certain place, hears evidence and then makes a determination in the light of all the technical information available to it, it seems to me that its recommendations should be binding on the Parliament and, consequently, on the Minister.
I would like to direct attention to a case that is very well known to me. It concerns the proposed erection of a new postal building at Bathurst, in my electorate. The report of the Public Works Committee on this matter was submitted to the Parliament as far back as 1951, but the PostmasterGeneral has taken no action in the matter. I feel that the circumstances should be ventilated. I question the effectiveness of the committee, and I suggest that the Parliament should accept its responsibility. If the Parliament sees fit to appoint a committee and send it forth to inquire into a certain matter, then the Parliament should be responsible for ensuring that the Ministers concerned do their duty and give effect to the will of the Parliament. The report which is now being presented will be of great interest, no doubt, to my colleague, the honorable member for the Northern Territory (Mr. Nelson), and the implementation of the recommendations will be hailed with great pleasure by the people of Darwin, just as the construction of a new postal building would give considerable satisfaction to the people of Bathurst.
I merely wish to direct the attention of honorable members to this matter, and to express the hope that the conscience of the Postmaster-General will be stirred, and that he will take action to carry out a decision made by this Parliament, through the Public Works Committee, in 1951.
.- I want to make a few brief comments in support of the remarks of the honorable member for Macquarie (Mr. Luchetti). I listened with interest to the speech made by the chairman of the Public Works Committee in presenting this report. I am interested in the activities of this committee, and I would like it to investigate postal facilities within the boundaries of my electorate. 1 refer particularly to the Dulwich Hill area, which is a very important and growing section of my constituency. In this district there is a pressing need for a modern post office, because the present post office is completely inadequate for the requirements of the area. I would like to see the Public Works Committee go to this centre, make an investigation and decide whether it should recommend the immediate construction of a new post office.
I agree with the honorable member for Macquarie that if an expert committee makes an investigation and brings a report to this Parliament recommending that certain work be done, then that report should be adopted and should be binding upon the Minister. As the honorable member for Macquarie has said, a recommendation was made in 1951 for the erection of a building in Bathurst, and the people of that city are still waiting for it. The honorable member may not entirely agree with me, but, having studied the form of this Government, I believe that if it acts even within ten years it is showing real speed1. However, eight years is a long time for the people of Bathurst to wait for a building that has been recommended, but which has not been provided because the Minister has not acted on the recommendation.
I have no objection to the recommendations contained in the report presented today. No doubt the committee has made a full investigation and has come to the conclusion that these facilities are necessary. I would ask the chairman of the committee, however, to approach the Minister with a view to having the committee go to the Dulwich Hill area, in the centre of the Grayndler electorate, look at the postal facilities, see the conditions under which people are working, and then make recommendations for the provision of a new building. If the committee does this, and then brings a recommendation before this Parliament, 1 hope that the Minister will not wait eight years before acting upon it, as he has done in the case mentioned by the honorable member for Macquarie. 1 hope that those Government supporters who are at present jeering and interjecting will see to it that the recommendations of the committees that they elect and which enjoy their confidence, are not only endorsed by the Parliament but are also given effect by the Ministers concerned. In the case mentioned by the honorable member for Macquarie the Postmaster-General has evidently been quite dilatory. I_believe he should be asked to give effect to that decision of 1951 immediately, and I hope that subsequently he will give effect to a recommendation for the construction of a new post office in the Dulwich Hill area of my electorate.
Question resolved in the affirmative.
Debate resumed from 24th September (vide page 1365), on motion by Mr. Menzies -
That the bill be now read a second time.
.- This bill proposes amendments to the Income Tax and Social Services Contribution Assessment Act, which sets out the principles upon which income tax shall be levied upon individuals and upon private and public companies. Income tax represents about £600,000,000 per annum of the total revenues of the Commonwealth, lt is, without doubt, the most significant single item in our taxation structure.
In the absence of the Treasurer (Mr. Harold Holt), the Prime Minister (Mr. Menzies) circulated an explanatory memorandum with regard to this bill. On page 3 of that memorandum are set out ten matters with regard to which the bill proposes amendments. The Labour Party gives its support to some of these proposals. Others we oppose because we regard them as being unfair and discriminatory, and as containing elements of concealed subsidies, which we feel it our duty to reveal as such. I think that if I were to go through the items as they appear in the memorandum and indicate first those to which we offer no objection, and then indicate in greater detail our opposition to those sections which deal with favorable and discriminatory con cessions given to the petroleum industry in Australia, that might be the best way in which to proceed.
The memorandum gives as the first of the main features of the bill -
To exempt income derived by residents of Christmas Island from sources within the island.
This is intended simply to place the new Territory of Christmas Island, which is now within Australian jurisdiction, on the same basis as the Territory of Papua and New Guinea. We offer no objection to the residents of this small island being placed on the same level, for tax purposes, as the residents of the other Territories of the Commonwealth.
The second feature listed in the memorandum deals with unfortunate people who were the victims of Nazi persecution during (he Hitler regime. The memorandum states this purpose of the bill as follows -
To exempt pensions, annuities and allowances paid by the West German Government as restitution for Nazi persecution.
Those payments are to be treated as exempt income in Australia. Again, we offer no objection to that proposal.
I shall pass for the moment over the third purpose of the bill as listed in the memorandum and move to item 4 which reads -
To allow deductions for gifts to certain organizations in Australia.
This is merely an extension of the list of such organizations which is already operative, and again we have no objection to this. I merely mention it for the information of the House. The National Trust of Australia (Western Australia) and the Northern Territory National Trust are to be given the privilege that donations made to them will rank as concessional deductions for income tax purposes. This already applies to the National Trusts in Victoria and New South Wales. This proposal simply is that the new trusts in Western Australia and the Northern Territory are to be similarly treated.
The next item covered by the extension of concessional deductions in relation to gifts deals with -
Public funds established and maintained for the purpose of financing marriage guidance by approved organizations.
The Australian National Committee for World Refugee Year and the Council for Jewish Education in Schools are also to be brought within the ambit of concessional deductions. Already concessional deductions are allowed in respect of contributions for Christian education in schools, and this is to be extended now to cover education provided by the Council for Jewish Education in Schools. Donations made to that fund will be allowable deductions for income tax purposes.
The next item with which I should like to deal, Mr. Deputy Speaker, is listed as item 6 in the memorandum as one of the purposes of the bill. It reads -
To remove the limit upon deductions for medical expenses paid by a person over 65 years of age in respect of self or spouse who has attained the age of 65 years.
Honorable members will be aware, of course, that the present law is that an individual is allowed to claim up to an aggregate amount of £150 for medical expenses, a term which covers not only fees paid to doctors but also fees or charges paid to registered nurses, public hospitals, chemists and dentists, in respect of each dependent member of the family or in respect of the taxpayer himself. If in any year the medical expenses of any one of those persons exceeds £150 no deduction is allowed for the excess. This proposed amendment will extend to aged people, or at any rate to the people over the age of 65 years, without any limit presumably, the right to claim any medical expenses in the year of income as a deduction.
This would mean that if an aged person or the spouse of an aged person were, say, in an approved public hospital and paid medical fees in excess of £150 per annum, the taxpayer could claim the whole of that amount as a concessional deduction. Again, while we do not oppose this, we simply point to the fact that, basically, the removal of the existing limit is likely to be applicable to only very small sections of the community - namely, those people in the aged group who have sufficient income to be able to pay the expenses in any case. Unfortunately, one of the neglected avenues of social relief in our community is the provision of adequate hospital and nursing care for people over the age of 65 years who, through no fault of their own, have no means other than the age or invalid pension itself. They, of course, would not rank for any benefit under this particular provision. This will apply only to people over the age of 65 years who have an income in excess of about £850 per annum and who pay medical expenses exceeding £150 in a year in respect of themselves or their dependants. I suggest that this would have very limited application, and that the number of people who will gain any advantage from this provision is relatively small.
The next item listed in the memorandum as a purpose of the bill, and to which we also offer no objection, is item number 9 dealing with the accelerating of deductions allowable to mining enterprises for expenditure on housing and amenities provided for employees and their dependants. Although we offer no objection to this we think that some provision should be included, or some guarantee given by the Government in respect of this proposal, so that the benefit derived from it will be reflected in lower rentals paid by employees. This provision is to operate retrospectively to the financial year 1955-56, presumably with a view to giving benefit to the Mount Isa mining company. This company was affected by a decision of the High Court recently. The company had made a claim for deductions which the Commissioner of Taxation had disallowed. The company then took the commissioner to court and the court upheld the commissioner’s decision, with the result that the company’s claim for a deduction was rejected. The proposed provision will enable the company to claim something like 60 per cent, or 80 per cent, of the amount of that deduction in the first year in regard to which the amendment becomes operative.
I suggest that legislation which is retrospective in operation always contains within it great dangers, particularly when, as in this case, it gives a concession amounting to, I should think, many thousands of pounds to one particular company. I suggest that when a government places this kind of provision before the Parliament it is open to charges of favoritism towards the particular interest concerned. What we say is that, from now on, mining companies which can claim this concession should at least pass the benefit on to the employees in the form of lower rentals for the houses occupied by the employees. The bill contains no guarantee in that respect other than that the houses concerned will be set aside for employees. The effect will be that those houses, as a result of the concession, will actually cost the company less than the apparent cost of them. This should be reflected in the rental paid by the employee. I agree with the principle, but I think there should be a guarantee that the ostensible purpose for which this concession is extended will be fulfilled - namely that suitable modern housing at lower rentals will be available to the individual employees. There is no guarantee in this legislation that that will be the case. As I see it, all that a firm has to say is that it has made this expenditure for housing for employees and that those employees are actually living in the houses. No reckoning has to be made of the economic rent for the occupant.
– Does the honorable member agree that the rent already charged is very reasonable?
– In some cases it is, but in other cases it could be less. All I am asking is that when concessions are given for a particular purpose - in this case presuming that employees will have the benefit of them - a guarantee should be written in to ensure that the benefit is in fact passed down to the employee by way of a lowered rent.
Item 10 of the memorandum refers to a purely technical matter. It refers to the variation of the calculation of provisional tax in order to give effect to the 5 per cent, reduction in the tax payable by individuals. The clause which provides for this variation is simply a machinery clause to which no opposition is offered.
I should now like to deal in more detail with the items mentioned in the memorandum and to which we offer objection. The first one I take is item 7, which refers to the increase from £300 to £400 of the maximum permissible deduction for life assurance premiums, superannuation contributions, &c. We oppose the relevant clause - clause 9 - because we regard it as conferring a benefit on a very small section of the community. This clause will mean a loss of revenue to the Government, but it would have been more equitable to spread that cost in the form of a benefit applied to wider sections of the community. Honorable members should occasionally ask themselves what kind of philosophy lies behind an extension such as this. Who are the people in the community who already are able to set aside almost £6 a week, because that is what £300 a year is, for superannuation and insurance? How many people in the community can afford to set aside £6 a week from their income for such a purpose? To begin with, what would be the level of income at which a saving of that kind would be possible? How many people will be able to avail themselves of the right to save a further £100, thereby raising their weekly savings from £6 to £8? What would be the level of their income? Of course, the higher the income the smaller the number of taxpayers becomes who can take advantage of particular concessions. It is high time this House looked at some of the deductions that have been accepted over the years and saw precisely what is going on.
I propose to direct the attention of honorable members to the 37th report of the Commissioner of Taxation. I commend the commissioner for the very great detail that is supplied in his annual report - detail that is of considerable assistance in assessing the levels of income of various groups in the community and which indicates the great disparity that still exists in income distribution. I commend him also for the great detail that is provided with respect to the profits and the asset accumulation of Australian companies. That document should be much more closely studied by honorable members than it is at present. At pages 110, 111 and 119 the commissioner gives details of the concessional deductions and other allowances claimed by people in various income brackets. I have made a summary of the information provided by the commissioner. With the concurrence of honorable members I incorporate that summary, which is in the form of a table, in “ Hansard “-
The first significant thing about that table is the large aggregate amount of the concessions. The concessions aggregate more than £600,000,000. They are made up of allowances for a taxpayer’s wife and children, medical expenses, life assurance premiums and the like. The particular deduction that I propose to deal with is that for life assurance premiums. A study of the table will show that this concession is availed of to a much greater extent by people in the higher income brackets than by people on lower incomes and I ask honorable members to note this when con sidering the extension of the allowance for life assurance premiums from £300 to £400. From the table it will be seen that the deductions for life assurance premiums claimed by the 3,800,000 taxpayers for the year ended 30th June, 1956, totalled almost £100,000,000. But of the 3,800,000 taxpayers only 164,000 or a little more than 4 per cent., had incomes of £2,000 a year or more. That 4 per cent. of taxpayers claimed £15,200,000 as deductions under the heading of life assurance, representing 15.6 per cent. of the total claimed under that heading. That shows that the life assurance deduction is a deduction determined according to the wealth of the taxpayer.
This legislation will aggravate the disparity that now exists because it can hardly be conceived that a man on, say, £1,000 a year with a family to support will get anything out of the increase of the amount that may be claimed for life assurance from £300 to £400. He is not claiming anything like the maximum amount at present and this concession is meaningless to all taxpayers other than those in the higher income groups. What sort of philosophy is indulged in and what kind of pressure is brought to bear to make a government single out for alteration an item of this kind while ignoring many other far more worthy concessions? The wealthy man who can afford to pay £400 for life assurance can claim as a concession on his savings almost three times as much as every taxpayer is allowed as a concessional deduction for his wife. What kind of equity lies behind such a determination? Members of the Government should occasionally ask themselves that question. I hope that this will be one matter to be considered by the committee that will examine our tax structure.
But this is not the whole of the story. The fact that a taxpayer can claim a concessional deduction of £1 does not mean that his taxation assessment is reduced by £1; all that it means is that the taxation assessment is reduced by the amount of tax thai he would pay on the last £1 of his income. In reality, the worth of a concession to a man on a low income is far less than it is to a man on a high income. I measure the worth by the loss in revenue, as it were, occasioned to the Government by the effect of allowing a concession. A married man with an income of £1,143 is not taxed on £1,143; he is taxed on £1,000, because he is allowed to deduct £143 for his wife. The real worth of the concession to him is the difference between the tax he pays on £1,000 and the tax he would have paid on £1.143 if he had not been allowed to make a deduction for his wife. Of course, the higher the rate of tax, the more the concession means. There is no equity in the application of the principle.
If a taxpayer’s marginal rate of tax is 13s. 4d. in the £1, then every £1 that he contributes in the payment of life assurance premiums means that the Government forgoes 13s. 4d. in revenue that it could otherwise have collected. It is believed that income tax is a progressive tax that is levied according to ability to pay, but the principle of concession works against the broad system of progression. The more fancy the concessions and the more limited the class to which they are applied, the more inequitable and distorted does the taxation structure become. This is reflected in the fact that at the moment a lower proportion of aggregate revenue is being collected from income tax than was collected, say, seven or eight years ago. The items that have not been altered proportionately with the fall in the value of money are family claims - the concessions for a wife and children. On the other hand, what may be termed luxury concessions, that is, concessions in respect of such items as life assurance, have been increased, and that further distorts the taxation picture.
I ask the Government to say what actuates it when it decides that the maximum amount that can be claimed for life assurance payments shall be increased from £300 to £400. Whom does this benefit? What advantage to the community is supposed to flow from this concession? I hope that before this debate is concluded we will be given answers to those questions. I have no doubt that involved in this decision was the very nebulous thought that it would encourage savings. But its effect on aggregate savings will be very minute, and its possible effect in loss of revenue will almost cancel any saving. This is not a concession that will be generally applicable to the community as a whole.
The other matter with which I want to deal in some detail concerns the concession now to be given to individuals or companies which contribute capital to other companies that will engage in the search for petroleum. I ask again that this be seen for what it is. It is a concealed subsidy given to companies or individuals investing in oil exploration. I think to understand this, honorable members need for a moment to examine just what the law is with regard to mining. The House should, first, ask why this matter, of all the anomalous matters within the whole framework of the income tax legislation, is singled out for attention as a matter of urgency.
In October of last year - just a fortnight before the election - the Government introduced a provision which is now to be repealed. It became section 77a of the Income Tax and Social Services Contribution Assessment Act and extended the concession to individuals and companies engaging in the search for petroleum, so long as they were resident in Australia. Now, little more than a year later, we have a second amendment, and the purport of this amendment, so we are told, is to clarify some matters that were not certain at the time of the previous amendment. This, I suggest, simply indicates the haste with which the first amendment was drawn and in my view raises some doubtful implications as to why it was drawn. Why are we now hurrying to remove the difficulties that exist with this section when honorable members can point to many other sections that need attention?
The essential difference between this provision and previous provisions is that a mine, whether it be a coal mine, a gold mine or a diamond mine, is expected to have only a limited life, and the taxation concept has been that, over the life of the mine, the whole of the capital outlay can be written off against profits before any taxes are levied. That does not apply to an ordinary business. The capital a man invests in a haberdashery or other store is his own business. If he makes profits, that is all right; if he incurs losses, that is unfortunate. But, except for depreciation on plant employed, he is not allowed to write the original capital investment off against the profits earned by the undertaking. However, the accepted concept with mining has been that, if any profits are made, the capital costs can be written off over the life of the mine. If no profits are made, of course, there is nothing against which to recoup the capital losses and the capital is simply lost. However, a change was made with gold-mining and certain other forms of mining that are listed in the act. The provision now is that, in the year in which capital is contributed to a company in the form of calls, whether by an individual or by another company, one-third of the amount of the calls can be claimed against the income of the individual or the company from its profits on any other undertaking.
Section 77a goes further than that, but only with regard to petroleum mining and not with regard to any other kind of mining. It goes further in that it allows an individual or company who subscribes capital to a company which engages in oil search to write off against taxable income the full amount of the calls paid in the year in which they are actually paid. Let me illustrate the effect of that. Suppose that you are an individual with an income of £5,000 and your marginal rate of tax is, say, 10s. in the £1. Let us say that you subscribe £100 in calls to one of the companies mentioned in the second annual statement made recently under the Petroleum Search Subsidy Act 1957-1958 - for example, Enterprise of New Guinea Gold and Petroleum Development N.L. That £100 would be taken off your taxable income in the year in which you paid the calls. At the marginal rate of tax which I have mentioned, this means, in effect, that the Government subsidizes you to the extent of half the contribution actually made. If, on thi other hand, Ampol Petroleum Limited decided to form a new subsidiary which ii called, say, Ampol Oil Search Limited,’ and the parent company subscribed £100,000 to the subsidiary, the taxable income of the parent company would be reduced by £100,000. and the Government would lose 100,000 times 7s. 6d. - the parent company’s rate of tax being 7s. 6d. in the £1 - or £37,500. Again, this amounts to a concealed subsidy given by the Government to these undertakings to encourage them to engage in the search for oil.
Government, supporters are always talking about private enterprise being ready to undertake risks. The new principle that is imported into the taxation law is that half, or nearly half, the risk is removed even before a start is made. If you invest £1,000 in a coal-mine and the mine is unsuccessful, you lose your capital. You do not receive any rebate of tax because you have made the investment. In respect of petroleum undertakings only, you are allowed to cut your losses. In fact, I think the matter is very well summed up by Mr. J. A. Gunn in the last edition of “ Butterworth^ Taxation Service “. Commenting on the existing section 77a, which is to be replaced by the section proposed in this bill, he stated -
In brief, if the operating company does not make the declaration-
At present, the company in which the money is invested has to declare that the money was in fact expended in the particular year before the shareholder, whether an individual or a company, can claim the deduction. Mr. Gunn stated -
In brief, if the operating company does not make the declaration and discovers payable quantities of petroleum, it will receive a full deduction from its assessable income of its capital expenditure on prospecting for and obtaining the petroleum.
If it does make the declaration, it will lose, “ pro tanto “, the benefit of that deduction if its search is successful.
This is the significant comment -
It is thought that most oil search companies will make the declaration, in accordance with the ancient proverb that a bird in the hand is worth two in the bush.
I suggest that that sums up the position very well, Mr. Deputy Speaker. Rather than wait against the day when you may make a profit, recoup your capital expenditure and ultimately hope to earn a dividend, you will say, “ I shall cut my loss now and claim the deduction for my capital subscription in the year in which I make the expenditure “. This imports an entirely new principle into the assessment of mining activities for income tax. This principle is being applied purely to petroleum companies.
I do not think that anybody is so naive as to imagine that most of the capital subscribed in petroleum companies will come from the little man in the street. It will come from oil distributing companies, the ownership of many of which is foreign to Australia. The existing section 77a, which was enacted in October, 1958, at least had the virtue that it excluded from, the benefit of this concession companies whose shareholders were not resident in Australia. The proposed section will extend the benefit of this concession to non-resident shareholders.
– Is not the same tremendous risk still present?
– As I have tried to indicate, in respect of a company, at least 37-J- per cent, of the risk is underwritten by the Government in the first place. That is a rather large part of the risk, and that fact certainly whittles away a considerable part of the honorable member’s argument if he relies on risk as the basis of assessment.
I direct the attention of honorable members to page 7 of the explanatory memorandum circulated by the Prime Minister on behalf of the Treasurer when this measure was introduced. At that page, the memorandum states -
When section 77a was introduced last year, the deductions for capital subscribed for petroleum exploration purposes were not made available to Australian companies in which non-residents have a controlling interest. From the information then available it appeared that tax allowances in the oversea countries would provide adequate tax incentive for these companies to invest in Australia.
These are the significant words -
This is not invariably the case and if these companies are to be encouraged by tax concessions to continue the search for oil in Australia or PapuaNew Guinea, taxation allowances by Australia will be necessary. 1 should think, to begin with, that die Government ought to indicate v/hat information is available to the Government in October, 1959, that, presumably, it did not have in October, 1958, and what it means by the words “ not invariably the case “. If this applies in some instances and not in others, why is not the section restricted purely to those shareholders, whether companies or individuals, who do not get the concession in their country of origin?
I think, as I have said, Mr. Deputy Speaker, that proposed section 77a imports entirely new principles into the Income Tax and Social Services Contribution Assessment Act. You can argue if you like that it is well to encourage national development. That may be conceded. But why pick out petroleum mining? Why not include goldmining or banana growing, for argument’s sake? Why choose only this form of petroleum search? Why not include shale oil undertakings such as that which was closed down by this Government - an undertaking from which we could have been certain of obtaining some petrol? Why not include the petro-chemical undertaking being conducted by the State Electricity Commission of Victoria, at Morwell, which, the commission states, by 1970, will be able to produce 20,000,000 gallons of petrol and 22,000,000 gallons of diesel fuel a year as chemical by-products? Why not underwrite the certainty rather than the hazard?
As I say, this is simply an indication of bowing to pressure groups which have been powerful enough, twelve months after an election, when the existing section of the act is not regarded as satisfactory, to plead before the Government the need for a further amendment of the act. I suggest that honorable members pick up the bulletin which most of us receive every month from the taxpayers’ association and read about the anomalies for which the association has been demanding solutions for years - anomalies concerning, in many cases, long service leave, fares to and from work, and things like that.
Why has the Government chosen to ignore these demands and go flat out to give extensive assistance to those favoured groups who happen to be searching for oil in Australia and New Guinea? Again, I ask the Government, what is the principle that lies behind its action in singling out particular institutions such as these whilst ignoring other demands which are just as urgent. The search for petroleum is not the only national development that could be encouraged in order to cut down our dollar and other overseas obligations. There are plenty of other activities to which strategic encouragement could be given through the discriminatory use of the income tax legislation. Why choose the petroleum industry knowing, as we do, that the major beneficiaries will not be small, humble individuals but companies, many of them not domiciled in this country? They will have a large part of their risk underwritten by the Commonwealth Government.
I suggest that if we were to evaluate the real worth of this concession in twelve months or two years the amounts provided by means of the petroleum search subsidy act would pale into insignificance. What is wrong about this is the concealment. It has been our duty as an Opposition to open this matter up for the examination that it needs in order to show that it is a discriminatory subsidy, given to a very limited section of the community at the expense of the public purse. It is almost a semi-socialized undertaking. At least 37i per cent, of the risk is public, not private risk. In the committee stage, the Opposition intends to fight against those particular clauses.
.- Mr. Deputy Speaker, the honorable member for Melbourne Ports (Mr. Crean) does not seem to be fundamentally interested in whether this bill promotes the search for oil or not. This is not a case of looking through the tax laws and finding what category of taxpayers should be given concessions. Rather is it a matter, as it should be, of looking at the vital question of oil supply and seeing how we can best promote the search for oil in Australia. When these concessions were first introduced, oil search in Australia was petering out. It has been revived only by the stratographic drilling subsidy and tax concessions.
The honorable member for Melbourne Ports asked, “Why single out oil? Why not coal?” But who feels that it is very urgent to find new coal supplies in Australia? The honorable member asked also, “ Why not give assistance to something that is a certainty? Why give concessions to something that is so uncertain? “ The reason is, of course, that the chances of making a profit out of the search for oil are negligible. The people engaged in it a little while ago were so despondent that this concession was introduced. The honorable member cited the possible gain to a taxpayer who is up to the taxation level of 10s. in the £1. He showed that, because of tax concessions, half the cost of contributions to an oil search company would be indirectly borne by the Government. I hope, Mr. Deputy Speaker, that this will become more and more widely known and appreciated by taxpayers so that they will be prepared to put at least some proportion of their income into this very hazardous and chancy game of searching for oil. If oil is to be found at all, we need, not to diminish our efforts, but to encourage them.
The honorable member for Melbourne Ports gave no alternative way of attracting people into the oil search field. He merely pointed to a remote possibility that, some day, some one who had hazarded a large amount of money in oil search would make a sudden profit. At least it is some considerable inducement to people to know that when they put their money into oil search the Government is bearing quite a large part of the cost. The only alternative is one which the honorable member for Melbourne Ports would favour. That is, confining the search for oil to Government enterprise. But that is not the kind of thing which has succeeded in finding oil in other countries. Most of the oil has been found by small operators and then exploited by much larger interests. The statements made by the honorable member concerning the benefits accruing to outside companies from these taxation concessions are entirely incorrect, because the concessions do not apply to non-resident individuals or companies. The reason for the change in this legislation to include subscriptions to companies the controlling interest in which is held outside Australia is the obvious one that if Australia is to find oil, Australian oil search companies need to have both their finance and their technical know-how greatly reinforced from overseas. Without the accumulated experience, and the enormous funds of big overseas companies who have found oil and who know the game from the practical viewpoint, the prospects of Australian companies, per se, discovering oil are very remote.
These few concessions which are obviously designed to extend the concessions originally given are very well designed to promote the further search for oil. The Opposition’s attitude comes as a surprise, after the claim made by the Opposition in another place during the debate on the oil search legislation in that the Government had been doing nothing to encourage the search for oil. Here is a good, practical measure to encourage oil search, but the Opposition opposes it! The only logical reason for the Opposition’s attitude is Labour’s desire to nationalize the whole process and put the entire search for oil onto a government footing. If the Opposition would come forward and say that, its attitude would be understandable. Certainly that is fully implied in the remarks of the honorable member for Melbourne Ports.
The Opposition, I take it, is also opposed to the proposal to increase from £300 to £400 the amount which may be deducted from taxable income for life assurance or superannuation payments. This, it says, will benefit only a limited number of people. But surely it is a twisted logic that asserts that the only people to whom any financial justice is due are those on the lowest incomes. Apart from promoting saving, which is a vitally essential part of the economic process which we should encourage, this is an increase which I find matches the recent increase in the superannuation units for senior members of the Public Service. Those increases are undoubtedly connected in some way, and rightly so.
The honorable member for Melbourne Ports cannot have it both ways. If this concession means a lot in the way of revenue, it must mean quite a bit in the way of .saving. If, in fact, it has a minute effect on saving, as he intimates, it must correspondingly have a minute effect on revenue. Obviously, this provision will encourage people in the higher income group to save for their future a greater proportion of their income and, in the .process, increase the funds available for investment, both private and public, in every sector of the economy. These concessions clearly benefit certain people who are in what might be called the better-off groups in the community. But surely they are entitled to some consideration. For too many years every trend has been in the opposite direction. If, in fact, some slight reversal of the progressive element in taxation is being introduced, it is certainly not before time. It is a warped and twisted logic which always maintains that anything but increases for those in the higher income group and anything but reductons for those in the lower income group is fair and equitable and conducive to economic welfare.
The honorable member for Melbourne Ports seemed to indicate also that this very useful concession to mining enterprises, which provide housing and welfare facilities in the vicinity of their mines for employees and dependants, might be confined to the Mount Isa mine. It is true that the Mount Isa company contested the decision of the Commissioner of Taxation in the High Court and lost the case, but this problem extends far beyond Mount Isa. Any one who takes an interest in mining and visits the mines in various parts of Australia, particularly some of the newer ventures, immediately must be struck with this very serious problem. The mining enterprises will receive a concession which would not be necessary for industries established in most other sectors of the country because in most towns, other than in remote areas, where economic enterprises are undertaken, housing, schools, roads, water supplies and other facilities are provided by public authorities. The Weipa undertaking is a classic instance. Many mining companies commence operations in remote areas and do not receive the assistance of public authorities. They have to do the whole job themselves. This provision is a very reasonable way in which to recompense them to some extent.
The honorable member for Melbourne Ports has suggested that if mining companies which provide housing for their employees are allowed the proposed concession, the concession should be reflected in some other direction such as the rent to be paid for the houses. The companies may deduct a proportionate amount for housing and welfare amenities over a period of five years, but the amenities still must be paid for out of their own resources. The provision of housing quite justifiably is being regarded more in the light of an ordinary working expense necessary to promote the success of the venture.
– The Mount Isa company is doing all right without this concession.
– We might have little to worry about if Mount Isa were the only mine concerned but, unlike the honorable member for Melbourne Ports, I do not accept for one minute that this is something in which only Mount Isa has an interest. This covers a much wider field than the interests of Mount Isa. Moreover, Mount Isa is a proved venture. Many other undertakings which have found it necessary to provide housing and welfare amenities for their employees may not have a future as rosy as Mount Isa has.
The honorable member referred also to other concessions in this legislation which in some respects are overdue. They certainly will be a help from the point of view of developing our economic life. One such feature is the alteration in the existing arrangement in relation to the retention allowances for private companies, and the amount that they retain from trading profits without attracting a penal rate of tax. As my colleague the honorable member for Farrer (Mr. Fairbairn) and I have been stressing for very many years, this aspect of the legislation should be regarded in the light of its importance to our economic growth. Small companies grow into large companies, but it is only by being able to put aside a reasonable proportion of their earnings to plough back into the undertaking and thereby increase their future profits and future scale of operations, that small companies can grow and eventually take their place among the larger undertakings. This is one consideration. The other consideration, however, is that if too many concessions are granted, certain groups of individuals are able to build up undue equities at the expense of the taxpayers. The pendulum has swung much too far the other way merely for the purpose of chasing tax revenue, and has not swung towards the further and longer-sighted viewpoint of promoting the health of small companies and economic growth generally.
It is satisfactory at least that the Opposition did not offer any objection to the proposed extension of the list of organizations and funds to which gifts of £1 and upwards may be made and be allowable deductions for taxation purposes. The inclusion of gifts for marriage guidance organizations is very well designed in the light of the coming legislation dealing with matrimonial causes. The provision for the Australian National Committee for World Refugee Year is in line with current obligations already approved by the Government and that for the Council for Jewish Education in Schools in Australia very fairly brings Jewish education into line with the treatment accorded to other established religious bodies.
As one looks through these provisions one is convinced that they conduce to economic growth and further economic activity in a way which is thoroughly healthy and designed to achieve greater success in the future. The additional concessions for those searching for oil and concessions to small private companies, also the concession to saving involved in increasing the amount of permissible deduction for life assurance and superannuation contributions from £300 to £400, are items all thoroughly in line with the Government’s prime objective of promoting incentive to increase the economic welfare and progress of this country.
.- As the honorable member for Melbourne Ports (Mr. Crean) has pointed out on behalf of the Opposition, members on this side are opposed to clauses 5, 13 and 16 of the bill. Clause 5 proposes to extend, in certain circumstances, the deductions allowed for capital contributed directly to companies engaged principally in exploring for petroleum in Papua and New Guinea or companies contributing capital directly to petroleum exploration companies.
We can see no reason why the Commonwealth Government should need to subsidize these oil companies. They are all very wealthy companies and they are all part of an international cartel. We are told that the Shell Company in Australia is different from Ampol and that Ampol is different from Vacuum Oil and so on, but we believe that they are all owned by the same interests overseas and that the exploration for oil in this country is not undertaken for the purposes of Australian development so much as it is for ensuring supplies for the oil companies in the years that lie ahead.
At the present time the oil companies are doing very well. They are certainly paying heavy royalties to the sheikhs in certain parts of Arabia, but they are doing pretty well out of the oil they extract from those countries and ship around the world to the refineries which have been set up following the trouble in Iran some years ago when Premier Mossadegh nationalized the whole of the oil installations in that country.
Geologists say that there is plenty of oil in Australia, but so far none has been found. What members of the Australian Labour Party are afraid of is that when the oil is found it will not be brought to the surface and the Australian economy will not be helped immediately. The Commonwealth Government proposes to subsidize further oil exploration for the benefit of the companies in 10, 20 or 30 years’ time. We do not think that that is a proposition that any Labour Opposition in this Parliament should support.
As the honorable member for Melbourne Ports pointed out, members on this side are opposed to the clause which increases the permissible deduction for life assurance premiums or superannuation contributions and like matters from £300 to £400 maximum. How many people in the community are there who could possibly contribute £8 a week for superannuation benefits? One would have to contribute between £6, £7 or £8 a week to obtain the benefit of this new provision. Very few people can afford to contribute £6 a week for life assurance or superannuation benefits. Apart from members of Parliament, Commonwealth and State public servants who are in the higher income brackets, and people working for local government or semi-government authorities, few can afford to huy provision for their old age at such a price. Therefore, this benefit which the Commonwealth Government is paying for - this subsidy which it is making - is being provided at the expense of people on the basic wage or in the lower income groups.
This provision is typical of what we have described as a rich man’s budget. This budget is designed by this Government to benefit its supporters and those who are inclined to vote for it on economic grounds, but it is not of much benefit to the average person in the community.
As the honorable member for Melbourne Ports further pointed out, we do not oppose clause 3, which exempts income derived by residents of Christmas Island from sources within the island. This provision is in consonance with provisions which already exist in the act in regard to other Territories of the Commonwealth. It is right and proper that the people of Christmas Island, who are now under our jurisdiction, should not be disadvantaged in regard to taxation matters, compared with other people living in other dependent territories.
The honorable member for Melbourne Ports pointed out that we do not oppose clause 4 which exempts pensions, annuities and allowances paid by the West German Government in restitution for Nazi persecution. It is a matter of great regret that it has taken so long for the surviving victims of the Nazi persecution to get this restitution which the West German Government has promised to pay. I suppose that one of the most terrible of all the terrible things which happened in the last war was the genocide practised by the Nazi Government, as represented by the destruction of 6,000,000 human beings on racial and religious grounds. One would not have thought that that could possibly have happened in our time, in the light of our development, but it did happen. Possibly it is happening in some other countries to-day.
The tragedy of the ‘ Jewish people throughout the world has been a most poignant one and although some restitution has been made, that is not a real consolation; it does not bring back those who are dead. But it is some slight recognition on the part of humanity that those crimes were committed and should never have been committed. As far as I can recollect the Government has not stated how much is involved in these restitution payments, but probably it is not a very great sum. However, the gesture is one on the part of the present West German Government to the victims of the Nazi regime and the Australian Government has very properly associated itself at least in the distribution of the amounts, concerned to those former German citizens of the Jewish religion who are now resident in Australia. We all hope, I am. sure, that- these unfortunate people will find peace and happiness in this country and that their descendants will never know any suffering, equal! to the brutality that was endured in those not so far distant times by- other members of their race in. other countries..
We do. not oppose clause 6 which allows,, as: income: tax deductions,, gifts tor certain organizations- in) Australia-. The list is already, a considerable one andi the- proposed! additions’ of other organizations are most, welcome; Ii remember, in the days of the Chifley Government when it. was decided to allow’ contributions-, to warmemorials as deductions for income tax pur-poses there was a- feeling, that- there: would- possibly be- some- abuses- and) I suppose that there have been some abuses of this concession;, but,, by and! large* these: war memorials which find expression-, in-, churches,, hospitals, soldiers’ clubs and? scholarships of various kinds are’ of great and’ lasting value- to the community: For my part I should1 like to? see the’ list: of’ organizations- extended.
This clause provides that gifts’ to the National Trust- of South Australia, the National Trust’ of Australia in WesternAustralia and’ the Northern Territory National Trust will be allowable as deductions. L think that is right. We also agree that gifts to what the clause describes as “ a public fund! established and maintained for the purpose “ of providing finance for approved marriage guidance organizations should’ properly be allowed as deductions. Other bodies to which gifts are made and are to be allowed as deductions for income fax purposes are the Australian National’ Committee for World’ Refugee Year and the Council for Jewish Education in Schools. This last body will receive similar treatment to that now being given to Christian educational bodies.
I should hope that every contribution made for cultural purposes-, within limits determined by the Commissioner for Taxation, would be brought within the provisions of this clause. I should like to see contributions to the Olympic Games funds lade items deductible for taxation pur poses. I remember that the honorable member for Chisholm (Sir Wilfrid Kent Hughes) raised, this-, issue two years ago and the then Treasurer,, Sir Arthur Fadden-,, promised to give the matter consideration. If- consideration was’ ever- given- to. the proposition it’ was- of’ a- very scant nature, because contributions to the Olympic Games funds have- not’ yet been made deductiblefor taxation purposes-.
It may seem, to the. Government that. this, present list rounds, off all the organizations which might be considered, but I do not think that that is- so..
– It isi constantly under review.
– Exactly. I’t is constantly under review, and’ I would ask the Minister to try to devise some way in which contributions to literary and cultural fund’s might be exempted. I would’ like to see. more money given to universities. I. would’ like, to see more done in the. way of scientific and’ technical education. I believe a good deal of encouragement under this taxation provision should” be given to semi. government bodies and to private organizations that. are. trying, to make, our community more scientific: and technical-minded! thaw it is at the present’ time.
We do not oppose clause 8, which’ proposes to remove the limit upon deductions: for medical expenses incurred by a personover 65 years of age in respect of the taxpayer, male or female, or the spouse of such a taxpayer’ if such spouse has alsoattained’ the age of 65 years. Although this provision may be open to abuse, and could be of great benefit to wealthy people, we believe that it should’ not be opposed,, because it will’ confer also a benefit on personswith very small incomes who have a great’ deal of sickness in their homes.
We do, not oppose clause 10, which proposes to increase the allowance deductible in. calculating the undistributed profits tax payable by private companies. The honorable member for Melbourne Ports (Mr. Crean) has dilated- at length on that question.
We certainly do not oppose clause 18, which provides for a variation in the calculation, of provisional tax in- order to- give effect to the 5 per cent, deduction in the tax payable by individuals. We do, however, object to the flat rate deduction of 5 per cent, in income tax which the Government has proposed, and which will be debated presently when the next piece of legislation, dealing with rates, is under consideration.
When the rates bill comes before us, the honorable member for Melbourne Ports will move an amendment, the purpose of which is to provide for more equitable distribution of this particular tax benefit. I want to say in passing that we of the Labour Party believe that a flat rate deduction is quite inequitable. The man with £4,000 a year of taxable income will get a benefit of £200, while the man with £400 taxable income will receive only £2 a year benefit.
– But the relativity is preserved.
– Well, is the relativity preserved? We want to preserve the relativity that means that the man earning £16,000 a year who is paying 13s. 4d. in the £1 in income tax shall continue to pay that high rate, while the man on the low income, who has to meet the ever-increasing cost of living, shall receive a greater benefit than he will under the proposed legislation.
We do not oppose clauses 11, 12 and 14, in order to ensure the benefits which the clauses will provide in the matter of low rentals being passed on to the employees, instead of being used to benefit the mining company or companies concerned. We do not know for certain that the mining companies will pass on all these benefits that the bill will give them, by charging lower rentals on properties occupied by their employees. I suppose that in general this practice will be followed, but we would like to see some provision to oblige wealthy companies, such as the Mount Isa company and some others, to pass on the benefit that this provision will give them.
We will allow the second reading of this bill to pass without division, but we will indicate our attitude towards the clauses I have mentioned when the bill is under consideration in committee. We will divide the committee on several of the matters that I have mentioned, and we will make our observations on the other provisions.
The Budget proposes to give a benefit of about £20,000,000 to income taxpayers by a reduction of 5 per cent, in the amount payable by each taxpayer. This will be the amount of the benefit in the current year, and presumably in other years. We believe that over the years it has been in office the Government has collected more in income tax than it should have collected. I have been supplied with figures by the Commissioner of Taxation which show that in all but two of the years in which this Government has been in power it has underestimated the amount of income tax that it would receive.
– That is good budgeting.
– Is it good budgeting? If you are taking more from the people than you estimated, you ought to give some of it back. But whenever this Government gives anything back the beneficiaries are the wrong people; they are not the great masses of the people. In actual fact this Government has over-estimated its taxation receipts in the ten years - including the estimate for this year- by £422,100,000. In the 1952 “ horror “ Budget, the Government increased indirect taxation.
– That amount was for ten years?
– Yes. I will give the Minister the figures. In the “ little horror “ Budget of 1956, although the eight professors who propounded the broad proposition wanted the Government to increase income tax to the extent of about £116,000,000, it increased company tax by about ls. in the £1, and then increased indirect taxation to the extent of about £100,000,000.
– Has the honorable member any proof of his statement regarding these professors?
– The Government accepted the advice of the professors with regard to skimming off - to use their euphemistic phrase - the surplus spending power of the community, but it did not adopt the method recommended by the profesors. The Government hit the small people, the family people, by increasing indirect taxation through greater excise duties and greater sales tax. Now, when there is something to be given back, the reduction should be in indirect taxation, that is in reduced excise duty and sales tax. It should not be in income tax which was not increased at the time of the “little horror” Budget. The people are still paying £100,000,000 more in indirect taxation than they were paying at the time when the 1955 Budget was introduced, on the eve of the election before last. A snide trick was practised by the Government. It did not say before the election that it intended to increase taxation to the extent of £116,000,000. Having won the election, it made the increase, and it has not removed those taxes over the years, except to the extent that it has reduced company tax by 6d. in the £1 . Otherwise it has not reduced the burden by one single penny. We believe the Government should now think of reducing excise duty and sales tax. If it cannot do so, it is because inflation is out of control. It is because the Government cannot balance its Budget without high taxation on inflated prices. Let me say in passing that this Budget is not even balanced. There is a deficit of £60,000,000, and the method by which that is to be raised will be the subject of further legislation, and we will have something to say on that matter. State governments are raising quite a number of issues with the Government with regard to increased Commonwealth contributions to the cost of State education systems, and increased grants to enable State governments to balance their budgets. But, generally, State governments are in a better financial position than the Commonwealth Government is now disclosing itself to be in. So, rather than reduce income tax at this stage, when the Government is budgeting for a huge deficit, it would be far better, in my opinion, to forego the reduction. I do not think it is good budgeting to have a deficit nearly three times as large as the amount by which we intend to reduce taxes. Even if the Government raises more money in income tax than it has budgeted for I think we should still be very careful at this particular time.
I have given the Government credit for exceeding the amount it is going to receive in income tax raising this year as compared with last year. I think income tax revenue will exceed the figure of £54,530,000 which the Government has set. Of course, the provisions of this bill do not permit me to talk about the Government’s bad budgeting and under-estimating in regard to other items of taxation; and, for the reasons I have stated, and having indicated the general lines of our attitude, and supporting the contention of my colleague, the honorable member for Melbourne Ports about this legislation, I have little further to say at this stage. However, I hope that when the bill is at the committee stage we will be able to get some assurances from the Government in regard to future levies on the people by way of indirect taxes. I do not want to canvass to any great extent the effect of the increased excise duties imposed in 1956. I wish only to say that they have very adversely affected quite a number of business undertakings. People who were previously making a reasonable living from certain undertakings are now complaining bitterly to members of Parliament that they cannot carry on while excise duties remain as high as they are.
Sales tax, too, is having quite a painful effect on family fortunes, particularly as child endowment payments have not been increased to enable mothers to buy all the things they need for the home. There are still quite a number of home items subject to sales tax, as well as a number of food items. The honorable member for Mallee, who used to be so vocal about the raisin loaf, has been significantly silent for a long time. The raisin loaf is still subject to sales tax, but ordinary bread is not.
– What about Mr. Speed?
– I am not worried about the Minister’s speech.
– No, Mr. Harold Speed. What did he say?
– Now I can fathom what the honorable gentleman is driving at. I will tell him about that some other time.
– I support this bill as being in line with Government policy. It makes some valuable, but mine, concessions in regard to income tax. I support it all the more gladly because the Government has announced that it proposes to undertake in the near future a comprehensive review of our income tax law. Honorable members will recall that this was done in 1950, shortly after the Government first came to office, and that, as a consequence, the law was very much improved and simplified. That will doubtless happen again; but I want to suggest to the House that that by itself is not enough at the present moment. What is needed is not just a revision and simplification and cleaning up of the law as it exists, but also the implementation of certain principles which go right beyond any question of the form of the law and relate rather to the substance of the law. I feel that the time has come when we should be looking at the real weight of our income tax legislation. We should be having a look at the principles on which it is founded, and the Government should not be just trying to bring up to date the form of the law - something which a committee could do - but rather should be taking to itself the responsibility for putting the principles of the law in their proper perspective.
We expect from an income tax law two things. First, we expect equity; secondly, we expect development. We expect that it will put the burden of providing the public finances fairly on the shoulders of the citizens in proportion to their ability to bear that burden. We expect, secondly, that the law shall be so directed as to encourage and foster the highest degree of national development.
There are three things, then, which need to be done. First, our income tax law should, to a much greater extent than lt does, foster the habit of saving in the community. The chronic short-fall in Australian savings is the weakest feature of our whole economy. It is because of this that the basis of our development is to some extent limited. To some extent we face the chronic danger of inflation. To some extent we become unhealthily dependent on the importation of capital from overseas.
There are many devices open to the Government in this regard. One or two minor ones are contained in the legislation before the House, but I feel that we have to go forward a lot further and a lot quicker than we have already done in this regard. 1 hope that when this fundamental review is undertaken the Government will be looking to ways and means of adapting the income tax law to the fostering of savings, both corporate and individual, in the Australian community.
The second thing, of course, is that the income tax law should be directed rather to the interests of the family. In the past few years, we have not kept pace with the interests of the family. There should be greater tax deductions for family responsibilities. These should be more recognized in the law, and particularly they should be recognized in a way which would help those in the community receiving lower incomes, when there are family responsibilities correlated with those lower incomes. I hope that when this comprehensive review is undertaken the statutory reductions made for family responsibilities will be much increased.
Thirdly, the complications in the law should be very much reduced. These have come about partly because of anomalies in rates, partly because of things like double taxation on dividends and other things of that character which put upon us the necessity of introducing complications in the law to close the loop-holes in company taxation and so on. A proper review of rates may make a number of these complications unnecessary.
Now, Sir, those are things that I do not intend to labour at the present stage; but I am glad to know that the Government is proposing to make this comprehensive review, and I would commend to honorable members the principle that the review should go right beyond the form of the income tax law and should be directed to its substance also.
With regard to the bill, which, as I have said, I support, I want to make one suggestion to the Government which I hope it will accept. The suggestion is a minor one. I know that in an income tax measure of this character the Government, once it has framed its budget, cannot accept a major alteration. Let us be reasonable about that. But I would not put forward and hope to have accepted anything that was big enough to affect sensibly or indeed perceptibly the budget structure. But there is one matter - important in its implications but unimportant as to its financial impact - which I would urge and hope would be accepted. I would hope that the Commonwealth Literary Fund would be included in the list of institutions to which donations may be made and claimed as deductions for purposes of income tax. A few moments ago the Deputy Leader of the Opposition (Mr. Calwell) expressed himself as being in agreement with the principle of making deductions for cultural purposes more widely available. Here is a concrete instance where those deductions should be extended.
I remember that about two months ago this House devoted some of its time to a discussion of the affairs of the Commonwealth Literary Fund. I felt in agreement with the proposition that the fund should have greater resources at its disposal. I felt in some disagreement with the proposition that those resources should be supplied by the government directly. I believe that it is not a good thing for all this money to come from government sources. I would rather see financial help to literary and artistic endeavours come from a number of sources so that there should not be a concentration of power, whether it be private or governmental power. It is much better to have the authority split up. What I would hope for is that it would be possible for people not only to make donations to the Commonwealth Literary Fund but to make conditional donations to the fund, that is, donations directed to a specific purpose so that the donors could to some degree control the way in which their money was to be used. I am not suggesting that this would be an open door. I do not think there should be a position where anybody, for any purpose that he likes, whether it be a real artistic purpose or not, should be able to obtain an income tax deduction, but I suggest that if a person has a bona fide purpose and that it is approved by the fund, he should be able to make a conditional gift.
– Would this apply to companies as well as to individuals?
– -Yes. I would suggest that we add a new clause to the bill - I think it would become clause 34 - which would allow gifts to be deductible where they are made to the Commonwealth Literary Fund, including conditional gifts, provided that such gifts have been accepted by the fund in the prescribed manner. I think that gives us a reasonable compromise. It gives the individual the power to make a gift for an artistic or cultural purpose which he or she - or in the case of a company, it - approves. It gives the government power to refuse the gift as a deduction if, in the view of the fund, it is not made for a bona fide purpose.
As honorable members know, the Commonwealth Literary Fund is formally administered by the Prime Minister, the Leader of the Opposition and the Leader of the Australian Country Party. I am certain that you could not get in the community three people who hold more responsible positions. Nobody would suggest that what they as a body approve would be lightly approved, nor would anybody suggest that what they as a body disapprove would be lightly disapproved. I think my suggestion gives a reasonable compromise and I hope that if it were adopted by the Government it would be possible for patrons of the arts, who want to further a particular project, to make a conditional gift to the Commonwealth Literary Fund. That gift would be administered by the fund for that purpose and it would be a deduction for income tax purposes if - and only if - the fund approved of it in the prescribed manner. As I say, this does not open the door too wide. It gives to these three responsible people who administer the fund the right to accept or refuse a gift as they think fit, but it also gives to the individual in the community, who has a genuine desire to help art in general or a particular artistic project, an opportunity to say to the Commonwealth Literary Fund: “ Here is what I propose to do. Would you approve the gift as a deduction for income tax purposes? “
I do not suppose that my suggestion would mean more than a few thousand pounds a year to revenue, if that much. It is not a matter that would have any impact on the Budget as a whole. I would not bring it forward as a matter that should be accepted if it did have that impact on a major scale. It is a minor financial thing. For reasons that were advanced from both sides of the House in the debate about two months ago I think it may be a thing of considerable importance from a nonfinancial aspect, but from the budget aspect it means practically nothing. I suggest that it may be possible for the Government to accept something along those lines when the bill is in committee.
– This bill affords honorable members an opportunity to look at one or two matters that are uppermost in the minds of most of us. As indicated by the honorable member for Melbourne Ports (Mr. Crean), who led the debate for the Opposition, generally speaking of the ten items listed in the memorandum explaining the bill we oppose two, and principally the granting of tax deductions in respect of investment in oil exploration within Australia.
As the honorable member for Mackellar (Mr. Wentworth) pointed out, this bill affords us an opportunity to say something about the equity of taxation in Australia at present. We affirm that the burden of taxation should fall squarely on those people best able to pay in accordance with their income. I was glad to hear the honorable member for Mackellar say that he hoped that the committee to be appointed to investigate taxation in this country would not restrict its activity to the taxation laws, because it is a fact that as a result of the inflationary trend since this Government came to office the assessment of taxes according to ability to pay is getting completely cockeyed. Our sister dominion, New Zealand, is attempting in some measure to level up the inequality, but unfortunately, it has been allowed to continue in Australia under the present Government. The maximum amount of income that may be earned in New Zealand without incurring income tax is three times what it is in Australia. But here we have the almost silly position of a pensioner couple, by reason of the age allowance, being able to have an income of about £850 a year without having to pay taxes. Yet the family man in Australia, earning the Commonwealth basic wage of £710 a year, is required to pay tax. A retired person with his own home - 1 have in mind railway employees - and with an income now of £850 a year is free of taxation; but a family man with five children, struggling to meet his commitments, must still pay tax. I agree with the honorable member for Mackellar and I hope that something will be done to help the people in the lower wage bracket, particularly those with families. The income of £104, which is the starting point for taxation, has remained constant.
I feel that we have reached the stage where we should have a complete review of our taxation methods. Mention has been made of the reduction in taxation of a flat 5 per cent., and the honorable member for Melbourne Ports has dealt with this. The relief thus afforded to the high income earner is really worthwhile, but it is only peanuts for the man in the lower wage group. The whole system has got out of proper perspective, particularly when we have regard to the present inflationary trend. The basic wage has risen from £3 7s. 6d. in 1932 to £13 13s. now, but in principle taxation rates remain the same to-day as they were when the basic wage was only £3 7s. 6d. I hope that the committee in its review of taxation will consider whether the present system of concessions is the most equitable system of assessing taxation, particularly for those who have the capacity to pay taxes.
The concession of £143 for a wife is worth pennies to the basic wage-earner but is worth pounds to the person with an income of, say, £16,000. It is completely inequitable to say that the value of the concession should vary merely because one taxpayer has a higher income than the other. The upkeep of the wife will be very little different in either instance, and so there is a complete imbalance within the framework of our taxation laws. Again I ask that the proper basis of the capacity of the individual to pay be considered by the committee in its review. The married man on the basic wage, with family commitments, should not be required to pay any tax. The basic wage is assessed according to the laws of the country by a tribunal set up by this Government, and it is accepted by every one as the minimum amount that should be received by a worker. That amount having been assessed as the minimum should remain the minimum. It should not be reduced by the levy of taxation, as it is now.
That aspect should be considered by the committee. As the basic wage rises under the inflationary policy of this Government so the commencing point of taxation should be increased. In this way, the family man who receives only the basic wage would not be required to pay income tax. If this is not done, the principle of collecting taxation according to the ability of a person to pay will not be followed. I put that proposition quite firmly. As I said, New Zealand is trying to do something to meet the situation, but nothing has been done by this Government about this inequality that has crept into our taxation laws because of the inflationary trend here.
Clause 9 of the bill increases from £300 to £400 the maximum deduction for life assurance premiums. Nobody on the basic wage, or even on double the basic wage, could even think in terms of paying £400 a year for life assurance. Where then is the justice in this concession? The man on the basic wage with an income of £710 will not gain anything from the increase of this concession by £100. The only deductions that he can claim are £143 for his wife, £91 for his first child and £55 for any other children. In round figures, taxation for a married man with two children commences at about £350. We oppose this provision because we say that it brings about an inequality and does not follow the principle of levying taxation on those who have the capacity to pay and thus raising the money needed to meet the commitments of this country. The purpose of taxation is to obtain sufficient revenue to meet the needs of the Government and of the community, and it is because this provision does nothing to further that purpose that we oppose it.
Clauses 5, 13 and 16 of the bill propose to extend the deductions allowed for capital contributed directly to companies principally engaged in exploring for petroleum in Australia. A new principle has been introduced here, and it is not good enough for the honorable member for Wentworth (Mr. Bury) to say blandly that oil is a necessity. Of course oil is a necessity. We all agree on that. But if honorable members pause for a moment to consider where the oil that we use is coming from, they must be fearful for the future of Australia if we continue with the policy of this Government to use oil in increasing quantities, particularly in rail transport through the use of diesel-electric locomotives. It is common knowledge that within five years the changeover of the railway systems to dieselelectric locomotion will be complete and the use of coal in transport will be finished. Yet the United States of America to-day, even with the vast quantities of oil that it has readily available, is spending millions of dollars on research in the use of coal. We have no oil in Australia, but in bringing down this measure the Government has not paid any attention to the real problem of research into the production of oil from the coal that is readily available here.
Production of oil in this way would relieve us of some of the great pressure that will be placed on us if the present situation worsens. We need not think in terms of a world war; we need think only of political considerations. In J 957-58 98 per cent, of our petroleum imports came from the Middle East, where political action, apart from any suggestion of war, could cut off our supplies of oil over-night. In 1957-58, we imported 9,184,206 tons of oil. The only oil-producing areas not subject to political upheaval are New Guinea and Venezuela, and only small quantities of oil are obtained in those parts of the world. We know that 98 per cent, of our oil comes from Sumatra, British North Borneo, New Guinea, Iran and other Middle East countries. The political situation in most of those countries is such that I can well understand why the Government and the honorable member for Wentworth want prospecting for oil to be undertaken in this country. I agree that it is terribly important. The honorable member said, also, that the chances of making profits out of oil in this country are so negligible that those who are drilling for oil here are despondent.
I put it to the Government that it is responsible for the general situation that is developing in Australia - a situation in which there is a greater need to do something immediately to develop the production of oil from coal than there is to give an open charter to the oil companies of Australia, as this bill will do, and thereby enable them to put money aside in order to prospect for oil free of tax. There are a few features of this measure that I do not think have been examined by many Government supporters. First of all, the oil companies in Australia are moving into a privileged position. In the financial year 1957-58, 2,800,000 tons of gasoline was produced in Australia from imported crude petroleum. The difference between the excise payable on the local production and that payable on imported fuel is lid. a gallon; so that, in 1957-58 alone, the Commonwealth Government subsidized the petroleum refining industry in Australia by approximately £4,000,000. That sort of thing is happening all the time, and this measure will only add to the process.
It is important to examine what has been said about this measure. At page 6, the explanatory memorandum circulated with this bill states -
It is proposed, in certain circumstances, to allow deductions for capital contributed to an interposed company where appropriate declarations are made and the Commissioner-
That is, the Commissioner of Taxation - is satisfied that the money will be used for oil exploration. These deductions will be allowable even though the capital is not passed on to a petroleum exploration company until a subsequent year of income.
On behalf of the Australian Labour Party, Mr. Deputy Speaker, I say that, in this measure, the Government is providing for a system that should not be tolerated for a moment. We want oil in Australia. There is no disagreement on that score. We agree that oil exploration is important. But let us not, at this stage, say to any person or any company - and particularly the oil companies which, already, receive a subsidy of £4,000,000 a year from Consolidated Revenue as a result of the development of the oil refining industry in Australia - that money may be subscribed to a company yet to be formed and may be deducted from taxable income, so that such subscriptions are free of tax. In this way, Consolidated Revenue is robbed of every penny of tax that should be paid on these funds, and there is no restriction as to the amount of such funds or the time within which they must be expended on the search for oil. That is the effect of the provisions of this bill.
If we are, in effect, to spend funds out of Consolidated Revenue on oil exploration, the Parliament and the country should know how much we are spending in this way and just what is happening in relation to it. I do not think that the Government is entitled, at any level, to spend funds of the magnitude of those involved in this bill without the Parliament being aware of what is happening and passing legislation to provide for this expenditure out of Consolidated Revenue. This is, in effect, a method of taking money directly from Consolidated Revenue by default. There is no control over the profits that the oil companies make in Australia. There is no price-fixing and, under the terms of this measure, there is no bar to the raising of the price of petrol by 3d. a gallon throughout Australia, and the whole of the proceeds being paid by the oil companies into funds for oil exploration in Australia, without the knowledge of this Parliament or the people at large. The first principle observed by this National Parliament should surely be that, if funds are to be made available for oil exploration out of Consolidated Revenue, as is being done in this instance, the present methods should not be adopted.
The honorable member for Wentworth asked how we could best subsidize oil exploration. If we wanted, for example, to provide funds for the production of oil from coal, we should introduce appropriate legislation in this Parliament and allocate the necessary funds. It is a fact - and the Government knows it - that, although oil cannot be produced from coal on a commercial basis in Australia at present, we are fast approaching the stage at which it will be cheaper to produce oil from coal than it is to adopt the present policy of allowing unlimited funds to be drawn from Consolidated Revenue and set aside by oil companies for oil exploration without this Parliament knowing how much is involved. If we introduced legislation to provide for the production of oil from coal, it would provide, in a proper manner, for the necessary expenditure, and we should know how much was involved.
I do not agree with the honorable member for Wentworth that those who are engaged in the search for oil in Australia are despondent. I believe that there is oil in this country, and that those who are searching for it know it is there. But it will not be found by measures such as this. Supplies sufficient for 100 years are available in the countries from which we at present obtain our oil, and this bill will allow the oil companies to find oil in Australia and leave it where it is. They will be handed unlimited amounts from Consolidated Revenue, in effect, because they will be free of taxation on funds that they put into other companies for oil exploration purposes - funds which they may expend this year, next year or at any time. As a result of this, there will be a constant drain on Consolidated Revenue, without any control by this Parliament.
– Has the honorable member any idea where the oil is? I should like to get a few shares in some of these companies.
– The point ls that one does not need to buy shares. It is not a question of trafficking in shares. As I have pointed out, it is stated, at page 6 of the explanatory memorandum, that these deductions will be allowable even though the capital is not passed on to a petroleum exploration company until a subsequent year of income. It is not even required that it shall be passed on in the following year. Honorable members will find, just for good measure, if they look at page 7 of the memorandum, that it is proposed to ‘make this provision retrospective to 1st October, 1958. In addition to giving the oil companies a free run up to any “Amount, the Government proposes to make this concession retrospective to 1st October, 1958! This is retrospective legislation in respect of taxation, and it confers a special privilege on certain organizations. That should not be tolerated by this Parliament, particularly at a time, as I remind the House, when we are imposing unduly heavy taxation on people who are not nearly so well able to pay taxes as are the oil companies.
It was a tragedy for oil exploration in Australia when this Government was returned to office on 10th December, 1949. That day will go down in history as one of the most tragic that Australia has known. The Chifley Government was, at that time, providing the Commonwealth’s own machinery for oil search. That is what should have been done. If we have to buy the know-how, let us buy it. But let us have complete control over oil exploration in our own country.
When I think of the production of oil from coal, I think of what is being done in South Africa. The Government there has not adopted legislation of this description. It knows that the production of oil from coal is not yet a commercial proposition, but it is experimenting. It has established one plant and proved that oil can be produced from coal by satisfactory methods. They are extending that plant to provide, in five years, all the oil that they want from coal in South Africa.
It is said that you cannot get the exact costing figures for the extraction of oil from coal, but the South Africans propose to do it. It is a matter of South Africans using South African materials. In other words, the South Africans stand stronger for South Africa than Australians do for Australia. They are not limiting the amount that they are spending on obtaining oil (tom coal. They are going ahead to make sure that their country is self-sufficient. We are not doing a solitary thing along the same lines; but we are prepared to put millions into this proposition! We have already put £4,000,000 into the refining of oil as a subsidy.
Now, in this type of legislation, without limitation, we allow the expenditure of money which should be paid to the Government as taxation. We are permitting this money to go into funds over which this Government will have no control. When members on the other side of the House expect the Opposition to support legislation of this description, I remind them quite frankly that it is not the type of legislation to which the Australian people are accustomed. We should not permit a situation in which big companies - and they are big companies, already in a privileged position, already in a monopoly grouping - can determine the way in which they shall expend money which they hold as a result of concessions extended to them by the Government. Under the Government’s proposals, although such a company may benefit from these concessions this year, it will not have to spend the money this year. It could spend it next year or in any subsequent year. Consequently, the Government is unable to give to this Parliament the figures relating to the amount of money that is likely to be expended on oil search as a result of the proposed concessions in any one year. Are we not entitled to know how much money is involved In a taxation measure such as this? Surely we could be told how much is involved in the clause of the bill which makes provision retrospective to October, 1958! If that information were before us we would have some knowledge of what amount will be involved in the final analysis.
Finally, I want to say something about clause 8 of the bill which removes the limit from the deduction permissible for medical expenses paidby a person over 65 years of age in respect of himself or in respect of his spouse if she also has attained that age. The Opposition does not oppose this clause. I point out that all the people affected by this provision -will be in receipt of an income exceeding £858 a year. It willbenefit onlythose who are not in receipt of a pension. It will benefit only those people who have an income greater than that which may be received by pensioners.
This proves the lopsided approach of the Government to our taxation laws. The principle involved in the rebate system is sound, but can any one convince me, or convince even a member on the Government side, that a principle of this kind should be extended to people over 65 years of age who have an income in excess of that which is permitted to those who draw a pension, while the same principle is not extended to the man on the basic wage who is attempting to rear a family? It just does not make sense. It is the family man on the bottom range of income whom we should be trying to help with a proposition such as this - the man who is unfortunate enough to strike heavy medical expenses which have to be paid.
If the Government wishes to extend the rebate system, surely the family man is entitled to first consideration. Most of the people who will benefit under this bill are in receipt of incomes of £1,000 a year and more and there are comparatively few of them. If the Government wishes to introduce this principle, it would have been far better to apply it to all people in receipt of less than £1,000 a year. Relief should be given first to all those in the bottom range of income. Under the Government’s policy, as indicated in this bill, we are providing more relief for those who are best able to pay and less for those who are in the lower ranges of income.
– That is the Government’s policy.
– If it is the Government’s policy, surely retribution will finally fall on the Government’s head. The day must surely come when justice will prevail in Australian taxation laws.
This bill perpetuates injustices.It extends privileges to those who are already privileged. It does nothing for those who really are crying out for some assistance from this -Government. The plea for the family man which was made by the honorable member for Mackellar (Mr. Wentworth) is timely. I am glad that this is the thinking of at least one man on the Government side of the House, but apparently it is not in keeping with the views of any member of the Cabinet - not even the Minister for Social Services (Mr. Robertori). This is the type of thing that the Government is indulging in. It is permitting an open go on the Consolidated Revenue for the big companies. It is granting concessions to oil exploration companies on the expenditure of which it cannot advise this Parliament. This is completely wrong in principle and should not be tolerated. I am happy to oppose that section of the legislation.
.- The honorable member for Melbourne Ports (Mr. Crean) and the Deputy Leader of the Opposition (Mr. Calwell) have been so moderate in their approach to this subject that I feel that I must do them the courtesy of replying to one or two of their arguments. At the same time, I recognize the difficulty under which they laboured, because their arguments were, in effect, insubstantial when related to the subjectmatter.
Let me deal, first, with the question of oil exploration. The honorable member for Melbourne Ports tried to bracket it in importance with gold-mining or coalmining. As any one knows, the most elusive mineral in Australia to-day is oil. We know where there is a lot of gold - there is a lot of earth mixed with it - and we know where there is a lot of coal. The Mount Isa company, by sheer accident, found a lode of copper 1,000 feet below the surface of the earth. But in spite of the efforts that have been made up to date, no payable oil whatsoever has been found in Australia. I commend the companies which are game enough to keep on trying to find oil. I hope that the company which has found a little oil near Innamincka will find payable oil before long. But I must say that the companies that are trying to find oil in Australia appear to the average person to be trying against all hope. Yet, there is some cause for consolation in the fact that only one hole out of twenty drilled in America is a commercial oil well. Let us hope, in view of the American average, that if 50 holes are put down in Australia one of them will be payable. To say that the Government is taking the taxpayer for a ride by granting taxation concessions to those who invest money in oil wells is the greatest overstatement that could be made. The people who are being taken for a ride willingly are those who invest money in oil exploration, because there is only the slightest chance of oil being discovered. That is the common-sense view of our prospects. Yet hope springs eternal in the human breast and we always will have optimistic oil drillers. I hope for their sake, as well as for Australia’s sake, that we find oil in ample quantities.
A friend of mine who lives in Edmonton, Alberta, in a letter that he wrote to me a few years ago said, “ You will be interested to know that within a short distance of Alberta we are delivering 1,000,000 barrels of oil a day “. He went on to tell me what the discovery of oil had meant to Alberta and to Canada generally. Can any one imagine what it would mean to the wealth of Australia if we could produce 1,000,000 or 10,000,000 barrels of oil a day, and the effect that that would have on our balance of payments? It is not necessary for me to pursue this matter further. Suffice it for me to say that the discovery of oil in Australia in large quantities would be one of the greatest blessings that could be bestowed on us.
Some criticism has been directed at the Mount Isa company. I hold no special brief for the company. I have no shares in it; in fact, I do not know any one very well who has, so I can speak quite freely about Mount Isa. I pay tribute to this great mining venture. Any one who has studied the history of Mount Isa cannot help but feel proud of the people who, in spite of obstacles, refused to be beaten. In the end they won the battle because they knew that the metal was there. If any one were asked to investigate such a field in the raw. as it were, he would refuse because he would feel that the cost and the trouble of development would be too great. The Mount Isa company is entitled to the profits that it is making because of the tremendous risks that three mighty organizations took and the money that they spent. In fact, they exhausted their resources.
What sort of place is Mount Isa? Geographically it is an inhospitable area, one in which most honorable members would not live in any circumstances. The Mount Isa company, realizing the lack of amenities, said: “ We will do the right thing by our employees. We will give them decent homes to live in and reasonable amenities. Then perhaps they will want to remain here “. The company spent nearly £700,000 on the provision of dwellings and other amenities for its employees. It regarded the expense involved as necessary to enable it to carry on its business, and therefore it claimed the expenditure as a deduction for income tax purposes. The Commissioner of Taxation decided that under the law as it then stood the company was not entitled to the deduction. The company took the matter to the High Court, but lost the case. I maintain that the bill now before us rightly restores to the company what was taken from it previously. The company is entitled to a tax concession in relation to the cost of providing fine amenities for its employees. In fact, in building houses and providing amenities, the company has set an example for the town of Mount Isa to follow.
As the honorable member for Wentworth (Mr. Bury) has said, the Mount Isa company is not the only undertaking which will benefit from this legislation. Many other companies will be encouraged to spend money to improve existing amenities and to provide dwellings for their employees and. eventually, the companies will operate on a better basis and the employees will get a better deal than is now the case. I am surprised that a party which aims at improving the lot of the workers should dare to suggest that any legislation designed to give employees a better deal is not good.
– We have not said that.
– The honorable member for Melbourne Ports said when replying to my interjection that it was good legislation.
Other honorable members opposite have been speaking as though they did not regard u ps good legislation. pass now from consideration of the Opposition’s half-hearted attack on the legislation to deal with two aspects of income tax law. The first of these is the fairness of tax as levied upon various kinds of taxpayers, and the second, the fairness of various types of tax in relation to each other. If the honorable member for Reid (Mr. Uren) finds that a little complicated, may I go on to say that the committee to be set up to investigate taxation should consider the starting point at which tax is payable. The honorable member for Blaxland has stated that the minimum of £105 is too low. He said that New Zealand had increased the minimum figure threefold. It is not for us in this chamber to determine the figure below which income tax is not payable. That is a matter for a committee to decide after having investigated all the facts and circumstances. I would suggest, however, that if we start taxing incomes at too low a figure, the cost of collecting the tax on the lowest income group may be disproportionate to the amount collected. In short, it may not pay us to bother collecting the tax that is normally paid on an income of £105. That aspect should be investigated by the committee. It should investigate also the income tax scale. On what income should the maximum rate be applied? We have heard a lot of criticism about the 5 per cent, reduction in income tax that we have received recently. I remind the critics that the man who earns £2,000 pays a good deal more than twice the tax that is payable on an income of £1,000. Due to the decline in the value of money over the years, salaries have continued to increase. Let us take the case of a man who at one stage received a salary of £1,000, but is now receiving £2,000. Under the existing scale, in proportion to the value of his income, he is paying a good deal more than twice the amount he was paying previously on his income of £1,000. In other words, assuming that in a given space of time the £1 has dropped in value by one-half, the tax that a salary-earner is liable to pay has not changed correspondingly. As I have said, on a salary of £2,000 he is paying more than twice the tax he previously paid on du income of £1,000.
The taxpayers in the higher income groups pay in tax a higher proportion of their earnings, having regard to the decline in the value of the £1, than do those in the lower income groups. So those taxpayers whose incomes are in the top bracket will receive a substantial benefit from the reduction.
Another aspect of the question which the committee must consider is what maximum rate should be paid by any taxpayer. It is easy for honorable members to say that the maximum rate of 13s. 4d. in the £1 is fair. Perhaps it was easy in previous times for them to say that 16s. 8d. was fair, but the present problem is what is a fair maximum rate in a time of peace. My submission is that the committee will have seriously’ to consider whether the maximum tax rate should be as high as 13s. 4d. in the £1. Would 10s. in the £1 be high enough? A man is prepared to commit all his capital and effort and take a tremendous risk and as a result receives a good-sized income. ls he giving enough away to the state in direct tax by paying half of his income?
A further matter for the committee to consider is how much more the family should be helped. It is significant that this year the concessional allowances to a married man for his wife and children have not been increased. Obviously, as a result of the decline in the value of money, the family man is not receiving the same degree of benefit that he received in past years. I should have appreciated the Government’s giving the family man greater benefits in this tax year. Since these have not been granted, I suggest that the committee should consider greater concessional deductions for the family man. He has so many expenses to meet that he needs every benefit he can get.
I am not suggesting for a moment that the single person should receive no consideration at all. There are many young people who are saving hard with a view to having a reasonable sum in hand at the time of their marriage. The single person cannot be penalized completely, but we are all aware that the married man finds it hardest to get along and therefore he deserves our consideration.
I have heard with interest the suggestion that contributions to the Commonwealth Literary Fund and to the Olympic Games funds should be allowed as income tax deductions. We know that it is impossible to make concessions in all ways, but the Olympic Games is one of the biggest functions in the world. It is a set of events in which nations have a chance to show the prowess of their athletes. It is very important from a national point of view and for that reason I support any suggestion to allow donations to Olympic Games funds as income tax deductions. Without going into details, because the matter has already been discussed, I support also the suggestion that donations to the Commonwealth Literary Fund should be regarded as income tax deductions.
I have a suggestion for the taxation committee relating to a matter which has not yet been mentioned. I suggest that donations to churches should be allowable deductions for income tax purposes. It is significant that al the present time we make concessions for all kinds of good causes but a most important matter for consideration is assistance to churches by way of donations. Honorable members are well aware that churches always find difficulty in getting enough funds to enable them to carry on their work properly. I understand that in the United States certain concessional allowances are made for donations to churches. The taxation committee might well consider that donations to churches - if not all then a percentage of the payments - should be allowed as income tax deductions, I am aware that, in certain circumstances donations made by taxpayers to memorial churches are allowed as deductions, but my suggestion goes far beyond that. All properly vouched payments or donations to churches or a percentage of them should be considered as deductions.
I have dealt with the question of fairness between classes of taxpayers and various allowances; next I should like to deal with the question of fairness in regard to types of tax.
Sitting suspended from 5.56 to 8 p.m.
– Before the suspension of the sitting I had made some suggestions for the proposed committee to inquire into our taxation system. I had put forward the view that fairness must be achieved as between taxpayers. I now propose to discuss the question of fairness as between types of taxation. A committee on taxation cannot serve its full purpose merely by considering in detail one kind of taxation. For instance, it cannot cover the whole field merely by considering income tax. Company tax also should be con sidered, as should sales tax, pay-roll tax, customs and excise duties, estate duty and gift duty, and, in short, all means of raising revenue by way of taxation.
We have heard the argument from the honorable member for Melbourne Ports (Mr. Crean) that direct taxation should be increased and indirect taxation decreased. This, surely, is a question to be inquired into by the committee on taxation, but if the committee considers income tax only, then the question of relativity between various types of taxation cannot be decided. The honorable member for Melbourne Ports put forward quite sincerely the suggestion that direct taxation should be at a higher level. I might suggest that the committee consider whether direct taxation should be reduced. However, I submit that this is a question for a committee to decide after considering the whole field of taxation. After all, the principal object of taxation is to obtain revenue. A government must obtain a certain amount of revenue, and in the most equitable way. The Government can be helped considerably by the report of a committee which has made a full investigation. The committee may be able to show the Government that direct taxation should be increased or that sales tax, for example, should be reduced. The committee might even go so far as to suggest that sales tax and other forms of indirect taxation should be increased.
Let us consider for a moment company tax. It is well known that many companies nowadays issue what are called loan notes. The companies accept money by way of loan from various persons, issue loan notes to those persons and pay interest on the amounts of the loans. If those lenders were to take out shares in the company to the value of the amount subscribed by way of loans, interest would not be paid directly, of course, on the amount invested originally. As a result, the profits earned by the company, to begin with, would be greater and would attract a greater amount of company tax. Then, after company tax was paid on the money subscribed by the investor, he himself would have to pay further tax on the dividends received from the company. By issuing loan notes, the company ensures that only one tax is paid, namely by the person who lends the money. Under this system there is no double tax. I believe this is a question that should be considered by the committee.
Then there is a question whether certain kinds of sales tax should be reduced. The committee should consider whether we would not better serve our purpose by reducing or abolishing entirely the sales tax on such an item as ice cream. It could1 be suggested too, that we should reduce sales tax on certain household goods, because this would be of considerable assistance to the family man. If the committee is to go into matters such as these, I would suggest that it might consider it worthwhile to inquire into the advisability of reducing sales tax on all items that affect the family man. It would also be necessary for the committee to consider whether pay-roll tax should be reduced or abolished. I am not insisting that it should be reduced or that it should be abolished. I merely say that this is a fit question for the committee to consider, because Ave know that if £50,000,000 worth of pay-roll tax is remitted, then that amount must be found from some other source. Then you are faced with the question of fairness as between various forms of taxation.
Similar remarks apply with regard to other kinds of taxation, such as estate duty, gift duty, and customs and excise duties. The committee might well consider, for example, whether the duty on certain spirits should be increased or reduced, because it is well known that when the excise duty on certain spirits is increased beyond a particular figure, sales resistance becomes stiffer, and the amount of tax raised is then less than it would have been if the duty had not been increased.
A further question to be considered is that of national development. The committee must consider, I submit, the rates and kinds of taxes that may be levied so that our national development can best be fostered. There is also the question of savings, as mentioned by the honorable member for Mackellar (Mr. Wentworth). I agree with the honorable member that we must give due consideration to the importance of encouraging savings. This also is a matter for the committee when it considers the various aspects of taxation.
In short, no system of taxation is ever perfect; but taxation is a necessity, and the aim of every good government must be to devise the best way in which to achieve fairness as between taxpayers and fairness as between the country and the taxpayer. The only way to do this in these changing times is to make a thorough investigation of the whole field of taxation.
.- I rise to support the sentiments expressed by the honorable member for Melbourne Ports (Mr. Crean), who led the debate on this bill from the Opposition side. I would like, later in my speech, to speak of some of the injustices that occur with regard to taxation rebates under our present system. The honorable member for Wide Bay (Mr. Bandidt), who has just resumed his seat, strayed a little from the issues before us and did not deal with the contents of the bill itself. I would like to express the view of honorable members on this side of the House. We believe that the Taxation Branch is one instrumentality that gives a socialist government fh= opportunity to distribute wealth more equitably among the people of Australia. We feel that this Government, while taking an unjust amount of money from the people on low incomes, is unjustifiably extending tax rebates to the less needy sections of the community. We shall try to tell the story of what has happened in that respect during this Government’s term of office.
The honorable member for Wide Bay took the honorable member for Melbourne Ports (Mr. Crean) to task regarding that honorable member’s statement about the tax rebate that is to be given retrospectively to the Mount Isa mining interests. Honorable members may recall that the Mount Isa mining company appealed to the High Court against the disallowance by the Commissioner of Taxation of a claim for a tax deduction made by the company in respect of housing provided for its employees. The amount of money involved in the claim was £250,000. This bill is to be retrospective in operation so as to cover to some extent that claim for deduction by the Mount Isa interests. We on this side of the House say that if a company receives a tax rebate in respect of the cost of houses provided for its employees we want to make sure that the workers occupying those houses share the benefit of that rebate by having their rents reduced accordingly.
– And retrospectively, too.
– That is quite true. The reductions should be retrospective. We want to see those workers getting some of the benefit by having their present rents reduced.
Now, I turn to a matter which honorable members on this side have already gone into quite thoroughly - tax rebates for people investing in oil shares. The honorable member for Wentworth (Mr. Bury) said that certain foreign companies and other people intended to pull out of the oil exploration business unless they received more incentive to stay in it. It is a wellknown fact that all the available oil leases in Australia and in Papua and New Guinea have been taken up. Consequently, it is only a selected group which has control of these leases. That group has complete control of them, and that is the group that alone will benefit from this new tax provision, because the rebate applies only in respect of the original investment. The rebate does not apply to the ordinary person who buys a few shares on the stock exchange, because these shares are merely being transferred from one owner to another. The rebate applies in respect of the original formation of the companies. We all know how the stock exchange functions. It is always the inner group, it is always the select few, who are able to profit from such developments.
– It is not nonsense. We have had something to do with the stock exchange and stockbrokers, and we know that when anything good is going the broker has his selected few clients. Consequently, when there are tax rebates going the broker will make sure that these people benefit. We oppose the portion of the bill which proposes this rebate for investors in oil exploration. We also oppose clauses 7, 9, 13 and 16.
Among our criticisms of the bill is one relating to the position of private companies. We believe that it is about time that company taxation was completely overhauled. We know that certain concessions have been made to private companies. We know that any provision regarding unpaid dividends of private companies is not of great moment because in private companies every person within reason goes on the payroll. We know that certain people in private companies are paid salaries consider ably above what they would receive for the same work elsewhere, and that partly these salaries are mere book entries. There are many ways of evading the tax laws. There should be a complete overhaul of company taxation. For a start, private companies and public companies should be on the same footing in regard to publication of balancesheets. The law now compels public companies to publish their balance-sheets, but does not compel private companies to do so. I hope that the committee which is to review the taxation system will look into that matter. Also, all company taxation should be on the same basis.
A matter on which I wish to speak more fully is the position arising from the increase from £300 to £400 of the maximum deduction in respect of life assurance and superannuation premiums paid by a taxpayer. This proposal is embodied in clause 9. As the honorable member for Melbourne Ports has said, there are very few people who can afford to pay £6 a week in insurance premiums, let alone £8 a week. Consequently, only a select few will benefit from this proposed amendment of the law. The Commissioner of Taxation in his 37th annual report provided us with some very informative details which honorable members would not otherwise be able to obtain, and for which he must be commended. The figures given are quite revealing. In the year covered by that report the maximum rebate in respect of life assurance and superannuation premiums was £200. Altogether 2,624,000 taxpayers, or 68.9 per cent, of the taxpayers, were earning under £1,000 a year and received rebates, in respect of insurance premiums paid, totalling £36,000,000. Taxpayers whose income was between £1,000 and £2,000 represented 26.7 per cent, of all taxpayers and received in rebates in respect of insurance payments a total of £46,300,000. Taxpayers earning more than £2,000 a year represented 4.3 per cent, of all taxpayers and received £15,200,000 in rebates. Consider those figures closely. I repeat, 4.3 per cent, of the taxpayers received £15,200,000 in rebates, yet 68.9 per cent, of the taxpayers - those in the lower income brackets - received only £36,000,000 in rebates. That shows the inequality with which the tax rebate for insurance premiums applies.
Now, let us look at how the concessional allowances for wives and children apply to taxpayers in the different income brackets. I have here a few figures which will show clearly the great inequality in the amounts of rebate for the first child that are enjoyed by taxpayers in the various income brackets. A person earning £800 a year receives a rebate of £13 10s. for the first child. A person on £1,500 a year receives a rebate of £24 10s. To a person on £2,000 a year the rebate is worth £27. The rebate is worth £40 to a person on £4,000 a year, £52 to a person on £8,000 and £60 to a person on £16,000 a year. So, the person earning not much over the basic wage gets only a small amount of rebate for his child. The rebate is worth to him only £13 10s., but to a person earning £16,000 a year the rebate is worth £60. Which family do honorable members opposite think needs the tax rebate most, needs help most - that of the person on £800 a year or that of the person on £16,000?
The same thing applies in respect of the allowance for a wife. A person in receipt of £800 a year receives a rebate of £21 in respect of his wife; a person on £1,500 a year receives £38; a person on £2,000 a year receives £42; a person on £4,000 a year receives £62; a person on £8,000 a year receives £82; and a person on £16,000 a year receives £94. In effect, a wife is worth £94 in tax rebate to a man on £16,000 a year but she is worth only £21 to a man on £800 a year. A person with the higher income gets a tax rebate in respect of his wife more than four times greater than the rebate received by the man earning close to the basic wage. Those are just some of the injustices in the present tax rebate system.
I have prepared a table from details supplied in the last report of the Commissioner of Taxation and with the concurrence of honorable members I incorporate it in “ Hansard “-
A glance at the report of the Commissioner of Taxation for the year 1957-58 shows that £130,000,000 was distributed in tax rebates. A total of 2,624,000 taxpayers - 69 per cent. of all taxpayers - received £39,100,000 in tax rebates. People earning between £1,000 and £2,000 a year - there are 1,000,000 taxpayers in that category, or 26.7 per cent. of taxpayers - received £63,000,000. But 165,000 people, or 4.3 per cent. of all taxpayers, received £27,600,000. In other words, a mere 4 per cent. of taxpayers received 21 per cent. of the total tax rebates of £130,000,000. A further 26 per cent. of all taxpayers received 49 per cent. of the tax rebates and the 69 per cent. of taxpayers in the lower income bracket received only 30 per cent. of the tax rebates. In other words, the 70 per cent. of taxpayers in the lower income brackets received 30 per cent. of the tax rebates whereas the 30 per cent. of taxpayers with higher incomes received 70 per cent. of the tax rebates. That is an injustice.
If we increased the age pension by £1 a week it would only cost £26,000,000 a year. If we doubled child endowment, as was proposed by Labour in its policy speech prior to the last election, it would cost only £58,000,000. Those two proposals could be financed by these tax rebates. These rebates are unjust to the people on the lower incomes. The Government’s policy is to take from the many and give to the few. The burden of indirect taxation has been continually increasing. The Government is selling out this country to overseas capital. Figures supplied to me recently show that in the last ten years £172,000,000 has left this country destined for the United Kingdom. That money left the country almost tax-free. An amount of approximately £82,000,000 has gone in like manner to the United States.
The proposed taxation review committee should make a complete revision of taxation in this country. Will the committee face up to the real issues? Will it recommend the abolition of indirect taxes? The committee must recommend a progressive policy of direct taxation. It must recommend that the burden of taxation should fall on the shoulders of those who are best able to bear it. The proposals submitted by the honorable member for Melbourne Ports (Mr. Crean), who led the debate for the Opposition, are good ones. There should be a searching inquiry into our taxation system. At present the system is topsyturvy and does not operate in the best interests of the masses. Approximately 69 per cent. of workers earn less than £1,000 a year. Approximately 96.5 per cent. of workers earn less than £2,000 a year. Yet approximately 4 per cent. of workers, who earn more than £2,000 a year, control more than 20 per cent. of the wealth of this country. A great deal of this country’s wealth is held by a small section of the community.
– I do not think that is right.
– It is right, and the honorable member may check those figures from the report of the Commissioner of Taxation. The figures are quite conclusive. This bill is a bad bill and later, in committee, an Opposition member will move an amendment that is just and in the best interests of the country.
.- It is quite obvious from the speeches of honorable members opposite that they have no faith in Australia and no faith in its future development. Everything that they have said in this debate shows that they are opposed to anything that will foster the development of Australia. The only thing that is holding up further development is the need for more capital - the need for more savings.
There are only two avenues for obtaining capital. One is the borrowing of money from overseas - and this Government has been extremely successful in that respect. It has borrowed every penny that is available. The other avenue for obtaining capital is savings from within our own community, yet every encouragement that is given by this House to savings is opposed by the Labour Party. This bill provides two extremely valuable encouragements to saving. One is the additional amount that is allowed as deductions in respect of life assurance and superannuation payments. Savings consist of money which the individual agrees not to spend for the time being but to make available to the Government or some instrumentality so that that money may be used for capital development. If, for example, an additional amount is put into superannuation, the wage or salary earner is unable to spend that amount. He has agreed that it will be repaid to him or his dependants at some particular time, but in the meantime that money becomes available to the country for its development.
Let us look at the Commonwealth superannuation fund. Members of the Labour Party have told us that they will oppose the proposals to increase the amount allowed as a taxable deduction in respect of superannuation contributions. They said that this proposal will benefit only the wealthy people in the community. Even if they are correct in that assumption, the country is helped to the extent of £3 for every £1 that is given to the individual. Let us assume that the civil servant pays 6s. 8d. in the £1 in taxation. If he contributes an additional £100 to a superannuation fund, he will receive a tax benefit of £33, but the country will have the benefit of an extra £100 for capital development.
If honorable members care to look at page 30 of the Auditor-General’s report for this year, they will find that Commonwealth civil servants, through superannuation payments, have built up a fund which to-day amounts to £62,000,000. That sum lias been available for the development of Australia; every penny of it has been lent to the Commonwealth or to State or local government authorities and used for the building of schools, electricity undertakings and housing, or in the development of the country. In the year ended 30th June, 1959, £7,000,000 was added to the Commonwealth Superannuation Fund. Let us assume that the civil servants who have saved that money obtain a benefit in taxation concessions of one-third of that amount or approximately £2,000,000. Australia has still had the advantage of £7,000,000. If by increasing this concession by £100 we are able to attract into various superannuation funds another £20,000,000, employees may be saved perhaps £6,000,000 in taxation, but the country has the benefit of the £20,000,000. We in this Parliament should do everything we can to encourage savings because in this way capital is provided for the development of the country. Yet, when we bring forward a bill to make even a modest provision such as this, every mem ber of the Australian Labour Party says that Australia should not have this extra capital! They say that Australia should not be able to get on with its capital works simply because a wealthy person may get the benefit of some tax deduction.
I now pass to another encouragement that is given to people to save, and that is the additional allowance provided for private companies. Surely the people who should be taxed are those who spend their money and not those who provide capital for development. Where a private company - or a public company for that matter, although this amendment applies to private companies - is prepared to save its profits for future expansion instead of spending them or disbursing them in dividends, it should have some advantage. Personally, I do not think that this allowance goes nearly far enough. I feel that if a private company, or a public company, is prepared to save money for future development, it should be allowed that amount as a tax deduction. However, it is pleasing to note that the Government is now giving an additional incentive to save by allowing private companies an amount additional to that allowed under the previous provision.
I pointed out that without savings we would have no capital development. At present, our taxation is reasonably high because people are not saving enough and consequently a large part of the capital works in Australia, and the whole of the Commonwealth Government’s capital works, are financed out of Consolidated Revenue. In other words, taxation is used to pay for them simply because we cannot get the people to save enough. If we could encourage the people to save, we would not have to draw on Consolidated Revenue so heavily for capital works, and consequently we would be able to reduce taxation.
The Budget papers show that for the year 1958-59 the capital works and services of the Commonwealth paid for out of Consolidated Revenue - in other words, out of taxation - amounted to about £132,000,000. This amount had to be paid out of Consolidated Revenue because the savings of the community were insufficient. For the current year, it is anticipated that some £142,000,000 will have to be paid out of Consolidated Revenue, or £9,500,000 more than last year. Those figures make it quite clear that the reason for our present taxation rates and for our insufficiency of capital is the inadequacy of savings.
I want to refer to other valuable provisions in this bill. The first is the allowance as a taxable deduction of gifts to various organizations. Included in the list now are marriage guidance organizations. These organizations do a marvellous job. Gifts to enable them to carry on their work should be allowable deductions for taxation purposes and for the first time, under the provisions of this bill, they will be.
This year is the World Refugee Year. Countries are attempting to re-settle those people who have been in concentration camps or in camps in various places since the end of the war. Perhaps because of the disability of one member of a family, no country has yet been willing to accept them. On this occasion, the various nations are uniting in an effort to get governments to accept their responsibility and to give these families an opportunity to live in peace and comfort in some free country. The Commonwealth Government has already agreed to give £50,000 for this purpose, and a general appeal is to be made to the people of Australia to add to this sum. As a result of the passing of this bill, donations made by the general public to the Australian National Committee for World Refugee Year will be allowable deductions for taxation purposes. I feel, Sir, that the resettlement of refugees is one of the greatest humanitarian tasks that the world has ever attempted. Many thousands of refugee families are still suffering the tribulations of life in camps, and they have little hope unless they can find a home in one of the democratic countries.
I also welcome the proposal to allow donations for Jewish education to be claimed as deductions. One of the things in which Australia takes greatest pride is its freedom of religion. Donations to Christian education societies are already allowable deductions, and this measure will extend a similar concession to donations to the Council for Jewish Education in Schools.
There is another humanitarian feature of this bill. We all know of the great sufferings, both during and after the war, of victims of the Nazi régime who were in concentration camps. The Government of West Germany has acknowledged its obligation to pay compensation to a great many of those people, and this bill provides that such compensation received by German settlers in Australia will not be regarded as income for taxation purposes.
Two other extremely valuable features of this measure relate to assistance to aged people. The first is the provision that medical expenses incurred by persons over the age of 65 shall be allowable deductions without limit. It is well known, Sir, that elderly people are more likely to incur medical expenses than are the younger members of the community. In addition, Sir, older people generally are less able to earn income out of which to pay those expenses. As I have said, under the terms of this bill, medical expenses shall be allowable deductions, without limit, for persons over the age of 65. In addition, the age allowance, which has been one of the most valuable benefits for the aged, is to be increased - from £410 to £429 for a single person, and from £819 to £858 for a married couple. The income ceilings, also, are to be increased from £460 to £485 for a single person and from £1,106 to £1,181 for a married couple. The effect of this, Sir, will be that any person who is deprived of the age pension by the operation of the means test will not have to pay income tax unless his income exceeds the total of pension plus permissible income. Those are extremely valuable concessions to the aged, and I congratulate the Government on providing for them in this bill.
Labour speakers in this debate, one after another, have criticized the Government for the concessions which are proposed in respect of expenditure on oil exploration. The finding of oil would be the greatest thing that could happen to Australia at the present time. Unless we are prepared to encourage people from overseas to invest in oil search in Australia, there will be no search for oil and no oil will be found. Recently, Sir, I made a trip to Papua and New Guinea. While there, I went to an oil well drilled by a company which had spent £30,000,000 on the search for oil without receiving back £1 from oil. Very nearly all of that £30,000,000 has been spent on wages paid tn people in Australia or Papua and on materials supplied from Australia. If Labour had its way, none of that expenditure would have been made. Labour says, “We do not want foreign people coming in and spending their money in Australia “. I say, Mr. Speaker, that we should be deeply grateful to people from overseas who are prepared to come to Australia and risk their capital here in the hope that they will find for Australia what Australia needs more than it needs anything else. We should give all possible encouragement to people from overseas to invest their money in our country.
I cannot see what objection Labour has to people from overseas coming here and providing capital equipment for Australia and employment for Australian people, and purchasing Australian materials. Yet Labour says, “We do not want your dirty capital. Keep it away from this country. We want to keep our people from overseas.” If that policy had bean adopted from the inception of settlement in Australia, this country would still be entirely undeveloped. Australia’s development has been made possible by the capital from overseas which has been invested here and which has been followed up by savings and capital investment by the Australian people themselves. We could not, out of our own resources, have spent the £30,000,000 which has been spent during the last few years by the company whose oil well I visited in Papua. We could not have spent the money which has been spent in recent years in Western Australia, or the money which is now being spent in South Australia, on the search for oil.
– Expenditure of that kind would have been the best possible defence expenditure.
– It is all very well for the honorable member to say that, but where can we get such money from at the present time? We cannot get enough savings from the people of Australia, and we have to tax them to the tune of £140,000,000 in order to make up the deficiency in savings. Therefore, it is perfectly clear that if overseas companies did not invest their money in Australia the oil search. that has been undertaken would not have gone on, and we should not have had the benefit of the additional employment which has been provided and of the purchases of Australian goods which have been made in the process. In the circumstances, Sir, I believe that we should give all possible encouragement to companies and individuals from overseas, to come to Australia, spend their money here and help us to develop this great country.
I have unbounded faith in the future of Australia, Sir. I believe that this country is developing faster than is any other. But we must increase the rate of development. Therefore, we ourselves must save more. The Government must encourage saving in every possible way, and we must encourage overseas people to bring their money here and help us in our great work.
.- Mr. Speaker, the honorable member for Sturt (Mr. Wilson) always makes an important contribution to debates on taxation measures because he always puts more clearly than does any one else on the Government side of the House the case for inequality. His argument is in favour of more income for those who have got more already. I think the honorable member is to be congratulated for the honesty of his thinking. He does not attempt to hide his belief in the kind of society that he believes to be necessary. He is a frank advocate of inequality and he reaches this position by a series of propositions which are worth while considering.
He rightfully emphasizes the great importance of economic development. He recognizes that, for economic development, we need to have funds to buy the capital that is necessary. He recognizes that those funds have to come from some place. Therefore, he states the importance of savings. He says that if we have to have funds for capital development we have to have savings. But he believes that savings come from income. He believes, therefore, that the greater the margin between the income and what has to be spent on consumption, the more savings there will be. The higher that incomes are in certain parts of the economy, therefore, in relation to what is spent on consumption in those parts, the greater will be the margin left for savings. Therefore, the honorable member for Sturt is compelled to be an advocate of inequality. He wants to see high incomes so that the margin between that which is spent on consumption by those income earners, and their incomes, will be high.
– The greater the disproportion of incomes, the better.
– The greater the disproportion of incomes, the better for the argument of the honorable member for Sturt. This is a most important point because it is frankly and honestly stated. The more glib members on the Government side of the House, such as the Minister for Labour and National Service (Mr. McMahon), the Leader of the House (Mr. Harold Holt) - the glib and polished and public relations type of people - do not admit this so frankly and openly as does the more honest honorable member for Sturt.
I want to examine the case put by the honorable member and see whether it is valid. This1 was the traditional nineteenth century argument for capital development, but during the course of the twentieth century some very acute thinkers have cast a great deal of doubt upon this kind of thought. Reference to the statistics of national income and its distribution shows that savings do not any longer come from personal income in the same way as they seemed to do in the nineteenth century. The most important way in which savings get into investment in the private economy to-day is through the income of private corporations, private companies and other private business concerns.
In 1958-59, £475,000,000 was allowed in depreciation allowances to private companies alone. Presumably, the greater part of that £475,000,000 would have been reinvested in the replacement of capital. A further £670,000,000 was made by those companies in profits, a large proportion of which would have been retained for investment. So we have this argument coming, not from me as a Labour spokesman, but from the Governor of the Commonwealth Bank, Dr. H. C. Coombs, in a lecture which he delivered on 26th August. He said -
Another important element in the pricing policy of industrialists and traders is their belief that selling prices should be sufficient to provide not merely cover for costs of production, including a reasonable return on capital, but also a substantial part of the additional capital required for expansion.
Not only has it become the policy and the practice of the large corporations to use their price-fixing mechanism to acquire from the market, compulsorily, enough funds to cover their capital investment, but it has now become the policy of the public corporations. The Australian State railways have been following this policy for a long time. Recently, this Government has been converted to the policy of using the Postal Department as a means of extracting savings from the community. Dr. Coombs also said in his lecture -
In recent years this tendency in pricing policy has been extended to include major public instrumentalities, with consequential increases in prices of services to consumers.
That is the policy of the large industrial concerns which, by their very largeness, are able to fix a price greater than they need to cover current costs, greater than they need for a return on capital, and sufficient to provide a large margin for investment in the future. Therefore, the personal income aspect of savings upon which the honorable member for Sturt alone relies has not nearly the force in the economy that it had in the nineteenth century when the honorable gentleman’s arguments were fashionable. That is my first point.
My second point is this: Even if we turn to personal income, we find that inequality of personal income can no longer contribute very much to the volume of savings. I want to compliment the Taxation Commissioner upon the quality of his return for 1955-56. His return is improving every year as a statistical document and I hope that that improvement will continue. In the return for 1955-56 we find that 88.7 per cent, of aggregate personal income was received by people with less than £2,000 a year. Only 11.3 per cent, of aggregate personal income was received by those with an income of over £2,000 a year. If we are to get funds for capital development we have to get it from where the funds are; The funds are not in the upper ranges of income.
Therefore, to follow the policy of inequality advocated by the honorable member for Sturt is not to reach out to where the funds are for investment. The personal income funds are, broadly speaking, -in the hands of the community. In the aggregate, therefore, a policy of inequality aimed to increase savings for the purpose of investment, public and private, would not succeed. The point has been proved in relation to Commonwealth loans. Over the last financial year only £11,000,000 came to the loans from personal contributions. The greater volume, about £240,000,000, came from financial institutions - the people who use their price policies to extract funds from the public, either to invest themselves or to re-lend. That is the great mechanism, these days, for the acquisition of funds for public investment. The belief of the honorable member for Sturt that inequality of personal incomes is needed to get savings is over 100 years out of date.
Looking at the matter in practical, realistic terms - in terms a good deal more austere than those of the honorable gentleman - the only ways for a community of our type to get funds for capital development are either through the use of the price mechanism by private or public corporations, or through the use of taxation by the Government. These are the two main mechanisms for getting funds for investment. Let us not any longer fool ourselves that there is any other possibility in a community where there is so much encouragement to spend on consumption, and where an increasing amount of expenditure is going into advertising and public relations and into the competitive production of goods which means no real advance on a utilitarian basis. This tendency to encourage spending on consumption in every conceivable way, plus the fact that the cost of living is rising continuously, make very difficult the accumulation of voluntary savings in the community. People do not save voluntarily because, in the first place, intense advertising campaigns encourage them to spend their money, and, in the second place, because they cannot afford to save. In the circumstances, we cannot expect to get much in the way of funds for investment from voluntary savings. The only two effective ways of obtaining such funds are, first, through the price policy of public or private corporations, and, secondly, by taxation. If we want more funds for investment, those are the ways m which we should try to obtain them.
This advocacy of inequality of income that has been put forward by the honorable member for Sturt is an old-fashioned device which was never effective anyway. Its main purpose was to justify inequality of income. In the nineteenth century it was stated that you had to have wealthy people so that you could obtain capital investment. That principle justified the inequality of incomes. It was never a valid instrument for the acquisition for funds for investment.
This bill contains a number of important principles which will have a number of important effects. In the first place, the bill will reduce tax proceeds and will channel national income, to some extent, more towards private investment and the higher income levels. It certainly will do some of the things that have been mentioned by the honorable member for Sturt. It is an instrument which will give more to those who already have plenty, and will channel funds away from public investment. Is this the kind of thing that we want? Honorable members on this side of the House have been saying for a long time that it is not, and that this trend of development that is normal in what might be called a capitalist economy is not what we need in Australia to-day. In a capitalist economy money behaves in a way opposite to that in which water behaves. In a capitalist economy, if money is left to itself it runs uphill to the higher income levels and not downhill to the lower income levels. In a capitalist economy, money goes to where profits are greatest and, therefore, we have a movement of investment away from the most essential to the lesser essential. The truth of this assertion is borne out by Dr. H. C. Coombs, Governor of the Commonwealth Bank of Australia. In the lecture to which I have already referred he said -
The advantages derived by industrial and commercial development are partly at the expense of public and social development. There is, I believe, good reason to feel that the provision of transport, water supply, and power tends to lag behind the growth of industry and commerce and that schools, universities, hospitals and other social equipment suffer by comparison, as does also housing.
This would be a better bill if it reflected a greater appreciation of the importance of public investment and a lesser appreciation of the need for assisting oil companies. It reflects the kind of valuation that underlies all the Government’s decisions. The Government is prepared at all times to assist the overseas capital holders, the large business corporations, the people who do not need assistance and the people who are wealthy. The oil corporations are the most wealthy corporations in the world. They are the organizations which are concerned with investment in our search for oil. They do not need any assistance, but the Government, instead of giving priority to the assistance of low-profit investment, gives priority to the assistance of investment in places where capital is already earning very high profits. 1 shall return in a few minutes to those aspects of the bill which relate to the search for oil, but before doing so I wish to refer to a matter which more logically follows the subject to which I have been referring, that is, the proposed increase from £300 to £400 a year in the allowable deduction of premiums paid for superannuation and life insurance. Before referring to that matter specifically, however, I should like to say something about deductions in general. This bill continues and extends the system of deductions. Under that system taxpayers are permitted to make deductions from their gross incomes for items such as money invested in petroleum search companies, money paid to life assurance societies and superannuation funds, medical expenses and money allocated by mining companies for the construction of dwellings for their employees.
Under this system the higher the income of the taxpayer, the greater is the benefit of the allowable deduction. This is in exactly the reverse of the principle that the honorable member for Mackellar (Mr. Wentworth) expounded as one of the essential principles that should underly our taxation laws. This afternoon the honorable gentleman said that the burden of taxation should be placed fairly accordingly to the ability of the taxpayer to carry that burden. The system of deductions which is enshrined in this legislation has the opposite effect.
– But the higher the income the higher the tax.
– The person earning the higher income can well afford the higher tax. You are departing a little from the principle that you accepted in the first place. I am contending against a departure from that principle of progression that you have accepted. The maximum income tax rate of 12s. 8d. in the £1 contemplated by the Government will be the lowest tax rate imposed in any civilized country in the world. That rate should be increased and not reduced. My point is that every £1 deduction, for any of the purposes to which I have referred, that is allowed a person receiving £105 a year, is worth 3d to him. For a person receiving £200 a year it is worth lid.; £300 a year, ls. 8d.; £400 a year, 2s. 2d.; £500 a year, 2s. 6d.; £600 a year, 2s. 10d.; £700 a year, 3s. 2d.; £800 a year, 3s. 6d.; £900 a year, 3s. 10d.; and £1,000 a year, 4s. 4d. Under this legislation people earning £1,000 a year will receive 4s. 4d. for each £1 of deduction. Going to the other end of the salary scale, for people who have an income of £3,600 a year each deduction of £1 is worth 9s. 3d. as compared with 2s. lOd. for a person on the basic wage. For persons earning £16,000 a year and over it is worth 1 3s. 4d. at present and will be worth 12s. 8d. after the introduction of legislation that has been foreshadowed. Each £1 deduction is worth varying amounts, from the lowest to the lowest income earners,, to the highest to the highest income earners. That is the effect of this principle of deductions which is enshrined in this legislation. It is in consonance with all other tax legislation introduced by this Government.
The system of deductions encourages money, as it were, to flow uphill. We do not think that is surprising because we believe that one of the main purposes of this Government is to assist those people who already have plenty of money. Every piece of legislation that comes before this house contains assistance of this kind to the wealthy. When we find that to be the case in bill after bill introduced by this Government, how can we avoid the conclusion that the Government is in office for the purpose of serving the wealthy and that it is the agent of the wealthy people? It is only too obvious that that is the case. The principle is extremely well illustrated in one of the central features of this bill. Clause 9, which the Opposition opposes, provides that the deduction from income for money paid in superannuation and life insurance premiums will be raised from £300 a year to £400 a year.
The Opposition has asked: What kind of people can afford to put £300 or £400 each year into insurance and superannuation? What kind of people can do that? Could the age and invalid pensioners, whose incomes are £247 a year, do so? Could the basic wage earner, whose income is £710 a year do so? Could he afford to increase his contributions for insurance or superannuation from £300 to £400? Obviously not! Obviously this is designed for some well-to-do people.
A couple of speakers on the Government side have suggested that this provision has arisen from the position of Commonwealth public servants. If that is a fact, is it the lobbying by some public servants in the higher income brackets which has produced this wonderful amendment? If one looks at the taxation statistics one finds it very difficult to find in them any suggestion that there is even one taxpayer in the Public Service at the present time who pays £300 a year into superannuation and can therefore benefit from a bill which raises the limit to £400.
I refer honorable members to the statistics of income. They show that in 1955-56 - and these amounts may have risen by 10 per cent, or 20 per cent, since then, but not more - there were 56 people in Australia who received an income of £50,000 or more a year. Those 56 people put only £6,736 into insurance or superannuation, which was an average of £120 each.If the people receiving £50,000 a year or more averaged only £120 in superannuation or insurance premiums, who is going to benefit from the amendment which raises the limit of contributions from £300 to £400 for the purpose of tax deductions?
Coming down the scale we find that there were 145 people who received in income between £30,000 and £49,999. Their average subscription for superannuation or insurance was £125. Coming down the scale further we find that 14,879 persons received incomes between £4,000 and £4,999. No doubt quite a number of them were senior public servants but their average contributions to insurance and superannuation amounted to only £108 a year. No doubt, some of them who were fortunate to be in this field of income of £4.000 a year and more were able to put £300 into superannuation.
I know that some members of Parliament receive a salary pretty close to that figure and they are in a very fortunate income group; but just how many people will benefit from this marvellous piece of legislation which this Government has introduced? Are there one dozen or two dozen people in Australia? I hardly think there would be 100, yet this legislation is introduced to benefit as few people as that!
I thought it was rather amusing this afternoon to hear the honorable member for Wentworth (Mr. Bury) defend this provision. He admitted that it would benefit only a limited number of people. He said, “ In a sense that is true.” It is true in every possible sense that it will benefit only a limited number of people. I would say that if more than 100 people benefit from this, that is certainly not indicated in the income statistics.
The honorable member for Wentworth said it is limited logic that those who desire social justice should see it only by increasing the earnings of those in the lower income brackets. That is not the position we take. We say that if the Government can influence the spending of £1 or £100 in the community it should do its best to see that the benefit of that spending goes where the need is greatest and not where it is least. We say that if the Government, by its legislation, can influence the flow of money, it should not do so for the benefit of those people who can afford to increase their annual contributions to superannuation from £300 to £400, even if they are senior public servants. We say that that amount of money should be put where it is needed most.
Let me refer, in conclusion, to clauses 5, 13, 16 and 7. These refer to the deductions to be allowed to companies engaged in petroleum search. We have opposed these clauses for quite a number of reasons. The first is that we believe these companies involved in petroleum search in Australia to-day can well afford to put a small part of their millions and millions of profits, which they take out of the Australian community, into the search for oil in this country. We believe that they have taken sufficient out of the Australian community to put a little of it back into the Australian community. We do not want people coming here for a further hand-out to encourage them to do this work. Of every £1 that is invested with these people in the search for oil in Australia, about 37i per cent, will come directly from Commonwealth revenue. Another couple of millions pounds in subsidy will be provided by a bill which will be introduced later this evening. The result probably will be that for every £1 invested in the search for oil in Australia perhaps 60 per cent, will be contributed by the Commonwealth. We say that that is going a little bit too far in the circumstances.
The honorable member for Sturt said that members of the Labour Party did not want to see foreign people investing their money in Australia. We want to see them investing their money in Australia but we want to see it done at a reasonable rate of profit. We do not believe in running after foreign people and giving them concessions which our own people cannot possibly get. Any one would think, from what the honorable member for Wentworth said this afternoon, that these companies were discovering oil all over Australia. Our geologists tell us there is oil in Australia and these companies have been searching for oil for a long time, but they have not found it. At least they have found it in a couple of places - on the coast of Western Australia and in New Guinea - but for some reason or other they have closed up the wells. I think the companies which are involved in the search for oil in Australia are in a somewhat ambiguous position. The honorable member for Wentworth gave the position away this afternoon when he said - and I quote him directly - “ Most of the oil in the world has been found by small operators and exploited by large operators.” That is the history of the oil industry all over the world. Small operators find oil and large operators take it over. It seems to me that as long as we put all our eggs in the basket of the large operators in this country we are running a risk.
It may well serve the interests of those large operators which have oil interests already in accessible parts of the world providing enough oil to last for 100 years. They want to use these supplies because they can exploit them under more favorable circumstances than they could in Aus tralia. Any one would think they are discovering oil in Australia, but they are not. I would not be prepared to put all our eggs in the basket of the large cartels.. Instead of putting, everything in that basket, it is the duty of this Commonwealth Government to put a little bit of money directly into the search for oil itself. This Government has at its disposal the services of the Commonwealth Scientific and Industrial Research Organization and of the Bureau of Mineral Resources. If it is necessary to go overseas for assistance, the Government should do so to acquire the technicians and managerial staff to carry on the search for oil. But this kind of submission is met by only one answer, which was weakly stated by the honorable member for Wentworth this afternoon, “That means nationalization “.
If the Bureau of Mineral Resources were to discover oil in Australia and the development of that discovery was controlled by a Commonwealth corporation^ that would be a very excellent result for Australia. I do not think the weak cry of “ nationalization “ is any kind of criticism of that kind of possibility; it is certainly not one that the average Australian will be prepared to consider.
But, of course, if the Government is not prepared to do that, it should be at least prepared, when it is handing out millions of pounds, as it is proposing to do in this bill and in the measure which will be introduced later to-night, to companies which are already the most wealthy and part of the most integrated cartel in the world, to try to get some one representing those companies to say what they will do if they discover oil. There is no undertaking, no statement of policy that they will follow, and no indication of the kind of treatment which the Australian taxpayer will receive at their hands. The Government is giving them everything and will get nothing in return.
Order! The honorable member’s time has expired.
.- Mr Speaker-
Question (by Mr. McMahon) put -
That the question be now put
The House divided. (Mr. Speaker - Hon. John McLeay.)
Majority . . 22
Question so resolved in the affirmative.
Original question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 3 - by leave - taken together, and agreed to.
Clause 4 (Exemptions).
.- This clause exempts from taxation money paid by way of pensions, annuities or allowances to the former victims of national socialist persecution in Germany. A case has come to my notice in which a victim of national socialist persecution received his annuity last year, after it had accumulated for, I think, three years. He had to prove, as all such people must prove, before a tribunal in Germany that he was entitled to this payment. Because he made his application last year, and the tribunal heard his claim last year and agreed that he was entitled to the payment, the annuity was dated back over a period of three years. Last year he received the annuity for three years in one lump sum. Another victim of persecution, who happens to put his case before the tribunal this year - or, indeed, he may have put it before the tribunal last year - and who receives a judgment, if one may call it such, after this bill becomes an act of Parliament, will not have to pay any tax on the amount received. It is entirely fortuitous that the man of whom I speak happened to have his claim granted by the tribunal last year, while other people in exactly the same situation may have their claims granted after this legislation comes into force.
There is no reason in justice why there should be discrimination of this kind. I directed the attention of the Treasurer (Mr. Harold Holt) to this matter in correspondence some time ago, but perhaps he has not yet had an opportunity to investigate the case. I do not propose now to move an amendment, but I do ask that the Treasurer give consideration to the matter, and I suggest that he could, perhaps, arrange for the Senate to insert an amendment to this clause so that all these people may be placed in the same situation. I believe the justice of the matter is perfectly plain. I have made written representations to the Treasurer setting out the circumstances, and I ask him to have a look at the matter. If after further study he considers that what I have suggested is just and reasonable, perhaps he will take appropriate steps to see that an amendment is inserted in the bill in another place.
– I think that, on behalf of the Treasurer (Mr.
Harold Holt) I can say that this matter will be looked at. The honorable gentleman will realize that adoption of his suggestion would introduce the principle of retrospectivity. The provision would operate from the date on which the tribunal found that a certain amount was payable to the person who had been persecuted. Nonetheless, I can give the honorable member an assurance that his suggestion will be looked at.
Clause agreed to.
Clause 5 - (1.) Section seventy-seven a of the Principal Act is repealed and the following section inserted in its stead: - “77a.- (1.) In this section-
– Section 77a of the Principal Act relates to moneys paid to a company in respect of shares and expended in prospecting for petroleum, &c. I move -
Omit all words after “ repealed “ to the end of the clause.
Honorable members who have studied the bill know that this gargantuan clause occupies nearly six pages of the bill. The clause is so large because of the kind of matters that it is attempting to deal with in one bite, as it were. As I have said in the course of the debate the amendment introduced in 1958 brought into the law a completely new concept. I think that on the present occasion the committee should make sure that it is well aware of what it is voting on in regard to this particular clause.
The effect of a favorable vote on my amendment would be not only to vote this clause out, but also to vote out the section that was agreed to last October in the dying hours of the last Parliament when, apparently, nobody took very much notice of what was being done. The explanation of the present proposed concession covers nearly ten pages of the printed memorandum which has been circulated to honorable members. I should think that most honorable members who have read the clause and the amendment as closely as I have done have been bamboozled at times as to precisely what is meant by some of the sub-clauses.
As was pointed out earlier in the debate, Mr. Chairman, the position is that if an individual subscribed capital to a mining company, including a petroleum mining company, prior to the operation of this provision he would get a deduction in respect of his own personal income tax of one-third of the calls only which were paid. The present clause goes further than that. It covers not only the full amount of the capital subscription made, but also the application and allotment moneys as well as calls. Also, it applies only to petroleum search undertakings.
We have heard a lot here to-night to the effect that petroleum mining should not be compared with coal-mining, gold-mining or any other form of mining in Australia; that because of its financially hazardous nature, petroleum mining is different, and that that is why it is being treated differently. I think it should be pointed out, as honorable members on the Government side have pointed out, that without this particular concession something in the region of £20,000,000 or £30,000,000 has already been expended by oil companies on oil search both on the continent of Australia and in the Territory of Papua and Now Guinea. So, even without this concession, those companies have engaged in a considerable degree of oil exploration. But the real effect of this concession, if this law be passed, will be that private expenditure will be underwritten by the amount of money which, in effect, the Government will forgo. I point out that that is what this clause means. Previously the individual or company making the call would have been entitled to a rebate of one-third of the amount involved. To take the example cited here this afternoon, the existing provision means that, because of the rebate allowed, the Government bears 3s. 4d. of the marginal rate of tax of 10s. in the £1 levied on a taxpayer with a personal income of £5,000, and so bears, in effect, 3s. 4d. out of every 20s. of the net cost of the expenditure. If, on the other hand, the investor were a company investing in an oil search programme it, too, would get a one-third rebate. At the rate of 7s. 6d. in the £1 company tax, this would have meant that 2s. 6d. of the liability in every £1 would have been met by the Government. The clause goes further than that, and makes the full amount of the call a rebate, provided the declaration that is mentioned here is made and the person making the contribution applies in his income tax return, as he may, for the rebate to be extended. It means that the capital expenditure, insofar as it is provided for by individuals, is underwritten to the full extent of the individual’s marginal rate or, in the case of companies, to the extent of 7s. 6d. in the £1.
In other words, this is apparently quite a good example of what honorable gentlemen opposite are prepared, when it suits them, to call “ creeping socialism “. Nobody in this debate has defined how far creeping socialism has to go before it becomes open socialism. But at least a fair part of the financial risk is to be underwritten by the Government under this clause. That is why we have taken the course of opposing the clause. We believe it provides for a concealed subsidy, and a discriminatory subsidy in that it will apply only to petroleum companies and to no other kind of activity. No other undertaking is to get capital treatment of the kind to apply, under this clause, to capital subscribed to petroleum search.
We have been told by honorable members opposite that we are against oil search in Australia. We are not against oil search in Australia. What we are against is so-called private search which, to a large degree, is being made possible by public subsidy. The effect of this clause is that the Government will forgo a considerable amount of revenue to which it would otherwise be entitled. We say that if the Government itself wanted to spend such an amount of revenue on oil search there is no reason in the world why it should not do so. One of my colleagues this afternoon quoted the example of the South African Government which has underwritten expenditure on the extraction of oil from coal. Recently when I was in South America a big battle was going on between countries like the Argentine and Brazil which, different from Australia, know that there is oil in their lands but do not want it to be exploited by American capital. They wanted to have a fair share in the exploitation of that oil when it is found. They were looking to America for technical assistance and know-how but there was an intense upsurge of nationalist feeling, both in Brazil and Argentina, over the great profits and benefits that could flow to those undeveloped countries as oil was sold to the countries of the world that needed it. They felt that the major part of the fruits of those profits should not go to foreign investors. Apparently those countries have a little more pride than we in Australia have. 1 was surprised to hear the defences that have been raised by Government supporters to-night. Apparently they do not like this legislation being revealed for what it is. This is an example of public subsidy in a field where Government supporters, when it suits them, say that private enterprise is best. Private enterprise, left to itself, has already spent something like £20,000,000 or £30,000,000 on the search for oil. If private enterprise wants to do that we have no objection, but we see no reason for legislation of this kind.
Order! The honorable member’s time has expired.
– May I very briefly reply to what has been said by my friend the honorable member for Melbourne Ports (Mr. Crean). I think that the argument put by the Opposition can be summarized in a few words. What the Opposition is objecting to is the fact that the Government is prepared to agree that it companies are prepared to spend money on oil search, then part of that money so spent may be deducted from their gross income and will not be classified as assessable income. Honorable members opposite feel that the money should be taxed and the proceeds passed on to the Commonwealth and that the Commonwealth itself should expend the moneys.
I regard that as an extremely mean approach to this problem and one that is contrary to the best interests of this country. What is the philosophy behind our actions? It is clearly that we think incentives are valuable. We think that if we give adequate incentives in cases where they are desirable and in the interests of national development, they should be given, and if they are successful, we in this country can achieve valuable results. If we can give an incentive to find oil and in fact if oil is found in payable and valuable quantities, then the people who will ultimately benefit will not only be the people who find the oil but by and large the people of this country and the economy as a whole. That is the philosophy behind our actions.
Let me mention some facts. At the present time we are importing petroleum products to the value of something like £135,000,000 a year. We feel that if the money that is, as it were, forgone under this measure as an incentive could possibly lead to the discovery of oil in this country with the consequence that we would not have to import oil at a cost of £135,000,000 a year and, I repeat, the real beneficiaries would be not those who are now getting a small percentage as profits but the people of Australia and the economy as a whole.
That is the philosophy and the policy behind what is being done. It may be of importance to give some particulars to the committee. The Commonwealth has already amended section 77a of the act, which is the section now under consideration, to provide that the benefits of the section will flow to Australian investors - resident Australian investors. It has been found that that was not a sufficient inducement to permit all the money that we wanted to be invested in oil search. We found that it was a deterrent against non-residents who were shareholders in Australian companies or Australian subsidiaries of foreign companies. So what has been attempted and what will be achieved by the legislation now before the committee is to correct too discriminatory features of the present legislation. This legislation does not, as was contended by the honorable member for Melbourne Ports, introduce discrimination. It in tact eliminates discrimination because it introduces two extra classes of investors who can benefit as a result of the legislation. Already Australian residents can get the benefit of section 77a of the act. Under the clause now before the committee, nonresidents who are investors in Australian companies or local subsidiaries of overseas companies can also get the benefit of the section.
I come back to the original proposition. We must discover oil in this country if it is present. We have high hopes that it is here, but as yet that has to be proved. We believe in incentives. We think that it is a proper way to go about achieving the purposes that we have set ourselves. Frankly, we think this is a very sensible move and one that could lead to the discovery of oil in Australia if it is here. For that reason we reject the amendment. We think that the proposals now before the committee are eminently wise and sensible.
.- I want to reply briefly to the remarks made by the Minister for Labour and National Service (Mr. McMahon). The Minister said that he wanted to tell us what was the philosophy behind this clause - that if you want to achieve valuable results you must give adequate incentives. The Minister argued that it is necessary to pass this clause in order to give sufficient incentive for the investment of capital in. oil search and to get valuable results. Neither the Minister nor anybody else on behalf of the Government has shown that the returns in Australia to the companies that are concerned in the search for oil have not been satisfactory. This legislation shows that it is not small individuals who are searching for oil. It is companies formed by companies concerned largely in the distribution of oil which are searching for oil in this country. There is a system of companies and interposed companies. There is no suggestion that small shareholders’ money is going into the search for oil. The honorable member for Hume (Mr. Anderson) is interjecting. If small shareholders are sinking their money into the search for oil, let the honorable member give us the facts.
– You give us the facts.
– The Government has to prove its case. The Government is putting this legislation before Parliament and neither the Minister nor anybody else has given one word of proof that small shareholders are contributing to the search for oil. Many small shareholders invested in the Exmouth Gulf project and when the thing blew up overnight some of them made fortunes but most of them lost their money. There is no evidence of small shareholders contributing to the search for oil in Australia to-day. No financial or industrial concern in Australia, or for that matter in the world, is enjoying greater incentives than the oil companies. The incentives that they enjoy are the highest of any and there is no evidence of a need for further incentives.
The second point that was made by the Opposition is that to rely completely upon this method is a risk because the search may not be successful. In quite a number of cases,, it may not be in the interests of the concerns that are making the search to discover oil at the present time.
– What proof have you of that?
– They are already associated with people who are supplying oil from other sources, and they do not want any competition with those sources. Surely the honorable member for Hume is not as unrealistic as that. Let us give some incentive to these people, but let us have some of our own people in the field. Let us have some one on whom we can rely, such as the Bureau of Mineral Resources, really doing the job. of searching for oil. We do not want to put all our eggs in one basket. The Minister has not answered arguments of that kind that have been advanced by honorable members on this side of the chamber.
Our third point is that this legislation and’ the legislation that is to follow, which carries out the Government’s policy on oil search, is giving everything and is not safeguarding the interests of the community in return. We say that if the Government intends to give hundreds of thousands of pounds in tax concessions and millions of pounds in subsidies, it has a responsibility to ensure that some kind of a charter will govern the development of these companies if they do find oil. They should not be completely free to do as they wish, but the Government is leaving them in that position. In answering, the case put by the Opposition, the Minister has made no reference to that fact.
Another telling point made by the honorable member for Melbourne Ports was that, if the Government is concerned to discover petroleum and not merely to assist those who are searching for it, then a wider definition, than that contained, in clause 5 is needed. The explanatory notes to the bill say - “Petroleum.” The definition, of “petroleum,” is unchanged. The word means “ naturally occurring solid, liquid or gaseous hydrocarbons in a free state but does not include any substance which may be extracted from rocks or minerals by any process of destructive distillation”.
It is petroleum in a free state. But petroleum is most likely to be found in Australia in rocks and minerals. Why not include in the definition a provision that companies searching in that field will be assisted, because it is in that field that petroleum is more likely to be found. Estimates have been made that in a few years 20,000,000 gallons of petroleum will come annually from the brown coal deposits in Victoria, and we know the history of shale oil in New South Wales. If the Government is concerned to discover petroleum rather than merely to assist those who are searching for it, it should widen the definition. That was another point made by the honorable member for Melbourne Ports which has not been answered by the Minister.
The. Minister said that clause 5 does not introduce discrimination but eliminates it. The point made by the honorable member for Melbourne Ports, however, was not that this clause introduces discrimination. He said that there had been discrimination since 1958 and that this clause extends it. This clause certainly does not eliminate discrimination, as the Minister suggested. In 1958, the concession was restricted to resident taxpayers, and. now the Government is extending it to non-resident taxpayers. The deductions for capital’ subscribed for petroleum exploration purposes were not made available to Australian companies in which nonresidents had a controlling interest. Now the concession is extended to Australian companies in which non-residents have a controlli’ng interest. The information given to us with the bill says -
From the information then available it appeared that tax allowances’ in’ the overseas countries would provide adequate tax incentive for these companies: to invest in Australia.
Apparently,, in 1958; they were getting adequate incentive at home. The evidence available to> nae shows that they certainly do get adequate incentive at home from, the legislation that, exists, and it does not seem to me that anything, additional is needed.
But now we are not too sure; the justification is a little vague. The explanatory notes accompanying the bill continue -
This is not invariably the case.
As the honorable member for Melbourne Ports pointed out, incentive apparently exists in some instances but does not in all instances. It s a pretty vague sort of justification. I had the opportunity to read a letter from the Taxation Branch relating to this point. I must confess that after having read the letter I was in the same position as I was in before I read it. I could not understand what the letter meant. The same applies to the justification for this bill. I do not think that the information that the Government now has is any better than the information it had in 1958, and in 1958 the Government thought there was sufficient incentive for overseas investors However, the Government now thinks that there is not sufficient incentive. But the evidence on which it is making its decision now is no better than was the evdence in 1958. Therefore, it does not seem to me that the Minister has given any satisfactory reply to the points raised by the honorable member for Melbourne Ports.
.- I must confess that on my reading of the legislation I cannot see that these tax provisions in fact give overseas interests any more benefit than they previously enjoyed. The extension of benefit is to enable residents to participate in companies where the controlling interest is held overseas. They may in fact play a part in the operations of these overseas companies which otherwise would probably remain closed to Australian capital. It is only because of these concessions that a lot of Australian capital will be forthcoming for the oil industry. If honorable members opposite are anxious to keep overseas interests out of Australia, or to keep these interests to a minimum, it is surprising when a measure is brought forward to enable Australian capital to go into concerns in which overseas people are interested, that Opposition members should then seek to say that this is an unjustified benefit.
The clear aim of this legislation, and it cannot be repeated too often is to keep oil exploration going. The honorable member for Yarra (Mr. Cairns) referred to Brazil’s great national pride in these matters. He said that Brazil would not allow benefits to go to overseas countries. The plain fact is that Brazil has been so highly nationalistic and narrow-minded that it has not been able to get oil except on a very limited scale. Yet potentially very large fields exist in Brazil. Brazil has been so anxious to prevent any one from making a profit, with the same kind of philosophy that motivates honorable members opposite, that oil has not been forthcoming. The suggestion that small shareholders do not benefit from this process is nonsense. It is quite clear that companies such as Santos and Wapet have large numbers of small shareholders and, as and when they want more capital, there will now be more capital forthcoming which certainly would not have been forthcoming but for this legislation.
The Opposition keeps on making the point that we discriminate in favour of oil as distinct from other minerals. The case of oil is patently different from that of other minerals. The search for other minerals is proceeding at a considerable pace, but about two years ago the search for oil almost came to an end. If, in fact, we are not to leave this field entirely to foreign companies, one way in which we can get Australian capital flowing into it and in which our nationals can participate as they should is by providing concessions first of all for small Australian companies so that they can get capital by this means, and then by enabling Australians to share with overseas interests in the exploration for oil. Any one would think that, by enabling this concession to be granted, all the benefit was being passed to those particular shareholders, but in fact most of the money that will be subscribed by this means will go to improve our geological knowledge of the country and into the future search for oil. Most of the subscriptions will undoubtedly be completely abortive and will eventually be totally lost to the shareholders. They, of course, are gambling on it. In the United States of America, over the last fourteen years, in districts where the geological structure is well known and is not an unknown quantity, as is the case in most parts of Australia, only one out of every 44 holes drilled has proved productive in the end. That indicates the chances taken by people who invest money in the search for oil. Unless some special inducement quite distinct from the inducements offered in other fields was offered, the search for oil simply would not go on.
.- Mr. Chairman, the honorable member for Wentworth (Mr. Bury) seems confused about the provisions of this bill. I suggest that he read the explanatory memorandum which has been circulated. It makes the position quite clear. At page 7, it states -
The practical effect of this provision is that Australian subsidiaries of overseas companies are treated as non-residents of Australia for the purposes of section 77a. In consequence, they are not entitled to deductions for capital contributed by them to petroleum exploration companies.
When section 77a was introduced last year, the deductions for capital subscribed for petroleum exploration purposes were not made available to Australian companies in which non-residents have a controlling interest.
I emphasize the words “ non-residents have a controlling interest”. The explanatory note continues -
From the information then available it appeared that tax allowances in the oversea countries would provide adequate tax incentive for these companies to invest in Australia.
The Opposition is trying to enlighten the Parliament about the provisions that the Government is trying to slip through in this measure. We are concerned about the national assets of this country. We take pride in our country and we believe that we can develop it with our own resources. We believe, as we have stated in this debate time and time again, that we have the necessary resources and that the Government should enter into the field of oil exploration. We should have our own independent field force for the purpose. The suggestion has been made - and there is little doubt about it - that monopoly interest may have found oil and may be keeping its presence hidden because they wish to market supplies from other parts of the world.
– That is rubbish. It is not true.
– We know that a monopoly combine controls the world’s oil. On one occasion, it felt powerful enough even to challenge the United States Government.
The explanatory note on the bill which I have just cited states further -
It is proposed that those companies will in future be accepted as residents of Australia for the purposes of section 77a, as they are for other purposes of the income tax law.
I hope that the honorable member for Wentworth will re-examine the matter. This measure provides a further protection for overseas interests.
I should like to give the committee some figures to indicate the benefits enjoyed in this country by overseas interests. I have had on the notice-paper for several months a question which seeks certain information from the Government, but I have not been able to get an answer. However, through my own efforts, I have obtained from the Commonwealth Bureau of Census and Statistics figures which indicate the profits that are being made in this country by overseas interests which enjoy the protection of international tax agreements. Those agreements impose a further burden on the people of Australia. This Government has been responsible for allowing United Kingdom interests alone to take out of Australia, practically tax free, £172,100,000 over eleven years. The amounts for individual years are: 1947-48, £11,600,000; 1948-49, £8,700,000; 1949-50, £9,000,000; 1950-51, £12,500.000; 1951-52, £12,500,000; 1952- 53, £18,100,000; 1953-54, £15,600.000; 1954-55, £19,800,000; 1955-56, £20,000,000; 1956-57, £20,800,000; and 1957-58, £23,500,000. Under the tax agreement, those moneys were virtually tax free.
Under a reciprocal agreement, United States companies pay tax at the rate of 15 per cent. on profits earned in Australia. Over a period of eleven years, United States and Canadian interests have taken out of this country a total of £82,600,000. It is revealing to note that £66,600,000 of that has been taken out since the reciprocal agreement was signed in 1954. This is the important link in the outward flow of dividends about which we are concerned. In the financial year 1952-53, United States and Canadian interests took out of Australia only £3,000,000. But, as soon as the reciprocal tax agreement came into force in the next year, those interests took out of this country £13,500,000 in one year. The figures for the following years are: 1954-55, £12,500,000; 1955-56, £11,800,000; 1956-57, £12,000,000, and 1957-58, £16,800,000. I hope that the Treasurer (Mr. Harold Holt), who is now in the chamber, will take note of these figures. The fact is that this new inward flow of capital about which the Government talks has brought us in only £5,800,000 from the United States of America, and £16,800,000 went out in 1957-58 alone. At the true tax rates prevailing before the signing of the international tax agreement, £6,900,000 would have been paid in income tax on that amount, but, under the agreement, only £2,900,000 was paid. So United States investors have been saved £4,000,000. The net result is that, in effect, the true capital inflow into this country from the United States has been, not £5,800,000, but £1,800,000.
We all know how these oil search leases are taken up. We on this side of the chamber made it quite clear that we believe that the Government should not make hand-outs to the monopoly controlling interests. It should itself take an interest in the search for oil and do something to find oil for the people of Australia instead of subsidizing very wealthy combines. There is no guarantee that, even if those combines find oil, they will let the fact be known, because it may not suit their monopoly interests to reveal the presence of oil. As I have already said, the oil combine has challenged greater governments than the Australian Government. We know that some of the State governments have had trouble with oil interests. We have warned this Government. It is time that it did the right thing and stopped giving these hand-outs to monopoly interests.
Question put -
That the words proposed to be omitted (Mr. Crean’s amendment) stand part of the clause.
The committee divided. (The Chairman - Mr. G. J. Bowden.)
Question so resolved in the affirmative.
Clause agreed to.
Clause ‘6 (Gifts, calls on mining shares, pensions, &c.).
. -I move -
At the end of the clause add the ‘following sub-paragraph: - “ ‘ (xxxiv) the Commonwealth Literary Fund, includingconditional gifts: Provided that such have been accepted by thatFund in the prescribed manner.’.”.
This proposal is not unfamiliar to honorable members. Whenthe debate on the Commonwealth Literary Fund was in progress about two months ago I outlined what I proposed to do, and I reiterated it this afternoon. During those two months, I had an opportunity to discuss the matter with some Ministers. The amendment that 1 have moved will have the effect of making donations to the Commonwealth Literary Fund deductible for income tax purposes. It is an amendment which will not make any significant difference to the Budget. The amount of money concerned is trivial, but the principle of greater support for literary and cultural advancement in Australia has, I think, a certain importance which should commend it to this committee.
The object of the amendment is plain from its wording. I should like to make it possible - and I think the committee will agree with me - for people to make gifts for specific literary or cultural purposes or for specific literary or cultural projects. I think it is essential that we should restore the practice of individual gifts and not leave patronage in the hands of one government or one authority. On the other hand, we cannot leave the door entirely open. So I am suggesting that these conditional gifts be not of effect for income tax purposes unless they are accepted by the Commonwealth Literary Fund in the prescribed manner.
As honorable members very well know, the Commonwealth Literary Fund is not a formally constituted body although it has sufficient identity to appear as such in the Budget papers, year by year. It is a fund which is controlled by three people - the Prime Minister, the Leader of the Opposition and the Leader of the Australian Country Party. Consequently, it is a most responsible fund. My proposal does not open the door too wide because the only gifts which would rank as deductions for income tax purposes are those accepted by the fund itself. This is an endeavour, then, to find a compromise position between the Commonwealth controlling all patronage and complete freedom to make capricious gifts and treat them as deductions for income tax purposes.
– What gifts have been made in the past?
– So far as I am aware, no such gifts have been made in the past. This is a scandalous state of affairs, which my amendment is designed to remedy.
I believe, and honorable members on both sides of the chamber have expressed the same view, that Australia’s patronage of its arts and culture is not as great as could be desired. If that is so - and I believe that the committee will agree that it is so - this amendment will go a little way towards remedying that situation. Even though it means very little in terms of cash so far as the Budget is concerned, I think that it will be a token of the sincerity of this Parliament if it is accepted.
I urge the Government to consider accepting this amendment. I would not have moved it if I had believed that the sum involved would be great enough to have an effect upon the structure of the Budget as a whole. Surely we can ask the Government to accept an amendment on its merits, if indeed it has merits, or to show why it has no merits. Surely we can ask the Government to treat sincerely and seriously an amendment which will not have any real impact upon the totality of its financial policy. I hope that the amendment will commend itself to honorable members.
.- The amendment now before us contains much with which the Opposition could agree in principle, but surely there must be some safeguards in this matter. The general difficulties that would be created by adopting this proposal would have to ironed out. For instance, the Commonwealth Literary Fund is really a name only. Money is allocated to the fund so that it can be distributed by the committee and the advisory board. The honorable member, quite reasonably, has suggested that more money should be allocated for Australian literary projects. The Prime Minister (Mr. Menzies), when he has been asked for more funds, has said that he would not like to turn the Commonwealth Literary Fund into a government department, and has found escape that way. The honorable member for Mackellar (Mr. Wentworth) now has submitted a very reasonable suggestion which could overcome the rather stubborn attitude that the Prime Minister has adopted in relation to the development of the fund.
However, the proposal would give rise to some difficulties. First, the fund as it now stands would have to be altered, because I do not think that it comes now within the category of organizations which can receive money from outside. The honorable member envisages that, and something would have to be done in that regard. If that were done, the fund would be most useful as a place to which donations and benefactions to literature could be made. Donations to medical research funds, to refugee funds, to the building of memorial halls and so on, are included in the list of allowable deductions that can be discovered in the income tax guide. Up to this point, we are in complete accord with the honorable member.
Then he said something which rather spoiled the whole thing for us. He said that the fund should accept conditional gifts. I do not think that gifts for literature should be conditional. When you give money for medical research, you do not say, “ I give this money for research into cancer of the right or the left lung “. It is a donation to a general research, and, as such, the Taxation Branch and the Treasury look at it in the broad sense. In general, we support what the honorable member is trying to do, but we feel that there could be opportunities for some persuasion one way or the other if gifts carried a condition. For instance, there are magazines which tend to the right or to the left in politics, and one could be subsidized to the detriment of the other.
The honorable member, very wisely, has put his argument on this basis: “ You have a factor which would prevent that. You have the Prime Minister, the Leader of the Opposition and the Leader of the Australian Country Party, who are the three men concerned on the literary committee. They are the men to say whether a condition will be accepted.” On the face of it, that seems to be a reasonable safeguard, but I do not think that the Government will accept the idea.
This is an attempt to do something for Australian literature and the development of a fund that ought to receive more money. It is quite obvious that the few thousands of pounds paid into the fund under the Budget are not adequate, as a result of inflation, to meet to-day’s needs. The honorable member is to be congratulated for trying to increase the flow of money to the fund. Whether this amendment will provide the solution, we are not prepared to say now, but we support the principle involved. We hope that the Government will give a satisfactory explanation of its intentions.
– Naturally I listened with interest to the suggestion that has been made by the honorable member for Mackellar (Mr. Wentworth). I wish to place the arguments that have come to my mind in three different compartments. In the first place, I think that the arguments of the honorable gentleman are illogical. If we proceed to the reason behind the amendment, we will find that he has suggested that we should take the gross income of a person and then permit a certain amount to be deducted from it before the assessable income for income tax purposes is arrived at. The honorable member has suggested that one item should be added to the deductions that already are permitted before arriving at the assessable income of the individual.
What is the position of thi Commonwealth Literary Fund? At present the Commonwealth is the sole contributor to that fund. It contributes on the basis that it does not want to interfere with the independence of the fund authorities to decide how the money is to be spent. The Government gives the fund authorities independence - a somewhat judicial independence, if you like to call it that. It wants them to remain strictly independent in determining how the money shall be spent to the best advantage of the literary people of Australia. My colleague from Mackellar has proposed that we should allow, not only gifts to the fund, but also conditional gifts. In other words, he has suggested that the very independence, the independent right of decision of the fund authorities, should be jeopardized. The honorable member for Parkes (Mr. Haylen) has said that he, and, as far as I can make out, the other members of the Opposition, would not agree to conditional gifts of this kind. I personally would not be prepared to accept them, and neither would the Government.
Let me now look at the second point, which relates to the constitutional position.
I venture to suggest that from, a constitutional viewpoint we could not accept the amendment. At present it is for the Government to decide what deductions may be made before assessable income is struck. The suggestion made here is that the fund authorities themselves should decide what deductions should be permitted - whether or not a person should be permitted an income tax deduction. Speaking from a purely constitutional point of view, I think that the Government would be abdicating the very function of government if it gave to some other authority the right to decide whether or not a sum of money was deductible.
The other point is a little difficult to accept on a practical basis. I have already dealt with the question of its logical content and also the constitutional content, and now I come to the practical basis of it. Each year the Commonwealth looks at the deductions which can be claimed. It has to consider the competing claims for deductions. This year the Government looked at many claims that had been submitted for consideration and in the light of the whole Budget and the fact that there would be a deficit of nearly £60,000,000 it decided that the best it could do on this occasion was to allow the deductions which are mentioned in clause 6 of the bill.
For that reason, against the general background of Budget problems and of the priorities that had to be given to the various competing claims, the Government came to the conclusion that, as a matter of common sense and practice, it was wise on this occasion to limit the deductions, as has been done in clause 6. For those reasons, I think that the Government has no alternative but to reject the suggestion that has been made.
– I want to talk generally on clause 6 because having once moved an amendment and called for a division on it, I do not propose to continue each year dividing the committee on the subjectmatter of the request that I am about to make. I have made this request m writing several times. I have made it by word of mouth several times, and the only course left to me now is to continue to make it in public every year when the Budget is under consideration.
Naturally, all honorable members know that I refer to my submission that funds donated to send the Olympic Games team overseas should be allowable deductions for income tax purposes. The Treasurer (Mr. Harold Holt) has recently been in the United Kingdom and the United States of America and I understand that such contributions, in both countries, are in the category of income tax deductions. Even if that were not so, I still hold that no one in this country does more to raise the standards of national health and national fitness, to fire ambition and to set ideals for the rising generation than the officials - men and women - of amateur athletic bodies and the amateur athletes, boys and girls and young men and young women who, by strict discipline and training continue to raise those standards, year in and year out and almost day in and day out. The officials give time, the value of which is incalculable, in organizing the various amateur athletic associations.
The Olympic Games in Melbourne were run by these officials in a way which, I think everybody will agree, was the greatest instance of peace-time national effort ever accomplished by Australians. It brought publicity to Australia which could not be bought for £50,000,000 and it brought a measure of international goodwill to Australia which could not be purchased for any amount. Therefore, may I say to the Government once again that I think this matter should be given very serious consideration.
As I have said previously in this Parliament, in regard to the promotional side of the games - I will not go through the details again - the result showed that there was at least a balance, a slight profit of £10,000 or £20,000. This was revealed when the value of the permanent capital assets was deducted, which had been debited against promotional expenses. I am not peeved because the Melbourne Cricket Ground benefited to the extent of £300,000 out of the games. Good luck to it! What I am saying is that the various athletic organizations, in trying to raise these funds - and no one can say that they are not trying, because they are running all sorts of competitions, getting assistance from sporting goods manufacturers, and staging exhibitions - are getting no outside assistance. All the money that is required to send the large team of athletes overseas has to be raised before they go because that team does not share in the gate-money. It is not like a cricket, football or tennis team; it gets nothing at all from the gatemoney and therefore has to raise the whole of its expenses.
We give money to music. Good luck to the Myer Music Bowl! We give money to opera. Good luck to the Sydney Opera House! Any gifts to either of these places are allowed as income-tax deductions. But why should music benefit, in one instance in Melbourne and in another in Sydney, while another organization which is perhaps the biggest factor in the promotion of national health and fitness in Australia, all of which is carried on by amateur officials and amateur athletes, receives no help by way of contributions to its funds being allowable deductions for taxation purposes?
As in the case of the Monash university we have to go to the Government, cap in hand, and say, “ Please will you give us so much “, and we never know how much the Government will give. If we were to ask the people responsible for raising the funds whether they would rather have the contributions which were allowed as income-tax deductions or the amount granted by the Commonwealth Government they would readily reply that they would prefer the former. Once again I ask that this matter be given very serious consideration by the Government.
I think we give about £150,000 to national fitness. What better and bigger national fitness movement is there than the amateur athletic organizations all over Australia?
– The Commonwealth Government gives £80,000 each year.
– That is so. The amount is £160,000 to which the Commonwealth and States contribute on a £l-for-£l basis. I do not begrudge that contribution to national fitness; good luck to that organization. But I feel that I have every justification for saying - and I am certainly supported by the amateur athletic organizations throughout Australia - that the Government should recognize the work that is being done to maintain the high standards and traditions of Olympic teams in the past and to keep publicity going to raise funds to send teams overseas. These organizations should not have to go cap in hand each year to the Government for funds. I do not think it would cost the Government any more in the long run - in fact it might cost less - to agree to make contributions to Olympic Games funds allowable deductions for income-tax purposes. Such an arrangement would make it much easier to raise the necessary funds.
.- The honorable member for Chisholm (Sir Wilfrid Kent Hughes) has carried the Olympic torch into the national Parliament and I believe it behoves all honorable members to support him. He has made out a reasonable case this evening. It should stir the national spirit of everyone, and above all, members of this chamber. What is being sought, in the first place, is a straight-out grant by the Government to aid an Australian team to visit Rome for the Olympic Games in 1960. That is a most desirable objective. If the Government is not prepared to accede to that request, then it is only a reasonable proposition that contributions made to the Olympic Games funds should be allowed as income tax deductions.
– Every government has given a grant at some time.
– Every government has given a grant but the honorable member for Chisholm, as well as all honorable members, must know that the amount which has been voted in the past has been totally inadequate and not in keeping with national pride and sentiments. The team goes from this land to represent Australia, not some small sectional body or one particular sport. Honorable members on the Government side talk a lot about international goodwill, friendship and amity, but I do not know of anything designed to help international goodwill, peace and understanding to a greater degree than the cultivation of amateur sport throughout the world so that those who are dedicated to sport for sport’s sake can meet in friendly, keen competition.
I have already referred to the fact that this Government has imposed sales tax burdens on many of our sporting bodies. Some of these organizations have been taxed almost out of existence. Let me refer in particular to the sport of rowing. This is a community sport, a public sport. The organizations connected with it have few opportunities to obtain financial aid. Sales tax is imposed on boats, oars, and anything connected with the sport. This Commonwealth Government, this national Government of Australia, has an opportunity to do something for our amateur sportsmen and women. We are not loath to accept the kudos when our athletes perform well at the Olympic Games or other sporting carnivals.
To-night, the Minister for Labour and National Service (Mr. McMahon), speaking, no doubt, on behalf of the Treasurer (Mr. Harold Holt), who has spent little time in this chamber during the debate on these financial matters, has told us that the Budget has been framed, that, in effect, the die has been cast and that we cannot afford to run any risks in respect of money that will be coming in or money that will be going out. I suggest that the Minister should read the Auditor-General’s report or the report of the Public Accounts Committee. He will find ample evidence that the Government’s budgeting has not been very exact. On a number of occasions there has been substantial overspending or underspending. What would be involved in carrying out the proposals of the honorable member for Chisholm? Certainly not very much.
– Order! This is hardly relevant to the clause before the committee.
– With deference, Mr. Chairman, I believe it is.
– The honorable member for Chisholm spoke on this matter. You have now answered him, and I suggest you now come back to the clause.
– I am putting to the committee that what is proposed by the honorable member for Chisholm would cost the nation very little. That being so, this Parliament should, as a matter of conscience, accept his proposals. The honorable member has said that he is not prepared to divide the committee on the matter. For my part, I believe the question is so important that the committee should be divided on it so that we may find out just where we stand.
– Order! 1 will tell the honorable member where he stands on this matter. His remarks are not relevant to the clause. The debate may continue on clause 6, but excluding references to the Olympic Games.
– What I put: was that donations made for the purpose of sending athletes to the Olympic Gamesshould be allowable deductions for income tax purposes. Are you ruling, Mr. Chairman, that this is not relevant to the clause?
– Clause 6 deals only with certain specific organizations,
.- I want to speak on clause 6, and I hope you will not rule me out of order, Mr. Chairman. I want to support the remarks of the honorable member for Chisholm. Clause 6 proposes an amendment to section 78 of the principal act. The marginal note in the bill is “ Gifts, calls on mining shares, pensions, &c. “
– Order! I hope the honorable member is not trying to get round my ruling. The marginal note is not part of the bill. The clause is quite specific.
– I am amazed, having regard to the representations that have been made through the years, that the Government has seen fit to provide, in clause 6, that only gifts to certain named organizations and funds shall be allowable deductions. These organizations and funds are the National Trust of South Australia, the National Trust of Australia (Western Australia), the Northern Territory National Trust, a public fund established and maintained exclusively for the purpose of providing money to be used in furnishing persons in Australia with marriage guidance through approved organizations, the Australian National Committee for World Refugee Year, and the Council for Jewish Education in Schools. I am surprized that the provision has not been widened a little. While I have quite a considerable amount of sympathy with the amendment moved by the honorable member for Mackellar (Mr. Wentworth), I must say that this is the first occasion on which this novel idea has been put before a committee of this Parliament. As to the matter raised by the honorable member for Chisholm, this has been brought forward previously, not only in a committee of the Parliament, but also in general correspondence.
– Order! The honorable member for Canning is doing very well in dodging the Chair’s ruling. He had better get back to the clause.
– I take a point of order, Mr. Chairman. If I move an amendment to the effect that donations for the purpose of sending athletes to the Olympic Games should be allowable deductions for income tax purposes, will we then be in order in debating the matter?
– That would be in order.
– Well, I will move it.
– The honorable member for Canning still has the floor.
– In view of the suggested amendment by the honorable member for Chisholm, I crave your indulgence, Mr. Chairman, and that of the committee, and ask that I be allowed to speak to the foreshadowed amendment.
– Why not speak while the honorable member for Chisholm drafts his amendment?
– Well, I have not been told to sit down.
– I rise to a point of order, Mr. Chairman. Are you ruling that no honorable member can speak against the clause, or can refer to a matter covered by a suggested amendment, unless he actually moves the amendment?
– There is no amendment by the honorable member for Chisholm before the Chair.
– But my point of order is this: Are you ruling that one cannot criticize the failure of the clause to deal with a particular matter unless one moves an amendment covering that particular matter?
– That is exactly what I am doing.
– I am opposing the amendment that is now before the Chair and supporting the amendment foreshadowed by the honorable member for Chisholm. A few years ago the Olympic Games were held in this country, and I believe that as a result, Australia grew up a little, as it did in 1915.
– Order! The honorable member is still defying the ruling of the Chair. The question is that the amendment of the honorable member for Mackellar be agreed to.
– I regret that the Government will not accept my amendment, but I feel that I should reply to some of the points raised in the debate. The honorable member for Parkes (Mr. Haylen) suggested that my proposal might require some amendment of the constitution of the Commonwealth Literary Fund. That, I think with respect, is not so. The Commonwealth Literary Fund has no formal constitution, but it has a sufficient identity to appear as a line in the Estimates year after year; and it has sufficient identity to receive a vote of money. If the committee will look at my proposed amendment it will see the words “ accepted by the fund in the prescribed manner “, which means that regulations could prescribe quite clearly, without in any way altering the constitution of the fund, the method of approval to be given. It would be quite easy for the Government to prescribe that it should be by the unanimous consent of the three members who constitute that fund, rather than the advisory committee about which the Minister for Labour and National Service (Mr. McMahon) seemed to be in some confusion. The fund is not the advisory committee. The fund is the Prime Minister, the Leader of the Opposition and the Leader of the Australian Country Party.
The honorable member for Parkes also raised some question about conditional gifts. Apparently he did not realize that the amendment would not in any way reduce the possibility of unconditional gifts. It refers to “ gifts including conditional gifts “ but it does not in any way rule out unconditional gifts and I, like him, would hope that some unconditional gifts would be made. I think it is a good thing for people to have an opportunity to give for an appropriate purpose which would receive the approval of the fund and, subject to that approval, a gift could be made for a specific purpose. Otherwise, I feel that, in the nature of things, there will not be adequate gifts. Those are the two points raised by the honorable member for Parkes and I feel that on reflection he will see that neither of them has very much substance.
May I confess that I was unable to follow the remarks of the Minister for Labour and National Service, who spoke of the independence of the fund being jeopardized. Nothing could be further from the truth, because this proposal in no way impinges upon the independence which the fund has now. It gives to the fund complete independence in deciding whether or not it wants to accept a gift for a specific purpose. That does not in any way affect the independence of the fund nor does it affect the independence of the fund in respect of the administration of the gift.
The Minister then spoke of the constitutional position. Apparently he was unaware of the provision in section 73 (6.) of the Income Tax and Social Services Contribution Assessment Act, for example, which makes the Commonwealth Scientific and Industrial Research Organization the determining body as to whether a gift shall or shall not be deductible for income tax purposes. He is apparently unaware that this principle which he regards as so constitutionally repugnant is already in the act. After all, a body consisting of the Prime Minister, the Leader of the Opposition and the Leader of the Australian Country Party must surely have an even greater constitutional authority than a body such as the C.S.I.R.O., however worthy that body may be. So I suggest to the Minister that if he looks at the act he will find the principle that he now regards as so repugnant is already there in a form even more farreaching than the one he would repudiate.
The last point that the Minister made was on the question of the amount of expenditure involved. He said that the Government had gone so far and it could not afford to do anything more. I do not think the committee can possibly take such a contention seriously. It is not a matter that has any significance in the overall accounts of the Government. First, the amounts concerned are small and, secondly, even though they are small they are also within the control of the Government itself, because they would not be deductible unless they were accepted by the fund, and the Government would always remain in control of that. It would be a small charge on the Government, so small as to be quite imperceptible in relation to the Budget. In addition, the decision as to which specific item a gift should be spent on would be totally within the Government’s control. I do not think that the Minister’s contention can be taken very seriously.
I put these points to the committee: First, that the arts in Australia are inadequately supported; secondly, that the support given to them should not come wholly from the Government, but that it is desirable that more of it should come from private sources; thirdly, that the amendment that I have proposed and which, unfortunately the Government finds itself unable to accept, would in fact have some reasonable effect in increasing the flow of funds from private sources for the purposes described.
.- I support the amendment moved by the honorable member for Mackellar (Mr. Wentworth). I think that he has answered the Minister for Labour and National Service (Mr. McMahon) point by point very effectively, and I am sure that it is only stubbornness that prevents the Minister from accepting this amendment, which has the precise purpose of giving another small boost to a very worthy Commonwealth fund. I commend the honorable member for Mackellar for his courage in bringing the matter forward. I am sorry that the honorable member for Chisholm (Sir Wilfrid Kent Hughes) has been diverted from his purpose in respect of another amendment - unless, of course, he decides to go on with it.
The honorable member for Parkes (Mr. Haylen) summed up the attitude of the Opposition. We battled during the consideration of the Budget for an increase in the amount of £12,000 a year granted by the Commonwealth to the Commonwealth Literary Fund. Our proposal was rejected.
Here is another sincere attempt to give a moral and small financial impetus to this worthy cause, which will help our own writers and artists. Honestly, I cannot understand the mentality of a Ministry that will knock this out. We are not asking for one penny from Commonwealth sources at this stage. This amendment refers specifically to outside assistance, which will come from ordinary taxpayers who may give donations to the fund. There may be many worthy citizens wishing to do so. But the Minister claims that this would throw the decision to what was to be done with the money outside the orbit of the Commonwealth Literary Fund committee.
I do not entirely agree with the phrase, “ including conditional gifts “, used by the honorable member for Mackellar in his amendment. I am not a bit keen about
Conditional gifts, because big financiers could make gifts to the fund and then, because of the size of their gifts, dictate to the fund committee the manner in which the money was to be used. There could be a dictatorship in that form. If the phrase, “ including conditional gifts “ were left out, perhaps the Minister would accept the amendment. I give firm support to the principle underlying the honorable member for Mackellar’s argument.
If I may be permitted, Mr. Chairman, to move, at this point, an amendment to cover a matter which I wish to debate-
– Order! There is already an amendment before the committee.
– I wish to move a further amendment-
– The honorable member may not do so.
– Well, free speech has died!
– Order! If the honorable member is not very careful something else will die.
Clause agreed to.
Clauses 7 and 8 - by leave - taken together, and agreed to.
Clause 9 (Life insurance premiums, &c).
Mr. CREAN (Melbourne Ports [11.0].- On behalf of the Opposition I propose to move that this clause be omitted.
– Order! The honorable member will be out of order if he moves for the omission of the clause. He can achieve his purpose by voting against the clause.
– Very well. The purpose of this provision is to increase the existing concessional allowance in respect of life assurance and superannuation payments from £300 to £400. In the course of the second-reading debate this afteroon the Opposition indicated that this is a clause that has very limited application and can be of benefit to very few people in the community. It can benefit only those who are fortunate enough to be able to save in the region of £8 a week from their income. That section of the community must be very limited indeed. There are many more matters within the scope of the income tax legislation that are in greater need of adjustment than this particular one. I do not want to canvass again the arguments raised earlier in the debate, but merely wish to state that the Opposition will vote against the clause.
Question put -
That the clause be agreed to.
The committee divided. (The Chairman - Mr. G. J. Bowden.)
Question so resolved in the affirmative.
Remainder of bill- by leave- taken as a whole, and agreed tq.
Bill reported without amendment; report adopted.
Bill - by leave - read a third time.
Motion (by Mr. McMahon) proposed - .
That the House do now adjourn.
.- I wish to raise a matter to-night that I have been trying to raise for several weeks. I was unable to do so during the consideration of the Estimates. I propose to refer to the Taxation Branch. I am glad that the Treasurer (Mr. Harold Holt) is in the House, because I want him to hear what I have to say. The matter I want to raise concerns the Gestapo tactics of taxation officers who are touring country districts, especially in my State of Tasmania, and interfering with what I regard as the sacred rights of the individual. The activities of these officers were first brought to my notice in August by an elector who, in the course of his letter, said -
I have been through one of the crudest tests a man could expect from any law court. The charge against me was apparent shortage of £14,300 in my returns. I was forced to get assistance and after asking for an extension of time was told 6% would be charged if not paid within thirty days.
He then mentioned the questions that he was asked, and I will discuss them in a moment. He continued -
After nine months the investigation ended and the whole amount was cancelled.
In other words, he was not guilty of the offence of which the Taxation Branch had accused him.
I am up in years and the continued worry has had a bad effect on my health. I am ordered to rest and there is not much chance of recovery. The investigation cost me £140 for accountancy work and about £50 for private expenses.
I wrote to the Treasurer about this matter and he courteously replied to me in a lengthy letter of explanation. However, his reply did not explain the amazing inquisitiveness of these officials from the Taxation Branch who are prying into the private affairs of Australian citizens, and that is the activity that I want to criticize to-night. Another farmer came to my office a fortnight ago and told me that he has been through this inquisition- it is not an investigation, but an inquisition of private citizens. We have never heard of this sort of thing before. Certainly, it never occurred under a Labour government. I cannot understand why officials of this Government have to go to individuals, business people and small farmers and ask them to go back over their affairs for five years and to remember every detail of income and expenditure for each of the five years. I condemn this practice wholeheartedly.
The farmer who came to my office told me that the official who interviewed him was a decent sort of young man. He does not complain about the attitude of the official, but he does complain about the questioning, which followed this pattern: What children’s birthday presents have you given over the last seven years? Where were they bought? How much did you pay? What did you get for Father’s Day? What did you give for Mother’s Day? What were your gifts at Christmas to your family? What was the cost of ice cream and lollies for your children? What sort of cigarettes do you buy? What sort of liquor do you drink? What functions does your wife go to and what sort of clothes does she wear? What sort of hats and shoes does she wear? What did she pay for them? Where do you go for holidays? what hotel do you stay at when you are on your holidays and what is the tariff you pay?
If a man asked me that sort of question, I would put him out of my home immediately. That is how I feel about this sort of inquisition. But that is not all that happened to this man. The officials went through every article in the home and every drawer. They asked: Where was this purchased? When was it purchased? What price did you pay for it? How much toilet paper do you use? What soap do you use? How much do you pay for it? What towels and washers do you have in the bathroom? What is the state of your children’s banking accounts? Where did you get the £12 to open one and the £6 to open the other? I have an official form on which these questions are listed, although they are not in the detail that I have mentioned? The taxpayer is required to remember the details over five years for every one of these many items. The last item - the one that includes the toilet paper - is -
Other Personal Expenses Not Shown Above Including Toilet Requisites, &c.
The farmers have every reason to condemn these Gestapo tactics used by the Taxation Branch. The great cost involved in having these officials tour the country in twos and threes must be borne by the taxpayers. Only last week, while the Parliament was in recess, these officials swooped on a businessman in the electorate of my colleague, the honorable member for Bass, and asked him there and then to turn out his pockets.
– Did you say that this did not happen in the days of a Labour government?
– I did not have one complaint all the time that we were in office, but I am getting complaints from many places now. The taxpayers concerned do not want me to mention their names, and I do not blame them for that. But their private affairs are being pried into and examined, as if with a magnifying glass, in a completely contemptible way and not in accordance with the principles that should be found in a democratic system. I know that certain people try to evade income tax. I am not so naive that I do not know that, but is this method of investigation approved by this Parliament? Why should all these personal matters be examined so closely? Why should a man be asked what gifts he gave on Mother’s Day, Christmas Day or his children’s birthdays? Why should he be asked where he got the money to open his children’s bank accounts, to buy cigarettes and drinks, and all the rest of it? This is absolutely ridiculous and shows that bureaucracy is supreme in this country. I have said before that bureaucrats run Australia and that Ministers are merely rubber stamps for the decisions of the bureaucrats.
These methods adopted by officials of the Taxation Branch are harassing citizens beyond all reason and are involving them in heavy costs because they must obtain legal assistance when the inquisition begins. They have to meet these costs even though they are innocent of the charges laid against them, as the case I mentioned earlier shows. That man was charged with understating his income by £14,300, but when the inquisition had ended he was shown to be innocent of any such offence.
– They have to pay to prove themselves innocent!
– That man had to pay to show that he was innocent. What a racket this is for lawyers, accountants and tax agents! They are reaping the benefit of this activity by taxation officials, and I condemn it. I am incensed about this matter, and any one who tries to subject me to this sort of inquisition will receive short shrift. I think the law of this country should be above the law of the Taxation Branch so that citizens will have some protection from this detailed inquisition into their personal affairs. I hope that other members of the Parliament, when they meet with cases such as this, will mention them in the Parliament.
Order! The honorable member’s time has expired.
.- I am glad that the Minister for Labour and National Service (Mr. McMahon) is at the table because I want to refer to a statement that he made in the Parliament on 6th
October. On that day, we were discussing the Estimates and the honorable member for East Sydney (Mr. Ward) had referred to the Amalgamated Engineering Union and court-controlled ballots. The honorable member for East Sydney (Mr. Ward) voiced the position in connexion with the union’s action on court-controlled ballots. The Minister for Labour and National Service (Mr. McMahon) got up to refute the statement of that honorable member, and in doing so he made an extraordinary statement. Personally, I do not think that the Minister intentionally misled the House, because I know him too well for that. But certainly somebody misled him because, in referring to court-controlled ballots, as far as the Amalgamated Engineering Union was concerned, the Minister had this to say -
The honorable member -
He was referring to the honorable member for East Sydney - has referred to the ballots that are taken by the Amalgamated Engineering Union. Previously, the A.E.U. conducted star-night ballots at which members raised their hands and showed publicly how they were voting.
I have been a member of the Amalgamated Engineering Union for the last 35 years. During that time I have attended scores of star-night meetings at which ballots were conducted. The policy of the A.E.U. in connexion with ballots is an extremely democratic one and I would say it is open to less malpractice than a court-controlled ballot. It is contrary to the procedure of the A.E.U. in ballots for the election of branch members, or the election of officials on a State or on a Commonwealth-wide basis, for members to raise their hands to show how they vote. One night is set aside for nominations. Nominations are made, and a star-night is held every quarter. Four times a year every member of the union is circularized by means of a printed circular, which is posted to him, in which he is informed that a ballot Wil take place on a certain date in connexion with a certain matter. When a member attends a meeting, he goes into the room in which the ballot-box is placed in full sight of every member at the meeting and is attended by two scrutineers. He then takes his pence card over for verification by the scrutineers and signs opposite his name on a printed sheet when he receives his ballot paper. He then votes on the ballot-paper and places it in the ballot-box. Before the meeting closes, the ballot-box is opened by the two scrutineers and the votes are counted by them. Every member of the branch who wishes to do so may stand around the table and see the votes counted. The votes are then officially recorded in the minutes and they are then sent to thz appropriate returning officer, according to whether it is a State or a Commonwealth ballot. Every member of the branch knows what the figures are and no member of the branch knows how other members voted.
For the Minister to say that a member raises his hand and shows publicly how he votes is a sheer mis-statement.
– Is there any provision for postal votes?
– No. There was provision for postal votes about ten years ago.
– I was a member before you were.
– The honorable member’s membership was different from mine in that I have been a member for 35 years and am still a member. That is more than he can say. The honorable member is saying that the A.E.U. discarded postal votes from its rules. For the last ten years the ballots have been conducted along the lines I have indicated. I think it is an amazing thing for a responsible Minister of the Crown to get up and say that the members of a reputable union raise their hands and publicly show how they vote. This has never been done in the history of trade unions.
The A.E.U. has an honorable record extending over very many years as far as the conduct of ballots is concerned. It was one of the first unions to institute a ballot of this nature. This ballot is practically foolproof, short of gross impersonation by somebody presenting somebody else’s pence card. This is not the case in regard to court-controlled ballots because the ballot-papers are sent out by post. I know from personal experience of instances in which members who have received ballotpapers through the post in court-controlled ballots nave handed them :to another person to vote for them .and ito post them back for them. In A.E.U. ballots, .the member votes in person on .the night of the ballot in full view off everybody - in that he puts his ballot-paper in the ballotbox. There is mo whisking of the ballotbox outside to open ,it; everything is -done in the full glare of publicity with all members present As I have said, every member is informed beforehand through the post by means of a printed circular that the ballot will take place on a certain night, and the names of the members who have been nominated are indicated. The Minister should be sure of his facts before making such a grossly inaccurate statement. The least he can do in relation to this union, which has an unimpeachable record as far as ballots are concerned, is to publicly withdraw his statement and apologize to the union.
– I did not intend .to speak on the motion far the adjournment, but in view of some of the comments that have been made <by the two preceding speakers 1 have, of courses a few words to say. First, for the honorable member for Wilmot (Mr. Duthie), “who has been in ‘this “Parliament as long as I have, to accuse the Taxation Branch of being contemptible - I think that was the word he -used - in ‘using this form to approach people -whom the -branch considered were evading their contribution to the revenue, is inexcusable. If this is the phraseology and the language that the honorable ‘member for Wilmot is going to use in respect of the Taxation Branch in this particular sphere, the same can be applied to the honorable member himself, because as an elected member of the House of Representatives - one of 124 people in this land of 10,000,000- he has a responsibility to the electors and to his constituency to see that this Parliament and its administrative officers protect the revenue of this country. The Taxation Branch uses this particular form only when it is absolutely sure that it is approaching somebody who has been endeavouring to evade his or her rightful contribution to the revenue by way of taxation.
The honorable gentleman said that this form was never used ‘during Labour’s regime. Anybody who has taken an -interest in the political affairs of this country and its administration, particularly the administration of the Taxation Branch, knows that that form, or one very similar to it - including all the questions, some of which the honorable member exaggerated to-night - has been used down through the years. And it is right that that should be so, because the law-abiding ‘citizens of this country who are prepared to pay their contribution towards the cost of government of this country should not be penalized by other ‘people who repeatedly try to evade their contributions to the revenue. I deplore the attitude that the honorable member has adopted. I have heard of this before some years ago - but for the honorable member for Wilmot to say he “would do what he has just indicated if anybody approached him in similar circumstances, is against the teachings he has preached - he should turn the other .cheek. He is not prepared to do that. I take strong exception, as do some of my colleagues, to anyone who has been here as long as the ‘honorable member for Wilmot saying that this was never done under Labour. He knows that statement :to he absolutely a contradiction of the truth; and I am surprised at the honorable gentleman using that phraseology to-night.
I interjected whan amy friend the honorable member for Batman .(Mir. Bird) was speaking about -ballots that ar<e ‘Conducted by the Amalgamated Engineering Union. I was a -member -of that particular .union before it was .called the Amalgamated Engineering Union, lt was (formerly called the Amalgamated -Society -of Engineers, but because of the confusion .of the letters A.S.E. with the Australian .Society of Engineers^ whom we .used to call blackfellows - quite friendly like - its .name was changed to its present title. My honorable friend implied that I was a dilutee. I have some knowledge of dilutees as well. Thank Goc the .government of the day had the courage to .introduce the dilutees here during the war! -If it had :not done so, we should not have had the amen to work in the metal trades.
– They were introduced by a Labour government.
– 1 do not care what government it was. However, the Labour government did not have the courage to continue with the system at the finish, and tried to run out of it. Nevertheless, it had the courage to introduce that system to carry out the work at the very heart of our war programme - the manufacture of munitions. One thing about which I want to remind the honorable member for Batman is that in the days when he and I first joined this union - and my time goes back a considerable way, because I am in the 60 age-bracket now - it was possible for a member-
– -Where did the honorable member work?
– In the Midland Junction railway workshops, if , me honorable member wants to know,
– The honorable member for Kingsford-Smith will come to order.
– He does not worry me a hit, .Mr. Speaker. In the days when the honorable member for Batman and I joined this union, a .man who was forced to move 1 00 or 200 miles away from iris union (branch head-quarters in order lo get employment was given the right ito a postal vote am union ballots. But that (does not apply to-day. It is practically impossible for a man employed 100 miles tar so away from the head->quarters of bis union -branch tra attend on the night of , the .ballot and register iris vote in the way that the honorable member for .Batman has described.
The honorable member is trying .to interject now. Before he starts again at this late stage, I remind him that I raised this matter in the Parliament two or three years ago. On that occasion, the honorable member for Fremantle (Mr. Beazley) wanted to have a go, and the honorable member for Batman told mm to keep quiet about it. I suggest to my friend, the honorable member for Batman, for whom I have the Highest regard, that he should use his best endeavours in order to ensure that the Amalgamated Engineering Union reverts to the kind of organization that it used to be and allows a man who, by force of circumstances, works many miles away from the head-quarters of his union branch to have a postal vote. The honorable member would be better advised to do that than to criticize in this Parliament something that is alleged to have happened in secret court-controlled ballots, which have enabled us to clean out a lot of the Communist control of the unions that existed in the days of the Labour “Government and immediately afterwards.
.- Mr. Speaker, I compliment .the honorable member for Batman (Mr. Bird) on raising this matter in order to put the record right in regard to the .misrepresentation made by the Minister for Labour and National Service ,(Mr. McMahon). There seems to be a season for attacking trade unions, criticizing their ballots and suggesting that no (Union ever conducts its business in a proper manner, I imagine that many organizations have rules and provisions for the , con.duct of ballots similar to those Binder which ballots of the Amalgamated Engineering Onion .axe conducted. Those who were present when the Minister addressed the House will recall Oris implication that the A.E.U. cannot be trusted to conduct its (bailors.
– On a point of order, Mr. Speaker: That is not correct, and the honorable member knows that it is not correct. He is not telling the truth. He “has lifted something right out of its context.
– No point of order is involved.
– The Minister was defending the Government’s action in introducing court-controlled ballots. Everybody .knows exactly .how a court-controlled ballot -comes about Ite ^Government has decided that a little over 1 per (Gent <of .the membership of the A.E.U. icas obtain a court-countrolled ballot, against the wishes et more than -9,8 per cent. ®f “the membership, toy signing a petition requesting that sUCh a ballot the held.
– That is democratic!
– That 5s what the Government (describes as a democratic method of conducting ballots. After listening to what the Government has to say about these harlots, one would imagine that there was no reason to question them or the way in Which they are conducted. The procedure is that a petition is prepared and presented to the Commonwealth Industrial Registrar. Those who present the petition are not obliged to present a statutory declaration at the same time in support of it, but there has grown up the practice of presenting statutory declarations in support of these petitions. Some of these statutory declarations have been proved to be false. They have been cleverly drawn up - no doubt, on legal advice - with certain flaws in them. According to the Government’s own legal advisers, it is impossible to prosecute anybody for making a false declaration in these instances, because the declarations have not been drawn up in accordance with the existing law.
What happens in respect of these petitions? Union officers do not have a chance to check whether the names appearing on them are those of genuine financial members of the union because the Industrial Registrar refuses to make a petition available to them so that they may examine it. They cannot check whether the requisite number of genuine union members have actually signed the petition. This situation is absolutely ridiculous. Practically every document that is lodged with the Commonwealth Industrial Registrar is made available to anybody for inspection if he pays the required fee. As far as I know, these petitions are the only documents lodged with the Registrar which are not made available to the officers of an organization for checking purposes. Why are not they made available? In my opinion, the only way to keep a check on these petitions is to make them available to union officers for examination. When union officials ask the Registrar to let them examine a petition for a court-controlled ballot, he replies, in effect, “ If you give me the names of people who have signed the petition and who are not members of your organization, I shall take some action, and I shall consider your request that the petition be made available to you “. How can union officials possibly give the Registrar names unless they know the names of the people who are purported to have signed the petition?
There was an occasion when union officials became aware of some of the names on a petition. They came into possession of the information only because officers from the Commonwealth Industrial Registrar’s office who were checking the list of names spoke some of them loudly and were overheard. When the branches of the union were approached in order to verify the genuineness of these names, the branch officers declared that there had never been branch members known by some of these names, that others were the names of people who had been members of the union years before and who were, at this time, unfinancial or who had left the industry altogether. This indicates the genuineness of the names that appear on some of these petitions which are accepted by the Industrial Registrar. The Registrar merely receives the petition with the names on it. He does not check the signatures to determine whether they are genuine. They could be forgeries. Somebody could have forged the names of union members who had no knowledge of the fact that their names appeared on the petition. In view of these circumstances, I say that the matter needs careful examination.
The Chifley Labour Government introduced the legislation which afforded individual union members, or groups of union members, an opportunity, if they had prima facie evidence of malpractice in a ballot, to approach the Industrial Registrar on the matter. If the Registrar was satisfied that there was a prima facie case, the matter went before the court, and the court decided whether there had been malpractice and whether action ought to be taken to declare the ballot null and void and to conduct a fresh one under the court’s jurisdiction. That was the procedure under Labour’s legislation. But the legislation introduced by this Government, which has been defended by the Minister for Labour and National Service, does not provide for the democratic control of trade unions. This Government accepts the say-so of a little more than 1 per cent, of the membership of this great organization - the Amalgamated Engineering Union - and allows that small percentage of the membership to take the control of the union’s ballots out of the hands of those who comprise more than 98 per cent, of the membership. This is a negation of democratic control of trade unions. If the Government thinks that this is a good principle, why does not it apply it to other organizations?
Let us examine what has happened In respect of some of these court-controlled ballots. The honorable member for KingsfordSmith (Mr. Curtin) well recalls a time when a ballot for the election of officers of the Sydney branch of the Boilermakers Society of Australia was conducted by the court. The officers appointed by the court to conduct the ballot had actually declared it. The whole process had been finished. The honorable member for Canning (Mr. Hamilton) talks about postal voting in union ballots. Some time after this ballot of which I am speaking had been completed and result had been declared by officers of the court, a postal bag containing a considerable number of votes which had never been counted was found at the Haymarket Post Office, in Sydney.
– The number was about 600.
– That large number of votes had not been taken into account at all. The officers appointed by the court found no difficulty in concluding the ballot while about 600 ballot papers were still lying in the Haymarket Post Office uncounted! How can the Government argue that that is a satisfactory and a sensible arrangement? I say to the Minister that instead of suggesting that trade union ballots are dishonest he should begin to examine some of the organizations with which he is associated. The honorable member for Canning thinks that it is a great principle to ensure that if a member of a union cannot attend a trade union meeting he ought to be provided with a postal vote. The honorable member comes from Western Australia and belongs to a party which believes in an upper chamber being elected on a restricted franchise, which denies the people the opportunity to vote at all.
It seems to me that the Government’s plea to the effect that it is cleansing the trade union movement of communism is a lot of rubbish. The trade union movement is as competent to deal with its domestic affairs as is any other organization in the country. I hope that the Labour Opposition will continue to press for the repeal of legislation which has been applied only to the trade union movement. The legislation introduced by Labour should stand, because under that legislation it was necessary to prove that there had been malpractice before a court-controlled ballot could be held, taking the conduct of the ballot away from the members of the union. That is the only provision that any reasonable person would want legislation of this kind to contain.
.- I have been a member of the Amalgamated Engineering Union for some 50 years. I have occupied an official position on a district committee of the union. I know intimately the ballot procedures, as well as the procedures for conducting other forms of business in that organization. The explanation given to the House this evening by the honorable member for Batman (Mr. Bird) was true in every respect. There is no organization that is more careful about the manner in which it conserves the right of each individual member properly to register his vote in any ballot that is conducted.
That being so, it is unfortunate that the Minister for Labour and National Service (Mr. McMahon) should have reflected on the standards of integrity that have been observed by the responsible officials of an organization which has given long and honorable service to working people in Australia and also in the United Kingdom. As one who knows exactly what transpires in the affairs of this union, and as one who has retained an active interest in the union, I am shocked to think that a man occupying the position of a Minister of the Crown should rise in his place and express views contrary to the facts. In every respect I subscribe to the views expressed by the honorable member for Batman in this matter.
– in reply - You can make mountains out of molehills, Mr. Speaker, and that is exactly what has been done by the honorable gentleman from Bonython (Mr. Makin). I am sure that the honorable member for Batman (Mr. Bird) will agree that he has taken my statement right out of its context. If the honorable member cares to read my remarks he will see that I was referring to two facts. The first was that the honorable gentleman from East Sydney (Mr. Ward) was completely out of touch with trade union opinion when he was suggesting that court-controlled ballots should be abolished, or that we should revert to the practice that existed under the Labour Government.
I was constrained to make that point because at the recent biennial conference of the. Australian Council of Trade Unions the problem was not even on the agenda for discussion.. Since I have been a Minister I have had no representations about it.
Secondly, Mr. Speaker; I drew attention to the fact that obviously the Amalgamated Engineering Union could not object to court-controlled ballots at the present time because the union had asked the Commonwealth whether it would pay portion of the costs of a secret ballot being conducted. I said, too, that the honorable gentleman from East Sydney had in this House made a suggestion to the effect that the excess costs should be paid by the Government. That is what I was speaking about. I was not speaking about the method of conducting a ballot, but about the fact that the excess costs were borne by the Commonwealth and not by the union itself.
The honorable member for Batman - and again I thank him for saying that my sincerity was not being tested - has taken my statement out of context. If he had been here he would have known that a title time before I spoke the honorable gentleman from East Sydney had referred to star night ballots of the A.E.U. I said that the A.E.U. conducted star night ballots at which members raised their hands and showed publicly how they were voting. I was speaking in the vernacular. I was arguing about one single set of facts. Those facts revolved around the question of whether there was any substantial objection to court-controlled ballots and whether the A.E.U. objected to receiving part of the money which was expended in the conduct of those ballots. That, Mr. Speaker, was the whole thing. If the honorable gentleman’s feelings have been hurt, then I for one regret that they have been hurt. As I have said, I was speaking in the vernacular and was giving an illustration. It took six long weeks for the honorable member for Bonython and East Sydney to know what had happened and to take exception to the statement that I had made in this House.
When the recent amendments of the Arbitration Act were being debated in this House I directed attention to the fact that there was no provision in the rules of the A.E.U. for a postal ballot, but that under the existing system of a star night ballot experience had shown that less than 10 per cent, of the eligible members voted. I wanted to make it perfectly clear that I did not think that that was a democratic method of having a vote conducted. We have, Sir, the point that whilst a postal vote is more costly than personal voting, it has now, I think, been established - and established to the satisfaction of those who do it - that officially conducted A.E.U. ballots under the postal ballot system have drawn from 40 per cent, to 50 per cent, of the eligible voters into voting in postal ballots. I venture to say that that is proof in itself that these postal ballots are valuable. Instead of 10 per cent, voting, from 40 per cent, to 50 per cent. vote. I am a democrat and if the honorable gentleman from Batman also is a democrat he should congratulate the Government on giving the members of the union the opportunity to vote and the opportunity to say how the union should be run.
– You made a long statement and it was not correct.
– If I have offended the susceptibilities of the honorable member for Batman who has not been well, I regret it. If the words that he used did not explicitly cover the facts, then again I venture to say that I believe his interpretation of what happens is the correct one.
I complete on this note: Of course we are anxious to strengthen the position of the trade union movement. I, for one, resent any implication that we, on this side of the House, would do anything which would reduce the authority or the standing of the trade union movement. I regret that the honorable gentleman from Bonython has become extremely excited and emotional about this. He has taken six weeks to gird himself for action and then has completely misunderstood exactly what I have said.
Question resolved in the affirmative.
House adjourned at 11.51 p.m.
The following answers to questions were circulated: -
d asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Health, upon notice -
– The answers to the honorable member’s questions are as follows: -
ser asked the Minister for the Interior, upon notice -
– The answers to the honorable member’s questions are as follows: -
s asked the Minister representing the Minister for Shipping and Transport, upon notice -
Is he able to furnish the following information: -
Is interest charged on funds invested in the State railways in Australia?
If so, what is, in each case, the (i) volume of funds on which interest is charged and (ii) cost of interest charged, and what are the rates of interest?
Over what period have funds on which interest is charged been invested in each of the State railways?
– The Minister for Shipping and Transport has furnished the following replies: -
In addition to the above amounts, the Commonwealth Government contributed £2,985,263 towards the South Brisbane-Grafton standardization work. The total net loan liability of the work was £4,360,209. Provision is made in the National Debt Sinking Fund for this amount.
In addition the Transport Commission in Tasmania has received interest-bearing advances from the State Treasury to meet working expenses, and the purchase and manufacture of stores amounting to £1,284,000.
The net loan liability figures shown in the table above are not all interest-bearing. Victoria, South Australia and Tasmania have received substantial assistance by way of interest-free loans.
The cost of interest charged to the various railway authorities for the year 1957-58 as shown in their published accounts is as follows: -
d asked the Prime Minister, upon notice -
Is the Commonwealth paying any of the expenses incurred by the right honorable member for Cowper or his wife during their present trip abroad; if so, what are the details?
d asked the Prime Minister, upon notice -
– The answer to the honorable member’s questions is as follows: - 1, 2 and 3. The Government has not received the request referred to by the honorable member for the appointment of a non-party committee to investigate and report upon the living conditions of pensioners.
m asked the Minister for Trade, upon notice -
– The answers to the honorable member’s questions are as follows: -
No notice has been given to terminate the trade agreements Australia has with Brazil, Czechoslovakia, France, Greece, South Africa and Switzerland.
The trade agreement between Australia and Belgium terminated on 28th July, 1959, after the requisite six months notice of termination was given by Australia to Belgium on 28th January, 1959. Trade relations between Australia and
Belgium are now governed by the provisions of the General Agreement on Tariffs and Trade to which both countries are contracting parties.
In the case of Southern Rhodesia, new arrangements to provide for the continued mutual exchange of preferences were necessitated by the official inauguration of the Federation of Rhodesia and Nyasaland on 3rd September, 1952, and the planned introduction of a unified customs tariff for the federation on 1st July, 1955. In consequence, Australia negotiated a new trade agreement with the Federation of Rhodesia and Nyasaland on 30th June, 1955, and this agreement replaced that formerly in operation between Australia and Southern Rhodesia.
m asked the Minister for Trade, upon notice -
On what occasions and by what percentages has the Australian Overseas Transport Association altered freight rates in the last ten years?
– The answer to the honorable member’s question is as follows: -
The following increases in freight have been ratified by the Australian Overseas Transport Association over the past ten years: - 1949, 10 per cent.; 1951, 15 per cent.; 1953, 7½ per cent.; 1955, 7½ per cent.; 1957, 14 per cent.; 1958, certain refrigerated cargoes (e.g.,lamb 7 per cent., fruit 8 per cent., beef, frozen, 23 per cent., beef, chilled, 31 per cent).
Sugar Cultivation in Papua and New Guinea.
m asked the Minister for Territories, upon notice -
Is it for (a) scientific, (b) economic or (c) political reasons that sugar is not cultivated in the Territory of Papua and New Guinea?
– The answer to the honorable member’s question is as follows: -
The Government is unaware of any proposal for the commercial cultivation of sugar in the Territory and any reply to the question would be speculative.
s asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
n asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Postmaster-General, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Postmaster-General, upon notice -
– The answers to ‘the honorable member’s questions are as follows: -
d asked the Minister for Immigration, upon notice -
– The answers to the honorable member’s questions are as follows: -
d asked the Minister for Immigration, upon notice -
– The answers to the honorable member’s questions are as follows: -
Experience has shown that many migrants who leave Australia return here to settle at a later date. It must be remembered also that the return of a whole family may result from the failure of only one member to settle down in Australia and that, consequently, all those departing cannot be classed as discontented migrants. The School of Demography at the Australian National University, with assistance provided by the Department of Immigration, is at present engaged in a research study into British migration. As part of this study a detailed examination will be made of the reasons for the return of a number of persons to the United Kingdom after having migrated to Australia.
m asked the Minister for Immigration, upon notice -
– The answer to the honorable member’s questions is as follows: - 1 and 2. The proposals to appoint welfare officers in the department, who would undertake certain of the functions previously performed by trained social workers, are still under consideration! and, as yet, the qualifications and duties of welfare officers have not been defined. It is unlikely, however, that the particular academic qualifications required for social workers at present employed in the department would be essential for welfareofficers. The latter would more appropriately be expected to have experience and a general, aptitude for welfare work, rather than the ability to provide a clinical service in specific cases.
Cite as: Australia, House of Representatives, Debates, 21 October 1959, viewed 22 October 2017, <http://historichansard.net/hofreps/1959/19591021_reps_23_hor25/>.